Countervailing Duties, Antidumping Tariffs, and the Byrd Amendment: A Welfare Analysis*

Transcription

1 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, Countervailing Duties, Antiumping ariffs, an the Byr Amenment: A Welfare Analysis* roy G. Shmitz an James L. Seale, Jr. Arizona State University an University of Floria *his researh was partially supporte by the International Agriultural rae an oliy Center, Foo an Resoure Eonomis, University of Floria. Working paper WC Abstrat his paper etermines the effet that offset payments uner the Continue Dumping an Subsiy Offset At CDSOA also known as the Byr Amenment have on tariff levels that are lobbie for by U.S. prouer groups. We erive the optimum antiumping tariff that woul maximize the welfare of prouers reeiving CDSOA offset payments. We ompare an ontrast this newly erive optimal antiumping tariff that maximizes the sum of prouer surplus an tariff revenue with the optimal revenue tariff that maximizes tariff revenue alone an the optimal welfare tariff that maximizes the sum of onsumer surplus, prouer surplus, an tariff revenue. We fin that prior to the CDSOA, U.S. prouers woul always lobby for prohibitive tariffs that maximize prouer surplus. However, uner the CDSOA, prouers will, in most ases, lobby for a tariff that is not prohibitive but is still higher than the optimal revenue or optimal welfare tariffs. Keywors: ariffs, antiumping uties, ountervailing uties, welfare, Byr Amenment JEL Classifiation: F13, D60, K33 Introution 1 U.S. antiumping laws, in a form that resembles the urrent version, began with the Antiumping At of 191 an was part of the Emergeny ariff At of that year. his early law ontains all the elements of what we now reognize as antiumping: that uties may be impose if the exporter s sales prie is less than the foreign market value, that foreign osts of proution may be alulate if the foreign market value is not asertainable, that the umping must be relate to injury suffere by the omesti inustry, that higher import uties are the appropriate remey, et. Irwin, 004. Antiumping ases beame use as early as the late 1930s but most omesti inustries file only single petitions at that time that targete imports of a partiular prout from a partiular ountry. In aition, most injury rulings were not grante until the early 1970s. By the mi 1980s, the majority of ases file reeive an injury etermination of one kin or another Irwin, 004. he number of antiumping ases inrease throughout the 1990s, but the early 000s witnesse an alarming jump in the number of antiumping ases. he large inrease in the number of suh ases in the early 000s was, for the most part, spurre by a signifiant hange in the way that ollete uties are now isburse.

