International Law Essay Example | Topics and Well Written Essays - 2500 words

International Law - Essay Example The definition definitely helps the Member States to understand what measures would be construed as subsidy with predictability and certainty of the rules and thus helps to limit the trade distortive subsidies. There are also some controls or disciplines on countervailing initiatives, which intended to make sure that these do not undesirably obstruct trade and that these offer aids for products, which are badly impacted by subsidies. (Chen 2010:33). Requirement as regards to Specificity A subsidy shall be precise to an industry or an enterprise or group of industries or enterprises so as to be covered under the SCM Agreement. The fundamental notion is that a subsidy that deforms the provision of resources within an economy should be subject to discipline. Whenever a subsidy is broadly seen within an economy, such a distortion in the allocation of resources is assumed not to happen. Hence, only some â€Å"particular† subsidies are falls under the ambit of SCM Agreement. A subsi dy is regarded â€Å"specific† if access to it is overtly restricted to some enterprises only. In US-Softwood Lumber IV case, it is held that it is not a necessary benefit derived is to be a direct and in some cases, benefit might have been passed through to other recipients also. In the above case, â€Å"the wood product industries â€Å"were regarded by the AB to constitute the restricted group of industries as recipient.(WTO 2010:1460).In EC- DRAMs Chips case, the subsidy was found to be used only just 6 out of 200 entitled companies was regarded as the basis for establishing the specificity. (McGovern 2008:32-15). Restricted Subsidies or Red-light Subsidies These subsidies are intended to impact the trade directly and hence, most likely to have bad impacts on the interest of the other Members. Article 3 (1) (a) of the SCM Agreement puts a bar on subsidies, which are accorded with a stipulation that it should meet certain parameters like usage of domestic products, in fa vor of imported products which are also known as domestic content subsidies. As per Article 4 of the SCM Agreement, these subsidies fall under an accelerated dispute settlement provision and the Member who found to grant such a subsidy would be asked to withdraw the same immediately. (Rothgeb & Chinapandhu 2007:39). â€Å"Actionable Subsidies or Amber Light Subsidies† Article 5 to 7 of the SCM Agreement controls actionable grants or aids. An action can be initiated against a Nation, if it has granted subsidies, which would have bad impacts on the interest other Member nations. When any of the following three conditions is met, then adverse impacts are said to be existing. If it causes any harm to the home industry of another Member Nation Under GATT 1994, if any impairment or nullification has happened or If under Article 5 of SCM Agreement, if grave unfairness to the interests of another Member Nation is found to be existing. When financial grant or aid is said to be exceedi ng five percent of the ad valorem of a product; or when operating losses suffered by an enterprise or an industry is being covered by the enterprise or industry or when subsidies are being offered directly to forgive debts. â€Å"