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Export subsidy is a government policy to encourage export of goods and discourage sale of goods on the domestic market through direct payments, low-cost loans, tax relief for exporters, or government-financed international advertising. An export subsidy reduces the price paid by foreign importers, which means domestic consumers pay more than foreign consumers. The World Trade Organization (WTO) prohibits most subsidies directly linked to the volume of exports, except for LDCs.[1] Incentives are given by the government of a country to exporters to encourage export of goods.
Export subsidies are also generated when internal price supports, as in a guaranteed minimum price for a commodity, create more production than can be consumed internally in the country. (These price supports are often coupled with import tariffs, which keeps the domestic price high by discouraging or taxing imports on the difference between the world price and the mandatory minimum.) Instead of letting the commodity rot or destroying it, the government exports it. Saudi Arabia is a net exporter of wheat, Japan often is a net exporter of rice.[citation needed]
At the WTO's Tenth Ministerial Conference, which was held in Nairobi, Kenya from 15 to 19 December 2015, the WTO member states agreed to eliminate export subsidies for agricultural products; least-developed nations had until the end of 2018 to eliminate agricultural export subsidies (until 1 January 2017 in relation to cotton exports), while developed nations agreed to eliminate most such subsidies immediately.
[2][3][4]
Export subsidies can cause inflation: the government subsidises the industry based on costs, but an increase in the subsidy is directly spent on wage hikes demanded by employees. Now the wages in the subsidised industry are higher than elsewhere, which causes the other employees demand higher wages, which are then reflected in prices, resulting in inflation everywhere in the economy.[citation needed]
Some countries provide indirect export subsidies in the form of tax reductions. In the United States closely held exporters of U.S. made goods may get a reduction of tax using an Interest Charge Domestic International Sales Corporation (IC-DISC).[5]
Another example is Armenia. According to Armenian legislation, IT companies that suit several criteria are getting 50% of the income tax they have paid back. In 2022, after the drastic revaluation of Armenian Dram against US Dollar, which could potentially harm exporting industries, a proposal has been put into discussion to return the entire amount of tax paid by IT companies during the previous 4 months.[6]
^Anti-dumping, subsidies, safeguards: contingencies, etc, Understanding the WTO: The Agreements
^"WTO members secure "historic" Nairobi Package for Africa and the world". World Trade Organization. 19 December 2015. Retrieved 20 December 2015.
^"World Trade Organization strikes 'historic' farming subsidy deal". BBC News. 19 December 2015. Retrieved 20 December 2015.
^WTO, Ministerial Declaration on Cotton, accessed 21 December 2015
^http://www.aicpa.org/Publications/TaxAdviser/2012/October/Pages/clinic-story-05.aspx[permanent dead link]
^ՏԵՂԵԿԱՏՎԱԿԱՆ ՏԵԽՆՈԼՈԳԻԱՆԵՐԻ ՈԼՈՐՏԻ ԱՌԵՎՏՐԱՅԻՆ ԿԱԶՄԱԿԵՐՊՈՒԹՅՈՒՆՆԵՐԻՆ ԵՎ ԱՆՀԱՏ ՁԵՌՆԱՐԿԱՏԵՐԵՐԻՆ ՊԵՏԱԿԱՆ ԱՋԱԿՑՈՒԹՅԱՆ ՏՐԱՄԱԴՐՄԱՆ ԿԱՐԳԸ ՀԱՍՏԱՏԵԼՈՒ ՄԱՍԻՆ [On supporting individuals and organizations operating in IT industry] (act N 399-L) (in Armenian). RA Government. March 22, 2022.
Exportsubsidy is a government policy to encourage export of goods and discourage sale of goods on the domestic market through direct payments, low-cost...
regulated the import and export of grain in Great Britain and Ireland for centuries. The laws were repealed in 1846. Agricultural subsidies in the twentieth century...
crop surpluses, which were unloaded on the world market by means of exportsubsidies, pushing food prices down. The fiscal burden of protective measures...
Kerosene subsidy was introduced during the 2nd Five Year Plan (1956–1961) and since 2009 slowly decreased until 2022 when it was eliminated. A subsidy, often...
decisions on exportsubsidy levels can be changed unpredictably." In 2015, the World Trade Organization decided to terminate the exportsubsidy for agricultural...
Fossil fuel subsidies are energy subsidies on fossil fuels. They may be tax breaks on consumption, such as a lower sales tax on natural gas for residential...
thus will be deterred. However, with a strategic trade policy of an exportsubsidy, the matrix changes as the protecting government covers some of the...
agreement between the United States and the European Union on exportsubsidy and domestic subsidy reduction commitments in the Uruguay Round of multilateral...
artificially low prices for certain imported goods, due to 'dumping', exportsubsidies or currency manipulation. There is near unanimous consensus among economists...
profits from foreign to domestic firms. Strategic use of exportsubsidies, import tariffs and subsidies to R&D or investment for firms facing global competition...
an exportsubsidy. In March 2000, the Appellate Body of the WTO found that the FSC provisions of U.S. law constituted a prohibited exportsubsidy under...
later dubbed the "invisible hand". In the book, Chydenius attacks the exportsubsidy as an example of the harmful effects of government intervention on the...
terms provided) and working to eliminate subsidies and trade distortions related to officially supported export credits. Since 1999, country risk categories...
These subsidies are purported to "protect" local jobs and to help local firms adjust to the world markets. Exportsubsidies: Exportsubsidies are often...
sugar quota system were: intervention prices, quotas, tariffs and exportsubsidies. Most of the system was paid for by the European consumers. These paid...
would focus on market access, including an elimination of agricultural exportsubsidies. He also said that the Singapore issues could progress by negotiating...
another country is an export from the originating country, and an import to the country receiving that product. Imports and exports are accounted for in...
Peace Clause. Article 13 holds that domestic support measures and exportsubsidies of a WTO member that are legal under the provisions of the Agreement...
adopted the Common Agricultural Policy (CAP—see Glossary) subsidy program and the exportsubsidy program, both of which benefit German farmers as well as...
ministerial conference (in Hong Kong) which agreed to phase out agricultural exportsubsidies and to adopt the European Union's Everything but Arms initiative to...
exports are $10.367 billion in July–November 2013 and imports are $18.110 billion. Pakistan's exports continue to be dominated by manpower export in...
The Dairy Export Incentive Program (DEIP) is a program that offers subsidies to exporters of U.S. dairy products to help them compete with other nations...
A voluntary export restraint (VER) or voluntary export restriction is a measure by which the government or an industry in the importing country arranges...