Trade Remedy Law Reform in the 108th Congress

CRS Report for Congress
Trade Remedy Law Reform
th
in the 108 Congress
Updated July 22, 2003
William H. Cooper
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division

Congressional Research Service ˜ The Library of Congress

Trade Remedy Law Reform in the 108 Congress
Summary
Trade remedies are government measures to minimize the adverse impact of
imports on domestic industries. Antidumping duties are used to counter the effects
of imports sold at unfairly low prices on the domestic market. Countervailing duties
are used to counter the price effects of imports that benefit from government
subsidies in the exporting countries. Safeguard remedies (also called Section 201
and escape clause remedies) are used to reduce the injurious impact of surges in fairly
trade imports.
Some of the bills introduced in the 108^th Congress would revise safeguard
remedies. Others would change antidumping and countervailing-duty remedies. The
congressional proposals follow different approaches to the same goal — to ease the
procedural burden in obtaining relief and improve the chances that U.S. industries
would obtain relief. In so doing, the legislation would make it less likely that
industries would press Congress to directly restrict imports through protectionist
legislation.
The 106th Congress did pass one change to U.S. trade remedy law, the so-called^th
Byrd amendment. The 107 Congress did not act on trade remedy legislation, but
treatment of trade remedy laws in trade negotiations was a major point of contention
during the debate over legislation to grant the President trade promotion authority.
Several bills that would amend U.S. trade remedy laws have been introduced in the^th

108 Congress.

Trade remedy legislation is largely supported by those industries, such as steel,
that are most sensitive to foreign competition. The legislation is generally opposed
by those industries and groups that use imports as inputs or consume them as final
products. Increased trade relief would likely result in higher prices to these latter
groups. This report will be revised as congressional action warrants.

Contents
What are Trade Remedies and How do They Work?......................1
Trade Remedies Overview.......................................2
Objectives of Trade Remedies....................................2
Economics of Trade Remedies...................................3
Eligibility Criteria and Procedures for AD and CVD..................3
Eligibility Criteria and Procedures for Safeguard Relief................4
Comparison of Injury Thresholds and Procedures ....................5
Changes in Trade Remedy Laws..................................6
U.S. International Obligations........................................6
Trade Remedy Reform Proposals in the 108^th Congress....................7
Safeguard Reform Proposals.....................................8
CVD and AD Reform Proposals..................................8
The Byrd Amendment..............................................9
TPA Debate.....................................................10
Potential Implications of Trade Remedy Reform and Alternative Options.....11

th
Trade Remedy Law Reform in the 108
Congress
Trade remedies are government measures to minimize the adverse impact of
imports on domestic industries. The remedies might be applied to counter the effects
of unfair foreign trade practices, such as foreign government subsidies or dumping,
that is, selling an import below its fair market value. Remedies might also be applied
to reduce the impact of surges in fairly-traded imports. While having some
antecedents in earlier U.S. law, trade remedies largely came into use when the United
States and other economically developed countries engaged in bilateral and
multilateral negotiations to reduce tariff and nontariff trade barriers. Policymakers
consider trade remedies a tool to cushion the adverse impact of trade liberalization
on import-sensitive industries and in so doing to build a political consensus for trade
agreements and open trade.
The Constitution assigns primary responsibility for regulating trade to the
Congress, but the Congress over time has delegated — for specified periods of time
— much of the authority to the executive branch but continues to shape U.S. trade
policy by passing new trade laws or amending old ones. At times, Congress has
responded to trade crises by proposing, and sometimes enacting, changes in the trade
remedy laws or new laws. Increasingly, U.S. trade partners have challenged in the
World Trade Organization (WTO) actions that the U.S. government has taken under
its trade remedy laws and have even challenged the validity of the laws themselves.
In some cases, the WTO has ruled against the United States ruling that the United
States must repeal the laws or else face sanctions. Since repeal would require
congressional action, these cases have become the subject of congressional debate
and legislation.
The report examines U.S. trade remedy programs. It also analyzes the
legislative proposals pending in the 108^th Congress and their potential implications.
What are Trade Remedies and How do They Work?
U.S. law provides for a range of administrative measures to reduce the adverse
effects of foreign trade policies and practices on U.S. industries. Three forms of
relief — safeguards, antidumping, and countervailing duty remedies — have been¹
the subjects of recent legislation and are the subject of the report.

