Subsidies

1. Subsidies No clear rules and no prohibition in GATT 1947 (notification and negotiation about limiting subsidies). Tokyo Round Subsidies Code. Revision of articles VI and XVI of GATT 1947. Negotiation of the SCM Agreement.

2. Subsidies (II) Definition: financial contribution by a government or any public body conferring a benefit to specific enterprises,industries, regions or productions.

3. Subsidies (III) Financial contribution: broad notion. • Direct transfer of funds; • Indirect transfer of funds (loan guarantees); • Government revenue, otherwise due, foregone or not collected; • The purchase by a government of goods; • The provision by a government of goods and services; • Government payment to a funding mechanism.

4. Subsidies (IV) Contribution by a government or public body: broad notion. Publicly owned companies. Benefit for the recipient = if the terms of financial contribution are more favourable than those available for other recipients in the market (loan guarantees, provision of goods or services, etc.).

5. Subsidies (V) Specificity: a measure is a subsidy if it is targeted to an enterprise, an industry or a group of enterprises (e.g. regional subsidies). De facto specific subsidies.

6. Subsidies (VI) • prohibited subsidies  export subsidies or subsidies upon the use of domestic over imported products. Multilateral remedies according to article 4 of the SCM Agreement. Establishment of a panel. Reduced timeframes. Withdrawal of the measure: otherwise, appropriate countermeasures.

7. Subsidies (VII) 2) actionable subsidies  subsidies that can cause adverse effects to the interest of other Members. Like products (=Articles I and III GATT) Domestic industry (= Article 16 of the Anti-Dumping Agreement) Injury, threat of material injury, material retardation. Causal link.

8. Exception to rules on free trade Need to strike a balance between free trade and other values. Member can justify measures incompatible with WTO Agreements under the different exceptions provided for in the Agreements. Similar rules in the GATT 1994 and in the GATS.

9. Exceptions (II) Article XX GATT: general exception: it is exhaustive and conditional, but it is not narrowly construed by the Appellate Body that tries to find a balancing between the general rule and the exception (measures that undermine the multilateral trading system? US-Shrimp). Test: • existence of one of the exceptions under Article XX a)-j); • consistency with the chapeau of Article XX.

10. Exceptions (III) Article XX Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures…

11. Exceptions (IV) Article XX GATT: • Public morals; • Human, animal or plant life and health; • National treasures of artistic, historic,or archaeological value; • Conservation of exhaustible natural resources; • restrictions on exports of domestic materials necessary to ensure essential quantities of such materials to a domestic processing industry

12. Exceptions (V) Other exceptions: • security exceptions (Art. XXI GATT and Art. XIV bis GATS); essential security interests and international peace and security; • economic emergency exceptions (Art. XIX GATT and Agreement on Safeguards); serious injury or threat of injury to domestic producers; • balance of payment exceptions; • economic development exceptions.

13. Exceptions (VI) Regional integration exceptions (Art. XXIV GATT)  customs unions, free trade areas as defined in Art. XXIV and necessity of the WTO-inconsistent measure for the establishment of the regional agreement  previous notification to the Council for Trade in Goods.