The document discusses subsidies and countervailing measures under WTO rules. It provides background on negotiations over subsidies from GATT to the current WTO agreement, defines key terms like subsidies and prohibited subsidies, and outlines principles of the current agreement regarding authorized subsidies, countervailing duties, and related issues.
The document discusses subsidies and countervailing measures under WTO rules. It provides background on negotiations over subsidies from GATT to the current WTO agreement, defines key terms like subsidies and prohibited subsidies, and outlines principles of the current agreement regarding authorized subsidies, countervailing duties, and related issues.
The document discusses subsidies and countervailing measures under WTO rules. It provides background on negotiations over subsidies from GATT to the current WTO agreement, defines key terms like subsidies and prohibited subsidies, and outlines principles of the current agreement regarding authorized subsidies, countervailing duties, and related issues.
The document discusses subsidies and countervailing measures under WTO rules. It provides background on negotiations over subsidies from GATT to the current WTO agreement, defines key terms like subsidies and prohibited subsidies, and outlines principles of the current agreement regarding authorized subsidies, countervailing duties, and related issues.
Subsidies and Countervailing Measures This presentation has been prepared by the Secretariat under its own responsibility. It is for general information only and is not intended to affect the rights and obligations of Members.
World Trade Organization, 2004
With written permission of the WTO Secretariat, reproduction and use of the material contained in this document for non-commercial educational and training purposes is encouraged.
WTO – Institute for Training and Technical Cooperation,
Centre William Rappard, 154 Rue de Lausanne, 1211 Geneva 21, Tel: (41 22) 739 56 31 , Fax: (41 22) 739 57 81 Why an Agreement? e-ppt-scm-206.ppt
1947: General rules concerning subsidies and countervailing measures (anti-subsidy) 1979: (Incomplete) plurilateral agreement Æ Desire to clarify and better regulate the use of subsidies and anti-subsidy (countervailing) measures
2 Historical Overview e-ppt-scm-206.ppt
1947 GATT Art. VI.3 Principle of countervailing duties (anti- subsidy) GATT Art. XVI Disciplines concerning subsidies (undefined terms) Section A: subsidies in general
if possible, to avoid serious
prejudice Section B: export subsidies
in principle, prohibited (other than
for primary products)
3 Historical Overview e-ppt-scm-206.ppt
1979 (Tokyo Round)
Plurilateral Agreement (Code) Still no clear definition of “subsidies” Clarified rules concerning the use of subsidies and “anti-subsidy” (countervailing) measures 1986-94 (Uruguay Round) Negociations Agricultural subsidies Other subsidies …
Direct transfers of funds Potential direct transfers of funds Potential direct transfers of funds or liabilities Public revenue foregone or not collected Provision of goods or services By a government … Or any public body, operating on behalf of or under instructions from the government Whereby a benefit is conferred To be determined in relation to the market Agriculture excluded from the scope of the Agreement 6 Specificity e-ppt-scm-206.ppt
Subsidy that distorts the allocation of
resources within an economy Subsidy specific to an enterprise Subsidy specific to an industry Subsidy specific to a region Export subsidy (specific by definition)
7 Prohibited subsidies e-ppt-scm-206.ppt
Export subsidies Subsidies contingent upon export performance Import replacement subsidies Subsidies contingent upon the use of domestic goods (local content)
8 Prohibited subsidies e-ppt-scm-206.ppt
Export subsidies Developed countries Phasing out within 3 years max. LDCs and developing countries ($1,000/year) Not prohibited Other developing countries Phasing out within 8 years (extension possible with the agreement of other Members) Economies in transition Phasing out within 7 years 9 Prohibited subsidies e-ppt-scm-206.ppt
Import substitution subsidies
Developed countries Phasing out within 3 years max. Developing countries Phasing out within 5 years max. LDCs Phasing out within 8 years Economies in transition Elimination within 7 years
10 e-ppt-scm-206.ppt
Authorized (Non-Actionable) Subsidies Non-specific subsidies Assistance for research Specific criteria (Art. 8.2(a)) Assistance to disadvantaged regions Specific criteria (Art. 8.2(b)) Assistance linked to environmental requirements Specific criteria (Art. 8.2(c)) The “green box” was discontinued following a review
11 e-ppt-scm-206.ppt
Authorized (Actionable) Subsidies = Neither “green” nor “red” subsidies Action in the event that they cause adverse effects Injury to a domestic industry (as with dumping) Nullification of benefits Serious prejudice Distorting the trade of a Member Price undercutting Increase in market share
12 Action e-ppt-scm-206.ppt
= Countervailing duties Only following an investigation Initiation by or on behalf of the domestic industry Existence of a specific subsidy Existence of injury, nullification of benefits, or prejudice Causal link
13 Countervailing duties e-ppt-scm-206.ppt
DE MINIMIS No action if the subsidy is less than 1 per cent of the value of the product (2% for developing countries; 3% for LDCs and the poorest developing countries) or if the volume of imports is less than 4 per cent of total imports (9% of total imports collectively)
14 Countervailing Duties e-ppt-scm-206.ppt
Measures Increase in customs duties Maximum = effect of the subsidy “Lesser duty” principle Subsidy undertakings Price undertakings voluntary, by the exporter (putting an end to an investigation) “Termination”, in principle, after 5 years Review
