More on the Byrd Amendment

I found the following discussion of a GAO report interesting. I formatted it slightly differently so it would be easier to read.

The International Law Section of Williams Mullen prepared the following brief descriptions of selected issues in international trade and commerce for general information purposes and use by clients and friends of Williams Mullen.

Highlights in International Trade and Commerce Issue 10/06/05


2. GAO Report Perks up Movement to Repeal Byrd Amendment Perquisites:

A recent Government Accountability Office (“GAO”) Report has revived debate about the Continued Dumping and Subsidy Offset Act or Byrd Amendment.

The Byrd Amendment distributes antidumping and countervailing duties to eligible U.S. producers.

Supporters argue that the Byrd Amendment offsets the effects of unfair competition from abroad. The GAO Report, however, has provided grist for critics, who argue that the Byrd Amendment hurts the U.S. economy in four ways.

First, the Bureau of Customs and Border Protection (“CBP”) faces implementation problems. CBP does not have enough resources to verify all companies’ claims for Byrd Amendment disbursements, and companies in the past have overstated those claims. CBP also lacks resources to collect the duties that fund the disbursements—and has, for instance, not yet collected about half the funds that should have been available for the 2004 fiscal year.

Second, the Byrd Amendment limits benefits to producers that filed a petition for relief or that publicly supported the petition during an investigation of whether imports caused injury. Given this eligibility requirement, a single company received one fifth of all Byrd Amendment payments through fiscal year 2004, only two companies received one third of such payments, and only five companies received half, with one of those top five companies owning two of the other top five. Paradoxically, some U.S. companies have benefited most when dumping has continued despite imposition of high duties. Critics have interpreted these facts as evidence that the Byrd Amendment does not restore conditions of fair trade but instead itself distorts competition in the United States.

Third, the WTO has found the Byrd Amendment to be “inconsistent” with the WTO Antidumping Agreement, because disbursement not only punishes foreign producers but also rewards their U.S. competitors. As a result, the United States faces additional tariffs on U.S. exports covering a trade value of up to $134 million dollars based on 2004 Byrd Amendment disbursements. Products subject to retaliation include live swine, fish, oysters, cigarettes, dairy products, wine, paper products, clothing, sweet corn, industrial belts, steel products, fork lift trucks and printing machines. Canada, the European Union, Mexico and Japan have already imposed punitive duties. Brazil, Chile, India and South Korea are expected to follow suit.

Fourth, the federal deficit has arguably placed a burden on supporters of the Byrd Amendment now to justify disbursements that decrease governmental revenues in a time of budgetary constraints.

Expect the debate to heat up in the weeks ahead.

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