Publication Type
Working Paper
Version
publishedVersion
Publication Date
1-2012
Abstract
We investigate how a domestic subsidy is treated in an international agreement, when a government, having incentive to use its domestic subsidy as a means of import protection, can disguise its protective use of subsidy as a legitimate intervention with which to address a market imperfection. We show that any optimal agreement, as opposed to the conventional message of the targeting principle, restricts the home government’s freedom to select its domestic subsidy in order to increase the market-access level for foreign exporters. Our finding suggests that a proper restriction on domestic subsidy is somewhere between GATT and WTO rules.
Keywords
Treatment of domestic subsidy, International agreement, GATT/WTO rules
Discipline
International Economics | International Trade Law
Research Areas
International Economics
First Page
1
Last Page
47
Publisher
SMU Economics and Statistics Working Paper Series, No. 26-2012
City or Country
Singapore
Citation
LEE, Gea M..
Optimal International Agreement and Treatment of Domestic Subsidy. (2012). 1-47.
Available at: https://ink.library.smu.edu.sg/soe_research/1254
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.