Congressional Budget Office Report Confirms Byrd Amendment is Harming U.S. Economy; Projects Ten-Year $3.8 Billion Handout to Petitioners


*FOR IMMEDIATE RELEASE*	Contact:	Dara Klatt
March 8, 2004		The PBN Company
		Tel.

CONGRESSIONAL BUDGET OFFICE REPORT CONFIRMS
BYRD AMENDMENT IS HARMING U.S. ECONOMY;
PROJECTS TEN-YEAR $3.8 BILLION HANDOUT TO PETITIONERS

Report Cites U.S. Steel Industry As Largest User of Antidumping Laws

Washington, D.C. The Consuming Industries Trade Action Coalition (CITAC) today again called for the United States to repeal or modify the “Continued Dumping and Subsidy Offset Act” (CDSOA), known informally as the “Byrd Amendment” following the release last week of a Congressional Budget Office (CBO) report confirming that the law is harming the U.S. economy. CITAC has been urging repeal or modification of the CDSOA to bring the U.S. into compliance with a 2003 World Trade Organization (WTO) finding.

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 CDSOA distributions to U.S. companies who file successful trade cases will total more than $3.8 billion by 2014.

The Byrd Amendment mandates distribution of antidumping and countervailing duties to companies that have petitioned 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 who file antidumping and countervailing duties petitions.

In his letter to Rep. Bill Thomas, Chairman of the House Committee on Ways and Means, CBO Director Douglas Holtz-Eakin states that the Byrd Amendment “subsidizes the output of some firms at the expense of others, leading to the inefficient use of capital, labor and other resources of the economy. It discourages settlement of cases by U.S. firms and will lead to increased expenditure of economic resources of administration, legal representation of parties and other various costs…. the law may lead to further interference in the ability of U.S. exporters to compete in the global trading system.”

The WTO declared the Byrd Amendment in violation of WTO agreements in January 2003, finding that it distorts trade. The CBO Report also notes that the U.S. is vulnerable to retaliation against U.S. exports. U.S. trading partners are preparing to retaliate unless Congress repeals the Byrd Amendment. The WTO is considering retaliation measures to authorize.

“The CBO Report confirms what CITAC has been saying for months: the Byrd Amendment distorts trade and harms the U.S. economy,” said Bob Bauer, CITAC's CDSOA Reform Coalition Chairman. “An earlier Department of Treasury report revealed the mismanagement of millions of dollars through the CDSOA. The law essentially taxes American consumers, violates WTO obligations and is going to lead to retaliation by our trading partners. How many more reasons does Congress need to repeal this Amendment?"

The CBO Report states that the distributions [money] mandated by the Byrd Amendment “are detrimental to the overall economic welfare of the United States.” The report cites the following reasons:

CDSOA distributions encourage the filing of more antidumping and countervailing duty cases, resulting in more duties that on balance harm the economy;
CDSOA distributions subsidize firms receiving them, preventing resources from flowing to higher-value activities in other firms and industries; and
CDSOA distributions increase the private and public cost associated with the operation and implementation of the laws. They also discourage settlement of cases by U.S. firms, which has mixed effects on the economy.

The CBO report found that the largest user of the antidumping or countervailing duty laws is the steel industry. According to the report, currently there are 131 active antidumping orders relating to iron and steel mill products, 30 related to iron and steel pipe products, and another 30 relating to other iron and steel products, including wire rod. These orders are one of the reasons steel costs paid by steel consuming industries in the United States are so high today.

“The CBO report fails to mention that petitioning companies often include products within the scope of trade cases that they do not make,” said CITAC Counsel Lewis Leibowitz. “The Byrd Amendment lets those companies collect money from duties that importers must pay to supply U.S. demand for products that are not even made domestically. Consuming industries pay the price; producing industries pay senior staff bonuses.”

Leibowitz cites steel wire rod as an example. “Wire rod is covered by AD/CVD orders but several types of wire rod (cold-heading quality, tire cord quality, for example) are not made in the U.S. or are in short supply. The petitioners (US manufacturers of wire rod) benefit economically from the AD/CVD duties on products they do not even make, because of the CDSOA. The law discourages them from removing products they don't make from the scope of the AD/CVD orders. The result is a shortage of wire rod in the U.S. and skyrocketing prices for U.S. manufacturers.”

“The law creates a destructive incentive for companies to maintain operations that are economically unjustified to keep duties in place so they can collect the money under the CDSOA. The CDSOA is simply bad trade and bad economic policy,” concluded Leibowitz.

For a copy of the CBO Report, please go to: http://www.cbo.gov/showdoc.cfm?index=5130&sequence=0.

CITAC is a coalition of companies and organizations committed to promoting a trade arena where U.S. consuming industries and their workers have access to global markets for imports that enhance the international competitiveness of American firms.