a

GAO

United States Government Accountability Office

Report to Congressional Requesters

September 2005 INTERNATIONAL 

TRADE

Issues and Effects of 

Implementing the 

Continued Dumping 

and Subsidy Offset Act

GAO-05-979
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-979.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Loren Yager at 

(202) 512-4347 or yagerl@gao.gov. 

Highlights of GAO-05-979, a report to 

congressional requesters 

September 2005

INTERNATIONAL TRADE 

Issues and Effects of Implementing the 

Continued Dumping and Subsidy Offset 

Act 

Congress enacted CDSOA to strengthen relief to injured U.S. producers. The 

law’s key eligibility requirements limit benefits to producers that filed a 

petition for relief or that publicly supported the petition during a government 

investigation to determine whether injury had occurred. This law differs 

from trade remedy laws, which generally provide relief to all producers in an 

industry. Another key CDSOA feature requires that Customs and Border 

Protection (CBP) disburse payments within 60 days after the beginning of a 

fiscal year, giving CBP limited time to process payments and perform 

desired quality controls. This time frame, combined with a dramatic growth 

in the program workload, presents implementation risks for CBP. 

CBP faces three key implementation problems. First, processing of 

company claims and CDSOA payments is problematic because CBP’s 

procedures are labor intensive and do not include standardized forms or 

electronic filing. Second, most companies are not accountable for the claims

they file because they do not have to support their claims and CBP does not 

systematically verify the claims. Third, CBP’s problems in collecting duties 

that fund CDSOA have worsened. About half of the funds that should have 

been available for disbursement remained uncollected in fiscal year 2004. 

Most of the CDSOA payments went to a few companies with mixed effects. 

About half of these payments went to five companies. Top recipients we 

surveyed said that CDSOA had beneficial effects, but the degree varied. In 

four of seven industries we examined, recipients reported benefits, but some 

non-recipients noted CDSOA payments gave their competitors an unfair 

advantage. These views are not necessarily representative of the views of all 

recipients and non-recipients. 

Because the United States has not brought CDSOA into compliance with its 

WTO obligations, it faces additional tariffs on U.S. exports covering a trade 

value of up to $134 million based on 2004 CDSOA disbursements. Recently, 

Canada, the European Union, Mexico, and Japan imposed additional duties 

on various U.S. exports. Four other WTO members may follow suit. 

Five Companies Received about Half of All CDSOA Payments through Fiscal Year 2004 

20% 20%

33%

13%

Remaining 731

companies ($203 million)

5% Candle-lite ($57 million)

5% MPB Corporation ($55 million)

3% Zenith Electronics Corporation

($33 million)

The Timken Company

($205 million)

Next 34 companies

($347 million)

The Torrington Company

($135 million)

Source: GAO analysis of CBP data.

Total $1,035 million

Between fiscal years 2001 and 2004,

the Continued Dumping and 

Subsidy Offset Act (CDSOA) 

provided over $1 billion funded 

from import duties to U.S. 

companies deemed injured by 

unfair trade. Some supporters 

state CDSOA helps U.S. companies 

compete in the face of continuing 

unfair trade. Some opponents 

believe CDSOA recipients receive a 

large, unjustified windfall from the 

U.S. treasury. Also, 11 World Trade 

Organization (WTO) members 

lodged a complaint over the law at 

the WTO. This report assesses (1) 

key legal requirements guiding and 

affecting agency implementation of 

CDSOA; (2) problems, if any, U.S. 

agencies have faced in 

implementing CDSOA; and (3) 

which companies have received 

CDSOA payments and their effects 

for recipients and non-recipients; 

and describes (4) the status of 

WTO decisions on CDSOA. 

What GAO Recommends

In considering whether to keep, 

modify, or repeal CDSOA, Congress 

should consider whether the law is 

achieving its purposes of 

strengthening U.S. trade remedy 

laws, restoring conditions of fair 

trade, and assisting U.S. producers. 

If Congress decides to modify the 

law, Congress should also consider 

extending the time frame for 

disbursing payments. In addition, 

we recommend that CBP take 

several steps to improve processing 

of CDSOA claims and payments, 

verification of claims, and 

collection of import duties. 
Page i GAO-05-979 International Trade

Contents

Letter 1

Results in Brief 3

Background 6

Key CDSOA Features Restrict Company Eligibility, Determine Share 

of Disbursements, and Set Tight Time Frame for Disbursing 

Payments 9

CBP Faces Three Key Problems Implementing CDSOA 18

CDSOA Payments Largely Concentrated on a Few Companies and 

Industries, with Mixed Effects Reported 28

Retaliation Against U.S. Producers Underway for U.S. Failure to 

Comply with WTO Ruling on CDSOA 40

Conclusions 44

Matters for Congressional Consideration 46

Recommendations for Executive Action 46

Agency Comments and Our Evaluation 47

Appendixes

Appendix I: Objectives, Scope, and Methodology 49

Appendix II: Top CDSOA Recipient Companies 55

CDSOA Payments to the Top Recipient Companies 55

CDSOA Effects on Top Recipient Companies 58

Appendix III: CDSOA Recipient and Non-Recipient Companies in Seven 

Industries 60

Views on CDSOA from Recipients and Non-Recipients in the 

Bearings Industry 61

CDSOA Effects on Bearings Companies 63

Scope and Methodology 67

Views on CDSOA from Recipients in the Steel Industry 68

CDSOA Effects on Steel Companies 70

Scope and Methodology 72

Views on CDSOA from Recipients and Non-Recipients in the Candle 

Industry 74

CDSOA Effects on Candle Companies 76

Scope and Methodology 79

Views on CDSOA from Pasta Company Recipients and 

Non-Recipients 80

CDSOA Effects on Pasta Companies 82

Scope and Methodology 86

Views on CDSOA from Recipients in the DRAM Industry 87
Contents

Page ii GAO-05-979 International Trade

CDSOA Effects on DRAM Companies 89

Scope and Methodology 91

Views on CDSOA from Recipients and Non-Recipients in Crawfish 

Industry 92

CDSOA Effects on Crawfish Processing Companies 94

Scope and Methodology 98

Views on CDSOA from Recipients and Non-Recipients in Softwood 

Lumber Industry 99

CDSOA Effects on Softwood Lumber Companies 101

Scope and Methodology 104

Appendix IV: Comments from Customs and Border Protection 106

Appendix V: GAO Contact and Staff Acknowledgments 109

Tables Table 1: CBP’s CDSOA Program Staff, Responsibilities, and 

Workload 21

Table 2: Fiscal Years 2001-2004 CDSOA Distributions to Top 

Recipient Companies 55

Table 3: CDSOA Effects on Top Recipient Companies 59

Table 4: CDSOA Effect on Companies’ Ability to Compete in U.S. 

Market 59

Table 5: Fiscal Years 2001-2004 Bearings CDSOA Recipients 63

Table 6: CDSOA Effects on Bearings Companies 65

Table 7: CDSOA Effect on Bearings Companies’ Ability to Compete 

in U.S. Market 66

Table 8: Top 10 Fiscal Years 2001-2004 Steel CDSOA Recipients 69

Table 9: CDSOA Effects on Steel Companies 71

Table 10: CDSOA Effect on Steel Companies’ Ability to Compete in 

U.S. Market 72

Table 11: Fiscal Years 2001-2004 Candle CDSOA Recipients 75

Table 12: CDSOA Effects on the Candle Companies 77

Table 13: CDSOA Effect on Candle Companies’ Ability to Compete in 

U.S. Market 78

Table 14: Fiscal Years 2001-2004 CDSOA Pasta Recipients 82

Table 15: CDSOA Effects on Pasta Companies 84

Table 16: CDSOA Effect on Pasta Companies’ Ability to Compete in 

U.S. Market 85

Table 17: Fiscal Years 2001-2004 DRAM CDSOA Recipients 89

Table 18: CDSOA Effects on DRAM Companies 90

Table 19: CDSOA Effect on DRAM Companies’ Ability to Compete in 

U.S. Market 91
Contents

Page iii GAO-05-979 International Trade

Table 20: Top 10 Fiscal Years 2001-2004 Crawfish CDSOA 

Recipients 93

Table 21: CDSOA Effects on Crawfish Companies 96

Table 22: CDSOA Effect on Crawfish Companies’ Ability to Compete 

in the U.S. Market 97

Table 23: Top 10 FY 2003-2004 Softwood Lumber CDSOA 

Recipients 101

Table 24: CDSOA Effects on Softwood Lumber Companies 102

Table 25: CDSOA Effect on Softwood Lumber Companies’ Ability to 

Compete in U.S. Market 103

Figures Figure 1: CBP’s and Treasury’s Units Involved in CDSOA Efforts 18

Figure 2: Potential Fiscal Year 2004 AD/CV Duties Available for 

Distribution under CDSOA and Actual CDSOA 

Disbursements 27

Figure 3: FY 2001-2004 CDSOA Payments to the Top Five 

Companies and to the Remaining Companies 29

Figure 4: Fiscal Year 2001-2004 Distribution of CDSOA Payments to 

the 39 Leading Recipient Companies 30

Figure 5: Top 24 Product Groups Receiving CDSOA 

Disbursements, FY 2001-2004 32

Figure 6: Number of AD/CV Petitions Filed 1980-2004 39

Figure 7: Timeline of WTO-Related Events on CDSOA 44

Figure 8: Fiscal Year 2001-2004 CDSOA Disbursements by 

Industries 61
Contents

Page iv GAO-05-979 International Trade

Abbreviations

AD antidumping

CBO Congressional Budget Office

CV countervailing

CDSOA Continued Dumping and Subsidy Offset Act

CBP Customs and Border Protection

EU European Union

IG Inspector General

NCA National Candle Association

ITC International Trade Commission

USTR Office of the U.S. Trade Representative

WTO World Trade Organization

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Page 1 GAO-05-979 International Trade

United States Government Accountability Office

Washington, D.C. 20548

A

September 26, 2005 Letr

The Honorable E. Clay Shaw, Jr. 

Chairman

Subcommittee on Trade

Committee on Ways and Means 

House of Representatives

The Honorable Jim Ramstad

Chairman

Subcommittee on Oversight

Committee on Ways and Means

House of Representatives

The Honorable Judy Biggert

House of Representatives

The Honorable John A Boehner

House of Representatives

The Continued Dumping and Subsidy Offset Act (CDSOA)1

 of 2000 has 

provided over $1 billion2

 to hundreds of U.S. companies in industries 

deemed to have been injured by unfair competition from dumped or 

subsidized imports. Before CDSOA’s enactment, these funds, which come 

from duties (import taxes) imposed and collected on such imports, went to 

the Department of the Treasury’s (Treasury) general revenue fund. Some of 

CDSOA’s defenders argue that the law gives U.S. firms and their employees 

a reasonable chance to compete and invest, despite facing continued unfair 

trade from foreign competitors. However, since the act’s enactment, 

various domestic and international interests have opposed its 

implementation. Some domestic opponents contend, among other things, 

that CDSOA recipients receive a large, unjustified windfall from the U.S. 

treasury. Also, several nations lodged a complaint over the law against the 

United States at the World Trade Organization (WTO) in 2001. 

1

19 U.S.C § 1675c.

2

All CDSOA disbursements are in nominal dollars. We also analyzed disbursement data in 

constant dollars, but the differences between disbursements in nominal and constant 

dollars are minimal given the short time span and fairly low inflation rate over the period 

covered by our analysis.
Page 2 GAO-05-979 International Trade

Nevertheless, defenders of CDSOA say that U.S. trading partners have been 

unable to demonstrate they actually suffered adverse effects from the law. 

The President has proposed repealing the CDSOA three times.3

 However, 

legislation recently introduced4

 to do so faces strong bipartisan opposition.

Given the pending legislation and disagreements over CDSOA’s 

implementation and effects, you asked us to assess (1) what key legal 

requirements guide and have affected agency implementation of CDSOA; 

(2) what problems, if any, U.S. agencies have faced in implementing 

CDSOA; and (3) which U.S. companies and industries have received 

payments under CDSOA and what effects these payments have had for 

recipient and non-recipient companies; and to describe (4) the status of the 

WTO decisions on CDSOA.

To identify legal requirements guiding and problems facing U.S. agencies in 

implementing CDSOA, we examined CDSOA legislation and regulations, 

obtained and analyzed agency documents such as procedures and 

disbursement reports, conducted field work at Customs and Border 

Protection’s (CBP) Revenue Division in Indianapolis, and met with officials 

of CBP and the U.S. International Trade Commission (ITC) in Washington, 

D.C. To identify company recipients, we obtained and analyzed CBP 

disbursement data for fiscal years 2001 through 2004. To assess the effect 

of disbursements on companies, we relied upon the views of the top 

recipients of all CDSOA funds, and of selected leading recipient and nonrecipient companies in seven industries via standard data collection 

questionnaires. A total of 24 of the 32 top recipient companies we 

contacted responded to our questionnaires. In the seven industries, a total 

of 92 of the 151 leading companies responded to structured questions we 

sent them,5

 ranging from 2 to 25 respondents per industry. The views of 

these companies are not necessarily representative of all recipient and nonrecipient companies. To describe the current status of the WTO decisions, 

we analyzed official U.S., foreign government, and WTO documents. We 

3

The President proposed the repeal of the CDSOA in three budget submissions, for fiscal 

years 2004, 2005, and 2006.

4

In March 2005, Congressman Ramstad introduced H.R. 1121, 109th Cong. (2005) to repeal 

CDSOA.

5

In the seven industries we examined, 61 of 69 recipient companies and 31 of 82 nonrecipient companies responded to our structured questions.
Page 3 GAO-05-979 International Trade

also met with U.S. officials. We conducted our work from September 2004 

through September 2005 in accordance with generally accepted 

government auditing standards. Appendix I contains a more detailed 

description of our scope and methodology.

Results in Brief CDSOA has the following three key features that guide agency 

implementation: 

• First, in passing CDSOA, Congress aimed to strengthen the remedial 

nature of U.S. trade laws, restore conditions of fair trade, and assist 

domestic producers. However, the law provides criteria restricting 

company eligibility for disbursements to a subset of domestic 

producers. Only those companies that filed or publicly supported 

petitions that resulted in an antidumping or a countervailing (AD/CV) 

duty order, while the government was conducting its investigation for 

injury, and remain in operation producing the product subject to the 

AD/CV order, are eligible for CDSOA disbursements. As a result, a 

number of U.S. companies, such as those that began production after 

orders covering their products came into effect, are ineligible. This 

means that CDSOA operates differently from trade remedies, such as 

AD/CV duties, which generally provide relief to all producers in an 

industry. 

• Second, the law identifies AD/CV duties collected as the source of funds 

for the disbursements and provides a pro rata formula for allocating 

disbursements so that those making the largest claims generally receive

the largest payments. 

• Third, the law requires CBP to disburse all AD/CV duties collected in a 

given fiscal year within 60 days after the first day of the following fiscal 

year. CBP officials say this tight time frame means payments are sent to 

companies before the agency can complete all the desired quality 

controls.

CBP has faced three major problems in implementing CDSOA: (1) 

processing CDSOA claims and payments, (2) verifying claims, and (3) 

collecting AD/CV duties. First, processing of CDSOA claims and payments 

is labor intensive and its associated workload is increasing; however, the 

agency lacks plans for managing and improving its CDSOA program’s 

processes, staffing, and technology. Because CBP does not require 

companies to file claims using a standardized method (e.g., an electronic 
Page 4 GAO-05-979 International Trade

form), CDSOA program staff must review each claim to ensure it contains 

the required information, enter the data into a “standalone” database, and 

check for data entry errors. CBP uses complex procedures to manually 

calculate the amounts available for distribution and allocate disbursements 

among companies because its computer systems do not have the 

capabilities to produce these figures. CBP’s CDSOA program is facing more 

than a 10-fold increase in its claim processing workload in fiscal year 2005. 

Second, although CBP has disbursed over $1 billion under CDSOA, CBP 

generally does not require companies to provide any claims-related 

supporting documentation. It has comprehensively verified the claims of 

only 1 of the 770 companies receiving disbursements. Even though this 

verification revealed significant problems, CBP does not plan to 

systematically verify CDSOA claims. Finally, CBP only distributed about 

half of the CDSOA money that should have been available for distribution 

in 2004 because it failed to collect about $260 million in applicable AD/CV 

duties. CBP has taken some steps to identify and address AD/CV duty 

collection problems, which undermine both the effectiveness of related 

trade remedies and the size of the amount available for disbursement under 

CDSOA. However, because its actions to date have not fixed these 

problems, CBP recently reported to Congress that it is working with other 

U.S. agencies to develop legislative proposals and other solutions by the 

end of 2005. 

Most of the $1 billion in CDSOA disbursements in fiscal years 2001-2004 

were concentrated in only a few companies and industries, with mixed 

effects reported. About half of all CDSOA disbursements in terms of value 

went to only 5 of the 770 recipient companies, and 80 percent of all 

disbursements went to 39 companies. Similarly, two-thirds of the payments 

went to three industries: bearings, candles, and steel. Top recipient 

companies that responded to our questions generally indicated that the 

CDSOA disbursements had beneficial effects on their companies and 

industries, but the degree varied from slight to substantial. Leading 

recipient and non-recipient companies we contacted in the seven industries 

also reported mixed effects. In two industries—steel and 

semiconductors—leading recipients we contacted reported positive 

effects. In four other industries—crawfish, candles, bearings, and pasta—

recipients generally reported benefits, but some non-recipients said that 

disbursements to competitors were having negative effects on them. 

Several non-recipients complained that, although they would like to receive 

disbursements, they were ineligible to receive them. In the final industry, 

softwood lumber, both recipient and non-recipient respondents indicated 

that disbursements to date have been too small to have a discernable 
Page 5 GAO-05-979 International Trade

effect, but non-recipient respondents expressed concern about potential 

future adverse effects because disbursements might grow dramatically. 

Critics have expressed concerns that CDSOA may increase the number of 

AD/CV petition filings and the scope and duration of AD/CV duty orders. 

However, the available evidence is inconclusive.

Some U.S. industries are facing the imposition of additional tariffs by key 

U.S. trading partners as authorized by the WTO because CDSOA does not 

comply with WTO agreements.6

 In response to separate complaints about 

CDSOA by 11 WTO members, the WTO ruled in January 2003 that CDSOA 

violated U.S. WTO obligations. The rationale for the WTO’s ruling was that 

CDSOA was not among the allowed trade remedy responses to injurious 

dumping and subsidies specifically listed in the applicable WTO 

agreements. The United States pledged to comply with the adverse ruling, 

but it did not do so by the December 2003 deadline. Although the President 

proposed CDSOA’s repeal, no change has been enacted by Congress. Three 

countries agreed to give the United States more time to come into 

compliance; the other eight members requested and received WTO 

authorization to retaliate by imposing additional tariffs on imports from the 

U.S. WTO arbitrators found that each of the eight members would be 

entitled to suspend concessions against U.S. exports in an amount equal to 

72 percent of the CDSOA disbursements associated with AD/CV duties on 

that member’s products each year. The total suspension authorized for 2005 

could be up to $134 million based on the fiscal year 2004 CDSOA 

disbursements. Specifically, for the fiscal year 2004 disbursements, the 

WTO arbitrators authorized the imposition of additional duties covering a 

total value of trade not exceeding $0.3 million for Brazil, $11.2 million for 

Canada, $0.6 million for Chile, $27.8 million for the European Union (EU), 

$1.4 million for India, $52.1 million for Japan, $20.0 million for Korea, and 

$20.9 million for Mexico. On May 1, 2005, Canada and the EU began the 

imposition of additional duties on various U.S. exports. On August 18, 2005, 

Mexico began imposing additional duties on U.S. exports. On September 1, 

2005, Japan began imposing additional duties on U.S. exports as well. The 

remaining four members say they might suspend concessions. 

This report contains matters for congressional consideration and 

recommendations to CBP. Specifically, given the results of our review, as 

Congress carries out its CDSOA oversight functions and considers related 

6

These members were Australia, Brazil, Canada, Chile, the European Union, India, 

Indonesia, Japan, Korea, Mexico, and Thailand.
Page 6 GAO-05-979 International Trade

legislative proposals, it should consider whether CDSOA is achieving the 

goals of strengthening the remedial nature of U.S. trade laws, restoring 

conditions of fair trade, and assisting domestic producers. If Congress 

decides to retain and modify CDSOA, it should also consider extending 

CBP’s 60-day deadline for completing the disbursement of CDSOA funds. If 

Congress retains the law, we also recommend that CBP take several steps 

to improve the processing of claims and payments, the verification of 

claims, and the collection of AD/CV duties.

We received written comments on a draft of this report from CBP (see app. 

IV) indicating that it concurred with our recommendations. We also 

received technical comments on this draft from CBP, the ITC, and the 

Office of the U.S. Trade Representative (USTR), which we have 

incorporated where appropriate.

Background The United States and many of its trading partners have long used laws 

known as “trade remedies” to mitigate the adverse impact of certain trade 

practices on domestic industries and workers, notably dumping (i.e. sales 

at below fair market value), and foreign government subsidies that lower 

producers’ costs or increase their revenues. In both situations, U.S. law 

provides that a duty intended to counter these advantages be imposed on 

imports. Such duties are known as AD/CV duties. The process involves the 

filing of a petition for relief by domestic producer interests, or selfinitiation by the U.S. Department of Commerce (Commerce), followed by 

two separate investigations: one by Commerce, which determines if 

dumping or subsidies are occurring, and the other by the ITC, which 

determines whether a domestic U.S. industry is materially injured by such 

unfairly traded imports. If both agencies make affirmative determinations, 

Commerce issues an order to CBP directing it to collect the additional 

duties on imports. These are known as AD/CV duty orders.7

 No later than 5 

years after publication of these orders, Commerce and the ITC conduct a 

“sunset review” to determine whether revoking the order would likely lead 

to the continuation or recurrence of dumping and/or subsidization and 

material injury. 

Congress enacted CDSOA on October 28, 2000, as part of the Agriculture, 

Rural Development, Food and Drug Administration and Related Agencies 

7

For further background see Vivian Jones, Trade Remedies: A Primer, a publication of the 

Congressional Research Service, Order Code RL 32371.
Page 7 GAO-05-979 International Trade

Appropriations Act to strengthen the remedial nature of U.S. trade laws, 

restore conditions of fair trade, and assist domestic producers. Congress 

noted in its accompanying findings that “continued dumping and 

subsidization . . . after the issuance of antidumping orders or findings or 

countervailing duty orders can frustrate the remedial purpose”8

 of U.S. 

trade laws, potentially causing domestic producers to be reluctant to 

reinvest or rehire and damaging their ability to maintain pension and health 

care benefits. Consequently, Congress enacted the CDSOA, reasoning that 

“U.S. trade laws should be strengthened to see that the remedial purpose of 

those laws is achieved.”9

 CDSOA instructs Customs to distribute AD/CV 

duties directly to affected domestic producers. Previously, CBP transferred 

such duties to the Treasury for general government use. 

Two agencies are involved in CDSOA implementation. The law gives each 

agency—ITC and CBP—specific responsibilities for implementing CDSOA. 

The ITC is charged with developing a list of producers who are potentially 

eligible to receive CDSOA distributions and providing the names of these 

producers to CBP.10 CBP has overall responsibility for annually distributing 

duties collected to eligible affected domestic producers. CDSOA also 

makes CBP responsible for several related actions. Specifically, it charges 

CBP with establishing procedures for the distribution of payments and 

requires that CBP publish in the Federal Register a notice of intent to 

distribute payments and, based on information provided by the ITC, a list of 

affected domestic producers potentially eligible for the distribution.

Both agencies had some start-up challenges and have made improvements 

in response to reports by their Inspectors General (IG). In September 2004, 

ITC’s IG found that the ITC had effectively implemented its part of the act 

but made several suggestions for enhancing the agency’s CDSOA efforts.11

For example, it suggested that the ITC better document its policies and 

procedures for identifying and reporting eligible producers to CBP and 

improve its communication with companies regarding eligibility. In 

response, the ITC implemented these suggestions to, among other things, 

8

Pub. L. No. 106-387, Title X, sec. 1002, 114 Stat. 1549, 1549A-72 (2000). 

9

§ 1002, 114 Stat. 1549A-72.

10The names are to be transmitted to Customs within 60 days of the issuance of an AD/CV 

duty order. See 19 U.S.C. § 1675c.

11U.S. ITC, Implementation of the Continued Dumping and Subsidy Offset Act of 2000, 

OIG-IR-01-04, Washington, D.C.: September 30, 2004.
Page 8 GAO-05-979 International Trade

formalize and strengthen its procedures for identifying eligible producers, 

developing a list of potentially eligible producers, and transmitting the list 

to CBP. For example, the ITC updated its desk procedures, clarified certain 

responsibilities to support the staff responsible for maintaining the ITC list, 

and added additional guidance on CDSOA requirements to its website.

In June 2003, the Treasury’s IG issued a report finding several major 

deficiencies in CBP’s implementation of CDSOA and made several 

recommendations.12 The Treasury’s IG found that CBP was not in 

compliance with the law because it did not properly establish special 

accounts for depositing and disbursing CDSOA payments, did not pay 

claimants within the required time frame, and did not institute standard 

operating procedures or adequate controls for managing the program. 

