As the world greets 2003, over a thousand American firms that saw their fortunes fade last year because of foreign imports will receive a cash gift — which the US government collected from their overseas competition.

The US Customs Service has already sent out letters to 1,200 American firms notifying them how much money they can pocket from tariffs on foreign companies that sell their products in the United States.

The tariffs are imposed when American companies successfully convince US officials that the imports are harming profits. The tariff-funded compensation program, now in its second year, will pay well over $300 million to most of the American companies that filed a complaint. Before 2001, the money was simply deposited into the US Treasury.

The program has become instantly popular: According to Jeff Laxague, the program’s director at US Customs, the number of claims rose to 1,200 in 2002 from 900 the previous year, and the award money increased to $329 million from $230 million in 2001.

The awards for the companies this year will range from hundreds of dollars to more than $60 million. This represents a huge incentive, and therein lies the program’s biggest problem.

Laxague says the increase in claims and award money has caused the Customs service significant technical problems and forced a delay in making final calculations and sending out the notifications, says Laxague.

An additional US government action targeted at foreign companies is the Continued Dumping and Subsidy Offset Act of 2000 — also known as the Byrd Amendment, in honor of its sponsor, Senator Robert C. Byrd (D-West Virginia), who maneuvered it into law.

The Byrd Amendment is particularly irksome to overseas governments and suppliers of goods because it urges American companies to file claims against foreign products — and then rewards money to the aggrieved companies directly.

In December 2000, the European Union and eight countries complained to the World Trade Organization about the Continued Dumping and Subsidy Offset Act of 2000. In September 2002, the WTO said that the act was not permissible and, in an unusually strong move, recommended that it be repealed.

The United States appealed the decision; the WTO’s response is expected this month.

“The Byrd Amendment is serving the purpose for which it was created, namely, to help injured industries recover from the harmful effects of dumping and unfair subsidies,” says Senator Byrd.

He blasts the WTO recommendation, saying it meddles with Congress’ authority to determine how US government funds are spent.

Congress is not expected to consider the amendment again until after the WTO responds to the appeal. In the meantime, US Customs will continue to hand out the cash.

Individual awards will not be made public until mid-January, after companies receive award notices, but Mr. Laxague said that the biggest industry beneficiary for 2002 will be ball-bearing manufacturers, and the biggest single company to benefit is a candle maker.

Last year, the makers of bearings also won the largest industry-wide awards.

The cash awards paid out by customs do not, however, necessarily benefit consumers in the form of lower prices.

(Companies can spend the money any way they choose.) However, the tariffs themselves help keep prices higher than they otherwise might be.

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Arab News Features 16 January 2003