2 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, On Otober 8, 000, the 106 th U.S. Congress passe the agriulture spening bill, ubli Law he Continue Dumping an Subsiy Offset At CDSOA was attahe as amenment itle X by Senator Robert Byr of West Virginia as part of the Agriulture, Rural Development, Foo an Drug Aministration an Relate Agenies Appropriations At of 001. he CDSOA amene itle VII of the ariff At of 1930 by aing a new setion 754 that instruts the U.S. Commissioner of Customs to ollet ertain antiumping an ountervailing ADCV uties an plae them in a learing aount. One entries are liquiate, the money is transferre to a speial aount from whih they are istribute to affete omesti prouers who petition for qualifying expenitures. he istributions are known as the ontinue umping an subsiy offset. atterson, 003 he so-alle Byr Amenment effetively empowers prouers an proessors, who suessfully petition the U.S. government to impose ADCV uties on ompeting imports, to keep the proees of those tariffs. In aition, there is a granfather lause that allows these groups to ollet the tariff revenue from ertain ADCV uties that were implemente prior to the CDSOA King, 00. reviously, the ollete tariff revenues arue to the general reasury ebearing.om. For a ompany to be eligible for payouts, it must prove that it suessfully litigate an antiumping or ountervailing uty ase against a speifi inustry in a speifi ountry. If eligible, a ompany shares all past an future ollete ADCV uties with the other original litigating ompanies. Companies that i not partiipate in the original antiumping or ountervailing uty ase o not reeive any of the ollete funs. he CDSOA was originally authore by Senator DeWine Ohio but faile to gather signifiant support ue to questions of its legality uner Worl rae Organization WO an North Amerian Free rae Agreement NAFA rules. However, Senator Byr hampione the CDSOA as a way to support the loal steel inustry. He iniate that the General Aounting Offie ha etermine that the program woul ost no more than $38 million an woul primarily benefit U.S. steel manufaturers ebearing.om. In fat, however, the CDSOA pai out $30 million to 900 laimants in 001, $39 million to 100 laimants in 00, an $190 million to 1494 laimants in 003 able 1. Of that amount, the two bearing manufaturers in Senator Byr s neighborhoo, imken an orrington who merge in 003, reeive $81 million in 001, $16 million in 00, an $9 million in 003, while most other steel ompanies reeive negligible payments. Agriultural prouts, inluing, pasta, pineapple, rawfish, mushrooms, garli, salmon, pistahios, ut flowers, honey, sugar, orange juie, an apple juie also reeive payments, totaling approximately $0 million in eah of the three years sine the Byr Amenment was enate. It i not take long for U.S. traing partners to reat vigorously against the CDSOA, espeially those partner ountries that were speifially targete for ADCV uties by U.S. prouers. On July 1, 001, Australia, Brazil, Chile, the European Communities, Inia, Inonesia, Japan, Korea, an hailan requeste that the WO form a panel to investigate the CDSOA with respet to U.S. obligations uner Artile 18.1 of the WO Antiumping Agreement AD an Artile 3.1 of the WO Agreement on Subsiies an Countervailing Measures SCM. he WO forme a panel on September 10, 001, an on September 16, 00, the panel foun against the U.S. on the CDSOA payments an reommene that the CDSOA be repeale U.S. Department of State. On Otober 18, 00, the U.S. appeale the ruling to the WO Appellate Boy, but on January 16, 003, the Appellate Boy onfirme that the CDSOA was inompatible with WO rules Lamy, 003. In January 004, the EU an other nations

3 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, aske for WO permission to take retaliatory ation against the U.S. beause of its failure to repeal the amenment. In the initial WO omplaint, the omplaining parties argue that the CDSOA is a speifi ation against umping an subsiization that is not in aorane with either the AD or SCM agreement an that it unermines the requirements that umping an ountervailing uty investigations not proee unless supporte by at least 5% of omesti prouers. he WO panel etermine that offset payments to omesti prouers aversely affet the ompetitive relationship of umpe/subsiize goos with omesti prouers an that the offset payments provie a finanial inentive to omesti prouers to file an support investigations an in so oing woul inrease the number of rulings against umping or subsiies WO anel. Hene, the CDSOA is inonsistent with both the AD an SCM agreements uner the WO. In this paper, we etermine the effet that offset payments uner the Continue Dumping an Subsiy Offset At CDSOA also known as the Byr Amenment have on tariff levels that are lobbie for by U.S. prouer groups. We erive the optimum antiumping tariff that woul maximize the welfare of prouers reeiving CDSOA offset payments. We ompare an ontrast this newly erive optimal antiumping tariff that maximizes the sum of prouer surplus an tariff revenue with the optimal revenue tariff that maximizes tariff revenue alone an the optimal welfare tariff that maximizes the sum of onsumer surplus, prouer surplus, an tariff revenue. he optimal revenue tariff an optimal welfare tariffs are well-known results from welfare analysis in international trae e.g., Shmitz an Shmitz, 1994 an are use as a benhmark for omparisons of tariff levels, tariff revenue, an total welfare resulting from an optimal antiumping tariff. he rest of this paper proees as follows. We begin with further isussion of the Byr Amenment an then provie empirial eviene regaring ADCV tariffs plae on speifi agriultural prouts. We then introue a two-ountry partial equilibrium moel for a large importing ountry, an erive quantity supplie, quantity emane, an quantity exporte as funtions of the speifi tariff level an the parameters of the omesti supply, omesti eman, exess supply, an exess eman urves. We then erive the optimal revenue tariff for this moel an use it as a basis to erive both the optimal antiumping tariff an the optimal welfare tariff. hese relationships are utilize in orer to ompare an ontrast tariff levels, welfare, an import revenue aross the three tariff regimes. Finally, onlusions are rawn. he Byr Amenment he CDSOA went into effet in 001 an was ontroversial from its ineption. resient Clinton signe the At but aske Congress to revisit an repeal the CDSOA before ajournment; however, Congress i not at. In inustries that reeive protetion from imports uner U.S. ADCV uty laws, ineligible ompanies for CDSOA payouts omplain that eligible ompanies reeive an unfair avantage erive from the subsiies. Small ompanies omplain that their inustry is harme by unfair imports but they o not have the money to hire expensive lawyers to litigate ADCV ases ebearing.om. he U.S. reasury Department s buget report states that the CDSOA allows ouble ipping beause eligible ompanies not only reeive protetion from imports through inrease import pries ue to ADCV tariffs but now also reeive orporate subsiies from the ollete ADCV revenues homas, 003.

