Byrd
Amendment Brings Sanctions
The Continued Dumping and Subsidy Offset Act of 2000, or Byrd Amendment, mandates
the payment of tariffs collected at the border to U.S. producers who bring
or support trade remedy petitions. There are many problems with this law.
First, the Byrd Amendment was sneaked onto an appropriations bill at the last possible moment without being fully debated in the Senate. The Senate Finance Committee, which had jurisdiction, never had a chance to review the amendment. If it had, it no doubt would have been struck from the bill as being in violation of WTO trade rules. From an economic view point, it is bad for Americans because it siphons tariff revenues out of the general treasury at a time when our deficits are enormous and growing. The money is distributed to a handful of corporations regardless of their economic need and without any strings attached. In theory, these companies are using the money to improve their competitiveness, but in reality we have no idea where the money is going because there is no oversight.
Other problems have arisen as well. The Bureau of Customs and Border Protection
was tasked with the collection and distribution of these duties before they
had the opportunity to get organized as part of the new Department of Homeland
Security. As a result, the Bureau made overpayments of $25 million. It takes
time and money to establish the infrastructure to administer a program like
the Byrd Amendment, and then more time and money to correct administrative
mistakes.
When the WTO ruled the Byrd Amendment inconsistent with our international trade obligations in 2002, we had until December 2003 to repeal the law. Congress still has not done this and is indicating that it won't do it any time soon. Instead it is encouraging the Administration to "negotiate" a solution at the WTO. What that means is that our legislators want the WTO to change its rules so that the Byrd Amendment becomes legal and can remain on the books.
This would undermine us in two ways. First, from the perspective of an American taxpayer, it is a rip-off. The taxes paid at the border by importers are passed along to consumers in the form of higher prices. It's simply unacceptable for these duties--largely paid by consumers--to be diverted from the Federal Treasury where they might be used to pay for useful public programs that benefit a large number of Americans and instead be given to a few large corporations without strings attached.
Secondly, asking the WTO to change its rules to accommodate a misguided American law sets a very bad precedent. Not only does it represent an abdication of leadership on the part of the United States, but it opens the door to other countries insisting that the international trade rules be changed to accommodate their illegal practices. If that's what we're going to do, then the WTO becomes completely irrelevant. The case against the Byrd Amendment is a crucial test of the WTO's credibility as well as that of the United States. Will the U.S. comply with international trade laws it helped draft itself? Or are we now going to say that those laws are an imposition on our sovereignty and ignore them?
Finally, of course, if
we fail to do anything, our exports will be penalized by retaliatory tariffs.
The EU and Canada have already begun to target American exports of clothing,
paper products, sweet corn, cigarettes, hogs, oysters and fish with a 15%
tariff. While these tariffs will not drive up the cost of these goods at home
- only in Canada and Europe - they will drive up the costs for these companies
and reduce sales, which could result in lay-offs in the U.S. Six other countries
- Brazil, Chile, India, Japan, Mexico and South Korea - are also entitled
to impose sanctions on U.S. exports and will do so soon if Congress doesn't
take action. As Byrd fund pay-outs to American companies rise over time, so
will the level of retaliation by our trade partners. Why should the U.S. Senate
decide that some American companies -- those looking for a big, fat handout
without strings attached-are more important than other companies that are
producing goods and commodities, selling them competitively on the world market,
and creating good jobs in the process?