The GAO report details key factual findings and problems with implementation of the law, and presents recommendations for improvements. It does not call for a repeal of the Byrd Amendment, since this is not the job of the GAO. However, it is clear from a review of the report that the GAO is highly critical of the content of the law and the manner in which it operates.

Set forth below is a summary of the report’s key factual findings and recommendations.

Findings:

• Although the Byrd Amendment was intended to strengthen relief to U.S. producers injured by unfairly traded imports, the operation of the law has often contradicted this purpose. Only those U.S. producers that were petitioners or which supported by petition, and remain in operation producing the product subject to the antidumping and/or countervailing duty order by the time a disbursement is made are eligible to receive Byrd Amendment funds. Therefore, it is often the case that some U.S. producers receive funds while others do not, thereby providing an unwarranted competitive advantage to the former.
• Five U.S. companies have received about half of the total Byrd Amendment disbursements through fiscal year 2004. These five companies are: The Timken Company (ball bearings); The Torrington Company (ball bearings); Candle-lite (candles); MPB Corporation (ball bearings); and Zenith Electronics Corporation (televisions and picture tubes). Together, these five companies have so far received about $485 million in Byrd Amendment disbursements (out of a total of $1.04 billion paid out to date).
• Other significant recipients of particular interest include several pasta makers (American Italian Pasta: $11.1 million; Hershey Foods: $8.2 million; A. Zerega’s Sons: $3.9 million; New World Pasta $3.6 million) and Maui Pineapple Company ($9.4 million).
• Most of the AD/CVD orders under which Byrd Amendment funds are being disbursed pre-date the law. The GAO report notes that this ex-post facto aspect “raises concern.” Among other things, “for AD/CVD petitions that were investigated before {the Byrd Amendment} was enacted, producers had no way of knowing that their lack of expression of support for the petition would later adversely affect their ability to receive … disbursement.”
• The Byrd Amendment specifies that funds paid pursuant to the law must be used for certain categories of “qualifying expenses,” such as health benefits and working capital expenses related to the product subject to the AD/CVD order. However, the Bureau of Customs and Border Protection (which is the lead agency for collection of AD/CVD duties and disbursements under the Byrd Amendment) does not require companies to provide any supporting documentation relating to the claims for monies. In fact, only 1 of 770 companies that received Byrd Amendment funds was ever verified by Customs, and in that instance, Customs found “significant problems” with the claim made by the company and the manner it which the funds were used by the company. In any case, Customs has no plans in place to systemically verify Byrd Amendment claims.
• Because the Byrd Amendment has been ruled illegal by the World Trade Organization (WTO), several of our major trading partners – including Canada, the European Communities, Mexico and Japan – have implemented retaliatory duties against certain exports from the U.S. several other WTO members – including Brazil, Chile India and Korea – have received authorization to implement retaliatory measures. In other words, the law operates to punish certain U.S. exporters which have received Byrd Amendment funds but which face stiff tariffs for their sales abroad.
• The number of Byrd Amendment claims is expected to rise dramatically over the next several years, as evidenced by a 10-fold increase in claims submitted for fiscal year 2005.

Recommendations:

• In considering whether to keep, modify or repeal the Byrd Amendment, Congress should consider whether the law is achieving its stated 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, it should also consider extending the time frame for making disbursements. Under the current law, the disbursements must be made within 60 days of the close of the fiscal year; a longer time frame would allow for additional internal control activities, which is especially important as the number of claims is expected to increase dramatically over coming years.
• Customs should take several steps to improve processing of Byrd Amendment claims and payments, verification of claims and collection of import duties.

As noted above, the GAO report does not call for repeal of the Byrd Amendment, nor does it attempt to make any evaluation of whether the existence of the law provides an incentive for U.S. companies to filed AD/CVD petitions. In fact, a good portion of the report discusses lapses in collection of AD/CVD duties and the negative impact that this has on the amounts of monies available to be disbursed to qualifying companies. Nevertheless, the report stands as the most comprehensive government study to date on the Byrd Amendment, and its tone is decidedly negative with respect to the issue of whether the law is serving its intended purpose, whether it is inherently “fair” to U.S. companies, and whether it is being administered in an efficient and accountable manner. For these reasons, it is an important document to bring to the attention of the many members of Congress that have little or no awareness of this particular legislative travesty.

In that vain, it serves as valuable “ammunition” for the Association’s fight, in concert with others, to educate lawmakers about this law and to further the battle for repeal at the earliest possible opportunity.