4 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, In 001, there were nine foo-inustry antiumping AD an four foo-inustry ountervailing uty CV ases for whih ompanies reeive tariff revenues uner the CDSOA. In 00, foo-inustry AD ases in whih ompanies reeive payouts inrease to 1 while foo-inustry CV ases remaine at four. By 003, there were 15 AD ases an six CV ases in the foo inustry able 1. In some ases, the same ompany that reeive payouts uner an antiumping ase also reeive payouts uner a ountervailing uty ase. For example, eligible U.S. pasta firms share $17.5 million, $4.7 million, an $1.7 million uner the antiumping ase A in , respetively. hey also share $.5 million, $.5 million, an $0.4 million uner ountervailing uty ase C in In the antiumping ase A , anne pineapple/hailan, one ompany, Maui ineapple, reeive the entire revenue of $1.8 million in 001, $0.5 million in 00, an $5.4 million in 003 able 1. In fisal year 00 an 003, rayfish firms reeive the largest foo-inustry CDSOA payouts. A list of the speifi rayfish firms, the amounts laime, amount pai, an alloation shares for 00 an 003 are provie in able. In aggregate, rawfish firms laime amounts of $35.4 million an $39.6 million in 00 an 003. However, they atually reeive $7.5 million an $9.8 million in those two years. One firm, Athafalaya Crawfish roessors, reeive 14 perent of all rawfish payments isburse uner the CDSOA in fisal year 003. rior to the CDSOA, it was in the best interest of U.S. prouers who ompete in inustries that fae the possibility of substantial foreign imports to lobby for a prohibitive tariff at a level that oes not allow ompeting imports into the ountry in orer to raise the omesti prie that they reeive for their goos. On the other han, it is in the best interest of the U.S. government in the large ountry ase to impose either an optimal welfare tariff that maximizes the ombination of onsumer welfare, prouer welfare, an tariff revenue or an optimal revenue tariff that maximizes tariff revenue. In what follows, we show that uner the CDSOA, prouers that reeive offset payments will not always lobby for a prohibitive tariff. However, they will still lobby for a tariff that is always above both the optimal welfare tariff an the optimal revenue tariff. Derivation of Optimal ariffs In orer to erive an ompare the optimal antiumping tariff, the optimal revenue tariff, an the optimal welfare tariff, we onsier the following system of equations that represent the supply, eman, an exess eman urves for a partiular prout in the Unite States along with the exess supply urve for the foreign market i.e., the rest of the worl. o make the solution tratable, we assume that eah of these equations is linear an that the U.S. an foreign markets are ompetitive. his system an be viewe as a linear approximation to the atual unerlying behavioral relationships, D S ED ES a bq α Q I I D S 1

