US vows compliance after WTO sanctions threat

1.00pm

WASHINGTON - The Bush administration said it would work with Congress to prevent US exports from being hit with potentially hundreds of millions of dollars in new sanctions approved on Tuesday by the World Trade Organisation.

"The United States will comply with its WTO obligations, and the administration will work closely with Congress to do so in a way that supports American jobs and American workers," said Christopher Padilla, a spokesman for the US Trade Representative's office, in a statement.

The WTO approved a retaliation request by the European Union, Japan, Canada, Brazil, India, Mexico, Chile and South Korea after the United States failed to meet a deadline last year for repealing the so-called "Byrd amendment," which has been declared illegal under international trade rules.

The programme distributes funds raised by US anti-dumping and anti-subsidy duties on imported goods to companies that asked for the protection. Previously, the funds went into the general treasury.

The US trading partners had asked to hit back with sanctions equal to the amount of disbursements, but the WTO arbitrators set the figure at 72 per cent.

In Brussels, EU Trade Commissioner Pascal Lamy urged the United States to avoid sanctions by repealing the measure.

About US$710 million ($1.1 million) has been paid to US ball bearing, steel, seafood, pasta, candle and assorted other companies over the past three years. The US government paid out about US$150 million in December, and at that time, another US$90 million was on hold pending the outcome of a case over which companies were entitled to the money.

The Bush administration began preparations in June to make a fourth round of payments this fall under the programme.

A Senate aide, who asked not to be identified, said there was "no way" Congress would simply repeal the Byrd amendment.

Lawmakers were more likely to revamp the programme by distributing the funds to communities or workers adversely affected by import competition, the aide said.

"But I think it's going to be very difficult, if not impossible, to do anything this year" given the tight legislative calendar ahead of the US presidential and congressional elections, he added.

A House Democratic aide, who also asked not to identified, said the ruling was another "big chink" in US President George W Bush's record of defending US anti-dumping laws at the WTO.

The Bush administration has lost 14 out of 17 cases brought against US trade remedy laws at the WTO, said the aide.

The ruling will bolster the view in Congress that the WTO Appellate Body is overstepping its bounds to impose new trade obligations on the United States, he said.

- REUTERS