The Continued Dumping and Subsidy Offset Act (CDSOA, 19 U.S.C. 1675c), (1) commonly known as the "ByrdAmendment," requires that duties collected due to antidumping or countervailing duty orders mustbe distributed to petitioners and interested parties in the investigations that resulted in the impositionof the orders. Eight countries successfully challenged the CDSOA in a World Trade Organization (WTO)dispute settlement proceeding, and in August 2004 a WTO arbitrator determined the level of"suspension of concessions" (retaliation) that the co-complainants may claim until the United Statescomplies with the WTO ruling. In late November 2004, the European Union, Japan, Korea, India,Brazil, Mexico, Canada, and Chile received formal authorization to retaliate. After warnings by theco-complainants of unified retaliation by July 2005, four have imposed increased tariffs on selectedU.S. goods. The European Union and Canada have been imposing tariff surcharges since May 2,2005; Mexico began doing so on August 18, 2005, and Japan introduced its measures effectiveSeptember 1, 2005. (2) Congressional action is required in order for the United States to comply with the WTOdeterminations, and, notwithstanding the strong congressional support enjoyed by the CDSOA inboth chambers, (3) severalefforts to repeal or amend the measure were introduced in the 109th Congress, first session. Mostrecently, repeal of the CDSOA was included in S. 1932 , the Deficit Reduction Act of2005, which was passed by the Senate on November 3, 2005, and by the House on November 18. In conference, language was negotiated that would repeal the CDSOA as of the date of enactmentof the Deficit Reduction Act, while allowing distribution of duties on all subject merchandise enteredbefore October 1, 2007. The conference report, with the CDSOA language included, subsequentlypassed the House on December 19, 2005, and the Senate on December 21. A point of order upheldin the Senate against inclusion of Medicare and Medicaid language in a budget bill caused a slightlydifferent version of the conference report to be passed in the Senate; therefore, the House will needto consider the measure once again in 2006. There have been three other efforts to repeal the CDSOA in the 109th Congress. Inmid-September 2005, two amendments offered by Senator Grassley to H.R. 2862 , abill that included appropriations for the Office of the United States Trade Representative, would havelimited implementation of the CDSOA ( S.Amdt. 1680 ) and removed a negotiationrequirement in the Senate-reported bill aimed at preserving the statute ( S.Amdt. 1681 ). Neither was voted upon, however. H.R. 1121 (Ramstad), a bill that would repeal themeasure, was proposed for inclusion in a larger miscellaneous duty suspension bill now expectedto be considered later in 2006. In Congress, the controversy over the Byrd Amendment is one component of a larger debateover the future direction of U.S. trade policy. Although many in Congress acknowledge that benefitsare received through liberalizing trade, there is sometimes disagreement over the proper balancebetween these benefits and the costs incurred to domestic industries, firms, and workers by theresulting increase in global competition -- especially if unfair foreign competition is perceived orfound to be the cause of job losses and plant closings. An overall assessment of the United States'WTO membership, including issues of U.S. compliance with certain WTO dispute settlement rulingsdeemed controversial by some, has already received significant attention in the 109th Congress. This report discusses the controversy over the CDSOA in three parts. First, it covers brieflythe background of the law, its effects, and the WTO dispute settlement case. Second, it discussesthe congressional debate on the pros and cons of repealing the measure. Third, options for Congressare discussed. Antidumping (AD) and countervailing duty (CVD) investigations are triggered by a petitionfiled by an interested party on behalf of an industry (4) alleging that the industry is injured or threatened with materialinjury by reason of imports that are, respectively, sold in the U.S. market at less than fair value(dumped), or subsidized. In order for the industry to obtain relief, two things must happen: (1) theInternational Trade Administration (ITA), an agency of the Department of Commerce, must finddumping or subsidization and (2) the International Trade Commission (ITC) must find that thedomestic industry is materially injured or threatened with material injury due to the dumped orsubsidized imports. These agencies conduct preliminary and final investigations in a detailedadministrative process with specific time lines. (5) According to