Specifically, Treasury’s IG noted that the absence of proper accounts, 

accurate financial data, and adequate internal controls had resulted in 

“overpayments of at least $25 million, and likely more.” Treasury’s IG also 

emphasized that several other issues warranted attention, including no 

routine verification of claims and significant amounts of uncollected 

AD/CV duties. In response, CBP consolidated the processing of claims and 

payments by establishing a CDSOA team in Indianapolis, Indiana; instituted 

procedures for processing claims and disbursements, and for conducting 

claim verification audits; and started proceedings to secure 

reimbursements from the companies that had received overpayments. 

Despite these efforts, CBP still faces issues raised by the Treasury IG, such 

as the issue of uncollected duties. 

The United States has an obligation that its trade remedy actions conform 

to its legal commitments as part of the WTO, an international body based in 

Geneva, Switzerland. The WTO agreements set forth the agreed-upon rules 

for international trade. The WTO provides a mechanism for settling 

disputes between countries, and serves as a forum for conducting trade 

negotiations among its 148 member nations and separate customs 

territories. WTO trade remedy rules involve both procedural and 

substantive requirements, and a number of U.S. trade remedies have been 

12Department of the Treasury, Financial Management: Bureau of Customs and Border 

Protection Needs to Improve Compliance with the Continued Dumping and Subsidy 

Offset Act of 2000 (CDSOA), OIG-03-085, Washington, D.C.: June 17, 2003.
Page 9 GAO-05-979 International Trade

challenged at the WTO.13 WTO members that believe other members are 

not complying with their WTO obligations can file a dispute settlement 

case. The resulting decisions by a dispute settlement panel, once adopted, 

are binding on members who are parties to the dispute, and WTO rules 

create an expectation of compliance. Under WTO rules and U.S. law, 

however, compliance is not automatic. WTO dispute settlement panels 

cannot order the United States to change its law. Alternatively, the United 

States may choose not to comply with WTO agreements and instead may 

choose to offer injured members mutually-agreed upon trade 

compensation or face retaliatory suspension of trade concessions by the 

complainant members. A new round of global trade talks aimed at 

liberalizing trade barriers is now underway and includes discussions of 

possible clarifications and improvements to the WTO rules on antidumping 

and on subsidies and countervailing measures. U.S. trade with members of 

the WTO totaled $2.1 trillion in 2004, giving the United States a 

considerable stake in these WTO negotiations, which aim to liberalize trade 

in agriculture, industrial goods, and services.14

Key CDSOA Features 

Restrict Company 

Eligibility, Determine 

Share of 

Disbursements, and 

Set Tight Time Frame 

for Disbursing 

Payments

Three key features of CDSOA guide and affect agency implementation. 

These features (1) determine company eligibility to receive CDSOA 

disbursements, (2) shape the allocation of CDSOA disbursements among 

companies based on their claimed expenditures, and (3) specify milestones 

that agencies must achieve when implementing the act, including a tight 

time frame for disbursing funds.

13For background see GAO, World Trade Organization: Standard of Review and Impact of 

Trade Remedy Rulings, GAO-03-824 (Washington, D.C.: July 30, 2003), and World Trade 

Organization: Issues in Dispute Settlement, GAO/NSIAD-00-210 (Washington, D.C.: Aug. 9, 

2000). The relevant WTO agreements for trade remedies are the Antidumping Agreement, 

the Agreement on Subsidies and Countervailing Measures, and parts of the General 

Agreement on Tariffs and Trade 1994.

14For background see GAO, World Trade Organization: Global Trade Talks Back on Track, 

but Considerable Work Needed to Fulfill Ambitious Objectives, GAO-05-538 (Washington, 

D.C.: May 31, 2005). This is the latest in a series of GAO reports on these negotiations.
Page 10 GAO-05-979 International Trade

CDSOA’s Criteria for 

Company Eligibility 

Restricts Benefits

CDSOA establishes criteria that restrict eligibility for CDSOA 

disbursements. As guidance for agency implementation, these criteria raise 

issues because (1) two-thirds of the orders in effect predate CDSOA, (2) 

ITC investigative procedures were not designed to, and do not result in, 

collecting information on support of petitions from all industry 

participants, and (3) other factors further limit company eligibility. Some 

companies deemed ineligible regard these criteria as unfair, and several 

have initiated legal action to secure eligibility.

CDSOA Restricts Eligibility The law restricts eligibility to “affected domestic producers”—namely, any 

“manufacturer, producer, farmer, rancher, or worker representative 

(including associations of these persons)” that (1) petitioned15 the ITC or 

supported a petition for relief to the ITC that resulted in an AD/CV duty 

order and (2) remains in operation. The law also requires the ITC to 

prepare a list of potentially eligible producers for CBP, which publishes it in 

advance of each annual distribution. The law only applies to orders in 

effect on or after January 1, 1999. CDSOA further specifies that support 

must be communicated to the ITC through a letter from the company or a 

response to an ITC questionnaire. Successor companies or members of an 

association may also be eligible for CDSOA distributions.16 Conversely, 

CDSOA deems as ineligible those companies that (1) opposed a petition, 

(2) ceased production of a product covered by an order, or (3) were 

acquired by companies that opposed a petition. 

15A petitioner is a manufacturer, producer, or wholesaler in the United States of a domestic 

like product; a certified union or recognized union or group of workers which is 

representative of an industry engaged in the manufacture, production, or wholesale in the 

United States of a domestic like product; a trade or business association a majority of whose 

members manufacture, produce, or wholesale a domestic like product in the United States; 

an association, a majority of whose members is composed of the aforementioned parties 

with respect to a domestic like product; and in any investigation involving an industry 

engaged in producing a processed agricultural product, a coalition or trade association 

which is representative of either: (i) processors, or (ii) processors and producers, or (iii) 

processors and growers. See 19 U.S.C. §§ 1671a, 1673a.

16A successor company may be eligible if it has succeeded to the operations of a predecessor 

company that appeared on the ITC list of potentially eligible companies and files a 

certification to claim a distribution behalf of the predecessor company. If a member 

company of an association appearing on the ITC list does not itself appear on the ITC list, 

the member company may file a claim, as long as the member was a member at the time of 

the petition and also meets the other requirements of the statute. However, according to the 

law, companies that had supported petitions but were acquired by a company that did not 

support a petition are not eligible to receive distributions. See 19 U.S.C. § 1675c and 19 

C.F.R. § 159.61.
Page 11 GAO-05-979 International Trade

Most Orders Predate CDSOA These eligibility criteria create special problems when older AD/CV orders 

are involved. Our analysis of ITC data reveals that roughly two-thirds of 

(234 out of 351) AD/CV duty orders in effect as of April 15, 2005, precede 

CDSOA. The application of CDSOA to orders that predate the law’s 

enactment raises concern. This is because, for AD/CV relief petitions that 

were investigated before CDSOA was enacted, producers had no way of 

knowing that their lack of expression of support for the petition would 

later adversely affect their ability to receive CDSOA disbursements. 

Moreover, firms that began operations or entered the U.S. market after the 

ITC’s original investigation are not eligible to receive CDSOA distributions. 

For petitions that have been investigated since CDSOA was enacted, 

producers would likely be aware of this linkage. The ITC and CBP told us 

that in a recent case involving shrimp, industry associations reached out 

broadly to ensure producers were aware of the need to communicate 

support to the ITC. Similarly, officials from a law firm that works with 

importers told us they were aware of such industry association efforts in 

cases involving live swine. However, in examining seven industries, we 

spoke to several ineligible companies that were frustrated because they 

had not expressed support during, or in some cases had not even known 

about, AD/CV investigations conducted before CDSOA’s adoption.

ITC Sometimes Does Not Collect 

Data from All Industry 

Participants

The ITC relies on company data that is sometimes incomplete, and this 

further limits eligibility. CDSOA’s criteria link companies’ eligibility to a 

process the ITC has long followed in investigating AD/CV petitions by U.S. 

domestic industry interests for relief from unfair imports. However, the 

ITC’s investigative process does not result in collecting information from 

all industry participants, because it is intended for purposes other than 

CDSOA. The ITC’s primary role in AD/CV investigations is to define the 

scope of the industry that is affected by competition from imported goods 

and to determine whether the industry has suffered or been threatened 

with material injury as a result of dumped or subsidized imports. The ITC 

collects information from U.S. producers, primarily by surveying them. ITC 

officials told us that they generally strive to cover 100 percent of industry 

production in their surveys and usually receive responses from producers 

accounting for a substantial share of production. In situations with a 

relatively small number of producers, ITC officials said they often succeed 

in getting coverage of 90 percent of the domestic industry. However, in 

certain circumstances, such as with agricultural products, which have a 

large number of small producers, ITC surveys a sample of U.S. producers 
Page 12 GAO-05-979 International Trade

instead of the entire industry.17 In these situations, it is not uncommon for 

the share of production reflected in the ITC’s questionnaire responses to 

account for 10 percent or less of production. 

Other Factors May Further Limit 

List of Eligible Producers ITC 

Provides CBP

The following four factors additionally define the list of eligible producers:

• The questionnaires that the ITC sends to domestic producers during its 

investigations have only asked respondents to indicate their position on 

the petition since 1985. For cases prior to 1985, only petitioners and 

producers who indicated support of the petition by letter in the ITC’s 

public reports or documents have been considered “affected domestic 

producers.”

• The ITC considers the most recent answer a company provides as the 

one that determines eligibility. In its investigations, the ITC sends out 

both preliminary and final surveys in which producers are asked about 

support for petitions. Presently, producers have the option of checking 

one of three boxes: (1) support, (2) take no position, and (3) oppose. 

According to ITC officials, because the statute requires support, only 

those firms that check the “support” box are considered eligible. 

Moreover, ITC’s practice has been to look to the most recent clear 

expression of a company’s position on the petition to determine its 

CDSOA eligibility. For example, if a company’s response was “support” 

on the preliminary survey but “take no position” on the final survey, the 

ITC interprets “take no position” as non-support, and considers the 

company ineligible for CDSOA disbursements.

• The ITC limits its list of potentially eligible producers to those who 

indicate their support can be made public. The ITC is required by statute 

to keep company information, including positions on petitions, 

confidential, unless the company waives its confidentiality rights.18

CDSOA requires CBP to publish the list of potentially eligible producers; 

as a result, the list the ITC provides CBP only includes companies who 

have affirmatively indicated willingness (in the original investigation or 

after) to have their support be made public.

17In situations where the ITC has good information about the universe of producers, the 

agency takes a stratified sample by dividing the universe of companies into different groups 

by size. It then draws a random sample from each group. However, in situations where the 

ITC has no information about the size of the industry, it simply takes a random sample.

18See 19 U.S.C. § 1677f.
Page 13 GAO-05-979 International Trade

• Because of CDSOA’s interpretation of the phrase “support of the 

petition,” the ITC only considers evidence of support during its initial 

investigation to satisfy CDSOA requirements. Once an investigation is 

over, a producer that has not communicated its support to the ITC 

cannot later become eligible for CDSOA disbursements, even if it 

supports the continuation of an existing order at the time of the 5-year 

“sunset review.” 

Several Companies Have 

Challenged CDSOA’s Eligibility 

Restrictions

Several companies have brought legal action challenging agency decisions 

that rendered them ineligible to receive disbursements, but none of these 

challenges have been successful. The following examples illustrate 

challenges to agency decisions: 

• A case was brought by candle companies to compel the payment of 

CDSOA distributions to them.19 The companies were not on the ITC’s list 

of potentially eligible producers and did not file timely certifications 

with CBP. The companies asserted that the ITC had violated CDSOA by 

failing to include them on the list of affected domestic producers and 

that this omission excused their failure to timely file their 

certifications.20 A federal appellate court held that the ITC properly 

excluded the two producers from the list of affected domestic 

producers because the producers provided support for the AD petition 

in a response to a confidential questionnaire and failed to waive 

confidentiality.21 The court also held that when the ITC properly 

excludes a producer from the list, the producer still must file a timely 

certification with CBP to obtain retroactive consideration for CDSOA 

distributions.22 As a result, the court found that the firms were not 

entitled to CDSOA disbursements for the years in question.

19Cathedral Candle Co. v. United States Int’l Trade Comm’n, 400 F.3d 1352 (Fed. Cir. 2005).

20Id. at 1360. 

21Id. at 1361, 1367.

22Id. at 1372. 
Page 14 GAO-05-979 International Trade

• Another set of candle companies, which had opposed the relevant 

petition and subsequently acquired companies in support of the same 

petition, brought a case seeking to obtain CDSOA disbursements on 

behalf of the acquired companies.23 An appellate court held that CDSOA 

bars claims made on behalf of otherwise affected domestic producers 

who were acquired by a company that opposed the investigation or were 

acquired by a business related to a company that opposed the 

investigation.24 The court also found that the acquired companies are 

also barred from claiming disbursements for themselves.25

• A seafood producer brought a case seeking an evidentiary hearing 

and/or inclusion of affidavits in the agency record where the producer 

was excluded from the list of affected domestic producers because the 

ITC had no record of the producer’s support for the petition. 26 The 

producer claimed that it had mailed a questionnaire response indicating 

support to the ITC on time and wanted to have its affidavits in support 

of the contention included in the agency’s records.27 The U.S. Court of 

International Trade held that because the producer failed to allege the 

proper reasons for amending the agency record, affidavits concerning 

the timely mailing of a questionnaire could not be added to the agency 

record and considered when reviewing the producer’s eligibility for a 

CDSOA distribution.28

Two other legal challenges are still pending and involve claims that CDSOA 

violates the First Amendment of the U.S. Constitution (“free speech”) by 

conditioning the distribution of benefits on a company’s expression of 

support for an AD/CV relief petition.29

23Candle Corp. of America v. United States Int’l Trade Comm’n, 374 F.3d 1087 (Fed. Cir. 

2004).

24Id. at 1094. 

25Id. at 1094.

26Bergeron’s Seafood v. United States Int’l Trade Comm’n, 306 F.Supp.2d 1353 (CIT 2004). 

27Id. at 1357.

28Id. at 1359.

29See PS Chez Sidney, L.L.C. v. United States Int’l Trade Comm’n, Court No. 02-00635 and

Bergeron’s Seafood v. United States Int’l Trade Comm’n, Court No. 03-00448.
Page 15 GAO-05-979 International Trade

Monies Collected on All 

Active Orders Fund Annual 

CDSOA Disbursements; 

Company Claims Determine 

Share of Disbursements

The second key CDSOA feature provides for CDSOA funding and a pro rata

mechanism for allocating funds among the companies that claim 

disbursements based on a broad definition of qualifying expenditures. 

Partly as a result of the incentive this creates, company claims approached 

$2 trillion in fiscal year 2004.

AD/CV Duties Fund CDSOA 

Disbursements

Each fiscal year’s duty assessments on all AD/CV duty orders that were in 

effect for that year fund annual CDSOA disbursements. Each fiscal year, 

CBP creates a special account that acts as an umbrella over multiple 

holding accounts used to track collections by specific active AD/CV duty 

orders and deposits collected duties under an order into its respective 

account. Within these accounts, CBP indicates that the dollar amounts 

attributable to each specific case are clearly identifiable. For example, a 

total of 351 AD/CV duty orders were in effect as of April 15, 2005, covering 

124 products from 50 countries. In other words, as of that date, CBP 

intended to allocate CDSOA disbursements not from “one CDSOA pie” but 

from “351 CDSOA pies.” Each of these accounts constitutes a separate fund 

from which CBP makes annual distributions. After the fiscal year closes, 

CBP distributes the duties collected and interest earned under a given 

order that year to the affected eligible producers filing timely claims related 

to the specific order.

The agency cannot distribute funds collected from one order to producers 

that were petitioners under other orders. For example, funds collected 

from the order on pineapples from Thailand cannot be used to pay 

producers covered by the frozen fish from Vietnam order. As a result, in 

fiscal year 2004, the one U.S. producer of pineapples received all the money 

collected under that order, but CBP did not make CDSOA disbursements to 

U.S. producers of frozen fish because the agency had not collected any 

funds under that order.
Page 16 GAO-05-979 International Trade

CDSOA Has Broad Definition of 

Qualifying Expenditures

CDSOA’s definition of expenses companies can claim is very broad. The 

law defines ten categories of qualifying expenditures, such as health 

benefits and working capital expenses, incurred during the production of 

the product under the order.30 According to CBP officials we spoke with, 

this broad definition means companies can include a wide range of 

expenses in their certifications. Moreover, CDSOA allows companies to 

claim any expenses incurred since an order was issued, a period that may 

span as far back as the early 1970s for some orders.31 Indeed, 68 of the 351 

orders in effect have been in place for 15 years or more. Companies can 

also make claims under multiple AD/CV orders. For example, in fiscal year 

2004, one of the top recipient companies filed claims for different products 

under 89 AD/CV orders. Finally, the law allows companies to submit claims 

for qualified expenditures that have not been reimbursed in previous fiscal 

years. However, CBP implementing regulations require that producers 

relate claimed expenditures to the production of the product that is 

covered by the scope of the order or finding. 

CDSOA Disbursements Are 

Proportional to Company Claims

CDSOA uses a pro rata formula to allocate disbursements under a given 

order among the eligible companies filing claims, with percentages 

determined according to the claims of qualifying expenditures submitted. If 

the amount collected under an order is insufficient for all claims to be paid 

in full, as is often the case, each company receives its pro rata share of the 

amount collected. This pro rata formula creates an incentive for producers 

to claim as many expenses as possible relative to other producers so that 

their share of the funds available under an order is as large as possible. 

CBP officials cited the increase in claims—from $1.2 trillion in fiscal year 

2001 to just under $2 trillion in fiscal year 2004—as an indication of this 

incentive.

30Namely, these expenditures might include expenses for manufacturing facilities; 

equipment; research and development; personnel training; acquisition of technology; health 

care benefits paid by the employer; pension benefits paid by the employer; environmental 

equipment, training, or technology; acquisition of raw materials and other inputs; and 

working capital or other funds needed to maintain production.

31Specifically, producers can claim expenses incurred after the issuance, and prior to the 

termination, of an order.
Page 17 GAO-05-979 International Trade

CDSOA Sets a Tight Time 

Frame for Disbursing 

Payments

The third key feature of CDSOA is that it sets a strict deadline by which 

CBP must distribute payments for a fiscal year. Most disbursement-related 

activities cannot begin until the fiscal year ends. As a result, CBP has a 

significant workload in October and November and cannot perform all the 

desired quality controls prior to disbursement.

CDSOA gives CBP a flexible time frame for processing claims and the CBP 

has used its discretion to give itself more time. Specifically, the law directs 

CBP to publish a Federal Register notice of its intent to distribute 

payments, and the list of affected domestic producers potentially eligible to 

receive payments under each order, at least 30 days before distributions are 

made. However, CBP has scheduled the publication, which is the first step 

in processing claims, at least 90 days before the end of the fiscal year for 

which distributions are being made. For the fiscal year 2004 disbursements, 

CBP actually published the notice on June 2, 2004—about 120 days before 

the end of the fiscal year. CBP requires producer claims/certifications to be 

submitted within 60 days after this notice is published. The fiscal year 2004 

deadline for submitting claims was August 2, 2004. This gave CBP the 

months of August and September to examine certifications, seek additional 

information from the producers, send acceptance or rejection letters to 

producers, and finalize a list of recipients. 

The law is not flexible in the time frame allowed for processing 

disbursements for a given fiscal year, specifying that payments must be 

made within 60 days after the first day of the following fiscal year. Because 

of the need to calculate funds available based on a completed fiscal year, 

CBP cannot commence these calculations until the following fiscal year. 

This tight time frame means that during October and November, CBP must 

perform the bulk of the tasks associated with calculating the funds 

available for disbursement under each order and the funds that will be 

distributed to each recipient company under an order. In discussions with 

us, CBP officials said CDSOA’s 60-day time frame for disbursing payments 

was tight, posing the biggest risk associated with running the program. For 

instance, in fiscal year 2002, the program missed this deadline by about 2 

weeks and, in the process, overpaid some producers. Efforts to collect 

these overpayments have yielded some results but are still continuing. An 

extension of 30 days in the disbursement deadline would give CBP 

additional time to undertake desired quality control measures before 

sending the instructions to Treasury and issuing payments. The present 

schedule does not allow sufficient time for quality control, forcing CBP to 

ask companies for repayment if errors are subsequently detected. 
Page 18 GAO-05-979 International Trade

CBP Faces Three Key 

Problems 

Implementing CDSOA

CBP faces three key problems in implementing CDSOA. First, despite some 

recent improvements, CBP’s processing of CDSOA claims and 

disbursements is labor intensive, and the agency is facing a dramatic 

increase in its 2005 workload. Second, the agency does not systematically 

verify claims and thus cannot be sure it appropriately distributes 

disbursements. Third, CBP disbursed only about half the funds that should 

have been available in fiscal year 2004 because of ongoing problems 

collecting AD/CV duties.

Figure 1 depicts how the various units of CBP and Treasury interact when 

processing claims, verifying claims, and making payments. Following the 

consolidation of CBP’s CDSOA program within the Revenue Division at 

Indianapolis in 2004, the division is now fully responsible for processing 

claims and disbursements. The division issues payment instructions for 

Treasury’s Financial Management Service, which actually issues CDSOA 

disbursement checks to U.S. companies. CBP’s Regulatory Audit Division 

may selectively perform claims verifications upon request of the CDSOA 

program. 

Figure 1: CBP’s and Treasury’s Units Involved in CDSOA Efforts

CBP’s CDSOA Program

Revenue Division

CBP’s Regulatory

Audit Division

Department of the

Treasury's Financial

Management Service

Source: GAO depiction based on CBP information.

Actual 

payments/ 

disbursements

Claims/ 

certifications

processing

Payments/ 

disbursements

processing

Claims/ 

certifications

verification
Page 19 GAO-05-979 International Trade

In addition to these offices within CBP, the Office of Regulations and 

Rulings addresses legal matters, the Office of the Chief Counsel addresses 

litigation, the Office of Information Technology provides necessary reports, 

and the Office of Field Operations is responsible for liquidations.

CBP’s CDSOA Program 

Faces Problems Processing 

Claims and Payments

The CDSOA program’s efforts to process claims and disbursements are 

cumbersome and likely to become more challenging with impending 

workload increases. The processing of claims and disbursements requires 

intensive manual efforts, in part because CBP does not require companies 

to file claims using a standardized form. Also, existing computer systems 

do not have the capabilities to produce the data needed to calculate 

amounts available for distribution. CBP’s guidance for filing claims is not 

sufficiently specific and causes confusion, requiring extra effort by CBP 

staff to answer questions from companies. CBP officials are concerned 

that, despite recent staffing increases, the number and experience level of 

staff may not be sufficient to handle the dramatic workload increase in 

fiscal year 2005. Despite being aware of these problems, CBP’s CDSOA 

program lacks plans for improving its processes, staff, and technology. 

Processing of Claims Is Labor 

Intensive

CDSOA claims processing is cumbersome and labor intensive. Through 

fiscal year 2004, CBP only received updates to the list of potentially eligible 

companies from the ITC in hard copy. As a result, CBP had to manually 

update its electronic database of potentially eligible producers. During the 

course of our review, ITC officials took the initiative to provide the list to 

CBP in hard copy and in electronic format to facilitate CBP’s processing of 

this information. CBP officials noted that getting the file electronically was 

very helpful. However, because CBP still needed to perform considerable 

data re-entry to get the list into the format they preferred, ITC and CBP 

officials told us they are exploring whether to formalize and improve this 

file exchange in the future. Because CBP does not require companies to 

submit claims electronically using a standardized form, program staff scan 

all the documents received for electronic storage and subsequently archive 

all paper copies of the documents. CDSOA program staff must review each 

claim to ensure it contains the required information, contact claimants to 

clarify basic information, and send out letters concerning rejected claims.32

Staff must manually enter information from accepted claims into a 

32Claims may be rejected if a claimant is not an eligible producer or fails to meet certain 

other CDSOA criteria.
Page 20 GAO-05-979 International Trade

“standalone” database, and perform repeated checks to ensure that they 

followed the prescribed procedures and that their data entries are valid and 

accurate. 

Gaps in Computer Systems 

Force Reliance on Manual 

Calculations of Disbursements

The payments processing component is also labor intensive because 

existing computer systems do not have the capabilities to provide precise 

information on the amounts available for disbursement under each order or 

the amounts to be disbursed to each claimant. CBP’s CDSOA program 

continues to face a risk in this area because its staff must manually perform 

the calculations and any inaccurate calculations can result in over or 

underpayments. Multiple data elements are required to determine the 

amounts available for disbursement, and these come from different 

computer systems. In some instances, the computer systems produce 

conflicting information, and program staff must manually reconcile these 

differences. While internal control procedures are in place to ensure the 

validity and accuracy of the calculations, the process is nonetheless subject 

to human error. Program officials told us that the new computer system 

being implemented agencywide will not have the financial component 

needed to perform this task for several more years. 

Guidance to Companies 

Generates Questions to CBP and 

Uncertainty by Companies

Claims processing is further complicated because the guidance about how 

to file CDSOA claims is very general and open to interpretation. As a result, 

CDSOA program staff field many phone calls from claimants regarding 

their claims, including clarification questions on how to file claims. 

Respondents to GAO’s questions generally praised CBP for its handling of 

these calls. However, a recent CBP verification of a company’s claims 

raised various claims-related questions. For example, CDSOA provides that 

companies can receive disbursements for qualifying expenditures not 

previously reimbursed, but officials involved in the verification said it was 

not clear whether companies must subtract all past disbursements when 

making claims under multiple orders, or only those disbursements related 

to a particular order. Also, one CDSOA recipient company reported that, 

because of uncertainty about whether cumulative expenses could be 

claimed, it claimed only 1 year’s expenses. As a result, it received a much 

smaller share of disbursements than it otherwise could have.

