683
THE RESILIENCE OF PROTECTIONISM IN U.S. TRADE
POLICY
Nancy Williams
*
ABSTRACT
Since the end of World War II, the global economy has shifted into a
multilateral trade system that promotes free trade among sovereign nations. The
United States and the United Kingdom were at the forefront of this shift. Against
this background, the Brexit vote in the United Kingdom and the presidential
election of Donald Trump in the United States came as a surprise to many—
especially because of the United States’ and United Kingdom’s political leaders’
vocal opposition to the multilateral trade system, of which the two nations used
to be the foremost proponents. These events are particularly startling, but they
represent a lesser departure from U.S. trade policy than they seem at first
glance. Rather, protectionism has never completely left U.S. trade law and
policy. Using the history and practice of antidumping and countervailing
measures as examples, this Note argues that protectionism has been resilient in
U.S. trade law, despite the country’s historical leadership in promoting the
World Trade Organization regime.
*
J.D. candidate, Boston University School of Law, 2019; B.A., International Studies,
Spanish, University of Wisconsin-Madison, 2014. I give my sincerest thanks to Professor
Daniela Caruso for her invaluable guidance and assistance throughout the drafting of this
Note. I would also like to thank the editors and staff of the Boston University Law Review for
their hard work throughout the editing process and my family and friends for providing
continual encouragement and support throughout my legal career.
684 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
CONTENTS
I
NTRODUCTION ............................................................................................... 685
I.MULTILATERAL TRADE IN THE GLOBAL SYSTEM ............................... 687
A. The Role of the United States in the Rise of
Multilateral Trade ...................................................................... 687
B. Free Trade in the Trump Era ...................................................... 695
1. The United Kingdom and Brexit ........................................... 696
2. The Presidential Election in the United States ...................... 698
II.PROTECTIONISM VERSUS FREE TRADE ....................................................... 700
A. The History of Protectionism in the United States ...................... 701
B. An Analysis of Protectionism and Free Trade ............................. 705
III.U.S. TRADE LAW: PROTECTIONISM PREVAILS ........................................... 708
A. Subsidies: Unfair Trade Practice or Legitimate
Policy Measure? .......................................................................... 708
B. Antidumping in U.S. Trade Law as an Example
of Protectionism ........................................................................... 711
C. Countervailing Duties in U.S. Trade Law as an Example of
Protectionism ............................................................................... 716
CONCLUSION ................................................................................................... 719
2019] THE RESILIENCE OF PROTECTIONISM 685
INTRODUCTION
After World War II, global leaders gathered to negotiate the General
Agreement on Tariffs and Trade (“GATT”), shifting the global trade system
from the traditional bilateral approach to a system that encouraged multilateral
free trade agreements. The United States and the United Kingdom were at the
forefront of those negotiations and their leaders brought together the most
powerful nations of the time to negotiate the establishment of international
institutions.
1
Over the upcoming decades, under the GATT framework and
eventually under the direction of the World Trade Organization (“WTO”),
multilateral agreements became more prevalent, resulting in the increasing
integration of domestic economies into the global economy. Furthermore, the
regulation of trade in goods under the GATT framework has extended into trade
in services and regulations on technical barriers to trade, investment, sanitary
and phytosanitary measures, and intellectual property.
2
After seventy years under the GATT framework, two of the foremost
proponents of the multilateral trade system began to clearly demonstrate their
discontent. In June 2016, the United Kingdom voted to leave the European
Union in the historic Brexit vote.
3
Then, in November, 2016, the United States
elected Donald Trump as President following his “Make America Great Again”
campaign, which promoted protectionist policies and prioritized the United
States’ domestic interests over international cooperation and win-win solutions.
4
Until the final results of both votes were revealed, neither event was clearly
anticipated.
5
These events, however unexpected, were arguably the results of
1
For further discussion, see infra Part I (describing role of United States and United
Kingdom in development of multilateral trade system).
2
See Overview: A Navigational Guide, WORLD TRADE ORG., https://www.wto.org/
english/thewto_e/whatis_e/tif_e/agrm1_e.htm [https://perma.cc/ZG3T-7Q7K] (last visited
Feb. 11, 2019) (outlining WTO and its purposes).
3
Brexit, GOV.UK, https://www.gov.uk/government/policies/brexit [https://perma.cc/NV
33-HSDL] (last visited Feb. 11, 2019).
4
People: Donald J. Trump, WHITE HOUSE (2017), https://www.whitehouse.gov/
administration/president-trump [https://perma.cc/YS3F-8A2T] (describing Donald J. Trump
and his rise to presidency).
5
See Brexit: Europe Stunned by UK Leave Vote, BBC (June 24, 2016),
http://www.bbc.com/news/uk-politics-eu-referendum-36616018 [https://perma.cc/AX6B-
P8EH] (“A wave of shock is reverberating around Europe as countries across the EU and
beyond digest the decision by UK voters to leave the European Union.”); Dan Hirschhorn,
How Donald Trump Shocked the World, T
IME (Nov. 9, 2016) http://time.com/
4563946/election-2016-donald-trump-victory-how/ [https://perma.cc/S9S9-VS5P] (“The
polls said it wouldn’t happen this way. The forecasts said it wouldn’t happen this way. Even
the betting markets said it wouldn’t happen this way.”); Euan McKirdy, Barry Neild & Steve
Visser, EU Referendum Results: David Cameron to Resign, Markets Tumble, CNN (June 24,
2016), http://www.cnn.com/2016/06/24/europe/uk-eu-referendum-results/index.html [https:/
/perma.cc/UZ7T-UWN2] (“There was a mixture of jubilation and tearful disbelief in the UK
as people awoke to the final result of Thursday’s extremely close vote, which deeply divided
686 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
decades of dissatisfaction with the multilateral trade system. More specifically,
multilateral trade has not been universally advantageous to all populations or
industries.
6
It has contributed to unequal distribution of wealth and severe losses
for certain industries within domestic economies, among other concerns.
Furthermore, the protectionism that instigated the GATT negotiations has never
been completely abandoned, and the appeal of mercantilism has never
completely faded from U.S. trade law.
This Note addresses the changes in the global trade system from overt
protectionism to a more covert protectionism, and it highlights the substantive
continuity of U.S. trade policies. Part I outlines the current state of multilateral
trade in the global system. More specifically, it discusses the role of multilateral
trade in the United States and how the recent presidential election confronted the
issue. This event is significant because trade is an important economic and
political issue for the United States; the current system supports shared interests,
and a threat to its stability could seriously compromise those interests.
7
Part II
discusses the United States’ protectionist policies before World War II and also
analyzes concerns with both protectionism and free trade policies. Part III argues
that protectionism has prevailed in the United States, despite the United States’
simultaneous promulgation of free trade policies. More specifically, this Part
argues that the United States’ antidumping and countervailing duty laws are
examples of how protectionism has been resilient in U.S. trade policy. Despite
its role in introducing and popularizing multilateral trade after World War II, the
United States continues to employ protectionist policies, as it always has. The
recent U.S. presidential election, the current U.S. trade platform, and the Brexit
vote are particularly startling, but they represent a lesser departure from
historical policy than they seem at first glance. Overall, this Note argues that the
recent events do not evince a revival of protectionism, but rather that they
demonstrate the resilience
8
and continuity of protectionist policies in U.S. trade
policy.
the nation.”); Chris Morris, Biggest Crisis Yet for Brussels, BBC (June 24, 2016),
http://www.bbc.com/news/uk-politics-eu-referendum-36616018 [https://perma.cc/N4QD-
S4MB]; Michael D. Shear, Presidential Election Live: Donald Trump’s Victory, N.Y.
TIMES
(Nov. 8, 2016), https://www.nytimes.com/2016/11/08/us/politics/election-live.html.
6
Anne O. Krueger, Are Preferential Trading Arrangements Trade-Liberalizing or
Protectionist?, 13 J. ECON. PERSP. 105, 114 (1999) (describing benefits and harms associated
with multilateral trade).
7
Salman Ahmed & Alexander Bick, Trump’s National Security Strategy: A New Brand of
Mercantilism?, C
ARNEGIE ENDOWMENT FOR INT’L PEACE (Aug. 17, 2017), http://carnegie
endowment.org/2017/08/17/trump-s-national-security-strategy-new-brand-of-mercantilism-
pub-72816 [https://perma.cc/5VCX-6QJG] (“[President Donald Trump’s] forthcoming
national security strategy will be closely scrutinized to understand what ‘America First’
means for the U.S. role in the world . . . .”).
8
As in Professor Vivien Schmidt and Mark Thatcher’s discussion of neo-liberalism’s
resilience in Europe’s political economy, resilience in this context can be characterized by a
concept’s “endurance, reoccurrence, and adaptability,” “dominance” over other options, and
2019] THE RESILIENCE OF PROTECTIONISM 687
I. MULTILATERAL TRADE IN THE GLOBAL SYSTEM
After World War II, the global community saw an increase in international
institutions, including the European Union, the International Monetary Fund, the
United Nations, and the World Bank. These institutions would create both
binding and nonbinding instruments and policies that would affect global trade
policy and direct nations in the creation and maintenance of their domestic trade
policies. For instance, the European Union retains the trade negotiation power
for all its member states, meaning individual member states cannot negotiate
their own trade agreements.
9
After World War II, global leaders recognized the
importance of using trade agreements as tools to prevent war and create a new
world order. One of the most influential of these tools was the GATT, a
framework established in 1947 to regulate and monitor multilateral trade flows.
The United States played an instrumental role in the GATT negotiations. Since
then, the United States has continually entered into free trade agreements with
other nations
10
and used the dispute settlement system as established by GATT,
and later the WTO.
11
However, more recently, the United States has been more
vocal about its discontent with the multilateral trade system, despite its
instrumental role in establishing that system.
12
A. The Role of the United States in the Rise of Multilateral Trade
By the end of the 1930s, World War II had broken out. Congress made
concerted efforts initially to remain neutral from the war by passing Neutrality
Acts. The Neutrality Acts regulated the export of arms, prohibited loans or sales
of securities to belligerents or countries engaged in civil strife, and forbade
American vessels from engaging in trade with belligerents.
13
Despite the
“survival not only in the face of strong challenges but also despite . . . [its] failures.” Vivien
A. Schmidt & Mark Thatcher, Theorizing Ideational Continuity: The Resilience of Neo-
Liberal Ideas in Europe, in R
ESILIENT LIBERALISM IN EUROPE’S POLITICAL ECONOMY 1, 15-
16 (Vivien A. Schmidt & Mark Thatcher eds., 2013).
9
Thomas Streinz, Cooperative Brexit: Giving Back Control over Trade Policy, 15 INT’L
J. CONST. L. 271, 271 (2017) (highlighting complexities surrounding Brexit and advocating
for cooperative efforts).
10
For a list of U.S. free trade agreements currently in force, see Free Trade Agreements,
OFFICE U.S. TRADE REPRESENTATIVE: EXECUTIVE OFFICE PRESIDENT, https://ustr.gov/trade-
agreements/free-trade-agreements [https://perma.cc/X962-Z6EK] (last visited Feb. 11, 2019).
11
For a list of disputes involving the United States in the WTO, see Dispute Settlement:
The Disputes,
WORLD TRADE ORG., https://www.wto.org/english/tratop_e/dispu_e/
dispu_by_country_e.htm [https://perma.cc/TNM3-SB85] (last visited Feb. 11, 2019).
12
Ahmed & Bick, supra note 7 (discussing President Trump’s trade strategy and potential
effects of “America First”).
13
Neutrality Act of 1939, ch. 2, 54 Stat. 4, 4 (codified as amended at 22 U.S.C. § 441
(2018)) (“To preserve the neutrality and the peace of the United States and to secure the safety
of its citizens and their interests.”); Neutrality Act of 1937, ch. 1, 50 Stat. 3, 3 (“To prohibit
the exportation of arms, ammunition, and implements of war from the United States to
Spain.”); Neutrality Act of 1936, ch. 106, 49 Stat. 1152, 1152 (outlining U.S. neutrality
688 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
Neutrality Acts, the United States did not remain completely neutral, particularly
with respect to the United Kingdom. For example, in November 1938, during
the self-imposed period of neutrality, the United States entered into a trade
agreement with Britain to respond to the threat of Nazism spreading throughout
Europe.
14
Additionally, President Roosevelt continually opposed the U.S.
Congress’s isolationist stance. In 1940, he expressed his concern about World
War II’s threat to global democracy, but Congress maintained its isolationist
policies.
15
In 1941, President Roosevelt further conveyed these concerns in his
Four Freedoms speech, which promoted the idea that all should be provided
freedom of religion, freedom from want, freedom from fear, and freedom of
speech and expression.
16
He deemed the elimination of protectionist tariffs an
important step towards granting those four freedoms.
17
He nonetheless
recognized that the United States could not unilaterally realize the endeavor.
During the summer of 1941, President Roosevelt and the United Kingdom’s
Prime Minister Churchill met off the coast of Newfoundland.
18
The two leaders
used this meeting to discuss their “common cause” and evaluate the situation on
the European continent to develop “common strategies” to address any threats
to their nations.
19
The meeting resulted in the Atlantic Charter, in which the two
leaders “deem[ed] it right to make known certain common principles in the
national policies of their respective countries on which they base their hopes for
a better future for the world.”