¹ U.S. law provides for other trade remedies as well. The Department of Labor administers
a trade adjustment assistance program for workers who can show that they have lost their
jobs because of imports and administers a separate program for workers who have lost their
(continued...)

Trade Remedies Overview
Safeguard (also referred to as escape clause and Section 201) relief provides for
temporary duties, quotas, or other restrictions on imports that are traded fairly but
cause or threaten to cause serious injury to a domestic industry. The relief is intended
to give the domestic industry the opportunity to adjust to the new competition and
remain competitive. The authority for the safeguard relief is found in sections 201-

204 of the Trade Act of 1974, as amended.²

Antidumping (AD) is relief to remedy the adverse price impact of imports sold
on the U.S. market at “less than fair value.” The relief is in the form of extra duties
on the dumped imports. The authority for AD relief is found in sections 731-739 of
the Tariff Act of 1930, as amended.³
Countervailing duty (CVD) is relief from the adverse price impact of imports
that receive foreign government subsidies. The relief is in the form of extra duties
on those imports. The authority for CVD relief is found in sections 701-709 of the
Tariff Act of 1930, as amended.⁴
Objectives of Trade Remedies
The three programs are designed to “level the playing field,” for adversely
affected industries in the face of unfair foreign competition or rapidly increasing fair
foreign competition. Specifically, AD and CVD relief eliminates the price
advantages that foreign competitors attain through unfair trade practices. The
rationale underlying safeguard relief is that while the benefits of trade liberalization
are distributed throughout a national economy, the adverse effects — loss of profits,
worker layoffs, firm and plant closures — are concentrated in specific, import-
sensitive industries. Safeguard relief is designed to give the injured industry the
opportunity to adjust, minimizing the destabilizing effects of trade.

¹ (...continued)
jobs because of imports coming into the United States as a result of the North American
Free Trade Agreement (NAFTA).The Department of Commerce operates a trade adjustment
assistance program for firms. Section 337 of the Tariff Act of 1930, as amended, gives
authority to the U.S. International Trade Commission to issue an exclusion order and/or a
cease-and-desist order against imports that it has determined are sold in the United States
through unlawful methods of competition or sale or the products of intellectual property
rights infringements. Section 406 of the Trade Act of 1974 provides for remedies against
imports from Communist countries that cause market disruption. It is a provision that is
similar to but more restrictive than the safeguard remedies. Sections 301-310 of the Trade
Act of 1974 as amended (often more simply called section 301) give authority to the United
States Trade Representative to act against foreign unfair trade practices. It is most used
against practices that violate U.S. rights under trade agreements or inhibit U.S. exports and
foreign investments.
² 19 U.S.C. 2251-2254.
³ 19 U.S.C. 1673-1673h.
⁴ 19 U.S.C. 1671-1671h.

In addition to these “economic” arguments, many trade specialists have argued
that trade remedies are means by which the United States has been able respond to
the concerns of the adversely affected sectors of the economy and achieve a domestic
political consensus on trade liberalization. Without these remedies, they argue, the
Congress would not have approved major agreements, such as the General
Agreement on Tariffs and Trade (GATT) and the WTO that became the foundation
for the post-war international trading system.⁵
Economics of Trade Remedies
Many economists assert, on the other hand, that while trade remedies may assist
injured industries they do so at a cost to the economy as a whole. They argue that,
whether imposed to mitigate the negative effects of unfair trade or fair trade, trade
remedies lead to higher costs to consumers. From this perspective, higher costs
reduce the real income and, therefore, the standard of living of American consumers.
Trade remedies can also adversely affect U.S. domestic industries, especially
those that rely on imports as inputs in production. In 1991, for example, major U.S.
computer manufacturers objected when a U.S. manufacturer of flat-panel screen
displays won an AD case against Japanese display manufacturers. Japanese-made
computer displays dominated the U.S. market. The U.S. computer manufacturers
argued that the higher production costs resulting from the AD duties made it
unprofitable for them to manufacture in the United States and forced them to move
production abroad.⁶
Eligibility Criteria and Procedures for AD and CVD⁷
U.S. trade remedy statutes and obligations under the World Trade Organization
Agreement require that an investigation be conducted of the relevant circumstances
surrounding the trade remedy petitions. For the investigation, the petitioning
industry must provide information and undertake certain measures. The government
must adhere to specific criteria and procedures. For AD cases and most CVD cases,
industries must go through a multi-stage investigation conducted by the Department
of Commerce (DOC) and the U.S. International Trade Commission. (ITC).
The process begins when an industry, a union or other representative group of
the industry files relevant petitions with the Office of Import Administration of the
DOC and with the ITC. The DOC may also initiate an investigation. Successful
completion of the process is contingent on four affirmative decisions. The ITC
makes a preliminary determination whether there is a “reasonable indication” that

