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1 - An Overview of the Agreement on Subsidies and Countervailing Measures – Including a Discussion of the Agreement on Agriculture

Published online by Cambridge University Press:  03 May 2010

Kyle W. Bagwell
Affiliation:
Stanford University, California
George A. Bermann
Affiliation:
Columbia University, New York
Petros C. Mavroidis
Affiliation:
Columbia University, New York
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Summary

Introduction

The present contribution aims to provide an insight into the World Trade Organization's (WTO's) multilateral disciplines on subsidies related to trade in goods and on unilateral measures to respond to these subsidies, in other words, countervailing duties (CVDs). In our discussion, we focus on the legal analysis and thus leave the economic analysis to other contributions in this book. As such, we offer only one part of the introduction to the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”), which should be complemented with the economic analysis to evaluate the subsidy and CVD disciplines from a normative point of view.

Our legal analysis is structured around six parts. After a short overview of the legal and historical context, we clarify the object and purpose of the SCM Agreement and examine the various aspects of the definition of “a subsidy” included in the SCM Agreement. When a specific subsidy is deemed to exist under the SCM Agreement, a traffic light metaphor can be made when categorizing subsidies. Some types of subsidies are prohibited (red light), whereas all other specific subsidies are allowed as long as they do not cause adverse effects (yellow light). At present, no type of subsidy gets the green light under the SCM Agreement. Later in this chapter, we look at how WTO Members may respond to subsidies provided by other WTO Members.

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Publisher: Cambridge University Press
Print publication year: 2009

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