Transparency is the Most Important Governance Issue in the WTO Subsidy Control

Abstract

Transparency, one of the basic pillars and fundamental norms of a well-functioning trading system, is increasingly seen as an inevitable tool in the governance of international trade. Without transparency, trade agreements are just words on paper. Transparency allows economic actors and trading partners to see how rules are implanted, reformed and implemented. For subsidy control, one of the most debated and ambivalent areas of international trade, it is more necessary than ever. The World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures (ASCM) establishes disciplines on its Members’ use of subsidies and provides extensive means for reporting and monitoring. Transparency in subsidization has increased considerably in the last two decades. But the transparency mechanism has been criticized for deficient attention, underperformance and impetus to implementation. Members comply with transparency obligations only half-heartedly. Lack of incentive for notification and sanction for non-compliance, resource constraint, ambiguous notification-template and inherent difficulties of the subsidy regime have been great obstacles for transparency to work. Experiences from the WTO Agreement on Agriculture and the Technical Barriers to Trade show that well-defined provisions, collaborative approach and capacity building for increased domestic reporting are necessary for the system to run smoothly. Civil society and NGO involvement may also contribute positively. For transparency to control subsidy, negotiators must think carefully about the government behaviour they wish to modify using the mechanism. The future of the WTO as a legitimate and effective international organization will depend, in short, on finding a mode of transparency accessible to all its Members.

Keywords: WTO, Subsidy and Countervailing Measures, Subsidy Control Mechanism, Agreement on Subsidy, Transparency, Accountability, Subsidy notification, Committee on Subsidy and Countervailing Measures, Trade Policy Review Mechanism, WTO Doha Round