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Cincinnati Post, 05/03/05

As soon as he was confirmed in a unanimous vote by the Senate as the US trade representative, Rob Portman headed to Paris for a series of meetings with his counterparts from around the world.

He got there just in time for the start of a trade war between the United States and some of its biggest export markets.

The 25-nation European Union, effective Sunday, imposed 15 percent tariffs on US clothing, sweet corn, stationery and construction cranes. Canada has slapped similar 15 percent levies on cigarettes, hogs and seafood. Six other nations - Brazil, Chile, India, Japan, Mexico, and South Korea - have the right to impose sanctions.

It's a rude but, as it happens, justified welcome for Portman to one of the trickiest jobs in government.

In this case, the World Trade Organization has ruled that the EU and the seven other countries have the right to retaliate against American exports. Why? Because, the WTO concluded, the United States is violating international trade through something known as the Byrd Amendment.

For more than a century now, the United States has had anti-dumping laws on the books. They generally say that if a foreign company sells products here at below cost, the US government can impose equalizing tariffs to protect domestic producers. Historically, money collected from violators has gone into the US Treasury.

Five years ago, however, US Sen. Robert Byrd, the West Virginia Democrat, slipped an amendment into a farm subsidy bill that changed America's anti-dumping law in a significant way. Taking an approach first developed by Sen. Mike DeWine, the Ohio Republican, the Byrd Amendment (as it's now known) says that companies which successfully prosecute an anti-dumping case can collect any tariff revenue that's collected.

Byrd and DeWine defend the change on common sense grounds: the companies, after all, are the ones who have been harmed, not the federal treasury.

But America's trade partners objected strenuously. Not only does it fly in the face of internationally agreed upon rules, they say the change amounts to a double penalty against losing companies. Not only do they have to pay a penalty  which makes their product uncompetitive abroad, the money goes directly to their competitors.

Other critics charge, with reason, that the Byrd Amendment promotes litigation, raises costs for unproductive purposes and gives marginal companies an incentive to file or join in complaints in hopes of collecting a cash award. The amendment has also proven a more costly hit on the Treasury than anticipated - the government has shelled out $1 billion so far, and the Congressional Budget Office estimates distributions will exceed $3.8 billion over the next decade.

President Clinton tried, though not very hard, to block the Byrd Amendment when it was first being enacted in 2000. Now the Bush Administration, exporters and free traders would like to see the amendment repealed. It should be repealed.

The retaliatory tariffs that took effect Sunday are just part of the argument for such a move. The WTO approved $150 million in retaliatory tariffs for the first year; it will be increased for every year the United States fails to repeal the amendment. Still, this is a pittance considering that last year the United States exported goods worth more than $800 billion.

But irritants like the Byrd Amendment have an impact out of all proportion to their economic cost, potentially poisoning negotiations over other, more serious trade disputes. The United States sacrifices moral authority when it flouts international trade laws it expects other nations to obey. And even small trade wars eventually raise prices and cost jobs.

Portman, while eminently suited for the post, faces many thankless challenges.

Engineering a repeal of the Byrd Amendment, during a time of rising protectionist sentiment, is one of them.

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