1 UNCTAD, Trade and Development Report, 2006 – Global Partnership and National Policies for Development (New York: United Nations Publications, 2006), 237 pp., at 169Google Scholar.

2 WTO, Lamy Calls for Debate on ‘Flexibility’ and What Makes Good ‘Policy Space’ (27 September 2006).

3 S&D treatment under the Agreement on Agriculture is not addressed.

4 An exception related to agricultural export subsidies was inscribed.

5 The US rejected the infant industry argument on classic grounds (i.e., inefficient local production) and S&D treatment did not serve its export interests. See Hudec, R. E., Developing Countries in the GATT Legal System (Aldershot: Gower, 1987), 259 pp., at 9–10Google Scholar.

6 As cited in Irwin, D., Mavroidis, P. C., and Sykes, A. O., The Genesis of the GATT (Cambridge: Cambridge University Press, 2008), at 76, 104–105Google Scholar. See also London Draft (E/PC/T/33), at 8, 16, 17, 32.

7 The contribution of selective (export) subsidies in such export-promotion strategy remains debated. In theory, an export subsidy is equally not an optimal instrument to correct domestic market failures as it, like tariffs, negatively affects domestic consumption but a recent World Bank study stressed that selective interventions spurring export diversification could be useful for low-income countries (see also below). See Bhagwati, J. N., ‘Export-Promoting Trade Strategy, Issues and Evidence’, 3:1World Bank Research Observer (January, 1988), 27–57CrossRefGoogle Scholar; World Bank, The East Asian Miracle: Economic Growth and Public Policy (Oxford: Oxford University Press, 1993), 389 ppGoogle Scholar.; Commission on Growth and Development, The Growth Report – Strategies for Sustained Growth and Inclusive Development (Washington, DC: The World Bank, 2008), 190 pp.Google Scholar; Newfarmer, R., Shaw, W., and Walkenhorst, P. (eds.), Breaking into New Markets – Emerging Lessons for Export Diversification (Washington, DC: The World Bank, 2009), 265 ppCrossRefGoogle Scholar.

8 See Hudec, above n. 5, at 23.

9 The US stance was weakened by its own persistent demand for more flexibility in the field of agriculture. See Hudec, above n. 5, at 15 − 16.

10 The multilateral non-violation complaint (XXIII(b) of the GATT) and unilateral CVDs are ineffective to protect exporters' interests in third markets.

11 Jackson, J. H., World Trade and the Law of GATT – A Legal Analysis of the General Agreement on Tariffs and Trade (Indianapolis: The Bobbs-Merrill Company, 1969), at 399.Google Scholar

12 For a list of 17 signatories, see MTN.GNG/NG10/W/4, 28 April 1987, at 75.

13 GATT Director-General as cited in Stewart, T. P. (ed.), The GATT Uruguay Round – A Negotiating History (1986–1992) – Volume 1 (Deventer: Kluwer, 1993), 1,382 pp., at 815Google Scholar.

14 Export subsidies were also seen as means of offsetting other distortions (e.g., overvalued exchange rate, high tariffs on imported capital goods).

15 They failed to obtain S&D treatment regarding CVD action by other countries.

16 See SCM/M/3, 27 June 1980, at 3–9; SCM/W/116, 5 September 1986; MTN.GNG/NG10/W/4, 28 April 1987, at 87–93; Hudec, above n. 5, at 88–89.

17 See SCM/M/3, 27 June 1980, at 5–10.

18 See Hudec, above n. 5, at 83–84, 89, referring to L/4905, 3 December 1979; L/3149, 29 November 1968.

19 See, for example, SCM/M/19, 21 February 1984, at 9–11; SCM/M/3, 27 June 1980.

20 See Leutwiler Report: Dunkel, A., Trade Policies for a Better Future – The ‘Leutwiler Report’, the GATT and the Uruguay Round (Dordrecht: Martinus Nijhoff Publishers, 1987), 174 pp.Google Scholar, at 46.

