EU and Japan threaten U.S. on customs duties

Bloomberg ^ | January 10, 2004

[sarcasm]

The European Union and Japan plan to raise tariffs on American imports after the United States missed a World Trade Organization deadline to repeal a law handing domestic companies millions of dollars in customs duties, according to officials.

Japan and the European Union will notify the trade organization on Monday of their intention to increase duties on unspecified products, according to an official at the Japanese Ministry of Trade, Economy and Industry, and Arancha González, the European Commission's spokeswoman for trade in Brussels.

"The purpose," González said, "is to reserve our right to retaliate and protect the interests of our companies suffering from the unfair practices of the U.S. administration. The most important thing right now is that the U.S. puts an end to the practice and stops distributing the proceeds of antidumping cases to its producers."

The threat comes a month after Japan and the EU dropped plans to impose $2.3 billion in sanctions on U.S. goods after President George W. Bush's decision to abolish tariffs on steel imports. His efforts to scrap the customs law may be hampered by some members of Congress who support its aim of helping farmers and companies that complain of unfair trade.

The United States missed a Dec. 27 deadline to repeal the law, known as the Byrd Amendment. The legislation, enacted in 2000, hands antidumping duties collected by U.S. Customs to American companies that initiated complaints against foreign competitors, rather than the Treasury.

International Paper, Temple-Inland and Potlatch are among U.S. timber companies that stand to gain at least $800 million from preservation of the law, because of duties on imports of Canadian softwood lumber. Some U.S. exporters, including Caterpillar and Maytag, favor repeal of the law.

The World Trade Organization first ruled the U.S. duties illegal last January, opening the way for possible sanctions. It will review any plans to retaliate and decide how much in tariffs can be imposed and on what products. That may take several months, the Japanese official said.

Seiji Murata, Japan's vice minister for economy, trade and industry, said the government was studying its options.

"We will make a final decision by early next week, and we will probably make a filing by the deadline," he said at a news conference in Tokyo.

The other countries that have complained about the U.S. policy - Canada, Brazil, Chile, Mexico, Indonesia, Australia, India, South Korea and Thailand - also have until Jan. 15 to notify the trade organization of their intentions.

An official at South Korea's Ministry of Foreign Affairs and Trade said his government was considering retaliation. Canada has also said that it is preparing to strike back against U.S. products unless Congress repeals the Byrd Amendment.

The Bush administration supports repealing the law and last February put forth a budget that called for the duties to be redirected to the Treasury. Still, after the initial ruling by the World Trade Organization, 68 of the 100 U.S. Senators signed a letter opposing its repeal.

Timkin, a ball bearing maker based in Canton, Ohio, was the biggest beneficiary of the law. U.S. Customs handed Timkin $53.9 million in 2002, and its subsidiary, Torrington, $72.5 million of the total $330 million that was awarded.

[CasearianDaoist]

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[Cicero]

I rather doubt this story. The EU is certainly bloody minded and eager to make trouble, but Japan has been very cooperative the past couple of years.

If push comes to shove, Europe and Japan need foreign trade a lot more than we do. A trade war would be destructive to all concerned, but more to them than to us.

[hermgem]

Euro protectionism.
Assume we come up with a scheme to discount exports and place a fee on imports to protect jobs. On top of it have this protection program legalized and sanctioned by the World Trade Organisation.
Never mind to have to come up with such import protectionism along with export subsidies, or to make a finer point: Just export unemployment together with low priced exports and gain price advantages in competitive foreign markets.
European countries already have this in place bu imposing a federal value added tax on goods averaging 20% throughout Euroland. This tax is applied within borders but does not apply to exports, as exports are not subject to this tax. For imports this 20% tax (surcharge) is applied.
When visualizing how many jobs could be retained or would still be in existence if, as only one example, low priced imported foreign clothing would cost 20% more and our exports are subsidized by a 20% legal federal discount.
The U.S. is disadvantaged now and will be more so on an ongoing continuous basis unless we change and adopt a different tax code.
Labor should be most interested and supportive of changing our system of taxation, which basically comes down to collecting federal taxes through an income tax.