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WTO'ing a Resolution to the China Subsidy Problem

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  • Bown, Chad
  • Hillman, Jennifer

Abstract

The United States, European Union, and Japan have begun a trilateral process to confront the Chinese economic model, including its use of industrial subsidies and deployment of state-owned enterprises. This paper seeks to identify the main areas of tension and to assess the legal-economic challenges to constructing new rules to address the underlying conflict. It begins by providing a brief history of subsidy disciplines in the GATT and WTO predating any concerns introduced by China. It then describes contemporary economic problems with China’s approach to subsidies, their impact, and the apparent ineffectiveness of the WTO’s ASCM to address them. Finally, it calls for increased efforts to measure and pinpoint the source of the problems—in a manner analogous to how the OECD took on agricultural subsidies in the 1980s—before providing a legal-economic assessment of proposals for reforms to notifications, evidence, remedies, enforcement, and the definition of a subsidy.

Suggested Citation

  • Bown, Chad & Hillman, Jennifer, 2019. "WTO'ing a Resolution to the China Subsidy Problem," CEPR Discussion Papers 14076, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:14076
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    Cited by:

    1. Kevin Lefebvre & Nadia Rocha & Michele Ruta, 2023. "Containing Chinese state-owned enterprises? The role of deep trade agreements," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 159(4), pages 887-920, November.

    More about this item

    Keywords

    Wto; Subsidy; State-owned enterprise; Dispute settlement;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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