GAO Reports on Issues and Effects of Byrd Amendment Implementation
The Government Accountability Office (GAO) has issued a report to Congressional requestors entitled, Issues and Effects of Implementing the Continued Dumping and Subsidy Offset Act (CDOSA, also known as the Byrd Amendment), which discusses the effects of Byrd Amendment payments to U.S. producers, implementation problems faced by U.S. Customs and Border Protection (CBP), and additional tariffs implemented by certain U.S. trading partners in response to the Byrd Amendment.
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(The Byrd Amendment requires that the revenues from antidumping (AD) and countervailing (CV) duties assessed on or after October 1, 2000 be distributed on an annual basis to affected domestic producers (i.e. currently operating producers (including worker representatives) that were either petitioners for the AD/CV duty order in question or interested parties in support of the petition) for specified qualifying expenditures (e.g. manufacturing facilities, research, and development, personnel training). See ITT's Online Archives or 10/19/00 news, 00101837, for BP summary.)
Highlights of GAO's Findings With Regard to Byrd Amendment Implementation
In its report on the implementation of the Byrd Amendment, the GAO made the following observations (partial list):
Byrd Amendment limits benefits to petitioners/supporters of AD/CV investigation. According to the GAO, Byrd Amendment contains key eligibility requirements that limit benefits to producers that filed a petition for relief or that publicly supported the AD/CV petition during a government investigation to determine whether injury had occurred. Thus, the Byrd Amendment differs from trade remedy laws, which generally provide relief to all producers in any industry.
Most Byrd Amendment payments go to only a few companies. The GAO states that most Byrd Amendment payments went to a few companies with mixed effects. About half of the payments went to five companies. Top recipients surveyed by the GAO stated that the Byrd Amendment had beneficial effects, but to varying degrees. Some non-recipients contended that Byrd Amendment payments gave their competitors an unfair advantage.
CBP faces key implementation problems. The GAO states that U.S. Customs and Border Protection (CBP) faces key implementation problems. First, processing of company claims and Byrd Amendment payments is problematic because CBP's procedures are labor intensive and do not include standardized forms or electronic filing. Second, most companies are not accountable for the claims they file because they do not have to support their claims and CBP does not systematically verify the claims. Third, CBP's problems in collecting duties that fund the Byrd Amendment have worsened. About half of the funds that should have been available for disbursement remained uncollected in fiscal year (FY) 2004.
With respect to CBP, the GAO also notes that the Byrd Amendment requires that CBP disburse payments within 60 days after the beginning of a fiscal year, giving CBP limited time to process payments and perform desired quality controls. This time frame combined with a dramatic growth in the program workload, presents implementation risks for CBP.
U.S. facing additional tariffs on exports due to Byrd Amendment. The GAO also notes that because the U.S. has not brought the Byrd Amendment into compliance with its World Trade Organization (WTO) obligations, it faces additional tariffs on U.S. exports covering a trade value of up to $134 million based on 2004 Byrd Amendment disbursements.
The GAO adds that recently, Canada, the European Union, Mexico, and Japan have imposed duties on various U.S. exports in retaliation for the Byrd Amendment. In addition, four other WTO members (i.e. Korea, Brazil, India, and Chile) may follow suit. (See ITT's Online Archives or 08/26/05 news, 05082610, for BP summary of Mexico's imposition of Byrd Amendment retaliatory duties, with links to earlier summaries concerning Japan, Canada, and the European Union.)
GAO Questions Whether Byrd Amendment is Achieving its Purpose
Among other things, the GAO concludes that in considering whether to keep, modify, or repeal the Byrd Amendment, Congress should consider whether the law is achieving its purposes of strengthening U.S. trade remedy laws, restoring conditions of fair trade and assisting U.S. producers. If Congress decides to modify the law, the GAO states that Congress should also consider extending the time frame for disbursing payments.
In addition, the GAO recommends that CBP take several steps to improve processing of Byrd Amendment claims and payments, verification of claims, and collection of import duties.
GAO Report (GAO-05-979, dated September 2005) available at http://searching.gao.gov/cs.html?charset=iso-8859-1&url=http%3A//www.gao.gov/new.items/d05979.pdf&qt=gao-05-979&col=&n=2&la=en