WASHINGTON — The House Ways and Means Committee voted Wednesday night to repeal a law deemed illegal by the World Trade Organization because it compensates U.S. companies hurt by undervalued imports dumped in the domestic market.

The committee voted 22-17 to approve a broad budget-savings package that contains a provision to repeal the trade law, commonly referred to as the Byrd Amendment.

House lawmakers who support rescinding the law maintain it will bring the U.S. into compliance with the WTO and could add $3.5 billion over five years to the Treasury Department’s coffers. Proponents of the Byrd Amendment, named for Sen. Robert Byrd (D., W.Va.), argue that U.S. companies will be put at a competitive disadvantage against countries that have unfair trade practices.

The move to repeal is expected to meet opposition in Congress. Shortly after the WTO found the subsidies to be illegal, 70 senators sent a letter to President Bush opposing the ruling and asking that the issue be addressed as part of the Doha Round of global trade talks.

Under the Byrd Amendment, the government compensates U.S. companies that are hurt when foreign firms sell goods in the U.S. market at below cost or less than their price in the home country, a practice known as dumping. The U.S. has distributed more than $1 billion in antidumping duties to companies over the last five years.

The bulk of the money has gone to steel, ball bearing, cement and candle makers, but the law has taken on importance for the textile and apparel industry. Textile producers maintain it helps level the playing field against subsidized imports and apparel manufacturers that are exporting certain targeted products under a retaliatory tariff into the European Union and want to see the law repealed so the sanctions will be lifted.

The WTO found the Byrd Amendment in violation of global trade rules in September 2002 and authorized the European Union and seven other countries to slap retaliatory punitive tariffs on U.S. exports if the U.S. did not comply. In May, the EU put a 15 percent tariff on imports of 10 kinds of U.S.-made apparel after Congress failed to meet a repeal deadline. The WTO has approved imposing as much as $134 million in retaliatory tariffs by Europe, Canada, Japan and other countries on a wide array of U.S product exports.

This story first appeared in the October 28, 2005 issue of WWD. Subscribe Today.

U.S. textile companies have filed only a handful of antidumping cases because they are costly and often take months to conclude. That could change when a remedy they’ve been relying on — the China safeguards — expires at the end of 2008 and the industry is left with few avenues to protect itself against an onslaught of imports.

Just a few textile companies, such as Mt. Vernon Mills, receive federal dollars under the Byrd law, stemming from older antidumping cases. In the 2003 fiscal year, Mt. Vernon received $92,000 in disbursements from duties collected in an unfair-trade case involving greige polyester cotton print cloth from China, according to U.S. Customs and Border Protection figures. In the 2004 fiscal year, Mt. Vernon received $6,000 from the government.

“Obviously, dumping will become much more of a focal point when the safeguard system expires,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “[The Byrd Amendment is] important not just to textile manufacturers but to manufacturers in general because these cases are enormously expensive and the impacted party should be compensated.”

Stephen Lamar, senior vice president of the American Apparel and Footwear Association, said, “This legislation never should have been enacted and it is causing distortion among industries affected by trade remedies. Having to go through enduring sanctions has a cumulative effect which chases away business from this country.”

Meanwhile, House Democrats introduced legislation Thursday to enhance federal assistance offered to workers displaced by imports. The Trade Adjustment Assistance Improvement Act amends the Trade Adjustment Assistance program to extend coverage to service workers, give authority to the Secretary of Labor to certify groups of workers as eligible for federal assistance on an industry-wide or occupational basis, triples current training funding cap from $220 million to $660 million by 2012, increases the health care tax credit and extends current TAA programs until 2012.

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