![]() ![]() While WTO agreements discipline certain subsidies where a harmful effect on competitors can be demonstrated, the new subsidies are often beyond the reach of international agreements. Increasingly, subsidy programs are entangled in national security concerns, often justified by a declared requirement to maintain a lead against rival countries or achieve independence from them in new technologies. In contrast to earlier protectionist programs for import-competing domestic industries, today’s subsidies are more likely to support industries focused on a global market - particularly high-technology businesses. As the international institutions argued, these huge programs pose a particular problem for smaller economies, which cannot begin to match them. Now in the order of US$361 billion a year, the industry subsidy programs of the big three are collectively bigger than the GDP of four-fifths of the world’s nations. These subsidies are sometimes complemented by policies designed to deny technological innovations to competitor economies.Ī report by Global Trade Alert reveals that the three economic superpowers introduced 18,000 industry subsidy programs in the years following the 2008 financial crisis, roughly split evenly. China, the United States and the European Union have vastly increased government subsidies to industries, frequently supporting the development of advanced technologies. There was a time when government spending to support particular industries was widely deplored as wasteful interference in free markets. Economics, Politics and Public Policy in East Asia and the PacificĪuthor: John Edwards, Curtin University and Lowy Institute
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