2.13 Comments on the two approaches based on US-Softwood Lumber Ⅳ
First comment: Is it appropriate for the US to find an undistorted foreign market as the market benchmark? As stated above, the AB rejected the Panel’s opinion and held that a market benchmark should not be distorted by the government. The US suggested that the American domestic price could be an alternative. With respect to the AB and American opinions, some questions are worth to be discussed. First of all, could the US domestic market be adapted properly? In addition, even if the US domestic timber market represented the undistorted market, can the undistorted market be regarded as the most appropriate benchmark? The first question concerns about whether the US foreign …show more content…
In some nations with a similar level of development, even if these countries share the analogous economic data, their performance in various economic sectors may be comparatively distinct. For instance, one country may have more comparative advantages than another country. The theory of comparative advantage means that if countries specialize in producing goods where they have a lower opportunity cost – then there will be an increase in economic welfare. Turning to the US-Softwood Lumber Ⅳ, although the AB stated that the US domestic market could be a market benchmark after adjustments, the comparative advantage factor should not be ignored. Assuming that Canada had a comparative advantage in the softwood lumber sector, and prices of the softwood lumber were lower than the US prices, it would be difficult to determine whether the Canadian government subsidized the softwood lumber sector. The only method for Canada to do was to correct the foreign country prices for any differences in comparative advantage, otherwise, the Canadian lower price might be subject to …show more content…
However, some other non-government distortions should be addressed as well. More significantly, when these distortions take place, how to adjust the market benchmarks distorted by non-government actions is a new question. The distortions are divided into two categories, which are government distortions, and non-government distortions. As the government distortions in the market have been discussed above, the next paragraphs will concentrate on non-government distortions which are often ignored when the market benchmark is
First comment: Is it appropriate for the US to find an undistorted foreign market as the market benchmark? As stated above, the AB rejected the Panel’s opinion and held that a market benchmark should not be distorted by the government. The US suggested that the American domestic price could be an alternative. With respect to the AB and American opinions, some questions are worth to be discussed. First of all, could the US domestic market be adapted properly? In addition, even if the US domestic timber market represented the undistorted market, can the undistorted market be regarded as the most appropriate benchmark? The first question concerns about whether the US foreign …show more content…
In some nations with a similar level of development, even if these countries share the analogous economic data, their performance in various economic sectors may be comparatively distinct. For instance, one country may have more comparative advantages than another country. The theory of comparative advantage means that if countries specialize in producing goods where they have a lower opportunity cost – then there will be an increase in economic welfare. Turning to the US-Softwood Lumber Ⅳ, although the AB stated that the US domestic market could be a market benchmark after adjustments, the comparative advantage factor should not be ignored. Assuming that Canada had a comparative advantage in the softwood lumber sector, and prices of the softwood lumber were lower than the US prices, it would be difficult to determine whether the Canadian government subsidized the softwood lumber sector. The only method for Canada to do was to correct the foreign country prices for any differences in comparative advantage, otherwise, the Canadian lower price might be subject to …show more content…
However, some other non-government distortions should be addressed as well. More significantly, when these distortions take place, how to adjust the market benchmarks distorted by non-government actions is a new question. The distortions are divided into two categories, which are government distortions, and non-government distortions. As the government distortions in the market have been discussed above, the next paragraphs will concentrate on non-government distortions which are often ignored when the market benchmark is