INCENTIVES TO SPECIAL ECONOMIC ZONES IN DEVELOPING COUNTRIES UNDER THE WORLD TRADE ORGANISATION REGIME

The establishment of the SEZs has undoubtedly helped to increase the volume of international trade. Further, a large amount of foreign investment has found its way not only into the export trade, but also into infrastructure construction and commerce. Foreign companies have been encouraged to establish their presence in the territories and the export industry has grown. Advanced foreign technology has been brought in with the inflow of foreign investment. All Members, and in particular middle income countries, should review their SEZ programs in detail to assure compliance with the SCM Agreement and other WTO disciplines. This is best accomplished using independent advisors and not government officials or local experts that may have a vested interest in defending the existing measures. It may be appropriate to request technical assistance from experts at the WTO, international financial institutions and other donors in connection with such a review.

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Upon request, the WTO Secretariat staff routinely provides confidential advice and in-depth technical assistance to individual Members about their programs, including bringing these into conformity with WTO disciplines. The next step is the development of a compliance plan to change prohibited subsidies and other WTO prohibited measures into WTO non-prohibited measures or to remove the measure. In this connection, it is important to consult with SEZ businesses and investors. In some instances, SEZ incentive measures cannot be modified or repealed without the consent of existing businesses and investors that have made financial commitments in reliance on these incentives. For example, after SEZ incentive measures were repealed in Ukraine in 2005, subsequent court decisions continued the fiscal measures for certain investors.

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Post Contributed By:

Abhishek Bhargava

Indian Institute Of Legal Studies

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