Congress Passes Bill to Repeal the Byrd Amendment and Step 2 Cotton Export Subsidy Program

The House originally passed the conference version of S. 1932 on December 19, 2005. The Senate amended the conference version of S. 1932 and passed the amended version on December 21, 2005. As the Senate amended the conference version of S. 1932, the House was required to reconsider the measure.

(See ITT's Online Archives or 12/21/05 and 12/29/05 news, 05122199 1 and 05122999 1, for previous BP summaries.)

Byrd Amendment to be Repealed, But Would Effectively Continue Until October 1, 2007

S. 1932, as passed by Congress, contains a provision that would repeal the Continued Dumping and Subsidy Offset Act (CDSOA), commonly known as the "Byrd Amendment."

Specifically, Section 7601 of S. 1932 would repeal Section 754 of the Tariff Act of 1930 (19 USC 1675c), and the item relating to section 754 in the table of contents for Title VII of that Act.

Section 7601 further states that all duties on entries of goods made and filed before October 1, 2007, that would, but for the repeal, be distributed under section 754 of the Tariff Act of 1930, shall be distributed as if section 754 had not been repealed.

(The Byrd Amendment requires that the revenues from antidumping (AD) and countervailing (CV) duties assessed on or after October 1, 2000 be distributed on an annual basis to the affected domestic producers (i.e. currently operating producers (including worker representatives) that were either petitioners for the AD/CV duty order in question or interested parties in support of the petition) for specified qualifying expenditures (e.g. manufacturing facilities, research and development, personnel training). See ITT's Online Archives or 10/19/00 news, 00101837, for BP summary.)

EU, Canada, Japan, and Mexico have retaliated against U.S. exports in Byrd Amendment dispute. On August 31, 2004, the World Trade Organization (WTO) authorized numerous countries to retaliate against the U.S. for its failure to bring the CDSOA into conformity with WTO rules by December 27, 2003.

To date, the European Union (EU), Canada, Japan, and Mexico have imposed retaliatory sanctions on selected U.S. products in light of the U.S.' failure to repeal the Byrd Amendment.

S. 1932 Would Also Eliminate Step 2 Cotton Export Subsidy Program

The State Department's Washington File reports that S. 1932, as passed by Congress, would eliminate by August 2006 the cotton export subsidy program known as Step 2. Step 2 is part of a larger farm program that pays domestic users and exporters to buy U.S. grown cotton whenever U.S. cotton prices exceed world market prices. (The provision eliminating the Step 2 cotton export subsidy program appears to be Section 1103.)

(In March 2005, the WTO ruled in a case brought by Brazil and cotton-producing countries in West Africa that the program violates the WTO agreement on subsidies.

In June 2005, the U.S. Department of Agriculture complied with the part of the WTO ruling that did not need congressional approval (i.e., legislation). See ITT's Online Archives or 07/11/05 news, 05071120, for BP summary.)

S. 1932 available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:s1932eas.txt.pdf.

State Department Washington File article (dated 02/01/06) available at http://usinfo.state.gov/xarchives/display.html?p=washfile-english&y=2006&m=February&x=20060201195110ebyessedo0.2258417&t=livefeeds/wf-latest.html.

House Ways and Means press release (dated 02/01/06) available at

http://waysandmeans.house.gov/news.asp?formmode=release&id=372.

Shippers NewsWire (dated 02/02/06, www.americanshipper.com.)

BP Note

Shippers NewsWire reports that the European Commission's (EC's) delegation in Washington, DC applauded the U.S. congressional repeal of the Byrd Amendment, but was disappointed that the law would not be phased out for another two years.