A plan by the US Customs Service to pay cash gifts to American firms harmed by foreign imports has drawn swift criticism from the World Trade Organization. The action by the Geneva-based international trade body has cooled an already chilly relationship between the WTO and the United States, and is creating a clash between Congress and the White House.

To date, the US Customs Service has sent out thousands of letters alerting national firms how much money they can pocket from tariffs on foreign companies that sell their products in the United States.

The tariffs are imposed when American companies are able to convince US officials that the imports have an adverse effect on profits. This year, the tariff-funded compensation program will pay well over $300 million. Prior to 2001, the money was simply deposited into the US Treasury. The Bush administration says it will comply with the international body’s decision.

But Senator Robert C. Byrd (D-West Virginia) — who authored the congressional measure that created the payment program, commonly known as the Byrd amendment — says the WTO wrongly challenges the ability of Congress to enact laws and to decide how money is spent. Byrd pushed the measure into law as part of the Agriculture appropriations bill in 2000. The legislation, officially called the Continued Dumping and Subsidy Offset Act, made possible payments of $329 million to about 1,200 companies last year and $230 million in 2001, according to US Customs Service, which administers the program. In July 2001, the 15-nation European Union and eight countries complained to the WTO that the act broke international trade rules. In September last year, a WTO panel agreed, and the United States appealed the ruling. The appeal was answered late last week.

“We are reviewing the report to assess the best compliance options and will discuss these with the [House] Ways and Means and [Senate] Finance committees, and all other interested members of Congress,” the US trade representative’s office said in a statement.

Senator Byrd says the WTO ruling is “ridiculous” and is asking US President George W. Bush to leave the law in place.

“It is plain wrong to urge the repeal of a law that supports American workers and companies which are under constant attack by unfair foreign trading practices,” Byrd says. Senator Charles E. Grassley (R-Iowa), chairman of the Finance Committee, says he plans to work with White House and Senate colleagues before deciding on the next step.

“Of course, we need to comply with our WTO commitments, win or lose. That’s part of expecting other nations to comply when they lose cases against us,” says Grassley, adding that the Byrd amendment was slipped into an appropriations conference report without full debate in the Senate. “I’m not surprised that a bill that was never considered by the committee of expertise or even the full Senate is found to violate our international commitments,” Grassley said in a statement.

US officials were not surprised by the WTO decision, though the Trade Representative’s Office said in the statement that it is “disappointed with the appellate body’s findings concerning the funds disbursed under the act.” In 2001, US Trade Representative Charlene Barshefsky said the amendment was “a bad idea.”

Companies and officials said last week that they were more concerned that the ruling would reach deeper into measures that the United States uses to safeguard domestic industries from foreign competition. The measures, in the form of anti-dumping and countervailing duty laws, allow US Customs to assess fees at the border — and raise the price of foreign goods — when the government finds that domestic companies are injured by overseas competitors. They are among the strongest measures in the US arsenal to shield companies from outside pressure. “The findings in this dispute do not affect the underlying US anti-dumping and countervailing duty laws, and the United States will continue to vigorously enforce those laws to ensure that US industries, farmers, and workers are not forced to compete with unfairly traded imports,” the trade representative’s statement said.

Senator Byrd’s Amendment is particularly irksome to overseas governments and suppliers of goods because it urges American companies to file claims against foreign products — and then rewards money to the aggrieved companies directly. Now that the WTO has issued it ruling, Congress will consider the amendment again.

Send questions and comments to: [email protected].

Arab News Features 23 January 2003