The Section 301 petition I mentioned a few weeks ago regarding Canadian subsidies to lure U.S. production of movies and TV shows has been rejected by USTR. The USTR press release says: "Based on a thorough review of the economic data, other facts, and legal arguments set out in the petition, the interagency committee unanimously recommended that the USTR not accept the petition because a dispute based on the information and arguments set out in the petition would not be effective in addressing the Canadian subsidies."
I can understand the reluctance to bring a complaint. Applying trade agreement rules to locational tax incentives is difficult, especially where there are services involved. I do think that such incentives are a serious problem, though. It's one thing to compete for businesses to locate in your territory by offering a well-educated workforce or an efficient governing regime. But it's a quite different matter to compete with other jurisdictions by offering tax breaks to specific companies or industries to get them to set up shop. I'm convinced we would be better off if cities, states and national governments stopped this competition. Unfortunately, the current domestic and international rules don't seem to address the problem very well.
On the other hand, I don't quite know what to make of this proposal to offer tax breaks if your companies locate somewhere else. Since it's not likely to happen, though, I'm not going to spend too much time thinking about it.