CDSOA Program Has Increased 

Staff but Faces Dramatic Growth 

in Workload

Although the number of staff assigned to process claims and payments has 

grown, program officials noted that this increase may not be sufficient to 

handle the dramatic workload increase expected in fiscal year 2005. 

Specifically, the number of eligible claimants has grown by 500 percent 

between fiscal years 2004 and 2005, and the number of claims might 
Page 21 GAO-05-979 International Trade

increase more than 10-fold, from 1,960 to over 29,000. This growth is largely 

due to AD duty orders on certain warm-water shrimp or prawns recently 

coming into effect. Table 1 shows the number of program staff for fiscal 

years 2003-2005 and the program’s responsibilities and workload during 

those years. 

Table 1: CBP’s CDSOA Program Staff, Responsibilities, and Workload

Source: GAO analysis of CBP data.

Program officials are concerned about fiscal year 2005 processing activities 

because only about half of the staff has processed claims and payments 

before. The rest are new and not experienced with the procedures. 

Moreover, if the workload becomes unmanageable, CBP may be unable to 

quickly bring new staff on board and up to speed. This is because new 

employees must undergo a 4 to 6 month background check and initial 

training of entry-level college graduates takes 3 to 4 months. New staff 

attains full proficiency only after they complete a full annual cycle of 

processing claims and payments. 

Despite these challenges, the CDSOA program does not have formal plans 

for improving its processes, technology, and staff. In our efforts to help 

improve the federal government’s performance, we regularly emphasize 

that processes, staff, and technology are vital to agency performance and 

that planning is central to managing and improving these three 

Fiscal 

year

Number

of staff Responsibilities Workload

2003 4 Process payments 

forwarded by CBP’s Office 

of Regulations and Rulings

Prepare for consolidation of 

the program

• Eligible claimants–1,000

• Claimants that filed-545

• Claims filed–2,196

• Claims per staff–549

2004 7 Process CDSOA claims and 

payments

• Eligible claimants–1,100

• Claimants that filed-493

• Claims filed–1,960

• Claims per staff–280

2005 9 Process CDSOA claims and 

payments

• Eligible claimants–5,400

• Claimants that filed–unknown

• Claims to be filed (est.)–29,300

• Claims per staff (est.) 3,255
Page 22 GAO-05-979 International Trade

organizational components.33 For instance, our work on human capital 

issues throughout the government has revealed the importance of having a 

human capital plan in place to address problems, such as those faced by 

the CDSOA program, and ensure that staff with the right skills and abilities 

is available continuously and can meet changing organizational needs.34

CBP Has Not Verified 

Claims Systematically

Claims verification poses another implementation problem for CBP. 

Companies are not held accountable for the claims they file because CBP 

does not require them to provide any supporting documentation for their 

claims and does not systematically verify company claims. The only 

comprehensive verification conducted to date found significant issues. 

Although CBP has put in place procedures for verifying CDSOA claims, it 

does not plan to implement them on a systematic or routine basis. 

Program officials told us they basically accept the information in company 

claims and rely on complaints from competitors to initiate verifications. In 

reviewing certain claims and CBP’s procedures, we found that claims are 

generally not questioned even though top CDSOA recipient companies 

have claimed over $2 trillion since fiscal year 2001 (see app.II). CBP 

normally does not take steps to determine that companies are still in 

business and producing the item covered by the order under which they are 

making a claim. Neither CDSOA nor CBP require companies to explain 

their claims, provide supporting documentation about their claims, or 

follow a format when listing their qualifying expenditures. For example, in 

reviewing the 2004 claims filed by top CDSOA recipients, we found that 

most companies did not provide any details about their claimed 

expenditures. Indeed, one company listed all of its claimed expenditures 

under the category of raw materials. CDSOA and CBP do not require that 

companies have their claims reviewed by a certified public accountant or a 

party outside of the company. 

33See Human Capital: Managing Human Capital in the 21st Century, GAO/T-GGD-00-77

(Washington, D.C.: Mar. 9, 2000).

34See Human Capital: Major Human Capital Challenges at SEC and Key Trade Agencies, 

GAO-02-662T (Washington, D.C.: Apr. 23, 2002); A Model of Strategic Human Capital 

Management, GAO-02-373SP, (Washington, D.C.: March 2002); Human Capital: Key 

Principles for Effective Strategic Workforce Planning, GAO-04-39 (Washington, D.C.: Dec. 

2003); and Human Capital: Observations on Final DHS Human Capital Regulations, 

GAO-05-391T (Washington, D.C.: Mar. 2, 2005).
Page 23 GAO-05-979 International Trade

CBP has only verified the claims of a handful of claimants. One of these 

verifications was comprehensive and revealed significant problems. In the 

first 3 years of the CDSOA program, staff in CBP’s Office of Regulations 

and Rulings conducted four, 1-day site visit verifications that revealed no 

substantive issues. Subsequently, CBP’s Regulatory Audit Division decided 

to conduct a fifth verification using the detailed verification procedures the 

division developed in mid-2004. This verification, which took about a year 

and was completed in June 2005, revealed significant problems, including 

substantial overstatement of claimed expenses. According to CBP, the 

primary cause of the CDSOA expenditure overstatement was the 

company’s failure to maintain an internal control system to prepare and 

support its CDSOA claims. This prevented the company from identifying 

the non-qualifying products and costs associated with them. As a result, the 

company included expenditures incurred in the production of products not 

covered by the scope of the AD/CV orders. The company acknowledged 

that it had wrongly claimed expenditures and subsequently took corrective 

action.

CBP does not plan to change its present reactive approach or to 

systematically target more companies for verifications. Although the law 

does not require verification of claims, CBP has recognized over time the 

need for them but has always stopped short of implementing a systematic 

verification plan. In the third year of CDSOA implementation, a CBP 

working group under the direction of the Deputy Commissioner’s office 

developed a statement of work to, among other things, verify claims 

according to a risk-based plan. However, CBP does not have any evidence 

that this plan was ever developed or implemented.

Despite having new claim verification procedures in place and having 

performed an in-depth verification as a prototype review to determine the 

extent of work involved in the verification, Regulatory Audit Division 

officials told us they do not plan to verify claims systematically or on a 

routine basis. Instead, CBP will continue to rely on complaints from 

competitors to select companies for verification. According to CBP 

officials, this approach is logical because the pro rata formula for 

allocating disbursements among firms creates an incentive for other 

companies to police their competitors. Although CBP has an agencywide 

risk-based plan for targeting companies for audits, this plan does not target 

the CDSOA program’s recipients because the agency does not consider the 

program a high risk to revenue or a high priority for policy reasons.
Page 24 GAO-05-979 International Trade

CBP’s current position is at odds with its own Inspector General’s (IG) 

position and our work on financial management, which highlights the 

importance of verifying claims. In its audit of the CDSOA program, 

Treasury’s IG emphasized the need for more robust claim verification. In 

the report, the IG questioned why CBP was not reviewing CDSOA claims 

on an annual basis, and particularly the expenditures claimed. The IG went 

on to note that certifications are legally subject to verification and that 

these certifications would serve as a deterrent against the submission of 

deceptive claims. Moreover, it emphasized that untimely verifications could 

result in the loss of revenue for other deserving companies if, in fact, 

deception was later discovered. Our overall work on claims and 

disbursements throughout the government shows that the systematic 

verification of claims before they are processed (or after they are paid) is 

key to ensuring the validity of transactions and to avoid disbursement 

problems such as improper payments.35 This work also reveals the 

importance of internal controls, such as verification, to ensure that only 

valid transactions are initiated in accordance with management decisions 

and directives. 

CBP’s Problems in 

Collecting AD/CV Duties 

Worsen

Collecting AD/CV duties has been another problem for CBP, compromising 

the effectiveness of AD/CV trade remedies generally and limiting funding 

available for distribution under CDSOA. CBP reported that the problem has 

grown dramatically in the last couple of years. For example, it distributed 

about half of the money that should have been available under CDSOA in 

fiscal year 2004. CBP’s efforts to date to address the causes of its 

collections problems have not been successful, leading CBP to pledge 

further steps in a July 2005 report to Congress.

Customs collections problems have been evident since mid-2003 and have 

two distinct components. Specifically, the 2003 report on CDSOA by 

Treasury’s IG highlighted CBP’s collections problems, raising particular 

concerns about the following two AD/CV collection issues:

35See, for example, GAO’s Policy and Procedures Manual for Guidance of Federal 

Agencies, title 7—Fiscal Guidance, ch. 6, Disbursements, pp. 7.6.1-7.6.16, (Washington, 

D.C.: May 18, 1993); Streamlining the Payment Process While Maintaining Effective 

Internal Control, GAO/AIMD-21.3.2 (Washington, D.C.: May 2000); Internal Control 

Management and Evaluation Tool, GAO-01-1008G (Washington, D.C.: August 2001) p.41; 

and Strategies to Manage Improper Payments, Learning from Public and Private Sector 

Organizations, GAO-02-69G (Washington, D.C.: October 2001).
Page 25 GAO-05-979 International Trade

• Unliquidated entries make the eventual collection of duties owed less 

certain. Liquidation is the final determination of duties owed on an 

import entry. Liquidation of import entries subject to AD/CV duties only 

occurs after Commerce issues a final order, determines final dumping 

margins or final net countervailable subsidies (i.e. duty), and issues 

liquidation instructions to CBP. Upon receipt of liquidation instructions, 

CBP calculates and seeks to collect the actual duties owed. In some 

cases, such as softwood lumber, liquidation is being suspended due to 

ongoing litigation. While neither Commerce nor CBP can hasten 

collection of duties tied up in litigation, Treasury’s IG report found that, 

in some cases, CBP was not collecting duties because Commerce had 

failed to issue proper liquidation instructions to CBP. In other cases, the 

report said CBP had overlooked Commerce liquidation instructions. The 

report said clearing up the liquidation backlog should be given a high 

priority given the substantial dollars involved—about $2 billion in 2003. 

Clearing the backlog is also urgent because discrepancies between 

unliquidated duties and final duties often means that CBP must attempt 

to collect additional sums from producers that did not expect to pay 

more, or that went out of business.36

• Open (unpaid or uncollected) duty bills are liquidated entries for which 

final bills have been issued but not paid. The Treasury’s IG report 

expressed concern that CBP had not collected $97 million in duties 

owed and said that the agency might not be able to recover some of 

these funds. Treasury’s IG said its discussion with CBP personnel 

suggested recovery could be difficult because: (1) port personnel are 

accepting bonds that are not sufficient to cover the duties owed plus 

interest when the entry is liquidated, and (2) the length of time between 

entry and liquidation is often several years, and in that time, some 

importers go out of business, leaving CBP with no way to go back for 

collection of additional duties.

36In the interim between the entry of imports after an AD/CV duty is first imposed and the 

final liquidation and collection of duties, CBP requires posting of cash deposits or, in limited 

circumstances, bonds to cover estimated duties. CBP also requires additional security, 

usually in the form of a continuous bond, on the entry. Because the final AD/CV rate often 

differs from the rates used to calculate these deposits, there are cases where CBP has 

collected less money than what is finally due. Moreover, the length of time that can elapse is 

sometimes several years, which further compromises duty collection. It also means that any 

measure CBP takes based on estimated duties, such as increasing continuous bond 

coverage, may not cover duties owed.
Page 26 GAO-05-979 International Trade

In response, CBP and Commerce took steps to identify and address the 

causes of CBP’s collections problems. CBP attributes the uncollected 

duties problem largely to “new shippers” with little import history,37 a 

problem that is particularly prevalent in the agriculture and aquaculture 

industries. According to CBP, one of these new shippers accounted for $130 

million in uncollected duties in fiscal year 2004. To address this problem, in 

2004, Commerce changed its new shipper review process and listed several 

steps it has taken to strengthen it. These included steps such as making the 

bondholder liable for duties owed on each import entry, and formalizing a 

checklist to ensure the legitimacy of new shippers and their sales. 

Subsequently in 2004, CBP announced an amended directive to help ensure 

that duties on agriculture and aquaculture imports were collected properly 

by reviewing and applying a new formula for bonds on these imports, 

effectively increasing these bonds by setting them at higher rates. 

Nevertheless, since the problem and its basic reasons became known in 

2003, the size of CBP’s collections problem has more than doubled. As 

figure 2 shows, according to CBP data, $4.2 billion in AD/CV duties 

remained unliquidated and $260 million in AD/CV duties were unpaid at the 

end of fiscal year 2004. According to CBP, a large amount of the 

unliquidated entries involves duties on softwood lumber from Canada 

37A “new shipper” is a foreign exporter or producer that did not export, and is not affiliated 

with, an exporter or producer that exported to the United States during the period of AD/CV 

investigation and that has begun to export to the United States. This shipper can request a 

separate, expedited review (called a “new shipper” review) to establish his own estimated 

dumping margin. The new shipper has the option of posting a bond or security in lieu of 

cash once Commerce determines that the company meets the requirements and initiates a 

review. Commerce conducts the review based on at least one shipment. The United States 

has expressed concern about abuse of such privileges, which were provided for in article 9.5 

of the WTO Antidumping Agreement and subsequently codified in U.S. law and regulations 

at 19 U.S.C. § 1675 (a)(2)(B)(iii). The concern is that, based on a single transaction, new 

shippers have received very low rates that allow them to post bonds at low rates and ship 

goods at low prices, subverting entirely or delaying relief to domestic producers from 

injurious imports. Moreover, CBP has had problems collecting duties when Commerce, after 

completing its review and finding higher dumping margins, has issued orders for CBP to 

liquidate the prior entries at higher rates. When CBP has tried to collect these higher rates 

(on goods that originally entered at a low rate), both new shippers and bondsmen have not 

been able to pay the duties owed. For example, CBP confirmed that it only collected $25.5 

million of the $195.5 million in AD duties owed on crawfish between 2002 and 2004. The 

antidumping order against freshwater crawfish tail meat from the People's Republic of 

China has involved numerous new shipper reviews. In many of these cases, new shippers 

were initially granted a very low rate, which was later raised significantly upon review. For 

example, one Chinese exporter was granted a rate of 0 percent (no duty) in May 1999 after 

requesting a new shipper review. However, an administrative review completed in April 2000 

raised its rate to 201.63 percent.
Page 27 GAO-05-979 International Trade

(about $3.7 billion). In February 2005, CBP reported to Congress that it had 

developed a plan to isolate suspended entries that were beyond the normal 

time frames of an AD/CV case and then worked with Commerce to obtain 

liquidation instructions, reducing the inventory of one million suspended 

entries by 80,000. However, many unliquidated entries remain and some of 

the unliquidated entries are still due to problems within CBP’s and 

Commerce’s control. CBP estimates that over 90 percent of all unliquidated 

AD/CV entries are awaiting Commerce instructions for liquidation. 

Regarding unpaid duties, a large percentage pertains to imports from 

China. Specifically, nearly two-thirds of these unpaid duties (about $170 

million) relate to an AD order on crawfish tail meat from China. The second 

largest amount (about $25 million) relate to an AD order on fresh garlic 

from China.

Figure 2: Potential Fiscal Year 2004 AD/CV Duties Available for Distribution under 

CDSOA and Actual CDSOA Disbursements

Potential AD/CV duties 

available for distribution 

$4.7 billion

Unliquidated AD/CV 

duties

$4.2 billion

Liquidated AD/CV duties

$549 million

Unpaid/uncollected 

AD/CV duties

$260 million

Actual AD/CV duties 

available for distribution

$294 million

Actual AD/CV duties 

distributed

$285 million

Source: GAO analysis of CBP data.
Page 28 GAO-05-979 International Trade

CBP’s continued collections problems have led to calls for more drastic 

measures. Several industry groups, including representatives of the garlic, 

honey, mushroom, and crawfish industries, have advocated for elimination 

of the new shipper bonding rules in favor of cash deposits on entries for 

new AD orders. Most crawfish and some steel recipients responding to our 

questionnaire also raised concerns about CBP’s collection efforts and 

quality of communication about ongoing problems.

As a result, CBP is pursuing additional measures. In a February 2005 report 

to Congress, CBP said it is working with Treasury to address financial risks 

associated with bond holders’ insolvency and monitoring of 

agriculture/aquaculture importers’ compliance with its new bonding 

requirements on a weekly basis. In its July 2005 report to Congress, CBP 

highlights that it has begun working with other U.S. agencies to develop 

legislative proposals and other solutions to better address AD/CV duty 

collection problems. CBP notes that it plans to forward the results of this 

interagency effort to Congress by December 2005. Meanwhile, Congress is 

considering legislation that would change new shipper privileges.38

CDSOA Payments 

Largely Concentrated 

on a Few Companies 

and Industries, with 

Mixed Effects 

Reported

Most CDSOA payments went to a small number of U.S. producers and 

industries, with mixed effects reported. Top recipient companies reported 

that the payments had positive overall effects, although their assessments 

of the extent of the benefits varied. Leading recipient companies within the 

seven industries we examined also reported varying positive effects. In 

four of these industries—bearings, candles, crawfish, and pasta—

recipients we contacted reported benefits, but some non-recipients said 

that CDSOA payments were having adverse effects on their ability to 

compete in the U.S. market. Although some have argued that CDSOA has 

caused increases in the number of AD/CV petitions filed and in the scope 

and duration of AD/CV duty orders, the evidence to date is inconclusive. 

A Few U.S. Producers and 

Industries Received the 

Bulk of CDSOA Payments

From fiscal year 2001 to fiscal year 2004, CBP has distributed 

approximately $1 billion in CDSOA payments to 770 companies from a 

broad range of industries. These payments have been highly concentrated 

in a few companies. Figure 3 shows the share of payments going to the top 

five companies and the share received by the remaining CDSOA recipients. 

38See H.R. 3283, 109th Cong. (2005). 
Page 29 GAO-05-979 International Trade

One company, Timken, a bearings producer, received about twenty percent 

of total distributions, approximately $205 million, during fiscal years 2001-

2004.39 Five companies, including Timken, received nearly half of the total 

payments, or about $486 million.

Figure 3: FY 2001-2004 CDSOA Payments to the Top Five Companies and to the 

Remaining Companies

Figure 4 shows the distribution of payments to the top 39 recipient 

companies that have received 80 percent of total CDSOA disbursements. 

These top recipient companies included several producers of steel, 

candles, and pasta. They also included producers of cement, chemicals, 

cookware, pencils, pineapples, and textiles.

39The fourth-leading recipient, MPB Corporation, is a subsidiary of the Timken Company. 

For fiscal years 2001, 2003, and 2004, CBP distributed CDSOA distributions separately to 

Timken and MPB. Timken also acquired the Torrington Company, the second-leading 

CDSOA recipient, in February 2003. 

20% 20%

5%

5%

33%

13%

Remaining 731 companies ($203 million)

Candle-lite ($57 million)

MPB Corporation ($55 million)

3% Zenith Electronics Corporation

($33 million)

The Timken Company ($205 million)

Next 34 companies ($347 million)

The Torrington Company ($135 million)

Source: GAO analysis of CBP data.

Total $1,035 million
Page 30 GAO-05-979 International Trade

Figure 4: Fiscal Year 2001-2004 Distribution of CDSOA Payments to the 39 Leading Recipient Companies 

Notes: 

a

The data for Torrington reflects the payments it received for fiscal years 2001 and 2002, prior to its 

acquisition by Timken. 

b

In 1972 Candle-lite was acquired by Lancaster Colony Corporation of which it remains a division 

today. For fiscal years 2001-2003, Lancaster Colony received CDSOA distributions under the name 

Candle-lite. The amount paid to Candle-lite and Lancaster Colony should be added together for an 

accurate account of CDSOA distributions made to the Candle-lite Division of Lancaster Colony 

Corporation. Total fiscal year 2001-2004 distributions equal $82,985,544 or 58.21 percent of total 

distributions to the candle industry. 

c

New World Pasta acquired Hershey Foods Corporation in 1999. CBP also made CDSOA distributions 

to New World Pasta. The amount paid to Hershey Foods (New World Pasta) does not include these 

separate distributions to New World Pasta, which were $3,584,898.

d

Eramet Marietta is included in this figure as a top recipient company because it is listed by CBP as 

having received CDSOA funds for fiscal year 2002. After contacting this company, we discovered that it 

was required to send back its CDSOA money to CBP due to a CBP overpayment error. 

Dollars in millions

Source: GAO analysis of CBP data.

Recipients

0 50 100 150 200 250

Remaining 731 companies

Armco Steel Corporation

A. Zerega's Sons

Olin Corporation

Allied Tube & Conduit

Neenah Foundry Corporation

USEC 

Lafarge North America

Holcim (US)

Lumi-Lite Candle Company

Sanford

Bethlehem Steel Corporation

J&L Specialty Steel

Eramet Mariettad

Reed Candle Company

Maverick Tube Corporation

Hershey Foods (New World Pasta)c

General Wax & Candle

Maui Pineapple Company

North American Stainless

Regal Ware

The Gates Rubber Company

International Steel Group

Muench-Kreuzer Candle Company

American Italian Pasta Company

Allegheny Ludlum Corporation

AK Steel Corporation

Emerson Power Transmission

E.I. du Pont de Nemours & Company

Carpenter Technology Corporation

Wellman

Home Fragrance Holdings

United States Steel Corporation

Lancaster Colony Corporationb

Micron Technology

Zenith Electronics Corporation

MPB Corporation

Candle-liteb

The Torrington Companya

The Timken Company
Page 31 GAO-05-979 International Trade

For most of the top recipient companies responding to our questionnaire, 

the ratio of CDSOA payments to sales was less than 3 percent. Specifically, 

the ratio of payments to sales ranged from less than 1 percent to over 30 

percent. The ratio was generally the smallest for steel companies and the 

largest for candle companies.

In analyzing CDSOA distributions by industry, or product group, the 

payments are similarly concentrated among only a few industries or 

product groups. For example, approximately two-thirds of total CDSOA 

distributions went to three product groups—bearings, candles, and iron 

and steel mills—which recieved approximately 40 percent, 14 percent, and 

12 percent respectively. Also, 95 percent of all total payments went to 24 

out of the 77 product groups. Figure 5 shows the leading industries or 

product groups that received CDSOA distributions.
Page 32 GAO-05-979 International Trade

Figure 5: Top 24 Product Groups Receiving CDSOA Disbursements, FY 2001-2004 

Dollars in millions

Source: GAO analysis of CBP data.

Industry/product group

0 100 200 300 400 500

Remaining 53 industries/

product groups

Brass sheet and strip

Roller chain

Low enriched uranium

Hand tools

Industrial nitrocellulose

Brake rotors

Preserved mushrooms

Softwood lumbar

Iron metal castings

Manganese metal

Canned pineapple

Cased pencils

Cooking ware

Industrial belts

Steel mill products

Gray portland cement and clinker

Crawfish tail meat

Fibers

Pasta

S/DRAMS

TV & picture tubes

Iron and steel mills

Petroleum wax candles

Ball and roller bearings
Page 33 GAO-05-979 International Trade

Companies Report Mixed 

Effects from CDSOA 

Payments

Top Recipients of CDSOA 

Payments Reported Varying 

Positive Effects

As detailed in appendix II, the 24 companies that responded to our survey 

of top CDSOA recipients indicated that the CDSOA disbursements had 

positive effects, but the extent of benefit varied from slight to substantial.40

We asked these companies to assess CDSOA’s effects at both the industry 

and company level on a number of different dimensions including prices, 

investment, employment, and ability to compete. The top recipients 

reported that CDSOA had the most positive impact in areas such as net 

income and employment. For example, one company commented that 

CDSOA payments have allowed for substantial investments in its factory 

and workers, providing, among other things, supplemental health care 

benefits. Another company reported that CDSOA payments have been 

helpful in justifying continued investment during periods when prices are 

depressed, due to dumping or subsidization. The top recipients reported 

that CDSOA had less of an effect in other areas such as prices and market 

share. For example, a company commented that disbursements have had 

little or no effect on prices for its CDSOA product because such prices are 

ultimately determined by market forces.

Companies in Seven Industries 

Reported a Mix of Positive and 

Negative Impacts

As detailed in appendix III, in our examination of seven industries that 

received CDSOA payments—bearings, steel, candles, pasta, dynamic 

random access memory (DRAM) semiconductors, crawfish, and softwood 

lumber—leading recipients we contacted generally reported benefits to 

varying degrees, and the non-recipients we contacted either complained 

about being disadvantaged or did not report effects.41 In four industries—

bearings, candles, crawfish, and pasta—recipients generally reported 

benefits, but some non-recipients complained that the disbursements were 

having negative effects on them. These industries all involve cases that 

predate CDSOA. In general, the non-recipients that complained of negative 

effects are ineligible for disbursements and several complained about their 

ineligibility. 

40We did not verify the accuracy of statements from these CDSOA recipients.

