Export Processing Zones and the WTO Agreement on Subsidies and Countervailing Measures

Many of the Commonwealth's developing countries have established export processing zones (EPZs) as trade policy instruments designed to promote non-traditional exports. Typically, these programmes provide that if a company locates a manufacturing facility within a geographically delimited zone, and exports all or most of its products, it will be provided with a number of incentives.

The WTO's Agreement on Subsidies and Countervailing Measures (SCM) contains specific definitions, restrictions and implementation dead-lines in relation to the use of export subsidies. These rules may affect incentives granted to EPZ companies in Commonwealth developing countries that are currently WTO Members or are contemplating accession.

This issue of Trade Hot Topics highlights some of the potential conflicts between the SCM Agreement and EPZ incentives.