Karl D. Meilke

Production Subsidy and Countervailing Duties in Vertically Related Markets: The Hog-Pork Case Between Canada and the United States

This paper analyzes U.S. countervailing import duties aimed at offsetting the effects of a Canadian hog production subsidy. Approximate countervailing duty formulae for two alternative objectives are derived, the permissible range of these duties is illustrated, and empirical evidence is provided. To restore equilibrium at the presubsidy level in the U.S. hog market, a countervailing duty on hog imports suffices; this duty should be less than the unit hog production subsidy. To restore equilibrium in both the U.S. hog and pork markets, countervailing duties on both hog and pork imports are required. Such duties should be less than the unit subsidy, and the duty on pork should be less than the duty on hogs.

Trade Remedy Actions in NAFTA: Agriculture and Agri-Food Industries

The economic rationale for trade remedy law, while always weak, is undermined by the formation of free trade areas. However, due to political pressure, first CUSFTA and then NAFTA have continued the use of domestic antidumping and countervailing duty laws. With the lowering of border protection, it was feared that there would be an explosion of trade remedy law as NAFTA was implemented. This article examines data on the use of anti-dumping and countervailing duty investigations in agriculture, and analyses the incidence between NAFTA partners before and after the implementation of free trade, and compared to the incidence with other countries. Given the cost of current AD and CVD suits, options are explored for alternative methods to resolve AD and CVD suits. Evaluation of options hinges on goals held for dispute resolution within NAFTA. Given continued political opposition to eliminating AD and CVD processes, increasing the options for resolving these suits may reduce their overall costs.

Four case studies of agri-food CVDs and a proposal for reforming national administered protection agencies

This paper reviews the role of national administered protection agencies, whose primary responsibility is the enforcement of national trade remedy laws. After reviewing four recent cases of trade disputes between Canada and the United States, it is argued that the role of national administered protection agencies should be changed. The growth of regional trading blocks, the increasing use of anti-dumping and countervailing duty actions against fairly traded imports and the additional responsibilities assumed by the WTO in administering the Agreement on Agriculture strongly suggest that all trade disputes should be taken to the WTO for settlement. The role of national administered protection agencies should be changed to make them agents for trade liberalization. This would involve these agencies taking on three primary functions: (i) as transparency agents; (ii) as investigatory agents; and (iii) as advocacy agents.