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US agency finds flaws in Byrd trade law: lawmakers

September 26, 2005

WASHINGTON (Reuters) – Five U.S. companies have received
nearly half of $1 billion in U.S. government payments under an
unfair trade practices program, according to lawmakers who have
seen a Government Accountability Office (GAO) report due out on
Monday.

The five-year-old program requires U.S. Customs to
distribute duties collected on unfairly priced or subsidized
foreign goods to U.S. companies facing the import competition.
The program was declared illegal by the World Trade
Organization (WTO).

The GAO finding gives a boost to proposals to repeal the
Continued Dumping and Subsidy Offset Act (CDSOA), better known
internationally as the “Byrd amendment” after one of its chief
sponsors, Sen. Robert Byrd, a West Virginia Democrat.

“The CDSOA lines corporate coffers for a select few, and
too many innocent companies and workers end up paying the tab,”
Senate Finance Committee Chairman Charles Grassley, an Iowa
Republican, said in a statement. “I’ll continue to seek repeal
or suspension of the CDSOA at the earliest possible time.”

The companies include ball bearings maker Timken, candle
manufacturer Candle-light and electronics company Zenith.

The GAO was expected to post its report on its Web site
later on Monday.

Congress passed the Byrd amendment in 2000 as part of an
agricultural appropriations bill. Opponents complained it was
snuck into the legislation without review by the House Ways and
Means Committee and the Senate Finance Committee, which have
jurisdiction over taxes and trade.

Eleven U.S. trading partners challenged the provision at
the WTO, which ruled in their favor. Canada, the European
Union, Japan and Mexico imposed about $115 million in
retaliation on U.S. exports after the United States failed to a
meet a WTO deadline for repealing the measure.

The GAO report found that five companies have received 46
percent of the more $1 billion paid out so far, according to
summary produced by the House Ways and Means Committee.

Timken was the biggest single recipient with $205 million.
Two other ball-bearing companies owned by Timken were in the
top five, with $135 million going to Torrington and $55 million
going to MPB.

Candle-light received $57 million and electronics company
Zenith got $33 million, respectively, Ways and Means said.

Two thirds of all payments went to three industries: ball
bearings, candles and steel, the House committee said.

“The one time that regulators comprehensively audited
expenses claimed under the CDSOA, they found significant
problems,” said Rep. Jim Ramstad, a Minnesota Republican, who
has co-authored a bill to repeal the program.

“The GAO study revealed that one recipient even used CDSOA
money to pay off a home mortgage, further exposing this flawed
law as a taxpayer-financed slush fund for a few lucky
recipients,” Ramstad said.




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