CDSOA: Not Dead Yet

News & Insights
Dec 9, 2013

Last week, U.S. Customs and Border Protection (CBP) announced the distribution of over $61 million in funds to affected domestic producers under the Continued Dumping and Subsidy Offset Act (CDSOA) (also known colloquially as “the Byrd Amendment”), with another $3 million in collected antidumping duties withheld.   In the thirteen years that CDSOA distributions have been made, CBP has reported paying out nearly $3.2 billion through the program.

The law creating CDSOA was repealed by the Deficit Reduction Act of 2005, effective with respect to imports entered on or after October 1, 2007.  Nevertheless, since the effective repeal of the program, CBP has disbursed over $1 billion to domestic industries as entries of imports made prior to October 1, 2007 have been liquidated and antidumping and countervailing duties collected.

CDSOA distributions for fiscal year 2013 were the lowest ever made under the program – roughly half of the $119 million distributed in fiscal year 2012.  The program no longer has significant meaning for many of the domestic industries that have benefitted from it in the past.Nevertheless, it would be wrong to conclude that the CDSOA program is simply winding down.  In fact, a review of the distributions made by CBP this year provides interesting insight into the operation and mechanics of U.S. trade remedy law.CBP’s annual report indicates that the vast majority ($60 million) of the duties collected in fiscal year 2013 related to just eight antidumping duty orders:  honey from the People’s Republic of China ($13.8 million); hand trucks from the People’s Republic of China ($10.4 million); pure and alloy magnesium from Russia ($7.2 million); frozen warmwater shrimp from the People’s Republic of China ($6.8 million); crawfish tail meat from the People’s Republic of China ($6.7 million); preserved mushrooms from the People’s Republic of China ($5.5 million); orange juice from Brazil ($5.4 million); and fresh garlic from the People’s Republic of China ($4.2 million).For each of these eight antidumping duty orders, the CDSOA distributions made in this year or the past few years have been substantially higher than those made in earlier years.  For example, between 2006 and 2012, only $3.3 million had been distributed on collected antidumping duties from Chinese frozen warmwater shrimp.  The CDSOA amount disbursed this year was over twice the collective amount distributed in the prior seven years.  Even more starkly, CBP reports distributing no antidumping duties collected on magnesium from Russia between 2006 and 2012 before distributing $7.2 million in 2013.A comparison of CDSOA distributions with historical clearing account balances demonstrates that for at least three of the antidumping duty orders, the substantial increase in funds disbursed related to the final disposition of antidumping duties deposited with CBP at the time the imports were entered for consumption.

However, for the remaining five antidumping duty orders, the disposition of duty deposits appears to have had little to do with the distributions.

If the CDSOA disbursements for these five orders are not resulting from final assessments resulting from liquidation of past entries after resolution of court challenges to administrative reviews, where are these funds coming from?CBP’s annual report, on its own, does not provide an explanation.  It is possible that some of these amounts are drawn from recoveries of past CDSOA distributions that were improperly made or additional duties paid above and beyond deposit rates.  However, most of the funds are likely to have resulted from final collections on bonds issued by sureties for which there was no corresponding cash deposit that would be reflected in clearing accounts.If this is true, it is apparent that collection of amounts from the bonds is subject to prolonged administrative processes before CBP that are not transparent to domestic industry beneficiaries of the CDSOA program.  For casual observers not involved in the relevant trade remedy litigation, estimating the extent of the amounts potentially involved – and the possibility of future CDSOA distributions – presents a very difficult task.  Nevertheless, as the history of CDSOA distributions under these five antidumping duty orders show, the amounts involved may be far more significant than past experience with administrative litigation regarding duty deposits would indicate.