subsidies & counter..g
TRANSCRIPT
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Agreement on Subsidies and Countervailing Measures (SCM
Agreement
Agreement on Subsidies and Countervailing Measures (SCM
Agreement
Presented by
Saroj Paswan(10020242026)
Swati charbhe(10020242030)Sushil Kamble(10020242035)
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Define subsidises and counterfiling
Define subsidises and counterfiling
Agreement of article on subsidies
Agreement of article on subsidies
Effect upon developing and developedcountries
Effect upon developing and developedcountries
Current overall situation
Current overall situation
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Definiti
onofsubsidy
Definitionofsubsidy
Financial contribution by a government or any
public body where government
Practice direct transfer of funds, potential transfer
of funds
Provides goods or services other than general
infrastructure
There is any form of income or price support by
the government
This Contribution confers a profit
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Aim: To balance potentially conflicting concerns.
Should not be obstacles for fair trade
Agreement on Subsidies and
Countervailing Measures
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Harmful effects of a subsidy
1)Material injury to domestic industry ofanother member country
2)Serious prejudice to the interests of
another WTO member country
3)Nullification or impairment of benefitsaccruing directly or indirectly to another
WTO Member, particularly with respectto binding commitments in WTO oncustom duties.
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Any reduction in import tariffs would likely increase imports
Increase in imports would cause industry to seek remedies
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Export incentives play an important role in encouraging exports
from a country
Almost every country provides incentives to its exporters.
However, not all types of export incentives are actionable under
the SCM Agreement.
To analyze what kind of export subsidy is actionable and what is
not, a good understanding of the main provisions of the
Agreement is an absolute must.
Whysu
bsidynece
ssary
Whysu
bsidynece
ssary
??
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financial contribution by a government or any public body
within the territory of a Member (referred to in this Agreement
as "government").
(i) a government practice involves a direct transfer of funds (e.g.
grants, loans, and equity infusion), potential direct transfers of
funds or liabilities (e.g. loan ,guarantees);
(ii) government revenue that is otherwise due is foregone or not
collected (e.g.
fiscal incentives such as tax credits)
(iii) a government provides goods or services other than general
infrastructure, or
purchases goods;
Article
1Definitiono
fsubsidies
Article
1Definitiono
fsubsidies
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There is any form of income or price support
And
a benefit is thereby conferred.
ArticleXVIofGAT
T1994
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Termsof the Benefit to the
RecipientGovernment provision of equity capital - If theinvestment decision was inconsistent with theusual investment practice.
A loan by a government Relevant difference in
the amount paid in case of commercial loan.A loan guarantee by a government Relevant
difference in the amount paid in case ofcommercial loan without guarantee.
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specific subsidies
Harmful
prohibited
Actionable non actionable.
open to challenge
T
ypes
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Only "specific subsidies" are subject to the"disciplines" of the SCM Agreement. (cont.)
1)Specific subsidies are subsidies that target: a) A specific enterprise or industry.
b) A group of enterprises or industries. c) Enterprises in a particular region.
1)Specific
subsidie
s
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Categories of Specific Subsidies
Prohibited subsidies ("red" subsidies) are subsidiesthat either:
Depend upon export performance, or
Are contingent upon the use of domestic instead ofimported goods.
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Categories of Specific Subsidies. (cont.)
2)Actionable subsidies ("yellow" subsidies)
are subsidies that are trade distortingbecause, in the way they are used, they:
Injure a domestic industry of anothermember state.
Nullify or impair benefits due anothermember state under GATT 1994.
Cause or threaten to cause "seriousprejudice" to the interests of anothermember state.
yello
w"subsid
ies
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Categories of Specific Subsidies. (cont.)
3)No actionable subsidies ("green" subsidies) aresubsidies that either:
Are not nonspecific.
Are infrastructural subsidies that involve governmentfunding to:
Assist (but not fully cover) the cost of businessresearch activities.
Aid disadvantaged regions.
Help existing facilities adapt to new environmentalrequirements.
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Non actionablesubsidies Assistance to disadvantaged regions within the
territory of a Member provided that:
region must be a clearly designated contiguousgeographical area with a definable economic andadministrative identity
the region is considered as disadvantaged on the basis ofcriteria that must be clearly spelled out in law, regulation
the criteria shall include a measurement of economicdevelopment
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Non actionablesubsidies
Assistance to promote adaptation of existing facilitiesto new environmental requirements:
one-time non-recurring measure
limited to 20 per cent of the cost of adaptation
does not cover the cost of replacing and operating the
assisted investment, which must be fully borne by firms directly linked to and proportionate to a firm's planned
reduction of nuisances and pollution, and does not coverany manufacturing cost savings which may be achieved
available to all firms which can adopt the new equipment
and/or production processes.
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Actions an injured state may take
Request consultations with the subsidizing state.