20
They expressed their intent “to bring about the
policy); Neutrality Act of 1935, ch. 837, 49 Stat. 1081, 1081 (“[I]t shall thereafter be unlawful
to export arms, ammunition, or implements of war from any place in the United States, or
possessions of the United States, to any port of such belligerent states . . . .”); see also Aaron
Xavier Fellmeth, A Divorce Waiting to Happen: Franklin Roosevelt and the Law of
Neutrality, 1935-1941, 3 B
UFF. J. INT’L L. 413, 425-34 (1996-97) (discussing Neutrality Acts
from 1935-1939).
14
Charles S. Maier, The Politics of Productivity: Foundations of American International
Economic Policy after World War II, 31.4 INT’L ORG. 607, 610 (1977) (“The danger of Nazi
expansionism further impelled Neville Chamberlain to solicit Washington’s cooperation and
conclude the Anglo-American trade agreement of November 1938.”).
15
Susan Dunn, The Debate Behind U.S. Intervention in World War II, ATLANTIC (July 8,
2013), https://www.theatlantic.com/national/archive/2013/07/the-debate-behind-us-interven
tion-in-world-war-ii/277572/ [https://perma.cc/FH9H-NKNR] (“In that critical month of May
1940, [President Roosevelt] finally realized that it was probably a question of when, not if,
the United States would be drawn into war.”).
16
TOWNSEND HOOPES & DOUGLAS BRINKLEY, FDR AND THE CREATION OF THE U.N. 27
(1997) (“These were, [President Roosevelt] said, not a vision for ‘a distant millenium,’ but ‘a
definite basis for a kind of world attainable in our own time and generation.’”).
17
Id. at 37 (“The elimination of all such practices was a major goal of the Roosevelt
Administration.”).
18
Id. at 26 (describing circumstances surrounding signing of the Atlantic Charter).
19
Id. (describing “secret rendezous” between Prime Minister Churchill and President
Roosevelt).
20
The Atlantic Charter, U.K.-U.S, Aug. 14, 1941, 55 Stat. 1603, 1603, E.A.S. No. 236.
2019] THE RESILIENCE OF PROTECTIONISM 689
fullest collaboration between all nations in the economic field with the object of
securing, for all, improved labor standards, economic advancement and social
security . . . . ”
21
The relationship between the United States and the United
Kingdom was further enhanced in 1942 when the two nations entered into a
Lend-Lease Agreement to exchange defense articles and information with each
other.
22
These two agreements would be considered the “groundwork for [the]
grand design for trade liberalization” that was developed after World War II.
23
These examples of collaboration between the United States and the United
Kingdom demonstrated their desire to strategize about the best economic course
that should be followed once the war was over, namely one based on
international cooperation.
Towards the end of World War II, the United States stepped onto the global
stage with significant wealth.
24
Embracing its leadership role, the United States
sought to promote its democratic values and international cooperation
25
and
convened a summit of forty-four nations in Bretton Woods, New Hampshire to
share the United States-United Kingdom plans for global economic and trade
policy.
26
The Allied nations wanted to build on “wartime habits of economic co-
operation” to form a comprehensive commercial policy.
27
The Bretton Woods
conference resulted in drafted agreements to establish the International
Monetary Fund and the International Bank for Reconstruction and Development
(the precursor to the World Bank), two institutions that would monitor global
financial development and exchange rates.
28
However, the participating nations
still recognized the need for an institution to monitor trade.
29
In 1945, Congress
21
Id. (emphasis added).
22
Lend-Lease Agreement of 1942, U.K.-U.S., Feb. 23, 1942, 56 Stat. 1433, 1433-34,
E.A.S. No. 241 (establishing cooperative weapons and war efforts).
23
BRUCE C. CLUBB, UNITED STATES FOREIGN TRADE LAW 120-21 (1991) (articulating
goals and themes of global economic development).
24
CHRIS BRUMMER, MINILATERALISM: HOW TRADE ALLIANCES, SOFT LAW, AND
FINANCIAL ENGINEERING ARE REDEFINING ECONOMIC STATECRAFT 38 (2014) (highlighting
how “United States emerged from the war as the wealthiest country in the world”).
25
Id. at 39 (“[T]he promotion of Western capitalist democracy was seen as essential in
checking the threat of Soviet economic and military expansion.”).
26
CLUBB, supra note 23, at 123 (describing conference at Bretton Woods); MICHAEL
TREBILCOCK, ROBERT HOWSE & ANTONIA ELIASON, THE REGULATION OF INTERNATIONAL
TRADE 23 (4th ed. 2013) (discussing U.K. and U.S. efforts to develop “strategies for
reconstructing the world economy after the war”).
27
Percy W. Bidwell, A Postwar Commercial Policy for the United States, 34 AM. ECON.
REV. 340, 349 (1944).
28
CLUBB, supra note 23, at 123 (“Although the focus of the IMF was on exchange rates,
a principal purpose was to facilitate trade . . . .”).
29
Id. at 123-24 (noting that IMF and World Bank alone were insufficeint to build effective
trade system). The Articles of Agreement of the International Monetary Fund explain that the
IMF was meant to “promote international monetary cooperation” and “facilitate the expansion
690 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
granted the President the power to negotiate trade agreements and reduce tariffs
through the Trade Agreements Extension Act of 1945.
30
However, this
authorization only lasted until 1948.
31
Thus, the negotiating nations completed
and signed the GATT just before the expiration of the President’s negotiating
authority.
32
The GATT was signed in October 1947 to become effective in
January 1948.
33
The framework under the GATT aimed to reduce trade barriers and eliminate
discriminatory treatment of imported goods.
34
The GATT’s most favored nation
(“MFN”) and national treatment provisions constitute the fundamental tools
through which non-discriminatory treatment of imports is implemented. Article
I of the GATT codifies the MFN principle. The MFN provision requires GATT
parties to provide all tariff concessions made to one GATT party available to all
parties.
35
The MFN principle was not a new concept at the time of the GATT; it
had been applied in Europe since before the world wars as a mutually protective
measure to ensure the lowest tariffs between trading partners.
36
The United
States also began employing the MFN principle after the passage of the
Reciprocal Trade Agreement Act of 1934 (“RTAA”).
37
However, preferential
trade agreements are a significant exception to the MFN principle.
38
Under
and balanced growth of international trade.” Articles of Agreement of the International
Monetary Fund, Art. 1, Dec. 27, 1945, 60 Stat. 1401, 205 U.N.T.S. 39.
30
CLUBB, supra note 23, at 124-25 (describing President Roosevelt’s power under Trade
Agreements Extension Act).
31
Id. (“[U]nless [the President’s] authority was renewed, additional trade agreements
would not be possible.”).
32
Ronald A. Brand, GATT and the Evolution of United States Trade Law, 18 BROOK. J.
INT’L L. 101, 118-19 (1992).
33
General Agreement on Tariffs and Trade, pmbl., Oct. 30, 1947, 61 Stat. A-11, 55
U.N.T.S. 188 [hereinafter GATT] (“[D]irected to the substantial reduction of tariffs and other
trade barriers and to the elimination of preferences, on a reciprocal and mutually advantageous
basis.”); see also C
LUBB, supra note 23, at 126 (describing signing of GATT).
34
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 29 (describing principle of non-
discrimination).
35
GATT, supra note 33, art. I, para. 1 (“[A]ny advantage, favour, privilege or immunity
granted by any contracting party to any product originating in or destined for any other
country shall be accorded immediately and unconditionally to the like product originating in
or destined for the territories of all other contracting parties.”); see also C
LUBB, supra note
23, at 119 n.6 (describing MFN principle); 1 EUGENE T. ROSSIDES & ALEXANDRA MARAVEL,
UNITED STATES IMPORT TRADE LAW 2-3 (1998) (“Among the many rules established by the
GATT the foremost is the ‘most-favored-nation’ (MFN) principle.”).
36
Krueger, supra note 6, at 105.
37
Id. (“[In 1923], the United States began to recognize that this unilateral approach was
costing much, and gaining little, and U.S. trade negotiators began changing to MFN
clauses . . . .”).
38
GATT, supra note 33, art. XXIV, para. 2 (permitting formation of customs unions); see
also T
REBILCOCK, HOWSE & ELIASON, supra note 26, at 83 (highlighting prevalence of
2019] THE RESILIENCE OF PROTECTIONISM 691
Article XXIV of the GATT, signatory countries are permitted to enter customs
unions or free trade areas, in which member nations “substantially eliminate[]
duties and other restrictive regulations of commerce” amongst the member
nations.
39
Preferential and regional trade agreements, such as the agreements
creating the European Union, have become increasingly common in recent
years.
In addition to the MFN provisions, the GATT applies the principle of national
treatment. Under Article III of the GATT, parties agree not to subject imports to
internal taxes or “other internal charges” or treatment that is “less favourable
than that accorded to like products of national origin.”
40
Thus, GATT parties
must treat their imported and domestic producers with the same taxes and
treatment. Overall, the MFN and national treatment provisions encourage and
regulate free trade among the GATT signatory parties.
The United States was an important player in the negotiation of the GATT
and wrote much of the text of the GATT.
41
For instance, the GATT includes an
escape clause, allowing nations to withdraw, suspend, or modify trade
agreements if unforeseen circumstances are causing “serious injury” to the
nation’s domestic economy, a provision advanced by U.S. negotiators as an
additional protection for GATT contracting parties.
42
Due to the influence of the
United States and Western Europe in the GATT negotiations, the GATT
framework was ultimately designed to complement similar economies:
“Western liberal economies, composed of price-sensitive, profit-maximizing
preferential trade agreements in international trade); Krueger, supra note 6, at 106 (noting
that GATT permits free trade agreements).
39
GATT, supra note 33, art. XXIV, paras. 3-6 (describing parameters for preferential trade
agreement); see also TREBILCOCK, HOWSE & ELIASON, supra note 26, at 83 (describing how
preferential trade agreements (“PTAs”) “advanc[e] trade liberalization and economic
integration among parties to the PTA”).
40
GATT, supra note 33, art. III, para. 1 (outlining national treatment provision).
41
Richard H. Steinberg, Great Power Management of the World Trading System: A
Transatlantic Strategy for Liberal Multilateralism, 29 LAW & POL’Y INT’L BUS. 205, 220
(1998) (“The United States authored the text that became the GATT 1947.”); see also
President Harry S. Truman, Charter Proposing an International Trade Organization
Transmitted to the Senate, Message to the Congress (Apr. 23, 1949), in D
EP’T ST. BULL., May
1949, at 601 (“We have learned through bitter experience how necessary it is for nations to
approach jointly the task of improving the conditions of world trade. During the 1930’s many
nations acted independently, each attempting to gain advantage at the expense of others. The
result was a vicious circle—with restrictions by one nation provoking more serious
restrictions by other nations in retaliation. The end result was a tremendous drop in the volume
of international trade which made the general depression worse and injured all countries.”).
42
GATT, supra note 33, art. XIX, para. 1 (“If, as a result of unforseen developments and
of the effect of the obligations incurred by a contracting party under this Agreement . . . , the
contracting party shall be free . . . to suspend the obligation in whole or in part or to withdraw
or modify the concession.”); see also MICHAEL K. YOUNG, UNITED STATES TRADE LAW AND
POLICY 37 (2001) (highlighting GATT’s provisions that provide temporary relief in certain
circumstances).
692 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
firms with little government intervention except for purposes of solving market
failures . . . and engaging in modest income redistribution.”
43
At the time of signing, the negotiating nations intended to engage in
subsequent negotiations that would establish the International Trade
Organization (“ITO”) to enforce the GATT.
44
The ITO would guide “the
conduct of trade relations [as] a forum for trade negotiations and an organ for
conciliation and settlement of disputes,”
45
and the parties intended the GATT to
be suspended upon establishment of the ITO.
46
An ITO Charter was drafted in
early 1948.
47
However, Congress opposed the ITO Charter and ultimately did
not ratify it.
48
Additionally, the United Kingdom opposed the Charter because
the Charter provided insufficient protection for the U.K. domestic economy and
policies.
49
This opposition from the United States and the United Kingdom led
to the Charter’s failure, leaving the GATT as the primary mechanism for trade
regulation.
50
In the 1950s, the United States began losing the absolute “economic
superiority” it had gained during World War II and the immediate postwar
period.
51
Nonetheless, free trade increased in the global system, and the United
States continued its support of trade liberalization.
52
The United States supported
the European Common Market and liberalization of trade in Europe more
generally.
53
Furthermore, President Kennedy encouraged multilateral trade as a
43
Steinberg, supra note 41, at 220.
44
Krueger, supra note 6, at 105-06 (explaining that GATT was “drawn up as an interim
measure” to continue negotiations until ITO charter could be ratified).
45
Brand, supra note 32, at 120 (citation omitted).
46
JEFFREY L. DUNOFF, STEVEN R. RATNER & DAVID WIPPMAN, INTERNATIONAL LAW
NORMS, ACTORS, PROCESS: A PROBLEM-ORIENTED APPROACH 666 (4th ed. 2015) (stating that
“the GATT provided that ‘on the day on which the [ITO Charter] enters into force,’ GATT’s
provisions ‘shall be suspended and superseded by the corresponding provisions of the
charter’”).
47
CLUBB, supra note 23, at 128.
48
Id. at 131 (describing Congress’s rejection of Charter).
49
John Linarelli, How Trade Law Changed: Why It Should Change Again, 65 MERCER L.
REV. 621, 646 (2014) (noting United Kingdom’s rejection of Charter).
