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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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Abstract

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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  • GianCarlo Moschini & Karl D. Meilke, 1992. "Production Subsidy and Countervailing Duties in Vertically Related Markets: The Hog-Pork Case Between Canada and the United States," Center for Agricultural and Rural Development (CARD) Publications 91-gatt6, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:91-gatt6
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    1. Mario Larch & Jeff Luckstead & Yoto V. Yotov, 2024. "Economic sanctions and agricultural trade," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(4), pages 1477-1517, August.
    2. Weerahewa, Jeevika & Meilke, Karl D. & Le Roy, Danny G., 2008. "An Economic Assessment of the BSE Crisis in Canada: Impact of Border Closure and BSE Recovery Programs," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 9(1), pages 1-26.
    3. Dermot J. Hayes & Lee L. Schulz & Chad E. Hart & Keri L. Jacobs, 2021. "A descriptive analysis of the COVID‐19 impacts on U.S. pork, turkey, and egg markets," Agribusiness, John Wiley & Sons, Ltd., vol. 37(1), pages 122-141, January.
    4. Peter Slade, 2018. "The Effects of Pricing Canadian Livestock Emissions," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 66(2), pages 305-329, June.
    5. 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, July.
    6. Meilke, Karl D. & Sarker, Rakhal, 1995. "National Administered Protection Agencies: Their Role in the Post-Uruguay Round World," 1995: Understanding Technical Barriers to Agricultural Trade Conference, December 1995, Tucson, Arizona 50714, International Agricultural Trade Research Consortium.
    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. James Rude & Yves Surry, 2014. "Canadian Hog Supply Response: A Provincial Level Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(2), pages 149-169, June.
    9. Hayes Dermot & Jacobs Keri & Schulz Lee & Crespi John, 2023. "Resilience of U.S. Cattle and Beef Sectors: Lessons from COVID-19," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 21(1), pages 53-67, May.
    10. Alston, Julian M. & Carter, Colin A., 1993. "Effects Of Farm Programs On Gains From Canada-U.S. Wheat Trade," 1993 Annual Meeting, August 1-4, Orlando, Florida 271410, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. 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.
    12. 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.
    13. James Rude & Marie‐Hélène Felt & Edgar Twine, 2016. "Detecting COOL Impacts on United States–Canada Bilateral Hog and Pork Trade Flows," Agribusiness, John Wiley & Sons, Ltd., vol. 32(2), pages 272-288, April.
    14. Ashley Beeler & K. Aleks Schaefer & Jacob Sestak & Glenn Conover, 2024. "Impacts of U.S. countervailing duties on phosphate fertilizers," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(2), pages 620-636, March.
    15. Alston, Julian M. & Carter, Colin A. & Gray, Richard & Sumner, Daniel A., 1994. "Export Subsidies And The Gains From Trade Liberalization: The Case Of Canada-U.S. Durum Wheat Trade," 1994 Annual Meeting, August 7-10, San Diego, California 271419, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Burfisher, Mary E. & Norman, Terry & Schwartz, Renee, 2001. "Nafta Trade Dispute Resolution: What Are The Mechanisms?," Proceedings of the 6th Agricultural and Food Policy Systems Information Workshop, 2000: Trade Liberalization Under NAFTA: Report Card on Agriculture 16843, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
    17. Karl D. Meilke & Rakhal Sarker, 1997. "Four case studies of agri‐food CVDs and a proposal for reforming national administered protection agencies," Agricultural Economics, International Association of Agricultural Economists, vol. 17(2-3), pages 147-164, December.
    18. 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.
    19. Larue, Bruno & Gervais, Jean-Philippe, 1996. "The Impact of the Canada-U.S. Hog/Pork Trade Dispute on the Composition of U.S. Pork Imports," Agricultural and Resource Economics Review, Cambridge University Press, vol. 25(2), pages 187-199, October.
    20. Meilke, Karl D. & 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).
    21. 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.
    22. Devadoss, Stephen, 2008. "An Evaluation of Canadian and U.S. Policies of Log and Lumber Markets," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(1), pages 1-14, April.
    23. Holloway, Garth J. & Hertel, Thomas W. & Han, Frank M., 1997. "Does Market Power Matter?," Working Papers 225884, University of California, Davis, Department of Agricultural and Resource Economics.

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