Strategies for Political-Economic Use of Subsidies in the Multilateral Framework

The purpose of this study is to find the gaps under WTO’ system that allows States to make use of illegal subsidies. In the negotiations to change rules, lack of representatives and technical conditions and the unanimous consent rule can be an obstacle in reaching an agreement. The gaps of the notification and review system is also a hindrance for transparency that hinder prompt actions. The problem of countervailing measures as they cannot be imposed in a third country also creates spaces that encourages subsidies when parties compete in a third market, especially in a world with quite fragmented production. Some diplomatic characteristics of the dispute settlement system is explored to show how it enables subsidies practices and the fact that the State is condemned to withdraw the subsidy only at the end of the entire process also enhance ways for subsidies’ strategies. In this sense, the discrepancy of economic power of members must be considered. By the end, the study suggests a cross retaliation system to restrain political and economic use of illegal subsidies.