North American Subsidies in the 1990s

Abstract

This chapter pursues the Canada-US subsidy/countervail dispute beyond the negotiation of the FTA. The first section examines the lack of progress in dealing with the subsidy issue following the Free Trade Agreement. This includes a review of the most serious obstacles, suggestions for solutions and explanations for delay. The three original reasons for delay were the difficulty in reaching an agreement, the ongoing GATT negotiations and the decision of Mexico to join the NAFTA. The second section outlines the terms of the subsidy provisions under the NAFTA and broadens the discussion to include other controversial aspects of rule-making in NAFTA. Because NAFTA subsidy provisions essentially reproduced the holding pattern of the FTA, little was accomplished. The conflictual aspect of rule-making in domestic domain was transferred into two other areas — labor and environmental legislation.