21 Article 27.1; see also Panel Report, Brazil–Aircraft (Article 21.5 – Canada) (WT/DS46/RW, adopted 4 August 2000), footnote 49.

22 The latest draft text: TN/RL/W/236, 19 December 2008. An overview of the latest state of negotiations: TN/RL/W/254, 21 April 2011.

23 Article 1.1(a)(1).

24 Or any form of income or price support in the sense of Article XVI of the GATT. Article 1.1(a)(2).

25 Article 1.1(b).

26 These subsidies are deemed to be specific by virtue of Article 2.3, and, therefore, do not have to pass the specificity test.

27 The effect on consumer welfare is not relevant for this analysis. See, for instance, Panel Report, EC–Large Civil Aircraft (WT/DS316/R, adopted 1 June 2011), para. 1.1991.

28 Annex VII(a) of the SCM Agreement.

29 On the use of GNI instead of GNP, see G/SCM/110/Add.8, 16 June 2011.

30 Moreover, countries will be re-included when their GNI per capita falls again below $1,000. See WT/MIN(01)/17, 14 November 2001, paras. 10.1 and 10.4.

31 With the omission of Honduras, which was added by a technical rectification (WT/L/384, 19 December 2000; WT/GC/M/62, 28 February 2001).

32 For a list of other non-original WTO Members with GNI per capita of less than $1,000 in 1990 dollars in 2009, see Creskoff, S. and Walkenhorst, P., ‘Implications of WTO Disciplines for Special Economic Zones in Developing Countries’, World Bank Policy Research Working Paper (2009), 42 pp.Google Scholar, at 24.

33 See TN/RL/GEN/177/Rev.2, 18 March 2011, para. 2.

34 The Doha Declaration (para. 10.1) also explicitly referred to Annex VII(b) countries.

35 The methodology for making this calculation is spelled out in G/SCM/38, 26 October 2003.

36 See G/SCM/110/Add 9, 20 June 2012.

37 Also LDCs that are non-original WTO Members benefit from this exception because Annex VII(a) is not a closed list.

38 Article 27.4.

39 See Torres, R. A., ‘Free Zones and the World Trade Organization Agreement on Subsidies and Countervailing Measures’, 2:5Global Trade and Customs Journal (2007), 217–223CrossRefGoogle Scholar, at 221.

40 G/SCM/39, 20 November 2001.

41 Article 27.4. See Panel Report, Brazil–Aircraft, paras. 7.58–7.67.

42 See WT/L/691, 31 July 2007.

43 See also Creskoff and Walkenhorst, above n. 32, at 23; Torres, above n. 39, at 221–222.

44 See TN/RL/GEN/177/Rev.2, 18 March 2011.

45 Article 27.2 reads:

46 They also hold that they could benefit from the possibility of further extensions pursuant to Article 27.4.

47 TN/RL/W/254, 21 April 2011, para. 34.

48 See G/SCM/N/74/BOL & Suppl.1, G/SCM/N/74/HND, G/SCM/N/74/KEN, and G/SCM/N/74/LKA.

49 See WT/L/691, 31 July 2007, para. 4.

50 Again, other WTO Members explained this to Vietnam during accession negotiations (WT/ACC/VNM/29, 30 October 2003).

51 Article 27.5.

52 Hence, it excludes production for domestic consumption. See Panel Report, US–Upland Cotton (WT/DS267/R, adopted 21 March 2005), para. 7.1441.

53 Article 27.6 of the SCM Agreement. The Secretariat only makes calculations according to the request of the WTO Member and does not interpret the results.

54 See G/SCM/132/Add.1, 23 March 2010; G/SCM/103/Add.1, 12 March 2003.

55 See, for example, G/SCM/W/443, 17 May 2001, at 2.

56 No request at the section level was made in the 2003 calculations.

57 The HS classification consists of 21 ‘sections’, subdivided into 98 ‘chapters’, and further subdivided into four-digit ‘headings’ and six-digit ‘HS codes’. Tariff lines are defined at the six-digit level (or at further subdivisions).

