i -ional Agricultural Trade and Policy Center
PRODUCER AND PROCESSOR RENTS UNDER THE BYRD
Andrew Schmitz, Troy Schmitz, and James Seale
PBTC 04-03 June 2004
POLICY BRIEF SERIES
Institute of Food and Agricultural Sciences
INTERNATIONAL AGRICULTURAL TRADE AND POLICY CENTER
The International Agricultural Trade and Policy Center (IATPC) was established in 1990
in the Food & Resource Economics Department (FRED) of the Institute of Food and
Agricultural Sciences (IFAS) at the University of Florida. Its mission is to provide
information, education, and research directed to immediate and long-term enhancement
and sustainability of international trade and natural resource use. Its scope includes not
only trade and related policy issues, but also agricultural, rural, resource, environmental,
food, state, national and international policies, regulations, and issues that influence trade
The Center's objectives are to:
Support initiatives that enable a better understanding of U.S. and international
trade policy issues impacting the competitiveness of Florida agriculture and all
specialty crops and livestock nationwide;
Serve as a nationwide resource base for research on international agricultural
trade policy issues on all specialty crops and livestock;
Disseminate agricultural trade related research results and publications;
Interact with researchers, business and industry groups, state and federal agencies,
and policymakers to examine and discuss agricultural trade policy questions.
Programs in the IATPC have been organized around five key program areas.
Risk Management and Capital Markets
Regulatory Policy and Competitiveness
Demand Systems and International Trade
State and Local Government Policy and Agricultural Competitiveness.
There are 10 faculty from the Food & Resource Economics Department who conduct
research in these program areas for the IATPC. Each of these program areas has a set of
projects that have been undertaken to address these critical areas of need. Faculty have
acquired additional grant funds of more than one million dollars over the last three years
to augment these programs.
Producer and Processor Rents Under the Byrd Amendment
Andrew Schmitz, Troy Schmitz, and James Seale*
The Continued Dumping and Subsidy Offset Act (CDSOA) of 2000 allows
producers and processors who successfully petition the U.S. government to impose
antidumping (AD) or countervailing (CV) tariffs on competing imports to keep the
proceeds of those tariffs. Also known as the Byrd Amendment, it has already provided
benefits to a variety of producers and processors in the United States, including more
than $7 million1 to Louisiana crayfish producers and processors and $65 million to U.S.
candle makers. These benefits originated from AD duties imposed on U.S. imports of
Chinese products (King 2002). One U.S. candle company, Candle-Lite, received $38
million in fiscal year 2002, while a ball-bearings company, Torrington, received $37
million in 2002 (U.S. Customs Service, 2003). The Byrd Amendment also has financial
implications for commodities, including citrus, steel, rubber, pencils, pineapple, and pasta
(King, 2002). In fiscal year 2002 alone, the U.S. government wrote checks totaling
nearly $320 million to companies that could prove they were involved in any AD or CV
duty case that eventually led to imposed tariffs (U.S. Department of Treasury, 2002).
The Byrd Amendment effectively allows U.S. producers and processors to collect
the resulting import-tariff revenue that would otherwise accrue to the U.S. government.
Furthermore, even though CDSOA was passed in 2000, there is a grandfather clause that
allows U.S. producer and processor groups to collect tariff revenues from certain AD and
* Andrew Schmitz, Professor, University of Florida; Troy Schmitz, Associate Professor, Arizona State
University; and James Seale, Professor, University of Florida.
1 All dollar amounts are given in U.S. dollars.
CV duties that were implemented prior to the CDSOA. The CDSOA has serious present
and future welfare implications in terms of transfers of Ricardian rent among consumers,
producers, and taxpayers. It also provides an even greater incentive for a proliferation of
future AD lawsuits.
II. The Byrd Amendment
The Continued Dumping and Subsidy Offset Act of 2000, also called the CDSOA
or Byrd Amendment, was enacted on October 28, 2000, as Title X of the 2001
Agriculture, Rural Development, Food and Drug Appropriations Act (Act), Public Law
106-387.2 The CDSOA modified Title VII of the Tariff Act of 1930 by instructing U.S.
Customs to put all collected AD and CV tariffs into special accounts, one for each case,
and to pay out these collected revenues directly to companies that successfully petition
the U.S. Government for these monies (U.S. Department of the Treasury, 2002).
