Abstract
This article critically examines the 2020 Joint Trilateral Statement by the US, EU, and Japan proposing additions to the list of prohibited subsidies under the WTO’s Agreement on Subsidies and Countervailing Measures (SCM Agreement). It argues that the proposal to include unlimited guarantees, subsidies to insolvent enterprises, subsidies in sectors with overcapacity, and certain debt forgiveness as prohibited subsidies is problematic for several reasons. First, there is a lack of economic rationale and evidence for blanket prohibition of these subsidies. Second, the language used in defining the proposed subsidies is vague and uncertain, leading to potential misinterpretation and implementation challenges. Third, the proposal potentially conflicts with the socio-economic needs of developing countries, particularly pursuant to the times of economic emergencies such as the COVID-19 pandemic. Fourth, there is a misalignment between the original basis for classifying prohibited subsidies in the SCM Agreement and the rationale for these new additions. The article analyses the existing SCM Agreement framework, explores the growing trend of regulating these subsidies in bilateral free trade agreements, and discusses the challenges in implementing such proposals, with a particular focus on countries like India. Through this comprehensive examination, the article concludes that the Trilateral Statement’s approach is fundamentally flawed and requires significant reconsideration to address these concerns and maintain a balanced global economic order.
Recommended Citation
Gupta, Manya and Pania, Uravi
(2024)
"Prohibiting More Subsidies: The Trilateral Statement vis- à-vis the SCM Agreement,"
National Law School of India Review: Vol. 35:
Iss.
1, Article 6.
DOI: 10.55496/QZRA3214
Available at:
https://repository.nls.ac.in/nlsir/vol35/iss1/6
Digital Object Identifier (DOI)
10.55496/QZRA3214
