As tariffs have been reduced by successive multilateral trade liberalization agreements, subsidies have emerged as a major issue in international trade policy. And as environmental concerns have been linked with trade issues, it has increasingly been recognized that subsidies can have significant environmental implications. In the past year, the issue of subsidies and the environment has been included in the work plans of the World Trade Organization’s Committee on Trade and the Environment, the U.N. Commission on Sustainable Development’s Intergovernmental Panel on Forests, and the Asia-Pacific Economic Cooperation (APEC) forum.
Subsidization of natural resource production and use is an acute environmental problem. It remains to be seen, however, whether states will take any meaningful action. Two major obstacles to the creation of an international regime on natural resource subsidies are political resistance to and lack of clarity about what constitutes a subsidy.