Sovereignty, Subsidies, and Countervailing Duties in the Context of the Canada-United States Trading Relationship

JOHN TERRY

ABSTRACT

Global reduction in the use of tariffs since the 1947 signing of the General Agreement on Tariffs and Trade (GATT) has been offset by an increase in the use of nontariff barriers and protectionist trade remedies. Of these, the domestic subsidy policies adopted by many states and the retaliatory countervailing duties imposed by others have been the most prominent source of international dissension.

The author undertakes a critical analysis of the international rules on subsidies and countervailing duties, with an emphasis on the Canada-United States trading relationship. He argues that the existing rules create three biases which favour the United States over Canada. The United States has used these biases to advance its own conception of the appropriate relationship between the state and the market, and to respond to domestic demand for protection. The author explores strategies Canada can adopt to counter these biases by using the existing rules, by pressing for reforms of the international rules, or by using the new mechanisms established under the Canada-United States free-trade agreement.

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Citation: (1988) 46(1) U.T. Fac. L. Rev. 48.
Copyright © 1988. University of Toronto Faculty of Law Review.
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