Unit 14 - SC Economic Development Problem

You are presumably familiar with South Carolina’s economic development efforts, including the effort to attract both domestic manufacturers (e.g., Boeing) and international manufacturers (e.g., BMW) to the state. Both Boeing and BMW export from South Carolina (alongside producing for the domestic market too). You are also familiar now with the concept that the WTO through its related agreement on subsidies as part of the general topic of subsidies and countervailing duties articulates certain limitations in terms of permissible and impermissible subsidies for exports (see http://www.wto.org/english/docs_e/legal_e/24-scm.pdf ). If you have been reading the newspapers, you presumably also know that the SC Department of Commerce and the Legislature have been offering quite substantial financial incentives to attract investment. The question is whether the SC “incentives” being offered are all permissible under applicable WTO rules, as opposed to being characterized as prohibited subsidies?

Write a short advisory memo addressed to SC economic development recruiters and members of the SC Legislature advising them what they can and cannot permissibly give companies in trade law terms in recruiting them to build factories in South Carolina. If you feel it appropriate, use past examples from South Carolina or other states of specific types of incentives to recruit businesses, permissible or impermissible, since your advice is directed to non-lawyers. Please make your advice and rules to follow specific and concrete, rather than leaving it at the level of generalities.