5 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, in whih is the prie, Q S is the quantity supplie by the U.S., I represents U.S. imports from the foreign market, an Q D is the quantity emane, whih equals the quantity supplie Q S plus imports I. 3 If we introue a speifi tariff, then rives a wege between the exess eman an exess supply urves. In equilibrium, the following relationship must hol:. ED ES Inserting the relationships for ED an ES an solving for imports I yiels: I. 3 he equilibrium U.S. prie is erive by inserting equation 3 into the exess eman urve ED, whih yiels:. 4 Finally, the U.S. quantity supplie in equilibrium an be erive by inserting equation 4 into the supply urve 1: α Q S. 5 Equations 3-5 give the equilibrium quantity importe, the U.S. prie, an the quantity supplie as funtions of the speifi tariff an the parameters of the various supply an eman equations. hese relationships an be use to fin the equilibrium tariff uner various tariff regimes. As a base of referene, we first erive the optimal revenue tariff OR in terms of the parameters of the various supply an eman equations. We then erive the optimal antiumping tariff AN as a funtion of the unerlying optimal revenue tariff. Finally, we erive the optimal welfare tariff OW an ompare an ontrast the three. First, onsier the optimal revenue tariff. he objetive of the optimal revenue tariff is to maximize tariff revenue with respet to the tariff. However, sine tariff revenue is simply equal to the speifi tariff multiplie by equilibrium imports I this problem an be written mathematially as: MAX R 6 whih makes use of equation 3. he optimal revenue tariff OR is foun by taking the erivative of equation 6 with respet to the speifi tariff, setting it equal to zero, an solving for. he erivative of equation 6 with respet to is:

6 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, R. 7 After simplifiation, the optimal revenue tariff beomes: OR. 8 Hene, the optimal revenue tariff is always exatly one half of the istane between the interepts of the exess eman urve an the exess supply urve. Now, onsier the optimal antiumping tariff efine as the tariff that maximizes the sum of prouer surplus an tariff revenue. he tariff revenue R is the same as in equation 6. rouer surplus for U.S. prouers as efine by Just, Hueth, an Shmitz, 198 is equal to the area above the supply urve, boune by the omesti prie. 4 Sine the supply urve is linear, prouer surplus is: 1 α Q S S. 9 However, the quantity supplie Q S an be written in terms of, α, an as: α S. 10 he optimal antiumping tariff is erive by making use of equation 4 to get the prie in terms of the speifi tariff, an maximizing the sum of prouer surplus an tariff revenue. his an be written as: 1 α S R MAX. 11 aking the erivative of 11 with respet to an setting it equal to zero yiels: 0 α S R. 1 Solving for equation 1 with respet to an rewriting yiels: α AN 13 he first term is simply equal to the optimal revenue tariff equation 8. he seon term an be rewritten using the fat that:

7 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, α α I Q S 14 Hene, the optimal antiumping tariff beomes: S OR AN Q 15 Sine is the slope of the exess eman urve, is always negative whih implies that the optimal antiumping tariff AN is always greater than the optimal revenue tariff OR. Now, onsier the optimal welfare tariff, efine as the tariff that maximizes the sum of tariff revenue, prouer surplus, an onsumer revenue. ariff revenue R omes from equation 6 while prouer surplus was foun in equation 10. Consumer surplus for U.S. onsumers as efine by Just, Hueth, an Shmitz, 198 is equal to the area below the eman urve, boune by the omesti prie. Sine the eman urve is linear, onsumer surplus is: 1 a Q CS D. 16 However, the quantity emane Q D an be written in terms of, a, an b using equation 1, so that onsumer surplus beomes: b a CS. 17 Using equations 4, 6, 10, an 17, the optimal welfare tariff OW an be erive by maximizing the sum of tariff revenue, prouer surplus, an onsumer surplus with respet : 1 1 α a b CS S R MAX. 18 aking the erivative of 18 with respet to an setting it equal to zero yiels: 0 α b b a CS S R 19

