An Italian sunglasses manufacturing company manufactures women's sunglasses in Italy and sell them to a wholesaler in Italy for a price equivalent to C$18.00. This price is sufficient for the manufacturer to cover all costs and recover his usual percentage of profit.

The same Italian manufacturer sells the sunglasses to a wholesaler in Canada. The extra cost of export to Canada (covering packing, shipping, insurance, customs duties, and handling) is C$1.00 per pair.

A Canadian manufacturing company manufactures an equivalent pair of sunglasses in Canada and sells to the Canadian wholesaler with the usual allowance for profit to the manufacturer is C$25.00 and appears in retail sunglass outlets priced from C$30.00 to C$35.00.

Questions:

Question 1) In this case, if the Government of Italy grants C$5.00 for each pair of sunglasses and the Italian manufacturer sells the sunglasses to the Canadian wholesaler for C$15.00 per pair. Please provide detail analysis whether it is a part of unfair trade.

Question 2) What is the process of determining subsidies and countervailing duties in Canada?