Byrds, Pigs, Oysters & Trade
Disputes
(As originally published in GST & Commodity
Tax Journal, April 2005)
Canada
has been miffed since the United States’ enactment of the October 28, 2000 Continued Dumping and
Subsidy Offset Act of 2000, now better known as the “Byrd
Amendment”.
The Byrd Amendment effectively
allows
U.S.
producers who have supported U.S. petitions for anti-dumping and/or countervailing duties as
petitioners or interested parties to share in the anti-dumping
duties ultimately imposed and collected.
It has been estimated that this revenue sharing scheme has
resulted in more than $1 billion in payments to U.S. producers,
which has caused the United States’ trading partners to complain
– and likely rightly so – unfairly enriches their U.S.
competitors.
Canada
has been threatening to retaliate by slapping sanctions on U.S.
imports. The U.S. has to date not really budged.
On March 31, 2005 Trade Minister
Peterson announced that
Canada
was taking the next step, and imposing a 15 per cent surtax on
cigarettes, oysters and live swine from the
United States. The measures also
cover certain types of fish, and will become effective May 1.
Canada
’s announcement parallels similar measures being taken by the 25
member European Union, which will see up to 15 per cent surtaxes on U.S.
imports like paper, textiles, machinery and farm produce, also
effective May 1.
Commentary
It is a bit hard to say what the
correct approach is in dealing with the U.S. on trade matters, or the issue thrown up by the Byrd Amendment.
It’s a bit like trying to steer an elephant from one path
to another.
If the elephant doesn’t want to
move, what can really be done ?
In the free trade context, the
question probably boils down the following conundrum:
when all else fails, is it better to impose measures that
further restrict trade, or do nothing?
Look at the matter this way.
Canadian producers of cigarettes, pigs, and oysters (?) will
surely welcome the surtax, as it would appear to make their own
products either more competitive or low-cost alternatives. On
the other hand, the persons affected by
U.S.
trade measures are not really producers of cigarettes, pigs, and
oysters. If you had to
pick a few industries, you might pick softwood lumber producers and
the cattle industry as most recently affected by U.S.
trade policy. Those
industry’s, however, are not being assisted by these measures.
And completely disregarded from this discussion is going to
be the impact on the Canadian consumer of the affected imports;
the consumer is going to be the person that ultimately
suffers the most, through the potentially higher priced goods in the
Canadian market, which will surely follow from the artificial trade
barriers being enacted.
In this context, one might hope
that
Canada
and the U.S.
will be able to deal with the Byrd Amendment without implementing
any further surtaxes, or taking any further retaliatory actions.
From a “world wide” perspective, one would hope that the
U.S.
is feeling at least some pressure.
Canada
is only one of the many countries around the world complaining about
the Byrd amendment, and the World Trade Organization itself has
deemed it illegal, and given
Canada
and the other complainants the right to retaliate.
Keep your fingers crossed!
Author:
Robert G. Kreklewetz
Millar Kreklewetz LLP
Hard
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