The Welfare Effects of the Byrd Amendment

Abstract

The Welfare Effects of the Byrd Amendment Nicoleta Iliescu Abstract In this paper, I investigate the domestic welfare effects of the Byrd Amendment, a piece of legislation passed in the US in 2000, which mandated that the tariff revenues collected from antidumping (AD) cases be directly distributed to the American firms that initiated or supported these cases. In response to the amendment, 11 US trading partners filed a complaint with the World Trade Organization (WTO) requesting that the amendment be revoked as it violated the US obligations taken under the WTO. The WTO ruling not only demanded that the law be repealed, but also allowed the complainants to impose retaliatory tariffs against the US exports. This paper demonstrates that the imposition of this law is detrimental to domestic consumers and that foreign retaliation reduces domestic firms’ profitability. Moreover, in the presence of the Byrd Amendment and with no or low retaliation abroad, if the AD tariff level is set to maximize tariff revenue, then petitioning domestic firms gain higher profits compared to the profits earned prior to the passage of the law. Full Text: PDF DOI: 10.15640/jibe.v3n1a1