It is not often that one small clause in a tariff act becomes a major issue between domestic producers and the firms which import competitive foreign goods, a major issue in trade talks between the United States and the European Community, and a bone of contention between the Congress and the Executive Branch. Yet, section 303 of the Tariff Act of 1930 has done just that and no solution to the issues it has raised is in sight...
Section 303 of the Tariff Act of 1930 is simple enough on its face. It imposes a countervailing duty on any goods imported into the United States that have been given a price advantage over domestically produced goods by the payment or bestowal of a direct or indirect "bounty or grant" by any entity in any country from which they come or have passed through on their way to the United States. The imposed countervailing duty equals the payment or bounty given and is assessed in addition to regular customs duties.
The purpose of section 303 is to neutralize the advantage a bounty gives a foreigner in the American market. Trouble arises, however, when one attempts to construct an airtight definition of what constitutes a grant or bounty...
The subject of countervailing duties and the V.A.T. is obscure, complex, and important. Those who are not in favor of protectionism and who are in favor of world-wide free trade would make a great mistake to dismiss the countervailing duty issue out of hand as merely another attempt by complacent industries to freeze foreign competition out of the American market. They might be surprised to find themselves on the same side as the steel industry, once they examine all the facts.
Charles L. Chambers,
The Steel Products Decision: An Inquiry into the Treatment of the Value-Added Tax under the Countervailing Duty Law,
9 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vjtl/vol9/iss4/5