Industrial Subsidies As a Major Policy Response Since the Global Financial Crises: Consequences and Remedies

The World Trade Organization (WTO) is at an impasse regarding the resolution of tensions surrounding the issue of subsidies. The weak implementation and surveillance of WTO disciplines is attributable to the lack of notifications by WTO members. Currently, major members are developing plurilateral initiatives to deal with the perceived unfair application of subsidies, which leads to market distortions, overcapacity, and unfair competition. Are these steps an attempt at broad reform or a self-serving agenda aimed at certain other members? This policy brief explores the major issues around subsidies, and identifies a plurilateral path forward if a broad—than member-targeted—reform agenda is to be followed. It proposes procedural steps that the Group of Twenty (G20) members can follow to address the subsidies problem and, thus, provides a set of substantive options to guide the proposed deliberations.