Subsidies and “New Industrial Policy”: Are International Trade Rules Fit for the 21st Century?
In: New Zealand Yearbook of International LawSearch for other papers by Tracey Epps in
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Abstract
This article reviews the interaction between international rules and governments’ provision of subsidies to support industrial policy. It does so in the light of the challenges that many governments are facing in today’s “turbulent times” and an associated renaissance in their use of industrial policy to increase competitiveness and encourage economic growth.
Subsidies are disciplined under the World Trade Organisation’s scm Agreement, butthere are concerns that the rules are not effectively curtailing the use of trade-distorting subsidies, and, at the same time, not providing governments with sufficient flexibility to adopt economic development policies.
This article finds that the case for disciplining subsidies is as strong as ever, but that the rules are not as constraining as some commentators have suggested. Nevertheless, the time is ripe for the rules to be reviewed to provide governments with greater certainty as to what is and is not allowed.