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Tue, May 02, 2006 - Page 10 News List

EU levies more sanctions on US

TRADE WAR The European Commission said the new US$9.1 million sanctions were intended to counter controversial US government payments to US companies

AP , BRUSSELS

The EU imposed additional retaliatory sanctions worth US$9.1 million against the US yesterday in response to antidumping measures meant to protect US companies, which were ruled illegal by the WTO.

EU Trade Commissioner Peter Mandelson's office said the new measures were justified because US government payments to US companies were planned to continue for two more years despite the disputed trade law being repealed in February.

The new US$9.1 million in EU sanctions, brings the total amount of penalties levied against the US in response to the disputed trade law to US$36.9 million, the European Commission said in a statement.

Since May last year, Europeans have had to pay more for US clothing, textiles, machinery, paper products and sweet corn as part of the EU trade sanctions, which have hurt sales for many US-based companies.

The EU executive said the measures would counter US government payments to US companies estimated to be worth more than US$2 billion over the next two budget years, ending in 2008. The US payments are part of a law known as the Byrd amendment, which allows US companies to receive proceeds from antidumping duties levied on foreign rivals.

"As long as the distributions continue, the United States will not be in compliance with WTO rules," the commission said.

Eight new items have been added to the list of US products covered by the punitive 15 percent additional import duty, the commission said.

"These products are different types of blankets, paper products, photocopying apparatus and drills," it said.

The Geneva-based WTO ruled the US legislation illegal in 2002 and gave the US until the end of 2003 to conform. When it didn't, eight complainants, including the EU were given the option in 2004 to impose sanctions.

The other complainants were Canada, Brazil, Chile, India, Japan, South Korea and Mexico.

The Byrd amendment was approved in 2000 and billions of dollars in payments have been distributed to producers of metals, food and other household items.

The EU said despite the long-running feud over the Byrd Amendment, "the huge bulk of EU-US trade is trouble free."

The two sides continue to spar in world trade talks and have slammed each other's recent proposals over opening up trade in their agricultural sectors.

The EU and US have also come to blows over subsidies and aid it gives rival aircraft builders Boeing Co and Airbus SAS, a dispute which is currently before a panel at the WTO.

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