TN/RL/GEN/188  
 
30 May  2017 
(17-2875) Page: 1/2 
Negotiating Group  on Rules  Original: English  
 
IMPROVING DISCIPLINE S ON SUBSIDIES NOTIF ICATION  
Communication from the European Union  
The following communication, dated 29 May 2017, is being circulated at the request of the 
Delegation of the European Union.   
 
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1. In the last two years the EU has consistently attempt ed to identify areas in the 
SCM Agreement that urgently deserve attention of the membership and that should be 
strengthened in order to address inadequacies in the SCM Agreement itself or in areas where the 
disciplines of the  SCM Agreement appear sufficient but the implementation of these disciplines by 
Members is unsatisfactory.  
 
2. Thus, in 2015 the EU submitted two papers concerning transparency and subsidy notification 
(TN/RL/W/260 and TN/RL/W/263). Likewise, the EU, alon g with other co -sponsors, submitted 
in 2016 and in 2017 two papers on the role of subsidies as contributors to overcapacity 
(G/SCM/W/569 and G/SCM/W/572).  
 
3. Article 25 of the SCM Agreement requires Members to notify subsidies. This requirement is a 
fundamental element to ensure the correct functioning of the SCM Agreement. The objective of 
Article 25 of the SCM Agreement is to ensure transparency in the subsidies provided by Members 
so as to allow Members to review each other 's actions in this regard.  
 
4. Unfortunately, the level of compliance by WTO Members with this requirement has 
deteriorated significantly since 1995 as the share of Members that notified subsidies decreased 
from 50% to 38%. As regards the latest notification cycle, namely for 2015, o ut of the 
membership of 162 mere 62 Members notified subsidies despite the obligation to do so by 
30 June 2015. Equally worrying is the fact that, while notifications are required for subsidy 
programs implemented at both the central and sub -central levels of government, some Members 
do not notify sub -central subsidy programs at all or these notifications are inadequate. In addition, 
the quality of actual notifications, including the attempts by some Members to notify subsidy 
programs that clearly fall outsi de the scope of the SCM Agreement to create the appearance of 
transparency without subjecting actual industrial subsidies to global scrutiny, also deserves 
attention.  
 
5. It is therefore imperative to continue working towards ensuring that all Members abid e by 
their obligations in this regard to allow full transparency in respect of subsidies being granted 
worldwide at all levels of government and to understand the impact that such subsidies might have 
on international trade in goods. At various fora, parti cularly at the SCM Committee, the EU and 
some other Members have consistently urged the membership to comply with their notification 
obligations under SCM Agreement. Yet, as the above and the latest background note by the WTO 
Secretariat (G/SCM/W/546/Rev.8 ) show, these calls have not brought about any improvement, to 
the contrary. In view of this dismal and ever deteriorating state of play of subsidy notifications a 
swift action is needed. The EU is convinced that the ways to improve transparency identified  in its 
paper TN/RL/W/260 need to be further explored and discussed in more detail at the RNG.  
 
6. One of the options to improve transparency under the SCM Agreement identified by the EU 
in its paper TN/RL/W/260 was streamlined monitoring of compliance wit h notification obligations TN/RL/GEN/188  
 
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  consisting of a greater involvement by the WTO Secretariat. A detailed explanation on how such a 
system would work in practice was provided in paper TN/RL/W/263 and the EU kindly refers the 
membership to this document. It is impo rtant to note that this system would not increase the 
notification burden of Members granting subsidies and that it would not require any changes to the 
SCM Agreement. Yet, if put in practice, it may considerably improve the deplorable level of 
subsidies n otifications. The EU would like to explain the practicalities of such a system at a 
dedicated RNG session.  
 
7. Other ways to improve compliance with notification obligations by WTO Members identified 
in the EU paper TN/RL/W/260 were incentives to notify w hich would require strengthening the 
disciplines of the SCM Agreement. The EU would like to elaborate in more detail on such options.  
 
8. One option might be a creation of a general rebuttable presumption according to which all 
non-notified subsidies woul d be presumed to be actionable. This would require an amendment of 
Article 25.7 of the SCM Agreement in that where a subsidy has not been notified under Article 25, 
such subsidy would be presumed to be causing serious prejudice to the interest of other Mem bers 
within the meaning of Article 6. It would then be for the subsidizing Member to demonstrate that 
the subsidy in question did not cause these effects. This system would not alter the extent of 
subsidies notifications for the subsidizing Member. It woul d only create a strong incentive to 
comply with the existing obligations under the SCM Agreement.  
 
9. Another, admittedly more moderate option to address the transparency problem would be a 
presumption of actionability that would be based on the mechanism  of the current Article 25.10 of 
the SCM Agreement. Thus, the presumption of actionability would exist only for subsidies that a 
Member brought to the notice of the SCM Committee because the subsidizing Member had not 
notified such subsidies despite having  been called on to do so bef orehand by the other Member. 
Of course, this would also be a rebuttable presumption of actionability. Therefore, the subsidizing 
Member would still be allowed to demonstrate that the subsidy in question did not cause the 
serious  prejudice. This option would thus require an amendm ent to Article 25.10 of the 
SCM Agreement.  
 
10. Such system would not create any extra burden on the regular subsidy notifications of the 
subsidizing Member because the initiative and the workload would b e on the Member that 
considers that the subsidizing Member did not notify specific subsidies in accordance with 
Article  25 of the SCM Agreement. The subsidizing Member would only have to determine whether 
such allegedly non -notified subsidies should have b een notified. In the affirmative, it would simply 
take the non -notified subsidies and notify them thus complying with its notification obligations. On 
the contrary, if such allegedly non -notified subsidy should not have been notified, for example 
because i t was not specific or because any of the conditions of Article 1 of the SCM Agreement was 
not met, there would be no risk for the subsidizing Member anyway because the rebuttable 
presumption would allow it to demonstrate that the non -notified support is no t a subsidy within 
the meaning of the SCM Agreement.  
 
11. The EU looks forward to discussing the above and any other possible ideas aiming at 
improving the compliance by Members with notification obligations of the SCM Agreement. The EU 
would like to invi te other Members to come up with other ideas that would improve the current 
gloomy state of affairs.  
 
12. The EU reserves the right to revise and expand its views and to submit further comments 
and proposals on these and other issues. In particular, the EU  may develop concrete ideas on how 
to tackle subsidies that contribute to overcapacity. Indeed, in paper G/SCM/W/572, the EU, along 
with the US, Canada and Japan concluded that these types of subsidies rightly should be 
considered for more stringent discip lines.  
 
 
 
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