41We did not verify the accuracy of statements from CDSOA recipients and non-recipients in 

these seven industries.
Page 34 GAO-05-979 International Trade

• Bearings. The leading domestic producer of bearings is eligible for 

CDSOA disbursements, but several large foreign-owned companies with 

longstanding production in the United States are its major competitors 

and ineligible. Three bearings recipient companies commented that 

CDSOA has had positive effects, although they varied in their 

assessments of the extent of the benefit. One company stated that the 

disbursements helped it to replace equipment and enabled it to recover 

to the position it had held prior to being injured from dumping. Another 

recipient commented that, while the CDSOA disbursements were 

helpful, they were distributed several years after the initial injury and 

did not fully compensate the company for lost profits due to unfair 

trade. Two non-recipients provided views. One non-recipient 

commented that CDSOA harms global bearings companies because the 

antidumping duties they pay are transferred directly to a competitor. It 

further commented that not only is it forced to subsidize competitors 

through CDSOA, but the money it is paying in duties limits its ability to 

invest in and expand its U.S. operations. The other said it is too early to 

know what injurious effect CDSOA disbursements would have on nonrecipients.

• Steel. In this industry, the largest U.S. producers are CDSOA recipients.42

Recipient companies reported that payments—though small relative to 

company size and the challenges they face in their capital-intensive 

industries—had positive effects. Steel accounts for the single largest 

industry share of outstanding dumping orders, and most major U.S. 

producers receive CDSOA payments under numerous AD/CV orders on 

different products. Steel recipients we contacted varied in their 

assessments of CDSOA’s effects, but generally agreed that the program 

benefited them by providing greater opportunities for making needed 

capital investments in their plant and equipment. Steel recipients also 

commented, though, that CDSOA has not been a complete solution to 

the serious problems they faced. When the Asian financial crisis 

spawned rising imports, falling steel prices, and consolidating of firms, 

42Within the steel industry, the non-recipients tended to be smaller and typically were not 

direct competitors of the leading recipients. Only one non-recipient steel company 

responded to our questionnaire on CDSOA, and it did not provide views on the program. 
Page 35 GAO-05-979 International Trade

the receipt of CDSOA disbursements did not prevent several steel 

producers from joining numerous others in the industry in filing for 

bankruptcy.43

• Candles. Ten of the estimated 400 U.S. candle companies are eligible 

and receive CDSOA disbursements. A number of recipients contended 

that distributions have helped keep them in business, enabling them to 

develop newer, better, and safer candles through investment in 

equipment and research and development. One recipient stated that it 

has been able to offer employees more consistent and comprehensive 

benefits packages due to CDSOA. Several large candle producers that 

are comparable in size to leading recipients complained that they are in 

favor of the order but are ineligible to receive CDSOA disbursements. 

Some non-recipients argue that recipients have an unfair advantage in 

their ability to keep prices lower than they otherwise would. For 

instance, a major non-recipient company has closed two of four of its 

domestic manufacturing facilities and has reduced shifts at others. A 

smaller non-recipient company contended that when it matched its 

competitors’ lower prices, it was not able to make a profit. As a result, 

the company stated that it was forced to exit this segment of the candle 

business and release some workers.

• Crawfish. About 30 small, family-owned crawfish processors have 

received CDSOA disbursements.44 Recipients said CDSOA payments 

provided the industry with its first effective relief against dumped 

imports in several years and enabled them to buy and process more 

crawfish, make long-needed repairs and investments, hire more 

employees, and pay off debts. In June 2003, the ITC reported that 

CDSOA disbursements to some domestic producers had converted an 

industrywide net loss into net income.45 The 16 crawfish tail meat 

processors who received CDSOA distributions that we spoke with 

generally believe that the program has had positive effects on the 

43According to data provided by a steel industry representative, 42 steel companies declared 

bankruptcy and 19 ceased operations from 1997 to 2003. Many of these companies were 

subsequently acquired by larger companies.

44Although CBP data indicates payments were made to 35 different companies between 

fiscal year 2002 and 2004, several of these companies reported under different names in 

different years.

45See U.S. International Trade Commission Crawfish Tail Meat from China, Investigation 

No. 731-TA-752 (Review), Publication 3614, (Washington, D.C.: July 2003).
Page 36 GAO-05-979 International Trade

industry and their companies, keeping businesses open and employees 

working. Non-recipients we spoke with in this industry said that CDSOA 

had helped recipient companies---but had put them at a competitive 

disadvantage. These companies want to be eligible for CDSOA 

disbursements and several reported they had contacted certain 

government and congressional sources to try to address their eligibility 

status, but were told they did not meet the law’s eligibility requirements 

regarding the expression of support during the investigation. As 

discussed previously, two of these companies brought legal action to 

challenge agency decisions on their eligibility status. Because they also 

have to compete against cheap Chinese imports, these non-recipients 

viewed the application of the law as unfair. In addition, several said they 

were not able to compete with recipient companies that offer processed 

tail meat at prices below their cost of production and appear to be able 

to do so because the recipients’ CDSOA disbursements will compensate 

them for any losses. In such conditions, some non-recipients said they 

cannot operate profitably and some decided to stop processing tail 

meat.

• Pasta. Three of the four leading U.S. pasta makers received CDSOA 

disbursements, but the fourth producer is ineligible. The top two 

CDSOA recipients in this industry did not respond to our questions, and 

one of them has filed for bankruptcy. The four CDSOA recipients that 

responded said they had used the funds to increase or upgrade 

equipment, invest in research and product development, defray 

manufacturing costs, and expand production capacity. Nevertheless, 

CDSOA payments, while not insignificant, were not large relative to 

sales or enough to offset other problems that the industry faces, such as 

decreased demand for pasta due to low-carbohydrate diets and low 

margins. Most non-recipients we contacted said CDSOA had no effect, 

but a few non-recipients said that the funds had created an uneven 

playing field and decreased their ability to compete in the marketplace. 

Several of these companies tried to file for CDSOA funds, but were 

found ineligible. The large non-recipient company said the money it pays 

in duties transferred to its competitors could have been used for 

product development, capital investment, and expansion of its new U.S. 

operations.

• DRAMs. All four major DRAM producers in the United States currently 

have production facilities in the United States as well as abroad; 

however, three of these companies are U.S. subsidiaries of foreign 

producers and have entered the market within the last decade. A CV 
Page 37 GAO-05-979 International Trade

order is in effect for DRAMs produced by one Korean company only,46

but the bulk of the distributions were made under an AD order on 

DRAMs of one megabit and above from Korea issued in 1993 and 

revoked in 2000, as well as on an AD order on SRAMs (static random 

access memory chips) issued in 1998 and revoked in 2002. A leading 

CDSOA recipient was the sole recipient of duties on these revoked 

orders. Fabrication facility costs are high and require complete 

replacement every few years. The DRAM industry is cyclical in nature 

and subject to “booms and busts,” where demand is driven by 

investments in computers and other end products. Both CDSOA 

recipients reported some net losses. One company reported benefits 

from receiving payments and another reported fewer effects; both 

payments were small relative to their net sales.

• Softwood Lumber. Both CDSOA recipients and non-recipients include 

leading softwood lumber producers. Recipients and non-recipients that 

we contacted indicated that disbursements to date have been too small 

to have a discernable effect. However, non-recipients expressed 

concern about potential adverse effects in the future, should the $3.7 

billion in AD/CV duties being held on deposit pending liquidation ever be 

distributed. These duties are presently in escrow pending the outcome 

of litigation by Canadian interests against the U.S. duties.

Effects of CDSOA on the 

Number of AD/CV Relief 

Petition Filings Not Clear

Current evidence does not clearly demonstrate that CDSOA is linked to an 

increasing number of AD/CV petition filings. Critics have raised concerns 

that, by awarding a portion of the tariff revenue that results from 

successful petitions, CDSOA could potentially lead to more AD/CV petition 

filings and thereby more restrictions on imports, to the detriment of the 

U.S. economy. However, the evidence we analyzed was inconclusive.

Because CDSOA provides direct financial benefits to firms participating or 

supporting AD/CV petitions by awarding them a proportion of the tariff 

revenue, some analysts have warned that CDSOA could lead to more 

petitions and to more companies supporting the filings because only 

46Recipients for this CV order include the U.S. company, and a U.S. subsidiary of a German 

company. The U.S. subsidiaries of the two Korean companies opposed the petition and 

therefore are ineligible to receive distributions.
Page 38 GAO-05-979 International Trade

companies who supported the petition would receive disbursements.47 A 

report by the Congressional Budget Office48 (CBO) supports this view, 

arguing on economic incentive grounds that CDSOA encourages more 

firms to file or support petitions and discourages settling cases. CBO also 

argues that firms may resume production or increase their output due to 

CDSOA, which would result in inefficient use of resources and would be 

harmful to the U.S. economy and consumers.

Our examination of the actual number of filings shows that there is no clear 

trend of increased AD/CV petition filings since CDSOA.49 Figure 6 shows 

that since the passage of CDSOA in 2000, the number of petitions spiked in 

2001 and then sharply declined over the next three years. Moreover, this fits 

the historical pattern of the number of AD/CV petition filings, which also do 

not show a clear upward trend. The number of AD/CV petitions filed each 

year has fluctuated widely, ranging from a maximum of 120 in 1985 to a 

minimum of 16 cases in 1995. Economists have found evidence that the 

number of antidumping filings is closely linked to macroeconomic 

conditions and real exchange rates.50

47See, for example, Kara Olson, Subsidizing Rent Seeking: Antidumping Protection and 

the Byrd Amendment, American University, 2004.

48See Economic Analysis of the Continued Dumping and Subsidy Offset Act of 2000, The 

Congressional Budget Office, 2004.

49For example, our regression analysis of the number of filings each year, versus 

macroeconomic conditions, which include real exchange rates, and CDSOA’s passage, was 

inconclusive and did not show clear evidence that CDSOA had an impact on the number of 

filings.

50Generally, there tend to be more AD/CV filings following years with slower U.S. economic 

growth and when the U.S. dollar appreciates against foreign currencies, which makes 

imports cheaper. See, for example, Michael Knetter and Thomas Prusa, Macroeconomic 

Factors and Antidumping Filings: Evidence from Four Countries, NBER Working Paper 

8010, 2000; Douglas Irvin, The Rise of Antidumping Actions in Historical Perspective, 

Department of Economics, Dartmouth College, 2004; and Richard Feinberg, U.S. 

Antidumping Enforcement and Macroeconomic Indicators: What Do Petitioners Expect, 

and Are They Correct?, Department of Economics, American University, 2004.
Page 39 GAO-05-979 International Trade

Figure 6: Number of AD/CV Petitions Filed 1980-2004

Our analysis of company responses to our case study questions similarly 

reveals mixed evidence but no trend. In general, companies told us CDSOA 

had little impact on their decision whether to file AD/CV relief petitions. 

Most companies that responded to our questions said that filing and 

winning new cases was too expensive, and the receipt of CDSOA payments 

was too speculative, for CDSOA to be a major factor in their filing decision. 

For example, producers accounting for a sizeable share of U.S. softwood 

lumber production freely chose not to support the case, despite being 

aware of the prospect of sizeable CDSOA disbursements. However, 

bearings companies that had not supported earlier cases subsequently 

supported a later case on China brought after CDSOA’s passage.

Effects of CDSOA on Scope 

and Duration of AD/CV Duty 

Orders Also Not Clear

In addition to the number of filings, our interviews and responses from 

companies in the seven industries we examined revealed a few allegations 

that CDSOA resulted in orders that cover imports of more products for 

longer periods—that is, through wider-than-necessary product scopes of 

0

20

40

60

80

100

120

CV petitions filed

AD petitions filed

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Number of AD/CV petitions filed CDSOA

Oct. 2000

Year

Source: GAO analysis of ITC data.
Page 40 GAO-05-979 International Trade

AD/CV duty orders and longer-than-warranted retention of existing orders. 

However, these allegations contradicted other examples, and we could not 

independently verify them.51 One steel user, for example, complained that 

CDSOA disbursements were a factor in the denial of its request for 

narrowing the scope of an order and claimed the result has been to put 

certain U.S. fastener makers at a disadvantage. In contrast, one steel 

company noted that the domestic industry has no incentive to overly 

broaden the scope of an AD/CV relief petition because doing so could 

undermine its ability to prove injury and to obtain an order in the first 

place. Bearings recipient companies similarly responded that CDSOA has 

not affected the scope or duration of AD/CV duty orders and said regular 

“sunset” reviews should ensure the government terminates unwarranted 

orders. Bearings non-recipients, on the other hand, drew a connection 

between the main CDSOA beneficiary within the industry and its support 

for continuance of orders. In the candle industry, companies universally 

reported that they are united in supporting retention of the existing order, 

but divided over efforts by some candle firms to expand its scope.

Retaliation Against 

U.S. Producers 

Underway for U.S. 

Failure to Comply with 

WTO Ruling on CDSOA

After finding the CDSOA inconsistent with WTO agreements and after the 

United States’ failure to bring the act in compliance with the agreements, in 

2004 the WTO gave 8 of the 11 members that complained about CDSOA 

authorization to suspend concessions or other WTO obligations owed to 

the United States. Canada, the European Unian (EU), Mexico and Japan 

have consequently applied additional tariffs to U.S. imports, and others are 

authorized to follow. 

WTO Rules CDSOA Not in 

Compliance with U.S. WTO 

Obligations

In 2003, the WTO found the CDSOA inconsistent with U.S. obligations 

under WTO agreements and asked the United States to bring the act into 

conformity with WTO Agreements.52 Eleven members had brought 

complaints about the CDSOA to the WTO and prevailed in their claims that 

51We were unable to obtain detailed scope-related AD/CV duty orders data from U.S. 

agencies because this data is not currently available. For instance, the number of petitioners 

and supporters of an order, the number of products covered by an order, and the number of 

products excluded from an order after it went into effect are not readily available for the 

years preceding and following the enactment of CDSOA.

52United States — Continued Dumping and Subsidy Offset Act of 2000, 

WT/DS217/AB/BRA,CHL, EEC, IND, JPN, KOR; WT/DS234/AB/CAN, MEX.
Page 41 GAO-05-979 International Trade

the CDSOA is inconsistent with WTO agreements. 53 The WTO found that 

CDSOA was not consistent with U.S. WTO obligations because it was not 

one of the permitted specific actions against dumping and subsidization 

specifically listed in applicable WTO agreements.54

The United States Pledges 

to Comply, but Has Not Yet 

Done So

The following the ruling, the United States indicated its intention to 

comply. WTO gave the United States until December 27, 2003, to bring the 

CDSOA into conformity with the organization’s pertinent agreements. 

However, all efforts to repeal the law have thus far been unsuccessful. 

Meanwhile, the United States is also pursuing negotiations at the WTO to 

address the right of WTO members to distribute AD/CV duties.

The President proposed repealing CDSOA in his fiscal year 2004, 2005, and 

2006 budget submissions. Senate Bill 129955 was introduced in Congress in 

2003 to amend the CDSOA and House Bill 393356 in 2004 to repeal the 

CDSOA. Neither of these efforts succeeded during that legislative session 

of Congress and thus expired. In a March 10, 2005, status report to the 

WTO, the United States reaffirmed its commitment to bringing the CDSOA 

into conformity with WTO agreements.57 The United States also reported 

that House Bill 112158 had been introduced on March 3, 2005, to repeal 

CDSOA and that it had been referred to the Committee on Ways and Means. 

Also in 2005, Senator Grassley introduced Amendment 1680 to the 

Departments of Commerce and Justice, Science and Related Agencies 

Appropriations bill to prohibit any further CDSOA distributions until the 

USTR determines that such distributions are not inconsistent with 

53These members were Australia, Brazil, Canada, Chile, the European Union, India, 

Indonesia, Japan, Korea, Mexico, and Thailand.

54WT/DS217/AB/EEC, paragraph 274.

55Bill to amend the Trade Act of 1974 to provide trade readjustment and development 

enhancement for America's communities, and for other purposes, S. 1299, 108th Cong. 

(2003).

56Bill to repeal section 754 of the Tariff Act of 1930, H.R. 3933, 108th Cong. (2004). 

57WT/DS217/16/Add.14 and WT/DS234/16/Add.14. 

58Bill to repeal section 754 of the Tariff Act of 1930, H.R. 1121, 109th Cong. (2005). 
Page 42 GAO-05-979 International Trade

U.S. WTO obligations.59 However, as of the date of publication of this 

report, Congress has not passed House Bill 1121 and the Senate Committee 

on Appropriations has not adopted Amendment 1680. 

Since late 2001, the United States has been engaged in WTO negotiations at 

the Doha Round, which may include changes to the WTO agreements under 

which CDSOA was challenged. Following a congressional mandate to the 

USTR and Commerce that negotiations shall be conducted within the WTO 

to recognize the right of its members to distribute monies collected from 

antidumping and countervailing duties,60 the United States submitted a 

paper to the WTO Rules Negotiating Group stating that “the right of WTO 

Members to distribute monies collected from antidumping and 

countervailing duties”61 should be an issue to be discussed by the 

negotiating group. USTR officials told us that, to date, the U.S. proposal has 

not attracted support from any other WTO member. 

WTO Authorizes Eight of Its 

Members to Retaliate; 

Canada, the European 

Union, Mexico, and Japan 

Have Imposed Additional 

Tariffs

In January 2004, 8 of the 11 complainants—Brazil, Canada, Chile, the EU 

India, Japan, Korea, and Mexico—sought and secured authorization to 

retaliate against the United States. As a result of binding arbitration 

regarding the level of authorized retaliation, the eight members received 

authorization to impose an additional import duty on U.S. exports covering 

a total value of trade up to 72 percent of the total of disbursements made 

under the CDSOA for the preceding year relating to AD/CV duties on that 

member’s products each year.62 The total suspension authorized for 2005 

could be up to $134 million based on the fiscal year 2004 CDSOA 

disbursements. Specifically, for fiscal year 2004 disbursements, the WTO 

arbitrators authorized the imposition of additional duties covering a total 

value of trade not exceeding $0.3 million for Brazil, $11.2 million for 

Canada, $0.6 million for Chile, $27.8 million for the EU, $1.4 million for 

India, $52.1 million for Japan, $20.0 million for Korea, and $20.9 million for 

59See Amendment No. 1680 to the appropriations bill for Science, the Departments of State, 

Justice, and Commerce, and related agencies for the fiscal year ending September 30, 2006, 

H.R. 2862, 109th Cong. (2005). 

60See Consolidated Appropriations Act of 2005, Pub. L. No. 108-447, Div. B, title II, 118 Stat. 

2809, 2872, 2874 (2004).

61TN/RL/W/153.

62United States — Continued Dumping and Subsidy Offset Act of 2000, 

WT/DS217/ARB/BRA, CHL, EEC, IND, JPN, KOR and WT/DS234/ARB/CAN, MEX.
Page 43 GAO-05-979 International Trade

Mexico. On May 1, 2005, Canada and the European Communities began the 

imposition of additional duties on various U.S. exports. In particular, 

Canada has imposed a 15 percent tariff on live swine, cigarettes, oysters, 

and certain specialty fish (including live ornamental fish and certain frozen 

fish) and the EU have imposed a 15 percent tariff on various paper 

products, various types of trousers and shorts, sweet corn, metal frames, 

and crane lorries. On August 18, 2005, Mexico began imposing additional 

duties on U.S. exports such as chewing gum, wines, and milk-based 

products. On September 1, 2005, Japan began imposing additional duties on 

U.S. exports such as steel products and bearings. The remaining four 

members say they might suspend concessions. 

The three members that did not request authorization to retaliate— 

Australia, Indonesia, and Thailand— have agreed to extend the deadline for 

requesting authorization indefinitely.63 As agreed, the countries will give the 

United States advance notice before seeking authorization to retaliate. In 

return, the countries retain the ability to request authorization to retaliate 

at any point in the future, and the United States agreed not to seek to block 

those requests. See figure 7 for a timeline of events related to the WTO 

decision on CDSOA.

63See WT/DS217/44, WT/DS217/45, and WT/DS217/46.
Page 44 GAO-05-979 International Trade

Figure 7: Timeline of WTO-Related Events on CDSOA 

Conclusions Congress’ stated purposes in enacting CDSOA were to strengthen the 

remedial nature of U.S. trade laws, restore conditions of fair trade, and 

assist domestic producers. Our review suggests that the implementation of 

CDSOA is achieving some objectives more effectively than others. One 

reason is that, as a result of some of the key features of CDSOA, the law in 

practice operates differently from trade remedies. For instance, while trade 

remedies such as AD/CV duties generally provide relief to all producers in a 

S O O N N D DJFMAMJJAS JFMAMJJASONDJFMAMJJASONDJFMAMJJA JJA SOND JFMAM

2000 2001 2002 2003 2004 2005

Dec. 21

Australia, Brazil, 

Chile, the 

European Union, 

India, Indonesia, 

and Japan 

request 

consultations 

with the United 

States

June 8

Korea and Thailand 

request consultations 

with the United States

May 21

Canada and Mexico 

request consultations 

with the United States

July 12

Australia, Brazil, Chile, the 

European Union, India, 

Indonesia, Japan, Korea, and 

Thailand request a Dispute 

Settlement Panel.

Aug. 10

Canada and Mexico join 

in the request for the 

establishment of a panel.

Sept. 16

Dispute Settlement 

Panel finds the 

CDSOA in violation 

of WTO agreements.

Jan. 27

The Dispute Settlement 

Body adopts the Appellate 

body report and the Panel 

report.

Jan. 16

Appellate body affirms the 

panel decision. United 

States has until 

December 27, 2003 to 

bring the CDSOA into 

compliance with WTO 

rules.

Jan. 23

United States objects to 

the amount of retaliation 

proposed and seeks 

arbitration to determine 

amount of permitted 

retaliation.

Aug. 31

WTO arbitration 

decision issued.

Dec. 27

United States fails to 

bring CDSOA into 

compliance, plaintiffs can 

now seek authorization to 

suspend concessions.

Jan. 15

Brazil, Canada, Chile, the 

European Union, India, 

Japan, Mexico, and Korea 

seek authorization to 

suspend concessions or 

other obligations owed to 

the United States

Sept. 1

Japan 

commences 

suspension of 

concessions or 

other obligations

Source: GAO analysis of WTO data.

S O ND

Aug. 18

Mexico 

commences 

suspension of 

concessions or 

other obligations

Dec. 7

Chile requests 

authorization to 

retaliate.

Nov. 11

Brazil, Canada, the 

European Union, India, 

Japan, Korea, and 

Mexico request 

authorization to retaliate 

at the rate set by the 

Arbitrator.

May 1

Canada and the European 

Union commence 

suspension of concessions 

or other obligations.
Page 45 GAO-05-979 International Trade

particular market, the eligibility requirements of CDSOA limit relief to only 

a subset of domestic producers—only those that petitioned for relief or 

that publicly supported the petition by sending a letter to the ITC or filling 

an ITC questionnaire while the agency was conducting its original 

investigation and remain in operation. Our analysis of CDSOA 

disbursement data and company views on the effects of CDSOA indicate 

that CDSOA has provided significant financial benefits to certain U.S. 

producers but little or no benefits to others. As a result, CDSOA has, in 

some cases, created advantages for those U.S. producers that are eligible 

and receive the bulk of disbursements over those U.S. producers that 

receive little relief or are ineligible, by choice or circumstance. Moreover, 

because the WTO found that CDSOA did not comply with WTO 

agreements, the EU, Canada, Mexico, and Japan recently retaliated against 

U.S. exports and this imposes costs on a number of U.S. companies 

exporting to those markets.

In implementing CDSOA, CBP faces problems processing CDSOA claims 

and payments, verifying these claims, and collecting AD/CV duties. The 

CDSOA program’s time frame for processing payments is already too tight 

to perform desired quality controls. The dramatic growth in the program’s 

workload--an estimated 10-fold increase in the number of claims in fiscal 

year 2005 and the potential disbursement of billions of dollars from 

softwood lumber duties--heighten program risks. CBP’s labor-intensive 

process for claims could be streamlined through steps such as regularly 

obtaining from the ITC electronic updates of the list of potentially eligible 

companies and having companies file CDSOA claims using a standard form 

and submit them electronically. CBP’s recent comprehensive company 

claim verification effort also indicates that the agency needs additional 

guidance in place for filing claims. In addition, CBP lacks plans for 

managing and improving its CDSOA program’s processes, staff, and 

technology. For instance, it needs a human capital plan for enhancing its 

staff in the face of dramatic growth in workload processing for both 

CDSOA claims and payments. Accountability for the accuracy of the claims 

is virtually non-existent and CBP has no plans to verify claims 

systematically or on a routine basis. Finally, CDSOA has helped highlight 

CBP’s collection problems. Despite reports to Congress on its efforts to 

address these problems, CBP faced a doubling in the AD/CV collections 

shortfall in fiscal year 2004, to $260 million. This shortfall not only reduces 

the amount available for disbursement under CDSOA, but also undermines 

the effectiveness of the trade remedies generally. 
Page 46 GAO-05-979 International Trade

Matters for 

Congressional 

Consideration

Given the results of our review, as Congress carries out its CDSOA 

oversight functions and considers related legislative proposals, it should 

consider whether CDSOA is achieving the goals of strengthening the 

remedial nature of U.S. trade laws, restoring conditions of fair trade, and 

assisting domestic producers. 

If Congress decides to retain and modify CDSOA, it should also consider 

extending CBP’s 60-day deadline for completing the disbursement of 

CDSOA funds. Meeting this deadline has been a problem in the past, and 

may be even more difficult in the future given that the program is 

experiencing a dramatic growth in its workload. For instance, extending 

the deadline for processing payments for another 30 days would give the 

program’s staff additional time for processing payments and for pursuing 

additional internal control activities.

