Subsidies and Countervailing Measures

INTRODUCTION
GATT 1947 imposed three different levels of obligation on the contracting parties:
Quantitative restrictions Tariffs Subsidies

In the Uruguay Round comprehensive attempt was made to elaborate detailed rules on subsidies and countervailing duties that were applicable to all the WTO members.

Agreement on Subsidies and Countervailing Measures The SCM Agreement addresses two distinct issues
A. B. The multilateral disciplines (set of rules) on the provision of subsidies that a Member nation must follow The countervailing measures to neutralize the adverse effect of subsidised imports

The Agreement categorically mentions:

...the exemption of an exported product from duties or taxes borne by the like product when destined for domestic consumption, or the remission of such duties or taxes in amounts not in excess of those which have accrued, shall not be deemed to be a subsidy.

Subsidies
A measure is defined to be a subsidy if it contains the following three elements:
(a) it is a financial contribution (b) the contribution is by a government or any public body within the territory of a Member

(c)

the contribution confers a benefit

All the subsidies have been categorized into the following three types:

(a) Prohibited Subsidies

(b) Actionable Subsidies (c) Non- Actionable Subsidies

Indias Export Promotion Programmes

Advance License
Export Promotion Capital Goods Scheme (EPCG)

EOUs, EPZs, EUTPs and STPs

Duty Drawback Scheme

Countervailing Duties
In case of prohibited or actionable subsidies causing adverse effects in the market , importing the subsidized product the country imposes a countervailing duties to neutralize the effect of the subsidy.

Indias Experience with the ASCM(Agreement on Subsidies and Countervailing Measures)

Did not face any request for remedial action under Articles 4, 7 and 9 Indian products had countervailing duties imposed on them in three major industrialised economies (USA, the EEC and Canada)

Central Government programmes for export promotion

(Received countervailing duty proceedings)
Advance License US-Metal Castings , Rolled Carbon Steel Flat Products EEC-Advance Release Orders (ARO) Scheme for sulphanilic acid Canada-Rolled Carbon and Alloy Steel Sheet and Strip

Duty Entitlement Pass Book (DEPB) Scheme

US- Quality Steel Plate ,Hot-Rolled Carbon Steel Flat Products

EEC-Broad Spectrum Antibiotics ,Polyethylene Tetraphthalate (PET) Film , Polyethylene Tetrapthalate,Certain Flat Rolled Products of Iron or Non-alloy Steel and Sulphanilic Acid Canada-Hot-Rolled Carbon Steel,Stainless Steel Round Bar

Export Promotion Capital Goods Scheme (EPCG) US-Cut-to-Length Carbon Steel Plate ,Hot-Rolled,Carbon Steel Flat Products EEC- Broad Spectrum Antibiotics,PET film,Flat Rolled Products of Iron or Non-alloy Steel and Polyethylene Tetrapthalate

Export Oriented Units (EOUs), Export Processing Zones (EPZs), Electronic HardwareTechnology Parks (EUTPs) and Software Technology Parks (STPs) US and Canada- not been investigated EEC-Broad Spectrum Antibiotics

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