Friday, April 01, 2005
It's time to revisit the Byrd Amendment
You remember the Byrd Amendment, right? In November, I wrote:
The Byrd ammendment "overcompensates" for any adjudicated trade imbalances ("dumping"). Since the awards are set so that import duties will fully correct the imbalance, the awards are quite large and the WTO sees the situation as already corrected. Since, in the US, the awards flow to the reporting company, it is rewarded twice, once when the tarifs do their job and fully correct the imbalance, and once again when all that reward money becomes a bonanza for the reporting company.
This creates 2 trade problems - not just the overcompensation but also the dogged determination of some companies to keep appealing forever even when they have a weak case, because the chance that they might win on appeal (or just wearing down the other side) carries such a large monetary award.
An interesting historical tidbit, which I only recently discovered (thanks to CATO):
The legislation was surreptitiously inserted into the agriculture appropriations bill in 2000 by Sen. Robert Byrd after it failed to win support from the congressional committees that have expertise and oversight on trade issues. President Clinton strenuously objected to the amendment, but could only have killed it by vetoing the entire appropriations bill. Instead, he signed the law and implored Congress to repeal the amendment, knowing full well -- as the trade committees and Sen. Byrd did -- that it was contrary to U.S. WTO commitments.
They go on to explain some of the insidious ways this bill works:
By compensating petitioners and supporters of petitions, the Byrd Amendment provides an additional financial incentive to file antidumping and countervailing duty cases. Furthermore, by excluding from compensation those companies that do not support the petitions, the law encourages them to change their positions simply to maintain eligibility for compensation.
The man, himself, Robert Byrd, isn't universally loved. In fact, the Citizens Against Government Waste web site has a page dedicated to him calling him The King of Pork.
In 2001, Senator Robert C. Byrd managed to claw $232 million in pork for West Virginia, or $128 for every single resident, using his privileged position as ranking chairman of the Appropriations Committee.
In fact, he's proud of it ... "One man's pork is another man's job. Pork has been good investment in West Virginia. You can look around and see what I've done."
In an interview with George magazine about loan guarantees for steel companies, Sen. Byrd claimed that "he has no apologies to make" to the American people for the more than $1 billion in taxpayer money he has wasted.
Perhaps a more serious issue is that Byrd seems to have been a prominent member of the KKK back in the day ...
Granddad was approached by the local Klan Recruiter to join the Klan. The recruiter at that time was none other than a young, well-liked politician that would later be known as Senator Robert Byrd. He was serving in the WV House of Delegates at that time and was already seen by many as an aggressive politician with a future.
At first Granddad told him to get lost. Granddad was very apolitical, but more importantly he employed a number of Blacks in his mills and as loggers. These were all very dangerous jobs, and dissention in the workplace was dangerous for all involved.
However strange things started happening in his business relations after refusing Byrd's overtures to join the KKK. School contracts vanished. Local unions refused to allow granddads trucks access to rail facilities. Mine surveyors started grading his logs as substandard for mine materials.
Soon he got the picture. The Klan took care of its own and the only way to stay in business was to join up. So he did. He paid the joining fee ($25) and attended a couple of "Halloween Parties" as he called them. Just a bunch of guys in sheets drinking beer and discussing business. Kind of like a Rotary Club in hoods.
After joining his business got much better. School contracts were suddenly available. No more union issues, and loads of mine headers that had been rejected last week were suddenly acceptable. [...]
Byrd encouraged these outings, but NEVER particiapted. He was management, the mailbox bashers were workers. He never wanted to be part of the latter.
More KKK stuff here.
In any case, back to the Amendment. In December 2004, the WTO gave Canada and the UN permission to apply sanctions against the US for continued utilization of the Byrd Amendment, contrary to the WTO. I wrote about it on December 22nd of last year.
First, lets look at some interesting statistics:
The Shrimp Industry: According to CITAC,
The trade petitions filed against shrimp imports from six developing nations were filed by a small segment of the domestic shrimp industry in order to receive millions of dollars in special interest taxes. A conservative estimate is that annual payouts will equal $180 million or nearly $829,493 per company.
As Ella used to sing, nice work if you can get it!
