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Production Subsidy and Countervailing Duties in Vertically Related Markets: The Hog-Pork Case Between Canada and the United States

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This paper analyzes U.S. countervailing import duties aimed at offsetting the effects of a Canadian hog production subsidy. Approximate countervailing duty formulae for two alternative objectives are derived, the permissible range of these duties is illustrated, and empirical evidence is provided. To restore equilibrium at the pre-subsidy level in the U.S. hog market, a countervailing duty on hog imports suffices; this duty should be less than the unit hog production subsidy. To restore equilibrium in both the U.S. hog and pork markets, countervailing duties in both hog and pork imports is required. Such duties should be less than the unit subsidy, and the duty on pork should be less than the duty on hogs.

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Paper provided by Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University in its series Food and Agricultural Policy Research Institute (FAPRI) Publications with number 91-gatt6.

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Date of creation: Jul 1992
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Handle: RePEc:ias:fpaper:91-gatt6

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Cited by:
  1. Burfisher, Mary E. & Norman, Terry & Schwartz, Renee, 2001. "Nafta Trade Dispute Resolution: What Are The Mechanisms?," Trade Liberalization Under NAFTA: Report Card on Agriculture; Proceedings of the 6th Agricultural and Food Policy Systems Information Workshop -2000 16843, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
  2. Sckokai, Paolo, 2001. "The Common Agricultural Policy In Econometric Models," Working Papers 14800, National Institute of Agricultural Economics, Italy INEA, Osservatorio Sulle Politiche Agricole dell'UE.
  3. Larue Bruno & Tanguay Luc, 1999. "Regional Price Dynamics and Countervailing Duties: Did the Canada-U.S. Hog/Pork Dispute Have a Permanent Impact?," International Economic Journal, Taylor & Francis Journals, vol. 13(1), pages 81-101.
  4. John Wainio & Linda M. Young & Karl Meilke, 2003. "Trade Remedy Actions in NAFTA: Agriculture and Agri-Food Industries," The World Economy, Wiley Blackwell, vol. 26(7), pages 1041-1065, 07.
  5. Meilke, Karl D. & Sarker, Rakhal, 1997. "Four case studies of agri-food CVDs and a proposal for reforming national administered protection agencies," Agricultural Economics, Blackwell, vol. 17(2-3), pages 147-164, December.
  6. Weerahewa, Jeevika & Meilke, Karl D. & Le Roy, Danny G., 2007. "An Economic Assessment of the BSE Crisis in Canada: Impacts of Border Closure and BSE Recovery Programs," Working Papers 24154, Canadian Agricultural Trade Policy Research Network.
  7. Amponsah, William A. & Qin, Xiang Dong, 2001. "Management Perspectives On The Impacts Of Nafta On The U.S. Textile And Apparel Industries," 2001 Annual meeting, August 5-8, Chicago, IL 20733, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Meilke, Karl D. & Sarker, Rakhal, 1996. "National Administered Protection Agencies: Their Role In The Post-Uruguay Round World," Working Papers 51212, International Agricultural Trade Research Consortium.
  9. Sarker, Rakhal & Ratnesena, Shashini, 2014. "Revealed Comparative Advantage and Half-A-Century Competitiveness of Canadian Agriculture: A Case Study of Wheat, Beef and Pork Sectors," Working Papers 165675, Canadian Agricultural Trade Policy Research Network.
  10. Buhr, Brian L. & Kim, Hanho, 1997. "Dynamic adjustment in the US beef market with imports," Agricultural Economics, Blackwell, vol. 17(1), pages 21-34, October.
  11. Yu-Ter Wang, 2010. "The Profits Of Firms And Countervailing Duties In Vertically Related Markets," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 55(04), pages 749-756.
  12. Meilke, Karl & Rude, James & Zahniser, Steven, 2006. "The Search for "NAFTA Plus"," 2006 NAAMIC Workshop III: Achieving NAFTA Plus 163881, North American Agrifood Market Integration Consortium (NAAMIC).

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