Can we stop a global subsidy race?
Advanced economies have long avoided industrial policy and subsidies because of their inefficiency. But the United States has set a new tone with the Inflation Reduction Act (IRA), which includes extensive tax credits for electric vehicles, green manufacturing, and renewable energy production. China has long subsidized its state-owned enterprises and the European Union is relaxing its state aid rules. The global economy is entering a global subsidy race, and while some subsidies are necessary for the green transition, others risk distorting global markets and hampering innovation. The World Trade Organization (WTO), World Bank, and the International Monetary Fund (IMF) have launched a joint project to promote access to subsidy information, but is there a way to find common definitions of good and bad subsidies and avoid raising trade tensions?
Cecilia Malmström (Peterson Institute for International Economics) discusses with Anabel González (World Trade Organization) and Inu Manak (Council on Foreign Relations) in this episode of the PIIE event series Trade Winds on June 21, 2023. For more information, visit: https://www.piie.com/events/can-we-st...
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