Wto Agreement On Subsidies And Countervailing Measures (Scm Agreement)

Article 3 of the agreement prohibits the use of local content and export subsidies for non-agricultural products. Least developed countries (and other countries with GNI per capita of less than US$1,000 in 1990) are exempt from the export subsidy ban (Article 27.2 and Appendix VII of the agreement and paragraph 10.1 of the Doha Ministerial Decision on Implementation Issues and Concerns (WT/MIN(01)/17). Developing countries The SCM agreement recognises three categories of members from developing countries: the least developed countries (LDCs), members with a per capita GNP of less than US$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. For example, LDCs and members with a per capita GNP of less than US$1000 per year, listed in Schedule VII, are exempt from the ban on export subsidies. Other developing countries have eight years to end their export subsidies (they cannot increase their export subsidies during this period). With regard to import substitution subsidies, LDCs have eight years and other developing countries have five years to end these subsidies. Achievable subsidies are also treated more favourably. For example, some subsidies related to privatization programmes for members of developing countries cannot be applied multilaterally. With regard to countervailing measures, exporters from developing countries are entitled to more favourable treatment in the event of a closed investigation when the level of subsidies or import volume is low.

The concept of financial participation was only incorporated into the SCM agreement after lengthy negotiations. Some Members argued that there could be no subsidies unless there was a charge on the public account. Other MPs felt that forms of public intervention that do not cost the government, but distort competition and are therefore considered subsidies. The SCM agreement essentially took the previous approach. The agreement requires a financial contribution and contains a list of the types of measures that constitute a financial contribution, such as grants. B, loans, capital inflows, loan guarantees, tax incentives, the provision of goods or services, the purchase of goods. Part I provides that the SCM agreement applies only to subsidies granted specifically to a company or industry or group of companies or industries and defines both the subsidy and the concept of specificity. In Parts II and III, all specific grants are categorized into two categories: prohibited and applicable (1), and they define specific rules and procedures for each category.

Part V defines the physical and procedural requirements that must be met before a member can apply a countervailing measure against subsidized imports.

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