50
MICHAEL J. TREBILCOCK, ADVANCED INTRODUCTION TO INTERNATIONAL TRADE LAW 10
(2015) (noting GATT has become “by default the permanent institutional basis for today’s
world trade regime”); see also Linarelli, supra note 49, at 647 (“The irony of the ITO’s failure
is that the parties that really pushed for its adoption—Britain and the United States—were
responsible for its failure.”).
51
CLUBB, supra note 23, at 165.
52
Krueger, supra note 6, at 106-07 (highlighting U.S. policy efforts to support trade
liberalization); see also Trade Expansion Act of 1962: Hearing on H.R. 9900 Before the H.
Comm. on Ways and Means, 87th Cong. 2-3 (1962) [hereinafter 1962 Hearings] (statement
of John F. Kennedy, President, United States) (discussing benefits of increased trade to
include expanded economy, increased exports, and enhanced domestic industries).
53
Krueger, supra note 6, at 106-07.
2019] THE RESILIENCE OF PROTECTIONISM 693
means to maintain the United States’ superiority.
54
In 1962, Congress authorized
President Kennedy to negotiate with the European Economic Community
through the Trade Expansion Act.
55
Although he was unsuccessful in negotiating
a free trade area, President Kennedy did negotiate a reduction in tariffs to further
liberalize trade between Europe and the United States.
56
In the mid-1960s, he
also negotiated an Antidumping Code
57
during the Kennedy Round of the
GATT,
58
although such an agreement was not expressly authorized by
Congress.
59
During the 1970s, Congress again authorized the President to
negotiate multilateral and liberalized trade policies at the Tokyo Round of the
GATT.
60
The GATT parties at the Tokyo Round added new restrictions to non-
tariff barriers, including regulations for codes of conduct.
61
During the Uruguay
Round in the 1990s, the GATT parties negotiated additional trade rules,
extending regulation into new areas of trade like intellectual property and
services.
62
Most significantly, the Uruguay Round resulted in the establishment
54
1962 Hearings, supra note 52, at 5 (statement of John F. Kennedy, President, United
States) (“If we are to retain our leadership, the initiative is up to us. The revolutionary changes
which are occurring will not wait for us to make up our minds. The United States has
encouraged sweeping changes in free world economic patterns in order to strengthen the
forces of freedom. But we cannot ourselves stand still. If we are to lead, we must act. We
must adapt our own economy to the imperatives of a changing world, and once more assert
our leadership.”).
55
CLUBB, supra note 23, at 167 (illustrating President Kennedy’s negotation efforts in
Kennedy Round).
56
CONG. BUDGET OFFICE, THE GATT NEGOTIATIONS AND U.S. TRADE POLICY 27-29
(1987) (highlighting “[s]ignificant progress on lowering tariffs” from Kennedy Round);
CLUBB, supra note 23, at 168.
57
For further discussion of antidumping laws, see infra Section III.B.
58
The GATT contracting parties met regularly to negotiate or renegotiate terms, which are
known as the “Rounds.” Perhaps the most famous is the Uruguay Round, during which the
WTO was established. TREBILCOCK, HOWSE & ELIASON, supra note 26, at 24-25 (discussing
advancements made in individual Rounds). In the early 2000s, the Doha Round became the
ninth Round and the first Round among WTO member nations. The Doha Round, W
ORLD
TRADE ORG., https://www.wto.org/english/tratop_e/dda_e/dda_e.htm [https://perma.cc/Q7
WE-BC6X] (last visited Feb. 11, 2019) (examining WTO membership trade negotiations in
Doha, Qatar). For further information about negotiations during each Round, see GATT
BILATERAL NEGOTIATING MATERIAL BY ROUND, WORLD TRADE ORG.,
https://www.wto.org/english/docs_e/gattbilaterals_e/indexbyround_e.htm [https://perma.cc/
78QM-LPPQ] (last visited Feb. 11, 2019).
59
CONG. BUDGET OFFICE, supra note 56, at 29 (describing Kennedy Round’s success in
negotiating antidumping agreement that “resolve[d] conflicts over nontariff barriers”);
C
LUBB, supra note 23, at 168.
60
CONG. BUDGET OFFICE, supra note 56, at 30 (describing Congress’s authorization for
President to negotiate in Tokyo Round).
61
Id. at 30, 36 (discussing how Tokyo Round addressed nontariff barriers).
62
DUNOFF, RATNER & WIPPMAN, supra note 46, at 667 (describing Uruguay Round’s
expansion of trade regulation).
694 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
of the WTO, the international institution presently responsible for monitoring
trade negotiations, tracking relations between member nations, and resolving
disputes between them.
63
The United States, again, played an influential role in creating a new
international institution: the WTO. One driving force behind creating the WTO
was a desire for a more effective system to resolve trade disputes than that which
the GATT framework provided. Although the GATT dispute resolution system
was relatively successful when compared to other international institutions,
64
the
United States adamantly advocated that the GATT dispute resolution system
was ineffective.
65
This discontent emerged in the late 1970s. Congress
authorized the United States Trade Representative (“USTR”) to determine
whether other countries had established trade barriers against the United States
and use such information to “persuade” those countries to either remove those
barriers or provide compensation to the United States.
66
Congress also
authorized the USTR to take action against those countries that were “unwilling
to comply with United States’ demands.”
67
The United States implemented these
measures because, in its view, the GATT did not adequately protect its interests,
and the GATT dispute resolution was “too cumbersome.”
68
Other GATT parties
63
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 40 (“[WTO] has been created to
oversee an integrated dispute settlement regime and to undertake a proactive trade policy
surveillance role.”).
64
Approximately eighty percent of international trade disputes submitted to the GATT
dispute panel were resolved. For further discussion of the GATT dispute resolution system,
see DUNOFF, RATNER & WIPPMAN, supra note 46, at 670 (discussing dispute settlement
activity through GATT).
65
Id. at 670, 674 (“The United States argued . . . unilateral procedues were necessary
because GATT dispute settlement was too cumbersome and too weak to protect U.S. trade
interests adequately.”). The U.S. government desired a stronger framework than that which
the GATT framework provided. The United States was concerned that “[g]overnments [were]
increasingly resorting to policies that [were] not regulated by GATT, and that conflict with
its principles of open and nondiscriminating trade.” C
ONG. BUDGET OFFICE, supra note 56, at
ix, xvi-xvii. The United States wanted to focus on “how to address the unequal distribution of
benefits and losses among different groups in a country, and how to react when another
country attempts to promote some of its own industries at the expense of its trading partners.”
Id. at x. Furthermore, the United States recognized that, despite its role as the “prime
motivator for trade liberalization since World War II, the intensity of its push for a new round
reflect[ed] concerns about the economic and political ramifications of recent record trade
deficits.” Id. at 1.
66
DUNOFF, RATNER & WIPPMAN, supra note 46, at 673-74 (stating that “[a]fter identifying
[trade distorting practices], USTR is directed to persuade the other government to eliminate
the unfair barriers or provide the United States with compensation”).
67
Id. (stating that “[i]f the other government is unwilling to accede to U.S. demands,
USTR may take retaliatory trade action”).
68
Id. at 674 (stating that “[t]he United States argued that these unilateral procedures were
necessary because GATT dispute settlement was too cumbersome and too weak to protect
U.S. trade interests adequately”).
2019] THE RESILIENCE OF PROTECTIONISM 695
opposed the United States and challenged the U.S. trade practices.
69
Ultimately,
during the Uruguay Round, the GATT parties modified the dispute settlement
system significantly within the newly created WTO.
70
Thus, since the end of
World War II, the United States has played an important role in developing the
global multilateral trade system.
B. Free Trade in the Trump Era
Since the establishment of the GATT framework, the United States has
negotiated several multilateral agreements. In recent decades, the United States
has increasingly used the negotiation of regional trade agreements as an
important free trade tool. For instance, in the 1990s, the United States entered
into the North American Free Trade Agreement (“NAFTA”) with Canada and
Mexico.
71
In 2013, the United States began negotiating with the European Union
for what could be the largest free trade area, the Transatlantic Trade and
Investment Partnership (“TTIP”).
72
Despite already low tariffs between the
69
Id. (stating that “[o]ther governments viewed the new legislation as an unacceptable
unilateral attempt by the United States to judge their trade practices and called a special GATT
meeting to demand a change in U.S. policy”).
70
Id. at 673 (stating that “GATT parties agreed to a dramatically enhanced dispute
resolution system in the DSU”). The new dispute resolution system automatically adopts
panel reports unless a consensus of the WTO members rejects the report. Additionally, it
includes stricter deadlines, permits sanctions for noncompliance with panel reports, and
creates a standing Appellate Body. Id. (discussing new dispute resolution system). For further
information about WTO dispute settlement, see Understanding the WTO: Settling Disputes,
WORLD TRADE ORG., https://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm
[https://perma.cc/6Y8G-UP6D] (last visited Feb. 11, 2019).
71
North American Free Trade Agreement, Can.-Mex.-U.S., Dec. 17, 1992, 32 I.L.M. 289
(1993); North American Free Trade Agreement (NAFTA), OFFICE OF U.S. TRADE
REPRESENTATIVE, https://ustr.gov/trade-agreements/free-trade-agreements/north-american-
free-trade-agreement-nafta [https://perma.cc/U2S3-UZQB] (last visited Feb. 11, 2019).
72
Press Release, Office of the U.S. Trade Representative, Fact Sheet: United States to
Negotiate Transatlantic Trade and Investment Partnership with the European Union (Feb. 13,
2013), https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2013/february/US-
EU-TTIP [https://perma.cc/S6UG-YMZC] (discussing trade negotiations between United
States and European Union); Press Release, Office of the U.S. Trade Representative, U.S.-
EU Joint Report on T-TIP Progress to Date (Jan. 17, 2017), https://ustr.gov/about-us/policy-
offices/press-office/press-releases/2017/january/us-eu-joint-report-t-tip-progress-0
[https://perma.cc/6D7A-QKB3] (“T-TIP would increase the exports and investment flows
that fuel our economies and support high-quality jobs on both sides of the Atlantic. It would
also enable the EU and the United States, drawing on our common values and interests, to
develop and promote together common high standards in the global economy, leveling the
playing field for our producers, exporters, and workers. Finally, as EU and U.S. leaders have
repeatedly emphasized, T-TIP offers an opportunity to strengthen further the broader
transatlantic partnership, based on our shared embrace of democracy, human rights, and the
rule of law, which has been an indispensable pillar of global security and prosperity since the
end of the Second World War.”); see also Jessica Watts, The Transatlantic Trade and
696 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
European Union and the United States, TTIP would remove non-tariff barriers,
standardize customs practices, and harmonize other regulations.
73
The United
States also signed the Trans-Pacific Partnership (“TPP”) in 2016 with eleven
other nations.
74
Similar regional agreements had become increasingly common
throughout the world in the latter half of the twentieth century.
75
Recently, the focus in trade law has shifted away from tariffs and toward
“growing economic imbalances, heightened social and environmental fragilities,
[and] persistent financial instability.”
76
These regional trade agreements and
other free trade agreements commonly address both tariffs and non-tariff
barriers, such as import licensing or rules of origin.
77
Despite the continued
negotiation and ratification of multilateral trade agreements in recent years, free
trade is not without its critics, especially in the United States and the United
Kingdom, the two leaders in the post-World War II multilateral trade movement.
1. The United Kingdom and Brexit
The European Union, like the GATT and many other international regulatory
institutions, was formed after World War II by nations seeking to prevent further
violent conflict. The United Kingdom did not join the European Union until the
1970s and was considered to be an unenthusiastic member of the European
Union.
78
Eventually, U.K. citizens experienced “increasing frustration with the
EU’s costs, inefficient policies, increasing bureaucracies, and net immigration
policy,” ultimately resulting in a referendum vote about whether the United
Investment Partnership: An Overly “Ambitious” Attempt to Harmonize Divergent
Philosophies on Acceptable Risks in Food Production Without Directly Addressing Areas of
Disagreement, 41 N.C. J. INT’L L. 83, 84 (2016) (“If successful, TTIP [would] create the
world’s largest free trade zone.”). However, TTIP negotiations tapered by the end of 2016.
Phuong Tran, Brexit: How a Weakened European Union Affects NAFTA, 22 L
AW & BUS. REV.
AM. 281, 289 (2016) (“There are increasing concerns that TTIP would undermine the EU’s
food safety, environmental standards, and job security.”).
73
Watts, supra note 72, at 90-91 (discussing both parties’ goals and objectives for TTIP).
74
TPP: What Is It and Why Does It Matter?, BBC (Jan. 23, 2017), http://www.bbc.com/
news/business-32498715 [https://perma.cc/BLL9-VNQG] (outlining TPP’s objectives).
75
It is arguable whether the rise of regional trade agreements is compatible with free trade.
See TREBILCOCK, HOWSE & ELIASON, supra note 26, at 84 (citations omitted) (highlighting
arguments by critics of preferential trade agreements that they are a “serious threat to the
integrity of the multilateral trade system”);
Sungjoon Cho, Defragmenting World Trade, 27
NW. J. INT’L L. & BUS. 39, 42 (2006) (arguing that regional trade agreements have disrupted
multilateralism and are “replacing, not complementing, the multilateral trade system”).
76
DUNOFF, RATNER & WIPPMAN, supra note 46, at 665.
