{"id":10449,"date":"2022-07-16T07:54:13","date_gmt":"2022-07-16T07:54:13","guid":{"rendered":"http:\/\/legalblog.ie\/subsidies-2\/"},"modified":"2022-12-06T23:13:45","modified_gmt":"2022-12-06T23:13:45","slug":"subsidies-2","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/subsidies-2\/","title":{"rendered":"Subsidies"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/subsidies-2\/#Subsidies\" title=\"Subsidies\">Subsidies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/subsidies-2\/#Agreement_on_Subsidies\" title=\"Agreement on Subsidies\">Agreement on Subsidies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/subsidies-2\/#Complaint\" title=\"Complaint\">Complaint<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/subsidies-2\/#Emergency_Action\" title=\"Emergency Action\">Emergency Action<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/subsidies-2\/#Agricultural_Subsidies\" title=\"Agricultural Subsidies\">Agricultural Subsidies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/subsidies-2\/#Agreement_on_Agricuture\" title=\"Agreement on Agricuture\">Agreement on Agricuture<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/subsidies-2\/#Tariff_Only\" title=\"Tariff Only\">Tariff Only<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/legalblog.ie\/subsidies-2\/#Subsidy_Reductions\" title=\"Subsidy Reductions\">Subsidy Reductions<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Subsidies\"><\/span>Subsidies<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Subsidies are payments and contributions made by states and other public bodies that benefit businesses, enterprises or industries.\u00a0 They may include grants, loans and soft investments.<\/p>\n<p>They may include loan guarantees, tax credits, the provision of goods and services and price support.\u00a0 They may be made directly or indirectly through private bodies or otherwise.<\/p>\n<p>If subsidies have an unreasonable impact on the third country\u2019s internal market, countervailing duties may be applied to offset their impact. \u00a0This is permissible, provided that it is justified, appropriate and is not excessive.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Agreement_on_Subsidies\"><\/span>Agreement on Subsidies<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>There is an agreement on subsidies and countervailing measures referred to as the SCM Agreement.\u00a0 It applies to specific subsidies that target specific enterprises or industries, groups of enterprises or industries or enterprises in a particular region.\u00a0 It does not apply to non-specific subsidies and certain agricultural subsidies (which are governed by an agreement on agriculture) and certain other defined subsidies.<\/p>\n<p>The specific subsidies under the agreement consist of three categories.\u00a0 Prohibited subsidies depend on export performance in exporting or are contingent on the use of domestic instead of imported products. They are presumed to distort trade, and it is forbidden for states to maintain or grant them.<\/p>\n<p>Actionable subsidies may not distort trade depending on how they are applied; they are specific subsidies that are used in any way to injure a domestic industry of another state, which nullify or impair benefits due to another state under GATT, or which cause or threaten serious prejudice to the interests of another state.\u00a0 WTO discourages its members from providing such subsidies, but they are not banned as such.<\/p>\n<p>Non-actionable subsidies are those that are non-specific.\u00a0 Infrastructural subsidies include government funding to assist but not fully cover research activities on behalf of business firms, aid disadvantaged regions (lower per capita or higher unemployment than normal) and help the existing facilities adapt to new environmental requirements.\u00a0 They are generally permissible.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Complaint\"><\/span>Complaint<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A WTO member which believes that industries have been injured by either prohibited subsidies or actionable subsidies has a number of options.\u00a0 It may seek a remedy from the WTO.\u00a0 It may impose its own countervailing duty.<\/p>\n<p>In order to obtain recourse from the WTO, the state claiming injury must consult first with the subsidising state.\u00a0 If they are not able to find an agreeable solution, the matter may be referred to the WTO Dispute Resolution Committee.\u00a0 It may set up a panel.<\/p>\n<p>The panel may be assisted by a permanent group of experts.\u00a0 If it is decided there is a prohibited subsidy, it recommends its removal.\u00a0 If it is an actionable subsidy, it recommends either removal of the subsidy or its adverse effects.\u00a0 If the decision is not appealed, it must be observed.<\/p>\n<p>If a state does not comply with the decision, the state complaining may adopt countervailing measures.\u00a0 Countervailing measures are designed to offset the subsidies. Alternatively, the state may having followed a procedure in the SCM agreement\/ (as in the anti-dumping code), may impose a countervailing duty unilaterally.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Emergency_Action\"><\/span>Emergency Action<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The agreement on safeguards provides for emergency action by WTO state members to protect domestic industries from serious injury arising from the sudden increase in the quantity of an imported product.<\/p>\n<p>A member state may apply safeguards against a product only after conducting an investigation, which determines that the product is being imported in such increased quantities and under conditions to cause a threat of serious injury to a domestic industry producing directly competitive or similar goods.<\/p>\n<p>The measures must be applied to products regardless of origin.