GLOBAL SUBSIDIES INITIATIVE
Subsidy WatchIssue 30, March 2009
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Stuck in reverse: recommendations on a long-term solution to a broken-down automobile industry
By Peter Wooders and Oshani Perera, International Institute for Sustainable Development
The dramatic decline in the demand for cars has been a signature effect of the global economic crisis. Faced with a massive drop in sales - for example, 29 per cent in the case of Toyota and 49 per cent across the General Motors brands - the United States, France, Germany, Italy, Spain, and more recently, South Korea, Brazil, Japan and China have concluded that government bail-outs are both justifiable and necessary for the health of their auto sectors.
Also in this issue:
Analysis
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Will government bailouts lead to trade wars?
As the global financial crisis continues to worsen, many developed and some developing countries have turned to bailout packages to resuscitate stricken businesses, which could potentially violate the World Trade Organization (WTO) rules on subsidies. In fact, some countries, such as Brazil, have already threatened to launch WTO claims against countries that implement them.
News
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Nigeria considers cuts in fuel subsidies; President Obama aims to reduce farm subsidies; U.S. project builds subsidy databases
Nigeria considers cut in fuel subsidies
The Nigerian federal government has announced plans to cut its subsidies for petroleum fuels, saying that the price tag has become unaffordable.According to the federal government, Nigeria spent over US$4.3 billion on petroleum fuel subsidies in 2008.
Despite its significant oil reserves, Nigeria imports much of its petroleum products, before selling them at below market rates.
Studies
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Biofuel subsidies in Asia; the link between corn subsidies and obesity; investment incentives in Asia
Subsidies for biofuels in China, Malaysia and Indonesia
Three recent reports by the Global Subsidies Initiative (GSI) survey subsidy policies for biofuels in China, Malaysia and Indonesia.
The reports marks a shift in focus for the GSI’s “Biofuels At What Cost?” series, from biofuel subsidy policies in OECD countries—which account for the lions share of global government support for biofuels—to that of certain developing countries that have stood poised to capitalize on heightened interest in these renewable fuels.
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