Canada Plans to Impose 15% Additional Duties on Selected U.S.-Origin Products Due to Byrd Amendment Dispute Beginning May 1, 2005
The Canadian Department of Foreign Affairs and International Trade (DFAIT) has issued a press release announcing Canada's plans to impose retaliatory sanctions on selected U.S.-origin products in light of the U.S.' failure to repeal the Byrd Amendment, which the World Trade Organization (WTO) has ruled is inconsistent with the U.S.' international obligations. (See BP note below for additional details on the Byrd Amendment dispute.)
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(In addition to Canada's impending additional duties, the European Commission (EC) has proposed to impose 15% additional duties on its own set of selected U.S.-origin products beginning May 1, 2005. The EC's proposal must still be approved by the European Council. See ITT's Online Archives or 04/04/05 news, 05040420, for BP summary of the EC's proposal.)
Canada's Sanctions Impose Surtax on Certain Agricultural Products & Cigarettes
Canadian sources have confirmed that Canada's retaliation measures have been approved and will go into effect on May 1, 2005. According to DFAIT's press release, Canada will impose a 15% surtax on U.S.-origin live swine, cigarettes, oysters, and certain specialty fish (e.g. ornamental fish, certain frozen fish like monkfish and tilapia) starting May 1, 2005 following approval of the necessary Orders in Council.
Level of Sanctions Imposed by Canada Could Fluctuate From Year to Year
DFAIT states that Canada's current retaliation level is $14 million; however, Canada will review the products each year against the fluctuating nature of Byrd Amendment disbursements.
In November 2004, Canada issued a proposed list of products that could be subject to additional duties as a result of this dispute. DFAIT explains that if Canada's retaliatory level increases in subsequent years, additional products would be drawn from this November 2004 list. (See ITT's Online Archives or 12/01/04 news, 04120115, for BP summary of Canada's lists of proposed tariff numbers.)
For example, DFAIT notes that the U.S. has collected softwood lumber duties from Canada of approximately $4.3 billion and continues to collect them at a rate of over $1 billion annually. If the Byrd Amendment remains in effect, and once the current lumber litigation is complete, the U.S. will be in a position to disburse these duties to U.S. producers, which would increase Canada's retaliation level.
Canada to Publish List of Tariff Numbers Subject to Additional Duties
DFAIT states that all U.S.-origin products subject to retaliatory duties will be identified in a forthcoming Canada Gazette Notice by tariff item as listed in the Customs Tariff Schedule. DFAIT adds that the Canada Border Services Agency (CBSA) will also be publishing a Customs Notice providing information on the application of the retaliatory measures. See future issue of ITT for this list of products.
(See ITT's Online Archives or 09/02/04 news, 04090205, for BP summary of the WTO's authorization for the European Union, Canada and six other countries to impose retaliatory measures.)
DFAIT Press Release (No. 56, dated 03/31/05) available at http://webapps.dfait-maeci.gc.ca/minpub/Publication.asp?publication_id=382342&language=E
DFAIT Byrd Amendment Information Page can be accessed at http://www.dfait-maeci.gc.ca/tna-nac/disp/byrd-main-en.asp
BP Note
The Byrd Amendment requires that the revenues from antidumping (AD) and countervailing (CV) duties assessed on or after October 1, 2000 be distributed on an annual basis to the affected domestic producers (i.e. currently operating producers (including worker representatives) that were either petitioners for the AD/CV duty order in question or interested parties in support of the petition) for specified qualifying expenditures (e.g. manufacturing facilities, research and development, personnel training). See ITT's Online Archives or 10/19/00 news, 00101837, for BP summary.
In January 2003, the WTO ruled against the U.S.' Byrd Amendment and gave the U.S. until December 27, 2003 to comply with its ruling. When the U.S. failed to meet this deadline, the eight complainants requested authorization from the WTO in January 2004 to impose additional import duties on U.S. products or to suspend other obligations to the U.S. In addition, three other complainants (Australia, Indonesia, and Thailand) reached an agreement with the U.S. allowing it until December 27, 2004 to implement the WTO's recommendations and rulings on the Byrd Amendment. See ITT's Online Archives or 01/21/04 news, 04012110, for BP summary.