United States Trade Policy Legislation: A Canadian View

Phillip J. Wood is an associate professor of political studies at
Queen’s University.

With the emergence of stiff economic competition from Japan and the EEC in the last decade and a half, the United States has not only seen its international economic dominance called into question but has also, as a result, entered into a serious crisis of deindustrialization — a period in which America’s inability to compete has caused major contractions in a number of manufacturing sectors and a serious drainage of capital out of the United States to regions where production costs are lower.

One attempt to deal with these tendencies in the United States has involved a drastic revision in trade policy in an effort to give increased protection to fragile domestic industries. Tariffs as the main means of protection have been replaced by “non-tariff’ barriers such as quotas, anti-dumping duties, countervailing duties, and so on. The introduction of the loose concepts of “injury” to domestic producers and “unfair” trade competition are designed to allow American administrators to exercise a significant degree of discretion in administering trade, as domestic conditions warrant. The recent restrictions on European steel imports are good examples of this increased discretion.

Grey’s book has two major aims. First of all, he outlines a number of the most important components of the new U.S. system — the escape clause, anti-dumping duties, countervailing duties, and the process of valuation in order to clarify the goals and operation of the new system. Second, he attempts to assess the potential effects of these policy revisions on the Canadian economy. Since only a few cases involving Canadian exports to the United States have arisen as a result of the new system, it is difficult to come to any detailed conclusions. Certainly, Grey suggests that since the cornerstone of the U.S. policy is the anti-dumping component and since high Canadian tariffs often make Canadian exports to the United States look like dumping, it is likely that those firms perceived to be dumping will suffer most.

More generally, if current U.S. policy (and Canadian policy also, according to Grey, since it is tending in the same direction) continues, an increasingly selective and increasingly politicised system of administered trade will emerge. For countries such as Canada, which export such a large proportion of the GNP to the United States, the long-term costs of this new system could be serious.