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Trade Remedy Laws and Agriculture. Anita Regmi David Skully 1. Paper presented at the Free Trade Area of the Americas, The WTO, and New Farm Legislation: Responding to Opportunities and Challenges, San Antonio, May 22-24, 2002.

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trade remedy laws and agriculture
Trade Remedy Laws and Agriculture

Anita Regmi

David Skully1

Paper presented at the Free Trade Area of the Americas, The WTO,

and New Farm Legislation: Responding to Opportunities and Challenges,

San Antonio, May 22-24, 2002.

1The authors are economists with the Market and Trade Economics Division, ERS/USDA.

The views expressed in this paper are those of the authors and do not reflect the views of the U.S. Department of Agriculture or the United States Government.

presentation will cover
Presentation will cover
  • Emergence and evolution of trade remedies
  • Trade remedy measures CVD, AD, SG, & SSG
  • Use of trade remedies by countries
  • Issues
emergence evolution of tr
Emergence & Evolution of TR
  • McKinley Tariff (1890) created 1st CVD.
  • Canada (1904) created 1st AD mechanism.
  • The US adopted AD law in 1916.
  • 1920s & 1930s most industrial countries adopted TR.
  • GATT Art. VI (1947) and Tokyo Round Code on AD (1979) attempted to discipline TR.
  • UR Agreement (1994) marks a major effort to bring discipline to TR measures.
countervailing duties cvd
Countervailing Duties (CVD)
  • GATT Article VI (1994) allows the use of CVD to offset public subsidies for the manufacture, production or export of any merchandise.
  • CVD use requires

1) proving the existence of subsidy

2) proving that the subsidized import

causes or threatens to cause injury

to domestic industry.

antidumping ad
Antidumping (AD)
  • Dumping: the introduction of a product of one country into the commerce of another country at less than its fair or normal value.
  • Normal value: comparable price for the product, in the ordinary course of trade, when destined for domestic consumption.
  • AD duties can be used if it is proven that 1) dumping exists and 2) causes or threatens to cause material injury.
safeguards sg
Safeguards (SG)
  • GATT Article XIX (1994) allows temporary border measures to be imposed if import surge causes or threatens to cause serious injury.
special agricultural safeguards ssg
Special Agricultural Safeguards (SSG)
  • Under WTO AoA provision, SSG duties can be levied when imports exceed pre-set volume or value trigger.
  • SSGs can be applied only to products identified with SSG symbol in country schedules.
  • Injury determination is not a pre-requisite for SSG implementation.
in summary
In Summary

Criteria for

Measures

Remedy Against

Duration

Implementation

Foreign government

Evidence of subsidy.

5-year, extended

CVD

subsidy.

Proof of injury.

upon review.

Exports below 'fair

Evidence of dumping.

5-year, extended

AD

value'.

Proof of injury.

upon review.

4 years, extended

SG

Surge of imports.

Proof of serious injury.

upon review.

Agricultural imports

None. Only commodities

exceeding set volume

1 year, extended if

SSG

notified with a SSG are

and value trigger

trigger is exceeded.

eligible.

levels.

how are members using tr
How are Members using TR?
  • Developing country use of AD and CVD is growing.
  • # of countries using SG limited by domestic legislation.
  • SSG use restricted to those countries and commodities with SSG notifications.
  • TR use by developing countries more on ag products.
cvd investigations 1995 2000
CVD Investigations: 1995-2000

Developed

countries

Developing countries

Source: WTO Secretariat, January 2002. http://www.wto.org/english/tratop_e/scm_e/scm_e.htm#annualreports

antidumping investigations 1987 2000
Antidumping Investigations: 1987-2000

Developing countries

Developed countries

Source: WTO Secretariat, Rules Division, Antidumpting Measures Database

and http://www.wto.org/english/tratop_e/adp_e/adp_e.htm#annualreports.

sg use increasing
SG Use Increasing

Between 1 Jan ‘95 - 9 Nov. 2000

about 50 investigations were notified.

Between 10 Nov 2000 - 29 Oct 2001

30 investigations were notified

ssg use
SSG use
  • Limited to product and country with SSG in country schedule.
  • Total of 38 Members eligible.
  • Only 8 have used to date.
  • EC, Japan and US have dominated.
  • Developing country use rising with Poland emerging as #1 user.
developing country tr use more on agriculture
Developing Country TR Use More on Agriculture

(1 Jul 98-30 Jun 99)

CVDInvestigations

ag

Non-ag

EC & US

7

91

Developing Countries

12

0

ADInvestigations (1987-1997)

Developed Countries

6% on Ag

Developing Countries

6-10% on Ag

sg use on ag is very high
SG Use on Ag is Very High
  • Since 1995, 1/2 of all SG on Ag.
  • 10 Nov 2000 - 29 Oct 2001, 30 investigations notified

U.S. action was on steel

Others (mainly developing countries)

>60% on ag

high value products most vulnerable to tr measures
High Value Products Most Vulnerable to TR Measures

Other products

Processed products

Hort. products

Oils & Fats

Animal products

(34 cases)

(79 cases)

Investigations 1995-2000

slide18

High Value Products Most Vulnerable to TR Measures

Other products

Processed products

Oils & Fats

Hort. products

Animal products

(24 cases 95-00)

(333 cases 95-99)

issues
Issues
  • Increased use has particularly hurt agricultural products.
  • Agricultural products have a high probability of positive ‘dumping’ finding.
  • Number of concerns with constructed normal values.
  • Consumer impacts not considered in injury findings.
  • No ‘injury’ criteria required for SSG.
  • SSG use restricted to those with notifications.
  • Other developing country concerns.
looking ahead
Looking Ahead..
  • Peace Clause expiration will render agricultural subsidies actionable.
  • Doha Ministerial Declaration: the new Round will aim at clarifying and improving disciplines governing AD & CVD.
  • TR reform is on the tables for the Doha Development Agenda and deserves attention from economist.