Some experts weigh in:
Claire Brunel and Gary Hufbauer of the Peterson Institute:
Auto bailouts in the United States and elsewhere largely fall within the purview of the WTO definition of actionable subsidies. But fuel-efficiency and environmental standards complicate the issue, and bringing a case to the WTO based on environmental mandates would be hard to justify politically. Moreover, since virtually all major auto exporters have implemented some auto industry aid, any country that brings the first case to the WTO can expect to be challenged with a case against their own auto measures. Therefore, it is unlikely that WTO cases will arise on auto-assistance measures.
National CVDs are more likely. However, any country that became the target of a US CVD case would probably not abandon the subsidy in response to the duties imposed against its exports. The target country would simply limit its exports to the United States. This would probably be followed by measures targeting US auto firms. Therefore, even a successful US CVD case would likely serve to fragment global auto markets even further, not a desirable outcome.
As auto bailouts and aid continue and intensify without WTO challenges, the world auto industry could gradually leave the realm of WTO discipline. This would set a dangerous precedent. If an important industry, like autos, can take itself out of WTO disciplines, the world trading system will be seriously weakened. Instead, G-20 leaders should proclaim a vision of restoring “normal market conditions” to both the auto industries and others that are now heavily subsidized.
Phil Levy and Michael Moore in The American:
[U.S. exports] could potentially be subject to retaliation from nations under WTO rules that the United States has long championed. These “countervailing” duties would be set to offset any competitive advantages that the Big Three exports might have received. This would be no empty threat as many countries could be quite aggressive in defending their own auto industries and would find it all too tempting to use permissible procedures, especially those that have previously blocked them from the American market. Other countries that primarily export cars to the United States could challenge the new subsidies at the WTO by arguing that their car companies had unfairly lost sales in America as a consequence of U.S. government intervention. If the United States were to lose these cases, then retaliation against other American export industries would result.
