How messed up are Trump Supporters?

[Angrboda]

While the U.S. has longstanding arguments about the market distortion caused by  government’s  role  in  Canada’s  softwood  lumber  industry,  the  justifications  it now considers as valid for claims of Canadian subsidization of newsprint are much broader and more creative. They include government programs to help the industry manage pine beetle infestations, provincial school tax-credit programs, local  municipal  revitalization  programs  and  even  the  construction  and  repair  of  public  access roads and bridges. It is hard to see how many of the dozens of programs identified by  the  Americans  as  subsidies  fit  the  traditional  definition.  If  these  are  now  considered  subsidies, then suffice it to say that there is scarcely a Canadian export that could not be accused of enjoying subsidies and become subject to trade disputes and tariffs.

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One of the key provisions in the WTO and in regional trade agreements (RTAs) like NAFTA are trade remedies or escape clauses that are designed and in place to address unfair trade practices among trading partners. There are several different types of these trade remedies, but countervailing duties (used when a trading partner’s government is accused of subsidizing exports) and anti-dumping duties (employed when firms are accused of charging lower prices in a foreign market than in the domestic market) have become the two most widely used trade-remedy tools. The use of these tools can be part of a healthy trading relationship but they can also be part of a more pernicious protectionist agenda. The United States has significantly increased its use of these measures and has also expanded the breadth of the types of protectionist trade actions it has used. According to the WTO, the use of these and other practices as a form of trade protection is on the rise worldwide, and the U.S. is leading the way. It is important to note that the WTO does enforce discipline on the use of these tools in the form of dispute-settlement procedures. Moreover, a key provision of the Canada-U.S. Free Trade Agreement (CUSFTA) and the subsequent North American Free Trade Agreement (NAFTA) is the Chapter 19 dispute-settlement provision, which also imposes discipline on the use of trade-remedy tools and protects all three countries from protectionist policies enacted by any of the other NAFTA members. In the current climate, Chapter 19 protects Canada and Mexico from some of the more aggressive forms of U.S. protectionism and the dispute-settlement mechanism in the CUSFTA and NAFTA include a vital tool for managing trade disputes within the discipline of the agreements. Although Chapter 19 is a mechanism
used by all three NAFTA members, the removal of these dispute-settlement provisions from NAFTA (i.e., Chapter 19) is one of the key U.S. objectives in the current NAFTA negotiations and is part of the increasingly protectionist U.S. trade agenda. Removal of Chapter 19 is a key objective of the U.S. negotiators and is considered a deal breaker for Canada and Mexico.

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It is beyond the scope of this paper to determine the appropriate treatment of these programs in the alleged subsidy case, but it does seem to be an extreme stretch to argue that most of these programs fit within the specificity considerations. The WTO agreement on subsidies and countervailing measures — known as the SCM Agreement — applies to subsidies that are specifically provided to an enterprise or industry and defines both the term “subsidy” and the concept of “specificity.” Only a measure that is a “specific subsidy” within the agreement’s meaning is subject to multilateral disciplines and can be subject to countervailing measures. The WTO’s definition of subsidy by a member country contains three basic elements: “(i) a financial contribution (ii) by a government or any public body within the territory of a member (iii) which confers a benefit.” The basic principle of specificity is that if a subsidy is widely available within an economy, such a distortion in the allocation of resources is presumed not to occur. Thus, only “specific” subsidies are subject to the SCM Agreement disciplines. There are four types of “specificity” within the meaning of the SCM Agreement:

1. Enterprise-specificity: A government targets a particular company or companies for subsidization;
2. Industry-specificity: A government targets a particular sector or sectors for subsidization.
3. Regional specificity: A government targets producers in specified parts of its territory for subsidization.
4. Prohibited subsidies: A government targets export goods or goods using domestic inputs for subsidization.

It is clear from the list of programs that Commerce alleges are subsidies to Canadian exports that almost none of them are specific in nature with respect to types 1 and 4 listed above. Some of the subsidies are directed at the industry (type 2) and some are regional in nature (type 3). The concern here is that if these broad labour-adjustment programs and programs directed at adjustment from a beetle infestation or directed at innovation are viewed as subsidies, then it would be difficult to find Canadian exports that are not considered to be subsidized. This is a concern, and Canada needs to work to challenge this use of CVDs.

https://www.policyschool.ca/wp-content/u...aulieu.pdf