By  on November 21, 2005

WASHINGTON — The House narrowly passed a budget-reduction package Friday that would eliminate a cotton subsidy program and repeal a trade law that compensates domestic firms hurt by undervalued imports — two measures found to be illegal by the World Trade Organization.

House GOP leaders barely overcame an impasse with moderate Republicans to pass the almost $50 billion package of mandatory spending cuts by a vote of 217-215. The leadership was forced to pull the legislation from a floor vote almost two weeks ago after many GOP lawmakers refused to line up with party leaders on sensitive cuts to programs such as Medicare, food stamps and student loans.

Last-minute deal-making came with concessions, including removal of a provision to open up oil drilling in the Alaskan National Wildlife Refuge, a centerpiece of President Bush's energy policy.

House leaders now likely will face contentious talks with the Senate, which passed a more modest budget-cut package in an effort to reconcile the differences between the two bills. One of the main points of contention in a conference committee could center around the repeal of the Byrd Amendment, named after Sen. Robert Byrd (D., W.Va.), which is contained in the House bill but not in the Senate's.

Textile executives oppose the elimination of the compensation provided by the Byrd Amendment law for goods dumped on the U.S. at prices below market value. The U.S. has distributed more than $1 billion in antidumping duties to companies under Byrd during the last five years.

U.S. textile companies have filed only a handful of antidumping cases because they are costly and often take months to conclude, but many experts expect to see an increase in textile cases once a remedy they have been using — China safeguard quotas — expires at the end of 2008.

Textile representatives argue the Byrd money helps compensate companies filing expensive antidumping cases.

Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, which opposes the repeal of the Byrd law, said there will be plenty of friction in the conference committee over the Byrd Amendment.

"On one side, Rep. Bill Thomas (R., Ca.), chairman of the House Ways & Means Committee, has to do something because of the WTO ruling, but on the other side, the majority of senators will not want to undermine the Byrd Amendment because it has built-in constituency," said Tantillo. "If you have a company in your state that has filed a dumping case and it gets relief through Byrd payments, you understand why a significant number of senators support it."Tantillo believes the Senate side will prevail.

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

In addition, the European Union slapped a 15 percent tariff on imports of 10 kinds of U.S.-made apparel in May after Congress failed to meet a repeal deadline set by the WTO.

Stephen Lamar, senior vice president at the American Apparel & Footwear Association, said the repeal of Byrd will "survive in conference." He said perceptions likely have changed since the General Accounting Office released a report stating Byrd payments only go to a handful of U.S. companies.

"Budget reconciliation is an exercise to try to find places where you can cut the budget and return money to the Treasury," Lamar said. "You've got money going out to a handful of companies [under Byrd] and not to the general welfare, so the law is not doing what Byrd proponents said it would do."

House lawmakers maintain that repealing the Byrd law could add $3.5 billion over five years to the Treasury Department's coffers.

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