The Expando Co. in State A receives a wide variety of general subsidies from the State A government (including tax breaks, low interest financing, and technical assistance) that State A offers to all domestic enterprises within its territory.
Expando manufactures wristwatch bands that it recently began to sell in State B. The Flexo Co. in State B manufactures similar watchbands and it has began to lose some of its market share to Expando. State A and State B are both WTO member states. Flexo would like State B to impose a countervailing duty to offset the subsidies received by Expando from State A, and Flexo has asked the State B Customs Service (which is responsible for imposing such duties) to do so.
After making an investigation, the Customs Service refused to impose any duties. Flexo has appealed to a court. Should the court overrule the decision of Customs Service? Explain.© BrainMass Inc. brainmass.com October 24, 2018, 6:04 pm ad1c9bdddf
Since both States A and B are members of the WTO, they must abide by the WTO agreement for subsidies and countervailing measures. This agreement does two things: it disciplines the use of subsidiaries and it regulates the actions countries can take to counter the effects of subsidies. It says a country can use the WTO's dispute settlement procedure to seek the withdrawal of the subsidy or the removal of its adverse effects or a State can launch its own investigation and charge extra duty (or, "countervailing duty") on subsidized imports that are found to be hurting domestic ...
What is a subsidy? What is a countervailing duty? When can these options be used? By what means can help be sought against a subsidy that creates an unfair market? Need a quick example? These issues are addressed in this solution.
The World Trade Organization And Agricultural Subsidies
What is the WTO? What are its relation with agricultural subsidies? What are these agricultural subsidies and who are affected by them.View Full Posting Details