Export promoting subsidies and what to do about them

This paper addresses the questions of what is a subsidy, which subsidies affect international trade, and why countries may wish to subsidize, particularly exporting industries. It considers the effects of these subsidies on other countries and why trading partners may wish to outlaw or countervail such export promoting subsidies. The paper then outlines the provisions of the GATT and the Subsidies Code as they relate to subsidies; this is followed by some data on the extent to which these provisions have been used, and by a consideration of the purposes for which they appear, in fact, to have been used. The question is then raised as to whether or not the proscribing/countervailing approach is in fact the best way to constrain subsidies and whether, if such control is desired, other approaches may be preferable and feasible.