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WTO Chair China-UIBE held a webinar on The 28th Global Trade Alert Report

On December 20th 2021, WTO Chair China-UIBE and Network on International Trade and Investment System (NITIS) successfully co-organized a webinar on “The 28th Global Trade Alert Report: Towards an Inventory of Subsidies by China, the EU & the USA”. Dr. Simon J. Evenett from the University of St. Gallen was invited as the keynote speaker, and he is also the co-author of The 28th Global Trade Alert Report. The host of the webinar was Prof. Tu Xinquan, dean of CIWTO and secretary-general of NITIS, with Mr. Hong Xiaodong from China Society for WTO Studies and Associate Prof. Li Siqi from CIWTO being the discussants.

Dr. Evenett began with a background introduction to The 28th Global Trade Alert Report. As is clearly seen by the entire international community, the amount of corporate subsidies awarded by governments is increased greatly in recent years. This trend has caused attention and raised questions for its nature to jeopardize global trade. The 28th Global Trade Alert Report has collected data and information on more than 18000 subsidy awards and tried to analyze from a objective perspective. The aim of the report is to make the case for an informal policy dialogue that builds trust and understand the links between corporate subsidies and market access.

In his presentation, Dr. Evenett clarified the definition of corporate subsidy which was used in the report. There are some distinguished characteristics that corporate subsidy possesses. It is a subsidy that involves an action or a commitment to action by a public body under certain circumstances; it must involve the actual or potential outlay of a public body’s resources; it must confer an advantage on a firm, and it must be selective in some meaningful respect. He demonstrated with specific data and evidence that corporate subsidies have grown in salience, especially the ones from China, the EU & the USA after the 2008 financial crisis. The inventory in the report shows that the transparency of the big three all needs to be improved.

The most important discovery in the report is the 7 main findings. Dr. Evenett then explained each of them in details. The studies show that corporate subsidies are not only awarded in crisis years. Corporate subsidies are not confined to agriculture or only awarded to import-competing firms, they can be seen in many other industries and companies, and they are not a feature of only one development model. It is unfortunate to see that less than 1.05% of subsidy changes have reduced payments or eliminated them. Moreover, before the pandemic, the Big three’s subsidies covered 62% of global goods trade and evidence suggests tit-for-tat dynamics among them.

In the end, Dr. Evenett talked about the future of corporate subsidy issues. He thinks that right now there is no appetite for a multilateral negotiation on subsidies besides fisheries, but an informal policy dialogue organized by a neutral third party might be a better solution. At this moment, we need to develop a better subsidy information system and assess the adequacy of WTO rules. When the informal dialogue is mature, it will be the time to bring it back to the WTO negotiations.

Mr. Hong Xiaodong commented on Dr. Evenett's report. He agreed with most of the report, and found the suggestions made by Dr. Evenett instructive. Mr Hong said that research on subsidies should not only focus on data and facts, but also on deeper questions, such as why subsidies are awarded and the spillover effects of subsidies. He sees subsidies as a tool for developing countries to boost their economies and create jobs. Subsidies also sometimes help correct market failures. The R&D subsidies in private sector are necessary, as well as subsidies related to resuming production during the pandemic. Hong explained the strategic significance of subsidies by developed countries, citing the U.S. subsidies to the auto industry when he was working in the United States. As for the classification of subsidies mentioned in the report, Hong cited the WTO Agreement on Subsidies and Countervailing Measures (SCM) as an example. As for the tit-for-tat subsidies among China, the EU & the USA, he said that if we look at the long-term data, the trend is not obvious. Finally, Mr. Hong raised his own question, namely whether the SCM could provide an effective solution to future negotiations on subsidy rules.

Associate Prof. Li Siqi also made comments on the speech. Li affirmed the research results and contributions made in the report. The data and analysis are very clear, which is very important for enhancing understanding, strengthening information sharing, and providing certain reference for the reform of WTO rules. She agrees with the main argument that subsidies exist not only in the public sector but are now more common in the private sector. In the future, the dialogue on corporate subsidies should be strengthened while taking into account the economic development levels of different member states. She believes that subsidies should be viewed objectively. On the one hand, subsidies will interfere with trade and distort the market economy, but on the other hand, the abuse of trade remedy can also cause great harm. She agrees with the two experts on subsidy classification and said that any future dialogue in the area of subsidy rules should be based on solid facts and impact assessments.

In the free discussion part, Prof. Tu Xinquan, Miss. Yu Nan and Miss. Xu Xin gave speeches and asked questions respectively. Participants spoke highly of the review of subsidies in The 28th Global Trade Alert Report and were interested in the third-party platform proposed by Dr. Evenett. In response to these questions, Dr. Evenett believes that the time is not yet ripe for negotiations on subsidies in the WTO, and that the joint statements made by the US, EU and Japan on the reform of subsidy rules are not satisfactory. The preliminary work of the third party dialogue platform is to pave the way for the final return to WTO negotiations. With the evolution of climate change and some other global issues, there will be more disguised subsidies hindering the development of trade in the future, and it will also be difficult to regulate local government subsidies and other forms of subsidies, so there is still a long way to go in order to negotiate rules in the future.

In the end, Prof. Tu summarized the discussion, and the online seminar on The 28th Global Trade Alert Report came to a successful conclusion.