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- Title
Perverse Consequences of the GATT: Export Subsidies and Switching Costs.
- Authors
Hartigan, James C.
- Abstract
The article presents a paper on the roles of General Agreement on Tariffs and Trade (GATT). This paper has utilized a two-period model of consumer switching costs for strategic substitutes to discuss an incompleteness in the coverage of counter-vailing duty law under the GATT. Because the material injury requirement gives the foreign government a one-period lead in introducing the export subsidy, the home government is unable completely to restore the competitive balance because of GATT restrictions on the imposition of countervailing duties. Because the GATT does not allow a countervailing duty to exceed an export subsidy, another problem arises that is not directly addressed by the framework of this paper. Current trade law may therefore provide an inducement to subsidization, as a result of circumstances that are not adequately addressed by that law. GATT permits its members to retaliate against unfair trade practices committed by its signatories. These include establishing injury to the pertinent industry in the offended country, requiring that the unfair practice be currently in existence, and mandating that duties not exceed the dumping or subsidy margin.
- Subjects
TRADE regulation; SUBSIDIES; TARIFF; DOMESTIC economic assistance; UNFAIR competition; DUMPING (International trade)
- Publication
Economica, 1996, Vol 63, Issue 249, p153
- ISSN
0013-0427
- Publication type
Article
- DOI
10.2307/2554640