I question Oxfam’s critique of the (yet-to-be-implemented) preferential trade agreement between Peru and United States. Oxfam’s Song of the Sirens report alleges:
According to the agreements signed, Colombia and Peru ‘shall not apply any price band system to agricultural goods imported from the United States’, thereby leaving national producers unprotected and exposed to the mercy of duty-free US imports.
US insistence on the dismantling of the price band system leaves the Andean countries with no alternative means of protection to counteract the effects of US subsidies [emphasis added]. It is also further evidence of double standards in US foreign trade policy. Oxfam believes that, insofar as the USA continues to provide extensive subsidies which lead to unfair trade practices, it should uphold the protection mechanisms used by developing countries to safeguard their most vulnerable domestic sectors.
The agreement’s Chapter 8, Section B:
1. Each Party retains its rights and obligations under the WTO Agreement with regard to the application of antidumping and countervailing duties.
2. No provision of this Agreement, including the provisions of Chapter Twenty-One (Dispute Settlement), shall be construed as imposing any rights or obligations on the Parties with respect to antidumping or countervailing duty measures.
So if the United States wrongly subsidizes agricultural exports, why can’t Peru just impose countervailing duties? As far as I know, CVDs can be applied to anything that isn’t green box. Oxfam’s report doesn’t mention CVDs — surely it should have. Can anyone explain their claim? Are US PTAs really paving the way for subsidized agricultural exports?
Perhaps what Oxfam meant to say was that they want developing countries to have a mechanism that has fewer conditions and is thus easy to use. With CVDs, you still have to prove injury. With the price band system, I don’t think you do.