Byrd's Bad Idea Is Back

Wall Street Journal
Monday, August 11, 2008

When Members of Congress believe they have a good idea in the national interest, they debate it in the open and demand a vote. When they know they have a bad idea for a chosen few, they work in secret. So it is with the subterranean efforts to revive the "Byrd Amendment," a nasty trade law that offers U.S. companies a double reward for seeking tariff help from Washington.

Senator Robert Byrd (D., W.Va.) and a few bipartisan pals snuck this protectionist gift into law in 2000 by attaching it to a spending bill. Congress repealed it in 2005, but not before the provision did great harm to America's trading reputation and U.S. exporters after being declared illegal by the World Trade Organization. Now with a new Congress, and in an election year, Mr. Byrd and Ohio Democrat Sherrod Brown are once again poised to sneak the provision into law.

A draft "Dear Colleague" letter of anonymous (but probably Byrd-Brown) provenance has been circulating in the Senate referring to "strong support for legislation to reinstate" the 2000 law, whose repeal "was a terrible mistake." Meanwhile, Sen. Byrd has put customs and duties language in a pending appropriations bill -- a red flag to those who know how such "placeholder" language could be expanded at the last minute to revive his 2000 act.

The goal of the Byrd Amendment -- aka the Continued Dumping and Subsidy Offset Act -- was to provide extra incentive for businesses to file trade complaints by giving them a share of proceeds. Instead of siccing the U.S. government on foreign companies to collect punitive duties for the Treasury, it gave the tariff money directly to the companies that file complaints.

As of 2007, some $1.9 billion had been handed out to thousands of supplicants, from bee keepers to steel manufacturers. The lion's share has gone to big business. A GAO report found that between 2001 and 2004, more than half of Byrd money went to five companies, and 20% went to just one, an Ohio bearings maker named Timken. In the 2007 rankings of 1,982 payees, Idaho's Micron semiconductor company won the jackpot, with $37,938,402.

Back in 2005, the GAO also reported that nobody was even checking to determine the accuracy of losses claimed under Byrd. In each sector -- raspberries, catfish, pencils, furniture, etc. -- the more you claimed, the bigger your share of the pot. The American Italian Pasta Company of Kansas City, Mo., which alleged more than $8 billion in losses, raked in millions as a result.

The losers in all this were the rest of us. That includes the American companies, as some told the GAO, which suffered or collapsed because they couldn't compete with domestic rivals flush with Byrd cash. Also incalculable are losses to American exporters. When the WTO ruled the Byrd Amendment illegal, it authorized 11 of our trading partners, including those in the EU and Japan, to impose retaliatory tariffs on American products. Many duly slammed us. A revived Byrd would trigger more retaliation, and at a time when exports are the main source of U.S. growth.

Even with all this evidence on their side, Byrd opponents are worried. Although Senator Larry Craig (R., Idaho) -- who brags on his Web site about steering Byrd money to Micron -- will soon retire, other Republicans, such as Thad Cochran (R., Miss.), are on board with many Democrats.

Whether they operate in the dark of night again, or subject their protectionist bill to open review, one thing has changed since 2000. This time around, no rhetoric about saving jobs can mask that Byrd is your basic billion-dollar slush fund.