⁵ See for example, Lawrence, Robert Z. and Robert E. Litan. Saving Free Trade: A
Pragmatic Approach. The Brookings Institution. Washington. 1986. p. 25.
⁶ Destler. I.M. American Trade Politics. Institute for International Economics and The
Twentieth Century Fund. Second Edition. June 1992. p. 172.
⁷ For the sake of brevity, this description provides the highlights of the complex process.
For more information see United States International Trade Commission. Summary of
Statutory Provisions related to Import Relief. USITC Publication 2944. January 1996.

imports in question are causing or threaten to cause “material” injury to the industry.⁸
An affirmative decision allows the investigation to continue. A negative decision
terminates the investigation.
The DOC then must make a preliminary determination whether dumping or
subsidies have taken place and, if so, make a preliminary calculation of what the
dumping or subsidy margin would be. Regardless of whether the DOC’s
determination is positive or negative, the DOC continues the investigation and makes
a final determination of dumping or subsidies and a final calculation of duty margins.
The investigation is terminated if DOC makes a negative final determination. If the
DOC makes an affirmative final determination, then the ITC continues its
investigation and renders a final determination of material injury or threat thereof. A
negative ITC determination terminates the investigation. If the two final
determinations are affirmative, then extra duties are placed on imports to be paid by
the importer. The determinations are subject to judicial review.
Both the DOC and the ITC must take into account a number of criteria in
making their respective determinations. In CVD cases, the DOC must consider
evidence of direct subsidies or upstream subsidies (subsidies provided to inputs the
benefits of which are passed on to the final producer) and, if found, what would be
the net countervailable subsidy. In AD cases the DOC must first determine the
“normal value” of the import (based on the price in the exporting country’s home
market, on the price of the export of the product to a third country market, or on a
“constructed” price, depending on the availability of data). The DOC must compare
the “normal value” with the actual price of the import in question to determine
whether dumping is taking place and, if so, what the dumping margin is.In either
procedure, the ITC must make two determinations: (1) Is the domestic industry being
materially injured or facing a threat of material injury? (2) Are the imports in
question a cause of the material injury. U.S. law establishes deadlines under which
the respective agencies must make their determinations.
Eligibility Criteria and Procedures for Safeguard Relief
The process for safeguard relief begins when ITC receives a petition from
representatives of an industry (firms, association, unions, etc) alleging that imports
of a like product as produced by the industry have surged at such a rate as to be a
“substantial cause” of “serious injury” or the threat thereof. The ITC may also
initiate an investigation on its own accord or as a result of a request from the
President, the United States Trade Representative (USTR), the Senate Finance
Committee or the House Ways and Means Committee.

⁸ In CVD cases the injury test and, therefore, ITC participation, is required only if the
country against which the U.S. industry is bringing a petition is a member of the WTO
(which includes most trading partners), or is a nonmember country, which is entitled to
MFN treatment under an agreement or has assumed equivalent obligations. Otherwise, only
a final determination by the DOC of the existence of a subsidy is required for the assessment
of the countervailing duty.