Previously, the collected tariff revenues accrued to the general U.S. Treasury. In order
for a company to be eligible for payouts, it must prove that it successfully litigated an
AD- or CV-duty case against a specific industry in a specific country. If a company is
eligible, it shares all past and future collected AD and CV duties with the other original
litigating companies. Companies that did not participate in the original AD- or CV-duty
case do not receive any of the collected funds (eBearing.com, 2000).
The CDSOA went into effect in 2001 and was controversial from its inception.
President Clinton signed the Act but asked Congress to revisit and repeal the CDSOA
before adjournment. Congress, however, neither revisited nor repealed the Act. In
industries that receive protection from imports under U.S. AD- and/or CV-duty laws,
2 Senator DeWine (Ohio) was the original author of the CDSOA, but it was Senator Byrd (West Virginia)
who added the CDSOA to the Agriculture Spending Bill of 2000.
ineligible companies for CDSOA payouts complain that eligible companies receive an
unfair advantage derived from these subsidies. Small companies complain that their
industry is harmed by unfair imports, but they do not have the money to hire expensive
lawyers to litigate AD and/or CV cases. The budget report of the U.S. Treasury
Department states that the CDSOA allows 'double dipping' because eligible companies
not only receive protection from imports through increased import prices due to AD
and/or CV tariffs, but now they also receive corporate subsidies from the collected AD
and/or CV revenues (Thomas, 2003).
U.S. trading partners have also reacted vigorously against the CDSOA. Eleven
World Trade Organization (WTO) member countries asked the WTO to form a panel to
investigate the CDSOA with respect to U.S. obligations under the WTO Antidumping
Agreement and the WTO Subsidies Agreement. The WTO formed a panel on September
10, 2001. On September 16, 2002, that panel ruled against the United States on the
CDSOA payments and recommended that the CDSOA be repealed (U.S. Department of
State, 2003). On October 18, 2002, the United States appealed the ruling to the WTO
Appellate Body. On January 16, 2003, the Appellate Body confirmed that the CDSOA
was incompatible with WTO rules (Lamy, 2003).
President Bush's budget for fiscal year 2004 also calls for a repeal of the CDSOA.
In spite of this repeal and the ruling of the WTO, as of February 4, 2003, 67 U.S. senators
had signed a letter to the U.S. President requesting that he resist the WTO action and
maintain the CDSOA. With such strong support in the U.S. Senate for the CDSOA, it is
still not clear that the law will be repealed.
In fiscal year 2001, which was the first year of U.S. government CDSOA payouts,
900 claimants received $230 million dollars (Table 1). For the second year of payouts in
2002, more than 1,200 claimants received approximately $330 million. Although most
of the payouts went to non-food companies, food companies received more than $22
million in 2001 and nearly $20 million in 2002. In 2001, there were 9 food-industry AD
cases and 4 food-industry CV cases for which companies received tariff revenues under
the CDSOA; whereas in 2002, there were 12 food-industry AD cases and 4 food-industry CV
cases for which companies received payouts.
Table 1. Continued Dumping and Subsidy OffsetAct, fiscal years 2001 and 2002
disbursements for food products.
Case Number Case Name
A-570-848 Crawfish tail meat/China
A-533-813 Preserved mushrooms/India
A-351-605 Frozen concentrated orange juice/Brazil
A-570-831 Fresh garlic/China
A-549-813 Canned pineapple/Thailand
A-560-802 Preserved mushrooms/Indonesia
A-337-803 Fresh Atlantic salmon/Chile
A-403-801 Fresh and chilled Atlantic salmon/Norway
C-403-802 Fresh and chilled Atlantic salmon/Norway
A-570-851 Preserved mushrooms/China
C-408-046 Sugar/European Union
A-570-855 Non-frozen apple juice concentrate/China
A-301-602 Fresh cut flowers/Columbia
Grand Total for all Products
i, i.Si Year
Source: U.S. Customs Servic i,_'c~ll).
In some cases, the same company that received payouts under an AD-duty case
also received payouts under a CV-duty case. As an example, eligible U.S. pasta firms
shared $17.5 million and $4.7 million under AD case #A-475-818 in 2001 and 2002,
respectively. They also shared $2.5 million under CV-duty case #C-475-810 in both
2001 and 2002. In another AD case (#A-540-843), Maui Pineapple received the entire
portion of the $1.8 million in 2001 and $0.5 million in 2002 that originated from duties
collected on canned pineapple imports from Thailand.