Also according to CITAC,
the two largest sectors beneficiaries of this largese in 2004 were Steel containing products ($80 million US) and steel products (the latter being raw and semi finished steel goods not yet ready for final use, i.e. steel bar, steel sheet, steel plate, etc) ($58 million US)
Total Byrd Amendment Disbursements to Date
Fiscal Year 2004 $284,124,933
Fiscal Year 2003 $190,247,425
Fiscal Year 2002 $329,871,464
Fiscal Year 2001 $231,201,891
Top Companies in 2004:
$52,673,229 The Timken Company Bearings
$26,225,555 Lancaster Colony Corp. Candles
$13,190,858 MPB Corporation Bearings
$11,959,014 Micron Technology DRAMS
$11,644,319 Emerson Power Transmission Corp. Bearings
$10,374,465 International Steel Group Steel products
$ 8,424,904 Home Fragrance Holdings Candles
$ 7,885,970 Wellman Polyester staple fibers
$ 7,123,402 United States Steel Corp. Steel products
$ 6,835,892 AK Steel Steel products
We're not talking chump change here, guys.
And there are some amusing ironies. According to the Rushford Report
when the U.S. Customs Service released its Notice of Intent to distribute antidumping tariffs that were actually collected in fiscal year 2001, look who the big winners were.
A whopping $24.3 million out of $28.8 million in dumping tariffs will be divided between mostly Japanese television makers who have set up operations in the United States, including Matsushita, Hitachi, Sanyo, Mitsubishi Electric, NEC, Sharp, and Toshiba. Only two names clearly recognizable as American get to share in the spoils: Montgomery Ward and Zenith Electronics.
What sweet irony. Japanese television makers moved production to this country to get around U.S. anti-dumping petitions against Japan. Now they are raking in antidumping tariffs assessed against other foreigners who came later, like the Koreans and Taiwanese.
A web site called eBearing has a nice chronology of the bill.
The Fabricator and a number of other web sites write about a bill that would repeal the Byrd Amendment.
CITAC Renews Call for Congress to Repeal Byrd Amendment After Canada and European Union Announce Retaliatory Tariffs Beginning May 1
beginning May 1, 2005, the EU will impose a 15% duty on various types of paper, clothing fabrics, footwear, and machinery -- amounting to tariffs worth approximately $28 million, and Canada will impose like duties on cigarettes, oysters and live swine worth $14 million because of the failure of Congress to repeal the WTO- illegal Byrd Amendment. Both governments will review the products each year against the fluctuating nature of Byrd disbursements.
In a statement, Canada's International Trade Minister Jim Peterson said, "For the last four years, Canada and a number of other countries have repeatedly urged the United States to repeal the Byrd Amendment. Retaliation is not our preferred option, but it is a necessary action. International trade rules must be respected."
Forbes wrote: Bye Bye Byrdie?
Opposition to Byrd is growing louder. The Bush Administration has called for repeal. And companies that import goods subject to these duties have banded together to fight for repeal.
Here's the official Canadian retaliation notice:
March 31, 2005
The Government of Canada announced today that it will retaliate against the United States in light of its failure to comply with the World Trade Organization (WTO) ruling on the Byrd Amendment. Following extensive consultations with domestic stakeholders, Canada will impose a 15 percent surtax on U.S. live swine, cigarettes, oysters and certain specialty fish, starting May 1, 2005.
Some people are starting to react ...
Byrd law jeopardizes state economy
Amendment must be repealed before Wisconsin loses foreign trade
Wisconsin businesses could stand to lose a considerable share of the more than $6 billion in annual trade with our biggest international customer - Canada - and other key trading partners unless Congress takes action to correct a serious defect in U.S. trade law.
Canada slaps rare sanctions on U.S.
Ottawa — Canada has turned up the pressure on its largest trading partner, slapping rarely used sanctions on the United States to force an end to an internationally condemned trade law.
The stakes are high: if Ottawa fails in this fight against the U.S. law known as the Byrd amendment, Canadian softwood lumber producers stand to lose more than $4 billion in duties paid so far in the longrunning trade dispute.
Even worse, the Byrd amendment would then hand all those Canadian payments over to their American lumber competitors.
To pressure Washington, Ottawa announced Thursday it will slap a 15 per cent surtax on cigarettes, oysters, live swine and some fish imports from the U.S., effective May 1.
The Washington Post said much of the same thing, but added near the end of the article:
Richard Gutting, an international trade attorney who has worked on oyster-related issues, said it appears that this might be just the "first wave" of sanctions.
