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What are prohibited subsidies?

Prohibited subsidies: subsidies that require recipients to meet certain export targets, or to use domestic goods instead of imported goods. They are prohibited because they are specifically designed to distort international trade, and are therefore likely to hurt other countries' trade.

What are actionable subsidies?

actionable subsidy. Bounty, grant, or subvention enjoyed by the exporters of a country that may be challenged by an importing country if it injures its domestic industry.

What are non-actionable subsidies?

Non-actionable subsidies are those which are applied to research and pre-competitive development activities, and others which assist disadvantaged regions. Prohibited subsidies cover mainly export subsidies and subsidies contingent upon the use of domestic over imported materials.

What is a subsidy agreement?

-the purchase of goods, or the provision of goods or services (other than general infrastructure). Under the Agreement, actions can only be taken against subsidies that are “specific.” A specific subsidy is one that is only given to one company, or to a special group of companies.

Are export subsidies illegal?

An export subsidy reduces the price paid by foreign importers, which means domestic consumers pay more than foreign consumers. The World Trade Organization (WTO) prohibits most subsidies directly linked to the volume of exports, except for LDCs.

Are subsidies allowed under WTO rules?

A subsidy granted by a WTO member government is prohibited by the Subsidies Agreement if it is contingent, in law or in fact, on export performance, or on the use of domestic over imported goods. (Special rules apply to agricultural subsidies under the WTO Agreement on Agriculture.)

What are subsidies in trade?

Definition: Subsidy government payment to producers attempting to lower the price of produce and increase quantity produced (encourage production). In the international trade context, the subsidy is given to domestic producers to increase their international competitiveness.

Why are subsidies unfair?

Anti-subsidy. Some subsidies are used to pursue domestic or social policies, for example supporting industries that help create new jobs. However, unfair subsidies can distort the EU market, create unfair competition and therefore damage European industry.

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