Subsidies and State Aids : The Definition of Acceptable Measures under the European Union and GATT Rules

Wishlade, Fiona (1996) Subsidies and State Aids : The Definition of Acceptable Measures under the European Union and GATT Rules. [Report]

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    Abstract

    The aim of this paper is to compare and contrast two separate systems for defining and disciplining subsidies in the international arena: the rules established on the basis of the Treaty of Rome for the regulation of so-called 'State aids' within the European Union; and the agreement reached under the Uruguay Round of GATT negotiations with respect to the control of subsidies in a global environment. The focus of the paper is on domestic subsidies to industry and on the substance of the rules, as opposed to the institutional or procedural aspects. The paper begins by outlining the main features of the EU and GATT approaches to State aids and subsidies in turn. In a second section, the question of how State aids and subsidies are defined under the two systems is considered. The third section reviews the provisions concerning 'acceptable' types of assistance and the respective rules applicable. A concluding section identifies the main contrasts between the approaches of the two systems and highlights those that raise issues for consideration in the EU.