The Law and Economics of Contingent Protection in the WTO

The Law and Economics of Contingent Protection in the WTO

Elgar International Economic Law series

Petros C. Mavroidis, Patrick A. Messerlin and Jasper M. Wauters

In this important book, three of the leading authors in the field of international economic law discuss the law and economics of the three most frequently used contingent protection instruments: anti-dumping, countervailing measures, and safeguards. When discussing countervailing measures, the authors also discuss legal challenges against prohibited and/or actionable subsidies. The authors’ choice is mandated by the fact that the effects of a subsidy cannot always be confined to the market of the WTO Member wishing to react against it. Assuming there are effects outside its market, an injured WTO Member can challenge the scheme as such before a WTO Panel. Taking the three agreements for granted as a starting point, the book provides comprehensive discussion of both the original contracts, and the case law that has substantially contributed to the understanding of these agreements.

Chapter 6: General introduction to the agreement on subsidies and countervailing measures: 'thou shall not subsidize'

Petros C. Mavroidis, Patrick A. Messerlin and Jasper M. Wauters

Subjects: economics and finance, international economics, law - academic, international economic law, trade law


PART II Subsidies In the next chapter, we will discuss a second type of contingent trade protection, countervailing duties. While countervailing duties is the term of art used in the WTO jargon, these measures are, to use the anti-dumping parallel, antisubsidy measures. An importing country which establishes that imported products which have been subsidized by the exporting country enter its market causing injury to the domestic producers of the like product, is allowed to take anti-subsidy action to protect its own domestic industry. Countervailing measures are thus unilaterally imposed by the importing country following an investigation into the conditions for imposition of such measures. As we will discuss later, the WTO Agreement on Subsidies and Countervailing Measures (the ‘SCM Agreement’), which disciplines both the use of subsidies and the possible unilateral reaction against subsidies, also provides for another, multilateral avenue using the WTO’s dispute settlement mechanism.

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