Natural Resource Underpricing in WTO Subsidies Rules and Beyond: A Reflection of North-South Divide in Globalization

Abstract

The article discusses natural resource underpricing in multilateral subsidy rules’ negotiations. It starts from the U.S. experiences to consider foreign natural resource underpricing practices under its underdeveloped subsidy rules. The United States then brought its domestic concern to the Uruguay Round establishing the World Trade Organization; however, conflicts had been shown between the industrialist countries and the resource-endowed ones regarding the ways of using natural resources as a comparative advantage. At this corner of trade rulemaking, the North’s pro-market demand was likely to collide with the South’s natural resource sovereignty. Natural resource underpricing has again taken the stage in the ongoing Doha Development Round for renegotiation of the WTO Subsidies Agreement; nevertheless, it seems to partly place this multilateral trade rulemaking under a stalemate. The crux of the subsidy debates on natural resources is how to deal with the government’s market predominance concern as to reflect the government’s roles in the natural resource sector. The European Union’s pressure on the WTO accession of several resource-endowed countries has been quite effective since the latter chose to surrender part of their natural resource sovereignty as a price of economic integration. However, the EU present anti-dumping practice against the natural resource underpricing problem seems to add fuel to the dilemma since its trade law consistency is under challenge.