8 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, After simplifiation, using the relationship in equation 14 an the fat that quantity emane equals quantity supplie plus imports, the optimal welfare tariff an be rewritten as a funtion of the optimal revenue tariff 8: OW OR I 0 where I is the import level from equation 3. Sine is the slope of the exess eman urve, whih is always negative, the optimal welfare tariff is always smaller than the optimal revenue tariff, as one woul expet. We an also make use of equations 15 an 0 to relate the optimal antiumping tariff to the optimal welfare tariff. Hene, the three types of tariffs are relate in the following fashion: AN OW AN OR OR OW Q I Q S D 1 Certain observations an be mae at this point. First, sine the optimal revenue tariff 8 is always equal to one-half of the slope of the exess eman urve minus the slope of the exess supply urve, then the optimal revenue tariff is never prohibitive. Furthermore, sine the optimal welfare tariff is always less than the optimal revenue tariff, the optimal welfare tariff is never prohibitive. However, it oul be the ase that the optimal antiumping tariff is prohibitive. In orer to explore this further, equation 1 nees to be expane in terms of the parameters of the supply an eman equations alone. Making use of 3, 5, 8, an 1, the three ifferent tariffs, ranke from lowest to highest beome: OW. OR. 3 α AN 4 Any tariff that is equal to or greater than the ifferene between the interept of the exess eman an the interept of the exess supply urves - must be prohibitive. Hene, the optimal antiumping tariff is prohibitive for ases in whih the right-han sie of equation 4 is greater than or equal to -.

9 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, Welfare an Revenue Comparisons he above tariff regimes are further illustrate in Figure 1 in whih S an D in the lefthan panel represent the supply an eman urves an ES an ED in the right-han panel represent the exess supply an exess eman urves. First, onsier the optimal antiumping tariff. he optimal antiumping tariff is the tariff that maximizes the sum of tariff revenue an prouer surplus whih measures the atual welfare of prouers that reeive payments uner the Byr Amenment. In the figure, the optimal antiumping tariff is represente by p 1 -π 1 where p 1 is the omesti prie uner the optimal antiumping tariff an π 1 is the resulting equilibrium worl prie uner the optimal antiumping tariff. ariff revenue uner the optimal antiumping tariff is given by area HIKNR an prouer surplus uner the optimal antiumping tariff equals area ABC. So total prouer welfare equals HIKNRABC. he optimal revenue tariff in Figure 1 is p -π in whih p is the omesti prie uner the optimal revenue tariff, an π is the resulting equilibrium worl prie. ariff revenue uner the optimal revenue tariff area IJKLNO is always larger than the tariff revenue uner the optimal antiumping tariff, but prouer surplus AB is always lower uner the optimal revenue tariff. Furthermore, sine the sum of tariff revenue an prouers surplus is maximize uner the antiumping tariff, it must be the ase that CHR > JLO. Furthermore, aggregate soial welfare the sum of prouer surplus, onsumer surplus, an tariff revenue is always larger uner the optimal revenue tariff, when ompare to the optimal antiumping tariff by an amount equal to area FJLO HR. Now onsier the optimal welfare tariff represente by p 3 -π 3 in whih p 3 is the omesti prie, an π 3 is the resulting equilibrium worl prie. Aggregate soial welfare uner the optimal welfare tariff is always larger than aggregate soial welfare uner the optimal antiumping tariff by an amount equal to area FGLM-HINR. However, tariff revenue uner the optimal welfare tariff area KLM oul be larger or smaller than tariff revenue uner the optimal antiumping tariff area HIKNR. In orer to ompare tariff revenue uner the optimal antiumping tariff with that of the optimal welfare tariff, it is helpful to make use of the fat that the antiumping tariff an be rewritten in terms of the optimal welfare tariff 1 an that imports an be rewritten in terms of the speifi tariff an the parameters of the supply an eman equations through 3. herefore, the optimal antiumping tariff an be rewritten as: OW QD R AN I OW QD. 5 Equation 5 an be rewritten as: R AN OW OW QD OW QD OR 4. 6 However, the first expression on the right-han sie of the equal sign is simply equal to the tariff revenue uner the optimal welfare tariff R OW. Hene, this equation an be rewritten as:

10 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, R AN ROW K OW QD OR 4. 7 where K QD is always positive sine is always negative an is always positive. Making use of 1 one more time, the above equation beomes: K QD R AN ROW I. 8 Sine is always negative, tariff revenue uner the optimal antiumping tariff is larger than uner the optimal welfare tariff if imports are less than one-half of omesti eman. In other wors, if foreign imports omprise a small perentage of omesti onsumption, tariff revenue uner the optimal antiumping tariff will be larger than uner the optimal welfare tariff. On the other han, if foreign imports omprise a large perentage of omesti onsumption, tariff revenue uner the optimal antiumping tariff will be smaller than uner the optimal welfare tariff. Conlusions, Limitations, an Future Researh he Continue Dumping an Subsiy Offset At of 000 empowers prouers an/or proessors, who suessfully petition the U.S. government to impose antiumping tariffs or ountervailing uties, to keep the proees of those tariffs. his introues inentives for prouers to lobby the government to impose antiumping or ountervailing uties that are higher than woul otherwise be optimal from the viewpoint of soietal welfare, but an still be lower than prohibitive levels. We have shown that uner the CDSOA, it is in prouers best interests to lobby for an optimal antiumping tariff that maximizes prouer welfare the sum of prouer surplus an tariff revenue. his tariff will always be higher than the optimal welfare tariff the sum of onsumer surplus, prouer surplus, an tariff revenue that maximizes aggregate soial welfare in the U.S. It will even be higher than the optimal revenue tariff that woul maximize tariff revenue aruing to the government treasury. We also ompare tariff revenue an prouer welfare uner the optimal antiumping tariff, the optimal revenue tariff, an the optimal welfare tariff. We showe that tariff revenue is always largest uner the optimal revenue tariff but that prouer welfare is always largest uner the optimal antiumping tariff. ariff revenue uner an optimal antiumping tariff may be larger or smaller than uner the optimal welfare tariff. If prouers suessfully lobby for an optimal antiumping tariff uner the CDSOA, tariff revenue uner the optimal antiumping tariff will be larger than uner the optimal welfare tariff the tariff that is optimal from soiety s stanpoint in those ases when foreign imports omprise a small perentage of omesti onsumption. On the other han, if foreign imports omprise a large perentage of omesti onsumption, tariff revenue uner the optimal antiumping tariff will be smaller than uner the optimal welfare tariff.

11 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, It remains an empirial question as to how the atual tariff levels establishe as a result of ADCV ases ompare to the optimal tariffs erive in this paper. Future researh oul proee by estimating the elastiities assoiate with the prouts that reeive protetion uner U.S. antiumping an ountervailing uty laws an omparing the optimal tariff levels to the atual levels that urrently exist. For example, Galloway et al. estimate that the presene of outstaning ADCV orers in the U.S. represents an aggregate net welfare ost aross all ases of as high as $3.95 billion in However, researh along these lines is iffiult to unertake for a variety of reasons. AD an CV ases generate a valorem rates that oul reaily be onverte into speifi tariffs. However, it may be the ase that AD orers an not be aurately moele as simple a valorem tariffs. he margins that are etermine by the U.S. Department of Commere USDOC are base on alulating the perentage ifferene between the foreign firm s U.S. prie an its omesti prie. Furthermore, these uties are often ajuste by the USDOC from year-to-year Gallaway et al., he fat that the uties in AD ases an be subjet to subsequent ajustment in future years leas to the possibility of various types of strategi behavior on the part of foreign firms. Blonigen 00 shows that there is a positive signifiant statistial relationship between the number of antiumping ases faing foreign firms an the instanes of foreign iret investment by those firms into the U.S., espeially for more evelope ountries. his form of tariff-jumping is just one strategi reation by foreign firms faing uties by the U.S. here also exists the possibility of retaliation by foreign firms in the form of ountervailing uties Blonigen an Bown, 001. Moreover, the foreign firm may raise its U.S. prie after an initial antiumping ruling in orer to have those uties lowere or remove in subsequent reviews by the USDOC Gallaway et al., Strategi behavior on the part of foreign firms as reations to ADCV uties oul be inorporate into future analysis. he estimate ost of litigating ADCV ases in the U.S. ranges from $50,000 to $1,000,000. It an be argue that a portion of the tariff revenue ollete by litigating prouers uner the Byr Amenment is simply use to offset that ost of litigation an that it oes not affet the unerlying ost strutures faing prouers. his may be true in instanes where risk oes not enter into the analysis. However, if risk were to be introue into the moel, the aitional tariff revenues may lower the marginal ost of proution an effetively shift the supply urve outwar, inuing an even further inrease in supply. Finally, Anerson an Shmitt 003 suggest that the reent proliferation of AD ases may result from a natural progression from the earlier use of tariffs only, to the use of quotas following liberalization an then finally to the use of antiumping laws when quotas have been jointly tariffie. hat is, the emergene of antiumping uties may be a result of moving from a non-ooperative regime of setting trae barriers to a more ooperative regime instigate by the more reent rouns of trae negotiations that finally le to the formation of the WO an that the graual replaement of trae tools has also been aompanie by a reution in the number of setors affete by non-tariff barriers. As a losing note, resient Bush s buget for fisal year 004 alle for a repeal of the CDSOA. However, in spite of this an the WO ruling, on February 4, 003, 67 U.S. senators signe a letter requesting that the resient resist the WO ation an maintain the CDSOA. As of May 4, 004, the CDSOA has still not been repeale.

