Government Subsidies In Trade In Services

Subsidies on trade in services is an important rule-making issue of the new WTO round ofnegotiations on trade in services. According to the provisions of GATS ARTICLE XV,members shall exchange information concerning all subsidies related to trade in services thatthey provide to their domestic service suppliers, such negotiations shall take into account theneeds of members, particularly developing countries members for the flexibility in this area,and it shall also address the appropriateness of countervailing procedures. As a developingcountry member, China can protect himself only if he takes part in the negotiations on trade inservices actively because the trade in service of China lags behind others. Under that context,this paper reviews the process and progress of the negotiation on subsidies in services and therequirement of the sixth ministerial conference, and then it discusses the role and limitation ofthe existing GATS rules disciplining the subsidies in services, and explains the necessity ofdeveloping the multilateral disciplines. Next it focuses on the technical issues to develop themultilateral discipline, such as the definition of the subsidies in services, informationexchange and trade-distortive subsidies. Finally it explained the issues taken into account forthe design of system of subsidies in services, e.g. the elements for defining the subsidies inservices including the types of subsidies, issues important to develop the multilateraldisciplines including the future model and specific subsidies on trade in services, and theappropriateness of a countervailing duty mechanism, it mainly explains the negative effects ofthe countervailing duty..