Reforming WTO Subsidy Rules: Past Experiences and Prospects

Abstract

Subsidies are a critical instrument in the toolbox that national governments use to address market failures and achieve a variety of policy goals. However, critics often arise to point out the inefficiencies and economic distortions that subsidies create, which raise the question of whether the existing WTO subsidy rules are adequate, and how to reshape WTO subsidy rules to address new emerging concerns especially in a global value-chain world. This article first reviews WTO Members’ subsidy-related proposals under the Doha Development Agenda and then addresses key concerns on subsidy rules in the current broader discussion of the WTO reform, trying to figure out feasible approaches toward shaping a ‘new generation’ of subsidy rules under the aegis of the WTO.