SKF USA Inc. (a division of SKF AB, Sweden) has clearly won an important victory in a potential landmark decision. The Court of International Trade's decision in effect overturns the entire CDSOA payout system -- and could pave the way for a large number of domestic U.S. bearing manufacturers to collect payouts under the CDSOA as "interested parties" in antidumping investigations and findings.

In addition, the Court of International Trade's [website] decision leaves the door open to the possibility that some previous years' CDSOA payouts may have to be disgorged (paid back) in order to properly recalculate and redistribute funds.

The controversial Continued Dumping and Subsidy Offset Act of 2000 (CDSOA, aka the "Byrd Amendment") requires U.S. Customs to set aside collected antidumping duties in separate accounts, one for each antidumping duty order. Then, rather than putting that money in the general fund where it used to go, it is paid out each fiscal year to U.S. domestic manufacturers affected by the dumping, or so-called "affected domestic producers." The definition in the legislation requires that to receive a payout, a company must have participated in or materially supported a successful trade action that resulted in an antidumping duty order.

Many have long argued this is a nonsensical limitation, that in most cases the companies suffering the most damage from dumping and unfair competition are the very ones least able to afford to pay Washington lawyers for lengthy and often valueless trade court actions.

In calculating and awarding yearly CDSOA payouts, the International Trade Commission has refused to include SKF because SKF's participation in the 1988 investigation and subsequent order was to argue against the imposition of antidumping duties. The CDSOA legislation specifically requires companies to have registered support for a complaint in order to collect payouts.

The CIT has now found that limitation unconstitutional under the Equal Protection doctrine, that trade remedies must protect industries and not specific business entities.

The financial fallout is potentially massive. SKF's complaint at this point involves its filing to recover a portion of more then $115 million in 2005 CDSOA payouts alone. If disgorgement and redistribution is ordered, tens of millions of dollars are potentially at stake for many CDSOA payees.

Because the court's decision could potentially involve a great number of U.S. domestic bearing manufacturers, we strongly encourage you to print out and read the entire decision:

The court's summary "Conclusion" section reads:
CONCLUSION

The Court holds that the requirement that an entity had to “support” an antidumping petition to be included as an “affected domestic producer” as defined in the CDSOA, 19 U.S.C. § Court No. 05-00542 Page 28 1675c(b)(1)(A), is a violation of the Equal Protection guarantees under the Fifth Amendment to the Constitution.

The classification treats similarly situated domestic producers differently and is not rationally related to a legitimate government objective.

The Court further finds that the classifying language “support of” is severable from the CDSOA. Therefore, the definition of “affected domestic producer” should read as “a petitioner or interested party in a petition with respect to which an antidumping duty order, a finding under the Antidumping Act of 1921, or a countervailing duty order has been entered.”

The Court finds all other arguments unpersuasive. Since SKF was denied “affected domestic producer” eligibility under the unconstitutional definition, the Court remands this matter to the ITC and Customs to review their decisions denying SKF CDSOA disbursements in accordance with this opinion. An order will be entered accordingly.

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