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Discussion Paper Details

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Title: Rethinking International Subsidy Rules

Author(s): Bernard Hoekman and Doug R Nelson

Publication Date: May 2020

Keyword(s): G20, international cooperation, Spillovers, Subsidy policies and WTO

Programme Area(s): International Trade and Regional Economics

Abstract: Geo-economic tensions, notably associated with the rise of China, and global collective action problems â?? climate change; the COVID-19 pandemic â?? 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 dividing all subsidies into 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. Addressing spillover effects of subsidies could start with G20 countries launching a work program 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. The need for such cooperation has become even more pressing by the COVID-19 pandemic and the associated increase in the use of subsidy programs in major economies.

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Bibliographic Reference

Hoekman, B and Nelson, D. 2020. 'Rethinking International Subsidy Rules'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14833