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CHAPTER 1 GLOBALIZATION, the STATE and SUBSIDIES 1. This Is Notes CHAPTER 1 GLOBALIZATION, THE STATE AND SUBSIDIES 1. This is an interpretation that stresses developments in the global political economy. Other work on globalization has stressed the compression of time and space, as well as broader sociological aspects (Shaw, 1994; Robertson, 1992). 2. For an extended consideration of these categories see the work of Robert W. Cox (1987; 1986). 3. James Laxer (1987) uses the terms 'enterprise' and 'enterprise-interven­ tion' to describe similar variations as hyperliberalism and state capitalism. 4. This statement presumes that the interests of domestic societies may not be synonymous with the demands of the international economy as articu­ lated by hegemonic spokespeople. CHAPTER 2 THE US TRADE LAW SYSTEM 1. This has led one prominent observer (Wolf, 1989: 286) to use 'stupidity' as a possible explanation for trade restrictions! 2. See 'Statement by Forty Economists on American Trade Policy', issued in April 1989 reprinted in The World Economy 12 no. 2 (June 1989: 263-4 and Bovard, 1991). 3. Nelson (1989) terms this a shift from distributional to regulatory politics. 4. C. Michael Aho refers to this practice as 'forum shopping'. See 'Com­ ments', (Smith, 1987: 44). 5. Public letter accompanying the release of the 1985 Trade Barriers Report (29 October) from United States Trade Representative Clayton Yeutter to Senator Bob Packwood, Chairman of the Senate Committee on Finance. 6. Belgium also brought in a CVD law at this time. 7. Concerns about the protectionist bias in antidumping cases are outlined in Devalut (1990). 8. Having made this point, it is acknowledged that other laws such as the antidumping provision and Section 301 can also be used to change other government activities. Antidumping cases are often aimed at products that are dumped on the world market because of government support such as the European Common Agricultural Policy. Section 301 attacking foreign trade barriers has been used in order to encourage Japan to change its domestic policies in the areas of retail practices and rice policy. 9. VERs are administrated by the exporting country while OMAs are moni­ tored in the importing country. 10. If a country is not a signatory to the GAIT code, material injury does not have to be demonstrated. For a clear, detailed discussion about the CVD process see Vakerics, Wilson, and Weigel (1987: 193-270). 11. 'Upstream subsidies' are subsidies given to an input product that is used 185 186 Notes in the manufacture of another product, which is then subject to CVDs. 12. 'Certain Softwood Products From Canada' , 5 International Trade Reporter Decisions (ITRD) (Washington, D.C.: Bureau of National Affairs), 1487. 13. The assumption is that if a subsidy is specifically targeted it will sway a country's comparative advantage in that product, but a generally avail­ able subsidy will not have the same effect. 14. Carbon black is used to strengthen natural and synthetic fibres and in the production of some inks. The decision is found in 'Carbon Black from Mexico', 5 ITRD 1514-24. 15. For a detailed analysis and severe critique of US practice in this case see Percy and Yoder (1987). CHAPTER 3 NATIONAL ORIGINS OF CANADA-US SUBSIDY CONFLICTS 1. For a critique of the Hartz-Horowitz debate see Forbes (1987). A brief critique of this culturaVinstitutional approach is given in Brym and Fox, (1989: 57-66). 2. See Section 36 (2) of The Constitution Act 1982, Section 36 (2). 3. Prior to 1984 they were called General Development Agreements (GDA). 4. (Stevenson, 1989: 188). Coincidentally these very Michelin plants became the object of attack via US trade law. The case is examined in Chapter 4. 5. These views are outlined in Report of the Royal Commission on Radio Broadcasting, September 1929. Reprinted in Bird (1988: 41-5). 6. Graham Spry, founder of the Canadian Radio League quoted in Raboy (1990: 40). 7. See the Canadian Associations of Broadcasters attack on the CRTC's Canadian content proposals contained in an editorial in Broadcaster maga­ zine in March 1970. Reprinted in Bird (1988: 454-8). CHAPTER 4 SUBSIDIES AND THE FREE TRADE AGREEMENT 1. Morton (1989: 2) places emphasis on three other factors - Canadian re­ liance upon exports to the US, perception by both countries that Canada subsidizes to a greater degree, and US reliance on trade remedy laws. 2. As negotiations progressed a second goal of liberalizing the domestic economy gained in importance (Hart, 1989b: 73). This view is also ex­ pressed by critics of the trade deal (Warnock, 1988). 3. Another interpretation is that the case was the result of a bidding war between Nova Scotia and Akron, Ohio, with the loser pursuing the CVD process. See Gary Horlick's comments in Smith (1987: 50). 4. The primary decision is 'Oil Country Tubular Goods', 8 lTRD 2407-20. Appeals on methodological grounds in 'Ipsco, Inc. v. U.S.', 10 lTRD 1267-82, 2379-83. 