Byrd Amendment repealed – with two year delay

The Continued Dumping and Subsidy Offset Act of 2002, known as the Byrd Amendment, re-routes duties collected by the U.S. government from anti-dumping or counter-vailing duties on imported products to the firms that brought the trade cases. (Refer to the Winter 2005 issue of NEFEM in print or for a full discussion of the impact of the Byrd Amendment and reasons for its repeal.)

A provision of the Deficit Reduction Act of 2005, the repeal passed the House by a two-vote margin, 216-214. The bill, which had been approved by the Senate prior to the December recess, has now been signed by President Bush.

In a concession to opponents, however, repeal is delayed for two years and payment of duties collected on imports subject to the duties will continue to up to October 1, 2007.

Two Congressmen from Idaho – home of Micron, a recipient of the payments, had earlier threatened to vote against the Deficit Reduction Act if it included Byrd Amendment repeal. Given the expected closeness of the vote, their threat had weight. Ohio Senator Mike DeWine (R-OH), home of Timken Company, the largest recipient of Byrd funds, also sought to delete Byrd repeal from the final bill. However, Senate and House leaders, notably Senator Chuck Grassley (R-IA), chair of the Senate Finance Committee, and Congressman Bill Thomas (R-CA), chair of the Ways and Means Committee, held fast that Byrd is bad trade policy and should be repealed.

Repeal of the Byrd Amendment does not change the trade duties, only whether or not they are paid out to the firms that brought the trade cases. Duties on imported stainless sheet and strip will continue through their scheduled expiration in 2008. But paying these duties to the firms that brought the cases (approximately $10 million went to U.S. manufacturers of stainless steel in 2004 alone) is an obvious incentive for firms to bring trade cases or ask for their renewal.

The effect of import duties on the market for a product where imports are significant, like stainless sheet and strip, is difficult to estimate precisely, and extends beyond the percentage of total supply that is imported – about 22 percent, in the case of stainless sheet and strip. But. It is likely that the increased costs paid by U.S. firms using stainless sheet and strip exceed the value of duties paid.

In addition to the unfortunate incentive of Byrd payouts to encourage trade complaints against foreign suppliers, the Byrd Amendment was having other effects on U.S. trade. The World Trade Organization (WTO) ruled this use of import duties illegal under rules to which the U.S. is party. As a result, major trading partners in the European Union (EU), Canada and Mexico have imposed retaliatory duties on a wide range of U.S. products. Fortunately, none include foodservice equipment. It is anticipated that retaliatory duties will remain in place for the next two years until the Byrd repeal goes into effect.

There could, of course, be efforts by firms that have benefited from these payouts to re-instate the Byrd Amendment before repeal is finally effective. NAFEM and CITAC are continuing to monitor the situation closely. For further information, contact Bob Wilbur, NAFEM director, government relations, +1.202.367.1224.