9 - US – Export Restraints United States – Measures Treating Export Restraints as Subsidies

Summary

Introduction

This study examines the dispute brought before the World Trade Organization (WTO) concerning the United States – Measures Treating Export Restraints as Subsidies (WT/DS 194), euphemistically referred to herein as US – Export Restraints. In this dispute, Canada challenged the US treatment of export restraints under US countervailing duty law and practice. The principal legal focus was therefore on the WTO Subsidies and Countervailing Measures (SCM) Agreement. This is one of a handful of WTO cases where the complainant (Canada) was not challenging the application of a governmental measure (by the US here) but rather the WTO consistency of existing legal measures. Essentially, Canada claimed that certain US legislation along with established practice by the US Department of Commerce constitute a violation of US obligations under the SCM Agreement.

The GATT has long recognized that subsidies can serve as a non-tariff barrier to international trade. Export subsidies were targeted as an early priority. Establishing more robust rules to cover subsidies became a priority during the Tokyo Round of multilateral trade negotiations and resulted in the 1979 Subsidies Code, which like other GATT codes only applied to its signatories. According to many analysts, the Code had proven inadequate for a number of reasons – including the ability of parties to engage in forum shopping between the Code and Article VI – and the negotiation of a more comprehensive set of disciplines covering subsidies and the application of countervailing duties remained a priority during the Uruguay Round.