Swan song for Byrd Amendment?

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Manufacturing News, Source : The Manufacturer US
Published : 23 Mar 2005 19:19

A law allowing manufacturers to benefit from the redistribution of special duties collected on foreign imports could soon be repealed.

The Continued Dumping and Subsidy Offset Act, better known as the Byrd Amendment after its sponsor, Senator Robert Byrd (D-W. Va.), is being challenged by representatives Jim Ramstad (R-Minn.), and Clay Shaw (R-Fla.).

The Byrd Amendment requires the special duties levied on foreign goods found either to be illegally subsidized or dumped on the U.S. market to be distributed among U.S. producers that claim to have been harmed by those imports. Before the Byrd Amendment came into force in 2000, the government kept the money.

Significant sums are involved. In 2004, Byrd payments totaled $284 million, with steel producers topping the list of beneficiaries. Last year the government paid $58 million to producers of pure steel products and another $80 million to companies that produce goods containing steel. Bearing manufacturer Timken, for instance, picked up a $52.7 million windfall. All kinds of manufacturers have taken advantage of the scheme, however. Candle maker Lancaster Colony received a lump sum of $26.2 million.

So why would Republicans want to repeal legislation that benefits manufacturers? It’s about the playing field. To qualify for a Byrd check, a U.S. producer hit by foreign dumping or illegal subsidies has to first petition the federal government. If the government upholds the complaint, the duties are then passed on to the companies that signed the petition. Companies equally affected by imports who did not sign the original petition get nothing.

The World Trade Organization ruled the Byrd Amendment illegal in 2002 and gave some countries the right to retaliate against the U.S. with their own duties. The law has also been criticized domestically as an incentive to sue, and as a form of corporate welfare. It is also a distraction from business, as Ramstad pointed out. "This illegal trade subsidy provides incentives for companies to seek anti-dumping and countervailing duty rewards rather than seeking new markets for their products," he said. "This is time, effort and capital that is being wasted chasing court cases instead of contributing to our economy and creating jobs."

According to Steve Alexander, executive director of the Consuming Industries Trade Action Coalition (CITAC), whose members include Procter & Gamble and Toyota, Byrd "undercuts the whole U.S. position on trade."

Repealing the amendment would also help the federal budget deficit. The Congressional Budget Office has calculated that an extra $4.2 billion would revert to the U.S. Treasury over the next ten years.

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