the findings in the CDSOA, the legislative intent of the act is to address theissue of foreign products which continue to be dumped or subsidized sales to the U.S. market afteran AD or CV duty has already been assessed, and, in so doing, to strengthen the remedial purposeof antidumping and countervailing duty laws. One of the findings underlying the law stated thatcontinued dumping or actionable subsidies "can frustrate the remedial purpose of the [trade remedy]laws by preventing market prices from returning to fair levels" which can lead to domesticproducers' reluctance to rehire employees or otherwise invest in the business in order to remaincompetitive. (6) The CDSOA is also somewhat unique as a trade policy concept because it holds that "therevenue from unfair trade should be used to help those hurt by trade." (7) Prior to its enactment, revenuecollected as a result of AD or CVD orders was deposited in the General Fund of the U.S. Treasury. Instead, the CDSOA directs the Bureau of Customs and Border Protection of the Department ofHomeland Security (CBP) to disburse these duties directly to petitioners and interested parties in theinvestigations that resulted in the orders. Many find the measure controversial, therefore, becausethey believe that it adds a level of "protection" on subject U.S. products in addition to theameliorative action afforded by trade remedies. Some also find the measure controversial because it was enacted without committee or flooramendment in either House. The measure was inserted into the Agriculture, Rural Development,Food and Drug Administration, and Related Agencies Appropriations Act 2001 ( P.L. 106-387 ) bySenator Robert Byrd, a conferee to the appropriations bill. Similar legislation had been introducedin the 105th Congress ( H.R. 2509 , Regula; S. 2281 , DeWine) and the 106thCongress ( H.R. 842 , Regula; S. 61 , DeWine), but these bills died incommittee. When President Clinton signed the appropriations measure, he noted the insertion of theamendment, saying "this bill will provide select U.S. industries with a subsidy above and beyond theprotection level needed to counteract foreign subsidies," and called on Congress to repeal or amendthe provision. (8) The CDSOA requires CBP to distribute all duties collected pursuant to AD or CVD ordersto "affected domestic producers," defined in the act as any manufacturer, producer, farmer, rancher,or worker representative (including associations of these individuals) that was (1) a petitioner orinterested party in support of a petition that resulted in an AD or CVD order, and (2) remains inoperation. (9) Distributions under the act may be used to offset "qualifying expenditures" within thefollowing categories that the domestic producer incurred between the issuing of an AD or CVD orderand its termination: (1) manufacturing facilities; (2) equipment, (3) research and development; (4)personnel training; (5) acquisition of technology; (6) health care benefits for employees paid by theemployer; (7) pension benefits for employees paid by the employer; (8) environmental equipment,training, or technology; (9) acquisition of raw materials and other inputs; or (10) working capital orother funds needed to maintain production. (10) In the first stage of the CDSOA distribution process, the International Trade Commissionsends a list to CBP of petitioners and interested parties in support of each investigation (generallyindicated by letter of support for AD or CVD petitions or through affirmative responses to ITCquestionnaires). CBP then publishes a notice of intent to distribute the offset, along with a list ofaffected domestic producers eligible for distributions and the estimated amount available to themat least 30 days prior to the offset distribution date. (11) In order to receive a payment, each company on the list mustdemonstrate that it is eligible to receive an offset disbursement, and must certify that it has qualifyingexpenditures incurred for which distributions have not yet been paid. (12) CBP places all estimated antidumping and countervailing duties that are deposited with CPBdirectly into "Clearing Accounts." An account is assigned individually to each antidumping orcountervailing duty order under which duties are collected. (13) When the goods areliquidated and the duty is finally paid, the funds are distributed into "Special Accounts," alsoidentified by the individual AD or CVD orders, from which offset payment to individual claimantsare paid. The total amount of offset payments disbursed is limited by the total amount of duties inthe Special Account for each case. (14) As a consequence of this limitation, the actual payments madeoften cover only a minimal portion of each claim involved.