Indirect Subsidization Under WTO Disciplines : Financial Contribution to One Entity, Benefit to Another

Indirect subsidization of domestic industries can occur where, for example, a financial contribution is provided to one entity but the associated benefit goes to another. This may materialize where (1) a financial contribution to an upstream producer results in a benefit to a downstream producer, or (2) privatization of a subsidized state-owned enterprise leads to the transmission of the subsidy to a post-privatization enterprise. A number of dispute cases initiated in the World Trade Organization have addressed both situations and resulted in substantial jurisprudence that cast light on some controversial issues on indirect subsidies. This paper examines the main findings made in case law, discusses subject-related Doha Round proposals and their possible implications for Korea