Seeking Common Ground: Canada-U.S. Trade Dispute Settlement Policies in the Nineties

By Andrew D. M. Anderson | Go to book overview

There is a danger, however, in too quickly seeing the improvements to the present set of GATT trade laws, including the 1994 GATT Subsidies Code provisions, as being of major benefit to freeing up world trade. This can be understood by alluding to two explanations of the relationships between protectionist trade sentiments or policies and international agreements to reduce protectionism. If the evolution of national protectionist policies is more like a series of rivers with one waterfall, e.g., one major type of protectionist policy per river, then the GATT provisions can be seen as dams which eliminate these waterfalls. Thus the marginal improvements in the various GATT negotiating Rounds are attempts to make the dams higher and stronger. Eventually, all the rivers will be dammed with strong dams and freer world trade will be the result.

If, however, the relationship is not like the "waterfall-dam hypothesis" but more like the "new river-rapid hypothesis," then marginal improvements to old GATT agreements may be no longer sufficient to overcome new national protectionist trade policies. Under the "new river-rapid hypothesis," as a dam is built on a river, new rapids appear such that the dam has little effect on smoothing the flow of water. Also, new rivers appear which make the old dams even more redundant and require new dams to be built all the time. Under this hypothesis, the lengthy times required to negotiate marginal improvements to old agreements is a slow and unwieldy process that can easily be bypassed by nations who independently and speedily can implement protectionist trade laws to solve their own problems. In this case, the GATT and the concepts lying behind the GATT to control protectionist national trade mechanisms need to be thoroughly rethought.


Notes
1.
This chapter is an update of an article previously published by Andrew D. M. Anderson ( 1993), An Analysis of the Proposed Subsidies Code Procedures in the "Dunkel Text" of the GATT Uruguay Round, Journal of World Trade, Vol. 27, No. 3:71-100. Permission granted to reprint the article.
4.
Barcello III ( 1991) provides a general history of the growth of the GATT CVD procedures being used as protectionist devices. For a strong criticism of the GATT Subsidy Code rules as they exist in the 1979 GATT Accords, see the subsidy chapter in Finger and Olechowski ( 1987).
6.
For the significance of the Cabot determination, see United States (1986h). For an overview of the Cabot Case, see Rugman and Porteous ( 1990).
7.
For more on the issue of externalities, see McFeteridge ( 1990), Lipsey ( 1990), and Block ( 1990a).
8.
For an overview of the net-net subsidies approach, see Anderson and Rugman ( 1989b), and for an earlier Canadian submission on this issue that received no support at the GATT negotiations, see Canada (1990b). For an earlier overview of Canada's position in the GATT on subsidies and countervailing measures, see Canada (1989a).
9.
For more on this issue, see Rugman and Gestrin ( 1991).

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