The Law and Policy of the World Trade Organization Text, Cases, and Materials

In addition to rules on dumping and anti-dumping measures, WTO law also includes rules on another practice that may or may not be considered unfair, namely, subsidisation. Subsidies are a very sensitive matter in international trade relations. On the one hand, subsidies are evidently used by governments to pursue and promote important and fully legitimate objectives of economic and social policy. On the other hand, subsidies may have adverse effects on the interests of trading partners whose industry may suffer, in its domestic or export markets, from unfair competition with subsidised products. Disputes about subsidies, and in particular subsidies to ‘strategic economic sectors’, have been prominent on the GATT/WTO agenda. Most noteworthy are the long-running disputes initiated by the European Union (EU) and the United States (US) in respect of subsidies to their respective civil aircraft industry.1 Agricultural subsidies promoting production and export of commodities such as cotton2 or sugar3 have also triggered much WTO litigation.