WTO Clears Penalty for U.S.

The World Trade Organization on Friday cleared the way for punitive sanctions on a variety of U.S. exports after Washington failed to repeal a corporate subsidy the WTO declared illegal two years ago.

Although expected, the WTO ruling was seen as a setback for U.S. trade policy. A variety of American exports to some of the nation’s biggest trading partners -- including the European Union -- could face new duties as a result of the decision.

“This sure doesn’t make us look good,” said Edward Gresser, trade policy director with the Progressive Policy Institute, a Washington think tank. “It’s embarrassing when you are out of compliance and trying to negotiate trade deals.”

The dispute centers on a 2000 law known as the Byrd amendment that allows American companies to receive duties levied on foreign rivals for alleged “dumping,” or selling goods at below-market prices.

The amendment, named for Sen. Robert C. Byrd (D-W. Va.) and intended to help U.S. steelmakers, was ruled illegal two years ago by the 148-nation WTO, which enforces global trading rules. The ruling followed a complaint filed by the EU and several other nations, including Brazil, Canada, Mexico, South Korea, Japan, India and Chile.

After Congress failed to change the law, the trade group in late August authorized an estimated $150 million a year in punitive tariffs on U.S. goods in an attempt to force compliance. Friday’s move by the Geneva-based WTO gave final approval to the August action.

President Bush said the United States intended to comply with the WTO decision, and promised to lobby Congress to make the necessary changes.

“I think it’s important that all nations comply with WTO rulings,” Bush told reporters during a brief appearance outside a restaurant near his family ranch in Crawford, Texas. “I’ll work with Congress to get into compliance.”

The punitive tariffs would amount to less than 0.1% of America’s estimated $150 billion in export trade with the EU, Gresser said. However, the duties could rise in coming years, and even the opening round of tariffs could hurt U.S. exporters of cod, textiles, glassware, mobile homes, apples, heavy machinery and other goods.

“This is a real headache,” Gresser said. “It’s not going to be disruptive to the U.S. economy, but it will be damaging for people who fish for cod or grow apples.”

California was the nation’s fourth-biggest producer of apples last year, although its 460-million-pound harvest lagged well behind that of Washington state, which ranked No. 1 with 4.5 billion pounds.

The dispute over the Byrd amendment is one of several recent trade disagreements between the U.S. and the EU. Last month, the United States and European Union each filed complaints over subsidies paid to European company Airbus and its U.S. rival, Boeing Co.

In his remarks Friday, Bush said: “We believe that the subsidies for Airbus are unfair for U.S. companies, such as Boeing.”

At least one trade official was skeptical of U.S. promises to repeal the Byrd amendment.

“The United States cannot point to any progress for the repeal of the Byrd amendment,” even though Washington “has received ample time to bring itself into compliance,” Canadian trade official Rambod Behboodi said.

More than $800 million has been handed over to U.S. companies since the Byrd amendment was adopted, and a new round of payouts that started Oct. 1 could total $290 million, officials said. The biggest beneficiaries have been U.S. steel and lumber companies, although other industries, including shrimpers and candle makers, also have profited.

Times staff writer Warren Vieth contributed to this report, and Times wire services were used in compiling it.