ABSTRACT
Under Article VI of the GATT, countervailing duties can be levied by member countries on imports that are causing harm to domestic industries due to subsidization by a foreign government’1 After antidumping actions, countervailing duty actions are the most frequently initiated trade-remedy actions, accounting for 18% of all import relief measures initiated between 1979 and 1988.2 However, unlike antidumping actions, one country is the main user: between 1979 and 1988 the United States initiated 371 actions while all other countries initiated only 58.3 According to Messerlin: ‘To the United States, the [GATT Subsidies] Code is an instrument to control subsidies. To the rest of the world, it is an instrument to control US countervailing duties.’4 The predominance of the USA as a user of countervailing duties illustrates the distinctive view of subsidies held by the USA, and limited international agreement on the status of subsidies as policy instruments. In the USA, subsidies are often viewed as illegitimate distortions of international trade, while in other countries industrial subsidies have often been considered a legitimate instrument of domestic policy. On some measures, rates of industrial subsidization more than doubled in G7 countries between 1952 and 1985: from 1.03% of GDP to 2.13%, while in the US the figure stood at 0.58% in 1985.5 Levels of subsidization have undoubtedly fallen more recently, as many governments, in the face of recessionary conditions in the late 1980s and early 1990s and rising budget deficits have cut public expenditures and committed themselves to domestic policies of privatization and de-regulation.
