economics medium True/False

Under the WTO's Agreement on Subsidies and Countervailing Measures (ASCM), 'Export Subsidies' (subsidies contingent upon export performance) are generally classified as prohibited 'Red Light' subsidies.

  1. True
  2. False

Answer: True

The WTO strictly prohibits export subsidies because they are explicitly designed to distort global trade by artificially lowering the price of a country's goods in foreign markets, harming competitors in other nations. If a country is found guilty of providing a prohibited Red Light subsidy, it must withdraw it immediately, or the affected countries can impose retaliatory countervailing duties.

Topic International Economics - WTO
Exam Relevance UPSC Prelims, SSC CGL
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