Against the Current: Countervailing Duties, Upstream Subsidies and the Trade Remedies Reform

Ambivalence underlies the U.S. trade policy on government participation in the marketplace. This ambivalence is evidenced by certain trade laws and agreements which are based on competing economic theories that simultaneously sanction free trade principles and government interventionist policies [2]. It is exemplified by certain countervailing duty (CVD) determinations made by the International Trade Administration (ITA) in cases involving upstream and natural resource subsidies [3]. In its attempt to reconcile free trade and interventionist policies, the ITA has been unable to administer the CVD laws consistently in upstream and natural resource cases. The crux of the problem lies in the fact that the ITA has no universal standard to aid it in determining whether a foreign government's practice constitutes a subsidy [4]. Yet, such a standard is crucial for its countervailing duty investigations since these investigations focus on two issues: (1) whether a particular foreign government's practice confers a subsidy on an industry within its jurisdiction, and (2) whether that industry's exports to the United States should be subject to countervailing duties that would offset the exact benefits of the subsidy [5]. While the ITA has developed some administrative standards in its effort to remedy the situation, it is clear from even a cursory examination of the relevant ITA determinations that the ITA's difficulties are rooted in the CVD laws themselves [6]. Lamb Meat from New Zealand [7], together with Certain Steel Products from the Federal Republic of Germany (FRG) [8], provide