News Releases

No. 09/06
February 1, 2006

US CONGRESS REPEALS THE BYRD AMENDMENT; ALLOWS FOR TRANSITION PERIOD

Today the United States Congress has 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 European Commission welcomes the move and the leadership of US House Ways and Means Committee Chairman Bill Thomas, Senate Finance Committee Chairman Charles Grassley and USTR (US Trade Representative) Rob Portman. The Byrd Amendment has been a persistent source of tension between the United States and its main trading partners and benefits only of a handful of US companies. Today’s vote is a significant step towards bringing the United States into compliance with its WTO obligations and removing a serious trade problem.

However, the European Commission 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 still be distributed after their collection, which in turn, under US practice, can take place several years after the import. That means that distribution of collected anti-dumping and anti-subsidy duties to US companies will continue to distort the conditions of competition on the US market at the expense of imported goods for a number of years.

The Commission will 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 subsidized imports and provides a direct financial incentive to file anti-dumping and anti-subsidy complaints. The EU and 10 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 subsidization, 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 has applied 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 have also applied 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 2/3 to 3 industries (bearings, candles and steel). Every year half of the payments went to a very limited number of companies (4 in 2001, 3 in 2002, 2 in 2003, 9 in 2004 and 4 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 subsidization. Repealing it leaves this system unaffected and therefore does not affect the United States’ ability to provide to its companies and workers with protection against unfair competition.

For additional information, see: http://www.eurunion.org/newsweb/HotTopics.htm#byrd.

Further Contact Information
Press and Public Diplomacy
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