58 See also Creskoff and Walkenhorst, above n. 32, footnote 56.

59 Hoda, A. and Ahuja, R., ‘Agreement on Subsidies and Countervailing Measures: Need for Clarification and Improvement’, 39:6Journal of World Trade 1009 (2005), 1009–1969Google Scholar, at 1028. See also G/SCM/W/443, 17 May 2001.

60 Hoda and Ahuja, above n. 59, at 1028.

61 Appellate Body Report, US–Softwood Lumber IV (WT/DS257/AB/R, adopted 17 February 2004), para. 59.

62 Indeed, to which element would the prefix ‘section’ exactly refer? Sections in the HS Nomenclature are subdivided in ‘chapters’, which are only then subdivided into ‘headings’.

63 The ‘object and purpose’ to preserve subsidies as a development tool might also rather point to a product defined at the section level given that export competitiveness is less easily reached and phasing out is more practicable.

64 On the basis of including intra-EU(27) trade.

65 See also G/SCM/M/79, 3 February 2011, para. 148.

66 G/SCM/M/79, 2 February 2012, para. 166.

67 A final interpretative difficulty is the exact starting point of the eight-year (or two-year in case of small trading countries) extinction period: the moment when export competitiveness was reached (i.e., the end of 2006), or when the computation was made (i.e., March 2010).

68 G/SCM/W/431/Rev.1, 20 March 2001; TN/RL/GEN/136, 16 May 2006.

69 G/SCM/W/431/Rev.1, 20 March 2001, para. 3.

70 Export competitiveness in a certain year would be calculated as an average of the share in exports over the last five years and would be present only if such export shares would pass the 3.25 threshold for two consecutive years. See TN/RL/GEN/136, 16 May 2006.

71 See, for example, G/SCM/W/431/Rev.1, 20 March 2001, para. 4; TN/RL/W/120, 16 June 2003, para. 10.

72 If export competitiveness would be lost during the phase-out period, the clock would be stopped and only re-start after it is reached again. If lost after the phase-out period, export subsidies could be re-introduced until export competitiveness would be established for a second time, in which case a phase-out period of two years would start to run.

73 See, for instance, G/SCM/W/450, 29 May 2001.

74 See, for example, G/SCM/W/443, 17 May 2001; TN/RL/W/254, 21 April 2011, paras. 9–11.

75 But in contrast to the GATT and the TRIMs Agreement, the SCM Agreement does not provide any ground for justification for local content subsidies and has specific and stricter dispute settlement provisions in place.

76 See Article 5 of the TRIMs Agreement (Article 4 is less relevant for our discussion). Regarding disciplines on local content requirements, see Article 2 juncto Annex, para. 1 of the TRIMs Agreement.

77 Or after accession.

78 Article 5.1 juncto 5.3 of the TRIMs. For a list of notifications, see G/L/900, 21 October 2009, Annex I.

79 The text does not explicitly state that these notified new TRIMs have to be approved by the Council for Trade in Goods but only that they have to be given positive consideration. So far, no notifications have been introduced. The duration of new TRIMs should not exceed five years, renewable subject to review and explicit ‘decision’ by the Council for Trade in Goods. Hong Kong Ministerial Declaration (WT/MIN(05)/DEC, 22 December 2005), Annex F.

80 Panel Report, Indonesia–Autos (WT/DS54, 55, 59, 64R, adopted 23 July 1998), paras. 14.47–14.55.

81 Note that there was no disagreement among the parties in Indonesia–Autos that Indonesia was a developing country entitled to S&D treatment under Article 27.9 of the SCM Agreement. Likewise, all parties in Brazil–Aircraft agreed that Brazil was a developing country within the meaning of the SCM Agreement. See Panel Report, Indonesia–Autos, para. 14.157; Panel Report, Brazil–Aircraft, para. 7.38.

82 See Report of the Working Party Report on the Accession of China (WT/ACC/CHN/49), para. 171. See also G/SCM/M/66, 14 April 2009, paras. 98–99.

