Subsidies involve help that is given to other countries so that they can reap more profit from what they are creating and exporting, while countervailing duties work to ensure that the taxes and tariffs that are paid by these countries are not excessive so that profit can still be made. Small businesses contribute a great deal to the exports that are created in these countries but if they cannot get the financing that they need to continue to prosper then they will not be able to contribute to the overall exports of the country.
Third World development is gaining in importance today and a lot of the multilateral trade negotiations which are taking place are changing prospects for many of these countries. It is, therefore, important to look at trade negotiations and what they will cause as they relate to the subsidies and countervailing duties for these countries. For purposes of this section, the United States and Canada, and any subsidies that they give, will not be examined. Instead, the focus will remain on countries that are in the Third World and/or that are just developing.
The growth of Third World countries remains very important because they will affect other countries and therefore it is important to understand the trade negotiations that are taking place within them. Many people do not understand these multilateral trade negotiations, especially where the Third World is concerned. Much of this has to do with how much emphasis is generally placed on North American issues. When too much emphasis is placed on issues in North America, not enough is learned about the rest of the world. Even though issues in North America are clearly important, the Third World must be addressed. In order to understand what is going on throughout the world when it comes to law on an international level, the Third World countries and the trade negotiations that are taking place within them must be addressed and understood.
When looking at subsidies and countervailing duties, the most important things to consider are trade agreements and negotiations. These trade agreements and negotiations will be the main issue that will be addressed here because understanding how they are harming the Third World countries and how this harm could continue well into the future is very important. Even though these Third World countries often need beneficial or extra treatment in order to boost their economic abilities and help their growth, North American countries must also be treated fairly where these agreements are concerned.
Finding a balance between these two things is often difficult and the fact remains that North American countries have much more power when it comes to trade agreements than Third World countries do. Changing this and making it more fair and balanced for everyone will not be something that can be done easily. However, with more understanding regarding the Third World countries, there is a much higher chance that agreements can eventually be reached that will benefit all countries involved and that will be deemed fair by all countries involved. Whether this can actually be accomplished is something that only the future can determine but it is something that these countries can work toward.
Much of the information that needs to be addressed where subsidies and countervailing duties are concerned deals with multilateral trade negotiations. Generally, these are designed to help these Third World countries develop faster economically and have changed a lot of the structure of international investment and trade in the process (Diaz-Alejandro & Helleiner, 1987). In 1995, the World Trade Organization was established and implemented. It was designed to phase in different things for different areas during certain periods of time as part of an agreement reached in the Uruguay Round of trade negotiations (Ho, 1998). This was the eighth trade negotiation that was held under a general agreement on tariffs and trade within the last 50 years (Ho, 1998). Every time that one of these negotiations was held the investment environment and the international trade abilities for developing countries in the Third World were changed in some way.
Because globalization and technology are moving so quickly, and because many parts in the Third World are still very underdeveloped, it is important to look at the environment for investment and trade in the Third World and look at what kind of prospects for the future are seen in the Third World countries. This has a lot of significance, not only for those countries in the Third World, but also for other countries that might have interest in trading with them. If the trades that these countries are able to make with other countries are not acceptable and agreements cannot be reached then the countries that have the goods and the countries that want the goods will both suffer.
Even though it might be oversimplifying the issue a bit, many of the different rounds of trade negotiations can be looked at as being a story of how much autonomy and freedom have changed in Third World countries as they pursue policies that help them develop as nations (Ho, 1998). There are both the new areas and traditional areas where these changes take place (Baughman, Mirus, Morkre, & Spinanger, 1997). In many of the more traditional areas there have been many fights for treatment that Third World countries called special and differential (Ho, 1998). The main focus for many of these trade negotiations has been reducing tariffs in many countries as well as dealing with reciprocal trade agreements and most-favored-nation status (Ho, 1998).
Having special and differential treatment relates not only to autonomy but reciprocation in tariff bargaining as well (Ho, 1998). It also relates to privileges that are expected where exporting is concerned and the autonomy to be able to create and deploy various subsidies (Ho, 1998). Many of these treatments have all but disappeared from the Third World countries and this is making their continued growth very difficult (Choate & Linger, 1988). Many of the North American countries argue very strongly against allowing any type of special and differential treatment for Third World countries and this harms them in specific areas.
The first area where this is a problem deals with industrial products that were imported to countries that were just developing (Ho, 1998). Many of these have tariffs on them but the number of goods that have tariffs went from 22% to 72% (Ho, 1998). This gives a chance to negotiate these tariffs more in future trade negotiations but is difficult for the Third World countries now. The second problem is that the restrictions on specific subsidies were made much tighter and some of the subsidies were prohibited altogether (Ho, 1998).
Even the subsidies that were not prohibited were restricted in many ways (Ho, 1998). When subsidies are restricted there are grace periods that are often granted between countries that are developing and countries that have not yet begun to develop (Ho, 1998). The idea is having a somewhat graduated scale so that all countries can catch up. Even though this is the idea, however, it is not necessarily working in the way that these countries wish it would.
Not all of the problems with the trade agreements were traditional. Some of the new problems deal with investments, intellectual property rights, and autonomy for Third World countries that wanted to pursue policies that would help them develop (Ho, 1998). A lot of these policies were curtailed in many different ways and future negotiations are likely to restrict them more (Ho, 1998). All members of the World Trade Organization must provide patent, copyrights, and trademark protection for certain numbers of years on all services are goods that are covered under any agreement that North American countries follow (Ho, 1998).
This does not seem like a strong burden until one considers the fact that judicial procedures have to be created in order to enforce this type of agreement and this places a large burden on many countries that are still developing their judicial systems and ideas of what is appropriate for their countries (Ho, 1998). Even when countries work together to trade goods and services some countries progress faster than others. Any type of economic analysis will indicate this. Many people that analyze trade have basically ignored how uneven the development and growth is between nations that trade with one another (Ho, 1998).
This unevenness is especially obvious between North American countries and countries in the Third World but this problem was not even addressed until the 1950s (Bhagwati, 1987; Agosin, Tussie, & Crespi, 1995). Many different models for trade between North America and the Third World countries have been created since more attention was placed on this in the 1950s and these include things like some of the declining terms where trade is concerned for many of the exporting companies, how much dominance North American capital actually has, and the lack of technology for use in business and innovation in…