The European Union has asked the World Trade Organization for authorization to impose trade sanctions on the United States because of a U.S. law that the trade body says is illegitimate. The law allows the U.S. government to distribute proceeds from anti-dumping fines against foreign companies to their American rivals.
The European Union has not specified how much it wants in sanctions, but officials at the 15-nation bloc's Brussels headquarters say they could demand hundreds of millions of dollars.
The EU request for permission to levy sanctions has strong support from countries such as Japan, China, South Korea, Brazil and India. They and others are expected to make similar requests to the WTO.
At issue is the so-called Byrd Amendment, named for the U.S. senator who sponsored the law that went into effect nearly four years ago. The legislation authorizes the U.S. government to give American companies the money from fines it collects from foreign firms that are judged to be selling products in the U.S. market at artificially low prices.
The U.S. steel industry has been the biggest beneficiary of the Byrd Amendment, although U.S. manufacturers of such products as pasta and candles have also benefited.
The law enjoys widespread support in Congress, and the threat of sanctions by America's trading partners could spark a backlash from lawmakers before elections later this year.
U.S. trading partners say that the Byrd Amendment discriminates against their exporters, because it both fines them and, then, passes the money to their U.S. competitors
The WTO has repeatedly ruled the amendment to be illegal under world trading rules. The Bush administration has promised to recommend eliminating the law, but has, so far, not done so. And a U.S. diplomat who follows trans-Atlantic trade issues says that, even if the administration makes such a recommendation, there is no guarantee that Congress will go along.
EU officials say that getting the green light from the WTO to impose sanctions on the United States does not mean that the retaliatory measures will be imposed immediately.
Although the WTO's disputes settlement panel will hear the EU request on January 26, the United States is expected to oppose the call for sanctions. If that happens, the case would go to arbitration, and a decision on the matter would be delayed for 60 days.