In fiscal year 2002, crayfish firms received the largest food-industry CDSOA
payouts (Table 2). Of the 27 eligible firms, Atchafalaya Crawfish Processors received
payouts of $800,000. Four companies received payouts of over $500,000, and another 17
firms received over $100,000. On average, the 27 crayfish firms received $300,000. In
total, CDSOA payouts (Column 3) amounted to 21 percent of the total production and
operating costs (Column 4) of these firms. Also, in fiscal year 2002, three citrus
processors received $1.18 million in CDSOA payouts. Citrus World received 67 percent
of the payouts for a total of $800,000 (Table 3).
Table 2. Continued Dumping and Subsidy OffsetAct, Disbursements for Crawfish Tail Meat
from China, Fiscal Year 2002
Claimant 1,000 US$
Atchafalaya Crawfish Processors 3,758
Seafood International Distributors 3,347
Catahoula Crawfish 2,937
Prairie Cajun Wholesale Seafood Dist. 2,449
Bayou Land Seafood 1,990
Crawfish Enterprises, Inc. (CPA)a 1,892
C.J.'s Seafood & Purged Crawfish 1,773
Riceland Crawfish 1,517
Cajun Seafood Distributors 1,511
Acadiana Fishermen's Co-Op 1,508
Bonanza Crawfish Farm 1,482
Randol's Seafood & Restaurant (CPA)a 1,445
L.T. West 1,126
Sylvester's Processors 1,036
Carl's Seafood 1,037
Choplin Seafood 999
Blanchard Seafood, Inc (CPA)a 990
Louisiana Seafood 947
Harvey's Seafood 783
Louisiana Premium Seafoods 771
Bellard's Poultry & Crawfish 502
Phillips Seafood 450
A&S Crawfish 330
Becnel's Meat & Seafood 324
Teche Valley Seafood 225
Arnaudville Seaford 171
Lawtell Crawfish Processors 80
Total for Case #A-570-848 35,380
a CPA indicates member of the Crawfish Processors Alliance.
Source: U. S. Customs Service. (2003).
Table 3. Continued Dumping and Subsidy OffsetAct, Disbursements for Frozen Concentrated
Orange Juice from Brazil, Fiscal Year 2002.
Claim Filed Amount Paid Allocation
Claimant 1,000 US$ 1,000 US$ Percentage
Citrus World 277,335 784 66.7
A. Duda & Sons dba Citrus Belle 75,817 214 18.2
LD Citrus, Inc. 62,553 177 15.0
Total for Case #A-351-605 414,705 1,175 100.00
Source: U.S. Customs Service. (2003).
Under the Byrd Amendment, producers of import competing commodities gain
from an antidumping duty in two ways. First, internal prices rise from the tariff. Second,
they obtain the tariff revenue, which normally would go to the government. This
provides extra money to lobby governments for protection. Interestingly, when the
processor collects the duty, not only is the processor better off than under free trade, but
so are the domestic competing producers with whom the processor deals. In the absence
of the Byrd Amendment, processors usually lobby for free trade.
eBearing.com. (2000). "Continued Dumping and Subsidy Offset Act of 2000 (CDSOA):
The Byrd Amendment." http://www.ebearing.com/legislation/2000act.htm.
King, Jr., Neil. (2002). "Trade Imbalance: New Dumping Law Lines the Pockets of
Manufacturers." The Wall Street Journal. Dow Jones & Company.
(December 5: 1).
Lamy, Pascal. (2003). "WTO Appellate Body Condemns the 'Byrd Amendment' The US
Must Now Repeal It." Delegation of the European Commission to the United
Thomas, Bob. (2003). "Bush Budget Slashes Byrd Amendment, Alters Byrd Bill." The
Intelligence TTheeling News Register. http://www.news-
register.net/news/story/025202003_new03.asp (February 5).
U.S. Customs Services. (U.S. Department of Homeland Security) (2003). "CDSOA
FY2001 and FY2002 Disbursements, Final."
U.S. Department of State, Office of International Information Programs. (2003). "USTR
Seeks to Comply with WTO Ruling on Byrd Amendment: Underlying antidumping laws
not affected, USTR emphasizes." http://usinfo.state.gov/topical/econ/wto/03011601.htm
U.S. Department of Treasury, Customs Service. (2002). "Distribution of Continued
Dumping and Subsidy Offset to Affected Domestic Procedures; Notice." Federal
Registry 67, No. 128 (Wednesday, July 3). http://frwebgate.access.gpo.gov/cgi-