In an effort to promote economic development and investment in
its domestic industries, the government of Thailand has implemented
an economic and trade stimulus program, which includes a variety of
measures. Which of the following measures is most likely to be
considered a prohibited subsidy under the GATT agreement?
A. The Thai government established and funded a Textile Research
Institute to engage in research and development related to textiles
and garment production where the results of the research are
distributed at no charge to all textile manufacturers in
Thailand.
B. The Thai government has identified several sectors of the
economy as “strategic,” including the electronics industry. For
these strategic sectors, the Ministry has instituted a system of
currency supports to protect manufacturers of electronics products
from fluctuations in exchange rates that might affect their export
earnings. The Central Bank of Thailand will provide an exchange
rate of not less than 200 baht to the U.S. dollar. The present
exchange rate is 171 baht to the U.S. dollar.
C. There are three manufacturers of ceramic floor and wall tiles
in Thailand. The Government Service Investment Corporation (GSIC)
of Thailand bought 100 million Thai baht (the Thai currency) worth
of stock in the three ceramic tile manufacturers. The GISC paid 150
baht per share. On the Thai Stock Exchange, the stock in these
companies trades at 80 to 100 baht per share.
D. In order to encourage economic development in the eastern
seaboard region, an economically distressed region of Thailand in
which per capita income is about half of the national average, the
Thai government will provide short-term, interest-free loans to
finance the construction of a semiconductor manufacturing facility
in the province. A small number of Thai semiconductor manufacturers
were awarded such loans.
In an effort to promote economic development and investment in its domestic industries, the government of Thailand has i
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