Rethinking international subsidy rules

Abstract

Geo-economic tensions and global collective action problems call for international cooperation to revise and develop rules to guide both the use of domestic subsidies and responses by governments to cross-border competition spillover effects. Current WTO rules that divide all subsidies into either prohibited or actionable categories are no longer fit for purpose. Piecemeal efforts in preferential trade agreements and bi- or trilateral configurations offer a basis on which to build, but are too narrow in scope and focus. Addressing the spillover effects of subsidies could start with launching a work program at the 12th Ministerial Conference of the WTO to mobilize an epistemic community concerned with subsidy policies, tasked with building a more solid evidence base on the magnitude, purpose and effects of subsidy policies.