83 Article 27.13 regarding privatization programmes has not been relevant in practice.

84 Panel Report, Indonesia–Autos, para. 14.156.

85 Such nullification or impairment has to impede or displace imports of a like product of another Member into the market of the subsidizing developing country Member.

86 Hoda and Ahuja, above n. 59, at 1028, 1058, 1059.

87 The four situations are: (a) the total ad valorem subsidization of a product exceeds 5%; (b) the subsidy covers operating losses sustained by an industry; (c) the subsidy covers operating losses sustained by an enterprise, other than one time measures; or (d) direct debt forgiveness.

88 See also Appellate Body, EC–Large Civil Aircraft (WT/DS316/AB/R, adopted 1 June 2011), para. 668.

89 Hoda and Ahuja, above n. 59, at 1029; Torres, above n. 39, footnote 19.

90 See Clarke, P. A. and Horlick, G. N., ‘The Agreement on Subsidies and Countervailing Measures’, in Macrory, P. F. J., Appleton, A. E., and Plummer, M. G. (eds.), The World Trade Organization: Legal, Economic and Political Analysis – Volume I (New York: Springer, 2005), pp. 679–748Google Scholar, at 728–729. Along the same lines, see Piérola, F., ‘Article 6 SCMA’, in Wolfrum, R., Stoll, P.-T., and Koebele, M. (eds.), WTO: Trade Remedies (Heidelberg: Max Planck Institute for Comparative Public Law and International Law, 2008), pp. 498–536Google Scholar, at 509.

91 See Clarke and Horlick, above n. 90, at 728–729.

92 Or a threat of serious prejudice. See Panel Report, Indonesia–Autos, para. 14.169.

93 First, the text of Article 31 refers to the temporary application of ‘(t) provisions of paragraph 1 of Article 6 and the provisions of Article 8’ (emphasis added). Hence, it not merely refers to the presumption elaborated in Article 6.1 of the SCM Agreement. Second, the text of Article 27.9 refers to ‘actionable subsidies … referred to in paragraph 1 of Article 6’ and, therefore, seems dependent upon the existence of this provision. The alternative reading suggested by Horlick and Clarke is possible but would be more difficult to align to the wording of this text. Third, the restrictive interpretation articulated by Hoda and Ahuja would mean that the extinction of Article 6.1 not only relaxed disciplines on domestic subsidies for developed countries (as the presumption of serious prejudice under Article 6.1 collapsed), but likewise for developing countries. This is justified given that the status of Article 6.1 was, at least in political terms, bound to the status of the green light category. In a sense, the collapse of Article 6.1 would thus compensate both developed and developing countries for more restrictive disciplines on green light subsidies. Fourth and finally, a restrictive reading might find contextual support in Article 27.1, which underscores the important role of subsidies in economic development.

94 Hoda and Ahuja, above n. 59, at 1028, 1058, 1059. This also seems the position of Benitah, M., The Law of Subsidies under the GATT/WTO System (The Hague: Kluwer Law International, 2001), 424 pp.Google Scholar, at 258–260, at 39.

95 Remarkably, Brazil seemed to adopt this position before the Panel in Brazil–Aircraft (para. 4.156).

96 Emphasis added.

97 Emphasis added.

98 These are not prohibited by virtue of S&D treatment.

99 Recall that the ‘serious prejudice’ claims might no longer be possible today.

100 The Panel in Indonesia–Autos (paras. 8.53, 8.90, footnote 724) cautiously circumvented this issue.

101 Appellate Body Report, US–Large Civil Aircraft (WT/DS353/AB/R, adopted 23 March 2012), para. 1253; Panel Report, Korea–Commercial Vessels (WT/DS273/R, adopted 1 April 2005), para. 7.334.

