The European Union and other trading partners of the United States were today given the go-ahead on to add potentially heavy tariffs on American goods.
The World Trade Organisation (WTO) backed the EU and seven other WTO members in their demand to punish a US failure to revoke an anti-dumping law -- the so-called Byrd amendment -- declared illegal under international trade rules.
A spokesman for US Trade Representative Robert Zoellick in Washington repeated a long-standing pledge to "work closely with Congress" in order to comply with WTO regulations.
The US Government has urged Congress to repeal the controversial measure, which passes on anti-dumping levies to American firms, but the law enjoys strong political backing because it is seen as helping struggling industries.
"The United States remains committed to resolving this issue in a way that promotes the competitiveness of American workers,", spokesman Christopher Padilla told Reuters.
The arbitrators, in a ruling running to more than 60 pages, set no fixed amount for the retaliation, but laid down a formula which complainant countries could apply.
The disputed law, named after Democratic Senator Robert Byrd, forces the government to distribute to US companies money raised in anti-dumping duties levied on foreign firms.
Under world trade rules, such levies can be imposed when companies accuse trading rivals of selling goods at artificially low prices to grab market share.
But the European Union, Japan, Canada, Brazil, India, Mexico, Chile and South Korea argued successfully at the WTO that those payments, to US ballbearing, steel, candle, pasta, seafood and other companies, amounted to an illegal subsidy.
The Byrd amendment has handed some $700 million to US companies since it came into force in 2000. Prior to that, the money had gone to the US Treasury.
Despite the ruling, diplomats said the EU would be reluctant to move to sanctions, which are a double-edged weapon that can also hurt exporting firms.
"It will not be overnight," said one diplomatic source in Brussels."The legal victory has been won and the preference would be that the US would simply see that there’s nowhere to go on this and withdraw the law."
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