IMPORTANCE OF THE SUBSIDY REGULATION UNDER THE WTO REGULATION

Аннотация

This thesis aims to explore the legal basis of the regulation of subsidies within the WTO. The regulation of subsidies holds significant importance in the realm of international trade. Subsidies, defined as financial contributions made by governments to support domestic industries, can have far-reaching implications for market competition and trade flows. Key words: regulation of subsidies, actionable subsidies, World Trade Organization (WTO), Agreement on Subsidies and Countervailing Measures (ASCM), protectionism, International trade, Agreement on Agriculture, GATT. Subsidies play a crucial role in promoting economic growth in several countries.1 Regulating subsidies ensures that government intervention does not hinder trade and that the benefits of economic growth are spread equitably across all countries. Multilateral rules governing subsidies promote opportunities for competitive trading and help countries integrate into the global economy, making international trade an excellent tool for economic growth. Subsidies in the agriculture sector have the potential to artificially protect recipients from market changes and distort2 the global prices for agricultural products.3 This may constitute unfair trade, since it may violate the commitments importing countries have made to the WTO regarding 1 For example, US high technology production and export are to a large extent due to substantial R&D subsidies to many industries through heavily subsidised university research sectors, subsidies to defence and space exploration sectors, as well as direct export subsidies provided by the Export-Import Bank of the United States to high technology industries, including aircraft production. See Brandner, supra note 33, at 64-65. 2 The measurement of subsidies in the international trade field was studied by the OECD, which developed a set of measures for the purposes of comparing Member countries’ levels of subsidies, types of subsidies, and reductions under the Uruguay Round Agreement on Agriculture. The Aggregate Measurement of Support [AMS] is now used to estimate the dubbed “trade distorting” agricultural support measures, which are the support policies slated for reduction under the AoA. Timothy Wise. “The Paradox of Agricultural Subsidies: Measurement Issues, Agricultural Dumping, and Policy Reform” Paper n. 04-02 from the Global Development and Environmental Institute, 2004 (Medford: Tufts University, 2004). 3 The World Bank predicts that removing trade barriers in agriculture could lift hundreds of millions of people out of poverty. There is an estimation that the removal of trade barriers in agriculture by industrial countries could reduce poverty worldwide by 8%, or about 200 million people. William R. Cline, Trade Policy and Global Policy, (Washington, DC: Institute for International Economics, 2004) [Cline, Trade Policy]. 75 NEW RENAISSANCE 2024 SEPTEMBER INTERNATIONAL SCIENTIFIC AND PRACTICAL CONFERENCE VOLUME 1 | ISSUE 7 market access4 and may displace exports from other WTO Members. According to these considerations, agricultural subsidies violate fundamental principles of the WTO.5 Therefore, the regulation of subsidies ensures that all countries have a level playing field when it comes to trade. Without regulations, some countries may provide massive subsidies to their domestic industries, giving them an unfair advantage in the global market, both to industrial and agricultural products. Agriculture receives extensive and well-documented government support.6 Over the course of 2018–2021, public budgets supported agriculture with $447 billion annually,7 of which almost three-fifths ($268 billion) went to producers directly and the remainder to general services or consumers.8 Improper and excessive usage of subsidies can lead to the destabilisation of the functioning of international trade and the distortion of international competition.9 Regulations ensure that competition is fair and that smaller countries have a chance to participate meaningfully in the global economy. By regulating subsidies, the WTO can promote sustainable development and ensure environmentally-friendly practices. Governments can offer less harmful subsidies that support green initiatives, such as promoting renewable energy and organic farming. Regulations ensure that subsidies do not cause harm to the environment but help protect natural habitats for future generations. Environmental degradation, poor food safety, resource waste, and labour disputes are examples of societal problems brought on by economic globalisation and progress.10 4 WTO market access conditions are the tariff and non-tariff measures agreed to by Members for the entry of specific goods into their markets. Each Member has a schedule of concessions associated with its tariff commitments. 5 Trade without discrimination, free trade, predictability and promoting fair competition (http://www.wto.org/english/theWTO_e/whatis_e/tif_e/fact2_e.htm). 6 The OECD measures supp