77
For further discussion of nontariff barriers regulated by the WTO, see Understanding
the WTO: The Agreements, W
ORLD TRADE ORG., https://www.wto.org/english/thewto_e/
whatis_e/tif_e/agrm9_e.htm [https://perma.cc/PY22-6AZM] (last visited Feb. 11, 2019).
78
JANICE MORPHET, BEYOND BREXIT?: HOW TO ASSESS THE UK’S FUTURE 12 (2017)
(illustrating United Kingdom’s hesitation with the European Union); Tran, supra note 72, at
281 (highlighting the United Kingdom’s current attitude towards the European Union).
2019] THE RESILIENCE OF PROTECTIONISM 697
Kingdom should leave the European Union.
79
The United Kingdom exports
significantly to the United States and, prior to the Brexit vote, the United States
threatened trade consequences against the United Kingdom should Brexit
occur.
80
Nonetheless, in June 2016, the United Kingdom voted to leave the
European Union after nearly fifty years of E.U. membership.
81
The United Kingdom began negotiating its exit with the European Union in
March 2017.
82
During these negotiations, the European Union maintains control
over the U.K. trade policy, as it does for every European Union member state,
until the United Kingdom officially exits the European Union.
83
Additionally,
as an E.U. member state, the United Kingdom is integrated into the Common
Market, which regulates movement of goods within the European Union and
between E.U. and non-E.U. countries.
84
Thus, the United Kingdom must follow
these regulations until its final exit. The Brexit negotiations are extremely
important for the United Kingdom and the European Union. The United
Kingdom obviously wants to have the best agreement for its own citizens, as
does the European Union. However, the European Union does not want to
79
Tran, supra note 72, at 281.
80
Bill Wilson, TTIP: What Is the Future for UK-US Trade?, BBC NEWS (Apr. 24, 2016),
http://www.bbc.com/news/business-36123622 [https://perma.cc/UD4E-3E7P] (discussing
President Obama’s threatened trade consequences if United Kingdom voted to leave European
Union). However, these threats have been criticized. See S
TEWART PATRICK, THE
SOVEREIGNTY WARS: RECONCILING AMERICA WITH THE WORLD 220 (2018) (“Brexit’s
champions may have been shortsighted and undiplomatic. But their critique of U.S. hypocrisy
hit the mark: Americans who counseled the United Kingdom to remain in the EU were indeed
asking Brits to accept infringements on their sovereignty-as-authority that few U.S. citizens
would countenance.”).
81
Brexit, supra note 3.
82
For the current status of Brexit negotiations, see Department for Exiting the European
Union, GOV.UK, https://www.gov.uk/government/organisations/department-for-exiting-the-
european-union [https://perma.cc/JUM8-QBN9] (last visited Feb. 11, 2019) (highlighting
British negotiations with the European Union).
83
MORPHET, supra note 78, at 91 (noting United Kingdom’s trade powers are controlled
by the European Union). Although the United Kingdom voted to leave the European Union
in June 2016, it did not officially provide notice to the European Union pursuant to Article 50
of the Treaty of Lisbon until March 2017. From March 2017, the United Kingdom and
European Union have two years to negotiate the United Kingdom’s exit before E.U. policies
become ineffective with respect to the United Kingdom. Thus, the United Kingdom retains
its responsibilities within the European Union until its official exit. P
ATRICK, supra note 80,
at 219-21 (discussing United Kingdom’s obligations within the European Union). The
European Union retains exclusive power over trade policy of its member states. Tran, supra
note 72, at 283 (“Only the EU, not individual member countries, can legislate on trade matters
and international trade agreements.”).
84
Alex Stojanovic & Jill Rutter, Frictionless Trade?: What Brexit Means for Cross-
Border Trade in Goods, I
NST. FOR THE GOV’T (Aug. 17, 2017), https://www.institutefor
government.org.uk/publications/frictionless-trade-brexit-august-2017 [https://perma.cc/4LE
M-CKEW] (describing Brexit’s impact on international trade).
698 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
encourage other member states to follow the United Kingdom’s lead.
Nevertheless, the Brexit vote demonstrated to the world that the United
Kingdom viewed international interference with its domestic policies with
increasing skepticism.
2. The Presidential Election in the United States
Meanwhile in the United States, then-presidential candidate Donald Trump
progressed with his “Make America Great Again” campaign, which aimed to
reach the many Americans who were disillusioned by globalization and the
United States’ international involvement.
85
Districts that favored President
Trump were characterized by shortages of low-skilled farm jobs, decreasing
availability of high paying blue-collar jobs, and decreasing wages.
86
Like Brexit,
President Trump’s election came as a surprise to many.
87
In the first year of his
presidency, Donald Trump was clear about his position on trade. In January
2017, he withdrew from TPP, “signal[ing] that he plans to follow through on
promises to take a more aggressive stance against foreign competitors as part of
his ‘America First’ approach.”
88
In May 2017, the USTR notified Congress of
its intent to renegotiate NAFTA.
89
As of publication, the TTIP negotiations
85
Karlyn Bowman, Who Were Donald Trump’s Voters? Now We Know, FORBES (June 23,
2017, 1:19 PM), https://www.forbes.com/sites/bowmanmarsico/2017/06/23/who-were-don
ald-trumps-voters-now-we-know/#174c3b783894 [http://perma.cc/2FW7-BZN5] (finding
“American perservationalists” who are skeptical of immigration and free trade make up the
“core group [of voters] who propelled Trump to the nomination”).
86
Duncan Kennedy, A Left of Liberal Interpretation of Trump’s “Big” Win, Part One:
Neoliberalism, 1 NEV. L.J. FORUM 98, 102 (2017) (summarizing state of job growth and
creation in red states and red areas in blue states). Kennedy also asserts that there is an
agreement between both liberal and conservative scholars that “there is a white, ex-working
class increasingly isolated from what is happening to everyone else and trapped . . . at the
bottom.” Id. at 103.
87
See supra note 5 and accompanying text (collecting sources which reported on sensation
of shock after President Trump’s election victory).
88
Peter Baker, Trump Abolishes Trans-Pacific Partnership, Obama’s Signature Trade
Deal, N.Y.
TIMES, Jan. 23, 2017, at A1. At the Asia-Pacific gathering in November 2017,
Trump “vowed to protect American interests against foreign exploitation, preaching a starkly
unilateralist approach to a group of leaders who once pinned their economic hopes on a
regional trade pact led by the United States.” Julie Hirschfield Davis & Mark Landler, Trump
Pitches ‘America First’ Trade Policy at Asia-Pacific Gathering, N.Y.
TIMES, Nov. 10, 2017,
at A1.
89
North American Free Trade Agreement (NAFTA), supra note 71 (“On May 18, 2017,
following consultations with relevant Congressional committees, U.S. Trade Representative
Robert Lighthizer informed Congress that the President intends to commence negotiations
with Canada and Mexico with respect to the NAFTA.”). In November 2018, the United States,
Canada, and Mexico signed the newly negotiated U.S. Mexico Canada Agreement
(“USCMA”), replacing NAFTA. Bill Chappell, USMCA: Trump Signs New Trade Agreement
with Mexico and Canada to Replace NAFTA, NPR (Nov. 30, 2018, 8:35 AM),
2019] THE RESILIENCE OF PROTECTIONISM 699
appear to have stalled.
90
President Trump’s policies to put “America First”
indicate that the United States may be losing interest in being the “world’s
policeman.”
91
President Trump’s national security advisor and his chief
economic advisor asserted that “America First signals the restoration of
American leadership and our government’s traditional role overseas—to use
diplomatic, economic, and military resources of the U.S. to enhance American
security, promote American prosperity, and extend American influence around
the world” and that “America First does not mean America Alone.”
92
In his first
State of the Union address, President Trump expressed that the United States has
“finally turned the page on decades of unfair trade deals that sacrificed our
prosperity and shipped away our companies, our jobs, and our Nation’s
wealth. . . . [W]e will protect American workers and American intellectual
https://www.npr.org/2018/11/30/672150010/usmca-trump-signs-new-trade-agreement-with-
mexico-and-canada [https://perma.cc/T2GZ-EL3Z].
90
Although it appears President Trump may be willing to negotiate a trade agreement with
the European Union, movement on TTIP, specifically, seems to have stalled. Richard Bravo
& Julia Chatterley, Trump Is Willing to Reopen TTIP amid EU-US Trade Dispute, Ross Says,
B
LOOMBERG (Mar. 29, 2018, 10:37 AM), https://www.bloomberg.com/news/articles/2018-
03-29/trump-willing-to-reopen-ttip-amid-eu-u-s-trade-spat-ross-says (“President Donald
Trump is willing to reopen negotiations with the European Union over the stalled Trans-
Atlantic Trade and Investment Partnership agreement, which stalled following his election,
according to U.S. Commerce Secretary Wilber Ross.”).
91
MORPHET, supra note 78, at 36; see also DONALD J. TRUMP,
https://www.donaldjtrump.com/about [http://perma.cc/RG95-K7ZA] (last visited Feb. 11,
2019) (“President Trump is working hard to implement his ‘America First’ platform,
continuing his promise to the American people to lower taxes, repeal and replace Obamacare,
end stifling regulations, protect our borders, keep jobs in our country, take care of our
veterans, strengthen our military and law enforcement, and renegotiate bad trade deals,
creating a government of, by and for the people. He is making America First, again, restoring
our nation’s faith, ushering in a bright, new future now and for generations to come.”
(emphasis added)); U.S.
TRADE REPRESENTATIVE, THE PRESIDENT’S 2017 TRADE POLICY
AGENDA, https://ustr.gov/sites/default/files/files/reports/2017/AnnualReport/Chapter%20I%
20-%20The%20President%27s%20Trade%20Policy%20Agenda.pdf [http://perma.cc/4WP7
-WL38] (highlighting the Trump Administration’s trade priorities as: “(1) defend U.S.
national sovereignty over trade policy; (2) strictly enforce U.S. trade laws; (3) use all possible
sources of leverage to encourage other countries to open their markets to U.S. exports of goods
and services, and provide adequate and effective protection and enforcement of U.S.
intellectual property rights; and (4) negotiate new and better trade deals with countries in key
markets around the world”). At the G20 summit in July 2017, CNN reported that “[l]eaders
appeared to be at an impasse over trade and climate change, with German Chancellor Angela
Merkel making clear that the US’ stance on the key issues were threatening to derail progress
and that talks had been difficult.” Nic Robertson & Angela Dewan, G20: World Leaders at
Odds with Trump on Trade, Climate, CNN (July 8, 2017, 9:02 AM), http://www.cnn.com/
2017/07/08/europe/g20-trump-merkel-trade-climate-change/index.html [https://perma.cc/7H
9H-AYXJ].
92
H.R. McMaster & Gary D. Cohn, Opinion, America First Doesn’t Mean America Alone,
W
ALL STREET J., May 31, 2017, at A17.
700 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
property, through strong enforcement of our trade rules.”
93
In March 2018,
President Trump imposed tariffs on aluminum and steel imports to address
national security concerns, an action viewed by free trade proponents as
dangerous.
94
Overall, President Trump’s actions and statements suggest that he
will continue to pursue policies through which the United States will protect its
domestic interests, even if those efforts may be contrary to means that are more
cooperative with other international actors.
Both Brexit leaders and Trump campaigners were successful in their effort
“to tap into voter discontent and class resentment.”
95
The United States has long
opposed complete submission “to the political authority of any supranational
body.”
96
President Trump’s platform utilized this opposition as a selling point,
criticizing the international trade agreements (and other international
agreements) negotiated before and during the Obama Administration as fuel for
his campaign fire, ultimately resulting in a successful election. In contrast to the
U.S. government that led the GATT negotiations, the current administration has
been actively seeking ways to reduce and limit free trade.
II. P
ROTECTIONISM VERSUS FREE TRADE
Despite its important role as the promoter of multilateral trade after World
War II, the United States has long employed protectionist trade laws and
policies. In reality, before World War II, the United States had a long history of
isolationist policies (trade and otherwise) in relation to the rest of the world.
97
More specifically, the extremely protectionist Smoot-Hawley Tariff Act of 1930
led to devastating international economic disorder, deepening the already
serious global depression.
98
Once the War came to an end, multilateral
93
Press Release, White House, President Donald J. Trump’s State of the Union Address
(Jan. 30, 2018) (emphasis added), https://www.whitehouse.gov/briefings-statements/
president-donald-j-trumps-state-union-address/ [https://perma.cc/D46P-ZXQE] (“The era of
economic surrender is over. From now on, we expect trading relationships to be fair and
reciprocal. We will work to fix bad trade deals and negotiate new ones.”).
94
The Latest: Trump Orders Tariffs on Steel, Aluminum Imports, AP (Mar. 9, 2018),
https://www.apnews.com/472d4cee3e384453ad8adc2ed67be2f6 [https://perma.cc/5N5P-
UYN9] (outlining President Trump’s imposition of twenty-five percent tariff on steel imports
and ten percent tariff on aluminum imports); The Threat to World Trade: The Rules-Based
System Is in Grave Danger, E
CONOMIST (Mar. 8, 2018), https://www.economist.com/news/
leaders/21738362-donald-trumps-tariffs-steel-and-aluminium-would-be-just-start-rules-
based-system (“For the first time in decades, [rules-based free trade’s] biggest foe is in the
man in the Oval Office.”).
95
PATRICK, supra note 80, at 218.
96
Id. at 221.
97
Brand, supra note 32, at 104 (“Throughout United States history, the tension between
protection of domestic industries and a desire for efficient access to goods and services at the
lowest possible costs has defined fluctuations in trade policy.” (footnote omitted)).
