In a major trade victory for India and several other countries, the World Trade Organisation has held as violation of global trade rules a controversial US law that allows American companies to collect more than $470 million in anti-dumping duties from the US government.
The ruling was given by an appellate body of the Geneva-based Dispute Settlement Body of the WTO while upholding a finding of a three-member dispute settlement panel that was challenged by the US.
The ruling is the latest in a spate of US defeats at the WTO after India, the 15-nation European Union, Australia, Brazil, Canada, Chile, Indonesia, Japan, Mexico and Thailand brought the case before the world trade body.
"The US Continued Dumping and Subsidy Offset Act of 2000 is inconsistent with certain provisions of the WTO agreements on anti-dumping and on subsidies because it is a specific action against dumping or a subsidy," the ruling said.
The case prompted more complaints than any other since the WTO was founded in 1995, with 11 governments challenging the so-called Byrd amendment, named after an American senator who sponsored the law.
Six other countries were also parties to the case and supported the objections.
The WTO panel has ruled in September 2002 that the US had unfairly awarded penal duties collected from foreign competitors to American companies including US Steel Corp, Hershey Foods Corp and Timken Co, which won trade complaints.
The WTO endorsed the views taken by India and other complainants that governments must keep with it the anti-dumping duties slapped on foreign companies and that distributing the funds to companies encouraged them to file trade complaints.
Some companies have appreciated the WTO panel's verdict for the simple reason that it directed the US government to pay the liquidated anti-dumping and anti-subsidies duties to the companies that have brought forward the cases for suffering in the hands of the Byrd amendment.
While the disputes panel had said in no uncertain terms that the best way of bringing US policies on the anti-dumping issues in line with the WTO guidelines would be to 'repeal' the law in question, the appellate body has maintained a discreet silence though the EU (one of the appellant organisation) has unequivocally demanded the repeal of the Byrd amendment.
The central issue is if Washington is willing to abide the 'collective wisdom' of the WTO, and repeal the 'offending' legislation, or if it will prefer to take the advantage of the 'escape route' provided by the appellate body's silence on repeal and adopt a different course of action, which would perhaps be technically acceptable but send wrong signals to the international community.
It is reported that a spokesman for the US Trade Representative was quoted as saying after the appellate body's decision that Washington intended to go in for an appeal against the decision rather than repeal the legislation (Byrd amendment).
In fairness to Washington, it must be agreed that even under the WTO framework member-nations must try their best to 'safeguard the national angle,' and the US may well use this route to tackle its predicament on the Byrd amendment.
But totally unacceptable would be acquiescence with policies, especially vis-à-vis poor countries, which would seek to lower the guard of economies that are, and always have been, at the receiving end of the trade exchange.
The developing countries, which are in a majority, are affected the most, hence should jointly voice their point of view against the Byrd amendment, should Washington appeal against the panel decision.
The appellant countries should also take up the ambiguity over why the panel has not clearly mentioned the repealing of Byrd amendment again so that the US does not take advantage of the panel's loosely worded decision.
Former commerce minister Murasoli Maran had carved out a niche for the country by being at the forefront of the battle with the developed economies, as was manifest in 1999 Seattle WTO third ministerial meeting.
His temporary successor in the commerce ministry, Divestment Minister Arun Shourie, did well in that on January 13, 2003, he clearly reiterated the Indian stand when he asked: "How can countries like India make adjustments at WTO-level negotiations if the developed countries do not care about its concerns?"
One has to wait and see whether Arun Jaitley can replicate Maran's achievements, by focusing not merely on India's national perspective but also on the need for the poor economies to get together and fight against rich protectionism and greater market access.
India should continue to be a leader of the developing world and project their point of view to safeguard their interests at the WTO ministerial meetings so that the developed world does not take advantage of its superior economy.