The Role of Economic Analysis in Countervailing Duty Disputes: Cases Involving Agriculture

Abstract

Several recent countervailing duty cases involving agricultural products have resulted in lively debate, and in some cases, additional political or legal action. This article examines whether several recent decisions involving agricultural products made under Canadian and U.S. countervailing duty law were consistent with economic theory, the GATT Subsidies Code and the relevant national lwa. On the basis of the analysis the article concludes that national trade laws, both in the U.S. and Canada, could be improved by explicitly incorporating an economic definition of a trade distorting domestic production subsidy, and an economic test for the causal link between a foreign subsidy and injury to a domestic industry.