\u00a0 They may be applied only for such time and to such extent as necessary to prevent and remedy the serious injury and facilitate the adjustment.<\/p>\n<p>Safeguards which last longer than a year must be liberalised progressively at intervals over their lifetime.\u00a0 If it lasts more than three years, a review must be undertaken to determine if it should be withdrawn or liberalised more quickly.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Agricultural_Subsidies\"><\/span>Agricultural Subsidies<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Agriculture presents special difficulties for international trade.\u00a0 Most developed states have sought to protect agriculture and assist farmers.<\/p>\n<p>Many states provide substantial subsidies to farmers. Subsidies distort free trade and affect agricultural products.<\/p>\n<p>The WTO has sought to reduce or eliminate agricultural subsidies.\u00a0 The United States and EU have sought to obtain tariff reductions from other states and other states that demanded a reduction in EU and US subsidies.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Agreement_on_Agricuture\"><\/span>Agreement on Agricuture<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The agreement on agriculture sets out guidelines for initiating the reform of trade in agriculture.\u00a0 Its ultimate objective is to move towards a market-oriented system for trade in agriculture without restrictions and distortions. Agricultural products covered include foodstuffs other than fish, animal hairs, skins, raw flax, hemp, silk and certain other products.<\/p>\n<p>The agreement specifies the products that it governs.\u00a0 It requires non-tariff barriers to be converted into custom tariffs.\u00a0 It defines types of permissible domestic support.\u00a0 It defines export subsidies.<\/p>\n<p>It provides for phased-in initial reductions in tariffs, impermissible domestic support measures and export subsidies during a six-year implementation period.\u00a0 It provides for the progressive integration of international trade in agricultural products under the GATT system.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Tariff_Only\"><\/span>Tariff Only<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>WTO state parties to the agreement on agriculture must convert non-tariff barriers to agricultural imports into the custom tariff.\u00a0 These include levies, licenses and quotas.\u00a0 Adjustment is made relative to the internal and external price and netting out other export costs and charges.<\/p>\n<p>The tariff rates are incorporated in a schedule of concessions, which each member state deposits with the GATT.\u00a0 On average, developed countries have reduced their subsidies by 36 per cent; developing countries 24 per cent.<\/p>\n<p>The agreement in agriculture exempts certain support measures.\u00a0 They must satisfy the requirement that they are publicly funded government programs.\u00a0 They must not have the effect of providing price support to producers.<\/p>\n<p>This includes measures for pest and disease control, training, support for research, advisory services, inspection services, market and promotion services, infrastructure services, food security, \u00a0domestic food aid, direct payments to producers, including income support not linked to production, participation in social and crop disaster insurance, structural adjustment assessments, environmental protection, regional assistance and programmes.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Subsidy_Reductions\"><\/span>Subsidy Reductions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>States have agreed to reduce export subsidies.\u00a0 Export subsidies include subsidies that depend on export performance.<\/p>\n<p>This may include direct governmental payments linked to export performance, sale for export of governmental and non-commercial stocks of the product at less than fair market value, government payments to exporters (even if financed from some levies on exports), subsidies for marketing or transport experts, subsidies on farm n products dependent on incorporation in export products.<\/p>\n<p>The agreement on agriculture (1994) allowed for the phasing in of member states&#8217; obligations.\u00a0 Where there was a six-year implementation period with 10 years for developing states.<\/p>\n<p>The periods apply to reducing tariffs, permissible domestic supports and export subsidies.\u00a0 There was a nine-year transition period in which measures and supports maintained in conformity with the agreement were not subject to action otherwise applicable under GATT or the SCM agreement unless they caused a threatened injury.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-10449\" data-postid=\"10449\" class=\"themify_builder_content themify_builder_content-10449 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Subsidies Subsidies are payments and contributions made by states and other public bodies that benefit businesses, enterprises or industries.\u00a0 They may include grants, loans and soft investments. They may include loan guarantees, tax credits, the provision of goods and services and price support.\u00a0 They may be made directly or indirectly through private bodies or otherwise. [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[145],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/10449"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=10449"}],"version-history":[{"count":3,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/10449\/revisions"}],"predecessor-version":[{"id":21104,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/10449\/revisions\/21104"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=10449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=10449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=10449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}