The World Trade Organization (search) on Friday approved sanctions on a wide range of American exports intended to punish the United States for failing to repeal what it considers protectionist legislation. The Bush administration indicated it would live with the new duties.
"It's been approved," said Amina C. Mohamed, Kenyan ambassador to the WTO and chairwoman of the organization's dispute settlement body.
The American law, formally known as the Continued Dumping and Subsidy Offset Act (search) of 2000, was ruled illegal two years ago by the 148-country WTO, which referees global commerce.
That followed complaints by WTO members including Canada, the EU, Brazil, Mexico, South Korea, Japan, India and Chile.
The legislation, nicknamed for its congressional sponsor, West Virginia Senator Robert Byrd (search), gives American companies the proceeds of anti-dumping duties levied against foreign goods that those companies complain are sold in America at unfairly low prices.
The WTO found that the measure breaks trade laws by punishing exporters to the United States twice - because they are first fined and then those fines are given to their competitors.
"The United States cannot point to any progress for the repeal of the Byrd amendment," even though Washington "has received ample time to bring itself into compliance," said Canadian trade official Rambod Behboodi.
Canada's International Trade Minister, Jim Peterson, said this week that Ottawa is "launching consultations with Canadians" on the form retaliation should take.
However, U.S. trade official Steven Fabry told Friday's WTO meeting that America intends to comply with the WTO decision and "we do not believe that it will be necessary" to apply sanctions.
A spokeswoman for the U.S. mission in Geneva said the United States plans to obey the ruling in a way that protects American jobs.
Distributions to American companies under the Byrd amendment amounted to $240 million US last year, primarily to makers of steel, ball bearings and household items.
Canada has outlined two retaliatory options: tariffs against "certain imports" from the U.S., and easier imposition of anti-dumping and countervailing duties against American goods.
The EU has made clear that it intends to act against American goods from influential parts of the United States that "could help Congress focus its mind on compliance."
Among those products are heavy machinery made by companies like Caterpillar Inc. (CAT), based in Illinois, the home state of U.S. House Speaker Dennis Hastert.
Other EU targets could include makers of pasta and candles.
Japan, meanwhile, "cannot overlook this disregard by United States of its obligations under the WTO," said Japanese trade diplomat Keiichi Higuchi.
In Washington, a spokesman for U.S. Trade Representative Robert Zoellick (search) said the administration is "continuing to work with Congress to bring the U.S. into compliance and we are consulting with our trading partners on these efforts."
Richard Mills added: "It's important to remember that these issues do not affect the ability of the United States to continue enforcing our trade laws to make sure Americans are being treated fairly."