The Shrimp Dumping Case and the Byrd Amendment

The trade petitions filed against shrimp imports from six developing nations were filed by a small segment of the domestic shrimp industry in order to receive millions of dollars in special interest taxes. A conservative estimate is that annual payouts will equal $180 million or nearly $829,493 per company.

Background: The Byrd Amendment

The Continued Dumping and Subsidy Offset Act (CDSOA), widely known as the “Byrd Amendment,” mandates distribution of antidumping and countervailing duties to companies that support petitions to the U.S. Government for trade protection, rather than to the U.S. Treasury, where other duties are sent. To date, the U.S. Government has paid more than $700 million to U.S. companies that file antidumping and countervailing duty petitions.

To be eligible to receive funds, a company must be one of the petitioners or otherwise actively participate in the antidumping investigation and support the imposition of antidumping taxes.

CITAC has been urging repeal or modification of the Byrd Amendment to bring the U.S. into compliance with a 2003 World Trade Organization (WTO) finding that the Byrd Amendment violates WTO agreements and distorts trade. The Congressional Budget Office (CBO) recently issued a report confirming that the Byrd Amendment is harming the U.S. economy. The CBO Report also found that the Byrd Amendment encourages the filing of more antidumping and countervailing duty trade cases (which force up the cost of affected imported products to consuming industries), and estimates that Byrd Amendment distributions to U.S. companies that file successful trade cases will total more than $3.8 billion by 2014. The Report notes that the WTO finding on the Byrd Amendment leaves U.S. exporters vulnerable to retaliation against U.S. exports. President George W. Bush and former President Clinton both have called for repeal of the Byrd Amendment.

Byrd Amendment Payout: Prime Motivation for Filing Shrimp Trade Petitions

Since passage of the Byrd Amendment in 2000, CITAC has warned that the law would create incentives for companies to launch trade cases in an attempt to close the U.S. market to global competition and gain a big piece of the monies disbursed. The shrimp trade case is perhaps the most blatant example.

The Southern Shrimp Alliance distributed materials to solicit support for the antidumping petitions (attached) that make plain the promise of windfalls from proceeds under the Byrd Amendment. One excerpt from these materials: “Attention: All shrimp Boats, Shrimpers, Packing Houses, Processors and Support Industries. You must register to participate in any monetary benefits that may accrue through duties levied on imported shrimp if the domestic industry prevails. The Byrd amendment [and its] importance to individual fisherman of supporting the case is at its beginning stage.”

Byrd Jackpot for Shrimp Petitioners: $829,493 per company

In 2002, shrimp imports from the six targeted countries were worth $2.4 billion dollars. Even with a very conservative assumption that under the Department of Commerce's methodologies, urged by petitioners, the antidumping margins would average 15% and cause shrimp imports from these six countries to be halved, annual payouts under the Byrd Amendment to the petitioners would be $180 million.

Those eligible to receive the windfalls are quite limited. Based on the International Trade Commission's preliminary report, only 32 processors and 185 shrimp fishing firms were petitioners or otherwise have participated in the investigation. No worker representatives participated. The payouts are allocated based on the size of an eligible firm's claims as a proportion of total claims filed. Virtually any claim from these firms is eligible for Byrd Amendment payouts.

If all eligible firms file the same claim amount, each firm would receive $829,493 each year in payouts of antidumping special interest taxes on food imports.

It is no wonder that the Southern Shrimp Alliance has stopped seeking support for antidumping taxes from others in the domestic industry, since to do so would only dilute their shares. And the lure of Byrd Amendment payout fully explains why the Louisiana Shrimp Association has been opposed to the petitions unless its few members were made eligible for Byrd Amendment funds, which they were by the International Trade Commission. Finally, Byrd Amendment payouts explain why the antidumping petitions argue for the imposition of unreasonably high duties.

And all of this subsidy will come right from the pockets of American consumers through the federal food taxes that would be imposed on imported shrimp. In return, Americans can expect that U.S. exports and the American jobs they create will be threatened with retaliation from the nations being targeted.

The Southern Shrimp Alliance was also recently forced to admit publicly that Mexico, which is a larger import source for shrimp than several of the targeted countries, paid substantial funds to support the antidumping petition in return for being left out of the case.