In November and December, both the House and Senate adopted budget bills containing provisions to repeal the Byrd Amendment. The Senate acted last week:
In a compromise reached between House of Representatives and Senate conferees, the repeal will be delayed for two years and Byrd Amendment distributions will continue for entries made prior to October 1, 2007. The conference report now heads back to the House for final action to resolve discrepancies between the House and Senate reports that are unrelated to repeal of the Byrd Amendment. President Bush is expected to sign the legislation soon. (CITAC news release)
No one is happier about repeal than the members of the Consuming Industries Trade Action Coalition (CITAC) - an industry group representing firms using imported inputs. Their web page has some background:
Formally known as the Continued Dumping and Subsidy Offset Act of 2000 (CDSOA), the Byrd Amendment annually funnels money collected from the imposition of antidumping (AD) and countervailing duties (CVD) from government coffers directly to companies that petitioned for those duties (more than $ 1 billion so far, with billions more waiting in the wings). The Byrd Amendment does not require that the funds be used for any particular purpose. The money is allocated based on a formula that includes ordinary business expenditures, assuring that large companies get more money than small ones.
It was a "dark deed done in the dead of night":
The Byrd Amendment was inserted by Senator Robert Byrd (D-WV) in the Agriculture Appropriations Act of 2000 during Conference Committee action on the bill. The provision was not included in either the House or the Senate-passed versions of the bill. No committee of jurisdiction in either the House or the Senate reviewed it...
It violates our international obligations:
...President Clinton signed the bill on October 28, 2000, but protested the Byrd Amendment provision, recognizing that it violates common sense as well as U.S. international trade obligations.
The World Trade Organization (WTO) ruled the Byrd Amendment unlawful under the agreements on antidumping and subsidy measures. Repeal is the only method of fixing this violation; however, to date, Congress has not taken this step. The Bush Administration has called for repeal of the Byrd Amendment, describing it (accurately) as a corporate welfare program and bad economic policy...
And its costing us:
Canada, the European Union, Mexico and Japan have all retaliated against U.S. exports because of Congress's failure to repeal the Amendment...
Import using industries benefit from repeal because:
Many consuming industries rely on imports of raw materials or components to maintain global competitiveness. The Byrd Amendment provides a double hit on importers of products subject to antidumping and countervailing duties. They not only must pay these duties (which, because of the "retrospective" system of collection, are of uncertain amount) but also must see them transferred to their U.S. competitors. The Byrd Amendment encourages U.S. producers to file AD and CVD actions knowing full well they will be eligible for monetary distributions. U.S. companies in line to receive these payments have a clear incentive to include more products within the scope of cases, including products not even made in the United States. Consumers see cases filed because of the promise of Byrd money (such as the infamous shrimp case). Other cases include within their scope products not produced here, such as certain antifriction bearings (e.g., certain metric sizes and metallurgical requirements); and steel wire rod for "cold-heading" and manufacture of wire for tire cord.
In September the Government Accountability Office (GAO) reported on the U.S. experience under the Amendment: Issues and Effects of Implementing the Continued Dumping and Subsidy Offset Act. The GAO report deals to some extent with the Amendment's WTO problems, but is more focused on problems of administration:
Congress enacted CDSOA to strengthen relief to injured U.S. producers. The law’s key eligibility requirements limit benefits to producers that filed a petition for relief or that publicly supported the petition during a government investigation to determine whether injury had occurred. This law differs from trade remedy laws, which generally provide relief to all producers in an industry. Another key CDSOA feature requires that Customs and Border Protection (CBP) disburse payments within 60 days after the beginning of a fiscal year, giving CBP limited time to process payments and perform desired quality controls. This time frame, combined with a dramatic growth in the program workload, presents implementation risks for CBP.
CBP faces three key implementation problems. First, processing of company claims and CDSOA payments is problematic because CBP’s procedures are labor intensive and do not include standardized forms or electronic filing. Second, most companies are not accountable for the claims they file because they do not have to support their claims and CBP does not systematically verify the claims. Third, CBP’s problems in collecting duties that fund CDSOA have worsened. About half of the funds that should have been available for disbursement remained uncollected in fiscal year 2004.
Most of the CDSOA payments went to a few companies with mixed effects. About half of these payments went to five companies. Top recipients we surveyed said that CDSOA had beneficial effects, but the degree varied. In four of seven industries we examined, recipients reported benefits, but some non-recipients noted CDSOA payments gave their competitors an unfair advantage. These views are not necessarily representative of the views of all recipients and on-recipients.
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