AbstractInternational disputes over subsidies are increasingly disrupting the world trading system. The creation of the WTO was nearly prevented by disputes in the Uruguay Round of GATT negotiations over the issue of negotiating disciplines on agricultural subsidies, an issue which continues to plague the ongoing Doha Round of WTO negotiations. Ongoing disputes over subsidies that violate existing WTO rules have led to the largest amount of authorized retaliation in GATT/WTO history. Yet the international rules that govern subsidies have received little attention in the form of systematic economic analysis. In this paper we provide a first formal analysis of the international rules that govern the use of subsidies to domestic production (as distinct from export subsidies). Our analysis highlights the impact of the new disciplines on subsidies that were added to GATT rules with the creation of the WTO. Our results suggest that, although GATT subsidy rules were typically viewed as weak and inadequate while the WTO subsidy rules are seen as representing a significant strengthening of multilateral disciplines on subsidies, the key changes introduced by the WTO subsidy rules may ultimately do more harm than good to the multilateral trading system, by undermining the ability of tariff negotiations to serve as the mechanism for expanding market access to more efficient levels.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10292.
Date of creation: Feb 2004
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- F1 - International Economics - - Trade
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-02-08 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert W. Staiger & Kyle Bagwell, 1999.
"An Economic Theory of GATT,"
American Economic Review,
American Economic Association, vol. 89(1), pages 215-248, March.
- Kyle Bagwell & Robert W. Staiger, 1996.
"Strategic Export Subsidies and Reciprocal Trade Agreements: The Natural Monopoly Case,"
1156, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Bagwell, Kyle & Staiger, Robert W., 1997. "Strategic export subsidies and reciprocal trade agreements: The natural monopoly case," Japan and the World Economy, Elsevier, vol. 9(4), pages 491-510, December.
- Bagwell, K. & Staiger, R.W., 1996. "Strategic Export Subsidies and Reciprocal Trade Agreements: The Natural Monopoly Case," Working papers 9605, Wisconsin Madison - Social Systems.
- Kyle Bagwell & Robert W. Staiger, 1996. "Strategic Export Subsidies and Reciprocal Trade Agreements: The Natural Monopoly Case," NBER Working Papers 5574, National Bureau of Economic Research, Inc.
- Bagwell,K. & Staiger,R.W., 2000.
"Strategic trade, competitive industries and agricultural trade disputes,"
11, Wisconsin Madison - Social Systems.
- Kyle Bagwell & Robert W. Staiger, 2001. "Strategic Trade, Competitive Industries and Agricultural Trade Disputes," Economics and Politics, Wiley Blackwell, vol. 13(2), pages 113-128, 07.
- Kyle Bagwell & Robert W. Staiger, 2000. "Strategic Trade, Competitive Industries and Agricultural Trade Disputes," NBER Working Papers 7822, National Bureau of Economic Research, Inc.
- Robert Z. Lawrence, 2003. "Crimes and Punishments?: Retaliation under the WTO," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 372.
- Kyle Bagwell & Robert W. Staiger, 2001.
"Domestic Policies, National Sovereignty, And International Economic Institutions,"
The Quarterly Journal of Economics,
MIT Press, vol. 116(2), pages 519-562, May.
- Kyle Bagwell & Robert W. Staiger, 1999. "Domestic Policies, National Sovereignty and International Economic Institutions," NBER Working Papers 7293, National Bureau of Economic Research, Inc.
- Kyle Bagwell & Robert W. Staiger, 2004. "The Economics of the World Trading System," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524341, June.
- Kyle Bagwell & Robert W. Staiger, 2005.
"Will international rules on subsidies disrupt the world trading system?,"
0405-21, Columbia University, Department of Economics.
- Kyle Bagwell & Robert W. Staiger, 2006. "Will International Rules on Subsidies Disrupt the World Trading System?," American Economic Review, American Economic Association, vol. 96(3), pages 877-895, June.
- Fritz Breuss, 2004. "WTO Dispute Settlement: An Economic Analysis of four EU-US Mini Trade Wars," WIFO Working Papers 231, WIFO.
If references are entirely missing, you can add them using this form.