REVIEW & OUTLOOK (Editorial)

Byrd Flu

491 words
2 August 2005
The Wall Street Journal
A10
English
(Copyright (c) 2005, Dow Jones & Company, Inc.)

Japan's threat yesterday to impose tariffs of up to $51 million against U.S. steel products and other goods was easy to predict. Tokyo is just the latest player in a contagious wave of protectionism that has been spreading throughout the world.

The retaliatory tariffs were slapped on in response U.S. duties imposed on Japanese imports under the so-called Byrd Amendment. The amendment, named for West Virginia Senator Robert Byrd and otherwise known as the Continued Dumping and Subsidy Offset Act of 2000, allows U.S. companies to reap the revenue collected by tariffs imposed on foreign competitors.

Japan has long protested the law but had not acted until threatening yesterday to impose 15% levies on imports of U.S. steel and other products if the tariffs are not repealed by September 1. "The Japanese government has decided that there is a need to more effectively pressure the U.S. by implementing retaliatory measures and promoting the repeal of the amendment in Congress," said Japanese Trade Minister Shoichi Nakagawa.

It's not just Tokyo that's crying foul. In 2003, the World Trade Organization ruled the U.S. measure as unlawfully protectionist. Later Japan and the European Union as well as six other countries won the right to impose a total of $150 million in economic sanctions against the United States.

The indignation of foreign governments is understandable: The Byrd amendment is particularly pernicious in that it first hits imports with tariffs and then allows competing American companies to pocket the revenues. The U.S. government has paid more than $1 billion to U.S. producers of such goods as steel, ball bearings and even candles out of the duties it has collected. It's no accident that many of these are among America's least competitive industries.

Moreover, the "dumping" that the Byrd Amendment supposedly tries to fight is difficult if not impossible to define. It can either mean selling at different prices in different markets (in other words, marketing) or as selling below the cost of production, which can only be guessed at by someone not privy to a producer's accounting ledger.

Byrd flu hit Canada and the European Union earlier this year. Both slammed thousands of American products with a 15% tariff in retaliation for the U.S. amendment. India, South Korea, Brazil, Chile and Mexico have also threatened the U.S. government with retaliatory measures. And even without any retaliation, American protectionism hurts U.S. consumers, as foreign companies add transfer tariff costs to their prices.

There is also the bad example the U.S. sets when the world's supposed trade leader behaves this way: Taking note of the Byrd Amendment, other countries have been filing more antidumping suits of their own against both American and other foreign goods. The longer Congress waits to repeal Byrd, the more American consumers and exporters will have to pay.

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