Enjoin The Byrd Amendment

Sunday, October 1, 2006 - 00:00

Since its enactment in October 2000, the Continued Dumping and Subsidy Offset Act (a.k.a. the 'Byrd Amendment') has been the target of remonstration because it pays private parties federal taxes collected on imported goods.The payouts violate U.S. international obligations not to restrain trade and are otherwise illegal because they subsidize only members of domestic industries that advocate protectionism by supporting the imposition of tariffs they will ultimately receive.The Byrd Amendment created what is essentially a special interest tax, designed to make it easier for petitioners to meet standing requirements that were tightened in 1995 to require broadened domestic industry support.Companies that embrace free trade and the enhanced competitiveness, lower prices and jobs created by it are not entitled to any piece of this government pie.For these and other reasons, the Byrd Amendment has been under attack since its inception as an abuse of legislative power, a misappropriation of tax revenues, and a flagrant violation of the world trade rules that the United States is committed to uphold.

Recently, Byrd Amendment critics have been vindicated by every reviewing adjudicative body that has examined this contentious law.In addition to being found in January of 2003 to be a direct violation of the World Trade Organization (WTO) international trade rules by going beyond established limits for dealing with dumping and subsidization, the United States Court of International Trade (CIT) has held in three 2006 cases that the Byrd Amendment is illegal on multiple grounds.In Canadian Lumber Trade Alliance v. United States , the CIT held that the law violated U.S. obligations under the North American Free Trade Agreement (NAFTA) for upsetting the balance of negotiated benefits.Subsequently, in PS Chez Sidney L.L.C. v. United States , the CIT found that the Byrd Amendment abridged the U.S. Constitution's free speech guarantees by compelling political speech because payout eligibility extends only to businesses that support antidumping and countervailing duty petitions.Most recently, in SKF USA Inc. v. United States , the CIT held that the Byrd Amendment violates the Fourteenth Amendment's equal protection clause, also for favoring one type of U.S. citizen over another.This rapid series of fundamental judicial decisions makes one wonder how this profoundly flawed provision ever made its way into law.

The Byrd Amendment is an example of backroom lawmaking at its worst.In October 2000, at the eleventh hour of the appropriations process, Senator Robert Byrd added the controversial amendment regarding the use of antidumping and countervailing duties collected on imports to an unrelated, yet veto-proof, agricultural appropriations bill in conference committee.This legislative trick completely avoided any public debate, substantive committee review, or congressional hearing on the provision.It was never subject to any aspect of the rigorous legislative process of public scrutiny that our system of government is supposed to ensure.The sole comment on the rider was by Senator Nickles, who rhetorically questioned why the bill did not go through normal procedures, a question never answered.As a result, U.S. businesses are left to confront a statute that violates U.S. law on several grounds and denigrates U.S. WTO and NAFTA commitments to free and fair trade.

For now, notwithstanding the CIT's repeated findings that the Byrd Amendment is illegal, the provision remains on the books and the monies continue to be paid.While aggrieved U.S. businesses continue to fight its ongoing harm to their economic welfare, in the absence of injunctions from the CIT, except on a limited basis with respect to some imports from Canada, the U.S. Bureau of Customs and Border Protection is continuing to distribute billions of dollars from the U.S. Treasury in persistent disregard of our nation's international obligations and constitutional guarantees.

Since Congress has prospectively repealed the Byrd Amendment in response to the 2003 WTO ruling and a General Accounting Office (GAO) report exposing the few companies that have received most of this largess (e.g., the GAO found that just five companies received almost $500 million, which is about half of all Byrd Amendment payments through FY 2004), one might question whether this is still a battle worth fighting.But the repeal will only apply to tariffs collected on imports entering the United States after September 2007.In the meantime, what about trading partners and American importers that must struggle uphill to do business on this tilted playing field? And what about domestic industries that do not support the imposition of tariffs because they believe that markets should pick winners and losers, without the government's thumb on the scale?These American companies must still cope with the direct subsidization of their competitors that have been illegally favored and paid millions in federal dollars for asserting a particular political view.The Administration has the ability to prevent further harm to these American businesses by accepting the CIT's decisions and stopping operation of the Byrd Amendment today.This is not going to happen voluntarily, and it remains up to the U.S. courts to require it by injunction.It seems that declaring something illegal and actually doing something about it may sometimes be two very different things.