98
Smoot-Hawley Tariff Act of 1930, Pub. L. No. 71-361, 46 Stat. 590 (codified as
amended at 19 U.S.C. §§ 1202-1683g (2012)); Douglas A. Irwin, From Smoot-Hawley to
2019] THE RESILIENCE OF PROTECTIONISM 701
agreements gained popularity as a reaction to decades of protectionism that
produced less than ideal, if not devastating, global economic circumstances.
99
Global leaders preached the importance of international cooperation in trade.
100
However, neither protectionist nor free trade policies are perfect. Rather, they
both come with potential harms and benefits.
A. The History of Protectionism in the United States
Many protectionist policies are rooted in mercantilist ideals. Mercantilism
was based on the theory that government should regulate international trade by
maintaining the balance of trade, discouraging imports and protecting domestic
industries, and promoting domestic production through subsidies.
101
Mercantilist policies intended to increase the trade surplus in order to increase
the nation’s wealth.
102
Overall, “mercantilism was fundamentally nationalist.”
103
Nonetheless, traditional mercantilism began to decline by the end of the
eighteenth century as the benefits of more liberalized trade and specialization
became increasingly recognized.
104
However, it did not disappear from the
discourse on political economy, nor did states completely abandon protectionist
policies.
105
Reciprocal Trade Agreements: Changing the Course of U.S. Trade Policy in the 1930s 16
(Nat’l Bureau of Econ. Research, Working Paper No. 5895, 1997) (“Smoot-Hawley became
infamous . . . for poisoning international trade relations by triggering a wave of foreign tariffs
that put world commerce on a downward spiral, and even for turning a modest recession into
the Great Depression.”).
99
Peter M. Gerhart, The World Trade Organization and Participatory Democracy: The
Historical Evidence, 37 VAND. J. TRANSNAT’L L. 897, 907-08 (2004) (discussing how world
leaders sought economic security after World War II through multilateral institutions).
100
Truman, supra note 41, at 601 (“We have learned through bitter experience how
necessary it is for nations to approach jointly the task of improving the conditions of world
trade.”).
101
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 2 (explaining mercantilists
advocated for government regulation of trade to “maintian a favorable blance of trade” and
“promote processing or manufacturing for raw mateirals at home”); Sungjoon Cho & Claire
R. Kelly, Are World Trading Rules Passé?, 53 V
A. J. INT’L L. 623, 630 (2013) (reciting basic
tenets of mercantilism as regulating trade, discouraging imports, and encouraging exports).
102
Linarelli, supra note 49, at 630 (“Mercantilism sought the maximization of the trade
surplus for a country in order to maximize the circulation of monetary gold in that country.”).
103
Ahmed & Bick, supra note 7, at 6 (citation omitted).
104
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 2 (noting how mercantilism was
“fundamentally attacked and undermined” by end of eighteenth century).
105
Cho & Kelly, supra note 101, at 624 (“[I]n order to transition away from a mercantilist
system, [post-World War II nations] adopted rules that preserved that mercantilist system, at
least to some extent.” (citation omitted)).
702 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
In the beginning of the twentieth century, the United States focused primarily
on its domestic industries.
106
Congress passed the Antidumping Act in 1916,
which protected the United States’ domestic industries by preventing imports
from being sold in the United States for cheaper prices than what the foreign
companies sold them in their home markets.
107
Additionally, while tariffs had
historically been an important source of revenue for the United States, they
gradually became more useful as a tool to protect domestic business.
108
In the
early twentieth century, the United States employed several protectionist trade
policies.
109
The United States insisted on using tariff schedules, as opposed to
other more globally cooperative measures.
110
The United States also subsidized
exports and depreciated currency to promote exports and discourage imports.
111
Eventually, the U.S. industry began maturing, and the United States became a
major creditor, especially to a debt-ridden Europe.
112
However, by the outbreak
of World War I, most nations returned to the implementation of more
protectionist policies.
113
Between World War I and World War II, the global economy fell into
disarray.
114
With the onset of the Great Depression, nations sought ways to
rebuild their domestic economies. A small portion of the U.S. gross domestic
product came from foreign trade, so the United States determined that closing
off its economy was the appropriate solution.
115
Congress passed the Smoot-
Hawley Act in 1930 against the advice of economists.
116
The Smoot-Hawley Act
106
Gerhart, supra note 99, at 913-14 (explaining that, as U.S. industry developed, the
United States frequently used tariffs to protect domestic industries and wages).
107
Antidumping Act of 1916, Pub. L. No. 64-271, tit. VIII, 39 Stat. 798; Brand, supra note
32, at 114-15 (noting that the Antidumping Act penalized imports sold at prices “substantially
less than the actual market value”). For a discussion of antidumping policies, see infra Section
III.B.
108
Brand, supra note 32, at 102-03 (chronicling historical change from tariffs as revenue
source to tool of economic protectionist policy in early twentieth century).
109
See id. at 111 (listing examples).
110
Krueger, supra note 6, at 105 (comparing trend in Europe toward using “most favored
nations” clauses, while “United States . . . insist[ed] on bargaining over tariff structures one
country at a time”).
111
DUNOFF, RATNER & WIPPMAN, supra note 46, at 666.
112
Brand, supra note 32, at 109 (explaining that even while income tax replaced tariffs as
primary source of revenue, protectionist sentiments remained).
113
Id. at 110 (“By World War I, all the major trading nations had moved away from free
trade to various levels of protectionism.”).
114
Irwin, supra note 98, at 16-18 (describing economic distress that Smoot-Hawley
exacerbated).
115
GAIL E. MAKINEN, CONG. RESEARCH SERV., 94-518E, THE SMOOT-HAWLEY TARIFF AND
THE
GREAT DEPRESSION OF 1929-1933, CRS-2 (1994) (explaining that Smoot-Hawley “should
have expanded GDP in the short term”).
116
72 CONG. REC. S8,327-30 (daily ed. May 5, 1930) (recording statements of 1,028
economists who opposed the Smoot-Hawley Act because they were “convinced that increased
2019] THE RESILIENCE OF PROTECTIONISM 703
raised the tariffs on imports to around sixty percent, an unprecedented level.
117
This protectionism was based on the idea that imports would threaten the
American economy—by increasing exports and reducing imports, the economy
could bounce back.
118
Instead of helping the United States, Smoot-Hawley did
the opposite; although not the cause of the Great Depression, it is generally
agreed that Smoot-Hawley intensified the economic downturn.
119
After the United States passed Smoot-Hawley, other countries passed similar
tariffs in response.
120
This chain reaction of protectionism instigated by the U.S.
trade policy illustrated an important lesson: such blatant acts of protectionism
would lead to retaliation.
121
Although this leaves both countries in a worse state,
retaliation can be a “natural political reaction” because the system is lacking in
other effective mechanisms of redress.
122
Smoot-Hawley became infamous for
decreasing U.S. trade by forty percent and triggering retaliatory trade actions
around the world that were unhealthy for the whole system.
123
Ultimately,
Smoot-Hawley would “bear[] part of the responsibility for the collapse of trade
in the early 1930s.”
124
After several years under Smoot-Hawley and facing a worsened depression,
Congress shifted trade policy through the passage of the RTAA.
125
The RTAA
authorized the President to negotiate trade agreements and modify tariffs.
126
The
United States then entered into over thirty bilateral trade agreements under the
protective duties would be a mistake”); see also Frank Whitson Fetter, The Economists’ Tariff
Protest of 1930, 32 A
M. ECON. REV. 355, 355 (1942) (commenting on uniqueness of “almost
unanimous opinion” by economists on issue of public policy).
117
Smoot-Hartley Tariff Act of 1930, Pub. L. No. 71-361, 46 Stat. 590 (codified as
amended at 19 U.S.C. §§ 1202-1683g (2012)); see also CLUBB, supra note 23, at 155 (“The
last tariff to be enacted under this system [requiring a vote by each congressman and senator]
was the Tariff Act of 1930 (the Smoot-Hawley Act).”); C
ONG. BUDGET OFFICE, supra note
56, at 25 (“The Smoot-Hawley Tariff Code of 1930 raised the average tariff rate on U.S.
dutiable imports to almost 60 percent.”).
118
Bidwell, supra note 27, at 340-41 (describing mercantilist undertones of Smoot-
Hawley).
119
MAKINEN, supra note 115, at i (arguing Smoot-Hawley deepened already existing
depression).
120
Brand, supra note 32, at 111 (highlighting global response to Smoot-Hawley).
121
Gerhart, supra note 99, at 907 (“When the policy of one country adversely affects
another, the other country is likely to take retaliatory actions because retaliation is a potent
way by which a form of redress may be sought.”).
122
Id. (“Although [the implementation of retaliatory tariffs is] counterproductive (because
it leaves both countries worse off and leads to counter-retaliation), in the absence of any other
mechanism for objecting to the harmful policy of another country, retaliation is a natural
political reaction.”).
123
Irwin, supra note 98, at 16.
124
Id. at 17.
125
Id. at 23 (describing RTAA’s passing by large majority in both houses of Congress).
126
Brand, supra note 32, at 111.
704 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
RTAA’s authority.
127
The shift to the RTAA demonstrated that U.S. leaders
were beginning to adopt a more internationalist stance with respect to trade
policy.
128
Overall, the RTAA allowed the President to engage in more
internationally cooperative arrangements that were still in the nation’s best
interest.
129
Nonetheless, while the RTAA increased the United States’
cooperation with other nations, World War II fractured the collaborative system
that was being built.
130
After World War II, global leaders began negotiating international policies
for various issues, including trade. Global leaders argued that free trade was the
appropriate solution.
131
The United States engaged in trade negotiations that
reduced tariff rates by about seventy-five percent.
132
The United States also
shifted its trade policy away from “[r]igid and uncompromising protectionism”
and “[t]ariff autonomy.”
133
The United States transformed from “an inward-
looking, isolationist, and protectionist country into one focused both on
international economic affairs and on exports. In the process, the United States
took the leadership role in international economic policy.”
134
However, the
United States still did not entirely abandon its protectionist history. The United
States and other leaders still recognized the values of mercantilist policies and
were unwilling to relinquish control entirely.
135
They understood that some
domestic protections would need to remain as trade liberalized in the global
127
Id. at 113.
128
Gerhart, supra note 99, at 909 (“[T]he Reciprocal Trade Agreements Act of 1934
(RTAA) turned the United States from an inward-looking, isolationist, and protectionist
country into one focused both on international economic affais and on exports.”).
129
Id. at 917 (summarizing four major effects of RTAA, including enabling the president
to have more internationally cooperative stance).
130
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 23 (noting how “outbreak of the
Second World War decisively shattered vision of a more cooperative international trading
environment”).
131
Truman, supra note 41, at 601 (“During the 1930’s many nations acted independently,
each attempting to gain advantage at the expense of others. The result was a vicious circle—
with restrictions by one nation provoking more serious restrictions by other nations in
retaliation. The end result was a tremendous drop in the volume of international trade which
made the general depression worse and injured all countries.”).
132
CONG. BUDGET OFFICE, supra note 56, at 28.
133
Bidwell, supra note 27, at 340-41 (citing “[r]igid and uncompromising protectionism”
and “[t]ariff autonomy” as being among key aspects of pre-war U.S. trade policy).
134
Gerhart, supra note 99, at 909.
135
Cho & Kelly, supra note 101, at 629-30 (“While the Bretton Woods architects rejected
mercantilist policies in principle, they could not step away from them completely and
immediately.”).
2019] THE RESILIENCE OF PROTECTIONISM 705
system.
136
Thus, “[while] the postwar trade rules embraced the principle of
comparative advantage, they did not fully implement it.”
137
B. An Analysis of Protectionism and Free Trade
Theoretically and practically, protectionism can be beneficial. Protectionism
can redistribute wealth, offset subsidies provided by foreign governments or
other methods of unfair foreign competition, protect domestic jobs, reduce trade
deficits, and support emerging industries.
138
Protectionism can provide “large
benefits to a small number of people,” while only causing a “slight loss” to a
larger number of consumers.
139
Generally, “[p]rotectionism protects one
group—some special interest—at the expense of the general public.”
140
Overall,
the benefits of protectionism are to protect certain domestic industries that could
be adversely affected by foreign-produced goods that are available at cheaper
prices than those provided by domestic producers.
However, protectionism has faced significant criticism. Protectionism is
particularly problematic in the historical context of the United States, and the
effects of Smoot-Hawley present a strong argument against strict protectionist
policies.
141
The extreme protectionism employed by the United States instigated
a series of retaliatory protectionist policies around the world that worsened the
Great Depression.
142
Although such overt protectionism by the United States has
been much less prevalent since the end of World War II, it has never been fully
abandoned in either theory or policy.
143
The recent election and current trade
platform in the United States seem to demonstrate an increased protectionist
stance. Additionally, as discussed above, the United States appears to be taking
136
Id. at 636 (noting how leaders recognized need for mercantilist principles to remain in
global trade framework).
137
Id. at 624.
138
VIVIAN C. JONES, CONG. RESEARCH SERV., RL32371, TRADE REMEDIES: A PRIMER 2
(2011) (noting that members of Congress “assert that the U.S. use of trade remedies is
necessary to protect U.S. firms and workers from unfair international competition”); Robert
W. McGee, An Economic Analysis of Protectionism in the United States with Implications for
International Trade in Europe, 26 G
EO. WASH. J. INT’L L. & ECON. 539, 542-49 (1993)
(highlighting benefits of protectionism).
