On 25 May 2023 a new Joint Subsidy Platform was launched by the IMF, OECD, World Bank, and WTO. The platform at www.subsidydata.org aims to facilitate dialogue on subsidies by providing easier access to information on the nature and size of subsidies.
In April 2022 the four international organisations issued a joint report on Subsidies, Trade and International Cooperation setting out the impact of subsidies and issues arising from their use. The paper highlighted the potential benefits that could arise from closer international cooperation on the issues and considered some areas where cooperative solutions could be pursued constructively.
Although in some circumstances well-designed subsidies can have a legitimate role for a limited period of time, such measures must be transparent and in line with trade commitments. Subsidies should not be used to provide a competitive advantage to domestic industry. The cost to trading partners should be kept as low as possible.
The Joint Subsidy Platform aims to support governments in developing an understanding of the issues involved. The platform will provide more transparency and will support high-quality analysis of the issues. By encouraging the disclosure of more data and analysis, the platform can promote a stronger dialogue between governments on subsidies.
The paper released by the international organisations in April 2022 noted that the growing use of distortive subsidies was affecting trade and investment flows, and disputes about subsidies were increasing global trade tensions. The current desire by countries to develop industrial policies that promote strategic sectors could distort international competition, disadvantage developing countries and give rise to discord within the trading system.
Subsidies are used by countries at all stages of development, and they can take many different forms. National and sub-national entities often provide subsidies in the form of direct grants, tax incentives and favourable terms for financing, energy or land. Many of the subsidies do not achieve their stated objective, or further their goals at high domestic cost or with harmful effects on other countries. The use of subsidies can be reduced by international cooperation and their design can be improved.
Although the current international rules provide a strong basis for regulating subsidies, there are still gaps in the rules. Significant trade-distorting domestic farm subsidies are still permitted in many cases, and fisheries subsidies can contribute to overfishing. Investment incentives are often granted at sub-national levels where they can be hard to monitor.
Countries could benefit from improved information, more objective analysis, and regular dialogue so they can identify subsidies that need to be reformed. Better monitoring and economic analysis can give countries more insight into how well their subsidy programs are achieving domestic policy objectives and the true costs involved. This type of analysis can support inter-governmental dialogue, helping countries to form a more common perspective on the role of subsidies and the development of updated policies. The work of improving analysis and engaging in intergovernmental consultation can be done by finance and trade ministries, and other specialised government agencies, supported by the international organisations.