In the meantime, U.S. law encourages the domestic industry to submit a plan
stipulating how it would use the relief, if granted, to make adjustments to become
more competitive. In conducting its investigation, the ITC must consider the state
of the domestic industry including a number of factors listed in the statute. If the ITC
determines in the affirmative, it recommends appropriate remedial measures which
must be an increase in tariffs on that product, a tariff-rate quota, a quantitative
restriction, trade adjustment assistance, or a combination thereof.
The ITC submits its recommendation to the President who must decide whether
to take the recommended action, an alternative action, or no action at all. In making
his decision, the President must consider a number of factors, including the industry’s
adjustment plan if submitted, the probable effectiveness of remedial action to
promote adjustment, the national economic interest and the national security interest.
U.S. law requires the ITC to make its respective determinations within specified
deadlines.
The President must report to Congress on the action he will take. If he decides
to take action other than that recommended by the ITC, or to take no action, the
Congress may direct him to implement the remedy recommended by the ITC by
enacting a joint resolution of disapproval of his proposed action.
Comparison of Injury Thresholds and Procedures
Procedures and injury thresholds applied in safeguard determinations are higher
and stricter than in the those applied in AD and CVD cases. The former require that
the imports be a “substantial” cause or threat of “serious injury.” “Substantial cause”
is defined in law as “a cause which is important and not less than any other cause.”
Serious injury is one that is a significant, overall impairment to the position of the
domestic industry. AD and CVD statutes require the determination of “material
injury” defined as injury which is “not inconsequential, immaterial, or unimportant.”
And AD and CVD statutes require that the injury occur “by reason of” the dumped
or subsidized imports, a less precise and lower causation threshold than under the
safeguard statute.⁹
In addition to stricter causation and injury standards, safeguard relief requires
that final decisions be made at a higher policy level — the President — than in the
AD and CVD. In addition, the President has wide discretion as to which safeguard
relief to implement, including taking no action. On the other hand, no discretion
exists in CVD and AD cases — relief as determined by the DOC is implemented by
a DOC antidumping or countervailing duty order without Presidential involvement.
The higher injury thresholds and more demanding procedures for safeguard
relief reflect the fact the procedures involve fairly traded imports from all sources.
In addition, the impact on overall U.S. national interests would likely be greater than
in the case of AD and CVD determinations.

⁹ Bhala, Raj and Kevin Kennedy. World Trade Law. Lexis Law Publishing.
Charlottesville, VA. 1998. p. 882-883.

The stricter standards and procedures are probably a significant reason why U.S.
industries have used and received relief much more often from AD and CVD
programs than safeguard. Between 1984 and 2002, 397 AD cases and 120 CVD
cases resulted in relief.¹⁰ Whereas during the same period, seven safeguard cases
resulted in relief.¹¹ The most recent case was President Bush’s imposition of higher
tariffs on the import of certain steel products.¹² The higher standards for section 201
have also led to criticisms that U.S. safeguard relief does not meet the needs of U.S.
import-sensitive industries and, therefore, must be reformed.
Changes in Trade Remedy Laws
The Congress has amended U.S. trade remedy statutes over the years largely in
response to industry concerns that the remedy procedures were not adequately
meeting their needs. In general, Congress has amended criteria for determining
injury which made it more likely that determinations would be made in favor of the
petitioning industry and has shortened the timeframes for agencies to make
determinations.¹³ The Congress has comprehensively amended trade remedy laws
most recently with legislation to implement the Uruguay Round agreements under
the General Agreement on Tariffs and Trade.¹⁴ Specifically, the amendments brought
U.S. laws into conformity with the multilateral WTO agreements on antidumping,
subsidies/countervailing, and safeguard procedures.
U.S. International Obligations
AD, CVD and safeguard remedies reflect and are subject to U.S. international
rules established under the World Trade Organization (WTO) and under the North
American Free Trade Agreement (NAFTA). The United States and other WTO
members must adhere to the Uruguay Round Agreement on Subsidies and
Countervailing Measures, which delineates definitions, procedures, and other criteria
for member CVD programs.¹⁵ For example, the Subsidies Agreement requires that
a determination of material injury (or threat thereof) to a domestic industry must be

¹⁰ Figures derived from data compiled by U.S. Department of Commerce. International
Trade Administration.
¹¹ Mastel, Greg. Section 201: Revitalizing the Forgotten Trade Law. Center for National
Policy. Washington. November 1999. p. 7 and Office of the United States Trade
Representative. 2003 Trade Policy Agenda and 2002 Annual Report. 2003. p. 245.
¹² For more details on the steel case see CRS Report RL31842, Steel: Section 201
Safeguard Action and International Negotiations.
¹³ Destler, I.M. American Trade Politics. Institute for International Economics.
Washington. p. 165-169.
¹⁴ The Uruguay Round Agreements Act of 1994 (P.L. 103-465).
¹⁵ The Uruguay Round Agreement on Subsidies and Countervailing Measures , which went
into effect on January 1, 1995, replaced the Subsidies Code under the General Agreement
on Tariffs and Trade (GATT) which was negotiated during the Tokyo Round negotiations
and went into effect in 1979.