139
McGee, supra note 138, at 541 (quoting VILFREDO PARETO, MANUAL OF POLITICAL
ECONOMY 379 (Ann S. Schwier & Alfred N. Page eds., Ann S. Schwier trans., Augustus M.
Kelley 1971) (1927)).
140
Id. at 539.
141
Cho & Kelly, supra note 101, at 631 (“As a striking reincarnation of mercantilism, the
Act raised the import duties of more than 20,000 items and immediately invited reciprocal
measures from major trading partners, starting with the United Kingdom. The spiral effect of
economic balkanization was indescribable: world trade shrunk by two-thirds. Furthermore,
economic miseries bred totalitarianism and eventually led to the Second World War.”).
142
Id.
143
Id. at 632 (“Ironically, the GATT in its very architecture betrayed a mercantilist nature
despite its ostensible antimercantilist (trade-liberalization) mission.”).
706 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
a step back from its previous leadership role within the international trade
system.
144
However, it would be dangerous for the United States to assert that it “can as
a blanket matter back away from multilateral institutions like the United Nations
without damaging its own interests.”
145
Additionally, the United States is not
necessarily in the same position of power as it was when the GATT was first
negotiated.
146
While it is undeniable that the United States has significant power,
global power is more evenly distributed around the world, and the United States
does not hold the same absolute influence it held at the end of World War II.
“[T]he Trump administration’s initial instinct to dismantle and renegotiate
existing international arrangements [is] deeply problematic, since there [is] little
guarantee that any new arrangements would be as favorable to U.S. interests and
preferences as those frameworks that had been negotiated at the height of U.S.
power.”
147
Thus, protectionism may not be very beneficial, especially for the
United States.
Like protectionism, free trade also has both pros and cons. From an economic
standpoint, free trade promotes and permits international specialization,
ultimately increasing the efficiency of global markets and production.
148
International specialization would then increase aggregate wealth and global
welfare.
149
Politically, free trade would create a prisoner’s dilemma, in which
nations are incentivized to cooperate because noncooperation has an increased
cost.
150
Free trade provides an increased range of products, increased
productivity, and increased consumer benefits, while also stimulating economic
growth.
151
Additionally, free trade allows small economies to contribute raw
materials and labor while also realizing their comparative advantage at certain
stages of production.
152
Ideally, free trade would permit nations to contribute to
their most competitive industries to create a more efficient and prosperous global
economy.
144
See supra notes 88-92 and accompanying text.
145
PATRICK, supra note 80, at 246.
146
Id. at 246-47 (noting that United States is “globally dominant power facing relative
(though not absolute) decline, at least in its share of the world economy”).
147
Id.
148
DUNOFF, RATNER & WIPPMAN, supra note 46, at 666 (“[I]n the absence of trade
restrictions, each state would specialize in the production of goods that it could make more
efficiently than other states.”).
149
Id. This theory is known as the economic theory of comparative advantage. Id.
150
Id.
151
CONG. BUDGET OFFICE, supra note 56, at 2-3 (highlighting benefits of free trade).
152
Cho, supra note 75, at 40 (“Globalization offers a worldwide ‘production value chain’
which enables even small economies to take part in the global commerce by offering raw
materials or labor. In fact, small economies hold a comparative advantage at certain stages of
the international manufacturing process.”).
2019] THE RESILIENCE OF PROTECTIONISM 707
However, free trade, as it has been implemented, has not come without costs.
One of the strongest criticisms is that free trade results in the unequal distribution
of wealth because only the most competitive can survive the process of
international specialization.
153
Free trade also results in government protection
for industries that are failing in comparison to international counterparts, despite
the negative impact that such protections could have on consumers.
154
Additionally, free trade is inhibited by various barriers, including the many
existing regional trade agreements that provide preferential treatment to their
members over non-member countries.
155
Opponents of free trade are also
concerned with imports from countries whose environmental, health and safety,
and labor standards are below the required domestic levels,
156
an erosion of
economic self-sufficiency, and the need for human rights protections that may
be lacking in countries that produce at low cost.
157
Furthermore, the theory of
comparative advantage “is based upon the assumption that those who control
scarce resources will move those resources to the production of goods in which
their nation holds a comparative advantage. In market economic systems (those
systems consistent with GATT concepts), those who control the scarce resources
are private parties.”
158
However, private parties are not directly involved with
the rulemaking process, being granted “indirect access only when their
governments have established administrative procedures.”
159
Thus, the free
trade system, at least in its current state, has many imperfections that have fueled
a significant opposition to free trade in general.
153
CONG. BUDGET OFFICE, supra note 56, at 3-4 (describing harms caused by free trade as
it has been implemented); JOSEPH STIGLITZ, GLOBALIZATION AND ITS DISCONTENTS 248
(2002) (“[F]or millions of people globalization has not worked. Many have actually been
made worse off, as they have seen their jobs destroyed and their lives become more insecure.
They have felt increasingly powerless against forces beyond their control.”).
154
CONG. BUDGET OFFICE, supra note 56, at 3-4 (noting how “governments often try to
protect these weaker segments of the economy from foreign competitors at a net cost to the
economy as a whole,” resulting in higher prices and lower productivity).
155
Cho, supra note 75, at 40 (highlighting how regional trading blocs use trade barriers
against non-members, “thus compartmentalizing the global market”).
156
This is known as “social dumping.” The fear is that it will then lead to a race to the
bottom because developed countries cannot remain competitive if developing countries do
not increase costs of their products through increased regulation for social concerns. Robert
Howse, From Politics to Technocracy—and Back Again: The Fate of the Multilateral Trading
Regime, 96 A
M. J. INT’L L. 94, 103 (2002) (highlighting implications of “race to the bottom”).
157
MICHAEL J. TREBILCOCK, UNDERSTANDING TRADE LAW 9 (2011) (objecting to free trade
because it “trumps environmental, health and safety, labour standards, and human rights
concerns” and “undermines economic self-sufficiency”).
158
Brand, supra note 32, at 139.
159
Id. at 140.
708 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
III. U.S. TRADE LAW: PROTECTIONISM PREVAILS
The actions the United States has taken following President Trump’s election
have been viewed as a revival of mercantilism.
160
This is not the first time that
mercantilist principles have re-emerged in the United States. “Historically,
interest in mercantilism has tended to resurface in moments of profound
upheaval, when accepted ideas on the relationship between politics and
economics are thrown into question.”
161
Thus, President Trump’s platform and
recent events, more generally, are not a resurrection of protectionism because
protectionism never died. Instead, a “mercantilist legacy” has impeded and
continues to impede the goal of a completely free trade system.
162
The United
States’ continuous antidumping duties and countervailing measures are
examples of how protectionism has remained a part of U.S. trade law, thus
undermining the overall effectiveness of multilateral trade.
163
A. Subsidies: Unfair Trade Practice or Legitimate Policy Measure?
Trade remedy laws, like antidumping measures and countervailing duties,
were originally designed to protect domestic firms against unfair competition
from foreign firms that can sell their products at lower prices than domestic
producers.
164
These lower prices could be caused by more efficient production
or by subsidization to that foreign producer by its government. Subsidies are “a
financial contribution by a government or public body . . . which confers a
160
See, e.g., Binyamin Appelbaum, Donald Trump Is Breaking with 200 Years of
Economic Orthodoxy on Trade, N.Y. TIMES, Mar. 11, 2016, at A18 (“Now Mr. Trump is
bringing mercantilism back.”); Tom Miles, Wider Benefits Seen in Trade Deals, Challenging
Trump-Style Mercantilism, R
EUTERS (Oct. 4, 2017, 6:23 AM), https://www.reuters.com/
article/us-trade-competition/wider-benefits-seen-in-trade-deals-challenging-trump-style-
mercantilism-idUSKCN1C919V [https://perma.cc/CCF4-QPGF] (“Mercantilism is
associated with attempts to use trade to gain economic advantage over other nations,
epitomized by Trump’s policies to ‘make America great again.’”).
161
Ahmed & Bick, supra note 7, at 4 (citing PHILIP J. STERN & CARL WENNERLIND,
MERCANTILISM REIMAGINED: POLITICAL ECONOMY IN EARLY MODERN BRITAIN AND ITS
EMPIRE 5-6 (2014)).
162
Cho & Kelly, supra note 101, at 628-29 (“[A] certain normative tension nonetheless
exists around the new trade realities, such as global supply chains, due to the anachronism
precipitated by the mercantilist legacy within the trading system.”).
163
The three predominant trade remedies that could be considered protectionist are
safeguards, antidumping measures, and countervailing duties. This Note focuses on
antidumping measures and countervailing duties because they are presumed to respond to
unfair trade practices. Safeguards, on the other hand, are measures enacted in response to an
emergency and unfair trade practices do not necessiate them. For more discussion of
safeguards, see T
REBILCOCK, HOWSE & ELIASON, supra note 26, at 411-33.
164
Laura Rovegno, Trade Protection and Market Power: Evidence from US Antidumping
and Countervailing Duties, 149 REV. WORLD ECON. 443, 444 (2013) (noting how
antidumping and countervailing duties were imposed to protect against cheap imports).
2019] THE RESILIENCE OF PROTECTIONISM 709
benefit.”
165
Subsidies could be considered unfair trade practices because they
allow foreign producers to sell their products below cost, a price unsubsidized
producers cannot afford.
166
Thus, without regulation of subsidies, fair
competition and market efficiency are jeopardized.
167
The WTO regulates subsidies through the WTO Agreement on Subsidies and
Countervailing Measures (“SCM Agreement”), which defines a subsidy as a
“financial contribution” by a public entity and requires that the industry be
conferred a benefit.
168
Under the SCM Agreement, subsidies must be specific:
“specific to an enterprise; specific to an industry; specific to a region; or
specifically prohibited.”
169
WTO parties are also required to notify the other
parties about the extent, nature, and effect of any planned subsidization.
170
The
SCM Agreement classifies subsidies as prohibited, nonactionable, or
actionable.
171
Prohibited subsidies are “subsidies contingent upon export
performance or the use of domestic over imported goods,” prohibited because
of their “inherently trade distorting” nature.
172
Nonactionable subsidies cannot
be challenged, although recommendations can be made to revise such subsidies
if they are “causing serious adverse effects to a domestic industry” of a WTO
member.
173
All other subsidies are actionable.
174
Under the SCM Agreement,
WTO members agree to not subsidize in a manner that would “cause ‘adverse
effects’ to the interests of other WTO members.”
175
165
JONES, supra note 138, at 7 (defining subsidy in GATT).
166
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 364 (illustrating how subsidies
“distort trade flows”).
167
GARY CLYDE HUFBAUER & JOANNA SHELTON ERB, SUBSIDIES IN INTERNATIONAL TRADE
8 (1984) (noting issues with subsidies); GURWINDER SINGH, SUBSIDIES IN THE CONTEXT OF THE
WTO’S FREE TRADE SYSTEM: A LEGAL AND ECONOMIC ANALYSIS 47 (2017) (“The
unregulated use of subsidies undermines the norms of fair competition that support production
and supply of goods to the consumers, both at the domestic level and abroad, within the price
range resultantly fixed by market forces of demand and supply. In the long run, the trade
practice of subsidies also prevents markets from attaining optimal-resource allocation.”).
168
Wentong Zheng, Counting Once, Counting Twice: The Precarious State of Subsidy
Regulation, 49 S
TAN. J. INT’L L. 427, 434 (2013) (quoting Marrakesh Agreement Establishing
the World Trade Organization, art. 2.1, Apr. 15, 1994, 1864 U.N.T.S. 154).
169
JANE M. SMITH, AM. LAW DIV., CONG. RESEARCH SERV., CRS-2014-AML-0291, NON-
A
GRICULTURAL SUBSIDIES AND INTERNATIONAL TRADE LAW 1 (2014).
170
GATT, supra note 33, art. XVI (outlining requirements when imposing subsidies).
171
J.F. HORNBECK, CONG. RESEARCH SERV. RL96-487E, SUBSIDIES, COUNTERVAILING
DUTIES, AND THE WORLD TRADE ORGANIZATION 17 (1996).
172
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 376.
173
Id. at 375 (noting that non-actionable subsidies cannot be challenged, although
recommendations can be made that they should be changed under limited circumstances). The
category of nonactionable subsidies expired in 2000. Id.
174
Id. at 380.
175
Id.
710 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
Under the SCM Agreement, developing countries are afforded specific
concessions; they are permitted to impose export subsidies for certain
industries.
176
Developing countries are also afforded special and differential
treatment through the Enabling Clause in the GATT, under which they are
permitted additional concessions in the implementation of agreements including
delayed schedules for tariff reduction.
177
Under the Enabling Clause, “developed
countries do not expect the developing countries, in the course of trade
negotiations, to make contributions which are inconsistent with their individual
development, financial and trade needs.”
178
Subsidies can provide social and economic benefits to developing nations.
They allow infant industries to develop.
179
For example, under a policy of import
substitution industrialization (“ISI”), developing countries could raise barriers
to imports and attempt to meet domestic demand through domestic
production.
180
Subsidies and protectionist policies could stimulate the growth of
domestic industries.
181
Subsidies in the agricultural industry can provide food
security and price certainty for developing countries.
182
Developed nations also
benefit from subsidies. Subsidies can provide security for industries and help
domestic producers maintain a competitive edge in the market.
