A member state may apply a safeguard measure only

A member State may apply a safeguard measure only following an official investigation by the competent
authorities: Art 3.
To apply a safeguard, the official investigation must determine that all of the following 4
requirements are satisfied:
1. The product is being imported into the territory in increased quantities; and
2. There is a domestic industry producing like or directly competitive products; and
3. There is serious injury caused or threatened to the domestic industry; and
• A “significant overall impairment in the position of the domestic industry”: Art 4.1(a).
4. The increased quantities imported is the cause or threat of the serious injury: Art 2.1 & Art 4.
The safeguard measure must be applied:
• Regardless of the origin of the product: Art 2.2.
• Only for the time and to the extent necessary to prevent or remedy serious injury and to facilitate
adjustment: Art 5.1 & Art 7.
Subsidies and countervailing measures – rules and remedies.
The Subsidies and Countervailing Measures Agreement (SCM Agreement) regulates the use of
subsidies and the actions States can take to counter the effects of subsidies of other States.
A subsidy is a financial contribution made by a State that confers a benefit on an enterprise, a group of
enterprises, or an industry. Examples are:
• Grants, loans and equity contributions
• Loan guarantees
• Tax credits
• Providing goods or services
• Conferring any form of income or price support: Art 1.
Subsidies are themselves not illegal.
The SCM Agreement classifies subsidies as:
1 Prohibited(“red subsidies”)– subsidies that:
• depend upon export performance, or
• are contingent upon the use of domestic goods instead of
imported goods: Art 3.
2 Actionable(“yellow subsidies”) –subsidies that maybe challenged as trade distorting if they:
• nullify or impair the benefits due another member State, or • injure a domestic industry of another
member State, or
• cause or threaten to cause serious prejudice to the interests of another member State: Art 5.
Remedies and countervailing measures are available to a State that believes its domestic industries have
been injured by prohibited subsidies: Art 4, or actionable subsidies: Art 7. The measures include:
• requesting consultations with the exporting member State, or • seeking a remedy from the WTO,
including imposition of countervailing duties, or
• independently imposing countervailing duties.
The SCM Agreement allows the imposition of countervailing duties when all of the following 4
requirements are satisfied:
1 The imported goods have been subject to a subsidy;and
2 There is a domestic industry producing like products; and
3 There is material injury in the domestic industry;and
4 The subsidised goods caused the material injury("causal link"): Art 1, Art 15 & Art 16.