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Why didn't any country complain to the WTO about the car company bailouts by the U.S.? Aren't financial bailouts considered to be illegal subsidies according to the WTO? If so, why didn't any country make any complaints in the WTO against the U.S.?

In an article, trade lawyers were quoted as saying the auto-bailouts could lead to WTO complaints.

Trade lawyers say that U.S. loans for Chrysler [CCMLPD.UL] and General Motors (GM.N), Swedish assistance for Saab (SAABb.ST) and Volvo (VOLVb.ST), and car industry aid packages in Canada, Germany, France, Australia, Argentina, South Korea, China and elsewhere all could lead to WTO complaints.

However, no complaints were made, why?

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    Isn't the list in the quote reason enough? No one wants to complain in case they're complained about in return.
    – Jontia
    Commented Jul 20, 2019 at 21:58
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    @Jontia: maybe: looking a "Boeing vs Airbus", they weren't shy of mutual complaints. dw.com/en/airbus-boeing-wto-dispute-what-you-need-to-know/…
    – 264 champagne bottles on ice
    Commented Jul 23, 2019 at 10:01
  • @Fizz no they weren't, but that doesn't mean they want to escalate to another industry. The article you've linked specifically mentions wanting to avoid tit-for-tat sanctions.
    – Jontia
    Commented Jul 23, 2019 at 10:20

1 Answer 1

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A subsidy, in and of itself, is not contrary to WTO rules.

Where it would become contrary to WTO rules is if it is designed to interfere with another country's domestic market. Examples of this, according to the US Department of Commerce, would include a subsidy that:

  • impedes or displaces another country's exports into the market of the subsidizing country;

  • impedes or displaces another country's exports to third countries;

  • significantly undercuts the price of a "like product" (e.g., an identical or similar product produced by another country; or,

  • increases the world market share of the subsidizing country for a particular primary product or commodity.

Any complaining country would need to show evidence that the subsidy was designed for one of these purposes, and not just the bankruptcy-prevention reasons stated by the government at the time.

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    Have a +1, though I still think the real reason is to avoid tit-for-tat. After all, if the company in question collapses then an neighbouring country could reasonably expect to increase exports into that market. It would be possible to argue the subsidy is pre-emptively displacing my exports.
    – Jontia
    Commented Jul 22, 2019 at 9:53
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    I'd go even further than @Jontia and say that any subsidy inherently does at least one of those things.
    – lazarusL
    Commented Jul 22, 2019 at 20:04
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    The litmus test question is whether the subsidy is designed for these purposes, or whether these things are simply consequential. If, say, the aim was to flog cheap cards on global markets, that would be a clear violation of WTO rules. If the aim is to prevent the loss of an entire industry at once, it's far less clear cut.
    – Joe C
    Commented Jul 22, 2019 at 21:35

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