made before a subsidy is countervailable (when the subsidized imports are from
another WTO member-country). The agreement also prohibits certain subsidies and
allows others and defines subsidies that are countervailable. In addition, the
agreement provides for adjudication of CVD disputes between WTO members.
Similarly, the United States and other WTO members must adhere to the Uruguay
Round Antidumping Agreement which establishes procedures for implementing
national antidumping programs, including determinations of dumping, and material
injury or the threat thereof.¹⁶
Article XIX of the General Agreement on Tariffs and Trade (1994) lays out the
basic conditions under which a WTO member can apply safeguards remedies. The
Uruguay Round negotiations resulted in an expansion of Article XIX by stipulating,
among other things, sunset requirements for member safeguard actions already in
effect, time limits on new safeguard actions, and criteria for determining “serious
injury.” Before the enactment of the Uruguay Round Agreements, member countries
that were the targets of safeguard actions could seek compensation from the country
taking the action. Under the Safeguards Agreement such compensation is delayed
for three years.
The United States also has obligations regarding trade remedies vis-a-vis
Canada and Mexico under the NAFTA. Chapter Eight of the NAFTA provides,
among other things, that escape clause measures against NAFTA members generally
last no more than three years. Chapter 19 allows for CVD and AD final
determinations involving another member’s goods to be reviewed by a binational
panel instead of in a domestic court.
A number of trading partners, including Japan, Korea, Chile, and Brazil, have
criticized U.S. use of its trade remedy laws, especially AD, as not fully in line with
WTO rules. They argued that a review of member-country trade remedy practices and
policies should be on the agenda of the forthcoming WTO round of negotiations.
The United States resisted this demand and many Members of Congress opposed it.
However, in November 2001, at the WTO Ministerial Meeting in Doha, Qatar, the

142 WTO members agreed to include trade remedy laws on the agenda.¹⁷

Trade Remedy Reform Proposals in the 108^th
Congress
A number of bills have been introduced in the 108^th Congress to the U.S.
safeguard (section 201) and the antidumping and countervailing duty laws. To date,
no further congressional action has been taken on them.

¹⁶ The Uruguay Round Antidumping Agreement (agreement on Implementation of Article
VI of the General Agreement on Tariffs and Trade 1994 , which went into effect on January
1, 1995, replaced the GATT Antidumping Code, which was negotiated during the Tokyo
Round negotiations and went into effect in 1979.
¹⁷ For more information, see CRS Report RL31206, The WTO Doha Ministerial: Results
and Agenda for a New Round of Negotiations. p. 9-12.

Safeguard Reform Proposals
H.R. 2365 (English), the Trade Reform Act of 2003, would make changes in a
number of U.S. trade remedy laws, including the section 201 safeguard law. Among
other things, H.R. 2365 revises to the causal linkage that must be established between
a surge in imports and serious injury. U.S. import-sensitive industries and other
critics of trade remedy laws have argued that the “significant cause” linkage to injury,
that domestic industries must establish, is too difficult and diminishes its utility.
H.R. 2365 would lower the causal threshold to require that import surges be only “a
cause” of injury to U.S. domestic industry. Supporters have asserted the change
would bring the U.S. the causation threshold in line with that required by the WTO,
although such a conclusion would likely be subject to legal interpretation of WTO
rules. In practical terms, the new threshold would mean that an investigation would
have to find only that imports have contributed to injury, not that they are “a cause
which is important and not less that any other cause.”
In addition, under current U.S. safeguard statutes, the ITC must consider a
number of factors when determining whether an industry faces serious injury or the
threat of serious injury. Regarding serous injury, the ITC must examine whether
there has been a significant idling of productive facilities in the industry, there has
been a significant number of firms to operate at a reasonable profit, and there has
been a significant level of unemployment or underemployment in the industry. H.R.
2365 would require additional factors be considered, including changes in the level
of sales and production, changes in productivity, changes in capacity utilization,
changes in profits and losses, and changes in employment levels.
Furthermore, under current law, the ITC must consider a number of factors in
determining whether a surge in imports has been the cause of serious injury,
including whether imports have increased either absolutely or relative to domestic
production and whether the share of the domestic market supplied by imports has
increased. H.R. 2635 would require the ITC to consider, in addition, the rate and
timing of the increase in imports, especially if the increase has been over a short
period of time.
Current law permits provisional relief be provided under “critical
circumstances,” that is when failure to take expedited action would do irreparable
injury to an industry. H.R. 2365 would require the ITC to make a determination
whether critical circumstances exist within 45 days of receiving the petition.
CVD and AD Reform Proposals
Several bills have been introduced in the 108^th Congress that would change U.S.
antidumping or countervailing duty laws. S. 136 (Lincoln)/H.R. 2092 (Berry) would
authorize an expedited antidumping investigation to take place if imports of a
product that is like a product already subject to an AD order increase “materially”
from another supplier not subject to the AD order. In the bills, increasing materially
is defined as increased by at least 15% over a period of time that is comparable to the
period of time that lapsed before the initiation of the original AD investigation.