183
The United
States, for example, subsidizes research and development in the energy, steel,
and agricultural industries.
184
176
Id. at 388 (justifying concession as playing “important role in economic development
programs of developing country Members”).
177
Differential and More Favorable Treatment Reciprocity and Fuller Participation of
Developing Countries, ¶ 3, L/4903 (Nov. 28, 1979), GATT BISD (26th Supp.), at 203-04
(1980) [hereinafter Enabling Clause] (implementing more lenient policies for developing
countries).
178
Id. at 204.
179
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 622 (“[T]emporary protectionism
was required for these fledgling manufacturing industries . . . [to] become competitive in both
domestic and export markets.”).
180
See id. at 622-24 (analyzing various rationales underlying ISI).
181
Id. at 622 (discussing theory that ISI would catalyze development of economy). The
success of ISI is not clear. The countries that were successful after employing other policies
also combined such practices with significant state regulation (i.e., the Asian tigers). These
interventions may have distorted the actual success of those policies compared to ISI. Id. at
625-27 (“[N]ot all econometric studies have found a causal connection between trade
openness and growth.” (footnote omitted)); Howse, supra note 156, at 104-05 (“[E]conomic
success of the Asian tigers could be attributed to openness in trade policy, as opposed to [ISI]
development policies. However, it turned out that a range of interventionist government
policy instruments may well have been crucial to the success of at least some of the Asian
tigers . . . .”).
182
SINGH, supra note 167, at 140-41 (noting that rationale for agricultural subsidies
includes addressing food security and price volatility).
183
Id. at 198 (analyzing benefits and harms of subsidies).
184
Id. at 60, 98, 110 (discussing trade disputes involving various U.S. subsidies).
2019] THE RESILIENCE OF PROTECTIONISM 711
Agricultural subsidies by developed nations have been particularly
controversial. While developing nations have attempted to negotiate changes in
the agricultural policies of developed nations, these negotiations have not had a
large impact.
185
The Agreement on Agriculture’s Article 15 provides developing
nations with special and differential treatment with respect to “investment
subsidies generally available to agriculture; agricultural input subsidies
generally available to low-income or resource-poor producers; and domestic
support to producers to encourage them to diversify from growing illicit narcotic
crops.”
186
However, agricultural subsidies by developed nations are poorly
regulated; this inhibits agricultural imports from developing nations whose
economies are flush with agricultural products.
187
Thus, developed nations
maintain dominance in the agricultural market and provide security to their
agricultural industries.
188
Overall, agricultural subsidies are a “matter of
necessity” for developing countries while they are a “matter of trade advantage”
for developed countries.
189
Nonetheless, while subsidies have the potential to
distort trade and competition, they are still prevalent.
190
B. Antidumping in U.S. Trade Law as an Example of Protectionism
To remedy unfair distortions of trade by foreign producers, U.S. trade law has
persistently used antidumping laws, which are arguably a form of protectionism
no less potent than subsidization.
191
Antidumping laws place duties on imports
that are “sold at ‘less than fair value’” and injure a domestic industry of the
country receiving the imports.
192
The dumping of a product into another nation’s
market is a form of “international price discrimination.”
193
Dumping results in
an export price “less than the comparable price, in the ordinary course of trade,
for the like product when destined for consumption in the exporting country.”
194
Foreign producers that engage in dumping export their products at lower prices
185
Id. at 28, 178 (highlighing unsucessful negotiations on agricultural subsidies).
186
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 648-49.
187
SINGH, supra note 167, at 28, 135, 163 (explaining global economic impact of
agricultural subsidies).
188
Id. at 113, 218 (explaining that developed countries use subsidies to “dominate the
agricultural market” and “provide a safety net to the farm sector”).
189
Id. at 135-36 (comparing justifications for agricultural subsidies).
190
Id. at 135 (contending agricultural subsidies reduce export opportunities of developing
nations, creating trade distortions).
191
Sungjoon Cho, Anticompetitive Trade Remedies: How Antidumping Measures Obstruct
Market Competition, 87 N.C.
L. REV. 357, 367 (2009) (“[T]he very history of antidumping
reveals that the major purpose of the antidumping statute is sheer protectionism . . . .” (citation
omitted)).
192
Wentong Zheng, Reforming Trade Remedies, 34 MICH. J. INT’L L. 151, 153 (2012).
193
Raj Bhala, Rethinking Antidumping Law, 29 GEO. WASH. J. INT’L L. & ECON. 1, 8-9
(1995) (footnote omitted).
194
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 336 (citation omitted).
712 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
in order to undercut the domestic producers; the cheaper imported goods become
more desirable to consumers, and the more expensive domestic goods are no
longer competitive.
195
Once domestic producers are driven out of the market,
foreign producers can then become the primary and only producer, allowing
them to set the price at any amount.
196
This phenomenon has led to extensive
government regulation.
197
During the 1970s and 1980s, antidumping laws became increasingly more
common, and, by the 1980s, the United States was using antidumping laws as
“its weapon of choice.”
198
As noted above, antidumping laws in the United
States date back to the early twentieth century, and Congress passed the first
antidumping statute in 1916.
199
Congress later passed the Continued Dumping
and Subsidy Offset Act of 2000, also known as the Byrd Amendment, which
amended the Tariff Act of 1930 to redistribute duties collected under
antidumping and countervailing duty laws to domestic producers that were
“injured” by those imports.
200
The WTO held both the Antidumping Act and the
Continued Dumping and Subsidy Offset Act to be inconsistent with the
GATT.
201
The GATT addresses the issue of dumping and the imposition of antidumping
measures in Article VI.
202
In order for a GATT party to levy an antidumping
duty on an imported product, the party must determine that the dumped products
“cause or threaten material injury to an established domestic industry, or is such
as to prevent or materially retard the establishment of a domestic industry.”
203
As discussed above, during the Kennedy Round, the GATT contracting parties
negotiated the Antidumping Code which preferred “the imposition of a duty that
is less than the dumping margin when the lesser duty will alleviate the injury.”
204
195
SINGH, supra note 167, at 206 (describing dumping as anticompetitive policy aimed at
achieving market monopoly).
196
Id. (“Such trade practices are often adopted with the intention of subsequently raising
prices of the concerned product in the foreign market . . . .”).
197
Bhala, supra note 193, at 3-4 (detailing global rise of antidumping regulations).
198
Id. (footnote omitted) (finding United States more than doubled percentage of imports
covered by antidumping orders between 1980 and 1990); see also T
REBILCOCK, supra note
157, at 61 (identifying antidumping regimes as “protectionist remedy of choice”).
199
Antidumping Act of 1916, Pub. L. No. 64-271, tit. VIII, 39 Stat. 798; see also Cho,
supra note 191, at 364 (attributing the Antidumping Act of 1916 to antitrust sentiments in late
nineteenth century).
200
JONES, supra note 138, at 20 (reporting annual redistributions of hundreds of millions
of dollars between 2001 and 2009).
201
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 344 (noting challengers alleged the
United States imposed dumping penalties other than those allowed under GATT).
202
GATT, supra note 33, art. VI, para. 1 (detailing criteria to establish existence of
dumping); see also TREBILCOCK, HOWSE & ELIASON, supra note 26, at 334.
203
GATT, supra note 33, art. VI, para. 5 (establishing further that this requirement may
only be waived by agreement and in very limited circumstances).
204
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 334 (footnote omitted).
2019] THE RESILIENCE OF PROTECTIONISM 713
After the Kennedy Round, Congress was unwilling to change the stricter
antidumping laws that were already in place in the United States.
205
As a result,
the GATT parties strengthened the antidumping protections further during the
Tokyo Round to be more in line with the U.S. position.
206
The parties also
revised the Code’s determinations of “injury” and “causation.”
207
The GATT’s
antidumping provisions were still insufficient from the U.S. perspective, and
U.S. antidumping laws are generally considered to be stricter than their
international counterparts.
208
Nonetheless, the Antidumping Code after the
Uruguay Round was the most detailed of the codes previously negotiated.
209
Antidumping laws, and trade remedy laws under the GATT framework more
generally, were created under the assumption that “goods are produced all over
the world in market economies.”
210
One difficulty in applying these laws occurs
when non-market economies enter the fold because they do not have “markets
to distort.”
211
Governments of non-market economies are assumed to manipulate
prices, so countries importing from non-market economies are permitted to
calculate the antidumping duty with more flexibility.
212
This issue is highlighted
by China’s entry into the WTO. When China joined in 2001, it was given a
fifteen-year period in which it was expected to move towards a market
economy.
213
During this period, other nations could continue to apply higher
duties than those that can normally be applied under the WTO framework, an
opportunity of which the United States took advantage.
214
Since that period
205
Id. at 335.
206
Id. (“[T]he 1979 Code only specified that any ‘injuries casued by other factors must not
be attributed to the dumped imports’, making it more consistent with the U.S. position.”
(footnote omitted)).
207
Id. (noting broad support for both revisions).
208
See id. at 336-39 (analyzing several trade disputes involving strict U.S. antidumping
standards).
209
TREBILCOCK, supra note 157, at 62.
210
Elliot J. Feldman & John J. Burke, Testing the Limits of Trade Law Rationality: The
GPX Case and Subsidies in Non-Market Economies, 62 A
M. U. L. REV. 787, 803 (2013)
(footnote omitted).
211
Id. at 788 (describing difficulty in combating unfair trade practices used by countries
with non-market economies).
212
Joel Trachtman, Is China a Non-Market Economy, and Why Does It Matter?,
ECONOFACT (Apr. 12, 2017), http://econofact.org/is-china-a-non-market-economy-and-why-
does-it-matter [https://perma.cc/JDA5-T2R4] (“An importing country has greater flexibility
to use arbitrarily-selected high third country prices as a reference for determining dumping
by exporters from [non-market economies] than it does for exporters from market
economies.”).
213
Id. (discussing unmet expectation of liberalization of Chinese economy).
214
Minsoo Lee, Donghyun Park & Antonio Saravia, Trade Effects of US Antidumping
Actions Against China, 31 A
SIAN ECON. J. 3, 4 (2017) (“[T]he US Department of Commerce
(DOC) finds consistently higher dumping margins for imports from China than for imports
from market economies because of the non-market economy methodology that it can apply to
714 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
ended in 2016, the United States has made it clear that it still considers China to
be a non-market economy in an attempt to justify its disparate treatment of
China, which includes the imposition of antidumping duties.
215
Other nations
have recognized China as a market economy, but if the United States were to do
so, its permissible trade remedies would become more limited.
216
However,
China argues that its price calculations are fair representations of the cost of
production.
217
In this instance, the United States is either maintaining a
competitive environment for domestic producers facing distorted Chinese
imports, or it is acting in an unduly protectionist manner to shelter its domestic
producers.
218
Antidumping measures have benefits. They provide protection to a domestic
producer if a foreign competitor unfairly threatens competition, a position the
United States asserts against Chinese imports.
219
The option to dump creates an
opportunity for a monopolistic entity to decrease its output and be more
discriminatory in pricing.
220
To address this, antidumping measures protect
domestic industries from adverse impacts caused by the predatory pricing of
China.”); Douglas Bulloch, China Is Not a Market Economy, and the WTO Won’t Survive
Recognizing It as Such, FORBES (Dec. 8, 2017, 4:01 AM), https://www.forbes.com/sites/
douglasbulloch/2017/12/08/china-is-not-a-market-economy-and-the-wto-wont-survive-
recognising-it-as-such/ [https://perma.cc/RV63-A27W] (detailing U.S. opposition to
recognizing China as market economy and surrendering opportunity for increased duties).
215
Bulloch, supra note 214 (observing similar E.U. standpoint); David Lawder, U.S.
Formally Opposes China Market Economy Status at WTO, REUTERS (Nov. 30, 2017, 3:37
PM), https://www.reuters.com/article/us-usa-china-trade-wto/u-s-formally-opposes-china-
market-economy-status-at-wto-idUSKBN1DU2VH [https://perma.cc/2TZW-D52A]
(discussing U.S. support for European Union in E.U. trade dispute with China).
216
Bulloch, supra note 214 (“[The United States] remain[s] implacably opposed for the
simple reason that this would restrict anti-dumping measures against China’s vast export
surplus.”).
217
See Sarah Hsu, Rejecting China’s Market Economy Status Could Have Huge
Implications for U.S.-China Trade, F
ORBES (Dec. 4, 2017, 8:00 AM), https://www.forbes
.com/sites/sarahsu/2017/12/04/u-s-rejection-of-china-market-economy-status-will-damage-
trade-relations/ [https://perma.cc/5EHB-NKKD] (reporting China’s “strong dissatisfaction
and firm opposition” to U.S. assertion of price distortions).
218
See Trachtman, supra note 212 (noting U.S. measures are meant to reduce impact of
artificially low Chinese prices on U.S. industries); see also China Airs ‘Strong
Dissatisfaction’ over U.S. Statement to WTO: Xinhua, R
EUTERS (Dec. 2, 2017, 5:49 AM),
https://www.reuters.com/article/us-china-trade/china-airs-strong-dissatisfaction-over-u-s-
statement-to-wto-xinhua-idUSKBN1DW0AP [https://perma.cc/EZ73-SFN4] (reporting
Chinese allegation that “some countries were trying to ‘skirt their responsibility’ under WTO
rules”).
219
Trachtman, supra note 212 (surveying each party’s rationale in disputing whether
China is non-market economy).