Recommendations for 

Executive Action

To the extent that Congress chooses to continue implementing CDSOA, we 

recommend that the Secretary of Homeland Security direct the 

Commissioner of Customs and Border Protection to enhance the 

processing of CDSOA claims and payments, the verification of these 

claims, and the collection of AD/CV duties. Specifically, we recommend 

that:

• To improve the processing of CDSOA claims, CBP should implement 

labor savings steps such as working with the ITC to formalize and 

standardize exchanges of electronic updates of the list of eligible 

producers, and requiring that company claims follow a standard form 

and be submitted electronically. This would also reduce data entryrelated errors.

• To further improve the processing of claims, CBP should provide 

additional guidance for preparing CDSOA certifications or claims.

• To enhance the processing of claims and payments in the face of a 

growing workload, CBP should develop and implement plans for 

managing and improving its CDSOA program processes, staff, and 

technology. For instance, a human capital plan would help ensure that 

the CDSOA program has staff in place with the appropriate 

competencies, skills, and abilities. 
Page 47 GAO-05-979 International Trade

• To enhance accountability for claims, CBP should implement a plan for 

systematically verifying CDSOA claims. This plan should aim to ensure 

that companies receiving CDSOA disbursements are accountable for the 

claims they make. CBP should also consider asking companies to justify 

their claims by providing additional information on their claims, such as 

an explanation of the basis for the claim, supporting financial 

information, and an independent assessment of the claim’s validity and 

accuracy.

• To better address antidumping and countervailing duty collection 

problems, CBP should report to Congress on what factors have 

contributed to the collection problems, the status and impact of efforts 

to date to address these problems, and how CBP, in conjunction with 

other agencies, proposes to improve the collection of antidumping and 

countervailing duties.

Agency Comments and 

Our Evaluation

We provided a draft of this report to the U.S. International Trade 

Commission, Customs and Border Protection, and the Office of the U.S. 

Trade Representative. We obtained written comments from CBP (see app. 

IV). CBP concurred with our recommendations. We also received technical 

comments on this draft from our liaisons at CBP, the ITC and USTR, which 

we have incorporated where appropriate.

We are sending copies of this report to interested congressional 

committees, the U.S. International Trade Commission, Customs and Border 

Protection, and the Office of the U.S. Trade Representative. We will also 

make copies available to others upon request. In addition, the report will be 

available at no charge on the GAO Web site at http://www.gao.gov.
Page 48 GAO-05-979 International Trade

If you or your staff have any questions about this report, please contact me 

at (202) 512-4347. Contact points for our Offices of Congressional Relations 

and Public Affairs may be found on the last page of this report. GAO staff 

who made major contributions to this report are listed in appendix V.

Loren Yager, Director

International Affairs and Trade
Page 49 GAO-05-979 International Trade

Appendix I

Objectives, Scope, and Methodology ApApenednxidexiIs

At the request of the Chairman of the House Subcommittee on Trade, 

Committee on Ways and Means, as well as several House Members, we 

examined the implementation and effects of the Continued Dumping and 

Subsidy Offset Act (CDSOA) of 2000. Specifically, we assessed (1) what 

key legal requirements guide and have affected agency implementation of 

CDSOA; (2) what problems, if any, U.S. agencies have faced in 

implementing CDSOA; and (3) which U.S. companies and industries have 

received payments under CDSOA and what effects these payments have 

had for recipient and non-recipient companies; and described (4) the status 

of the World Trade Organization (WTO) decisions on CDSOA.

To determine the key legal requirements that guide and have affected 

agency implementation of CDSOA, we obtained and reviewed legislation 

and regulations establishing the requirements and procedures for the 

International Trade Commission (ITC) to determine company eligibility to 

receive CDSOA funds and for the Department of Homeland Security’s 

Customs and Border Protection (CBP) to implement CDSOA. We discussed 

these requirements and their relationship to agency implementation with 

officials at the ITC and CBP that carry out the agencies’ respective roles. 

We also reviewed judicial opinions and other documents associated with 

certain legal cases that have been brought to challenge key requirements of 

CDSOA, and incorporated the viewpoints expressed by some companies 

that we contacted in addressing our third objective, which illustrated the 

impacts of certain requirements. 

To assess the problems, if any, U.S. agencies have faced in implementing 

CDSOA, we first determined the agency roles and responsibilities that 

CDSOA established. We then obtained and analyzed ITC and CBP 

documents outlining their procedures for carrying out their CDSOA 

responsibilities and discussed with agency officials the actions the 

agencies have taken to implement CDSOA. We reviewed evaluations of 

CDSOA operations in both the Department of the Treasury (Treasury) and 

ITC conducted by the Inspectors General (IG) of those agencies. We also 

obtained from CBP a statement of work that had been developed for 

improving CBP’s management of the CDSOA program. We discussed 

agency implementation of CDSOA with officials from the Departments of 

Commerce and Agriculture, as well as certain industry representatives, 

affected companies, and law firms that handle CDSOA-related actions for 

their clients. We also reviewed GAO’s documents on human capital and 
Appendix I

Objectives, Scope, and Methodology

Page 50 GAO-05-979 International Trade

disbursements1 for additional criteria to assess the agencies’ 

implementation of CDSOA. Our work focused on certain problems at CBP:

• To assess CBP’s claims and payments processing procedures, we 

conducted field work at CBP’s Revenue Division in Indianapolis where 

we met with officials and staff of the CDSOA Team. After they gave us a 

comprehensive briefing of their CDSOA operations, we observed these 

operations, reviewed documentation of their procedures, and discussed 

challenges they face in implementing the law. We discussed changes in 

the CDSOA Team’s workload over time with these officials and obtained 

data on their workload and staff resources. We discussed the team’s 

procedures for counting and recording eligible and actual claimants and 

claims, which included information they obtain from the ITC on eligible 

producers and internal controls the team applies to ensure accuracy in 

receiving and processing claims. We determined that their data were 

sufficiently reliable for the purpose of analyzing the changing 

relationship between the team’s workload and staff resources. 

• To assess CBP’s approach to verifying claims, we discussed the 

approach and the extent of claim verification since the program’s 

inception with CBP officials and we reviewed CBP procedures for 

verifying company claims that were developed in 2004. We also 

reviewed documentation of a comprehensive verification of one 

company’s CDSOA claims that was conducted using these new 

procedures. Because this verification raised issues about the quality and 

consistency of CBP’s guidance regarding claims submission, we 

examined the fiscal year 2004 claim files for 32 top CDSOA recipients to 

ascertain the prevalence of these issues and also obtained the 

viewpoints of certain CDSOA recipients on CBP’s claims guidance.

• To describe CBP’s efforts to collect the anti-dumping (AD) and 

countervailing (CV) duties that fund CDSOA, we obtained and reviewed 

data on CBP’s annual CDSOA disbursements and AD/CV duty 

liquidations and collections. To assess the reliability of the data on 

unliquidated AD/CV duties, we compared them to data used by 

Treasury’s IG in its 2003 report and performed basic reasonable checks. 

We determined the data were sufficiently reliable to support the finding 

that there had been a substantial increase in unliquidated AD/CV duties 

1

See GAO, Internal Control and Management Evaluation Tool, GAO-01-1008G

(Washington, D.C.: August 2001).
Appendix I

Objectives, Scope, and Methodology

Page 51 GAO-05-979 International Trade

since 2002. We also reviewed CBP reports to Congress in 2004 and 2005 

that reported on AD/CV duty collections issues and problems and the 

section of the 2003 Treasury IG report that addressed CBP’s efforts 

related to liquidating and collecting AD/CV duties. Finally, we 

incorporated the viewpoints of certain companies and industry groups 

about the status of uncollected duties, and CBP’s efforts to collect them.

To determine which U.S. companies and industries have received payments 

under CDSOA and what effects these payments have had for recipient and 

non-recipient companies, we obtained and analyzed CBP’s annual 

disbursement data for fiscal years 2001 to 2004 and collected information 

from top CDSOA recipients and from recipients and non-recipients in seven 

industries. Specifically, we identified 770 companies that had received 

disbursements at some point during fiscal years 2001 through 2004 and 

combined the multiple disbursements that companies may have received to 

calculate the total amount of disbursements made to each company during 

this period. Some companies received disbursements under different 

names or were acquired by, or merged with or were otherwise affiliated 

with, other companies on the list during this period. We did not make 

adjustments to the number of companies, but rather retained the company 

distinctions in the data as CBP provided it. We then identified 39 companies 

that had received the top 80 percent of the disbursements made during 

fiscal years 2001 through 2004 and we reported information about these 

disbursements. Using this data, we also identified the top 24 product 

groups that received 95 percent of disbursements during fiscal years 2001 

through 2004, and we reported information about these disbursements. 

We assessed the reliability CBP’s CDSOA disbursements data, and the 

related Harmonized Tariff Schedule data, and Census Bureau’s data 

matching the Harmonized Tariff Schedule to the North American Industry 

Classification System by (1) performing electronic testing of required data 

elements, (2) reviewing existing information about the data and the system 

that produced them, and (3) interviewing agency officials knowledgeable 

about the data. We determined that the data were sufficiently reliable for 

the purposes of this report.

To further determine the effects of CDSOA payments on recipients and 

non-recipients, we primarily relied on the views provided by top CDSOA 

recipient companies and of certain recipients and non-recipients in 7 of the 

top 24 industries (bearings, steel, candles, pasta, DRAMs, crawfish, and 
Appendix I

Objectives, Scope, and Methodology

Page 52 GAO-05-979 International Trade

softwood lumber) to which CDSOA payments have been made.2 We 

selected these industries based on a range of criteria including: the leading 

recipients of CDSOA funds; industries with the most AD/CV duty orders; 

industries receiving press coverage related to CDSOA; and industries 

considered by certain experts to have unique or noteworthy situations. In 

selecting these industries, we also considered including different types of 

industries and industries with differing numbers of CDSOA recipients. We 

consulted with experts at the ITC, the Departments of Commerce and 

Agriculture, and relevant trade associations to help define the industries 

and identify leading non-recipients companies within them. In addition, we 

obtained industry background from ITC investigative reports and other 

official industry sources. 

To obtain these companies’ views on CDSOA, we developed and sent out a 

questionnaire to top CDSOA recipient companies, and a set of structured 

questions to selected recipient and non-recipient companies in the seven 

case study industries. We developed and pretested the questionnaire 

between February and April 2005. Our structured questions were based on 

the items in our questionnaires. 

We sent surveys to 32 of the top 39 recipient companies we had identified.3

Twenty-four of these companies provided written responses to our 

questions. Their views are not necessarily representative of all CDSOA 

recipients.

We selected non-probability samples of CDSOA recipients and nonrecipients that are U.S. producers for each of our seven case study 

industries.4

 We selected recipient companies based primarily on the 

amount of CDSOA funds they had received between fiscal year 2001 and 

2004. However, in certain industries with small numbers of recipients, 

2

We were not able to verify the accuracy of statements from CDSOA recipients and nonrecipients.

3

We sent surveys to the 32 of the 39 companies that received 80 percent of CDSOA payments 

from 2001-2004. Six of the seven companies that we did not survey either were no longer in 

operation or had been acquired by another company that did respond to our survey. The 

additional company that we did not survey was required to send back its CDSOA payments 

to CBP due to a CBP overpayment error. Eight of the top recipients that we contacted did 

not respond to our survey.

4

Some of the recipients and non-recipients may be U.S. producers that are foreign-owned. 

We did not exclude these companies from our sample because CDSOA does not restrict 

foreign-owned U.S. producers from receiving CDSOA payments.
Appendix I

Objectives, Scope, and Methodology

Page 53 GAO-05-979 International Trade

including bearings, DRAMs, and candles, we sent structured questions to 

all recipient companies. We selected non-recipient companies based on 

industry experts’ views of the importance of the companies and recipient 

company views of their major non-recipient competitors. We also 

considered available lists of companies by industry, but found that these 

lists had limitations in terms of coverage and could not be used to draw 

probability samples. Overall, we selected 69 recipient and 82 non-recipient 

companies in the seven industries. 

In total, we received 61 written responses from recipient companies and 31 

written responses from non-recipient companies. Appendix III provides 

details on how many companies we contacted and received information 

from for each industry. All recipient companies in the bearings, DRAMs, 

and candles industries provided responses, and these responses can be 

generalized. For recipient companies in the other four industries, and for 

non-recipient companies in all the industries, the responses we received 

cannot be generalized because of the non-probability samples we used 

and/or the number of responses we received. Thus, in these cases, the 

views we report are not necessarily representative of their respective 

groups. However, we supplemented the information we received with 

telephone interviews to verify, and in some cases, expand upon, the 

information that some companies provided. We also compared the overall 

responses in each industry with industry experts’ views and the 

information contained in available studies, such as ITC reports, and found 

the information we gathered to be broadly consistent with these sources.

Finally, within this objective, we also conducted an analysis on the trends 

in the filings of AD/CV relief petitions. We collected data on the number, 

type, and status of AD/CV duty orders from the ITC and Commerce. We 

verified this information directly with the Federal Register notices, which 

are the official sources for AD and CV orders. We determined that the data 

were sufficiently reliable for the purposes of this report. In addition, we 

reviewed literature on the determinants of AD petition filings. We applied 

regression analysis to study the effects of macroeconomic conditions, real 

exchange rates, and CDSOA itself on the number of petition filings. We also 

asked the companies we surveyed to discuss CDSOA’s impact on AD/CV 

filings and interviewed industry representatives to gain an understanding of 

what affects their decision to file or support AD/CV petitions, and whether 

CDSOA was a significant factor in their decision. 

To determine the status of the WTO decisions on CDSOA, we analyzed 

official U.S., foreign government, and WTO documents. We also 
Appendix I

Objectives, Scope, and Methodology

Page 54 GAO-05-979 International Trade

interviewed officials from the Office of the U.S. Trade Representative and 

the Department of State. 

We conducted our work in Washington, D.C., and Indianapolis, Indiana, 

from September 2004 to September 2005 in accordance with generally 

accepted government auditing standards.
Page 55 GAO-05-979 International Trade

Appendix II

Top CDSOA Recipient Companies ApendxiI

This appendix provides information on the CDSOA payments1 received by 

the top recipient companies and the views of these companies on CDSOA’s 

effects. 

CDSOA Payments to 

the Top Recipient 

Companies 

Table 2 lists the top 39 companies that received 80 percent of the total 

CDSOA payments during fiscal years 2001-2004. This table also presents 

each company’s percentage of the total payments and the cumulative 

percentages. Each company’s industry is also listed.

Table 2: Fiscal Years 2001-2004 CDSOA Distributions to Top Recipient Companies 

1

All CDSOA disbursements are in nominal dollars. We also analyzed disbursement data in 

constant dollars, but the differences between disbursements in nominal and constant 

dollars are minimal given the short time span and fairly low inflation rate over the period 

covered by our analysis.

Dollars in thousands

Rank Company Amount paid Amount claimed

Percentage of

total payments

Cumulative

percentage of

total payments Industry

1 The Timken 

Companya

 $205,328,783 $59,990,348,732 19.83 19.83 Bearings

2 The Torrington 

Companya

 135,349,304 22,175,725,680 13.07 32.90 Bearings

3 Candle-liteb 56,759,989 1,285,509,591 5.48 38.38 Candles

4 MPB 

Corporationc

 55,131,485 9,158,867,720 5.32 43.71 Bearings

5 Zenith 

Electronics 

Corporation

 33,412,990

 23,270,258,343

3.23 46.93 Television sets

6 Micron 

Technology

 33,389,988 9,093,423,782 3.22 50.16 DRAMs

7 Lancaster Colony 

Corporationb

 26,225,555 1,382,869,375 2.53 52.69 Candles

8 United States 

Steel 

Corporation

 22,925,628 590,935,208,013 2.21 54.91 Steel products

9 Home Fragrance 

Holdings

 20,394,804 444,243,884 1.97 56.88 Candles

10 Wellman 15,681,319 1,291,294,651 1.51 58.39 Polyester fibers
Appendix II

Top CDSOA Recipient Companies

Page 56 GAO-05-979 International Trade

11 Carpenter 

Technology 

Corporation

 13,991,133 24,272,753,229 1.35 59.74 Steel products 

12 E.I. du Pont de 

Nemours and 

Company

 12,485,357 6,188,244,053 1.21 60.95 Chemical 

products

13 Emerson Power 

Transmission

 12,132,932 6,518,385,490 1.17 62.12 Bearings

14 AK Steel 

Corporation

 11,337,171 273,729,695,233 1.09 63.21 Steel products

15 Allegheny 

Ludlum 

Corporation

 11,107,788 42,821,265,506 1.07 64.29 Steel products

16 American Italian 

Pasta Company

 11,052,969 8,063,794,100 1.07 65.35 Pasta

17 Muench-Kreuzer 

Candle Company

 10,695,594 212,476,879 1.03 66.39 Candles

18 International 

Steel Group

 10,374,465 568,595,773,448 1.00 67.39 Steel products

19 The Gates 

Rubber 

Company

 10,208,272 2,037,888,247 0.99 68.37 Rubber 

products

20 Regal Ware 9,804,074 1,364,648,692 0.95 69.32 Stainless steel 

cooking ware

21 North American 

Stainless

 9,697,133 35,786,766,024 0.94 70.26 Steel products

22 Maui Pineapple 

Company

 9,376,864 335,327,969 0.91 71.16 Pineapples

23 General Wax & 

Candle

 9,297,725 150,256,642 0.90 72.06 Candles

24 Hershey Foods 

(New World 

Pasta)d

 8,136,032 4,853,308,844 0.79 72.85 Pasta

25 Maverick Tube 

Corporation

 7,295,447 35,919,351,631 0.70 73.55 Steel products

26 Reed Candle 

Company

 7,214,429 152,164,485 0.70 74.25 Candles

27 Eramet Mariettae 6,274,365 32,661,954 0.61 74.85 Manganese 

metal

28 J&L Specialty 

Steel

 6,227,041 21,580,366,304 0.60 75.46 Steel products

(Continued From Previous Page)

Dollars in thousands

Rank Company Amount paid Amount claimed

Percentage of

total payments

Cumulative

percentage of

total payments Industry
Appendix II

Top CDSOA Recipient Companies

Page 57 GAO-05-979 International Trade

Source: GAO analysis of CBP data.

Notes: 

a

Timken acquired Torrington in February 2003. The CDSOA distributions we report for Torrington in 

this table reflect the distributions received by Torrington in FY 2001 and FY 2002.

b

In 1972 Candle-lite was acquired by Lancaster Colony Corporation of which it remains a division 

today. For fiscal years 2001-2003, Lancaster Colony received CDSOA distributions under the name 

Candle-lite. The “amount paid” for Candle-lite and Lancaster Colony should be added together for an 

accurate account of CDSOA distributions made to the Candle-lite Division of Lancaster Colony 

Corporation Total fiscal year 2001-2004 distributions equal $82,985,544 or 58.21 percent of total 

distributions to the candle industry. Likewise, the amount claimed for Lancaster Colony Corporation is 

applicable to Candle-lite. 

c

MPB Corporation is a subsidiary of Timken. CDSOA distributions are listed separately for Timken and 

MPB because they reflect the CDSOA distributions as reported by CBP. 

d

New World Pasta acquired Hershey Foods Corporation in 1999. CBP also made CDSOA distributions 

to New World Pasta. The amount paid to Hershey Foods (New World Pasta) does not include these 

separate distributions to New World Pasta, which were $3,584,898. 

e

Eramet Marietta is included in this table as a top recipient company because it is listed by CBP as 

having received CDSOA funds in fiscal year 2002. After contacting this company, we discovered that it 

was required to send back its CDSOA money to CBP due to a CBP overpayment error. 

29 Bethlehem Steel 

Company

 5,975,849 277,902,636,707 0.58 76.03 Steel products

30 Sanford 5,892,337 478,764,505 0.57 76.60 Cased pencils

31 Lumi-Lite Candle 

Company

 5,625,486 89,582,027 0.54 77.15 Candles

32 Holcim (US) 4,726,614 6,986,480,910 0.46 77.60 Cement

33 Lafarge North 

America

 4,633,793 6,850,627,559 0.45 78.05 Cement

34 USEC 4,401,004 411,300,000 0.43 78.47 Low enriched 

uranium

35 Neenah Foundry 

Company

 4,307,616 5,849,676,065 0.42 78.89 Iron castings

36 Allied Tube & 

Conduit

 4,198,722 21,792,742,720 0.41 79.30 Steel pipe

37 Olin Corporation 3,987,611 7,517,617,388 0.39 79.68 Brass sheet 

and strip

38 A. Zerega’s Sons 3,889,333 2,290,556,634 0.38 80.06 Pasta

39 Armco Steel 

Corporation

 3,716,372 155,054,850,596 0.36 80.42 Steel products

Total $563,228,970 $2,236,867,713,610 80.42 80.42

(Continued From Previous Page)

Dollars in thousands

Rank Company Amount paid Amount claimed

Percentage of

total payments

Cumulative

percentage of

total payments Industry
Appendix II

Top CDSOA Recipient Companies

Page 58 GAO-05-979 International Trade

CDSOA Effects on Top 

Recipient Companies 

Top Recipients of CDSOA 

Payments Reported Varying 

Positive Effects

We sent surveys to the companies that received 80 percent of the CDSOA 

payments from 2001 through 2004, asking for their views on CDSOA’s 

effects.2

 We asked these companies to assess CDSOA’s effects on a number 

of different dimensions including prices, employment, and ability to 

compete. 

We asked the companies to rate CDSOA’s effect, ranging from 1 (very 

positive) to 5 (very negative) for each particular company dimension.3

The top recipients reported that CDSOA had the most positive impact in 

the areas of net income and employment.4 In its written comments, one 

company stated that CDSOA payments have allowed it to make substantial 

investments in its plant and its workers, including providing supplemental 

health care benefits. The top recipients reported that CDSOA had less of 

effect in areas such as prices, net sales, and market share. Several 

companies commented that, for example, disbursements have had little or 

no effect on prices for its CDSOA products, since such prices are ultimately 

determined by market forces. 

The ratio of CDSOA payments to company net sales ranged from less than 1 

percent to over 30 percent. However, this ratio was less than 3 percent for 

all but five companies. 

In table 3 we present summary information on these companies’ responses.

2

We sent surveys to 32 of the 39 companies that received 80 percent of CDSOA payments for 

fiscal years 2001-2004. Six of the seven companies that we did not survey either were no 

longer in operation or had been acquired by another company that did respond to our 

survey. The additional company that we did not survey was required to send back its 

CDSOA payments to CBP due to a CBP overpayment error. Eight of the top recipients that 

we contacted did not respond to our survey. 

3

To conserve space in table 3 we combined the company responses of “very positive” and 

“positive” into one category for positive effects. Similarly we combined the “very negative” 

and “negative” categories into one category for negative effects.

4

We were not able to verify the accuracy of statements from these CDSOA recipients. 
Appendix II

Top CDSOA Recipient Companies

Page 59 GAO-05-979 International Trade

Table 3: CDSOA Effects on Top Recipient Companies

Source: GAO analysis of company questionnaires. 

CDSOA Effect on Company 

Ability to Compete in U.S. 

Market

Table 4 shows that 17 of the 24 companies reported that CDSOA had 

increased their ability to compete in the U.S. market.

Table 4: CDSOA Effect on Companies’ Ability to Compete in U.S. Market

Source: GAO analysis of company questionaires.

Category

Positive

effects

Little or no

effects

Negative

effects

No basis to

judge

Number of

respondents

Prices 2 20 0 0 22

Net sales 5 15 0 3 23

Gross profits 12 10 0 1 23

Net income 20 2 0 1 23

Property, 

plant, and 

equipment 17 6 0 1 24

Research and 

development 16 6 0 1 23

Employment 17 5 0 1 23

Ability to 

compete 14 9 0 0 23

Market share 4 17 0 1 22

Increased

Stayed about

the same Decreased

Don’t know/no

basis to judge

Number of

respondents

17 7 0 0 24
Page 60 GAO-05-979 International Trade

Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries ApendxiI

This appendix provides information on the CDSOA payments1 received by 

recipient companies in seven industries: bearings, steel, candles, DRAMs, 

pasta, crawfish, and softwood lumber. It also discusses the views of 

recipient and non-recipient companies in these industries on CDSOA’s 

effects.2

 

Figure 8 shows the share of CDSOA disbursements received by U.S. 

companies in the seven industries and in the remaining industries.

1

All CDSOA disbursements are in nominal dollars. We also analyzed disbursement data in 

constant dollars, but the differences between disbursements in nominal and constant 

dollars are minimal given the short time span and fairly low inflation rate over the period 

covered by our analysis.

2

We were unable to obtain the views of CDSOA non-recipients from the steel and DRAMs 

industries. We also were not able to verify the accuracy of statements from CDSOA 

recipients and non-recipients in these seven industries. 
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 61 GAO-05-979 International Trade

Figure 8: Fiscal Year 2001-2004 CDSOA Disbursements by Industries

Views on CDSOA from 

Recipients and NonRecipients in the 

Bearings Industry

Background Bearings are used in virtually all mechanical devices and are used to reduce 

friction in moving parts. Types of bearings include ball bearings, tapered 

roller bearings, and spherical plain bearings. The market for bearings is 

25%

14%

40%

12%

Candles ($143 million)

Steel ($129 million)

3% DRAMs ($33 million)

3% Pasta ($33 million)

1% Lumber ($5 million)

2% Crawfish ($25 million)

Remaining industries ($254 million)

Bearings ($413 million)

Source: GAO analysis of CBP data.

