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Scm Agreement Wiki

The WTO does not allow countervailing duties until the importing country has conducted a thorough investigation into subsidized exports. The agreement contains detailed rules for determining whether a product is subsidized and calculating the level of these subsidies, criteria for determining whether these subsidized imports relate to domestic industry, and rules for the application and duration of countervailing duties, which are generally five years. Consider the following example of countervailing duties. Suppose country A offers an export subsidy for widget creators in the nation who export widgets en masse to Land B, at $8 per widget. Country B has its own widget industry and home widgets are available for $10 per widget. If country B finds that its domestic widget industry is damaged by frantic imports of subsidized widgets, it can impose a 25% countervailing duty on widgets imported from Country A, so the cost resulting from imported widgets is also $10. This eliminates the unfair pricing advantage that widget manufacturers have in country A because of their government`s export subsidies. Article 13 of the Agricultural Subsidy Agreement sets out specific rules for agricultural subsidies during the implementation period provided for by this agreement (until 1 January 2003). Export subsidies, which are fully compliant with the agricultural agreement, are not prohibited by the SCM Convention, although they remain subject to countervailing measures.

Domestic aid, which is fully compliant with the agricultural agreement, is not of multilateral application, but may also be subject to countervailing duties. Finally, under the agricultural agreement, domestic aid cannot be implemented multilaterally and is not subject to compensatory measures. At the end of the implementation period, the SCM agreement applies to agricultural subsidies, in accordance with Article 21 of the Agriculture Agreement. If your business is commercially harmed by subsidized competition, two remedies can be applied under the subsidy agreement: a controversial WTO transaction or a counterparty investigation by the United States.

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