2 Dec 2020

Agreement On Subsidies And Countervailing Measures Slideshare

Post by Mobile Design Guy

Members in transition to a market economy have seven years to end the prohibited subsidies. However, these subsidies must have been notified within two years of the WTO agreement (i.e. until 31 December 1996) to receive special treatment. Changing members also receive preferential treatment for applicable subsidies. For a financial participation to be a grant, it must be paid by or on the instruction of a government or public body located in the territory of a member. Therefore, the SCM agreement applies not only to measures taken by national governments, but also to actions taken by sub-national governments and public bodies such as state-owned enterprises. The Subsidies and Countervailing Measures Agreement (MCS) addresses two separate but closely related issues: multilateral disciplines governing the granting of subsidies and the application of countervailing measures to compensate for the damage caused by subsidized imports. A financial contribution from a government is not a subsidy, unless it grants an advantage. In many cases, such as a cash grant, the existence of an advantage and its assessment will be clear. However, in some cases, the issue of performance will be more complex.

For example, when to grant a loan, a capital injection or the purchase of a good performance by a government? Although the SCM agreement does not provide comprehensive guidelines on these issues, the appellate body (Canada Aircraft) has decided that the existence of a benefit must be determined in relation to the market (i.e. on the basis of what the recipient could have obtained in the market). With respect to countervailing duties, Article 14 of the SCM Convention contains a number of elements to determine whether certain types of measures are beneficial. However, in the context of multilateral disciplines, the question of the importance of benefits is not fully resolved. Substantive Rules A member cannot impose a countervailing measure unless he finds that there are subsidized imports, harm to a domestic industry and a causal link between subsidized imports and the injury suffered. As noted above, the existence of a specific subsidy must be determined on the basis of the criteria of the first part of the agreement. However, the criteria for injuries and causes are in Part V. One of the main developments of the new SCM Convention in this area is the explicit authorisation to combine the effects of subsidised imports from more than one Member State if certain criteria are met. In addition, Part V contains rules for determining the existence and amount of a benefit.

Specificity. However, assuming that a measure constitutes a subsidy within the meaning of the SCM Agreement, it is not subject to the SCM Convention, unless it has been specifically made available to a company or group of companies or a group of companies or industries. The fundamental principle is that a subsidy that distorts the allocation of resources within an economy must be disciplined. In the event that a subsidy is widespread within an economy, it is considered that such a distortion will not occur in the allocation of funds. Therefore, only specific grants are subject to the disciplines of the SCM Convention. There are four types of specificities within the meaning of the SCM agreement: developing countries The SCM agreement recognises three categories of members from developing countries: LDCs, members with gNP per capita of less than $1000 per year, listed in Schedule VII of the SCM Convention, and other developing countries. The lower a member`s level of development, the more favourable the treatment he or she receives for grant disciplines.