5. A prominent exception to this thinking has been Gary Horlick, a Wash­ ington trade lawyer and Canadian government advisor who has argued that Canada should launch CVD cases against the US to educate Con- Notes 187 gress about subsidy practices. See his comments in Smith (1987: 50). 6. Some trade analysts have suggested that the fundamental purpose of ne­ gotiating trade laws is the establishment of a stable environment for in­ vestment decisions. See the comments of Gary Horlick (Smith, 1987: 49). If the dominant value is stability, a managed trade agreement may be able to serve the function as well as a free trade agreement. 7. These figures reflect the number of investigations pending or concluded in each year of the United States International Trade Commission Annual Report, 1978-90 Washington: International Trade Commission. 8. The value of exports threatened in the mid-1980s was $7 billion. During this time period Canadian exports to the United States fluctuated in the $100 billion range. (Statistics Canada, 1984-6). 9. The shift towards a free trade strategy and the· fit of the business agenda and the Conservative government's policies is explored in McQuaig (1991). 10. The following account of the free trade negotiations is based on Hart (1994); McQuaig (1991), Doem and Tomlin (1991) and interviews. 11. Disputes in areas other than CYD and antidumping go through a process of consultation and arbitration set out in Chapter 18 of the FfA. Diverg­ ing views on its utility can be found in Clarkson (1988); Lipsey and York (1988: 93-4); Dearden (1989: 19-30, 31-8). 12. Rodney de C. Grey (1981: 55-{)7) provides a good discussion of the problems of import diverting versus export enhancing subsidies. 13. 1991 US administration report on the FfA listed some areas of concern, but gave a favorable review to the agreement as a whole (USTR 1991b). For Canada see Doem and Tomlin (1991: 205-42). 14. Interview with USTR official March 1994. CHAPTER 5 NORTH AMERICAN SUBSIDIES IN THE 1990s 1. In a November 1991 interview an MPEAA official expressed exasperation with 'all this Canadian culture crap' claiming that the dispute is 'basi­ cally economic, veiled by culture'. 2. While subsidies in particular sectors may be large Bence argues that overall trade effects are probably minimal as provincial subsidies account for only 0.25 per cent of production sales in 1987-8. 3. See the statement of A. L. Halliday, Chairman, Subsidies and Trade Remedies Working Group, Canadian Department of External Affairs in House of Commons (1989: 7). 4. See the presentation of Gordon Wilson, President, Ontario Federation of Labour (House of Commons, 1987). 5. Morton (1989) proposed dropping the idea of a yellow category. A bilat­ eral commission could be appointed to slot all programs into either the red or green sections, based upon economic analysis. While making refer­ ence to the obstacles created by divergent views of government's appro­ priate role, the author fails to suggest how an economic approach will mitigate the dispute. 6. For a sampling of ideas see Horlick and Steger, 1989; Hart, 1989; Hufbauer, 1989. 188 Notes 7. Interviews with Congressional staff members of the House Ways and Means Subcommittee on International Trade, November 1991. 8. Interview with ITC official, March 1994. See Article 1905 of the North American Free Trade Agreement (Supply and Services, 1993). 9. Article 1907: 2 (Supply and Services, 1993). 10. Interview with Mr Miguel Leaman, Minister for Trade Affairs, Mexican Embassy, Washington, March 1994. 11. Interview with USTR Official, March 1994. 12. Interview with Gary Hufbauer, International Institute for Economics, March 1994. 13. An earlier Constitutional challenge to the PTA arrangements had been dismissed in June of 1993 because it had been filed in the district court of the District of Columbia rather than the Court of Appeals of the Dis­ trict of Columbia. CHAPTER 6 SUBSIDIES AT THE GATT I. The countries were Australia, Brazil, Canada, China, Cuba, Czechoslova­ kia, France, India, Netherlands, Luxembourg, New Zealand, South Af­ rica, the Soviet Union, and the United Kingdom, 2. Seven key norms are identified in Finlayson and Zacher (1981). A helpful overview of GATT's difficulties and some possible solutions can be found in Jackson (1990). 3. A useful overview is provided by a former GATT panelist in Pescatore ( 1993). 4. A clear, concise summary of the GATT experience with the subsidy question can be found in Jackson (1989: 249-73). Dam (1979: 132-47) reviews GATT provisions until the late 1960s. 5. The Michelin Tire Case was examined in Chapter 4. 6. One involved the elimination of the American Selling Price and the other an attempt to reform the antidumping law. 7. Gary Clyde Hufbauer (1983) argues that the 'reef of subsidies became more visible in the 1970s not simply due to the lowering 'water level' of protection in other areas but because they had actually grown.
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