Deferred repeal date opens door for new petitions, continued sanctions

By Peter A. Buxbaum, AJOT

The repeal of the Byrd Amendment may spark a flurry of countervailing duty and antidumping petitions, according to an international trade attorney. That’s because the repeal does not take effect until October 2007, allowing US companies that could profit from such a petition to take action. The deferred repeal date will also have another effect, said Peggy Clarke, a partner in the Washington law firm of Powell Goldstein: it allows World Trade Organization members that complained against Byrd Amendment provisions to continue their retaliatory sanctions.

The Byrd Amendment, formally known as the Continued Dumping and Subsidy Offset Act, was repealed by Congress in February in response to World Trade Organization decisions saying that the legislation contravened WTO rules. Passed in 2000, the Byrd Amendment provides that proceeds from anti-dumping and countervailing duties be paid to the US companies responsible for bringing the cases.

The WTO viewed this scheme as an unlawful export subsidy and authorized US trading partners to impose retaliatory duties on US exports. The European Union imposed a total of $28 billion in such sanctions on US exports including paper, agricultural, textile, and machinery products. Seven other complaining countries, Brazil, Canada, Chile, India, Japan, Korea, and Mexico, also applied sanctions.

Smaller businesses and steel and agricultural concerns are likely to be the ones trying to dip into Byrd Amendment largesse, according to Clarke. ‘What we will probably see is more agricultural cases filed,’ she said, ‘and they are likely to be coming from smaller businesses rather than larger ones. Whether steel companies will also be filing will depend on what the market is doing.’

Since the Byrd Amendment repeal, only one petition has been filed, according to Clarke, by Calgon Carbon and Norit Americas over activated carbon imports from China. Byrd Amendment petitions are filed simultaneously before the US International Trade Commission and the Department of Commerce’s Office of International Trade Administration.

If Clarke is right about who will be filing, any such increase in petition activity will represent a departure from recent trends in which the roller bearing and candle making industries have received a large proportion of Byrd Amendment benefits. A Government Accountability Office report released in September revealed that nearly half of the $1 billion in payments made under CDSOA had gone to only five companies, and two-thirds have been paid out to only three industries: bearings, candles, and steel. The top two companies to receive benefits, Timken Co. and Torrington Co., both bearings manufacturers, received over $240 million in Byrd payments between them between 2001 and 2004, according to the GAO, around one-third of all money so distributed. Among the top ten recipients of Byrd Amendment payments, bearings manufacturers received around $300 million and candle makers received over $100 million. United States Steel received $23 million and steel companies collectively received around $95 million.

Other industries have been less successful. A furniture industry publication recently reported that the federal government paid out only $144,159 to 24 furniture companies in 2005, a small fraction of the $116.9 million in duties the government collected on Chinese bedroom furniture, the subject of an antidumping petition.

‘Abuse of antidumping laws’

Industries dependent on imports have long opposed the Byrd Amendment. National Retail Federation vice president and international trade counsel Erik Autor welcomed the repeal, terming it ‘a major victory for retailers, consumers and common sense.’ Autor claimed that the Byrd Amendment encouraged ‘the abuse of antidumping laws’ and said it ‘has driven up prices of consumer products while achieving no purpose other than to line the pockets of companies that bring and support antidumping cases.