WTO'ing a Resolution to the China Subsidy Problem

25 Pages Posted: 6 Nov 2019

See all articles by Chad P. Bown

Chad P. Bown

Peterson Institute for International Economics; Centre for Economic Policy Research (CEPR)

Jennifer Hillman

Georgetown University Law Center

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Date Written: October 2019

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.

Keywords: Dispute Settlement, state-owned enterprise, Subsidy, WTO

JEL Classification: F13

Suggested Citation

Bown, Chad P. and Hillman, Jennifer, WTO'ing a Resolution to the China Subsidy Problem (October 2019). CEPR Discussion Paper No. DP14076, Available at SSRN: https://ssrn.com/abstract=3478772

Chad P. Bown (Contact Author)

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Jennifer Hillman

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

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