The World Trade Organization gave Chile authorization to impose punitive duties on US exports because of Washington's failure to repeal the so-called Byrd amendment that has helped the US steel industry.
Chile was one of eight WTO members that lodged a complaint against the 2000 law. The other seven ? the European Union, Brazil, Canada, Japan, Mexico, South Korea and India ? were authorized to impose sanctions last month.
Two years ago, the WTO ruled that the legislation breached global trade rules, which are set by the 148-nation organization, and said the United States should change the law.
US Ambassador Linnet Deily told the meeting of the WTO Dispute Settlement Body that Washington intends to change the law, in compliance with the trade body's ruling. She said the Bush administration is working with Congress to repeal the law ? and that there would be no need for sanctions.
But Chilean Ambassador Alejandro Jara rejected this, saying there had been no meaningful action to change the rules over the past two years. "Chile had no choice but to seek the formal right to retaliate", he said.
The Byrd amendment allows American companies to receive proceeds from duties levied by the US government on foreign products that officials determine have been ??dumped'' ? sold at below-market prices ? in the United States.
The law was intended to level the playing field, because dumping can make it impossible for American producers to compete, officials said.
The US steel industry has been the major beneficiary of the law, which was named for its sponsor, West Virginia Senator Robert Byrd. Other beneficiaries include the makers of pasta and candles.
The WTO ruled that the legislation breaks trade laws by punishing exporters to the United States twice, fining them and then passing on the fines to competitors.
Chile did not submit a list of US exports that could face sanctions, but said it may do so at WTO meetings next year. Brazil and Mexico have taken a similar approach.
But the EU, Japan, South Korea, India and Canada already have submitted lists, and EU trade chief Peter Mandelson said sanctions could be applied early next year.
The value of the sanctions has yet to be determined, but trade officials have said they could amount to more than US$150 million a year.
EU trade official Raimund Raith told WTO that the eight complaining members are major US trade partners ? together they receive almost three-quarters of America's exports. That shows the widespread concern over the issue, he said.