S. 219 (Craig) would amend U.S. antidumping law that would require the U.S.
Department of Commerce, when calculating the “fair market value” of an import, to
include any countervailing duties that are applied to the import in the cost of
production. The bill’s sponsors intend the legislation to remedy what they allege is
Canada’s practice of not including the countervailing duties which are applied to U.S.
imports of Canadian softwood lumber. They claim that omitting the duties from the
calculation lowers the fair market value of the product and therefore unfairly lowers
the antidumping duty that would be applied if dumping were determined to be taking
place.¹⁸ H.R. 491 (Pickering) and Section 109 of H.R. 2365 (English) would impose
the same requirement.
S. 1155 (Grassley)/H.R. 1073(Sensenbrenner) would repeal the Antidumping
Act of 1916 as would S. 1080 (Hatch). The Antidumping Act of 1916, a seldom-
used statute, allows victims of dumped imports to sue for treble damages and
provides for criminal penalties if the intent of the dumping was to harm a U.S.
industry or to restrain or monopolize trade. The European Union and Japan filed a
complaint against the United States claiming that the law violates Article VI of the
GATT 1994 and the Antidumping Agreement. A WTO dispute settlement panel
rules against the United States in a April 2000 decision and the WTO Appellate Body
upheld the decision. The WTO ruled that the U.S. law had to be repealed. Although
the United States had missed several deadlines on carrying out the decision, the EU
and Japan agreed to delay any sanctioned retaliatory action. The three bills were
introduced to put the United States in compliance with the decision. S. 1155 and
H.R. 1073 would not only repeal the law but would also force the dismal of any cases
pending under the law. S. 1080 would repeal the law but would not affect pending
cases.
S. 492 (Craig) would direct the Secretary of Commerce to impose 80% ad
valorem countervailing duties on dynamic random access memory (DRAM)
semiconductors produced by the South Korean firm Hynix Semiconductor. Its
sponsor claims that the South Korea government has subsidized the company giving
its products an unfair competitive advantage in the U.S. market.¹⁹
The Byrd Amendment
On October 28, 2000, President Clinton signed the Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies Appropriations
Act 2001 (P.L. 106-387). Section 1003 of the Act contained a provision, the
“Continued Dumping and Subsidy Offset Act (CDSOA) of 2000,” sometimes called
the Byrd Amendment after its chief sponsor, Senator Robert Byrd.
The provision amended U.S. antidumping and countervailing duty laws by
requiring that antidumping and countervailing duties be re-distributed to the domestic
industries that have been injured by the imports that are subject to the AD and CVD

¹⁸ Congressional Record. January 28, 2003. p. S1669-1671.
¹⁹ Congressional Record. March 3, 2003. S.2992-2993.

