Subsidies and spillovers in a value chain world : new rules required?

Abstract

Assessing the effects of subsidies is complicated, given the need to consider linkages within and across supply chain networks. A precondition for determining whether existing WTO disciplines on subsidies are adequate is better information and more empirical research on the extent to which negative international spillovers are created by prevailing policies. Many of the policies that affect supply chain operations are not considered subsidies under the WTO. There are no rules on subsidies for services or investment incentives. Conversely, some WTO rules may not be appropriate or effective given the increasing prevalence of value chains. There is an urgent need for policy analysis to determine how existing WTO disciplines impact on value chain s and whether and how large the negative spillovers are of national policies. A necessary condition for any such determination is much better data on the measures that are employed by governments around the world, both at the central and sub-central levels.