Agreement On Subsidies And Countervailing Measures ( Scm Agreement )

The concept of financial participation was only incorporated into the SCM agreement after lengthy negotiations. Some Members argued that there could be no subsidies unless there was a charge on the public account. Other MPs felt that forms of public intervention that do not cost the government, but distort competition and are therefore considered subsidies. The SCM agreement essentially took the previous approach. The agreement requires a financial contribution and contains a list of the types of measures that constitute a financial contribution, such as grants. B, loans, capital inflows, loan guarantees, tax incentives, the provision of goods or services, the purchase of goods. The CMS agreement disciplines the use of subsidies and regulates the measures countries can take to counter the effects of subsidies. Part I provides that the SCM agreement applies only to subsidies granted specifically to a company or industry or group of companies or industries and defines both the subsidy and the concept of specificity. In Parts II and III, all specific grants are categorized into two categories: prohibited and applicable (1), and they define specific rules and procedures for each category.

Part V defines the physical and procedural requirements that must be met before a member can apply a countervailing measure against subsidized imports. Parts VI and VII define the institutional structure and the modalities for notification and monitoring of the implementation of the SCM Convention. Part VIII contains specific and differentiated treatment rules for different categories of members from developing countries. Part IX contains transitional rules for members of the developed country and the former central plan economy. Parts X and XI include dispute resolution and final rules. Part V of the SCM agreement contains certain physical requirements that must be met to impose a compensatory measure, as well as detailed procedural requirements for cross-investigation and imposition and maintenance instead of compensatory measures. Non-compliance with the physical or procedural requirements of Part V may be invoked to allow disputes to be resolved and may form the basis for the cancellation of the measure. Article 13 of the Agricultural Subsidies Agreement sets out specific rules on agricultural subsidy during the implementation period provided for by this agreement (until 1 January 2003).

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