The Byrd ammendment "overcompensates" for any adjudicated trade imbalances ("dumping"). Since the awards are set so that import duties will fully correct the imbalance, the awards are quite large and the WTO sees the situation as already corrected. Since, in the US, the awards flow to the reporting company, it is rewarded twice, once when the tarifs do their job and fully correct the imbalance, and once again when all that reward money becomes a bonanza for the reporting company.
This creates 2 trade problems - not just the overcompensation but also the dogged determination of some companies to keep appealing forever even when they have a weak case, because the chance that they might win on appeal (or just wearing down the other side) carries such a large monetary award.
An interesting historical tidbit, which I only recently discovered (thanks to CATO):
The legislation was surreptitiously inserted into the agriculture appropriations bill in 2000 by Sen. Robert Byrd after it failed to win support from the congressional committees that have expertise and oversight on trade issues. President Clinton strenuously objected to the amendment, but could only have killed it by vetoing the entire appropriations bill. Instead, he signed the law and implored Congress to repeal the amendment, knowing full well -- as the trade committees and Sen. Byrd did -- that it was contrary to U.S. WTO commitments.
They go on to explain some of the insidious ways this bill works:
By compensating petitioners and supporters of petitions, the Byrd Amendment provides an additional financial incentive to file antidumping and countervailing duty cases. Furthermore, by excluding from compensation those companies that do not support the petitions, the law encourages them to change their positions simply to maintain eligibility for compensation.
The man, himself, Robert Byrd, isn't universally loved. In fact, the Citizens Against Government Waste web site has a page dedicated to him calling him The King of Pork.
In 2001, Senator Robert C. Byrd managed to claw $232 million in pork for West Virginia, or $128 for every single resident, using his privileged position as ranking chairman of the Appropriations Committee.
In fact, he's proud of it ... "One man's pork is another man's job. Pork has been good investment in West Virginia. You can look around and see what I've done."
In an interview with George magazine about loan guarantees for steel companies, Sen. Byrd claimed that "he has no apologies to make" to the American people for the more than $1 billion in taxpayer money he has wasted.
Perhaps a more serious issue is that Byrd seems to have been a prominent member of the KKK back in the day ...
Granddad was approached by the local Klan Recruiter to join the Klan. The recruiter at that time was none other than a young, well-liked politician that would later be known as Senator Robert Byrd. He was serving in the WV House of Delegates at that time and was already seen by many as an aggressive politician with a future.
At first Granddad told him to get lost. Granddad was very apolitical, but more importantly he employed a number of Blacks in his mills and as loggers. These were all very dangerous jobs, and dissention in the workplace was dangerous for all involved.
However strange things started happening in his business relations after refusing Byrd's overtures to join the KKK. School contracts vanished. Local unions refused to allow granddads trucks access to rail facilities. Mine surveyors started grading his logs as substandard for mine materials.
Soon he got the picture. The Klan took care of its own and the only way to stay in business was to join up. So he did. He paid the joining fee ($25) and attended a couple of "Halloween Parties" as he called them. Just a bunch of guys in sheets drinking beer and discussing business. Kind of like a Rotary Club in hoods.
After joining his business got much better. School contracts were suddenly available. No more union issues, and loads of mine headers that had been rejected last week were suddenly acceptable. [...]
Byrd encouraged these outings, but NEVER particiapted. He was management, the mailbox bashers were workers. He never wanted to be part of the latter.
More KKK stuff here.
In any case, back to the Amendment. In December 2004, the WTO gave Canada and the UN permission to apply sanctions against the US for continued utilization of the Byrd Amendment, contrary to the WTO. I wrote about it on December 22nd of last year.
First, lets look at some interesting statistics:
The Shrimp Industry: According to CITAC,
The trade petitions filed against shrimp imports from six developing nations were filed by a small segment of the domestic shrimp industry in order to receive millions of dollars in special interest taxes. A conservative estimate is that annual payouts will equal $180 million or nearly $829,493 per company.
As Ella used to sing, nice work if you can get it!
