US’s Abuse of International Commerce System

The WTO issued an interim decision against the US Byrd Amendment for its violation of the WTO Convention. This decision puts on hold the unilateral commerce policy of US.

If US accepts this decision, the conditions for Korean exporters will be improved since they will be less disadvantaged by, for example, US anti-dumping tax or counter-valling duty.

The Byrd Amendment was introduced by Sen. Robert Byrd (Democrat) and signed into law on October 31, 2000. Under this bill, US manufacturers will receive some of the anti-dumping tax and the countervailing duty.

It means the double penalty on the companies that export to US. Therefore, the international community has criticized it as an example of anti-free trade law.

In response, 9 countries including Korea, Japan and the EU requested for the review of the Bill in last July, and two members of the NAFTA (i.e. Canada and Mexico) also joined.

The three-member panel of WTO’s Dispute Solving Board rendered an interim decision that the US unilateral bill violated the international commerce regulations. The final decision comes at the end of next month.

According to the New York Times, WTO officials publicly said that US has no option other than repealing of the Byrd Amendment. Therefore, the chances are pretty slim that the final decision would overturn the current one.

Since the implementation of the Amendment, US has already given 270 million dollars to US companies out of taxes levied on foreign companies, and plans to give additional 270 million dollars this year. In total, the monetary benefits will reach 478 million dollars (approximately 557 billion won).

Kim Sung-woo, head of the commerce team in the Korean Iron & Steel Association, predicted, “US currently imposes 21 kinds of taxes, including the anti-dumping tax and the countervailing duty, on various Korean steel products. By this interim decision, it is expected that the number of claims US companies file will be reduced significantly.” He added, “Under the Byrd Amendment, US companies have enjoyed tax protection and aides. Consequently, they have frequently filed claims.”

Ja-Ryong Koo bonhong@donga.com