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• W1606091628 abstract "Why did countries achieve a consensus to restrict export subsidies and export- promoting domestic subsidies when the World Trade Organization (WTO) began in 1995, but not decades earlier under the General Agreement on Taris and Trade (GATT)? This question poses a challenge for the theory of trade agreements because export promotion improves the terms of trade of importers, so subsidy restrictions re- duce the welfare of importing nations. This paper argues that cross-border externalities arising from political economy and pro…t-shifting can explain the historical pattern of subsidy rules. Motives to restrict export promotion do not exist when trade policies are chosen noncooperatively, because import tarirevenue neutralizes any motive for export promotion. Once import taris fall, as in the 1950s and 1960s, then motives to restrict export promotion can arise. Governments prefer to protect domestic sales through international subsidy restraints rather than to allow consumers to bene…t from unfettered subsidization. Governments could in theory have eliminated the need for subsidy rules by eliminating domestic intersectoral misallocation or by adjusting both import taxes and export subsidies consistent with the GATT principle of reciprocity, but in practice they have not done so. GATT documents and the WTO negotiat- ing history provide support for the theory that the WTO subsidy rules address an international pro…t-shifting problem." @default.
• W1606091628 created "2016-06-24" @default.
• W1606091628 creator A5053302436 @default.
• W1606091628 date "2013-12-01" @default.
• W1606091628 modified "2023-10-02" @default.
• W1606091628 title "The Evolution of International Subsidy Rules" @default.
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