The establishment of a system of multilateral remedies to enable MEPs to challenge harmful subsidies is a major step forward from WTO regulation. However, in most cases, the difficulty will continue for a complaining member to demonstrate the adverse commercial effects resulting from the subsidies, a fact-intensive analysis that panels can hardly find in some cases (2). Given that the governments of WTO member states have the right to impose countervailing duties and that many countries have countervailing duties similar to those of the United States, it is important to keep in mind that your company, as a U.S. exporter, could face an investigation against the tax in another country. Article 25 of the SCM Convention requires members to notify the SCM Committee of all specific subsidies (at all levels of government and for all product sectors, including agriculture). New and complete notifications are required every three years, with update notifications in the interim years. Notifications are subject to extensive review and discussion by the SCM committee. Countervailing Duties (CVD) are a key regulation that aims to offset the negative effects that subsidies to the production of a good in one country have on the same industry in another country where the production of that property is not subsidized. If these subsidized imports remain unchecked, they can have a serious impact on domestic industry by imposing plant closures and resulting in huge job losses. Because export subsidies are considered unfair trade practices, the World Trade Organization (WTO), which deals with global trade rules between countries, has detailed procedures in place to determine the circumstances under which countervailing duties can be levied on an importing country.
Rules of Procedure Part V of the SCM Convention contains detailed rules on the opening and implementation of counter-investigations, the establishment of interim and final measures, the use of companies and the duration of measures. One of the main objectives of these rules is to ensure that investigations are conducted in a transparent manner, that all interested parties have the full opportunity to defend their interests and that the investigating authorities adequately explain the basis of their conclusions. Here are some of the key developments in the WTO SCM agreement: Laws and Countervailing Measures All members are required to disclose their countervailing duty laws and regulations to the countervailing tariff committee, in accordance with Article 32.6 of the SCM agreement. Members are also required to notify all semi-annual compensatory measures as well as interim and final compensatory measures at the time of completion.