By Bruno Waterfield - 30th August 2004
The World Trade Organisation has given the green light to the EU sanctions against the US.
Geneva trade officials have backed Brussels and seven other WTO members proposing penalties worth $150 million after Washington refused to scrap anti-dumping laws known as the Byrd Amendment.
The WTO ruling opens the door for EU retaliation as the US gears up for presidential elections.
EU trade commissioner Pascal Lamy stressed that the move is "as we expected" but said that Europe has yet to decide which goods should be targeted with punitive sanctions.
Washington has remained defiant. "Today's determination will not affect the ability of the US to continue enforcing its trade laws to impose duties on countries that sell unfairly dumped or subsidised products in the US market," said American trade representative Christopher Padilla.
"The Byrd Amendment simply deals with how the funds collected from such duties are disbursed by the Treasury."
Under world trade rules, such duties can be levied when companies accuse trading rivals of selling goods at artificially low prices.
But the EU has insisted - with WTO support - that the payment of duties under the Byrd amendment to US companies is an illegal subsidy.
Brussels figures show that a total of US $231m was distributed in 2001 and around US $ 330m in 2002 to companies in the bearing, steel, metal, household and food sectors.
But Padilla claims that EU, Japan, Canada, Brazil, India, Mexico, Chile and South Korea have "grossly exaggerated".
"The arbitrators' determinations fell far short of the amount requested by the complaining parties, the US remains committed to resolving this issue in a way that promotes the competitiveness of American workers," he said.
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