Canton Repository

January 17, 2003

Timken may lose millions if trade law dumped 

By PAUL M. KRAWZAK
Copley Washington correspondent

WASHINGTON — The Timken Co. could potentially lose tens of millions of dollars in future compensation for unfair trade under an international ruling that the United States appears ready to accept.

The World Trade Organization on Thursday said the U.S. law that distributes the proceeds from illegal trading fines to companies like Timken violates international trade agreements and should be repealed.

Timken has been one of the main beneficiaries of the two-year-old “dumping and subsidy offset” law, which shares the revenue from tariffs with U.S. companies that have suffered from illegal imports.

Timken, an enthusiastic supporter of the law, collected $31 million last year, almost one-sixth of the $207 million distributed to American manufacturers by the Treasury Department.

This year, the Canton-based maker of tapered bearings and specialty steel expects to receive another $54 million out of a total of $270 million going to companies.

Timken has sought the payments after participating in trade cases in which the federal government determined that foreign bearings sold in the United States were illegally traded — either because they were priced below cost or subsidized by foreign governments.

Thursday’s ruling came from a WTO appeals body, which agreed with an earlier determination that the law is “inconsistent with certain provisions of the WTO agreements on anti-dumping and on subsidies.”

A coalition of U.S. trading partners, including Canada, Mexico and the European Union, brought the case against the United States. They said the law punishes exporters twice — first by raising the price of their products with tariffs and second by giving the revenues to their competitors.

While expressing disappointment with the decision, the U.S. Trade Representative’s Office said in a prepared statement that it “will seek to comply with its WTO obligations. We are reviewing the report to assess the best compliance options.”

U.S. Rep. Ralph Regula, R-Bethlehem Township, fired off angry letters to U.S. Commerce Secretary Don Evans and U.S. Trade Representative Robert Zoellick, urging them to fight the ruling.

“I urge you not to seek the repeal of the ... law because of this WTO decision,” wrote Regula, whose district includes Timken headquarters. “I urge you to seek reforms of the WTO dispute settlement and appellate process to ensure that U.S. sovereignty is not impacted by their decisions.”

Sen. Robert Byrd, D-W.Va., who authored the law, called on the administration to stand behind it.

“The mere suggestion that the Bush administration would want to repeal this law is ludicrous,” he said.

Many nations, the United States included, have long imposed tariffs that punish illegal trade by making imports more expensive. But historically, the United States and other governments spend the tariff revenues they collect. Congress’ adoption of the “Byrd amendment” two years ago allowed the distribution of tariff revenues to American manufacturers that have suffered from illegal trade.

Timken officials criticized the WTO decision, which they said exceeded the trade forum’s authority.

“There’s nothing in the WTO agreement that specifically prohibits statutes like” the Byrd law, company spokeswoman Denise Bowler said.

“The appellate body’s decision to read such a prohibition into the agreement basically undermines the entire WTO system’s credibility. Through decisions such as this, the WTO is expanding their control over countries like the U.S. without any negotiations or legislation.”

Bowler said it’s premature to talk about what impact the denial of the payments would have on Timken.