Risk & Compliance

Food Fight

Domestic critics of the Byrd Amendment say it encourages companies to file trade complaints, and the WTO has declared it illegal.
Tim ReasonMarch 29, 2004

If only that mad cow in Washington State were the worst beef facing U.S. trade representatives. Sure, it’s payback time for the countries whose meat was once banned here. But the United States has far more countries frothing at the mouth over the Continued Dumping and Subsidy Offset Act (CDSOA), also known as the Byrd Amendment.

The CDSOA requires that the proceeds of antidumping tariffs, which traditionally went into the U.S. Treasury, be given instead to the companies that filed the original dumping complaint. (Dumping is generally defined as the export of a product at a lower price than the company charges in its home market.)

Passed in October 2000, the CDSOA sparked complaints from an unprecedented 25 countries. The World Trade Organization declared it illegal in January 2003. “This measure clearly flies in the face of the letter and the spirit of WTO law,” EU trade commissioner Pascal Lamy said at the time.

Congress, however, has refused to repeal the Byrd Amendment, and as CFO went to press, a WTO arbitrator was in the midst of deciding how much the complaining countries could charge in retaliatory tariffs.

Domestic critics of the Byrd Amendment argue that it encourages companies to file trade complaints. “It is a subsidy to companies that claim they were victims of dumping,” declares Laura Baughman, an economist for the Consuming Industries Trade Action Coalition and a registered lobbyist. “It is a perfect example of corporate welfare.”

Gregg Warren, spokesman for Weirton Steel Corp., which received an $885,000 CDSOA payment in January, begs to differ. “Does anybody think $800,000 even comes close to covering the cost of fighting these illegal imports? That’s crap,” he argues. “These tariffs are being collected, period. It is none of the WTO’s business whether they go into the U.S. Treasury or back to the companies that filed these cases.”

Preliminary data suggests U.S. Customs plans to disburse at least $240 million in tariffs collected in 2003. In 2002, U.S. companies received $330 million, but claimed dumping damages totaling more than $1.4 trillion.

Although steel and metal manufacturers account for the greatest number of claims, companies filed claims for dumping of everything from flowers to crawfish-tail meat. The top 20 recipients of payouts in 2002 also included six candle makers and two pasta companies.

William Reinsch, president of the National Foreign Trade Council, opposes the Byrd Amendment, but adds, “What worries me is that [these disputes] create pressure on the WTO as an institution, and growing numbers in Congress are skeptical about its ability to deal with its responsibilities.”

Paid for Trade
Largest CDSOA payouts for 2002 (in $thousands)
Torrington* $72,509
Timken* 53,929
Candle-Lite 39,177
Micron Technology 14,413
Home Fragrance Holdings 11,970
Zenith Electronics 9,016
DuPont 8,461
* The Timken Co. acquired Torrington in 2/03
Sources: U.S. Customs Bureau; CITAC