Total $1,035 million
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 62 GAO-05-979 International Trade

global and dominated by only a few multinational companies.3 Within the 

U.S. market the degree of concentration among different segments of the 

industry varies; the Census Bureau listed 19 producers of tapered roller 

bearings and 65 producers of ball bearings in 2003. The Timken Company is 

the largest U.S. bearings company, but several foreign-owned companies 

have also had a long-standing presence in this country as bearings 

producers and are Timken’s main competitors in the U.S. market. One 

foreign-owned producer, for example, has operated U.S. production 

facilities for over 80 years, while two others have produced in this country 

for over 25 years. These companies have not been eligible to receive 

CDSOA disbursements because they did not support the original cases.

In 1975 the ITC determined that tapered roller bearings from Japan were 

harming the domestic industry and a dumping finding was published the 

following year. The Department of Commerce subsequently published 

antidumping orders on tapered roller bearings against Japan, China, 

Hungary, and Romania in 1987. Commerce then issued antidumping orders 

for ball bearings, cylindrical roller bearings, and spherical plain bearings 

from a number of other countries in 1989. Currently, there are eight 

bearings orders in effect against seven countries. Import penetration of the 

U.S. market has grown from 5 percent of consumption in 1969 to 

approximately 25 percent in 2003. When Commerce levied ball bearing 

dumping duties against Japan, Singapore, and Thailand in 1989, an 

opportunity arose for China. All of the world’s major bearing companies, 

including Timken, now have manufacturing facilities in China.

Timken and Torrington are the two largest CDSOA recipient companies. 

Together, they received over 80 percent of all disbursements to the bearings 

industry and one-third of disbursements to all companies in CDSOA’s first 

four years. Table 5 shows CDSOA recipients in the bearings industry from 

fiscal years 2001 through 2004.

3

Public information on the comparative size and market share of leading bearings producers 

is limited, but a report by the Department of Commerce stated that in 1999, the world’s 10 

largest producers accounted for about 80 percent of total production. 
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 63 GAO-05-979 International Trade

Table 5: Fiscal Years 2001-2004 Bearings CDSOA Recipients

Source: GAO analysis of CBP data.

Notes:

a

Timken acquired Torrington in February 2003. The CDSOA distributions we report for Torrington in 

this table reflect the distributions received by Torrington in FY 2001 and FY 2002. 

b

MPB Corporation is a subsidiary of Timken. CDSOA distributions are listed separately for Timken and 

MPB because they reflect the CDSOA distributions as reported by CBP. 

c

McGill Manufacturing is owned by Emerson Power Transmission. CDSOA distributions are listed 

separately for McGill Manufacturing and Emerson Power Transmission because they reflect the 

CDSOA distributions as reported by CBP. 

d

CBP listed separate CDSOA distributions to Pacamor/Kubar Bearings and Kubar Bearings in its 

Annual Reports on CDSOA.

CDSOA Effects on 

Bearings Companies 

Bearings Recipients 

Reported Positive Effects 

from CDSOA Payments

We obtained the views of three bearings recipient companies. These 

companies commented that CDSOA has had positive effects, although they 

varied in their assessments of the extent of the benefit. Bearings recipients 

reported that CDSOA’s greatest impact has been in the areas of net income, 

employment, and ability to compete. These companies also commented 

that CDSOA has had less of an effect on prices, sales, and profits. One 

company stated that the disbursements helped it to replace equipment and 

become more competitive, enabling it to recover to the position it had held 

Company Amount paid Amount claimed

Amount paid as a

percentage of total

paid to industry

1 The Timken 

Company $205,328,783 $59,990,348,732 49.7

2 The Torrington 

Companya 135,349,304 22,175,725,680 32.7

3 MPB Corporationb 55,131,485 9,158,867,720 13.3

4 Emerson Power 

Transmission 11,574,736 6,503,215,604 2.8

5 McGill 

Manufacturingc 2,703,403 653,293,608 0.7

6 Pacamor/Kubar 

Bearings 2,267,413 442,474,178 0.6

7 Kubar Bearingsd 1,132,137 259,875,305 0.3
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 64 GAO-05-979 International Trade

prior to being injured from dumping. Another recipient commented that 

while the CDSOA disbursements were helpful, they were distributed years 

after the initial injury and did not fully compensate the company for lost 

profits due to unfair trade. 

The bearings recipient companies vary greatly in their overall size. These 

companies are also significantly different in terms of the amount they have 

received through CDSOA, overall and as a percentage of their sales. For the 

recipient companies in our case study, in fiscal year 2004, CDSOA 

disbursements as a percentage of company sales ranged from just over 1 

percent to 21 percent with the larger recipients generally at the low end of 

this scale.4

Non-Recipients Reported 

Varying Effects

We obtained the views of two non-recipients, one of which reported 

negative effects, while the other said it is too early to tell the extent of the 

harm that CDSOA has caused. One company commented that CDSOA is 

harmful because the antidumping duties it pays are transferred directly to a 

competitor. The company further stated that the money it is paying in 

duties limits its ability to invest in its U.S. operations. The other nonrecipient company emphasized the size of the CDSOA disbursements in the 

bearings industry, but commented that it is still too early to know the 

injurious effect these disbursements will have on non-recipient producers. 

The leading non-recipient producers have not been eligible to receive 

CDSOA payments because they did not support the original cases.

Table 6 provides bearings recipient and non-recipients’ responses to our 

questionnaire on CDSOA’s effects. 

4

The ratio of a company’s fiscal year 2004 CDSOA disbursements to its 2004 new sales may 

not be representative of this ratio for prior fiscal years or of the average ratio of 

disbursements to net sales for the company since CDSOA’s inception, because of 

fluctuations in the size of CDSOA disbursements to net sales. Calculating average ratios 

would help take account of these fluctuations, but we did not calculate such ratios because 

we lacked consistent information about disbursements and net sales for all CDSOA 

recipients that responded to our case study questions.
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 65 GAO-05-979 International Trade

Table 6: CDSOA Effects on Bearings Companies

Source: GAO analysis of company responses to structured questions.

CDSOA Effect on Company 

Ability to Compete in U.S. 

Market

Table 7 provides these companies’ responses to our question on CDSOA’s 

effect on their ability to compete in the U.S. market.

Category

Positive

effects

Little or no

effects

Negative

effects

No basis to

judge

Number of

respondents

Recipients

Prices 0 3 0 0 3

Net sales 0 3 0 0 3

Gross profits 0 3 0 0 3

Net income 3 0 0 0 3

Property, 

plant, and 

equipment 2 1 0 0 3

Research and 

development 1 2 0 0 3

Employment 3 0 0 0 3

Ability to 

compete 2 1 0 0 3

Market share 1 2 0 0 3

Non-Recipients

Prices 0 1 0 1 2

Net sales 0 0 1 1 2

Gross profits 0 0 1 1 2

Net income 0 0 1 1 2

Property, 

plant, and 

equipment 0 0 1 1 2

Research and 

development 0 0 1 1 2

Employment 0 0 1 1 2

Ability to 

compete 0 0 1 1 2

Market share 0 0 1 1 2
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 66 GAO-05-979 International Trade

Table 7: CDSOA Effect on Bearings Companies’ Ability to Compete in U.S. Market 

Source: GAO analysis of company responses to structured questions.

Company Uses of CDSOA 

Funds

We also asked companies to describe how they used the CDSOA payments 

that they received. However, the law does not require that distributions be 

used for any specific purpose. The bearings recipient companies varied in 

their responses to this question. One company responded that it has used 

the disbursements to rebuild production equipment, maintain employment 

levels, and add more technical personnel for pursuing bearings customers. 

A second company commented that it does not earmark funds for a specific 

project; thus the funds have been spent on debt reduction. The third 

company did not specify how it used the funds, reiterating that the 

disbursements were based on previous qualified expenditures and 

emphasizing that its investments in U.S. bearings production have 

exceeded the money it received through CDSOA. 

Net Sales and Employment 

Trends

No clear trend emerged from these companies’ production and 

employment data over the 4 years that CDSOA has been in effect. One 

recipient’s net sales increased from 2001 to 2004, for example, while 

another’s declined. Similarly for employment, one recipient’s number of 

workers decreased over the 4 years, while another’s remained about the 

same. The responses from the non-recipients also did not show a clear 

trend for production or employment. For two of the three companies, 

employment declined, while all three companies’ net sales increased to 

varying degrees. 

Extent of Overseas 

Production

Most of the bearings companies that we contacted indicated that they had 

both domestic and overseas production operations. Of the three recipient 

companies, only one reported that it imports CDSOA products, but its 

imports make up a small share of its overall sales. 

Increased

Stayed about

the same Decreased

Don’t know/no

basis to judge

Number of

respondents

Recipients

2 1003

Non-Recipients

0 0112
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 67 GAO-05-979 International Trade

Scope and 

Methodology

To obtain bearings companies’ views on CDSOA’s effects, we sent out a set 

of structured questions to certain CDSOA recipients and certain nonrecipients in the bearings industry. CDSOA payments are made in this 

industry under multiple AD orders that were issued in different years. 

To identify CDSOA recipients, we obtained information from CBP about 

the companies that have received payments in each of the four years that 

disbursements have been made and the amount of disbursements they have 

received. Using this information, we developed a list of seven recipients 

and ranked them by their total CDSOA receipts. We obtained additional 

information from company representatives and CBP resulting in our 

combining certain recipients and treating them as three distinct 

companies.5

 For example, CBP sometimes listed in its annual reports on 

CDSOA, as separate distributions, payments to entities that were divisions 

or subsidiaries of other companies that also received CDSOA distributions. 

We surveyed the three companies, and all of them provided completed 

surveys. 

The universe of bearings non-recipients is larger than the universe of 

recipients.6

 We sought to obtain views from a comparable number of nonrecipients as recipients. To identify these companies, we obtained 

information from associations or others that were knowledgeable about 

the industry. Specifically, we obtained information about non-recipient 

bearings companies by (1) identifying members of the American Bearings 

Manufacturing Association, (2) asking recipient companies to identify their 

competitors, and (3) conducting our own research. We surveyed three nonrecipient companies, of which two provided completed surveys.7

 These 

two non-recipients are multi-national companies that are among the 

leading global producers of bearings and have had a long-standing history 

of production in the United States. The views of the non-recipients that 

responded to our questions may not be representative of all non-recipients.

5

Timken, Emerson Power Transmission, and Pacamor/Kubar Bearings.

6

Whereas there are seven CDSOA bearings recipients, in 2003, the Census Bureau listed 19 

producers of tapered roller bearings and 65 producers of ball bearings.

7

We also sent out and received back a survey from an additional company. We did not 

include this survey in our results because this company does not produce bearings within 

the United States. 
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 68 GAO-05-979 International Trade

Views on CDSOA from 

Recipients in the Steel 

Industry 

Background For this case study, we defined the scope of the steel industry to include 

companies that produce steel by melting raw materials.8

 The two main 

types of producers of raw steel are integrated mills and minimills. 

Integrated producers use older, blast furnaces to convert iron ore into steel. 

They mainly produce “flat” products, such as plate and hot-rolled steel that 

are used in transportation equipment, construction, and heavy machinery. 

The minimills are a scrap-based industry, producing steel from recycled 

metal products, such as crushed cars or torn-down buildings. They use 

newer, electric-arc furnaces, and account for almost all of the industry’s 

“long” production, including wire-rod and rebar. The top three domestic 

steel producers—Mittal, U.S. Steel, and Nucor—together account for about 

half of overall domestic steel production, which is approximately 100 

million tons a year.9

 A third, much smaller sector of the industry is the 

specialty, or stainless, sector. These producers also use electric-arc 

furnaces and represent about 2 percent of the overall industry output and 

about 10 percent of value. The steel industry is by far the largest user of 

AD/CV duty orders, with over 125 iron and steel mill orders in place as of 

June 2005. 

Several industrywide trends occurring at the same time as CDSOA 

disbursements are relevant. Between 1997 and 2003 period, 40 steel 

companies declared bankruptcy, with some of them ceasing operations 

altogether. CDSOA recipients were not immune from this general trend; 

several of them have declared bankruptcy and various firm consolidations 

have also occurred. The Asian financial crisis was an important factor in 

increasing steel imports to this country, as Asian demand for steel dropped 

and foreign steel companies increasingly looked to the United States as a 

8

We excluded from our scope companies that make steel-related products, such as pipe or 

tubing, from purchased raw steel. 

9

In 2003, according to the Census Bureau, there were 226 producers of carbon steel, 64 

producers of alloy steel, and 74 producers of stainless steel in this country. 
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 69 GAO-05-979 International Trade

market for their products.10 The surge in imports led to the filing of relief 

petitions on hot-rolled steel against Russia, Japan, and Brazil beginning in 

1998. Companies subsequently filed relief petitions against 11 other 

countries. In 2002, the President also took action under section 201 of the 

Trade Act of 1974,11 which allows him to implement temporary relief when 

an industry has been seriously injured by surging imports. Under this 

authority the President announced a series of safeguard tariffs of up to 30 

percent on a range of steel products. These tariffs, which were imposed in 

addition to the AD/CV duties, remained in place from March 2002 until late 

2003. Much of the industry returned to profitability in 2004, when prices 

rose.

Table 8 depicts the top 10 CDSOA recipients for steel in fiscal years 2001 

through 2004.

Table 8: Top 10 Fiscal Years 2001-2004 Steel CDSOA Recipients

10We identified the vulnerability of the U.S. steel and semiconductor industries (among 

others) to surging imports in the wake of the Asian financial crisis, as well as concerns over 

dumping and subsidies, in a 1999 report to Congress. See GAO, International Monetary 

Fund: Trade Policies of IMF Borrowers, GAO/NSIAD/GGD-99-174 (Washington, D.C.: Jun. 

23, 1999), pp. 29-35.

1119 U.S.C. § 2251.

Company Amount paid Amount claimed

Amount paid as a

percentage of total

paid to industry

1 United States 

Steel Corporation

 $22,610,280 $589,595,769,913 17.6

2 Carpenter 

Technology 

Corporation

 13,991,133 24,272,753,229 10.9

3 AK Steel 

Corporation

 11,337,171 273,729,695,233 8.8

4 Allegheny Ludlum 

Corporation

 11,107,788 42,821,265,506 8.6

5 International Steel 

Group

 10,374,465 568,595,773,448 8.1

6 North American 

Stainless

 9,697,133 35,786,766,024 7.5
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 70 GAO-05-979 International Trade

Source: GAO analysis of CBP data.

CDSOA Effects on 

Steel Companies 

CDSOA Recipients 

Commented That 

Disbursements Have Had a 

Moderately Positive Effect 

Recipient steel companies varied in their assessments of the payments’ 

effects, but generally agreed that they had a positive impact in the areas of 

net income and investing in plant, property, and equipment. For example, 

several recipients said disbursements enabled them to make investments 

needed to survive the steel crisis and be competitive in the future. The 

companies also generally stated that CDSOA disbursements have had little 

or no effect on prices, net sales, and market share. Some steel recipients 

also commented that CDSOA has not been a complete solution to the 

problems they faced due to unfairly traded imports. One recipient 

commented, for example, that while CDSOA payments could be presumed 

to have had a tangible benefit for the industry, they have not come close to 

erasing the years of financial injury brought on by unfairly traded steel 

products. 

Some steel companies acknowledged that the CDSOA disbursements have 

not been significant in relation to their size or capital expenditure needs. 

For each of the 13 steel companies in our case study, the CDSOA 

7 J&L Specialty 

Steel

 6,227,041 21,580,366,304 4.8

8 Bethlehem Steel 

Company

 5,975,849 277,902,636,707 4.6

9 Armco Steel 

Corporation

 3,716,372 155,054,850,596 2.9

10 Maverick Tube 

Corporation

 3,454,452 13,870,701,890 2.7

(Continued From Previous Page)

Company Amount paid Amount claimed

Amount paid as a

percentage of total

paid to industry
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 71 GAO-05-979 International Trade

disbursements they received amounted to less than 1 percent of their net 

sales in fiscal year 2004.12

Table 9 provides steel recipients’ responses to our questionnaire on 

CDSOA’s effects. 

Table 9: CDSOA Effects on Steel Companies

Source: GAO analysis of company responses to structured questions.

CDSOA Effect on Company 

Ability to Compete in U.S. 

Market

Table 10 provides these companies’ responses to our question on CDSOA’s 

effect on their ability to compete in the U.S. market. 

12The ratio of a company’s fiscal year 2004 CDSOA disbursements to its 2004 new sales may 

not be representative of this ratio for prior fiscal years or of the average ratio of 

disbursements to net sales for the company since CDSOA’s inception, because of 

fluctuations in the size of CDSOA disbursements to net sales. Calculating average ratios 

would help account for these fluctuations, but we did not calculate such ratios because we 

lacked consistent information about disbursements and net sales for all CDSOA recipients 

that responded to our case study questions.

Category

Positive

effects

Little or no

effects

Negative

effects

No basis to

judge

Number of

respondents

Recipients

Prices 0 11 0 0 11

Net sales 0 12 0 0 12

Gross profits 6 6 0 0 12

Net income 10 2 0 0 12

Property, 

plant, and 

equipment 9 3 0 1 13

Research and 

development 8 4 0 0 12

Employment 6 5 0 1 12

Ability to 

compete 8 4 0 0 12

Market share 1 10 0 0 11
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 72 GAO-05-979 International Trade

Table 10: CDSOA Effect on Steel Companies’ Ability to Compete in U.S. Market 

Source: GAO analysis of company responses to structured questions.

Company Uses of CDSOA 

Funds

We also asked companies to describe how they used the CDSOA payments 

that they received. However, the law does not require that distributions be 

used for any specific purpose. The steel recipient companies generally did 

not provide specific replies to this question. General comments by these 

companies included that they used the CDSOA payments to make capital 

investments, reduce debt, and assisted in the acquisition of steel-making 

assets. 

Net Sales and Employment 

Trends

Sales, profit, and income figures generally improved markedly for the steel 

companies between 2003 and 2004, as the overall industry enjoyed a strong 

rebound from the previous years. In some cases companies went from 

showing net losses to net income between these 2 years. Some companies 

also expanded greatly among all categories as they grew by acquiring the 

assets of other companies. Overall, some companies gained employees, 

while other companies lost them. 

Extent of Overseas 

Production

None of the recipient steel companies responding to our questionnaire 

reported that they are involved in overseas production or importation of 

CDSOA products. 

Scope and 

Methodology

To obtain steel companies’ views on CDSOA’s effects, we sent out a set of 

structured questions to certain steel CDSOA recipients and non-recipients. 

CDSOA payments are made in this industry under multiple steel and steelrelated AD and CV orders that were issued over several years. For this case 

study, we defined the scope of the steel industry to only include companies 

Increased

Stayed about

the same Decreased

Don’t know/no

basis to judge

Number of

respondents

Recipients

9 4 0 0 13
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 73 GAO-05-979 International Trade

that produce steel by melting raw materials.13 Our scope excludes 

companies that primarily make steel-related products (such as pipe or 

tubing) from purchased raw steel. As discussed below, we were not able to 

obtain information from steel non-recipients on CDSOA’s effects. 

To identify CDSOA recipients, we obtained information from CBP about 

the companies that have received payments, according to our definition of 

the industry, in each of the 4 years that disbursements have been made and 

the amount of disbursements they have received. We obtained information 

from representatives of the ITC, Commerce, and industry associations to 

determine precisely which companies fit under our definition of the steel 

industry. Using this information, we developed a list of 69 recipients and 

ranked them by their total CDSOA receipts.14 Because of time and resource 

constraints, we decided to survey the top 15 steel recipient companies that 

had received 90 percent of the distributions made under the orders 

included in our scope. Two of these companies had ceased operations. We 

surveyed the remaining 13 companies and received completed surveys 

from all of them. The 13 respondents accounted for about 72 percent of the 

CDSOA payments to this industry; their views may not be representative of 

all recipients, particularly those that received relatively small CDSOA 

receipts.

The universe of steel non-recipients is larger than the universe of 

recipients.15 We sought to obtain views from a comparable number of nonrecipients as recipients. To identify these companies, we obtained 

information from associations or others that were knowledgeable about 

the industry. Besides ITC, we spoke with several steel industry associations 

(American Iron and Steel Institute, Steel Manufacturers Association, and 

the Specialty Steel Industry of North America) to identify leading steel nonrecipients. We also asked recipient companies to identify their competitors. 

Based on these meetings and our own research, we surveyed 12 leading 

non-recipient steel companies, from which we received 1 completed 

13These are classified under the North American Industry Classification System (NAICS) 

code, 331111 – Iron and Steel Mills.

14The calculation of the total number of steel companies to receive CDSOA funds may 

include some payments that were received separately by different divisions of the same 

company. In calculating the total number of recipient steel companies we added the number 

of entities to receive distributions for steel products, as listed by CBP.

15Whereas there are 69 CDSOA steel recipients, in 2003, the Census Bureau listed 226 

producers of carbon steel, 64 producers of alloy steel, and 74 producers of stainless steel. 
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 74 GAO-05-979 International Trade

survey. However, this survey did not include comments or views on 

CDSOA’s effects. As a result, we are not able to present the views of steel 

non-recipient companies on CDSOA’s effects. 

Views on CDSOA from 

Recipients and NonRecipients in the 

Candle Industry

Background Petroleum wax candles are produced in several forms including columns or 

pillars, wax-filled containers, tapers or dinner candles, votives, and novelty 

candles. They are sold to consumers through retail outlets, the largest 

percentage of which are through mass merchandisers (such as Wal-Mart or 

Target); these are followed by department stores, discount retailers, card 

and gift shops, and door-to-door sales through membership groups. The 

majority of petroleum wax candles are produced and imported for national 

markets. The number of domestic producers has grown from over 100 

when the ITC performed its original investigation in 1986 to over 400 at the 

time of its second 5-year review in 2005. Only 10 domestic candle 

producers are eligible for CDSOA payments. Table 5 shows these 

companies’ CDSOA disbursements and claims. According to the ITC, these 

recipients, in addition to approximately 35 other candle producers, make 

up 70 percent of U.S. candle production.

In 1985 a petition was filed by the National Candle Association (NCA) 

alleging that the U.S. candle industry was materially injured by dumped 

imports of petroleum wax candles from China.16 The ITC determined injury 

in 1986, and Commerce issued an antidumping duty order of 54 percent on 

all Chinese producers and exporters. The ITC conducted a 

5-year, expedited review in 1999, and the duty doubled from 54 percent to 

108 percent after another expedited review in 2004. U.S. producers’ share 

of the market by quantity (pounds) went from 43 percent in calendar year 

16The ITC determined in the original investigation that beeswax candles should not be 

included within the domestic like product. Beeswax candles are composed of more than 50 

percent beeswax, manufactured by U.S. producers principally for religious and specialty 

markets, and priced considerably higher than petroleum wax candles. 
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 75 GAO-05-979 International Trade

1999 to 53 percent in calendar year 2004. Imports from China, which some 

perceive as lower-end candles, accounted for 20 percent in 1999, rising to 

27 percent in 2004. U.S. producers and Chinese suppliers have both gained 

market share in recent years. U.S. producers’ share of candles dollar value 

was 66 percent in 1999 rising to 70 percent in 2004, while China’s share rose 

from 10 percent in 1999 to 14 percent in 2004. The ITC is presently 

conducting a full 5-year “sunset” review of this order, and recently 

presented its findings to Commerce. Also, Commerce is considering 

whether the scope of the order should be changed, inquiring whether 

mixed wax candles composed of petroleum wax and varying amounts of 

either palm or vegetable wax alter the product so that they are not subject 

to the current order.

Table 11 depicts CDSOA recipients for candles in fiscal years 2001 through 

2004.

Table 11: Fiscal Years 2001-2004 Candle CDSOA Recipients

Source: GAO analysis of CBP data.

Company Amount paid

Amount

claimed

Amount paid as a

percentage of total

paid to industry

1 Candle-litea $56,759,989 $1,285,509,591 39.81

2 Lancaster Colony 

Corporationa

26,225,555 1,382,869,375 18.39

3 Home Fragrance 

Holdings

20,394,804 444,243,884 14.30

4 Meunch-Kreuzer 

Candle Company

10,695,594 212,476,879 7.50

5 General Wax & 

Candle

9,297,725 150,256,642 6.52

6 Reed Candle 

Company

7,214,429 152,164,485 5.06

7 Lumi-Lite Candle 

Company

5,625,486 89,582,027 3.95

8 A.I. Root Company 3,338,318 163,393,408 2.34

9 Candle Artisans 1,171,570 57,421,924 0.82

10 Cathedral Candle 

Company

1,155,876 56,565,862 0.81

11 Will & Baumer 691,842 913,379 0.49
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 76 GAO-05-979 International Trade

a

In 1972 Candle-lite was acquired by Lancaster Colony Corporation of which it remains a division 

today. For fiscal years 2001-2003, Lancaster Colony received CDSOA distributions under the name 

Candle-lite. The “amount paid” for Candle-lite and Lancaster Colony should be added together for an 

accurate account of CDSOA distributions made to the Candle-lite Division of Lancaster Colony Corp. 

Total fiscal year 2001-2004 distributions equal $82,985,544 or 58.21 percent of total distributions to the 

candle industry. Likewise, the amount claimed for Lancaster Colony is applicable to Candle-lite.