12 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, Footnotes 1. he authors woul like to thank Lynn Kenney for his omments on an earlier raft of this paper, whih was presente at a onferene entitle International Agriultural rae Disputes: Case Stuies in North Ameria that was hel in San Antonio, exas in Marh In aition to the $190 million alreay isburse for 003, there is an extra $50 million earmarke for isbursement pening the outome of a ourt ase that still has not been settle as of Marh 1, 004. here were also some negative isbursements for FY003 whih were a result of refuns to importers as a result of reliquiations or ourt ases U.S. Department of Homelan Seurity, While it is theoretially possible to erive the interept of the exess eman urve an the slope of the exess eman urve as a funtion of the unerlying parameters of the omesti supply an eman urves, it woul not ontribute to the analysis presente here. In fat, it woul make it muh more iffiult to simplify the relationships among various tariff regimes that are erive below. 4. Of ourse, in ases where the supply urve is inelasti, the interept is atually negative for a linear supply urve. herefore, tehnially, the measure of prouer surplus use in this paper shoul be ajuste by subtrating the area of the triangle boune by the horizontal axis an the interept. However, sine we are onerne with only omparing the prouer surplus aross ifferent tariff speifiations that yiel positive pries, the area below the horizontal axis always anels out. Referenes Anerson, S.. an N. Shmitt Nontariff Barriers an rae Liberalization, Eonomi Inquiry, 411, Blonigen, B. A. 00. ariff-jumping Antiumping Duties, Journal of International Eonomis 571, Bloningen, B. A. an C.. Bown Antiumping an Retaliation hreats, National Bureau of Eonomi Researh Working aper ebearing.om Continue Dumping an Subsiy Offset At of 000 CDSOA: he Byr Amenment, Gallaway, M.., B. A. Blonigen, an J. E. Flynn Welfare Costs of the U.S. Antiumping an Countervailing Duty Laws, Journal of International Eonomis, 49, Irwin, D he Rise of U.S. Antiumping Ations in Historial erspetive, National Bureau of Eonomi Researh Working aper Just, R. E., D. L. Hueth, an A. Shmitz Applie Welfare Eonomis an ubli oliy. New York: rentie-hall, In.

