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News Releases
No. 128/05
December 20, 2005
US CONGRESS REPEALS BYRD AMENDMENT BUT ALLOWS FOR A TRANSITION PERIOD
Today the United States’ Congress passed the
“Deficit Reduction Act of 2005,” which among other
provisions repeals the Continued Dumping and Subsidy
Offset Act, more commonly known as the “Byrd
Amendment.” The Deficit Reduction Act will
enter into force once the President signs it into law.
The EU praises the action of the US Congress, in
particular, the leadership of House Ways and Means
Committee Chairman Bill Thomas and Senate Finance
Committee Chairman Charles Grassley and the efforts of
the Administration and USTR Rob Portman. It is a
significant step to bring the United States in
compliance with its WTO obligations and to remove a
serious trade irritant not only in US-EU relations but
in US-rest of the world relations. By imposing a second
hit on dumped or subsidised imports, the Byrd Amendment
has put the United States at odds with its main trading
partners for the benefit of a handful of US companies.
However, the EU regrets that repeal of the Byrd
Amendment will not be effective immediately. Under a
transition clause, duties imposed on goods imported into
the United States up to 30 September 2007 will indeed
still be distributed after their collection. In the
United States, such collection may take place several
years after the import. That means that distribution of
collected anti-dumping and anti-subsidy duties to US
companies will continue and distort the conditions of
competition on the US market at the expense of imported
goods for an undetermined number of years.
The EU will now carefully review the details of the
compromise reached in Congress and its implications for
EU companies. In so doing, the EU will work in close
coordination with the other complainants.
Background
The Continued Dumping and Subsidy Offset Act (CDSOA or
the so-called “Byrd Amendment”), signed into law in
October 2000, provides that proceeds from anti-dumping
and countervailing duties shall be paid to the US
companies responsible for bringing the case at the
origin of the measure.
The enactment of this legislation raised immediate and
widespread concerns not only in the EU but in the whole
WTO membership, as it imposes a double hit on dumped or subsidised
imports and provides a direct financial incentive in
filing anti-dumping and anti-subsidy complaints. The EU
and ten other WTO members (Australia,
Brazil, Canada, Chile, India, Indonesia, Japan, Korea,
Mexico and Thailand) brought a complaint to the WTO
dispute settlement system. This unprecedented joint
action is a clear indication of the important systemic
concerns that the legislation raises.
In January 2003, the WTO ruled the Act as an
impermissible response to dumping and subsidisation,
thus upholding the core of the complainants' claims. The
United States had until 27 December 2003 to comply with
the WTO ruling, but failed to do so.
Faced with US inaction, the EU had no other solution
than to apply retaliatory measures in the form of a 15%
additional import duty applicable since 1 May 2005 on a
range of US products including paper and textile
products, machinery and sweet corn. Three other WTO
members also apply retaliation: (1) Canada also from 1
May 2005 (a 15% additional import duty on live swine,
tobacco, oysters, specialty fish) (2) Mexico from 18
August 2005 (additional duties of 30% on dairy products,
20% on wine and 9% on candy and chewing gum) and (3)
Japan from 1 September 2005 (a 15% additional import
duty on ball bearings, different steel products,
printing machines, fork lift trucks). Brazil, Chile,
India and Korea have also completed all required steps
in the WTO allowing them to apply retaliation.
Since the enactment of the CDSOA, the US authorities
have distributed to domestic petitioners more than US $1.2 billion. Further, a very limited number of
recipients received a major part of the payments. Of the
total disbursed so far, 40% went to one company and its
subsidiaries and two-thirds to three industries
(bearings, candles and steel). Every year half of the
payments went to a very limited number of companies (four
in 2001, three in 2002, two in 2003, nine in 2004 and
four in
2005).
This concentration of the CDSOA benefits into the hands
of a few companies was one of several flaws underlined
in a critical report released by the US General
Accountability Office (GAO) on 26 September 2005. The
GAO also stressed the substantial overstatement of the
eligible claims since their accuracy is, in practice,
not verified or the distortion of competition generated
by the Act, including at the expense of US producers who
cannot receive any payments for not having supported the
investigation at the origin of the anti-dumping or
anti-subsidy measure.
The CDSOA is an “added piece” to the US system of
protection against dumping or subsidisation. Repealing
it leaves this system unaffected and therefore does not
affect the United States’ ability to provide to its
companies and workers a protection against unfair
competition.
Further Contact Information
Press and Media Relations
Delegation of the European Commission
2300 M Street, NW
Washington, DC 20037
http://www.eurunion.org/PressRoom
Tel: 202-862-9552
Fax: 202-429-1766
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