Amar Breckenridge, Senior Associate at Frontier Economics, spoke at an event organised by the International Centre for Trade and Sustainable Development (ICTSD) on industrial development and trade policy. Amar’s presentation focused on the role of subsidies in industrial development and the implications for WTO rules.
WTO rules prohibit export subsidies and impose constraints on subsidies that are specific to firms or industries and that cause adverse effects to trade partners. The rules provide greater flexibility for poorer countries, but some of these countries have been arguing for greater flexibility.
Amar discussed the use of subsidies to correct for market failures, drawing on the insights from recent research into export performance at the firm and industry level. Amar said: “In order to correct market failures, the key issue is to identify cases where justifiable interventions are constrained by existing rules. As such cases are likely to be very context-specific, seeking block ’carve-outs’ from existing rules may not be appropriate.” He suggested that a better way to address this issue would be to develop a review process that considers, on a case-by-case basis, whether a proposed measure is likely to solve the market failure in question, and then assesses the likely impact of the measure on trade.
Frontier Economics regularly advises on international trade policy. It has partnered with the ICTSD and four other organisations to establish the Trade Knowledge Exchange.
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