102 First, the corresponding provision under the Subsidies Code referred to ‘any subsidy, other than an export subsidy’ and the replacement by the term ‘actionable subsidies’ in Article 27.9 seems to aim at implementing the new traffic light approach (in a confusing manner), rather than at substantively modifying its scope and, therefore, seems not intended to bring ‘export subsidies’ within the scope of Article 27.9. Second, developing countries signatories already agreed under the Subsidies Code that their export subsidies should not cause serious prejudice and developed countries aimed at strengthening disciplines on developing countries during the Uruguay Round. The opposite reading would deprive the final sentence of Article 27.7 (i.e., ‘[t]he relevant provisions in such a case shall be those of Article 7’) of any substantive meaning.

103 Such S&D treatment was not foreseen under the Subsidies Code (above n. 15).

104 Article 27.11 provided for a 3% de minimis threshold for some developing countries, but provision has expired.

105 Article 27.10 of the SCM Agreement.

106 See Appellate Body Report, US–Carbon Steel (WT/DS213/AB/R, adopted 19 December 2002), para. 82.

107 See Gantz, A., ‘Non-Market Economy Status and US Unfair Trade Actions Against Vietnam’, Arizona Legal Studies – Discussion Paper (December 2009), 35 pp.Google Scholar, at 7.

108 These figures might be incomplete as they are based on notifications by Members.

109 Developing countries were subject of 61% of all CVDs measures. See WTO Secretariat, World Trade Report 2009 – Trade Policy Commitments and Contingency Measures (Geneva: WTO Publications, 2009), 171 pp.Google Scholar, at 140. See WTO Secretariat statistics based on notifications by WTO Members. Available at: http://www.wto.org/english/tratop_e/scm_e/cvd_init_exp_country_e.pdf. http://www.wto.org/english/tratop_e/scm_e/cvd_meas_exp_country_e.pdf.

110 TN/RL/GEN/160, 4 December 2009; TN/RL/GEN/161, 4 December 2009; TN/RL/GEN/169, 14 October 2010; TN/RL/GEN/164, 8 April 2010.

111 See TN/RM/W/4, 25 April 2002; TN/RL/W/99, 3 May 2003.

112 The latter could explain why large developing countries employ much more frequently anti-dumping duties. In case of tariff overhang, countries could respond by raising their applied level of tariffs, but this should be done on an MFN basis.

113 Developed countries account for 86% of all CVDs measures (World Trade Report 2009, above n. 109, at 140). See also WTO Secretariat statistics based on notifications: http://www.wto.org/english/tratop_e/scm_e/cvd_init_rep_member_e.pdf. http://www.wto.org/english/tratop_e/scm_e/cvd_meas_rep_member_e.pdf.

114 The imposition of CVDs on US broiler products is currently challenged by the US before the WTO dispute settlement system (DS427).

115 A welfare maximizing large country is rather advised to tax exports. A production subsidy to its import-competing industry could, in theory, be welfare-improving for the subsidizing country, but an optimal tariff would be a more direct, and thus an efficient, instrument to exploit its terms of trade.

116 One reason why these subsidies are usually criticized by third countries could be seen in the fact that the adversely affected producers are better organised than benefitting consumers.

117 They could also be used to exploit strategic trade opportunities in oligopolistic markets (i.e., profit-shifting rationale), but this is less relevant in the context of developing countries. Brander, J. A. and Spencer, B. J., ‘Export Subsidies and International Market Share Rivalry’, 18 Journal of International Economics (1985), 83–100Google Scholar. The specific assumptions adopted in the Brander – Spencer model also make export or general output subsidies not a robust policy recommendation. See, e.g., Eaton, J. and Grossman, G. M., ‘Optimal Trade and Industrial Policy under Oligopoly’, 101:2The Quarterly Journal of Economics (May, 1986)Google Scholar.

118 See also Appellate Body Report, US–Large Civil Aircraft, para. 1253.

119 Of course, developing countries would be ‘large’ with regard to the production of those products in which they have a substantive share of total production.

120 See, for instance, Moran, T. H., Graham, E. M., and Blomström, M. (eds.), Does Foreign Direct Investment Promote Development? (Washington, DC: Institute for International Economics, 2005)Google Scholar.

