Coming to an agreement on a 'new and improved' Subsidies Code has not been an easy task; it has taken nearly eight years for the 117 members of the GATT to reach a final agreement on some of the most contentious trade issues of our time. Throughout the tumultuous process, the breakdowns, and the walkouts, part of the difficulty was the divergent expectations and objectives with which the participants entered into the negotiations. Aside from issues such as agricultural subsidies and the civil aircraft problem that threatened to derail the entire process, the key participants in the negotiations over the subsidies code could not agree on why a subsidies code was even needed.
The US ostensibly sought strict controls on subsidies, although its commitment to a subsidies code was less than apparent. Canada and the EU's primary objective was to contain the US use of CVDs, 1 while neither was willing to admit that the US use of countervailing duties is, in essence, no different from their own use of subsidies. The US and Canada pursued a more judicial approach to subsidies regulation, while the EU argued that 'the dispute settlement procedure cannot be used to create new obligations or to replace the process of negotiation', 2 even though the highly judicialised internal dispute resolution mechanism of the EU has, in many ways, fostered negotiation rather than stifled it.
The Agreement 3 attempts to bridge these widely divergent, and even contradictory, approaches. It does so first by adopting what the literature has termed the 'traffic light' approach to subsidies. Second, it remains faithful to the principle of multilateralism enshrined in the GATT and the Subsidies Code. Third, while retaining the