Some market analysts expressed initial concerns that the duty rebate program would
contribute to increased U.S. imports of Canadian agricultural products, particularly live
hogs and processed pork products, since Canada’s pig industry was a major user of
imported U.S. corn.8
U.S. trade officials voiced an additional concern. They suggested
that the duty-drawback program could result in U.S. trade action against Canada based on
how such a duty-rebate program was implemented. For example, suppose that imported
U.S. corn was fed to swine that were then slaughtered and processed into various meat
cuts such as pork chops. Then, suppose that the Canadian meat packer exported the pork
chops to the United States and claimed a certain share (say 30%) of the value of that pork chop as imported U.S. corn meritorious of a duty-drawback. If the true corn value-share
of the pork chop were only 10%, than a duty-drawback based on a 30% corn share would
represent an export subsidy, which is illegal under WTO rules