121 The empirical evidence (above n. 6) is theoretically underpinned. The standard rationale for the infant industry argument rests on the assumption of a capital market failure for which a production subsidy would at most serve as a second best corrective instrument. Subsidizing ‘infant industries’ may be beneficial in a second-best fashion when, for instance, (i) learning spills over to other actors in the economy; (ii) information externalities inhibit self-discovery (see below); or (iii) private actors fail to coordinate their complementary actions.

122 Recall that only ‘selective’ domestic subsidies are disciplined (Article 2) and that such serious prejudice claim would also be dependent on the successful demonstration of trade effects (Article 6.3).

123 See, for example, Panel Report, Indonesia–Autos.

124 Temporary subsidization would slow down the adjustment process in case of congestion in the labor market. The more workers are unemployed at the same time, the less likely that they will find a job. By temporarily protecting jobs, the chances for unemployed workers to find a job increases (congestion is reduced).

125 Policy space for such subsidies might also be relevant from a systemic perspective (see next paragraph).

126 Bagwell, K. and Staiger, R. W., ‘Will International Rules on Subsidies Disrupt the World Trading System?’, The American Economic Review (June, 2006), 877–895Google Scholar.

127 Because subsidization is welfare improving for net-importing countries, countries have been advised by Krugman to send a thank you note to the foreign country instead of taking CVD action.

128 Article 27.1.

129 The deterrence rationale for CVDs was rejected by proponents of the entitlement theory in the 1980s. Goetz, C. J., Granet, L., and Schwartz, W. F., ‘The Meaning of “Subsidy” and “Injury” in the Countervailing Duty Law’, 6 International Review of Law and Economics (1986), 17–32Google Scholar; Diamond, R., ‘Economic Foundations of Countervailing Duty Law’, 29 Virginia Journal of International Law (1989), 767–812Google Scholar.

130 CVDs would allow governments to make a credible commitment to their import-competing industries that bound levels will be respected. This would make it more feasible in political-economy terms to agree upon multilateral tariff reductions. See also Sykes, A. O., ‘Countervailing Duty Law: An Economic Perspective’, 89 Columbia Law Review (March, 1989), 199–262CrossRefGoogle Scholar.

131 This has been suggested by India in Doha Round.

132 See TN/RL/41/Rev.1, 10 March 2003.

133 Hoekman, B. M., Maskus, K. E., and Saggi, K., ‘Transfer of Technology to Developing Countries: Unilateral and Multilateral Policy Options’, IBS Research Program on Political and Economic Change, Working Paper PEC 2004–2003 (May, 2004), 34 pp.Google Scholar, at 22–23.

134 Rodrik and Hausmann have explained that the cost of discovering what a country can produce profitable is borne by the initial investor but this has a ‘demonstration effect’ on others to enter this profitable market without bearing the initial sunk cost. Assuming low barriers to entry, this knowledge spillover implies that market forces lead to underinvestment in self-discovery. Hausmann, R. and Rodrik, D., ‘Economic Development as Self-Discovery’, 72 Journal of Development Economics (2003), 603–633CrossRefGoogle Scholar, at 604–605. Empirical support for this market failure hypothesis has been found by Klinger, B. and Lederman, D., ‘Export Discoveries, Diversification, and Barriers to Entry’, 35 Economic Systems (2011)Google Scholar, at 64–83.

135 See Hoekman, Maskus, and Saggi, above n. 133, at 22–23.

136 Such self-discovery subsidies should extinguish over time, because only in that situation can it be effectively demonstrated that the products in question can be produced at competitive (i.e., non-subsidized) prices.

137 Although failing to discriminate between innovators and imitators, an export subsidy might be useful to induce self-discovery as it directs innovations at the world market and offers a straightforward criterion to filter out unsuccessful innovations ex post (performance criteria). Hausmann and Rodrik, above n. 134, at 630.

138 See Newfarmer, Shaw, and Walkenhorst, above n. 7.

139 See also Commission on Growth and Development, The Growth Report – Strategies for Sustained Growth and Inclusive Development (Washington, DC: The World Bank, 2008), 190 pp.Google Scholar, at 11.

