WORLD TRADE
ORGANIZATIONTN/RL/W/85
30 April 2003
(03-2313)
Negotiating Group on Rules Original:  English
GENERAL CONTRIBUTION TO THE DISCUSSION OF THE NEGOTIATING
GROUP ON RULES ON THE AGREEMENT ON SUBSIDIES AND
COUNTERVAILING DUTY MEASURES
Submission from Australia
The following communication, dated 30 April 2003, has been received from the Permanent
Mission of Australia.
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Australia submits this paper in parallel to its general contribution on anti-dumping as a
general contribution to discussion of subsidies and countervailing duty measures issues in particular.
Prohibited subsidies
WTO jurisprudence on prohibited export subsidies, in particular subsidies contingent ‘in fact’
upon export performance, has clarified many of the concepts contained within Article 1 of the SCM.
Analysis by panels however on the export contingency of a measure, including the standard for
meeting the ‘in fact’ contingency, has not clarified or brought predictability to whether certain
subsidies may be prohibited or actionable.  At the heart of this uncertainty is the export propensity of
certain products, industry sectors or markets.  A subsidy provided in a large domestic market of aWTO Member, and considered to be an actionable subsidy, may be deemed a prohibited subsidy
contingent in fact on export performance if provided in a small domestic market of another WTO
Member.
While panels have made it clear that a number of facts are considered when determining
export contingency, and no single fact is determinative, the standard appears necessarily subjective
and disadvantages smaller economies or markets.  Clarification needs to be made of whether more
equitable and predictable rules in relation to prohibited export subsidies can be achieved.  In this
regard, the concept of levels of export competitiveness in a product is a concept used in the SCM in
relation to special and differential treatment.  Co uld such a concept help to address any confusion
between a product which has been subsidised contingent on export performance, and a product which
may be subsidised but, due to fluctuating domestic market conditions, is no longer solely for the
domestic market?
Enforcement
Australia sees merit in discussions to clarify the remedy set down in Article 4, namely
“withdrawal of the subsidy” where it has been established that a prohibited subsidy has been
provided.
Should there be consistency in the application of a remedy and what is meant by “withdraw
the subsidy”?  If the subsidy agreement is based on the so-called traffic light test according to theTN/RL/W/85
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effect a subsidy has on trade, would the replacement of a prohibited subsidy with an actionable
subsidy “withdraw the subsidy”?  Further, should a remedy involve retrospectivity?  If the purpose of
the remedy is to bring measures into conformity and balance rights and obligations, how is
retrospectivity consistent with this?  Where does enforcement go beyond any adverse trade effect?
According to the view of th e Article 21.5 panel in the Australian Leather  case, “terminating a
programme found to be a prohibited subsidy or not providing, in the future, a prohibited subsidy, may
constitute withdrawal in some cases”.1  It went on to say that “[h]owever, such actions have no
impact, and consequently no enforcement effect, in the case of prohibited subsidies granted in the
past.”
An effective remedy is one where the measure is brought into conformity.  Australia suggests
that conformity does not mean retrospectivity.
There is also the issue of whether recurring or non-recurring subsidies should be treated
differently in terms of a remedy.  In Australia’s view, SCM Article 4.7 does not distinguish between
recurring or non-recurring subsidies in terms of the remedy, i.e. “withdraw the subsidy”.
Countervailing duty investigations and procedures
Australia agrees that there should be analogous provisions within the Subsidies Agreement
relating to countervailing duty measures to reflect corresponding provisions in the Anti-DumpingAgreement, for example, clarification of facts available under SCM Article 12.7.
Non-actionable subsidies
Australia notes that there have been many assertions in relation to non-actionable or “green
box” subsidies.  As Australia commented in rela tion to TN/RL/W/41, the “traffic light” approach is
based on the trade distorting effects of certain subsidies.  Australia considers that, notwithstanding the
lapsing of SCM Article 8, a non-specific subsidy within the meaning of SCM Article 2 is a non-
actionable subsidy.  Australia notes Venezuela’s suggestion
2 that a useful starting point on
clarification on non-actionable subsidies could be an  examination of the lack of recourse to SCM
Article 8.
Subsidy Notifications
Australia considers that there would be merit in further consideration of the SCM
Committee’s consensus on treatment of notifications at the May 2001 meeting.3  Australia also
considers that the work initiated within the Committee in relation to compliance and streamliningsubsidy notifications could also be examined and considered in the context of clarification and
improvement of the SCM.
Calculation of subsidization
Notwithstanding the lapsing of Article 6.1, and Australia notes that some Members are
seeking the reinstatement of that provision within the SCM, Australia considers that for the purposes
of Part V of the SCM, the work undertaken by the Informal Group of Experts on calculation of ad
                                                     
1 Australia – Subsidies Provided to Producers and Exporters of Automotive Leather , Recourse to
Article 21.5, Report of the Panel, WT/DS/126/RW, 21 January 2000, paragraph 6.34.
2 Venezuela’s submission, “Preliminary Replies to the Questions by Australia contained in document
TN/RL/W/61” (TN/RL/W/70, 18 March 2003)
3 See G/SCM/M/30, 14 August 2001TN/RL/W/85
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valorem subsidization would be a good basis to examine and set further priorities for potential
consensus and acceptable practice/guidelines.
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