The European Community and National Subsidy Policies

  • Steven J. Warnecke


The American position in the current round of trade negotiations for revising GATT Articles VI and XVI includes a proposal for a tripartite differentiation of national subsidies.1 This so-called ‘traffic light’ or ‘red, green, amber’ system is in many respects quite close to existing European Community (EEC) practices. Since the EEC represents the most far-reaching attempt to liberalize trade among industrialized states, its experience with subsidies, albeit a highly specialized issue, may not only provide useful insights for understanding the American proposal, but also be relevant to efforts to reform the pertinent GATT articles. These include such questions as the extent to which and under what conditions general rules and obligations can be defined which are economically relevant, politically acceptable and enforceable multilaterally among a group of industrialized states; the frame of reference a multilateral organization can develop for evaluating national subsidies; the pressures it can bring to bear on its members; and the limits imposed on policy formulation. In the EEC’s case one limit is a result of the fact that the Community constitutes a suboptimal area from the perspective of the international economy.


Member State Industrial Policy Competition Policy Custom Union Free Trade Area 
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Notes and References

  1. 5.
    For an early authoritative statement see Hans von der Groeben, ‘Policy on Competition in the European Community’, in Bulletin of the European Community (Brussels: Nos. 7–8, 1961 ).Google Scholar
  2. 7.
    Hans von der Groeben, Handbuch für Europäische Wirtschaft (Baden-Baden: Lutzeyer, 1975, 132 Lieferung), p. 220.Google Scholar
  3. 10.
    Commission of the European Community, First Report on Competition Policy ( Brussels: April, 1972 ), pp. 112–6.Google Scholar
  4. 11.
    See P. S. R. F. Mathijsen, A Guide to European Community Law ( London: Street and Maxwell, 1975 ), p. 130.Google Scholar
  5. 16.
    Commission of the European Community, Third Report on Competition policy ( Brussels: May, 1974 ), pp. 76–8.Google Scholar
  6. 24.
    Commission of the European Community, Third Report on Competition Policy ( Brussels: May, 1974 ), pp. 96–7.Google Scholar
  7. 25.
    Commission of the European Community, Second Report on Competition Policy (Brussels: April, 1975 ), pp. 106–9.Google Scholar
  8. 33.
    Robert Middleton, Negotiating on Non-Tariff Distortions of the Trade: The EFTA Precedents ( London: Macmillan, 1975 ), p. 160.CrossRefGoogle Scholar

Copyright information

© Steven J. Warnecke 1978

Authors and Affiliations

  • Steven J. Warnecke

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