140 See, for instance, MTN.GNG/NG10/W/33, 30 November 1989, para. 7; TN/RL/W/99, 6 May 2003. The first-best option would be to correct the market failure directly, which does not involve export subsidization unless, for instance, in case of positive learning-by-exporting externalities.

141 Empirical evidence on horizontal spillovers is mixed but the evidence on positive productivity effects on suppliers (vertical) is somewhat more promising. See, for instance, Bitzer, J. and Görg, H., ‘Foreign Direct Investment, Competition and Industry Performance’, 32:2The World Economy (2009), 221–233CrossRefGoogle Scholar. Because spillovers are hard to calculate, subsidies might easily be offered beyond legitimate levels. See Javorcik, B. S., ‘Can Survey Evidence Shed Light on Spillovers from Foreign Direct Investment?’, 23:2The World Bank Research Observer (Fall 2008), 139–159Google Scholar.

142 Alternatively, the export contingency condition attached to incentives implemented in EPZs could be deleted. These schemes would still be vulnerable to actionable subsidy claims and CVD action. See Torres, above n. 39, at 220.

143 Recall that export subsidies are deemed to be specific.

144 Nullification or impairment of tariff concessions is not relevant with regard to export subsidies.

145 See Creskoff and Walkenhorst, above n. 32, at 23.

146 See, for example, MTN.GNG/NG10/W/29, 22 November 1989, at 2; MTN.GNG/NG10/W/20, 15 June 1988, at 7.

147 Other instruments (e.g., domestic subsidies) might become more useful.

148 Newfarmer, Shaw, and Walkenhorst, above n. 7.

149 Finger, M. J. and Winters, L. A., ‘What Can the WTO Do for Developing Countries?’, in Krueger, A. O. (ed.), The WTO as an International Organization (Chicago: The University of Chicago Press, 1998), 425 pp., 365–392Google Scholar, at 387.

150 P. Brenton, R. Newfarmer, W. Shaw, and P. Walkenhorts, ‘Breaking Into New Markets: Overview’, in Newfarmer, Shaw, and Walkenhorst, above n. 7, 1–35, at 27–28.

151 See Panel Report, Brazil–Aircraft, para. 7.89 (footnotes deleted).

152 Article 25. The TPRM already partly increases this transparency.

153 See, for instance, Rodrik, D., One Economics – Many Recipes – Globalization, Institutions, and Economic Growth (Princeton: Princeton University Press, 2007), 255 pp.CrossRefGoogle Scholar, at 148–149; UNCTAD, above n. 1, at 171.

154 Lee, Y.-S., ‘Facilitating Development in the World Trading System – A Proposal for Development Facilitation Tariff and Development Facilitating Subsidy’, 38:6Journal of World Trade (2004), 935–954Google Scholar, at 948–954.

155 See also Y.-S. Lee, ‘Economic Development and the World Trade Organization: Proposal for the Agreement on Development Facilitation and the Council for Trade and Development in the WTO’, in Chantal, T. and Trachtman, J. (eds.), Developing Countries in the WTO Legal System (Oxford: Oxford University Press, 2009), pp. 291–319Google Scholar.

156 Next to notification to the WTO, this would provide for prior public notice as well as public hearings on its implementation.

157 Lee, above n. 154, at 951.

158 Ibid., at 952–953.

159 See World Bank, The East Asian Miracle, above n. 7.

160 Linking R&D subsidies to export performance induces firms to export rather than to sell domestically and would thus be contingent upon exportation according to the Appellate Body (see below n. 165). Export subsidies are also deemed to be specific (Article 2.3).

161 Panel Report, Brazil–Aircraft, para. 7.92. Rodrik pointed to the outcome of this case against Brazil as an illustration that the WTO precludes successful development strategies. See Rodrik, above n. 153, at 226, footnote 13.

162 Developed countries were already subject to a prohibition on export subsidies under the Subsidies Code. Yet, disciplines on export credit support were far less restrictive and the WTO dispute settlement system also improved the enforceability of this prohibition. Importantly, Brazil was successful in its various counterclaims against Canadian export subsidies.

