Subsidies training builds Uzbekistan capacity before WTO membership

Subsidies are a form of government support that makes business activity cheaper. Most countries use them, either to lower the cost of goods or to stimulate economic activity in the public interest, as they encourage businesses to undertake activities they normally would not. An example is the subsidies for solar panels to help energy users migrate to cleaner energy sources. Nascent industries are often nurtured into through subsidization. 

But subsidies do not only have positive effects, because producers who get them have an unfair advantage over those who do not. They can distort trade, and as such they are regulated by the WTO.

The WTO does not ban subsidies outright. Member States can support their businesses, as long as it does not harm the interests of other WTO Members. Only subsidies that directly boost exports or favour domestic over imported goods (import-substitution subsidies) are prohibited outright.

Subsidies are treated in several agreements of the WTO – notably the GATT, the Agreement on Subsidies and Countervailing Measures (the SCM Agreement), the Agreement on Agriculture.

The ITC organized a training for policymakers – at the campus of the University of World Economy and Diplomacy (UWED) and online – on 19 and 25 June, on key aspects of WTO rules on subsidies, state aid and competition. The well-respected expert Luca Rubini gave the training.

The training was the seventh course of the joint ITC-UWED WTO  trade policy programme to fast-track policymakers’ knowledge on WTO topics.

Subsidies and competition

The participants came to grips with the WTO’s definition of subsidies, and the effects of these incentives on trade and competition. They learned how to identify actionable subsidies and how subsidies work in the case of State Trading Enterprises. Participants also learned about state aid and competition provisions through the WTO legal framework and current free trade agreements.

Practical exercises and case studies supplemented the training and relevant dispute settlement cases were under the lens. The course also drilled into the specifics of subsidies in agriculture. Agriculture is an important sector in Uzbekistan, and through group discussions, participants learned how to implement the SCM Agreement provisions in Uzbekistan, focusing on agricultural subsidies.

Twenty-three policymakers attended the training. Ubekistan’s chief negotiator Azizbek Urunov was present, as well as representatives from the Ministry of Investment and International Trade, the Ministry of Economy and Finance, the Ministry of Agriculture, the Ministry of Justice, the Antimonopoly Authority, the Plant Protection and Quarantine Agency, the State Assets Management Agency and other relevant government department and agencies.

The ITC facilitated the training with funding from the European Union as part of its project titled Facilitating the process of Uzbekistan’s accession to the WTO project.