orders. The provision requires the Customs Bureau to deposit the duties into a
special account rather than into the general treasury. It then must distribute the funds
to eligible firms, farmers, or other producers that were petitioners in the original AD
or CVD cases to offset certain expenses that they incurred as a result of the dumped
or subsidized imports. The provision was originally contained in S. 61. (DeWine, et.
al), and other bills. The Customs Bureau reported that in 2001 it had distributed
around $206 million in offsets to claimants.²⁰
The “Byrd Amendment” is controversial because it was inserted into the
legislation during conference and had not received committee consideration in either
house. In addition, the amendment has raised concerns about whether it conforms
to WTO rules under the relevant WTO agreements. Eleven members of the WTO
— the European Union, Australia, Brazil, Canada, Chile, India, Indonesia, Japan,
Mexico, South Korea, and Thailand, filed a complaint with the WTO charging that
the amendment violates WTO obligations. On September 2, 2002, the WTO dispute
settlement panel announced its determination that the Byrd Amendment violates
U.S. obligations under the WTO Antidumping Agreement and the Agreement on
Subsidies and Countervailing Duty Measures. The panel furthermore recommended
that the law be repealed. The WTO Appellate Body reaffirmed the decision in a
January 16, 2003 decision. However, the law has proved very popular in the
Congress. In February 4, 2003 letter to President Bush, 70 Senators expressed
support for the law and against the WTO ruling.
In his proposed FY2004 budget, President Bush recommended that the CSDOA
be repealed. S. 1299 (Snowe) was introduced on June 19, 2003, and would repeal
the CSDOA to put the United States in compliance with the WTO rulings but would
also require that revenues collected under AD and CVD orders be directed to a new
trade adjustment program for communities adversely affected by trade.
TPA Debate
Treatment of trade remedy laws during U.S. trade agreement negotiations^th
became a highly contentious subject during the 107 Congress’s debate on extending
trade promotion authority (TPA) to the President. The Senate -passed version of the
bill (H.R. 3009) contained the so-called Dayton-Craig amendment. This amendment
would have required that fast-track procedures contained in the TPA would not apply
to any provision of trade agreement implementing legislation that would change any
U.S. trade remedy law. The amendment grew out of concern by a number of
Members that the inclusion of trade remedies on the agenda of the Doha
Development Agenda would result in weakening of U.S. laws. The House version
of the bill did not contain this provision. The provision was not contained in the
conference report that as enacted into law (P.L. 107-210), although it does contain
a principal negotiating objective to preserve the ability of the United States to
vigorously enforce its trade remedy laws and to avoid agreements that could weaken
those laws.

²⁰ [http://www.customs.gov].

Potential Implications of Trade Remedy Reform and
Alternative Options
At this time, it is difficult to determined what impact the “Byrd Amendment”
will have although it has already proved controversial. Trade remedy legislation
generally ignites a debate over the direction of U.S. trade policy. Trade remedy
legislation is largely supported by those industries, such as steel, that are most
sensitive to foreign competition. The legislation is often opposed by those industries
and groups that are users of imports as inputs or consumers of final products.
Increased trade relief would likely result in higher prices to these groups.
Changes in trade remedy laws could have an impact on U.S. relations with its
major trade partners, who might challenge the legality of some changes in U.S. trade
remedy laws under the WTO. Along with their challenge of the “Byrd Amendment,”
the European Union and Japan are challenging other U.S. antidumping laws and
practices in the WTO. In 1999, the two trading partners filed disputes regarding the
U.S. Antidumping Act of 1916, a law which allows U.S. firms to sue foreign
companies in U.S. court over dumping of imports and to collect damages if dumping
is found. They claimed it violates the WTO Antidumping Agreement. The WTO
upheld their claim.
With the United States in mind, the European Union and Japan are advocating
a review of the antidumping practices of WTO members as part of the agenda for a
new round of WTO negotiations. The United States opposes this position.
Amending U.S. trade remedy statutes is one option available to Congress to
cushion the impact of import competition on American industries. Some trade
specialists have suggested, for example, that the federally funded trade adjustment
assistance (TAA) programs could be reformed and made more effective. TAA
programs are available for workers (through the Department of Labor) and for firms
(through the Department of Commerce). They provide funds for training and other
adjustment measures to those who can demonstrate an adverse impact from imports.
Many economists prefer this option over trade restrictive remedies because its directs
assistance to those most affected and does so without distorting prices. But TAA
programs as currently designed and administered have been criticized by labor
advocacy groups as ineffective in responding to workers’ needs in a globalizing
economy.
The Congress might also require the President to halt or quantitatively restrict
imports. Such a measure would resolve the immediate problem of adverse effects
on the import-sensitive workers and firms and have been proposed and in some cases
enacted in the past. But they would very likely be challenged by other WTO
members as violating WTO rules. They would also reduce competitive pressures on
a U.S. industry(ies) which might encourage inefficiency, higher costs and a decline
in the general economic welfare.