163 Hausmann, R. and Rodrik, D., ‘Economic Development as Self-discovery’, 72 Journal of Development Economics (2003), 603–633CrossRefGoogle Scholar. In other publications, Rodrik recognizes that some countries benefit from an exemption on export subsidies but he often limits this S&D treatment to LDCs (see, for example, below n. 173).

164 Only one of the listed examples has recently graduated (i.e., Dominican Republic).

165 Rodríguez-Clare, A., Microeconomic Interventions after the Washington Consensus (Washington, DC: Inter-American Development Bank, February 2005), 37 pp.Google Scholar, at 23.

166 This would be more transparent and less costly. Rodríguez-Clare, above n. 165, at 28.

167 Appellate Body Report, EC–Large Civil Aircraft, paras. 1044, 1086, 1091, 1098, 1099, 1102.

168 An export subsidy is only present if it is provided so as to incentivize the recipient to export ‘in a way that is not simply reflective of the conditions of supply and demand in the domestic and export markets undistorted by the granting of the subsidy’. Appellate Body Report, EC–Large Civil Aircraft, paras. 1045, 1048.

169 Footnote 4 of the SCM Agreement; Appellate Body Report, EC–Large Civil Aircraft, para. 1092. The Appellate Body has also underscored that export orientation of a firm may form ‘a relevant factor’ but is insufficient on itself. See Appellate Body Report, Canada–Aircraft, para. 173 (emphasis in the original).

170 Referring to the findings by Imbs and Wacziarg, Rodriguez-Clare holds that the appropriate mix of both types of industrial policy depends on the level of development: poor countries should induce self-discovery and more advanced countries should induce specialization. However, Imbs and Wacziarg show that countries start specializing relatively late in their development process and specialization of exports even kicks in at a much later stage. The 2009 World Bank study seems to approach both types of interventions in a complementary rather than sequential way. H. Hesse, ‘Export Diversification and Economic Growth’, in Newfarmer, Shaw, and Walkenhorst, above n. 7, 55–80, at 58; Imbs, J. and Wacziarg, R., ‘Stages of Diversification’, The American Economic Review (March, 2003), 63–86CrossRefGoogle Scholar; Newfarmer, Shaw, and Walkenhorst, above n. 7, at 3–4; Rodríguez-Clare, above n. 165, at 23–24.

171 Rodrik, for example, proposes to organize bids for public resources on the basis of pre-investment proposals so as to subsidize costs of self-discovery. Rodrik, above n. 153, at 117.

172 The interventions listed by Rodrik as part of a successful industrial policy do not necessitate export subsidies. Rodrik, above n. 153, at 117–119.

173 For instance, Rodrik seems to stress the importance of leeway on domestic subsidization but fails to take into account the S&D treatment on such subsidies offered under the SCM Agreement. See Rodrik, D., ‘Growth After the Crisis’, Paper prepared for the Commission on Growth and Development (May, 2009), 42 pp.Google Scholar, at 23.

174 Such risk would be higher when green light is offered to export subsidies because of their more direct impact on trade compared to domestic subsidies.

175 Even with the CVD option in place, these countries might prefer substantive tariff overhang to be able to counter foreign subsidization.

176 See Coppens, D., ‘How Much Credit for Export Credit Support Under the SCM Agreement?’, 12:1Journal of International Economic Law (2009), 63–113CrossRefGoogle Scholar.

177 Allowing drawbacks on capital inputs is precisely one of the measures that developing countries still benefiting from S&D treatment on export subsidies have implemented as part of their EPZs policy. However, these exemptions could still be challenged as actionable subsidies or be countervailed.

178 Communication from the International Monetary Fund (WT/TF/COH/15, 14 February 2003).

179 The amendment would place drawbacks on capital inputs outside the reach of actionable subsidy claims and CVD action.

180 Communication from the International Monetary Fund (WT/TF/COH/15, 14 February 2003).