CDSOA Effects on 

Candle Companies 

Candle Recipients Reported 

Positive Effects from 

CDSOA Payments

Recipients report that CDSOA distributions have had positive effects on 

their net income; on their property, plant and equipment; and on research 

and development. One of the larger recipients of CDSOA distributions 

claims that these payments have lessened the need to consider outsourcing 

their candle products from abroad. However, the company reported that 

because of the effects of dumped Chinese candles, they continue to lay off 

workers, though fewer than they may have absent the CDSOA funds. Other 

recipients claim to have developed new, better, and safer candles with 

research and development reinvestment of CDSOA disbursements. 

Fiscal year 2004 CDSOA disbursements as a percentage of company sales 

range from 0.4 percent to 34.7 percent for the 10 recipient candle 

companies, with most companies’ shares in the higher end of this range.17

Candle Non-Recipients 

Reported Negative Effects

Non-recipients report that CDSOA distributions to their competitors have 

had negative effects on their ability to compete in the market, on their 

gross profits, and on net income. They also reported very negative effects 

on industry competition. One non-recipient company has closed two of 

four domestic manufacturing facilities, eliminated or reduced shifts, and its 

released workers. Another non-recipient company claims that their 

CDSOA-recipient competitors could reduce selling prices. While the 

17The ratio of a company’s fiscal year 2004 CDSOA disbursements to its 2004 new sales may 

not be representative of this ratio for prior fiscal years or of the average ratio of 

disbursements to net sales for the company since CDSOA’s inception, because of 

fluctuations in the size of CDSOA disbursements to net sales. Calculating average ratios 

would help take account of these fluctuations, but we did not calculate such ratios because 

we lacked consistent information about disbursements and net sales for all CDSOA 

recipients that responded to our case study questions.
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 77 GAO-05-979 International Trade

company matched competitors’ lower prices, they made no profit. Because 

of this, they have recently exited this segment of the candle business and 

released workers accordingly. Some non-recipients also expressed the view 

that their ineligibility for CSDOA disbursements is unfair. One nonrecipient company joined the NCA as a leader of the organization a few 

years after the issuance of the order, but stated that they have no 

institutional memory of receiving an ITC questionnaire during its original 

investigation in 1986. This company said it has supported the order as well 

as NCA’s efforts to defend the order since joining the NCA. Another nonrecipient is ineligible by virtue of being acquired by a firm that opposed the 

original investigation, and was unsuccessful in its legal challenge of this. 

Table 12 shows candle recipient and non-recipients’ responses to our 

questionnaire on CDSOA’s effects. 

Table 12: CDSOA Effects on the Candle Companies

Category

Positive

effects

Little or no

effects

Negative

effects

No basis

to judge

Number of

respondents

Recipients

Prices 1 9 0 0 10

Net sales 2 5 0 3 10

Gross profits 6 3 0 1 10

Net income 9 0 0 1 10

Property, plant 

and equipment 9 1 0 0 10

Research and 

development 8 1 0 1 10

Employment 6 4 0 0 10

Ability to 

compete 6 3 0 1 10

Market share 2 4 0 4 10

Non-Recipients

Prices 1 0 4 3 8

Net sales 1 0 4 3 8

Gross profits 0 0 4 4 8

Net income 0 0 4 4 8

Property, plant 

and equipment 1 0 4 3 8
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 78 GAO-05-979 International Trade

Source: GAO analysis of company responses to structured questions.

CDSOA Effect on Company 

Ability to Compete in U.S. 

Market

Table 13 depicts these companies’ responses to our question on CDSOA’s 

effect on their ability to compete in the U.S. market.

Table 13: CDSOA Effect on Candle Companies’ Ability to Compete in U.S. Market

Source: GAO analysis of company responses to structured questions.

Company Uses of CDSOA 

Funds

We also asked companies to describe how they used the CDSOA payments 

that they received. However, the law does not require that distributions be 

used for any specific purpose. Several recipients claim that they have used 

CDSOA funds to invest in new and better equipment, and in research and 

development. One recipient company reports that it has been able to offer 

employees consistent and comprehensive benefits packages due to CDSOA 

funds.

Net Sales and Employment 

Trends

For smaller candle companies—both recipients and non-recipient 

respondents alike—net sales have stagnated, as has employment of 

production and related workers. Some of the larger non-recipient 

respondents appear to have experienced some growth in these categories, 

while some of the larger recipients seem to have experienced some decline 

Research and 

development 1 1 3 3 8

Employment 1 1 3 3 8

Ability to 

compete 0 0 4 4 8

Market share 1 0 4 3 8

(Continued From Previous Page)

Category

Positive

effects

Little or no

effects

Negative

effects

No basis

to judge

Number of

respondents

Increased

Stayed about

the same Decreased

Don’t know/no

basis to judge

Number of

respondents

Recipients

7 2 0 1 10

Non-Recipients

1 043 8
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 79 GAO-05-979 International Trade

or stagnation in net sales and some growth or stagnation in production and 

employment.

Extent of Overseas 

Production

Most candle companies are strictly domestic producers; however, one nonrecipient stated that it would start to import some of its candle products 

from Asia in order to keep its costs down.

Scope and 

Methodology

To obtain the views of candle companies on CDSOA’s effects, we sent out a 

set of structured questions to candle CDSOA recipients and certain nonrecipient companies within the industry. CDSOA payments are made under 

one AD order that was issued in 1986. 

To identify CDSOA recipients, we obtained information from CBP about 

the companies that have received payments in each of the 4 years that 

disbursements have been made. Using this information, we developed a list 

of 11 recipients and ranked them by their total CDSOA receipts. One of 

these companies now receives CDSOA payments under the name of its 

parent company, leaving 10 distinct companies. We sent surveys to all 

recipient companies, and all of them provided completed surveys. 

The universe of candle non-recipients is larger than the universe of 

recipients.18 We sought to obtain views from a comparable number of nonrecipients as recipients. To identify these companies, we obtained 

information from associations or others that were knowledgeable about 

the industry. Specifically, we (1) obtained a list of members of the NCA 

from its website; (2) corroborated this list with information from a recent 

ITC publication; and (3) obtained information about certain non-NCA 

members based on our own research. Because of time and resource 

constraints, most of the non-recipient candle companies we contacted are 

members of the NCA. Surveys were sent to non-recipient candle companies 

for which an E-mail address could be obtained either from the NCA list or 

from the company directly. We surveyed 26 non-recipient candle makers, of 

which 8 provided completed surveys. Respondents included two relatively 

large candle companies whose net candle sales were similar in magnitude 

18Eleven candle companies received CDSOA disbursements during fiscal years 2001-2005. 

According to ITC estimates, the U.S. candle industry contains about 400 candle producers 

and 45 of these producers represent approximately 70 percent of the domestic candle 

industry. 
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 80 GAO-05-979 International Trade

to one of the largest candle CDSOA recipients, and several smaller candle 

companies whose net sales were similar to or slightly larger than several of 

the smaller CDSOA candle recipients. The views of these respondents may 

not be representative of all non-recipients.

Views on CDSOA from 

Pasta Company 

Recipients and NonRecipients

Background The bulk of pasta production in the United States is dry pasta, with 

production of frozen or refrigerated pasta constituting a smaller portion of 

the U.S. industry. After several decades of mergers and acquisitions, and 

the 2001 sale of one major producer’s production facilities and brand 

names to two of its competitors, the industry’s current structure reflects a 

high degree of concentration among a few large producers. The four largest 

U.S. producers as of 2001, based on ITC data, were American Italian Pasta 

Company, New World Pasta, Dakota Growers Pasta Company, and Barilla 

America, Inc. (a U.S. subsidiary of an Italian pasta company that was set up 

in 1998 after antidumping and countervailing duty orders on Italian dry 

pasta imports were issued). An industry expert estimated that these four 

companies currently account for about 80 percent of dry pasta production 

in the United States, with the remainder supplied by smaller or specialty 

companies.19 Three of the four are eligible for CDSOA disbursements, but 

Barilla America, Inc., whose share of U.S. production is growing and which 

said it only imports a small percentage of the pasta it sells here, is not. 

Overall demand for dry pasta in the United States has been declining since 

the late 1990s, a trend that has been exacerbated, according to dry pasta 

companies and industry experts, by diets that emphasize low-carbohydrate 

intake.20 Further, the industry has been experiencing decreased sales, 

excess capacity, and plant closures. Among the more significant indicators 

19According to the U.S. Census Bureau, there were 182 dry pasta companies in 2002, down 

from 249 in 1997. 

20Information on U.S. demand for pasta for the 1997-2000 period was available from ITC. 

More recent information was obtained from annual assessments of the pasta industry 

published by Milling & Baking News, a trade magazine that follows the pasta industry.
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 81 GAO-05-979 International Trade

of the downturn, New World Pasta—a leading CDSOA recipient—filed for 

Chapter 11 bankruptcy protection in 2004. According to ITC, about threefourths of U.S. consumption of dry pasta in 2000 was supplied by domestic 

producers, with the remainder supplied by imported products. At that time, 

the largest sources of imported pasta were Italy, Canada, Korea, and 

Mexico. 

Several U.S. producers petitioned for relief from rapidly growing imports in 

1995. In 1996, Commerce issued antidumping and countervailing duty 

orders on certain pasta imports from Italy and Turkey.21 Initial AD duties 

rated from 0 to about 47 percent on Italian pasta and about 61 to 63 percent 

on Turkish pasta, while initial CV duties ranged from about 0 to 11 percent 

on Italian pasta and about 4 to 16 percent on Turkish pasta. Since 

Commerce issued the order, dry pasta imports from Italy have declined and 

Turkey is no longer a leading supplier of pasta to the United States. The ITC 

completed a sunset review in 2001 that extended the orders until 2006. 

The top seven CDSOA recipients have received about 99 percent of the 

payments made to the industry, with American Italian Pasta Company and 

New World Pasta/Hershey Foods receiving 70 percent of total payments.

21The orders cover non-egg dry pasta in packages of 5 pounds or less.
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 82 GAO-05-979 International Trade

Table 14 shows total payments made to all dry pasta CDSOA recipients in 

fiscal years 2001 through 2004.

Table 14: Fiscal Years 2001-2004 CDSOA Pasta Recipients

Source: GAO analysis of CBP data.

a

New World Pasta acquired Hershey Foods Corporation in 1999.

CDSOA Effects on 

Pasta Companies 

Pasta Recipients Reported 

Mostly Positive Effects 

From CDSOA Payments

The four pasta recipients that responded to our survey viewed the CDSOA 

program as having mostly positive effects on their companies. The two 

largest recipients did not respond to our survey, and we did not contact the 

three smallest recipients. All respondents cited the most positive company 

effects in the areas of profit; income; and investment in property, plant, and 

equipment; and most cited positive effects on net sales and ability to 

compete. Some recipient companies noted that the program has enhanced 

their ability to increase production through plant expansions and upgrades; 

Company Amount paid Amount claimed

Amount paid as

a percentage of

total paid to

industry

1 American Italian Pasta 

Company

$11,052,969 $8,063,794,100 34.0

2 Hershey Foods (New 

World Pasta)

8,136,032 4,853,308,844 25.0

3 A. Zerega’s Sons 3,889,333 2,290,556,634 12.0

4 New World Pasta 3,584,898 8,213,502,091 11.0

5 Dakota Growers Pasta 

Company

2,328,690 3,285,863,416 7.2

6 Philadelphia Macaroni 

Company

2,002,478 1,176,503,668 6.2

7 Gooch Foods 744,737 30,137,692 2.3

8 Pasta USA 463,953 698,654,710 1.4

9 Fould’s 185,155 260,992,108 0.6

10 S.T. Specialty Foods 112,247 282,512,767 0.4

11 D. Merlino & Sons 31,067 43,778, 230 0.1
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 83 GAO-05-979 International Trade

improved their cash flow, allowing them more operating flexibility; reduced 

manufacturing costs; and enhanced some companies’ competitive position. 

Funds have also helped some companies develop new products. 

CDSOA disbursements to the pasta industry have been small compared to 

each company’s net sales. For example, fiscal year 2004 CDSOA payments 

to the pasta companies that responded to our survey represented about 1 

percent or less of each company’s 2004 net sales.22

Non-Recipients Reported 

Minimal or Negative Effects

Among the six pasta non-recipients that responded to our survey, views 

about the effect of CDSOA funds were mixed. A few said the funds had 

impacted their companies negatively in certain areas or created an unfair 

competitive environment in the industry, while others thought effects were 

minimal or could not judge the program’s effects. About half of the nonrecipients thought the program has had little or no effects for their 

companies in the areas of employment, prices, sales, investment, or market 

share. Some non-recipients thought the program had negatively impacted 

their company’s profits, income, and ability to compete. Some nonrecipients said that the program has probably helped recipients cut prices, 

and that this has created an unfair advantage in the industry for recipients. 

One non-recipient stated that it has had to transfer substantial sums of 

money to its competitors because of CDSOA, and that these funds would 

likely have been used for product development, capital investment, and 

expansion at its U.S. facility. 

Table 15 provides pasta recipients’ and non-recipients’ responses to our 

questionnaire on CDSOA effects. 

22The ratio of a company’s fiscal year 2004 CDSOA disbursements to its 2004 new sales may 

not be representative of this ratio for prior fiscal years or of the average ratio of 

disbursements to net sales for the company since CDSOA’s inception, because of 

fluctuations in the size of CDSOA disbursements to net sales. Calculating average ratios 

would help take account of these fluctuations, but we did not calculate such ratios because 

we lacked consistent information about disbursements and net sales for all CDSOA 

recipients that responded to our case study questions.
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 84 GAO-05-979 International Trade

Table 15: CDSOA Effects on Pasta Companies

Source: GAO analysis of company responses to structured questions.

CDSOA Effect on Company 

Ability to Compete in U.S. 

Market

Table 16 provides these companies’ responses to our question on CDSOA’s 

effects on their ability to compete in the U.S. market.

Category

Positive

effects

Little or no

effects

Negative

effects

No basis to

judge

Number of

respondents

Recipients

Prices 2 2 0 0 4

Net sales 3 1 0 0 4

Gross profits 4 0 0 0 4

Net income 4 0 0 0 4

Property, 

plant, and 

equipment 4 0 0 0 4

Research and 

development 2 1 0 1 4

Employment 3 1 0 0 4

Ability to 

compete 2 2 0 0 4

Market share 1 2 0 1 4

Non-Recipients

Prices 0 3 1 2 6

Net sales 0 3 1 2 6

Gross profits 0 2 2 2 6

Net income 0 2 2 2 6

Property, 

plant, and 

equipment 0 3 1 2 6

Research and 

development 0 2 1 3 6

Employment 0 4 0 2 6

Ability to 

compete 0 2 2 2 6

Market share 0 3 1 2 6
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 85 GAO-05-979 International Trade

Table 16: CDSOA Effect on Pasta Companies’ Ability to Compete in U.S. Market

Source: GAO analysis of company responses to structured questions.

Company Uses of CDSOA 

Funds

We also asked companies to describe how they used the CDSOA payments 

that they received. However, the law does not require that distributions be 

used for any specific purpose. Recipients used CDSOA funds for a variety 

of purposes. For example, some said they used the funds to purchase new 

equipment or upgrade existing equipment; reduce manufacturing costs and 

improve cash flow; increase production capacity; and invest in research 

and product development. This, in turn, led to increased production and 

employment among some companies. One company that did not respond to 

our survey disclosed in its 2003 annual report that it used a significant 

portion of the funds to increased investment in brand building activities 

and to strengthen the company’s organization. One recipient noted that 

CDSOA funds have been helpful because margins in the industry are very 

thin and competition is strong. As CDSOA improved one company’s bottom 

line, it was able to obtain more attractive financing rates. 

Net Sales and Employment 

Trends

Our information about the effect of CDSOA on net sales and employment in 

this industry is limited because the two largest companies did not respond 

to our survey. Although press coverage of the industry has noted generally 

declining net sales among U.S. dry pasta companies in recent years, the 

companies that responded to our questions reported general increases in 

net sales during 2001 through 2004. Specifically, two companies reported 

increased sales in the 2001 through 2004 time frame, and two companies 

reported fluctuating sales that were higher at the end of the period than at 

the beginning. Among recipient respondents, two companies’ employment 

levels generally increased, and two companies’ employment levels 

generally decreased since the implementation of CDSOA. Among nonrecipient respondents, net sales and employment showed mixed trends. 

Three companies reported increased sales, one company reported 

Increased

Stayed about

the same Decreased

Don’t know/no

basis to judge

Number of

respondents

Recipients

3 1004

Non-Recipients

0 1326
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 86 GAO-05-979 International Trade

fluctuating sales that were higher at the end of 2004, and two companies 

reported decreased net sales. Three companies reported generally 

increased employment levels and three reported general decreases. 

Extent of Overseas 

Production

All of the recipient pasta companies that responded to our survey produce 

their product only in the United States. However, the top CDSOA recipients 

that did not respond to our survey produce pasta domestically and in other 

countries. Four of the non-recipients produce exclusively in the United 

States, and two produce both domestically and overseas. 

Scope and 

Methodology

To obtain pasta companies’ views on CDSOA’s effects, we sent out a set of 

structured questions to certain pasta CDSOA recipients and non-recipients. 

CDSOA payments are made in this industry under two AD and two CV 

orders that were issued simultaneously. 

To identify CDSOA recipients, we obtained information from CBP about 

the companies that have received payments in each of the 4 years that 

disbursements have been made and the amount of disbursements they have 

received. Using this information, we developed a list of 11 recipients and 

ranked them by their total CDSOA receipts. CBP provided additional 

information that indicated there were actually 10 distinct companies.23

Because of time and resource constraints, we decided to survey the top 

seven companies that had received 99 percent of the total payments made 

under these orders, from which we received four completed surveys.24 The 

two pasta companies that are top CDSOA recipients did not respond to our 

survey. Our information about CDSOA effects for recipients is limited to 

the four pasta companies that responded, which together accounted for 

about 27 percent of CDSOA payments to this industry. 

23One recipient had acquired another recipient.

24One company said it lacked information to answer our questions because its CDSOAeligible subsidiary was no longer producing pasta.
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 87 GAO-05-979 International Trade

The universe of dry pasta non-recipients is larger than the universe of 

recipients.25 We sought to obtain views from a comparable number of nonrecipients as recipients, but we had difficulty identifying non-recipient dry 

pasta companies. To identify these companies, we obtained information 

from associations or others that were knowledgeable about the industry. 

Specifically, we obtained company names and contact information from (1) 

the website of the National Pasta Association, which presently carries out 

only limited activities on behalf of the industry; (2) an association 

management company that handles administrative matters for the National 

Pasta Association; (3) a directory of pasta companies published on 

http://www.bakingbusiness.com, a division of Milling and Baking News, 

which is a business news organization that ITC had identified as closely 

following the pasta industry; and (4) other pasta companies. Many of the 

companies we identified through these sources were not makers of dry 

pasta as defined in the orders, but were instead makers of egg noodles, 

fresh or refrigerated pasta, couscous, and boxed or frozen foods that use 

pasta, or were flour mills or other companies linked to the production of 

dry pasta. We surveyed eight non-recipient dry pasta manufacturers, from 

which we received six completed surveys. The respondents include the 

fourth-largest dry pasta manufacturer in the United States, several smaller 

pasta companies that produce durum wheat pasta, one company that 

produces wheat-free pasta, and one company that produces exclusively 

organic pasta. The views of these respondents may not be representative of 

all non-recipients.

Views on CDSOA from 

Recipients in the 

DRAM Industry

Background Dynamic random access memory (DRAM) semiconductors are considered 

commodity products and compete largely on the basis of price; DRAMs of 

similar density, access speed, and variety are generally interchangeable 

25Whereas only 11 pasta recipient companies have received CDSOA disbursement, the U.S. 

Census Bureau identified 182 dry pasta companies in its 2002 economic census. See U.S. 

Census Bureau, Dry Pasta Manufacturing: 2002 Economic Census (Washington, D.C.: 

December 2004). 
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 88 GAO-05-979 International Trade

regardless of the country of fabrication. Today, four companies produce 

DRAMs in the United States:26 Micron Technologies is a U.S. company, 

Infineon Technologies is a spin-off of the German company Siemens, and 

Samsung Electronics27 and Hynix Semiconductor28 are Korean companies. 

All of these companies now have production facilities in the United States 

as well as abroad, but the latter three have entered the U.S. industry within 

the past decade. The DRAM industry is cyclical in nature, where demand is 

driven by investments in computers and other end-products. Fabrication 

facility costs are high and require complete replacement approximately 

every 10 years. Due to high fixed costs, chip manufacturers cannot afford 

to scale down production; they must constantly produce chips and invest 

or go out of business.

One countervailing duty order is currently in effect for DRAMs produced by 

Hynix only.29 This duty order came into effect in 2003 and its duty rate is 

currently 44 percent. Micron Technology received the bulk of distributions 

in this industry because it was the sole recipient of duties from two 

antidumping orders dating from the 1990s on DRAMs and other kinds of 

chips. Payments were made to Micron on DRAMs of 1 megabit and above 

under one AD order issued in 1993 and revoked in 2000, as well as on an AD 

order on SRAMs (static random access memory chips) issued in 1998 and 

revoked in 2002. The vast majority of CDSOA disbursements to the industry 

(approximately $33 million) in fiscal years 2001 through 2004 were related 

to these orders. Infineon did not incorporate in the United States until 2000 

and, therefore, did not participate in the earlier investigations. Both 

Infineon and Micron are eligible and received disbursements under the 

26The Department of Commerce’s final determination defines the imported merchandise 

within the scope of its investigation as DRAMs from the Republic of Korea (ROK), whether 

assembled or unassembled. Processed wafers fabricated outside of the ROK and assembled 

into finished semiconductors in the ROK are not included in the scope. 

27Samsung Electronics Co. Ltd. of Korea is associated with Samsung Austin Semiconductor 

LLC in Texas. Wafers fabricated in the Austin facility are sent to Samsung facilities in Korea 

for cased DRAM assembly and in some cases module assembly. These do not fall under the 

scope of the order. 

28Hynix Semiconductor, Inc. of Korea has two U.S. subsidiaries in California and Oregon. 

However, DRAM wafers fabricated in Oregon are sent to Korea for assembly. These do not 

fall under the scope of the order. 

29The Department of Commerce determined that the Government of Korea directed credit to 

the Korean semiconductor industry through 1998 and specifically to Hynix and companies 

that continue to be, or were part of, the Hyundia Group from 1999 through June, 2002. 
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 89 GAO-05-979 International Trade

current order but Hynix and Samsung are not eligible because they 

opposed the petition. Because DRAMs are a technologically dynamic 

product, it is expected that Commerce will revoke these orders when the 

subject products are obsolete. New products open themselves to new 

petitions and orders, thereby allowing new potential CDSOA recipients.

Table 17 depicts CDSOA recipients for DRAMs in fiscal years 2001-2004. 

Table 17: Fiscal Years 2001-2004 DRAM CDSOA Recipients

Source: GAO analysis of CBP data.

CDSOA Effects on 

DRAM Companies 

CDSOA Disbursements 

Have Mixed Effects on 

DRAM Companies

The two recipients of CDSOA disbursements reported mixed effects. One 

recipient reported that, although at the time it was operating at a net loss, 

CDSOA distributions improved its profitability, investment, employment, 

and research and development. The company noted that it would be of 

greater help if payments were made soon after other countries began their 

unfair trade practices. Another recipient reported that disbursements were 

immaterial to their operations.

Company Amount paid Amount claimed

Amount paid as

a percentage of

total paid to

industry

1 Micron Technology $33,389,988 $9,093,423,782 99.98

2 Infineon Technologies 

Richmond

5,974 590,776,005 0.02
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 90 GAO-05-979 International Trade

Fiscal year 2004 CDSOA disbursements are equal to less than 1 percent of 

both companies’ sales.30

Table 18 presents DRAM recipients’ responses to our questionnaire on 

CDSOA’s effects. 

Table 18: CDSOA Effects on DRAM Companies

Source: GAO analysis of company responses to structured questions.

CDSOA Effect on Company 

Ability to Compete in U.S. 

Market

Table 19 shows companies’ responses to our question on CDSOA’s effect on 

their ability to compete in the U.S. market.

30The ratio of a company’s fiscal year 2004 CDSOA disbursements to its 2004 new sales may 

not be representative of this ratio for prior fiscal years or of the average ratio of 

disbursements to net sales for the company since CDSOA’s inception, because of 

fluctuations in the size of CDSOA disbursements to net sales. Calculating average ratios 

would help take account of these fluctuations, but we did not calculate such ratios because 

we lacked consistent information about disbursements and net sales for all CDSOA 

recipients that responded to our case study questions.

Category

Positive

effects

Little or no

effects

Negative

effects

No basis to

judge

Number of

respondents

Recipients

Prices 0 2 0 0 2

Net sales 0 2 0 0 2

Gross profits 1 1 0 0 2

Net income 1 1 0 0 2

Property, plant, 

and equipment 1 1 0 0 2

Research and 

development 1 1 0 0 2

Employment 1 1 0 0 2

Ability to compete 1 1 0 0 2

Market share 0 2 0 0 2
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 91 GAO-05-979 International Trade

Table 19: CDSOA Effect on DRAM Companies’ Ability to Compete in U.S. Market

Source: GAO analysis of company responses to structured questions.

Company Uses of CDSOA 

Funds

We also asked companies to describe how they used the CDSOA payments 

that they received. However, the law does not require that distributions be 

used for any specific purpose. One recipient uses CDSOA distributions to 

fund U.S. operations and to invest in new U.S. production equipment. The 

other recipient also uses distributions in operations.

