Subsidies, whether related to exports or to production and investment, have been causes of many serious trade tensions and disputes throughout the history of GATT. This fact, primarily is an outcome of the economic nature of subsidies, since they have proved to be very effective instruments in industrialization, re-distribution of income, alleviation of unemployment, regional development, technological progress and attainment of competitive power.Secondly, the rather unclear formulation of GATT rules regarding subsidies has contributed to confusions and disputes, stemming from implementation of subsidies.In 1995, with the birth of the WTO, the Uruguay Round Agreement on Subsidies and Countervailing Measures came into force. Although a much comprehensive and detailed text compared to its predecessors, that Agreement also has certain deficiencies and contradictions that lead to biases against developing countries. This study is an attempt to analyze industrial subsidies in the GATT/WTO system. Since agricultural subsidies are dealt with in the Agreement on Agriculture, they won't be covered here.
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