By  on November 15, 2005

WASHINGTON — A budget-reduction package that would eliminate two measures deemed illegal by the World Trade Organization is in limbo because of an impasse between House GOP leaders and moderate Republicans.

The leadership was forced to pull the budget package — with legislation ending a cotton subsidy program and a trade law known as the Byrd Amendment that compensates domestic firms hurt by undervalued imports — from a floor vote last Thursday after many GOP lawmakers refused to line up with party leaders.

The leaders tried to appease one group of moderates by removing a provision to open up oil drilling in the Alaskan National Wildlife Refuge — a centerpiece of President Bush's energy policy. However, the move failed to sway enough votes.

House Majority Leader Roy Blunt (R., Mo.) has placed the budget bill on the agenda for this week, but its fate is uncertain and lawmakers are to begin their Thanksgiving recess on Friday.

The $51 billion package of mandatory spending cuts has caught the attention of textile executives and the retail and importing sector. The executives oppose the elimination of the "Step 2" cotton subsidy payments and the compensation provided by the Byrd Amendment law for goods dumped on the U.S. at prices below market value. The WTO has ruled that both programs violate global trade rules and must be abolished or U.S. firms face export tariffs.

Cass Johnson, president of the National Council of Textile Organizations said Step 2 acts as a "safety valve" for U.S. textile mills competing against low-priced cotton imports, while Byrd helps companies "recoup some of the cost" associated with filing expensive antidumping cases.

Importers and retailers, however, are pressing for the repeal of the Byrd Amendment because they contend it increases consumer prices.

Paul Kelly, senior vice president at the Retail Industry Leaders Association, said, "My overall sense is that Byrd is pretty secure within the confines of this budget legislation."

He acknowledged some lawmakers might demand it be removed from the package in exchange for their votes.

The Senate has approved its own package to slash $35 billion from the federal budget over the next five years by cutting spending programs such as agriculture supports, prescription drugs and student loans, but that bill does not include a provision to repeal the Byrd Amendment.If the House passes the budget package, it will head to a joint conference committee, where a showdown on repeal of Byrd is expected. There is still a possibility that House leaders could remove action on the Byrd law from the budget bill.

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