From “Soundings - Trade Only Today (11/26/2004)
Canada threatens 100-percent boat surtax
The National Marine
Manufacturers Association says urgent action is needed to stop a 100-percent surtax from being imposed on American-made recreational boats imported into Canada
The surtax would apply to imported products from the United States, including pleasure vessels such as yachts, sailboats, powerboats, inflatables and canoes. NMMA is asking its members to contact their dealers in Canada
and urge them to register their opposition.
“This surtax would be devastating to U.S. boat manufacturers that export vessels to Canada,” said NMMA president Thom Dammrich in a statement. “It would double the price
of all American boats sold over the border, eliminating our competitiveness in the Canadian market.”
The Canadian government
Tuesday announced that it might impose the surtax in retaliation for the Byrd Amendment, a law that allows duties collected from antidumping and countervailing to be given to U.S. firms that petition for tax relief. Canada said it intends to levy tariffs on many other imported U.S. goods in addition to boats.
The Byrd Amendment, named for U.S. Sen. Robert Byrd, D-W.Va., was challenged by a number of countries in the World Trade
Organization. The WTO has ruled that the amendment violates trade agreements, and that member countries can retaliate against the United States
Canada has said it favors repeal of the Byrd Amendment over the imposition of tariffs, but until that happens, government
officials there said they must explore the retaliatory measures allowed by the WTO.
The WTO found in January 2003 that the Byrd Amendment was inconsistent with its rules and gave the United States until December of that year to come into compliance. When Congress failed to act by January of this year, WTO members began to file for permission to retaliate.
“NMMA will be aggressively pursuing a repeal of the Byrd Amendment in the 109th Congress, and will be meeting with key congressional staff next week,” said Monita Fontaine, NMMA vice president of government relations, in a statement. “The amendment must be repealed immediately in order to prevent not only Canada but other WTO countries from seeking to impose tariffs on the boating
The Canadian government is soliciting comments on the proposed tariffs until Dec. 20.
Visit NMMA @: http://www.nmma.org/government/issue....asp?catid=234
On October 28, 2000, President Bill Clinton signed the "Agriculture, Rural Development, Food
and Drug Administration, and Related Agencies Appropriations Act, 2001". The "Continued Dumping and Subsidy Offset Act of 2000" (Byrd Amendment) was part of that Act.
Under the Byrd Amendment (which amended the Tariff Act of 1930, the principal U.S. trade remedy statute), anti-dumping and countervailing duties are given to U.S. producers who supported those trade remedy actions. These duties were previously deposited in the U.S. Treasury.
This means that U.S. companies that bring trade remedy cases to U.S. authorities stand to benefit not only from the imposition of anti-dumping and countervailing duties on competing imports, but also from direct payments from the U.S. government when those duties are disbursed.
In September 2001, eleven WTO Members, including Canada, challenged the Byrd Amendment at the WTO. The ten other co-complainants are: the European Union, Australia
, and Thailand
In September 2002, the WTO Panel determined that these payments are not consistent with U.S. obligations under WTO Agreements governing Anti-Dumping and Subsidies and Countervailing Measures. The Panel determined that the payments constitute an additional measure against injurious dumping and subsidization not contemplated in either agreement.
The case was then appealed by the U.S. and in January 2003, a WTO Appellate Body report, upholding the key panel findings against the Byrd Amendment, was adopted by the WTO’s Dispute Settlement Body (DSB).
A WTO Arbitrator subsequently gave the U.S. 11 months (until December 27, 2003) to bring its measure into compliance. The U.S. failed to meet this deadline.
WTO rules require that, in the event of non-compliance by a member
following dispute settlement procedures, complainants seeking to preserve their retaliation rights, must seek retaliation authorization from the DSB within thirty days of the implementation deadline -- in this case, by January 26, 2004.
Accordingly, at a special meeting on January 26, 2004, the DSB considered the requests for retaliation authorization made by Canada and the European Union, Brazil
, and South Korea
Canada requested that the level of retaliation be linked to the dollar amount disbursed under the Byrd Amendment to would ensure that Canada’s retaliation rights would be protected in the event of any large future disbursements. Canada proposed as possible retaliatory options, a surtax on imports from the U.S. and the suspension of the injury test in Canadian anti-dumping and countervailing duty investigations involving imports from the U.S..
Under WTO rules, anti-dumping and countervailing duties may only be imposed if dumped or subsidised imports are causing or threatening to cause injury to domestic producers. Canada’s request proposed the suspension of that requirement on imports from the U.S. as a possible option for retaliation.
The U.S. objected to all the complainants’ requests and the determination of the level of retaliation was referred to arbitration.
On March 2, 2004, the non-partisan U.S. Congressional Budget
released a report which condemned the Byrd Amendment on several grounds. The report highlights that trade retaliation was among the consequences if the Byrd Amendment was not repealed. The Report also states that the Byrd Amendment encourages trade remedy cases, subsidizes the outputs of some firms at the expense of others and discourages settlement of cases by U.S. firms that brought those trade remedy actions. The report can be found here.
On August 31, 2004, the WTO Arbitrator ruled that Canada could retaliate against the United States up to 72% of the annual level of U.S. anti-dumping and countervailing duties collected on Canadian goods disbursed to U.S. producers under the Byrd Amendment. This level is based on an economic model developed by the WTO to measure the trade effect of the Byrd Amendment on U.S. trading partners. This level was also provided to the seven other WTO Members involved in the arbitration (Brazil, Chile, European Union, India, Japan, Mexico, and South Korea).
On November 10, 2004, Canada joined the Brazil, the European Union, India, Japan, Mexico, and South Korea in submitting its final retaliation authorization request, reflecting the WTO Arbitrator’s decision. That request will be considered at the November 24th meeting of the Dispute Settlement Body. It will be automatically be accepted unless all Members, including Canada, rejects the request.
According to U.S. Customs
, Byrd disbursements to U.S. producers amounted to US$ 231 million in 2001, US$ 330 million in 2002, and US$ 240 million in 2003.
Disbursements linked directly to duties paid on Canadian goods amounted to US$ 5.2 million in 2001, US$ 2.5 million in 2002, and US$ 9.5 million for 2003. Estimated 2004 disbursements linked to duties paid on Canadian goods is approximately US$ 14 million.
Canadian softwood lumber
producers have paid over US$3 billion in cash deposits to date. Small amounts of softwood lumber
duties for which no administrative review was requested were disbursed in 2003. Approximately US$ 1 billion could begin to be disbursed annually starting in late 2007. This is due to the ongoing process of administrative reviews
and NAFTA litigation.
Now this proposed Surtax ...