Subsidies and countervailing measures under the GATT and the WTO and in the US law and practice: parallel developments and interactions

Although the number of subsidy and countervailing duty cases, both at national and WTO level is declining, they still hold centre stage in the trade wars that are the hallmark of modern international economy. Suffice it to mention the “Foreign Sales Corporations” case, the “softwood lumber” cases and the ongoing “US-EC large civil aircraft” dispute. There are several reasons for this. On the one hand, the multilateral regulation of subsidies can strongly impinge on governmental autonomy in the management of the national economy. On the other, the boundaries of subsidisation are often quite uncertain as subsidies can overlap with quite distinct areas in the public management of the economy, such as taxation. Probably as a result of the foregoing factors, the multilateral discipline on subsidies was slow to develop and it is only with the Uruguay Round that a fully fledged, wide-ranging regime took shape, while the identification of countervailable subsidies and the conditions under which they can be countered have been left for long to domestic countervailing duty proceedings. The United States, for a long time the main user of CVD proceedings, developed a much more sophisticated and detailed regime than the GATTs. The competitive margin provided by US administrative practice has enabled it to impose its perspective on the shaping of the multilateral regime, firstly as a result of the Uruguay Round negotiations, and secondly because of the creative interpretation of the WTO rules, especially by the Appellate Body. On the other hand, in implementing the WTO regime the United States has often been able to withstand attempts to change its domestic regime, although some of its aspects are not necessarily consistent with the WTO rules. The success of the United States, however, has been far from complete as the US has not been able to impose its viewpoint on decisive aspects of the subsidy regulation in the GATT and in the WTO system.