Byrd Amendments incites Boat Tax

[GordMay]

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 “The amendment must be repealed immediately in order to prevent not only Canada but other WTO countries from seeking to impose tariffs on the boating industry.”

The Canadian government is soliciting comments on the proposed tariffs until Dec. 20.

Visit NMMA @: http://www.nmma.org/government/issue....asp?catid=234

Backgrounder:

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, Brazil, Chile, India, Indonesia, Japan, Mexico, Korea, 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, Chile, India, Japan, Mexico, 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 ...

[BC Mike]

The US is going to have an ongoing problem because of the size of their trade deficit, they now purchase more goods from China than Japan. Canada has a trade surplus. It is not surprising that the US needs to do something about it, but some measures are extreme at best and do not get to the core of the problem. The Canadian dollar will increase in value to the US as the US $ declines. The dispursement of lumber duty $$ will likely be the issue that causes this to become a large problem. There is talk of retaliating with the supply of natural gas and electricity, plus other commodities. This will likely be contrary to the NAFTA aggreement but it is already being ignored in some areas of the US and it would be retaliatory. Isn't trade a wonderful thing. NZ has gone toe to toe with the US in the past on many issues. I think the more extreme approaches from the US will get shot down. For a US resident buy your new floor jack from a US builder, while in Canada we can buy one from China. For the record, I imported many US made boats worth a lot of $$ during the 70's and 80's, my own boat is made in Canada but my new car is US made.
BC Mike C

[GordMay]

Planned 100% Surtax on U.S.-Built Boats Canned
Posted on Wednesday, April 06 @ 09:45:31 PDT by pyeditorial
http://www.pacificyachting.com/

As expected, the Canadian Government has announced that U.S. yachts and boats are not on the list of products subject to a surtax that takes effect May 1, 2005.

In August 2004, the World Trade Organization ruled in favour of several WTO members, including Canada, allowing them to impose sanctions on a number of U.S.-manufactured products. The Canadian government developed a list of products on which it was considering imposing a 100% surtax, which included U.S. yachts and other pleasure boats.

These measures were to be taken in retaliation for the Byrd Amendment, which allowed U.S. companies to collect anti-dumping and countervailing duties from foreign competitors. Under the amendment, American producers of items such as steel, lumber, seafood and other products have received hundreds of millions of dollars in Byrd “handouts” in recent years.

Essentially, they are being rewarded for instigating trade actions instead of competing in the global marketplace. The Byrd Amendment was found to be illegal by the WTO. The proposed surtax worried many in the boating industry because the Canadian recreational marine industry is largely dependent on U.S. boat manufacturing.

Canada will now impose a 15% surtax (down from the proposed 100%) on U.S. live swine, cigarettes, oysters and certain specialty fish starting in May. Canada’s current retaliation level is $14 million. This total is relatively insignificant compared to the $4.3 billion the U.S. has collected in softwood lumber duties alone, and continues to collect at a rate of more than $1 billion annually. The Canadian government will review the products each year against the fluctuating nature of Byrd disbursements.

Further information un the U.S. Byrd Amendment and Canada’s retaliation decision can be found on the website of the Department of Foreign Affairs
http://www.dfait-maeci.gc.ca/tna-nac...rd-main-en.asp