Inside US Trade
Opponents of a controversial provision in the agriculture appropriations bill approved by the House this week that would transfer antidumping and countervailing duties from the government to domestic industries face an uphill battle in their efforts to undo the provision. Their hopes are focused on passing legislation that would undo the provision sponsored by Sen. Robert Byrd (D-WV) because it is unlikely to be struck out of the conference report when it comes to the Senate floor next week.
But opponents concede that they may only have a chance to do so in a new Congress next year. The House passed the agriculture appropriations bill by a strong 340 to 75 vote, and the Clinton Administration has indicated it would sign the bill.
Nevertheless, House Ways & Means trade subcommittee chairman Phil Crane (R-IL) said on Oct. 12 he hoped to resolve the issue before the appropriations went to President Clinton for signing. At this point, Crane is evaluating his options for undoing the Byrd amendment, a congressional source said.
In addition to the policy problems the amendment would cause, it cannot be administered, the source said. Generally, opponents have charged that the amendment would entice U.S. producers to file more trade remedy petitions because of potential payouts from successful cases, and have argued that it would amount to a subsidy to U.S. firms paid by foreign competitors.
The Byrd amendment has been criticized by the European Union as running afoul of U.S. obligations in the World Trade Organization, and labeled by Senate Finance Committee Chairman Bill Roth (R-DE) as a problem for U.S. efforts to seek tighter rules on foreign subsidies and more market access. "I am concerned that we will be obliged to pay some future negotiation, such as market access on agriculture, to preserve what will undoubtedly be described as a private right of action to garner industry-specific government subsidies," Roth wrote in a letter to Senate appropriators.
Roth also pointed out that the Byrd provision falls under the jurisdiction of the Finance Committee and not the Appropriations panel. He urged the appropriators to strike the provision from the agriculture appropriations bill, as did House Ways & Means Committee chairman Bill Archer (R-TX) last week (Inside U.S. Trade, Oct. 6, p.8).
But Archer's pressure to remove the Byrd provision from the relevant section of the appropriations bill did not sway House Appropriations Committee Chairman C.W. "Bill" Young (R-FL), as he did not move on Oct. 5 to reconsider the amendment. According to sources on both sides of the issue, Young did not have the votes to remove the amendment.
The House Rules Committee then adopted a closed rule for the consideration of the agriculture appropriations conference report. This waived all points of order against the bill making it impossible for opponents to make procedural moves to strike the Byrd amendment.
The Clinton Administration weighed in on the Byrd amendment with an Oct. 11 Statement of Administration Policy, in which it questions the necessity of the amendment, and points out potential problems with U.S. trade policy obligations as well administrative difficulties in implementation. "[T]here are significant concerns regarding administrative feasibility and consistency with our trade policy objectives, including the potential for trading partners to adopt similar mechanisms," the SAP said. The same problems were brought up when a proposal similar to the Byrd proposal was raised in the context of the Uruguay Round implementation bill, the SAP said. "That proposal was ultimately rejected," the Administration said.
Opponents of the measure are worried that it will bring a challenge from the European Union and possibly Japan and Canada. The EU has already weighed in with members of Congress urging members to strike the provision from the bill because it would violate the General Agreement on Tariffs & Trade by providing an unauthorized remedy, according an Oct. 6 letter by Guenter Burghardt, the EU ambassador to the U.S.
He also argued that the amendment would offer "double protection" to the domestic industry already protected by antidumping and countervailing duties instead of the balanced treatment between imports and domestic products required by the WTO. "This level playing field would be destroyed if the domestic industry receives the proceeds of the duty," Burghardt said.
Opponents of the Byrd amendment this week weighed their options to get rid of the Byrd measure in a meeting between House Ways and Means staff and industry. They include trying to attach their own amendment to another bill that would nullify the Byrd provision, according to sources. This is expected to be difficult because of the lack of bills moving through Congress and the short time left until adjournment expected this week.
This approach would also require exact timing of the vehicle that repeals the Byrd amendment to ensure it would be signed after the agriculture appropriations bill, sources said.
At this time, the nature of a possible amendment has not been worked out and no vehicle has been determined.
The Byrd amendment would transfer duties liquidated from anti-dumping and countervailing cases into a fund for eligible domestic producers affected by the trade practices. The funds would be distributed for the duration of time foreign competing products are being dumped or subsidized. The funds would be used for purposes such as improving manufacturing facilities, equipment, research and development, personnel training, health care and pension benefits, and environmental equipment, training and technologies.
Opponents of the provision say that distributing the duties to the private-sector instead of sending them to the general treasury violates Article VI of the GATT, which states that a country cannot go beyond imposing a duty on a product in response to dumping. Providing funds as compensation to the injured industry goes further than the imposition of a duty, and could constitute a subsidy in violation of the Agreement on Subsidies and Countervailing Measures.
But supporters reject that explanation and insist that the Byrd amendment does not change issues raised by the GATT rules, such as when dumping petitions can be filed, what determines dumping and what duties to apply. One source said that the Byrd amendment does not alter duties as a response to dumping, as required by GATT, but merely their use, which he said is not stipulated in international rules.
But a source familiar with the rules said the assumption of the GATT agreements is that duties collected in trade remedy cases go into the general treasury.
Regarding subsidies, Byrd opponents point to article 1 of the Agreement on Subsidies and Countervailing Measures, where a subsidy is defined as a financial contribution from the government to domestic producers. The transfer of duty funds to injured domestic industries is therefore seen as a subsidy, they argue.
But proponents of the measure argue that it is not a prohibited subsidy, which under GATT rules are those that are contingent on export performance or on preference of domestic products over imports. They also argue that the payments would not make the threshold to become an actionable subsidy.
Payments would not meet the specificity test under article 2 of the ASCM, these supporters say. One source said that the provision is open to all sectors of the economy and does not specify in advance which industries qualify. "This amendment is applicable to anyone who brings a case," the source said.
However, opponents counter that that the amendment is de facto specific because only industries that file cases receive the benefits.
According to a source who is not involved in the wrangling over the Byrd amendment, the distribution of funds as proposed could pass the specificity test and be considered a subsidy because it is only available to sectors and industries that compete with exports and to those that file dumping cases. "On its face it is a subset of industries, but in reality, the recipients are a small group," the source said. "As long as a segment is receiving benefits that others don't receive, it is receiving a subsidy."
Byrd proponents also add that even if the transfer of funds to domestic producers were considered a subsidy, it is not actionable because it would not have adverse effects on a WTO member's domestic industry. Sources using the $39 million CBO number said that splitting this money among the industries entitled to receive it would have little effect on global competitors making it non-actionable.
But opponents pointing to larger dollar amounts say that the subsidy would be actionable because the domestic industries would receive much more money.
Supporters and opponents also battle over the dollar amounts generated for industry by the amendment. Byrd uses a $39 million figure obtained by the Congressional Budget Office, which estimated that amount for liquidated duties per year until 2010. Opponents of the provision put the amount closer to $500 million a year, which is the amount of collected duties, but not what was ultimately assessed.
But opponents question whether the actually liquidated duties would amount to as little as 10 percent of the collected duties.
The Byrd amendment only calls for assessed duties to be distributed to eligible parties. "There has never been a year when there have been assessments of $500 million," a source said.:
