Maine businesses stand to lose more than $100 million in trade with our biggest international customer – Canada – unless the United States Congress takes action to correct a serious defect in U.S. trade law. Recently, the government of Canada announced they are proposing 100 percent surtaxes on everything from canoes to paper to maple syrup that is manufactured in the United States and exported to our northerly neighbor. Our state and federal elected officials must take notice of what is being proposed and take immediate steps to protect our state’s interests.
In late 2000, Sen. Robert Byrd, D-W. Va., used his position of influence to “slip” an obscure piece of legislation call the “Continued Dumping and Subsidy Offset Act of 2000” into an important Agriculture Appropriations Bill that Congress was rushing to complete before adjourning for the 2000 elections. Rather than introduce his legislation for consideration by the full House and Senate of the United States Congress, Sen. Byrd instead had the legislation placed in the “conference report” of the appropriations bill, thus averting a vote by our elected officials.
In fact, then President Bill Clinton complained about the measure being included in the Agriculture Appropriations Bill when he signed the measure into law on Oct. 28, 2000. President Clinton, left with no options but to sign the massive spending bill, said the Byrd amendment, as the legislation came to be known, defied common sense and would surely be found to violate international trade law. The president was correct on both counts. His successor, President George W. Bush, has called for repeal of the Byrd amendment.
The Byrd amendment seeks to punish foreign firms that manufacture products subject to countervailing and anti-dumping duties that are ultimately imported into the United States. According to established international trade law, a company importing certain goods into the United States must first pay duties that are established under international trade law and designed to “level the playing field” eliminating any advantage the foreign manufacturer may have by virtue of their home location.
This has been a part of international trade for many decades, however, Sen. Byrd’s legislation says that rather than those duties being retained by the United States Treasury for use by our government, they are instead distributed to domestic manufacturers based on a formula that includes ordinary business expenses. This virtually guarantees that large companies will get large distributions under Byrd than small ones. In fiscal year 2004 one single company – a ball bearing manufacturer – received 22 percent of the total disbursements under the Byrd amendment.
In an analysis released last year, the Congressional Budget Office, an objective, nonpartisan function of Congress said that the Byrd amendment raises the cost of doing business to U.S. firms and consumers of the products in question. The CBO went on to say the Byrd amendment:
. encourages more anti-dumping cases;
. encourages inefficient production by domestic firms;
. will lead to retaliation by U.S. trading partners;
. discourages the settling of trade cases;
. increases transaction costs;
. causes a lower output for the U.S. economy.
CBO’s prediction that our trading partners will take retaliatory action is precisely what the government of Canada announced it was proposing in November 2004 when they proposed surtaxes on $4.1 billion worth of exports from the United States into Canada. According to the Maine International Trade Center $118 million of trade between Maine and Canada will be jeopardized unless Congress takes action. Pulp, paper, lumber, distilled spirits, fish, home furnishings, salmon and vegetables are among the more than four dozen categories of state exports that would be subject to 100 percent retaliatory surtaxes. And its important to point out, that other countries may well be looking at similar actions, thereby expanding the list and the impact on Maine manufacturers.
We need to remember that the World Trade Organization’s Appellate Body has ruled that the Byrd amendment violates international trade law. Canada’s and the actions of other countries are only about having the United States come into compliance with international trade law. Here in the United States we can’t embrace decisions that go our way, then ignore decisions that we may not agree with.
Every morning I awake concerned about what actions I will need to take to protect the jobs and livelihoods of 530 Washington County men and women I am proud to call co-workers. Knowing that our mill has more than $25 million worth of annual business at risk worries me. Easy, simple solutions like that envisioned by the Byrd amendment are often wrong and in many cases – including this one – counterproductive.
Rather than propping up non-competitive industries, like the Byrd amendment seeks to do, let’s instead work on core problems, finding solutions that we all can live with, and most importantly, solutions that don’t violate the same international trade laws that the United States has supported for so many decades.
Deborah Feck is general manager of Domtar’s Industries Inc.’s pulp and paper mill in Baileyville.