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How did the Tokyo Round address subsidies and countervailing duties?
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During the Tokyo Round (1973β1979), negotiators made significant progress in addressing nontariff barriers by establishing a Code on Subsidies and Countervailing Duties. This code introduced two primary mechanisms to regulate these trade practices:
- Identification of Unacceptable Practices: The code explicitly listed a series of subsidy practices deemed unacceptable in international trade.1
- Procedural Requirements: It mandated that formal procedures be followed before a country could impose a countervailing duty on subsidized imports. Specifically, an investigation was required to establish that the subsidized imports were causing injury to competing domestic firms.1
While this code represented a major step in addressing nontariff issues, it was not signed by all members of the General Agreement on Tariffs and Trade (GATT). Consequently, the benefits of the code were only extended to other signatories, marking a departure from the GATT principle of most-favoured-nation (MFN) treatment.1