Direct vs Indirect Subsidies - WTO Concerns

Subsidies are government financial contributions to domestic producers, aiming to support specific industries or achieve social objectives. The World Trade Organization (WTO) regulates these subsidies to prevent unfair trade distortions. WTO rules differentiate between direct (e.g., cash transfers) and indirect (e.g., input cost reductions) subsidies, with varying levels of permissibility under the Agreement on Subsidies and Countervailing Measures (SCM Agreement) and the Agreement on Agriculture (AoA).

Recent Developments

  • The WTO's Appellate Body remains largely dysfunctional in 2024-25, complicating dispute resolution.
  • India continues to face scrutiny over its agricultural subsidies, particularly Minimum Support Prices (MSP) for products like rice and sugarcane, which ....
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