From Political Pre-occupation to Legitimate Rule against Market Partitioning: Export Subsidies in WTO Law after the Appellate Body Ruling in the Airbus Case

Abstract

Since its inception, GATT/WTO subsidies law has been troubled by two distinct but related questions: what are export subsidies and why should they be specifically regulated? The parameters of the first question have been blurred, inter alia, by ambiguous references to de facto export subsidies. And perplexity about the second question has been driven by the observation that export subsidies tend to be either ineffective or to enhance welfare in the importing country. In the Airbus case, the Appellate Body confirmed that an export subsidy is a subsidy contingent upon export. The Appellate Body further confirmed that assessing whether or not there is a subsidy contingent in fact upon export does not involve changing the legal standard but merely the consideration of different evidence. In particular, the Appellate Body faulted the panel for equating the legal standard of contingency with an enquiry into the reasons for which a subsidy is granted. Rather, the adjudicator must explain how the evidenced facts, working together in specifically explained ways, permit the existence of a contingency to be inferred. The concept of an export subsidy in WTO law has thus evolved from an intuitive if imprecise and irrational pre-occupation with exports, into a contemporary and legitimate concern with market partitioning, as in EU State aid law. From that perspective, it is logical to conclude that certain other market partitioning contingent subsidies are also inconsistent with various provisions of the WTO Agreement.