220
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 352 (examining societal costs of
dumping, including artificial scarcity of goods).
2019] THE RESILIENCE OF PROTECTIONISM 715
foreign industries.
221
Moreover, if a foreign government is subsidizing an
industry, the importing country has the flexibility to consider this subsidization
when calculating the antidumping duty.
222
Antidumping laws in the United
States were first enacted “out of a concern for predatory pricing by foreign
competitors,”
223
with the U.S. steel industry being a strong proponent of
continued antidumping measures.
224
The steel industry receives significant
protection through trade remedy laws.
225
Overall, the arguments for antidumping
laws mirror the arguments for protectionist trade policies.
226
However, antidumping laws are criticized. Economists assert that
antidumping laws are inefficient and lack “sound economic rationales” because
price discrimination in some capacity makes the market efficient.
227
U.S.
antidumping laws, in particular, have blurred the distinction between
competitive and predatory pricing, eliminating one economic justification for
their use.
228
Antidumping laws adversely impact consumers by reducing foreign
competition and increasing prices.
229
They provide a “faulty safety valve”
because they set “arbitrary levels” of protection for domestic industries.
230
Antidumping laws have also been criticized not just for their political and
221
JONES, supra note 138, at 1 (describing U.S. trade remedy legislation and justifications).
222
Timothy Meyer, Free Trade, Fair Trade, and Selective Enforcement, 118 COLUM. L.
REV. 491, 514 (2018) (“This flexibility allows governments to use antidumping duties to
respond to prices that are artificially low due to another government’s financial support.”).
223
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 355.
224
N. Gregory Mankiw & Phillip L. Swagel, Antidumping: The Third Rail of Trade Policy,
84 FOREIGN AFF. 107, 113 (2005) (observing U.S. steel industry has accounted for almost half
of U.S. antidumping tariffs since 1970).
225
Bruce A. Blonigen, Benjamin Liebman & Wesley W. Wilson, Antidumping and
Production-Line Exit: The Case of the US Steel Industry, 42 REV. INDUS. ORG. 395, 396
(2013) (reporting at least one-third of all U.S. trade remedy orders protect steel industry).
226
See Mankiw & Swagel, supra note 224, at 108 (describing antidumping policy as “little
more than an opaque way of protecting favored industries”).
227
Cho, supra note 191, at 372 (stating economic harms of antidumping including
inefficiency and costs to consumers); Zheng, supra note 192, at 155, 160 (noting
antidumping’s “near-unanimous disapproval from scholars”).
228
Mankiw & Swagel, supra note 224, at 111 (explaining how predatory pricing harms
domestic competitors and consumers).
229
See Lee, Park & Saravia, supra note 214, at 4 (“The asymmetry in the incentives of
producers and consumers to successfully lobby for protectionist measures is perhaps the most
prominent explanation for why countries engage in protectionism despite the net loss of
welfare.”); Mankiw & Swagel, supra note 224, at 115 (noting higher prices for consumers as
a harm of antidumping laws); Zheng, supra note 192, at 163 (providing high net welfare cost
of antidumping).
230
Zheng, supra note 192, at 167 (identifying defects of antidumping laws as first step in
reforming it as “better safety valve”).
716 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
retaliatory nature,
231
but also for their threat to the WTO’s effectiveness.
232
They
allow inefficient producers to survive in a market in which they are no longer
the most competitive, threatening free trade by inhibiting countries’
specialization in their most efficient sectors.
233
Free trade intends to remove
trade barriers, but antidumping laws create duties that could be ten to twenty
times higher than a normal tariff would be.
234
Thus, antidumping laws have
become a method for “special interests to shield themselves from competition at
the expense of both American consumers and other American companies.”
235
Despite these criticisms, antidumping laws are still employed to protect
domestic industries from foreign competition. Professor Sungjoon Cho argues
that “the very history of antidumping reveals that the major purpose of the
antidumping statute is sheer protectionism . . . .”
236
The United States has
continually employed protectionist policies through antidumping laws, despite
the proliferation of free trade agreements and the United States’ role in the
movement towards free trade.
C. Countervailing Duties in U.S. Trade Law as an Example of Protectionism
Similar to the antidumping laws, the use of countervailing duties in U.S. trade
law is an example of how protectionism has prevailed in the free trade era.
Countervailing duties are levied on imports from foreign producers when a
foreign government or other public entity has subsidized that producer.
237
Thus,
a countervailing duty purports to offset “countervailing benefits” that the foreign
subsidy has provided to the foreign industry.
238
Congress enacted its first law
imposing countervailing duties in 1890 to offset European subsidies in the sugar
industry.
239
The framework for the current countervailing duty statute can be
found in the Tariff Act of 1930,
240
which was amended in 1979 through the
231
Id. at 156 (providing additional criticisms of antidumping including “bias in
administration” and “strategic or retaliatory nature”).
232
Mankiw & Swagel, supra note 224, at 115 (noting antidumping’s downfalls in
international trade negotiations).
233
Id. at 108 (explaining antidumping’s threat to free trade).
234
Id. at 112 (highlighting substantial impact of tariffs on trade and difficulty in removing
tariffs).
235
Id. at 107.
236
Cho, supra note 191, at 367.
237
JONES, supra note 138, at 32 (summarizing U.S. trade remedy laws).
238
Alan O. Sykes, Countervailing Duty Law: An Economic Perspective, 89 COLUM. L.
REV. 199, 199 (1989).
239
Zheng, supra note 168, at 428-29 (recalling first countervailing duty legislation
designed to offset effect of subsidies on beet sugar).
240
Id. at 432.
2019] THE RESILIENCE OF PROTECTIONISM 717
Trade Agreements Act.
241
Under the Tariff Act, “a countervailing duty [is]
imposed on imported goods when it is found that the country is directly or
indirectly subsidizing the manufacture, production or exportation of goods
imported into the USA.”
242
A countervailing duty can be imposed even when a
foreign subsidy is indirectly applied to the industry and a material injury to a
domestic industry exists.
243
Additionally, as discussed above, Congress passed
the Continued Dumping and Subsidy Offset Act of 2000, which has since been
repealed after a finding that it violated the WTO Subsidies Agreements.
244
More
recently, during the Obama Administration, Congress passed a law permitting
the imposition of countervailing duties on non-market economies, aiming to
combat cheap imports from Chinese producers.
245
Countervailing duties were among the most frequently used measures on
imports in the 1970s and 1980s, especially by the United States.
246
Furthermore,
“[t]he United States pursues countervailing duty cases more aggressively than
many other countries.”
247
Between 1979 and 1988, the United States filed 371
countervailing duty actions for import relief while all other countries combined
filed fifty-eight actions.
248
While many other nations regularly employ subsidies
for their domestic industries, the United States generally views subsidies as
“instruments that illegitimately distort international trade,”
249
although it also
subsidizes several of its industries as discussed above.
Under Article VI of the GATT, parties can impose countervailing duties but
not “in excess of an amount equal to the estimated bounty or subsidy determined
to have been granted, directly or indirectly, on the manufacture, production or
241
Trade Agreement Act of 1979, 19 U.S.C. §§ 2501-2581 (2018) (codifying amendments
to Tariff Act of 1930); see also MICHAEL J. TREBILCOCK & ROBERT HOWSE, THE REGULATION
OF
INTERNATIONAL TRADE 275 (3d ed. 2005).
242
TREBILCOCK & HOWSE, supra note 241, at 276 (citation omitted).
243
Id. at 277-79 (describing how injury test ensures that duties are imposed only when
nexus exists between foreign practice and harm suffered in domestic industry).
244
JONES, supra note 138, at 20 (discussing controversies surrounding Continued
Dumping and Subsidy Offset Act).
245
Doug Palmer, U.S. Bill Targeting Chinese Subsidies Goes to Obama, REUTERS (Mar.
6, 2012, 2:59 PM), https://www.reuters.com/article/usa-china-trade/u-s-bill-targeting-
chinese-subsidies-goes-to-obama-idINDEE8250HE20120306 [https://perma.cc/6MDC-
ZEEH]
(describing bill allowing United States to impose duties on Chinese goods).
246
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 364.
247
HORNBECK, supra note 171, at 11.
248
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 364 n.5 (citing Patrick A. Messerlin,
Antidumping, in C
OMPLETING THE URUGUAY ROUND: A RESULTS-ORIENTED APPROACH TO
THE
GATT TRADE NEGOTIATIONS 108, 110 (Jeffrey J. Schott ed., 1990)) (illustrating United
States as predominant user of countervailing duties).
249
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 364 (presenting the United States’
views on subsidies compared to other countries’ views).
718 BOSTON UNIVERSITY LAW REVIEW [Vol. 99:683
export of such product in the country of origin . . . .”
250
During the Tokyo
Round, the GATT parties negotiated a Subsidies Code that required the
importing nation to demonstrate that an injury exists before the duty can be
imposed.
251
The Code also prohibited the use of export subsidies, except for
certain products.
252
However, the GATT parties did not define subsidy in the
Code until later.
253
During the Uruguay Round, the contracting parties
negotiated the SCM Agreement, which provided more extensive subsidy
regulations.
254
As a domestic policy instrument, countervailing duties have obvious benefits.
As previously mentioned, subsidies lead to market inefficiencies by permitting
industries that are not the most efficient to continue to produce.
255
In order to
correct these market inefficiencies, countries receiving the subsidized imports
can impose countervailing duties.
256
Countervailing duties protect consumers
from foreign industries that can engage in predatory pricing because the
government subsidizes the costs of production.
257
Additionally, countervailing
duties can be justified under the rationale of fairness: subsidies are an unfair
trading practice and countervailing duties provide domestic industries with a
“level playing field.”
258
In summary, countervailing duties are meant to provide
domestic industries with similar advantages as those received by the foreign
subsidized industry.
However, countervailing duties can be harmful for two main reasons: first,
they may increase tensions between nations because they are protectionist;
second, they are not tailored closely enough to distortionary subsidies.
259
Countervailing duties increase the costs to consumers by allowing domestic
producers with higher production costs to continue to compete in the market and
by reducing foreign competition.
260
The United States has also been criticized
250
GATT, supra note 33, art. VI, para. 2; see also Zheng, supra note 168, at 432
(referencing GATT article VI).
251
Zheng, supra note 168, at 433 (noting limitations on levying countervailing duties).
252
Id.
253
Id. at 434 (stating first definition of “subsidy” was provided under SCM Agreement).
254
Id. (outlining SCM Agreement and its provisions).
255
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 389 (presenting rationales for
regulating subsidies).
256
Id. at 389-90 (presenting possible remedies to offset “effects of trade distortions”).
257
Id. at 390 (suggesting additional efficiency argument that concerns over predation do
not justify existing countervailing duty laws).
258
Id. at 390-91 (discussing how countervailing duties may “increase potential gains from
trade”).
259
Id. at 392 (noting issues with laws on subsidies and possible reforms).
260
HORNBECK, supra note 171, at 6 (noting taxpayer cost of supporting production through
subsidy itself).
2019] THE RESILIENCE OF PROTECTIONISM 719
for focusing its trade remedies against developing countries.
261
Similar to
antidumping measures, countervailing duties create a barrier to imports that may
have a more competitive price or could be made more efficiently, potentially
disrupting the effectiveness of the free trade system.
Since the GATT framework was first established, the United States has been
determined to pursue comprehensive trade remedy laws, such as countervailing
duties and antidumping measures.
262
By identifying “inappropriate” policies of
other countries, the United States was able to portray those as “barriers to market
access” and create remedies to address them.
263
While these trade remedies were
originally conceived to combat unfair trade policies, they have arguably become
unfair trade practices on their own.
264
The United States has been persistent,
even aggressive, in its usage of countervailing duties and antidumping measures.
Thus, while freer trade could economically benefit the global system, “political
barriers still remain” to actual free trade.
265
CONCLUSION
At first glance, the U.S. trade policy currently appears to be at a crossroads.
President Trump’s “America First” policies are in stark contrast to the more
liberal policies of the previous administration. During the Obama
Administration, the President underwent negotiations in the East and West to
create large and comprehensive free trade agreements. Conversely, the Trump
Administration appears to be taking every step to dismantle those agreements.
While these actions are by no means insignificant, they are not nearly as large a
departure from U.S. trade policy as they may seem. Even after leading the world
into negotiations of groundbreaking free trade agreements, the United States has
continually advocated for international trade policies that could easily be
considered protectionist. As evidenced by its role in the proliferation of
antidumping and countervailing measures and its consistent usage of both, the
United States has allowed its protectionist policies of the past to continue.
Although nowhere near the isolationist nation it was in the past, the United States
has not only allowed protectionist tools in trade law to remain resilient, but has
led the West in the implementation of such tools.
261
TREBILCOCK, HOWSE & ELIASON, supra note 26, at 606-07 (explaining high barriers to
exports of goods and services from developing countries); cf. STIGLITZ, supra note 153, at 6
(noting how Western nations have “pushed poor countries to eliminate tariff barriers, but kept
up their own barriers, preventing developing countries from exporting their agricultural
products and so depriving them of desperately needed export income”).
262
HORNBECK, supra note 171, at 16.
263
Howse, supra note 156, at 101 (presenting the United States’ role in “rewriting the rules
of the game for multilateral trade”).
264
Rovegno, supra note 164, at 444 (suggesting effect of trade remedies on protecting
domestic producers and disrupting competition).
265
SINGH, supra note 167, at 13.
