Notes

NOTES

1. Trade subsidy data are from Global Trade Alert: https://www.globaltradealert.org/. 2. The metric here is a simple count of measures, not the value of the support implied by a measure or its effects. Given that state aid and subsidies often are large in value, the implied share of subsidies versus other trade-impacting policies may be a downward-biased measure of the economic significance of such instruments. 3. Data on the share of subsidies in GDP or government budgets are from the International Monetary

Fund (IMF) Government Finance Statistics (GFS) database. These statistics report IMF data on subsidies to enterprises—private and public—of the types the GTA monitors as potentially competition distorting. The GFS country coverage is limited, and such data are not reported for all Latin American and Caribbean economies. 4. The OECD International Cartels Database provides information on cartel investigations and fines imposed by six Latin American and Caribbean countries. See https://qdd.oecd.org/subject .aspx?Subject=OECD_HIC. 5. Adverse effects include injury to a domestic industry, nullification or impairment of tariff concessions, or serious prejudice to the country’s interests. Serious prejudice is defined to exist if the total ad valorem subsidization of a product exceeds 5 percent, subsidies are used to cover operating losses of a firm or industry, or debt relief is granted for government-held liabilities.

Serious prejudice may arise if the subsidy reduces exports of a foreign country, results in significant price undercutting, or increases the world market share of the subsidizing country in a primary product. WTO regulations in cases of prejudice focus on the amount of the assistance given, not on the extent to which a subsidy affects trade. 6. Most analyses of PTAs are limited to a focus on the legal text and assume that provisions dealing with policy areas such as subsidies, regulation, and SOEs are implemented, reflecting that little is known about whether and to what extent PTAs result in changes in the domestic policies of interest after signature or ratification. The analyses presume that if provisions are not implemented, dispute settlement proceedings would be pursued because trade agreements are self-enforcing for binding commitments (in contrast to “soft law” best endeavor promises). 7. As discussed later, a partial exception in several recent Latin American and Caribbean PTAs pertains to regulatory cooperation. 8. Article 106, Treaty on the Functioning of the European Union (TFEU). Article 107(3) lists measures considered compatible with the internal market, including (a) aid to promote the economic development of areas where the standard of living is abnormally low or there is serious underemployment, (b) aid to remedy a serious disturbance in the economy of a member state, and (c) aid to facilitate the development of certain economic activities or of certain economic areas, as long as it does not adversely affect trading conditions. 9. For the EU State Aid Scoreboard, see https://ec.europa.eu/competition-policy/state-aid /scoreboard_en. 10. Following a 2012 reform, EU member states are no longer required to notify state aid in advance to the EU Commission if the measures fall under the General Block Exemption Regulation. 11. Wolfe (2021) discusses the factors that allowed the OECD to calculate and report producer support estimates for agriculture in the 1980s, noting that a key factor was demand by finance ministers seeking to control agricultural support levels. There is a possible parallel today in the recourse to subsidy programs in response to the COVID-19 pandemic in many countries. 12. The ICN was formed in 2001 by national competition agencies in part because of the effort to launch negotiations on competition policy in the WTO in the early 2000s. See Hollman and

Kovacic (2011). 13. Horizontal regulations are distinct from product-specific regulation—the technical standards and food and plant safety standards that are covered by separate chapters that generally parallel extant

WTO disciplines. 14. As in all these cases, the PTAs are recent; there is no experience yet of how they (will) operate.