Ask the WTO to authorize it to imposecountervailing duties.
Independently impose countervailing duties. Must follow the same procedures used for
imposing antidumping duties
t t f b idi il bl i t
structure of subsidies available in wto
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Prospects
structure of subsidies available in wtoagreement
structure of subsidies available in wtoagreement
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Structure
Part I Apply only to subsidies that aregiven to a specific enterprise or industry or
group of enterprises or industries. Terms,subsidy and specificity are defined.
Parts II, III, IV Place all the subsidies inthe traffic light category.
Part V requirements both of substanceand procedure
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Structure
Parts VI & VII concern the machinery of theagreement, establishing its institutions andits arrangements for notification andsurveillance.
Parts VIII & IX set out special provisions forvarious categories of developing countriesand for countries that are moving fromcentral planning to a market economy.
The final sections, Parts X and XI deal withdispute settlement and final provisions.
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Definition countervailing
Countervailing duties (CVDs) are duties imposedunder WTO Rules to neutralize the negative effects ofsubsidies.
They are imposed after an investigation finds that aforeign country subsidizes its exports, injuringdomestic producers in the importing country.
Since countries can rule domestically whether
domestic industries are in danger and whetherforeign countries subsidize the products, theinstitutional process surrounding the investigationand determinations has significant impacts beyondthe countervailing duties
http://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/Subsidyhttp://en.wikipedia.org/wiki/Subsidyhttp://en.wikipedia.org/wiki/World_Trade_Organization -
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Duration & Review ofcountervailing duties To the extent necessary to counteract subsidization
which is causing injury.
Interested parties can request the authorities to reviewwhether the continued imposition of the duty is
necessary to offset subsidization. Notwithstanding the above provisions, duty cannot be
terminated on a date later than five years from itsimposition.
omm ee on u s es
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omm ee on u s esand Countervailing
MeasuresRepresentatives from each of the MembersElection of chairman
The WTO Secretariat acts as the secretariat to theCommittee
The Committee may set up subsidiary bodies asappropriate
Permanent Group of Experts 5 persons highlyqualified in the fields of subsidies and trade relations
PGE consultations
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Determination ofInjuryVolume of subsidized imports
Price undercutting of like products
Prevent price increases
Evaluation of all relevant economic factors and indices
More than one country simultaneously subject to countervailingduty, cumulative assessment done if:
Amount of subsidization > de minimums (for both)
Similar conditions of competition between the imported products &like products
Impact of subsidized imports on the domestic producers
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Public Notice
Initiation of investigation to member/members of theproduct & other interested parties.
Preliminary or final determination, whether affirmativeor negative.
Imposition of provisional measures Conclusion or suspension of an investigation in the case
of an affirmative determination.
Termination or suspension of an investigation.
omm ee on u s es
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omm ee on u s esand Countervailing
MeasuresRepresentatives from each of the MembersElection of chairman
The WTO Secretariat acts as the secretariat to theCommittee
The Committee may set up subsidiary bodies asappropriate
Permanent Group of Experts 5 persons highlyqualified in the fields of subsidies and trade relations
PGE consultations
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Existing Programmed
Subsidy programmed established before the signingthe WTO Agreement & which are inconsistent with theagreement should be:
notified to the Committee not later than 90 days after thedate of entry
brought into conformity with the provisions of thisAgreement within three years of the date of entry
Extension and renewal of such programmed is notpossible
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Current trend regardingsubsidies
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0
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8
1948 1957 1966 1975 1984 1993 2002
GATT 48 WTO 95
Value of world trade 19482003US$ trillion, current prices
1997
MORE trade? Of course, but
look at the STABILITY >
If 67%had been
wiped out
Preliminaries
Source: WTO data
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In 1997 there was another financial crises. Currencies in east
and southeast Asia were devalued.
These lowered the price of those countries exports. Fearing a
surge in cheap imports, lobbies campaigned to raise trade
barriers in the major markets of North America and Europe.
The governments resisted. They were bound by theirobligations in the WTO, and because they knew others were
similarly bound, they had confidence that the system would
remain stable.
.It would probably have been worst on developing countries.
.
Source: WTOEffectupondevelopin
gand
develope
dcountries
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NAMA and Agriculture Chairs Circulatedtheir blueprints for an Agreement (Feb
8 2008) AgricultureAgriculture
Domestic Support
Market Access SensitiveSensitive ProductsProducts Special
Products Export Competition
Next Room E meeting 31 March (Cancelled)
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ResultCURRENT NEGOTIATIONS
Better trade
MOST DIFFICULT:
to move forward What can as well as take
EASY OPTION:
Defensive no deal is better than a bad deal
)
h ld d
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The World TradeOrganization
THANK YOU
The World Trade OrganizationCentre William Rapped
rue de Lausanne 154
CH1211 Geneva 21Switzerland
website: www.wto.org