Agreement On Subsidies And Countervailing Measures Upsc

These trade defence mechanisms can be used on a temporary basis to protect vulnerable sectors from the consequences of trade liberalization in certain circumstances. The three aid to trade allow WTO members to impose tariffs beyond related levels. In addition, safeguards may take the form of quantitative restrictions. The conditions for all three types of remedial measures are similar, particularly in the case of anti-dumping and countervailing measures. The establishment of a system of multilateral remedies to enable MEPs to challenge harmful subsidies is a major step forward from WTO regulation. However, in most cases, the difficulty will continue for a complaining member to demonstrate the adverse commercial effects resulting from the subsidies, a fact-intensive analysis that panels can hardly find in some cases (2). 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 scope of these prohibitions is relatively narrow. Developed countries had already accepted the ban on export subsidies under the Tokyo SCM Convention and subsidies for local content, as prohibited by the SCM Convention, were already at odds with Article III of the 1947 GATT. The most important feature in the new agreement in this area is the extension of obligations to members of developing countries subject to certain transitional rules (see section on special and different treatment), as well as the creation of a rapid settlement mechanism (of three months) for complaints relating to prohibited subsidies contained in Article 4 of the SCM Convention.