Implications of WTO Disciplines for Special Economic Zones in Developing Countries
Many developing countries operate geographically delineated economic areas in the form of export processing zones, special industrial zones, or free trade zones. This paper provides an overview of the application of World Trade Organization discipl...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090406164735 http://hdl.handle.net/10986/4089 |
| Summary: | Many developing countries operate
geographically delineated economic areas in the form of
export processing zones, special industrial zones, or free
trade zones. This paper provides an overview of the
application of World Trade Organization disciplines to
incentive programs typically employed by developing
countries in connection with such special economic zone
programs. The analysis finds that the disciplines under the
Agreement on Subsidies and Countervailing Measures have the
most immediate relevance for middle-income World Trade
Organization members that are not exempt for certain
"grandfathered" programs, but will also concern
other developing countries in the future, as their exemption
expires or their per-capita income passes a threshold of
US$1,000. Incentives related to special economic zones can
be broadly grouped into three categories: (i) measures that
are consistent with the World Trade Organization, notably
exemptions from duties and taxes on goods exported from
special economic zones; (ii) measures that are prohibited or
subject to challenge under World Trade Organization law,
notably export subsidies and import substitution or domestic
content subsidies; and (iii) and measures where World Trade
Orgainzation consistency depends on the facts of the
particular case. The paper provides a set of recommendations
on how to eliminate questionable incentives. The single most
important zone policy reform to achieve World Trade
Organization compliance is to remove all requirements to
export and permit importation of goods manufactured in
special economic zones into the national customs territory
without any restrictions other than the application of
import duties and taxes. |
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