State-aid programs of BRICS countries: Сase of transport equipment trade
DOI:
https://doi.org/10.21638/spbu05.2018.304Abstract
State aid or subsidy programmes are a common practice of developed and developing countries to support national companies. Despite the fact that they are strictly regulated by the WTO rules, BRICS countries actively apply this measure, even though they announce the path to liberalization and trade cooperation. The aim of the paper is to reveal the distinguishing features of such programs in the BRICS in the field of trade in transport equipment. The methodology is based on a cross-country comparative analysis and case studies. The authors firstly explain the controversy in theoretical approaches to state aid policy analysis. Secondly they identify the peculiarities of non-tariff measures applied by BRICS and the role of state aid. And, finally, the paper presents the specific case studies in transport equipment trade. The authors conclude that the effectiveness of subsidies in the transport sector is not so obvious, as the dynamics in imports and exports of relevant products depends on various external factors. Nevertheless, the application of state aid in the industry leads to more favourable environment for national producers. State aid programmes, in most cases, do not comply with the WTO regulations, that implies trade distortion and could provoke trade disputes. The BRICS countries should strengthen the monitoring of these programs and focus on the opportunity of applying horizontal rather than vertical subsidies.
Keywords:
state aid, subsidy, non-tariff measures, BRICS, protectionism, foreign trade, trade in transport equipment
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Articles of the St Petersburg University Journal of Economic Studies are open access distributed under the terms of the License Agreement with Saint Petersburg State University, which permits to the authors unrestricted distribution and self-archiving free of charge.