Entrusted or Directed Subsidies in WTO Disputes

Abstract

Entrusted or directed subsidies occur where a government or public body grants a subsidy by acting through private parties. Article 1.1(a) (1)(iv) of the Subsidies and Countervailing Measures Agreement allows for such subsidies to be caught by the regulation of World Trade Organization. The interpretation of entrusted or directed subsidies has been the subject of a string of Panel and Appellate Body rulings. The interpretation was restrictive at the first step, but there has been a loosening of the notion of entrustment or direction and the corresponding evidentiary standard. In this regard, this study attempts to analyze comparatively and comprehensively the legal criteria for defining entrusted or directed subsidies rendered in disputes involving Hynix, a South Korean manufacturer of semiconductors and memory chips. This study also explains a series of restructuring programs for Hynix and how they were addressed in different disputes