The Hindu Business Line : Controversial Byrd law: Will sanctions follow?

WHAT next after the World Trade Organisation (WTO) gave its "green light" to the European Union, Brazil, India, Chile, Canada, Mexico and South Korea to impose trade sanctions against the US worth $150 million, for its failure to repeal the controversial Byrd trade amendment or law?

Under this controversial law, the US Customs authorities were entitled to distribute proceeds of anti-dumping and anti-subsidy duties to the companies that benefited from the controversial Byrd Legislation.

The Byrd amendment was enacted in 2000 and since then about $800 million has been paid out to US manufacturers and exporters of ball bearings, steel, canals, pasta etc among other products.

The trade and employment issues are highly emotive and divisive in the US election year, although the financial significance of Byrd legislation is minimal for the global trade volumes in these commodities. But it is the principle of free trade, which is at stake.

Mr Pascal Lamy, European Union's Trade Commissioner, stated that to start with the US anti-dumping rules under the controversial Byrd amendment must first go.

According to current sentiments here, a "consensus trade dialogue" based on the principles of free and fair trade practices could follow this controversy. The latest WTO ruling highlights the third time that the US has been found in breach of internationally agreed trade rules.

Despite such ruling, from a practical viewpoint of the European Union and other countries, which have complained against Byrd Legislation, it also remains to be seen how the US administration responds to this challenge. According to local trade specialists, this could also become an election issue in the November presidential election. As a European Union official put it: "The aim is to get the US to comply with the WTO rules but not to impose trade sanctions." In the WTO authorised sanction figure of $150 million, the European Union's share could amount to $27 million, which is minimal in background of some $2 trillion trade flows across the Atlantic. Mr K.M. Chandrashekar, India's Ambassador at WTO in Geneva, today told Business Line: "It is not a question of figures. For example, India's share could amount to just $3 million. But it is the principle of free trade which is at stake. Hence, India like the European Union looks forward to a positive response by the US administration in coming weeks."

The outright imposition of trade sanctions against American firms in the so-called "swing States" in the US presidential election may also have a negative impact all round, according to current sentiment at the European Commission. The American trade officials have expressed positive sentiments by suggesting that the US will comply with the latest WTO ruling. The latest WTO ruling covers only those countries that requested sanctions authorisation. Three other countries - Australia, Thailand and Indonesia that joined the original complaint against Byrd legislation did not press for sanctions, but agreed to give the US until the end of the year to repeal the Byrd legislation.

The general European perception would suggest that the latest WTO ruling has drawn a "distinct line" on the controversial Byrd legislation in the US, but it is not an excuse to trigger a sanctions war or regime. In background of high unemployment on both sides of the Atlantic, there is concern about loss of manufacturing jobs, which can have a nasty impact on national economies on both sides of the Atlantic. However, no policy options can be implemented before the outcome of the US election in first week of November.

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