Subsidies Design Considerations: International Cooperation and Trade

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While many policy decisions about subsidies are made at the national level, the international economy and the global nature of climate change necessitate international cooperation. Economic and ecological interdependence have increased the demand for coordinated national policies and international collaboration. Especially in developing countries, national efforts in research and development may be underfunded without international collaboration. The transfer of technology to developing countries depends on enabling conditions and financing.

 

While the need for international cooperation is widely recognized, there is some question about the best way to achieve this cooperation. No single organization can currently provide the administrative functions to facilitate international cooperation on subsidy policies, but several organizations focused on global climate change policy have been identified as potential catalysts of international cooperation: the World Trade Organization’s Agreement on Subsidies and Countervailing Measures, the United Nations Framework Convention on Climate Change Research, the International Energy Agency, and the United Nations Environment Programme. Other international financial organizations, including the Organisation for Economic Co-operation and Development, the World Bank, and the International Monetary Fund, have also been identified as organizations that can facilitate international cooperation on subsidies.