13 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, King, N., Jr. 00. rae Imbalane: Why Unle Sam Wrote a Big Chek to a Sparkler Maker A New Dumping Law Sens ariff roees to Firms that File the Complaint --- Break with International Law, Wall Street Journal Eastern eition, Deember 5. New York, N.Y. Lamy, WO Appellate Boy Conemns the Byr Amenment he Us Must Now Repeal It, Delegation of the European Commission to the Unite States, January No. 03/03. atterson, E Worl rae Organization Ruling on US Continue Dumping an Offset At of 000 CDSOA, Amerian Soiety of International Law ASIL Insights. Shmitz, A. an. G. Shmitz ariffs an rae, Aaemi ress, In. 4, homas, B Bush Buget Slashes Byr Amenment, Alters Byr Bill, he Intelligener Wheeling News Register, February 5. U.S. Customs, Customs.gov. CDSOA FY001 an FY00 Disbursements, Final, U.S. Customs & Borer rotetion. CDSOA FY 003 Annual Report, annual_report.xml. U.S. Department of Homelan Seurity. U.S. Department of State, Offie of International Information rograms USR Seeks to Comply with WO Ruling on Byr Amenment: Unerlying antiumping laws not affete, USR emphasizes, January U.S. Department of reasury, Customs Servie. 00. Distribution of Continue Dumping an Subsiy Offset to Affete Domesti roeures; Notie, July 3. file.pf. Feeral Registry 67, No. 18. Worl rae Organization. 00. Unite States - Continue Dumping an Subsiy Offset At of 000, Seon anel Hearing: Oral Statement by Australia, Marh W/DS17 an W/DS34. Geneva, Switzerlan.

14 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, able 1. CDSOA FY Disbursements for Foo routs 1000$ Case Number Case Name FY001 FY00 FY003 OAL A asta/italy 17,533 4,674 1,730 3,938 A Crawfish tail meat/china - 7,469 9,764 17,33 A Canne pineapple/hailan 1, ,395 7,718 C asta/italy,480, ,387 A reserve mushrooms/inia 171,155 1,36 3,65 A Frozen onentrate orange juie/brazil - 1, ,176 A reserve mushrooms/inonesia ,050 A Fresh garli/china A Fresh Atlanti salmon/chile A reserve mushrooms/chile Fresh an hille Atlanti A salmon/norway C Fresh an hille Atlanti salmon/norway C Roaste in-shell pistahios/iran A Fresh ut flowers/columbia A reserve mushrooms/china A Honey/China C Sugar/EU C asta/urkey A asta/urkey A Non-frozen apple juie onentrate/china A Raw in-shell pistahios/iran A Honey/Argentina C Honey/Argentina Foo otal,09 19,84 0,40 6,434 Gran otal 31,0 39, ,47 751,30 Soure: U.S. Customs Servie.

15 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, able. CDSOA Disbursements for Crawfish ail Meat from China, FY Antiumping Case Number A $ Claimant Amount Claime Amount ai Alloation Share Athafalaya Crawfish roessors 3,758 5, , Seafoo International Distributors 3,347 4, , Catahoula Crawfish,937 3, rairie Cajun Wholesale Seafoo Dist.,449, Bayou Lan Seafoo 1,990, Basin Crawfish roessors 0, Aaiana Fishermen's Co-Op 1,508, Crawfish Enterprises, In. CA 1,89 1, Bonanza Crawfish Farm 1,48 1, Rielan Crawfish 1,517 1, Cajun Seafoo Distributors 1,511 1, Ranol's Seafoo & Resturant CA 1,445 1, Choplin Seafoo 999 1, Carl's Seafoo 1,037 1, Sylvester's roessors 1,036 1, Blanhar Seafoo, In CA Harvey's Seafoo Louisiana remium Seafoos Shexnier Crawfish hillips Seafoo C.J.'s Seafoo & urge Crawfish 1, Arnauville Seafor ehe Valley Seafoo A&S Crawfish Clearwater Crawfish Farm L.. West 1, Louisiana Seafoo Bellar's oultry & Crawfish Benel's Meat & Seafoo Lawtell Crawfish roessors OAL for A ,380 39,648 7,469 9,764 Soure: U. S. Customs Servie CA iniates member of the Crawfish roessors Alliane.

16 Shmitz an Seale, International Journal of Applie Eonomis, 11, September 004, Figure 1. Optimal Antiumping, Revenue, an Welfare ariffs S p 1 p p 3 A D C B F G E D π 3 π π 1 H I J K L M N O R ES ED Q I