International Affairs:

Benefits of International Agreement on Trade-Distorting Subsidies Not Yet Realized

NSIAD-83-10: Published: Aug 15, 1983. Publicly Released: Aug 15, 1983.

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GAO reviewed U.S. efforts to reduce and eliminate the adverse effects of trade-related subsidy practices of foreign governments.

GAO found that the United States wanted stronger rules on the use of subsidies and better procedures for resolving subsidy-related disputes between governments. It appears to have achieved these goals with the Subsidies Agreement; however, the emphasis of the agreement is not on the elimination of subsidies, but rather on dealing with their trade-distorting effects. Since January 1980 the U.S. Government has tried to use the agreement to reduce and eliminate trade-distorting subsidies by: (1) persuading developing countries to make commitments to reduce or eliminate export subsidies that are inconsistent with their development needs; (2) persuading agreement signatories to report the extent, nature, and effect of subsidies; (3) using the agreement's conflict resolution procedures to help eliminate the effects of specific subsidy practices; and (4) negotiating an improved arrangement on the use of officially supported export credits and continuing to negotiate further improvements. Article 7 of the Subsidies Agreement provides for improved disclosure of information about subsidy practices. GAO found that the European Community and the U.S. Government disagreed about what constitutes a reportable subsidy practice under Article 7. GAO concluded that the reporting provisions of the agreement have done little to improve disclosure of subsidies information. Considerable problems exist in reaching an understanding with other signatories as to how some provisions of the agreement should be applied.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The U.S. Trade Representative should issue regulations governing section 305 of the 1974 Trade Act, as amended, including interpretation of the statutory phrase "the nature and extent of a specific trade policy or practice--with respect to particular merchandise" in section 305(a)(1).

    Agency Affected: Executive Office of the President: Office of the U.S. Trade Representative

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The U.S. Trade Representative should direct the section 305 coordinator to send a copy of all nonconfidential subsidy information collected pursuant to a request under section 305 of the 1974 Trade Act, as amended, to the Department of Commerce's foreign subsidies library.

    Agency Affected: Department of State

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The U.S. Trade Representative and the Secretaries of Agriculture and State should each designate a representative to cooperate with Commerce's foreign subsidies librarian in establishing procedures to improve the flow of information on foreign subsidy practices to Commerce's library.

    Agency Affected: Department of State

  4. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The U.S. Trade Representative and the Secretaries of Agriculture and State should each designate a representative to cooperate with Commerce's foreign subsidies librarian in establishing procedures to improve the flow of information on foreign subsidy practices to Commerce's library.

    Agency Affected: Department of Agriculture

  5. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The U.S. Trade Representative and the Secretaries of Agriculture and State should each designate a representative to cooperate with Commerce's foreign subsidies librarian in establishing procedures to improve the flow of information on foreign subsidy practices to Commerce's library.

    Agency Affected: Department of State

  6. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Commerce should direct the Deputy Assistant Secretary for Import Administration to include the full text of section 305, "Requests for Information" (19 U.S.C. 2415), in the written material typically sent to potential petitioners under countervailing duty law. Inclusion of section 305 should be accompanied by the caveat that it is neither required nor recommended that potential petitioners seek subsidy-related information under section 305 and specifically that the statutory language, "petition--which is accompanied by information reasonably available to the petitioner supporting those allegations" (19 U.S.C. 1671a), does not mandate the use of section 305.

    Agency Affected: Executive Office of the President: Office of the U.S. Trade Representative

 

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