Learning by Not Doing: Subsidy Disciplines in Services Trade

This paper explores the hitherto futile quest for developing disciplines on the trade- and investment-distorting effects of services subsidies. It sheds light on the multiplicity of factors that have weighed on the conduct of negotiations on subsidy disciplines in a services trade context at both the global and preferential levels, and advances a few thoughts on what the future may hold for the adoption of such disciplines. The analysis suggests that it is rather unlikely that WTO Members will any time soon reach a consensus on the matter of subsidy disciplines for services beyond those that currently (and timidly) obtain in the GATS and in many preferential trade agreements. The main reason behind such a conclusion stems from a marked rise in the value of preserving policy space in a trading environment characterized by considerably greater global market contestability than two decades ago.