Agreement on Subsidies and Countervailing Measures is one of the key agreements under the World Trade Organization (WTO) that governs the rules and regulations surrounding subsidies and countervailing measures in international trade. In this article, we will explore the key aspects of this agreement and its impact on global trade.

Subsidies are financial resources provided by governments, public bodies, or other entities that give an advantage to a particular industry, company, or product. Countervailing measures are measures taken by importing countries to counterbalance the effects of subsidies provided by exporting countries.

The Agreement on Subsidies and Countervailing Measures (ASCM) was created to regulate these practices and ensure that subsidies and countervailing measures are not used to distort competition in international trade. The agreement has three main objectives: to clarify the legality of subsidies, to establish rules for countervailing measures, and to address the effects of subsidies on trade.

Under the ASCM, subsidies are classified into three categories: prohibited subsidies, actionable subsidies, and non-actionable subsidies. Prohibited subsidies are those that are deemed to be trade-distorting and are therefore not allowed. Actionable subsidies are those that may cause injury to other WTO members and are subject to countervailing measures. Non-actionable subsidies are those that are considered to have no impact on the trade and are therefore not subject to countervailing measures.

Countervailing measures are measures taken by importing countries to counterbalance the effects of subsidies provided by exporting countries. The ASCM sets rules for the use of countervailing measures and establishes a framework for determining the amount of countervailing duties that can be imposed.

Apart from trade-distorting subsidies and countervailing measures, the ASCM also addresses the issue of the effects of subsidies on trade. This includes provisions for consultations between WTO members when one member believes that the subsidies of another member are causing adverse effects on its domestic industry.

In conclusion, the Agreement on Subsidies and Countervailing Measures is a crucial piece of legislation that helps regulate the use of subsidies and countervailing measures in international trade. By establishing rules and guidelines, the ASCM helps ensure that subsidies are not used to distort competition and that countervailing measures are fair and appropriate. Understanding and complying with the ASCM is essential for companies looking to engage in international trade and avoid any legal or financial repercussions.