Europe Seeks to Impose Trade Sanctions on U.S.

ELIZABETH BECKER / NY Times 15jan04

WASHINGTON, Jan. 15 — Europe asked the World Trade Organization today for permission to impose sanctions on the United States for failing to change a law that was ruled an unfair subsidy for American corporations.

In a move that will further heighten trans-Atlantic trade tensions, Europe said it would begin retaliating with new duties on United States goods as soon as the world trading body approves its petition.

Canada, Japan, Korea and Chile, which were also parties to the successful case against the United States, said they, too, wanted to begin sanctioning the United States.

The total sanctions from all of these nations could be at least $200 million every year until the law is changed.

The W.T.O. ruled against the United States in January 2003 and set a Dec. 27 deadline for Congress to change to change a law known as the Byrd amendment. The W.T.O. ruled that the amendment — named after Senator Robert C. Byrd, the West Virginia Democrat who added the measure to the fiscal 2000 budget — was an unfair subsidy. The amendment allows American corporations to receive antidumping fines collected from foreign nations by the United States government.

But Congress failed to meet the deadline and now Europe has acted.

"I hope the U.S. will now take action to remove this measure, thus avoiding the risk of sanctions," said Pascal Lamy, the chief European trade commissioner, in a statement released today.

This is the latest setback for the United States, which lost its appeal late last year when the W.T.O. ruled that the steel tariffs imposed by President Bush were illegal. Mr. Bush then dropped the tariffs, avoiding the more than $2 billion of sanctions on imports from the United States that Europe would have imposed.

The United States also faces a March deadline to change tax breaks for exporters that also were declared an illegal subsidy. Europe could impose as much as $4 billion of sanctions in that case.

Europe and Canada successfully argued before the W.T.O. that the Byrd amendment encouraged American companies to file more antidumping cases because any fines would go to them rather than the United States Treasury.

The office of the United States trade representative said while the Bush administration encouraged Congress to make the changes necessary to comply with the W.T.O. ruling, it would raise questions about the amount of sanctions that would be allowed.

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