If your business is commercially harmed by subsidized competition, two remedies can be applied under the subsidy agreement: a controversial WTO regulation or a counterparty investigation by the U.S. Department of Commerce. The subsidy agreement can also be very useful if your company`s exports become the target of a subsidy survey initiated by another country. The World Trade Organization (WTO) agreement on subsidies and countervailing measures (subsidy agreement) contains provisions relating to the use of government subsidies and the application of remedial measures to combat subsidized trade, which have negative effects on trade. 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. In October 2014, a mutually acceptable solution was found to the cotton dispute, just before Brazil increased tariffs on hundreds of millions of dollars of U.S. products. [7] These include cars, electronics and pharmaceuticals. [7] Under the terms of the agreement, the United States awarded the Brazilian Cotton Institute a one-time payment of $300 million.

[8] The judgment showed that the United States and the European Union have used loopholes and creative accounting to continue dumping in developing markets, harming impoverished farmers in developing countries. The WTO Dispute Settlement Group also found that the United States wrongly characterized some programs as “non-distortion of trade” when in fact they were trade distortions. [6] For more information on the Department of Commerce`s efforts to implement the grants, visit the Website of the Grant Administration Office. In addition, you can learn more about filing a compensatory tax claim by visiting the import administration website. The petitioners` advice is available via e-mail: Petitioners_Support@ita.doc.gov. If your business is commercially harmed by subsidized competition, two corrective measures can be taken as part of the subsidy agreement: WTO dispute resolution or U.S.-led counterparty investigation.