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46 Nw. J. Int'l L. & Bus. 1 (2026)

handle is hein.journals/nwjilb46 and id is 1 raw text is: Northwestern Journal of International Law & Business The Conundrum of Industrial Policy: Incompatibility with the Rules of International Trade Law Yong-Shik Lee* Abstract: Since the end of World War II, successful developing countries such as South Korea, Taiwan, Singapore, and, more recently China, have leveraged industrial policies notably trade measures and subsidies to achieve economic development. However, these industrial policy tools often conflict with the rules of international trade established under the World Trade Organization (WTO law), which aims to minimize government interference and reduce trade distortions. Paradoxically, such regulatory constraints hinder the development aspirations of many countries. Meanwhile, majorglobal economies, including the United States, China, and the European Union, have revived industrial policies to support their key industries, such as semiconductors and electric vehicles, in contravention of WTO law. Some countries, such as the United States, have also attempted to justify WTO-inconsistent measures by invoking the national security defense under GATT Article XXI. This article explores the inherent conflict between industrial policy and international trade law, analyzes the resurgence of industrial policy in the advanced economies, examines the feasibility of national security defense, and argues for regulatory reforms to reconcile these tensions. Keywords Industrial Policy, Tariff Binding, Subsidy, WTO Agreement on Subsidies and Countervailing Measures, National Security, World Trade Organization The author is a Professor at West Virginia University College of Law and the Director and Professorial Fellow, The Law and Development Institute. He has received a Ph.D., M.A., B.A. (law) from the University of Cambridge, U.K. and a B.A. (economics) from the University of California at Berkeley. Email: ys.lee@mail.wvu.edu. The author is grateful to Turner Jensen and Jane Lee for editorial assistance. I also acknowledge the support of the West Virginia University College of Law and the Arthur B. Hodges Summer Research Grant. 1 Copyriglit2026 by Yong-Shik Lee Vol. 46, No. 1