Japan Invokes Retaliatory Tariffs on U.S. Bearings, Other Products

Japan, following through on its threats, made a historic move today and slapped 15% retaliatory tariffs on seven classifications of bearings and bearing components from the United States. Several other goods were also hit, including some steel products, but none to the same extent as bearings. This marks Japan's first-ever use of punitive tariffs against the United States, and follows similar moves in May by the European Union and Canada. The punitive tariffs, authorized by the World Trade Organization, are in response to U.S. Congress' refusal to repeal the "Byrd Amendment," or Continued Dumping and Subsidy Offset Act (CDSOA), enacted in 2000 and subsequently ruled illegal by the WTO. The U.S. agreed to abide by the WTO rulings and was given until December 2003 to repeal the Byrd Amendment. After repeatedly claiming progress, but failing to repeal the trade law, the WTO fielded a wide array of retaliatory tariff requests against U.S. products by trading partners. In mid-2004, the WTO granted those retaliatory tariffs, but U.S. trading partners still held off, giving the U.S. additional time because the Office of the U.S. Trade Representative claimed the Byrd Amendment would be repealed in early 2005. In total, WTO allows Japan's duties to top out at ¥ 56.8 billion (USD $52 million), calculated based on fiscal year 2004 impact of the Byrd Amendment on the affected Japanese products. 15% retaliatory duties on the following products from the U.S. HS code 848210000 - Ball bearings HS code 848220000 - Tapered roller bearings, including cone and tapered roller assemblies HS code 848240000 - Needle roller bearings HS code 848250000 - Other cylindrical roller bearings HS code 848280000 - Roller bearings, including combined ball/roller bearings, other than subheadings Nos. 8482.20 to 8482.50 HS code 848291000 - Balls, needles and rollers of ball or roller bearings HS code 848299000 - Parts of ball or roller bearings, other than balls, needles and rollers along with three types of steel, navigational instruments, machinery accessories, printing machines, forklifts, and industrial belting. The E.U. and Canada slapped 15% retaliatory tariffs on various other products effective May 1, 2005. Mexico has scheduled retaliatory duties totaling $21 million, from a 30% tariff on various dairy products. duties Canada's retaliation centers on various animals and cigarettes. Brazil, Chile, India and Korea are also eligible under WTO rulings to impose sanctions against the U.S. but have not yet done so. The largest single beneficiary of the Byrd Amendment has been the Timken Company, since 2000 reaping more than $200 million in payouts. Timken is scheduled for a fifth round at the end of 2005 unless the CDSOA is repealed, which remains unlikely. The tariffs to be paid out in December 2005 have already been collected, as the government fiscal year ends July 1, 2005. A bill sponsored by Reps. Jim Ramstad (R-MN) and Clay Shaw (R-FL), H.R. 1121, would repeal the Byrd Amendment (section 754 of the Tariff Act of 1930). It was introduced March 3 but immediately stalled in the House Ways and Means committee, where it remains today.