updated 8/31/2004 12:36:10 PM ET 2004-08-31T16:36:10

World Trade Organization arbitrators Tuesday authorized the European Union and other leading U.S. trade partners to impose sanctions against the United States in response to antidumping rules.

The decision by the WTO in Geneva allows the complainants to fine the United States up to 72 percent of money collected under the Byrd Amendment, which empowers Washington to levy fines against foreign companies judged to be dumping goods on the U.S. market.

Those fines are then paid to rival American companies that filed complaints against the foreign exporters.

The EU’s trade commissioner, Pascal Lamy, indicated that the 25-nation bloc may hold off before imposing sanctions. “This is a decision that still has to be taken,” he told reporters.

Besides the EU, global trade regulators backed the bids by Japan, Brazil, Canada, Chile, India, South Korea and Mexico to impose countermeasures against the U.S. law.

However, the complainants may prefer to use the threat of sanctions as a “smoking gun” to force the United States to repeal the legislation more quickly or to obtain concessions in other trade negotiations.

“Japan strongly hopes the United States will repeal the Byrd Amendment at an early date, so that we can avoid invoking our right to take countermeasures,” Japan’s economy, trade and industry minister, Shoichi Nakagawa, said in Tokyo.

Nakagawa was quoted by Japan’s Kyodo News service as saying that if the United States refuses to repeal the Byrd Amendment, Japan will ask the WTO to approve, “possibly this fall,” specific retaliatory measures.

U.S. officials pointed out that the WTO’s ruling fell short of the requests of the complainants, who had sought the right to increase import tariffs on selected U.S. goods by the total amount collected in fines against their exporters in the previous year.

“The arbitrators’ determinations fell far short of the amount requested by the complaining parties,” U.S. trade spokesman Christopher Padilla said in a statement.

He said the Bush administration would work with Congress to comply with the WTO “in a way that supports American jobs and American workers.”

Named for its sponsor, West Virginia Senator Robert Byrd, the 3-year-old amendment primarily benefited American steel manufacturers. Other recipients include makers of pasta and candles.

The WTO ruled the measure illegal in 2002, backing claims that it punishes exporters to the United States twice because they are fined first, and then those fines are passed on to their competitors.

Padilla said the ruling would not affect Washington’s powers to impose duties on countries that unfairly dump cut-price goods on U.S. markets, since the Byrd Amendment only concerns how those duties are disbursed.

The WTO had given the United States until the end of last year to change the law, but although the Bush administration recommended the amendment should be repealed, U.S. Congress has yet to make the changes.

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