Rethinking the Relationship Between Subsidies and Developing States

8 Baku St. U. L.Rev. 149 (2022)
Article language: English.

Apart from being a substantial tool for improving a state’s economy, subsidies are one of the most controversial issues covered by the World Trade Organization. Especially, the question whether subsidies can exist in extraterritorial forms has given rise to heated debates in the academia. Taking into account the influence of subsidies on competition and, in general, on economies, the importance of possible answers to this question becomes clearer. Additionally, the status of “developing states” is still unresolved. Being considered a “developing state” increases chances to apply subsidies. But under which conditions is a state considered a “developing state” is controversial. Therefore, clarifying the criteria for developing states is also important.
In this article, subsidies have been analyzed from legal and economic points of view – in particular, the effects of subsidies on developing states’ economies have been discussed. After reviewing the definition and impact of subsidies, some flaws in the World Trade Organization’s regulation and case-law of the Dispute Settlement Body have been studied, and proposals are given to remove these shortcomings.

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