Subsidies as an Instrument of Industrial Policy: Are they WTO Compliant?

Image: Flickr, World Trade Organisation

Global responses to economic recession revealed a trend towards trade protectionism, specifically through ‘bail-out’ measures in the form of large sums of government revenue handed out to specific industries.

South Africa similarly responded to the economic crisis by offering rescue packages to affected industries. While they may generate some short-term benefits, these measures erode the efforts of the multilateral trading system to reverse the injurious effects of unilateral trade measures. It may be more advantageous to South Africa and the multilateral trade system to focus on long-term measures, such as increased trade-facilitation that would free up trade and help reverse the contraction of global trade.