Net Sales and Employment 

Trends

Historically, the DRAM market is subject to periods of “boom and bust.” 

Both CDSOA recipients reported some net losses and have experienced 

slight declines in production and related workers during the past 4 fiscal 

years.

Extent of Overseas 

Production

One company has DRAM production facilities in three U.S. states as well as 

Japan, Italy, and Singapore. The other indicated that it has both domestic 

and foreign production facilities; they also noted that DRAMs 

manufactured in the United States can be sold abroad, and DRAMs 

manufactured abroad can in turn be sold here.

Scope and 

Methodology

To obtain the views of DRAM-producing companies on CDSOA’s effects, we 

sent a set of structured questions to the two CDSOA recipients. Current 

CDSOA payments on DRAMs are made on a CV order issued in 2003. 

To identify CDSOA recipients, we obtained information from CBP about 

the companies that have received payments in each of the 4 years that 

disbursements have been made. CBP identified two companies. We 

surveyed both recipient companies, and both provided completed surveys.

To identify non-recipients, we consulted the recipient companies to identify 

their competitors, and we obtained information on domestic producers 

Increased

Stayed about

the same Decreased

Don’t know/no

basis to judge

Number of

respondents

Recipients

1 100 2
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 92 GAO-05-979 International Trade

from the ITC’s final determination on DRAM and DRAM Modules from 

Korea.31 There are two U.S. subsidiaries of Korean companies that are 

considered domestic producers who opposed the petition for the current 

order. We attempted to contact these companies but were unsuccessful in 

our efforts. We did not attempt to contact a fifth company that is also 

considered a domestic producer; this company does not list the major 

DRAM producers as competitors, and has no fabrication facilities.32 ITC 

listed other domestic producers for the purposes of its investigation, but 

these companies have since ceased DRAM production or have ceased to 

exist. 

Views on CDSOA from 

Recipients and NonRecipients in Crawfish 

Industry

Background Crawfish are freshwater crustaceans that resemble lobsters but are 

considerably smaller. U.S. commercial production of crawfish is 

concentrated within a relatively small area of southern Louisiana, where 

crawfish are harvested in the wild by fishermen and farmed in ponds. 

Crawfish may be sold whole and live, whole and boiled, or as fresh or 

frozen tail meat. Whole crawfish and fresh tail meat is consumed primarily 

in Louisiana and neighboring states, where there is generally a preference 

for local products in season. Tail meat is also sold more broadly throughout 

the United States. U.S. producers supply whole crawfish and fresh and 

frozen tail meat, whereas imports, mainly from China, are primarily frozen 

tail meat. U.S. businesses that process whole crawfish into tail meat are 

primarily small, family-owned concerns. Inexpensive imports and poor 

harvests have driven many domestic crawfish processors out of business in 

recent years. It is estimated that there were over 100 processors in 

31See ITC, DRAM and DRAM Modules from Korea, Investigation No. 701-TA-431 (Final), 

Publication 3616 (Washington, D.C.: August 2003). 

32According to the ITC, companies that only package DRAMs into DRAM modules and 

fabless design houses do not engage in sufficient production-related activities to warrant 

their inclusion in the domestic industry. Nonetheless, ITC included this company in a list of 

domestic producers for the purposes of its investigation. 
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 93 GAO-05-979 International Trade

Louisiana in the 1980s and early 1990s, but that number has dropped by 

more than half.

In 1996, the Crawfish Processors Alliance, an industry association, and the 

Louisiana Department of Agriculture and Fisheries, filed a petition alleging 

that U.S. processors of crawfish tail meat were being injured by dumped 

imports of crawfish tail meat from China. Significant imports of tail meat 

began in the mid-1990s, and ITC estimates that imports’ share of 

consumption grew from just over 60 percent in 1997 to about 87 percent in 

2002. In 1997, Commerce issued an anti-dumping order on crawfish tail 

meat and imposed anti-dumping margins that ranged from about 92 to 

about 202 percent. 

Table 20 depicts the top 10 CDSOA recipients for crawfish in fiscal years 

2001-2004.

Table 20: Top 10 Fiscal Years 2001-2004 Crawfish CDSOA Recipients

Source: GAO analysis of CBP data.

Company

 Amount

paid

 Amount

claimed

Amount paid as a

percentage of

total paid to

industry

1 Atchafalaya Crawfish 

Processors

$3,054,297 $5,940,653 12.0

2 Seafood International 2,394,144 4,231,815 9.4

3 Catahoula Crawfish 2,136,763 4,033,844 8.4

4 Crawfish Enterprises 1,722,957 5,559,354 6.8

5 Prairie Cajun Seafood 

Wholesale Distributors

1,711,875 3,063,186 6.7

6 Bayou Land Seafood 1,512,866 3,083,890 6.0

7 Acadiana Fishermen’s Co-Op 1,297,685 2,635,910 5.1

8 Bonanza Crawfish Farm 1,086,372 2,084,090 4.3

9 Riceland Crawfish 1,061,156 2,192,214 4.2

10 Cajun Seafood Distributors 1,052,414 2,172,290 4.1
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 94 GAO-05-979 International Trade

CDSOA Effects on 

Crawfish Processing 

Companies 

Crawfish Recipients 

Reported Positive Effects 

from CDSOA Payments

CDSOA recipient respondents in the crawfish tail meat processing industry 

stated that the program has generally had positive effects for the industry 

and their companies. Several recipient respondents credited CDSOA with 

saving the domestic crawfish processing industry. Because of the program, 

they said, businesses remained open, employees kept their jobs, and 

crawfish fishermen continued to fish. The areas in which positive effects 

were most often cited were income; profits; investment in property, plants, 

and equipment; employment; and ability to compete. The program was 

generally seen as having little or no effect on prices, research and 

development, and market share. Many recipients stated that the program 

had encouraged them to purchase and process more crawfish and freeze 

more tail meat for sale in the off-season, leading to increased employment 

among some processors and higher sales volumes for crawfish farmers and 

fishermen. 

Many respondents noted the poor collection rate and enforcement of the 

AD order for crawfish and viewed the CDSOA program as providing their 

only effective relief from dumped imports. (CBP disbursed about $9.8 

million to crawfish processors in fiscal year 2003 but reported that the 

uncollected duties related to crawfish in that year were about $85.4 million. 

In fiscal year 2004, CBP disbursed about $8.2 million to the industry, but 

uncollected duties rose to about $170 million. Nearly two-thirds of all 

uncollected duties in fiscal year 2004 were related to the crawfish order.) 

Recipients complained that widespread non-payment of duties means 

Chinese crawfish continues to enter the U.S. market unabated. In its 2003 

review to evaluate continuation of the AD order, ITC found that Chinese 

tail meat undersold (was sold at a lower price) domestic tail meat to the 

same degree with the AD order in place as it had before the order was 

issued, suggesting that the order has not affected the price of imported tail 

meat.33

33See ITC, Crawfish Tail Meat from China, Investigation No. 731-TA-752 (Review), 

Publication 3614 (Washington, D.C.: July 2003).
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 95 GAO-05-979 International Trade

Although CDSOA disbursements in this industry have been small compared 

to certain other industries, these payments have been significant for some 

recipients when compared to net sales. Among the 16 recipients that 

responded to our survey, their fiscal year 2004 CDSOA disbursement as a 

percent of their 2004 net sales ranged from a low of about 4 percent for one 

company to a high of about 350 percent for another.34 Among the other 

respondents, four companies’ fiscal year 2004 disbursement was about 15 

to 18 percent of their net sales that year, five companies’ disbursement was 

about 27 to 33 percent of their net sales, and four companies’ disbursement 

was between 52 and 96 percent of their net sales.35 One company did not 

report any net sales information to us. 

Non-Recipients Reported 

Negative Effects

Non-recipients crawfish processors that responded to our survey said that 

the CDSOA program has helped recipient companies, but has harmed nonrecipient companies by creating conditions of unfair competition among 

domestic processors. Most non-recipients cited negative effects for their 

companies in terms of ability to compete, net sales, profits, income, 

investment, and employment, which are generally the areas where 

recipients saw positive effects. Several non-recipients stated that they were 

unable to compete with the CDSOA recipients. For example, several nonrecipients said that recipient companies were offering tail meat for sale at 

prices that were below the cost of production and were able to do so 

because their CDSOA funds would compensate them for any losses. In 

such conditions, some non-recipients said they cannot operate profitably 

and some decided to stop producing tail meat in recent years.

Table 21 provides crawfish recipients and non-recipients’ responses to our 

questionnaire on CDSOA’s effects. 

34The ratio of a company’s fiscal year 2004 CDSOA disbursement to its 2004 net sales may 

not be representative of this ratio for prior years or of the average ratio of disbursements to 

net sales for the company since CDSOA’s inception, because of fluctuations in the size of 

CDSOA disbursements and net sales. Calculating average ratios would help take account of 

these fluctuations, but we did not calculate such ratios because we lacked consistent 

information about disbursements and net sales for all CDSOA recipients that responded to 

our case study questions.

35This includes information for two companies based on their fiscal year 2003 disbursements 

and net sales because we lacked information to calculate the ratio for fiscal year 2004.
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 96 GAO-05-979 International Trade

Table 21: CDSOA Effects on Crawfish Companies

Source: GAO analysis of company responses to structured questions.

CDSOA Effect on Company 

Ability to Compete in U.S. 

Market

Table 22 provides these companies’ responses to our question on CDSOA’s 

effect on their ability to compete in the U.S. market.

Category

Positive

effects

Little or no

effects

Negative

effects

No basis to

judge

Number of

respondents

Recipients

Prices 3 13 0 0 16

Net sales 9 7 0 0 16

Gross profits 11 4 0 0 15

Net income 14 2 0 0 16

Property, 

plant, and 

equipment 11 3 0 0 14

Research and 

development

5 9 0 0 14

Employment 11 5 0 0 16

Ability to 

compete 10 6 0 0 16

Market share 5 9 0 0 14

Non-Recipients

Prices 2 1 5 1 9

Net sales 0 1 8 0 9

Gross profits 0 1 8 0 9

Net income 0 1 7 1 9

Property, 

plant, and 

equipment 0 2 7 0 9

Research and 

development 0 3 4 2 9

Employment 0 2 7 0 9

Ability to 

compete 0 0 9 0 9

Market share 0 2 6 1 9
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 97 GAO-05-979 International Trade

Table 22: CDSOA Effect on Crawfish Companies’ Ability to Compete in the U.S. 

Market

Source: GAO analysis of company responses to structured questions.

Company Uses of CDSOA 

Funds

We also asked companies to describe how they used the CDSOA payments 

that they received. However, the law does not require that distributions be 

used for any specific purpose. Recipient companies reported a wide range 

of uses for the funds. For example, most of the companies that reported 

this information said they purchased or upgraded equipment, buying new 

or larger delivery trucks, boilers, ice machines, freezers, coolers, and 

vacuum-pack machines. Several companies bought more crawfish to peel 

and hired more employees, thereby increasing their production of tail meat. 

Several companies said that they made investments and repairs to their 

plants, such as installing or expanding docks for receiving shipments of 

whole crawfish. Several also paid off long-standing company and personal 

debts. For example, the head of one small family-run company said he paid 

off mortgages on the plant and his residence, bought new equipment, and 

made needed repairs without incurring new financing costs. One company 

said that it started a pension plan for its employees.

Net Sales and Employment 

Trends

More than half of the recipient companies that we surveyed had growing 

net sales in the 2001 through 2004 time frame. Other companies’ net sales 

fluctuated, decreased, or were relatively stable. Several respondents said 

that one of the most significant outcomes of the CDSOA program was to 

encourage them to purchase and process more crawfish and freeze more 

tail meat for sale in the off-season, thereby improving their year-round cash 

flow. Most non-recipients that responded to our survey did not provide net 

sales information.

More than half of the crawfish recipient respondents also reported growth 

in employment levels, and some of these increases were significant. One 

company quadrupled the number of production and related workers during 

Increased

Stayed about

the same Decreased

Don’t know/no

basis to judge

Number of

respondents

Recipients

12 3 0 1 16

Non-Recipients

0 1809
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 98 GAO-05-979 International Trade

the 2001 through 2004 period (from 28 to 111) and the number of such 

workers at three other companies doubled. Several stated CDSOA enabled 

them to hire more people. Three recipients reported net decreases in the 

number of production and related workers in this time period. Nonrecipients also generally did not report employment information.

Extent of Overseas 

Production

Survey respondents said they process tail meat exclusively in the United 

States. We did not gather any information that disclosed whether, in the 

course of doing business, any of these processors also import or offer 

imported tail meat for sale. 

Scope and 

Methodology

To obtain crawfish tail meat processing companies’ views on CDSOA’s 

effects, we sent out a set of structured questions to certain crawfish 

CDSOA recipients and non-recipients. CDSOA payments are made in this 

industry under one AD order. 

To identify CDSOA recipients, we obtained information from CBP about 

the companies that have received payments in each of the three years that 

disbursements have been made and the amount of disbursements they have 

received. Using this information, we developed a list of 35 recipients and 

ranked them by their total CDSOA receipts. CBP provided additional 

information that indicated that certain companies had received funds 

under different names in different years. Because of time and resource 

constraints, we decided to survey 20 of the top recipients that had received 

about 90 percent of the total payments made under this order. We received 

16 completed surveys. These 16 companies accounted for about 73 percent 

of CDSOA payments to this industry; their views may not be representative 

of all recipients, particularly those that received relatively small CDSOA 

disbursements. 

The size of the universe of crawfish non-recipients not known.36 We sought 

to obtain views from a comparable number of non-recipients as recipients, 

but we had difficulty identifying non-recipient crawfish companies. To 

36Precise information about the number of crawfish processors is unavailable. According to 

ITC, more companies are licensed to process crawfish than are active in any given year. In a 

2003 report to evaluate the effects of the order, ITC received information from 42 crawfish 

processors, of which 27 were CDSOA recipients. See ITC, Crawfish Tail Meat from China, 

Investigation No. 731-TA-752 (Review), Publication 3614 (Washington, D.C.: July 2003).
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 99 GAO-05-979 International Trade

identify these companies, we obtained information from associations or 

others that were knowledgeable about the industry. Specifically, we 

obtained contact information for current and former tail meat processors 

that are non-recipients from (1) a law firm that represents the Crawfish 

Processors Alliance, an entity that was a petitioner in this case; (2) the 

Louisiana Department of Agriculture and Fisheries, an entity that was a 

petitioner in this case; (3) the Louisiana Department of Health and 

Hospitals, which licenses and inspects processors; and (4) certain other tail 

meat processors. We lacked accurate contact information for several of 

these companies. We surveyed 17 current and former processors, from 

which we received 9 completed surveys.37 The views of these respondents 

may not be representative of all non-recipients.

Views on CDSOA from 

Recipients and NonRecipients in Softwood 

Lumber Industry

Background Softwood lumber generally comes from conifers or evergreen trees 

including pine, spruce, cedar, fir, larch, Douglas fir, hemlock, cypress, 

redwood, and yew. Softwood is easy to saw and used in structural building 

components. It is also found in other products such as mouldings, doors, 

windows, and furniture. Softwood is also harvested to produce chipboards 

and paper. U.S. softwood lumber producers are generallly located in the 

southeast and northwest, with the northwest softwood lumber being 

comparable to Canadian softwood lumber. CDSOA disbursements to the 

softwood lumber industry went to 143 companies in fiscal years 2003 and 

2004. According to one estimate, about half of the softwood lumber 

companies are eligible to receive these disbursements. 

37We sent surveys to all current processors that we identified, with the exception of one 

company that had just entered the business and felt it lacked perspective on the questions. 

Included in the definition of current processors are certain companies that are not currently 

employing people to process tail meat but that continue to hold licenses to process crawfish 

and/or have engaged other companies to process tail meat on their behalf. We also sent 

surveys to former processors that had processed tail meat at any time since 2002, when 

CDSOA disbursements to this industry began. 
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 100 GAO-05-979 International Trade

Canada’s share of the U.S. lumber market rose from less than 3 billion 

board feet (BBF) and 7 percent of the market in the early 1950s to more 

than 18 BBF per year and 33 percent of the market in the late 1990s. In 

2003, U.S. imports of softwoods were 49,708 thousands of cubic meters, 

and the ratio of these imports to consumption was 37.4 percent. Since 1981, 

the United States and Canada have been involved in several softwood 

lumber disputes, leading to, among other things, a 15 percent Canadian tax 

on lumber exports in 1986; a countervailing duty of 6.51 percent on 

Canadian imports in 1992, which ended in 1994; and a 1996 Softwood 

Lumber Agreement restricting Canadian exports for five years, until 2001.

The U.S. again imposed antidumping and countervailing duties on 

Canadian imports in 2002. From May 2002 to December 2004 most 

Canadian softwood lumber exported to the United States was subject to a 

combined antidumping and countervailing duty of 27 percent. In December 

2004 this combined duty was reduced to 21 percent. These two duty orders 

funded about $5.4 million in CDSOA disbursements to U.S. softwood 

lumber companies in fiscal years 2003 and 2004. Leading U.S. softwood 

lumber producers are among the industry’s top CDSOA recipients. 

However, major U.S. producers are also among those ineligible to receive 

CDSOA disbursements. CBP has received over $3.7 billion in deposits to 

cover estimated duties from softwood lumber imports from Canada.
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 101 GAO-05-979 International Trade

Table 23 depicts the top 10 CDSOA softwood lumber recipients for fiscal 

years 2003-2004.

Table 23: Top 10 FY 2003-2004 Softwood Lumber CDSOA Recipients

Source: GAO analysis of CBP data.

CDSOA Effects on 

Softwood Lumber 

Companies 

Softwood Lumber 

Recipients and NonRecipients Reported Little 

or No Effects from CDSOA 

Payments

Recipient and non-recipient companies generally noted that, because 

CDSOA disbursements had been so small in fiscal years 2003-2004, totaling 

about $5.4 million, they had had little or no effect on their companies.

Although recipient companies vary greatly in their overall size, these 

companies do not vary significantly in terms of the amount they have 

received through CDSOA as a percentage of their sales in fiscal year 2004. 

Company Amount paid

 Amount

claimed

Amount paid as a

percentage of

total paid to

industry

1 International Paper $761,907 $3,450,790,984 13.98

2 Sierra Pacific Industries 549,622 2,479,493,488 10.09

3 Stimson Lumber 350,766 1,587,151,896 6.44

4 Hampton Resources 321,954 1,459,096,581 5.91

5 Potlatch Corporation 261,543 1,186,058,000 4.80

6 Temple Inland Forest 165,907 763,770,440 3.04

7 Plum Creek Reek Timber 141,260 650,304,609 2.59

8 Swanson Group Inc 135,481 623,700,679 2.49

9 Gilman Building Products 120,249 550,635,410 2.21

10 Seneca Sawmill 107,278 483,738,802 1.97
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 102 GAO-05-979 International Trade

Specifically, CDSOA disbursements to company sales amounted to less 

than 1 percent for the recipient companies in our study.38

However, some recipient and non-recipient companies emphasized that, if 

the United States ever were to liquidate and disburse the large amount of 

softwood lumber duties currently being held in deposit by Treasury, these 

disbursements would have major effects on both recipient and nonrecipient companies. One recipient company noted that these 

disbursements would have positive effects on its company, while a nonrecipient company emphasized negative effects. Because capital is a major 

function in competitiveness, a non-recipient company stated that, if 

recipient companies were to invest large CDSOA disbursements on new 

mills, they would be able to dramatically increase their efficiency, output, 

and market share. 

Table 24 provides softwood lumber recipients and non-recipients’ 

responses to our questionnaire on CDSOA’s effects. 

Table 24: CDSOA Effects on Softwood Lumber Companies

38The ratio of a company’s fiscal year 2004 CDSOA disbursements to its 2004 new sales may 

not be representative of this ratio for prior fiscal years or of the average ratio of 

disbursements to net sales for the company since CDSOA’s inception, because of 

fluctuations in the size of CDSOA disbursements to net sales. Calculating average ratios 

would help take account of these fluctuations, but we did not calculate such ratios because 

we lacked consistent information about disbursements and net sales for all CDSOA 

recipients that responded to our case study questions.

Category

Positive

effects

Little or no

effects

Negative

effects

No basis to

judge

Number of

respondents

Recipients

Prices 1 12 0 0 13

Net sales 1 12 0 0 13

Gross profits 1 12 0 0 13

Net income 1 12 0 0 13

Property, plant, 

and equipment 1 12 0 0 13

Research and 

development 1 12 0 0 13

Employment 1 12 0 0 13
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 103 GAO-05-979 International Trade

Source: GAO analysis of company responses to structured questions.

CDSOA Effect on Company 

Ability to Compete in U.S. 

Market

Recipient and non-recipient companies generally reported that the CDSOA 

disbursements had had no effect on their companies’ ability to compete in 

the U.S. market. 

Table 25 presents these companies responses to our question on CDSOA’s 

effect on their ability to compete in the U.S. market.

Table 25: CDSOA Effect on Softwood Lumber Companies’ Ability to Compete in U.S. 

Market

Source: GAO analysis of company responses to structured questions.

Ability to compete 1 12 0 0 13

Market share 1 12 0 0 13

Non-Recipients

Prices 0 5 0 1 6

Net sales 0 5 0 1 6

Gross profits 0 5 0 1 6

Net income 0 5 0 1 6

Property, plant, 

and equipment 0 5 0 1 6

Research and 

development 0 5 0 1 6

Employment 0 5 0 1 6

Ability to compete 0 5 0 1 6

Market share 0 5 0 1 6

(Continued From Previous Page)

Category

Positive

effects

Little or no

effects

Negative

effects

No basis to

judge

Number of

respondents

Increased

Stayed about

the same Decreased

Don’t know/no

basis to judge

Number of

respondents

Recipients

2 8 0 3 13

Non-Recipients

0 2136
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 104 GAO-05-979 International Trade

Company Uses of CDSOA 

Payments

We also asked companies to describe how they used the CDSOA payments 

that they received. However, the law does not require that distributions be 

used for any specific purpose. Overall, companies noted that they had used 

the payments for a variety of purposes, such as paying debt, past qualifying 

expenditures, general operating expenses, general corporate expenses, and 

capital investment. Others noted that the payments had been too small to 

track their use in any area.

Net Sales and Employment 

Trends

Overall, recipient and non-recipient companies we contacted vary 

significantly in size. Both show slight increase in net sales and employment 

over the 4 years that CDSOA has been in effect. Leading U.S. producers are 

among the CDSOA recipient and non-recipient companies. 

Extent of Overseas 

Production

Most recipient companies we contacted produced CDSOA-related products 

domestically. Some non-recipient companies we contacted produced these 

products domestically. Others produced them both domestically and 

abroad.

Scope and 

Methodology

To obtain softwood lumber companies’ views on CDSOA’s effects, we sent 

out questionnaires to certain softwood lumber CDSOA recipients and nonrecipients. CBP made CDSOA payments to recipients in this industry in 

fiscal years 2003 and 2004 under an AD order and a CV order both issued in 

2002.

To identify CDSOA recipients, we obtained information from CBP about 

the companies that had received CDSOA payments in the 2 fiscal years and 

the amount of disbursements they had received. Using this information, we 

developed a list of 143 recipients and ranked them by their total CDSOA 

receipts in the 2 fiscal years. Because of time and resource constraints, we 

decided to survey the top 14 recipients that had received about 60 percent 

of the total softwood lumber payments. CBP provided contact information 

on these companies to us. From these 14 companies, we received 13 

completed surveys. These 13 companies accounted for about 59 percent of 

all softwood lumber disbursements. Their views may not be representative 

of all recipients, particularly those that received relatively small CDSOA 

disbursements.
Appendix III

CDSOA Recipient and Non-Recipient 

Companies in Seven Industries

Page 105 GAO-05-979 International Trade

Given that about half of the industry is eligible to receive CDSOA 

disbursements, we sought to obtain views from a comparable number of 

recipients and non-recipients. To identify non-recipient companies, we 

obtained information from public and private sources that are 

knowledgeable about the industry. Specifically, we obtained information on 

non-recipients from the ITC and softwood lumber companies. We surveyed 

15 companies and we received six completed surveys from them. These 

respondents included a wide range of top non-recipients, including one of 

the largest companies in the industry. However, their views may not be 

representative of all non-recipients.
Page 106 GAO-05-979 International Trade

Appendix IV

Comments from Customs and Border 

Protection ApendxiIV
Appendix IV

Comments from Customs and Border 

Protection

Page 107 GAO-05-979 International Trade
Appendix IV

Comments from Customs and Border 

Protection

Page 108 GAO-05-979 International Trade
Page 109 GAO-05-979 International Trade

Appendix V

GAO Contact and Staff Acknowledgments ApendxiV

GAO Contact Loren Yager, (202) 512-4347

Staff 

Acknowledgments

Kim Frankena served as Assistant Director responsible for this report, and 

Juan Tapia-Videla was the Analyst-in-Charge. In addition to those named 

above, the following individuals made significant contributions to this 

report: Shirley Brothwell, Ming Chen, Martin de Alteris, Carmen Donohue, 

John Karikari, Casey Keplinger, Jeremy Latimer, and Grace Lui. The team 

benefited from the expert advice and assistance of Jamie McDonald, Jena 

Sinkfield, Tim Wedding, and Mark Speight. 

(320289)
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