Despite the White House’s prodding, Congress has yet to bring itself to repeal the Byrd Amendment, a law which the World Trade Organization found in 2002 runs afoul of international trade rules. One week ago, the EU Commission and Canada said they would levy retaliatory tariffs on U.S. goods in response to the amendment. U.S. companies that have not benefited from the law’s largesse will pay the price for Congress’ inaction.
The amendment is passed off by many lawmakers as legislation geared towards establishing fairness in international trade. It works as follows: The Commerce Department places a tariff on imported goods that have been determined to be “dumped,” or sold below market prices, in the United States, when those sales are found to be injurious to U.S. companies. The tariff is intended to bring the price of the dumped good up to market prices, and thereby eliminate the injury to the U.S. company. Before the passage of the Byrd Amendment in 2000, the proceeds of that tariff went to the federal government. Under the law, though, the companies that were found to have been affected by the dumping started receiving the windfall. The proceeds have been considerable for a select group of companies (in particular the makers of steel, ball bearings, honey and candles), which have received more than $1 billion.
The problem with the law is that U.S. companies began receiving double compensation for dumping. The tariff on dumped goods was intended to neutralize the potential injury caused by the imports, but since U.S. companies were receiving millions of dollars on top of that remedy, they were in effect given a government subsidy.
After ruling against the law in 2002, the WTO gave the United States until 2003 to come into compliance. Late last year, the WTO gave the European Union, Canada, Brazil, Japan, India, South Korea, Chile and Mexico the right to levy retaliatory tariffs in response to the Byrd Amendment. President Bush called for its repeal in February.
If EU member countries back the EU Commission’s call to levy retaliatory tariffs on U.S. companies, the union will begin charging on May 1 an extra 15 percent duty, worth about $28 million a year, on U.S. paper, clothing and machinery imports. Canada also said it will impose retaliatory duties of 15 percent on imports worth about $14 million a year, further damaging U.S. companies. Congress should take quick action to repeal the law.