SUBSIDIES AND COUNTERVAILING MEASURES

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The chair of the committee once again highlighted the problem of missing subsidy notifications. A recent background note prepared by the WTO Secretariat (G/SCM/W/546/Rev.10) notes that between 1995 and 2017 the number of members that have failed to make a notification rose sharply. To date, 77 WTO members have not submitted subsidy notifications for 2017, 62 members have still not submitted subsidy notifications for 2015, and 55 members still have not submitted subsidy notifications for 2013. The chair once again declared that the chronic low compliance with the fundamental obligation to notify subsidies constitutes a serious problem in the proper functioning of the SCM Agreement. 

More than a dozen members took the floor to comment, with most citing the fundamental importance of members meeting their transparency obligations. One member said the record to date was abysmal. Several developing members also underlined the importance of transparency but said capacity constraints in developing and least developed countries had to be considered.  

Separately, 12 WTO members – Argentina, Australia, Canada, Costa Rica, the European Union, Iceland, Japan, Korea, New Zealand, Norway, Chinese Taipei and the United States – once again jointly called on members to meet their commitment at the 11th Ministerial Conference in Buenos Aires to strengthen transparency with respect to fisheries subsidies. The US said the 12 were calling on members to correct course and submit complete subsidy notifications, including information on subsidies to the fisheries sector, by 30 June this year or risk missing the deadline for an agreement on disciplining harmful fisheries subsidies.

The United States also presented a revised proposal for ensuring timely responses to questions posed by members on the subsidy programmes of other members. The US originally proposed that members receiving requests provide written answers within 60 days and provide written replies to follow-up questions within 30 days; responding to concerns voiced by some members, the US said its proposal would now fix these timelines not as firm deadlines but as "best endeavour" objectives. 

Several members expressed their support for the revised US proposal. Others, however, said the proposal would cause difficulties for developing and least developed countries facing capacity constraints by increasing their reporting workload.

At the regular committee meeting a joint item proposed by Canada, the EU, Japan and the United States focused on the impact of subsidies on industrial overcapacity. The US drew the committee's attention to an OECD report called "Measuring Distortions in International Markets, the Aluminium Value Chain". The co-sponsors reiterated the need for greater WTO transparency requirements on subsidies, stronger subsidy rules and stricter disciplines to better capture state influence in the economy, particularly through state-owned enterprises.

Several members agreed the WTO needs better rules to address the role of state-owned enterprises and government involvement in markets. Others expressed caution; China again said the SCM Committee was not the proper forum for the discussion of issues related to overcapacity and that it was a structural problem resulting from many factors, including trade protectionism.

Separately, the United States and the European Union once again expressed concerns regarding China's non-notification of possible subsidy programmes for steel producers. China said it noted the consistent concerns of the US and the EU on this issue but said its efforts to improve transparency in the steel sector should not be ignored or underestimated.

Korea raised concerns with two US countervailing duty investigations on imports of Korean hot-rolled and cold-rolled steel flat products and, more recently, large diameter welded pipe. Under "other business", Mexico criticized the US Commerce Department's recent decision to initiate a countervailing duty investigation on imports of fabricated structural steel from Mexico. 

The next meeting of the SCM Committee is tentatively scheduled for the week of 4 November 2019.

More information on the WTO’s work on subsidies and countervailing measures, the SCM Agreement, and the subsidy notifications of members is available here on the WTO website.

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