I've complained before about the use of government tax breaks to lure investment. A new FT article indicates that such measures are on the increase among U.S. states (via Trade Diversion):
Tennessee, for instance, has just disclosed that it agreed to give German carmaker Volkswagen $577m in incentives for its $1bn plant in Chattanooga.
A senior executive at Fiat, the Italian industrial conglomerate, said: “With the amount of money US states are willing to throw at you, you would be stupid to turn them down at the moment. It is one of the low-cost locations to be in at the moment.”
ThyssenKrupp, the German steelmaker and industrial group, is receiving more than $811m to build a new steel mill in Alabama. It turned down even more from Louisiana, which reportedly offered as much as $2bn, as well as an additional $900m in cheap debt from Alabama, which it declined as it wished to remain debt-free.
I hadn't heard of these recent deals, which make clear that the practice is as strong as ever.
When the amounts get this high, isn't there a risk that they will be challenged under the SCM Agreement "actionable subsidies" rules? Or is every country both giving and getting the subsidies, so there is no one willing to bring a complaint?
