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. These are enforced through invoking the WTO dispute settlement mechanism. More precisely, certain subsidies are prohibited, and some other specific subsidies may be challenged if these cause adverse effects to the interests of other Members. Unlike the earlier Tokyo Round SCM Agreement, which is replaced by the WTO SCM Agreement contains a definition of the term “subsidy”. The definition contains three basic elements:
- a financial contribution
- by a government or any public body within the territory of a Member
- which confers a benefit to the recipient. All three of these elements must be satisfied in order for a subsidy to exist.
Countervailing measures are a form of unilateral remedy, but it may only be applied by a Member after an investigation by that Member and a determination that the criterion set forth in the SCM Agreement are satisfied. The substantive criteria requires a Member not to 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 of countervailing measures. A failure to respect either the substantive or procedural requirements can be taken to dispute settlement and may be made the basis for invalidation of the measure.
In the area of subsidies and countervailing measures, the range of our services includes: