Japan has decided to continue to impose 15 percent duties on 15 items imported from the United States, in retaliation against the U.S. Continued Dumping and Subsidy Offset Act, also known as the “Byrd Amendment.” The additional duties will be assessed against such articles as ball bearings and steel imported into Japan through August 31, 2008. At that time, Japan will again determine whether to extend the imposition of retaliatory duties against the United States, which it has imposed since September 1, 2005.

The European Union (“EU”) has also extended its 15 percent retaliatory duties against U.S. imports for another year, effective May 1, 2007. The EU added 32 new products to the existing list subject to retaliatory duties. The additions include various types of apparel, sports footwear, pens and plastic furniture. The EU has imposed retaliatory duties on U.S. imports since May 1, 2005.

In the past, Canada and Mexico have imposed retaliatory duties on U.S. imports, but both have allowed the sanctions to expire because of the U.S. Court of International Trade decision in Canadian Lumber Trade Alliance v. United States, Slip op. 06-104 (July 14, 2006). According to this decision, U.S. Customs and Border Protection is not allowed to disburse antidumping and countervailing duties collected on imports from Canada and Mexico to U.S. companies.

As background, President Clinton signed the Byrd Amendment into law in October 2000. The Byrd Amendment requires proceeds received by the government from antidumping and countervailing duty cases to be paid to the U.S. domestic producers who initiated such proceedings. In 2001, 11 World Trade Organization (“WTO”) members brought a complaint before the WTO against the Byrd Amendment. The WTO ruled that the Byrd Amendment was an impermissible response to dumping and subsidization because it effectively penalizes exporters to the United States twice, fi rst by imposing antidumping duties on their imports and then by passing the proceeds of the duties to their U.S. competitors. Thus, the Byrd Amendment provides the domestic industry a benefi t beyond the leveling effect that the antidumping duties were intended to address.

President George W. Bush repealed the Byrd Amendment in February 2006 by approving the Defi cit Reduction Act of 2005. The repeal is effective October 1, 2007, but since collection of duties may take place several years after importation, it may not produce any effect until October 2009 or later. Consequently, the Japanese and EU sanctions (and the potential for sanctions from other WTO member states that participated in the WTO dispute) could continue until the U.S. Byrd Amendment disbursements cease.