Also according to CITAC,
the two largest sectors beneficiaries of this largese in 2004 were Steel containing products ($80 million US) and steel products (the latter being raw and semi finished steel goods not yet ready for final use, i.e. steel bar, steel sheet, steel plate, etc) ($58 million US)
Total Byrd Amendment Disbursements to Date
Fiscal Year 2004 $284,124,933
Fiscal Year 2003 $190,247,425
Fiscal Year 2002 $329,871,464
Fiscal Year 2001 $231,201,891
Top Companies in 2004:
$52,673,229 The Timken Company Bearings
$26,225,555 Lancaster Colony Corp. Candles
$13,190,858 MPB Corporation Bearings
$11,959,014 Micron Technology DRAMS
$11,644,319 Emerson Power Transmission Corp. Bearings
$10,374,465 International Steel Group Steel products
$ 8,424,904 Home Fragrance Holdings Candles
$ 7,885,970 Wellman Polyester staple fibers
$ 7,123,402 United States Steel Corp. Steel products
$ 6,835,892 AK Steel Steel products
We're not talking chump change here, guys.
And there are some amusing ironies. According to the Rushford Report
when the U.S. Customs Service released its Notice of Intent to distribute antidumping tariffs that were actually collected in fiscal year 2001, look who the big winners were.
A whopping $24.3 million out of $28.8 million in dumping tariffs will be divided between mostly Japanese television makers who have set up operations in the United States, including Matsushita, Hitachi, Sanyo, Mitsubishi Electric, NEC, Sharp, and Toshiba. Only two names clearly recognizable as American get to share in the spoils: Montgomery Ward and Zenith Electronics.
What sweet irony. Japanese television makers moved production to this country to get around U.S. anti-dumping petitions against Japan. Now they are raking in antidumping tariffs assessed against other foreigners who came later, like the Koreans and Taiwanese.
A web site called eBearing has a nice chronology of the bill.
The Fabricator and a number of other web sites write about a bill that would repeal the Byrd Amendment.
CITAC Renews Call for Congress to Repeal Byrd Amendment After Canada and European Union Announce Retaliatory Tariffs Beginning May 1
beginning May 1, 2005, the EU will impose a 15% duty on various types of paper, clothing fabrics, footwear, and machinery -- amounting to tariffs worth approximately $28 million, and Canada will impose like duties on cigarettes, oysters and live swine worth $14 million because of the failure of Congress to repeal the WTO- illegal Byrd Amendment. Both governments will review the products each year against the fluctuating nature of Byrd disbursements.
In a statement, Canada's International Trade Minister Jim Peterson said, "For the last four years, Canada and a number of other countries have repeatedly urged the United States to repeal the Byrd Amendment. Retaliation is not our preferred option, but it is a necessary action. International trade rules must be respected."
Forbes wrote: Bye Bye Byrdie?
Opposition to Byrd is growing louder. The Bush Administration has called for repeal. And companies that import goods subject to these duties have banded together to fight for repeal.
Here's the official Canadian retaliation notice:
March 31, 2005
The Government of Canada announced today that it will retaliate against the United States in light of its failure to comply with the World Trade Organization (WTO) ruling on the Byrd Amendment. Following extensive consultations with domestic stakeholders, Canada will impose a 15 percent surtax on U.S. live swine, cigarettes, oysters and certain specialty fish, starting May 1, 2005.
Some people are starting to react ...
Byrd law jeopardizes state economy
Amendment must be repealed before Wisconsin loses foreign trade
Wisconsin businesses could stand to lose a considerable share of the more than $6 billion in annual trade with our biggest international customer - Canada - and other key trading partners unless Congress takes action to correct a serious defect in U.S. trade law.
Canada slaps rare sanctions on U.S.
Ottawa — Canada has turned up the pressure on its largest trading partner, slapping rarely used sanctions on the United States to force an end to an internationally condemned trade law.
The stakes are high: if Ottawa fails in this fight against the U.S. law known as the Byrd amendment, Canadian softwood lumber producers stand to lose more than $4 billion in duties paid so far in the longrunning trade dispute.
Even worse, the Byrd amendment would then hand all those Canadian payments over to their American lumber competitors.
To pressure Washington, Ottawa announced Thursday it will slap a 15 per cent surtax on cigarettes, oysters, live swine and some fish imports from the U.S., effective May 1.
The Washington Post said much of the same thing, but added near the end of the article:
Richard Gutting, an international trade attorney who has worked on oyster-related issues, said it appears that this might be just the "first wave" of sanctions.
