Subsidies in the context of the World Trade Organization
Jan Jakub MICHALEK
During the Uruguay Round (UR), regulations concerning subsidies
were substantially modified. In the WTO three types of subsidies are
distinguished: prohibited, actionable and non-actionable. The export subsidies
are prohibited, while production subsidies are actionable, if they cause an
injury to the domestic industry. The remaining subsidies are considered to be
non-actionable. This categorization reflects standard theory: distortion in
international trade caused by an export subsidy is stronger than that caused by
a production one. The number of notifications of countervailing (CVD) duties is
quite small, in comparison with A-D actions, and is decreasing after 1999. The
countries most frequently targeted by CVD actions were: India, Republic of
Korea, Italy, EC (as a whole) and Canada. The export subsidies in agricultural
sector are permitted within the commitments undertaken during the UR. The total
financial support provided to agriculture by OECD countries remains high. The
liberalization proposals presented during preparations to a new WTO round
differ significantly. Under so called « compromise » scenario, the
liberalization of agricultural trade and reduction of subsidies may increase
world welfare by US$ 13 billion. In the EU an increase in the consumer surplus
might be accompanied with a significant reduction in producer surplus.
Keywords :
Commercial policy, trade negotiations, WTO, subsidies, countervailing duties.
• 1. THE WORLD TRADE ORGANIZATION (WTO)
• 2. THE WTO RULES ON SUBSIDIES : THE SCM AGREEMENT
• 3. SPECIFIC WTO RULES REGARDING SUBSIDIES IN AGRICULTURE
• 4. ECONOMIC RATIONALE BEHIND WTO RULES ON SUBSIDIES
• 5. COUNTERVAILING INVESTIGATIONS IN THE WTO
• 6. AGRICULTURAL SUBSIDIES IN THE CONTEXT OF NEW ROUND OF WTO
NEGOTIATIONS
• 7. POSSIBLE EFFECTS OF FUTURE LIBERALIZATION OF AGRICULTURAL
TRADE
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