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WTO Consultancy

Subsidies and Countervailing Measures

The Agreement on Subsidies and Countervailing Measures ("SCM Agreement") addresses two separate but closely related topics: multilateral disciplines regulating the provision of subsidies, and the use of countervailing measures to remove the injury caused by subsidized imports.

Multilateral disciplines are the rules regarding whether or not a subsidy may be provided by a Member. They are enforced through invocation of the WTO dispute settlement mechanism. More concretely, certain subsidies are prohibited, and some other specific subsidies may be challenged if they cause adverse effects to the interests of other Members.

Unlike the earlier Tokyo Round SCM Agreement, which it replaces, the WTO SCM Agreement contains a definition of the term "subsidy". The definition contains three basic elements: (i) a financial contribution (ii) by a government or any public body within the territory of a Member (iii) which confers a benefit to the receipt. All three of these elements must be satisfied in order for a subsidy to exist.

Countervailing measures are a unilateral remedy, but it may only be applied by a Member after an investigation by that Member and a determination that the criteria set forth in the SCM Agreement are satisfied. The substantive criteria require that a Member not impose a countervailing measure unless it determines that there are subsidized imports, injury to a domestic industry, and a causal link between the subsidized imports and the injury. In-depth procedural requirements regulate the conduct of countervailing investigations and the imposition and maintenance in place of countervailing measures. A failure to respect either the substantive or procedural requirements can be taken to dispute settlement and may be made basis for invalidation of the measure.

Special and differential treatment

(a)	that dumping is occurring,
(b)	In respect of subsidies, the SCM Agreement recognizes that subsidies can play an important role in the economic development of developing country Members, and provides special and differential treatment to such Members. Differing levels of development among countries mean differing levels of obligations and transition periods with regard to the SCM Agreement. The SCM Agreement recognizes three categories of developing country Members: (i) least-developed country Members ("LDCs"), (ii) certain Members identified in Annex VII(b) of the Agreement until such time as their GNP per capita has reached USD 1,000 per year, and (iii) other developing countries. (Categories (i) and (ii) are collectively referred to as "Annex VII countries"). The lower a Member's level of development, the more favourable the treatment it receives with respect to subsidies disciplines as well as when faced with countervailing duties.
(c)	In respect of subsidies, Article 27 provides certain special and differential treatment to developing country Members whose exports are subject to countervailing duty investigations. Specifically, an investigation regarding a product originating in a developing country Member shall be immediately terminated if: - De minimis: 2 or 3 per cent instead of 1 per cent Subsidies by developing countries shall be regarded as de minimis if their overall level does not exceed 2 per cent of the value of the product. For developing country Members that have eliminated their export subsidies before the end of the transition period, and for Annex VII Members, the de minimis level is 3 per cent: for other Members, the de minimis level is 1 per cent. - Share of imports less than 4 per cent, unless... An investigation of subsidized imports from a developing country Member shall also be terminated if their volume represents less than 4 per cent of the total imports of the like product in the importing Member, unless imports from developing country Members whose individual shares of total imports represent less than 4 per cent collectively account for more than 9 per cent of total imports of the like product in the importing Member.

Our Services

S. U. Khan Associates provides expertise to clients on a wide variety of WTO related consultancy services, including services on subsidies and countervailing measures. The range of our services includes:

»	Preparation of subsidy case on behalf of local industry /applicant and pursuing the same with the Investigating Authority till the conclusion.
»	Representing importer before the Investigating Authority to safeguard their interest, including providing technical assistance to fill in importers questionnaire and to give oral and written submission on the application filed against their interest.
»	Representing foreign exporters/producers before the Investigating Authority with a view to file the foreign exporters/producer’s questionnaire and to give oral and written submissions throughout the investigation including comments on the application filed against the exporters and representation in hearings and disclosure meetings.

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