The UK gives up on a WTO subsidies complaint because there are no rules for subsidies to services:
"Last year the Government said that the UK via the European Union would take legal action against Canada if its support for its videogames industry violated WTO rules," said Richard Wilson, Tiga's CEO. "We now know that there are no legal grounds on which to lodge a complaint."
"We cannot stop our competitors from benefiting from tax breaks but there is a simple solution: copy them. The Government should announce in the Budget its intention to introduce a 20 per cent tax break for games production, similar to the EU approved French regime that applies to games that pass a cultural test," he added.
I can see why they gave up on the case, given GATS Article XV, which states:
1. Members recognize that, in certain circumstances, subsidies may have distortive effects on trade in services. Members shall enter into negotiations with a view to developing the necessary multilateral disciplines to avoid such trade-distortive effects.7 The negotiations shall also address the appropriateness of countervailing procedures. Such negotiations shall recognize the role of subsidies in relation to the development programmes of developing countries and take into account the needs of Members, particularly developing country Members, for flexibility in this area. For the purpose of such negotiations, Members shall exchange information concerning all subsidies related to trade in services that they provide to their domestic service suppliers.
2. Any Member which considers that it is adversely affected by a subsidy of another Member may request consultations with that Member on such matters. Such requests shall be accorded sympathetic consideration.
If the result of the absence of rules is a subsidy war, as the industry has now requested, perhaps this will motivate WTO Members to negotiate some rules in this area.
