Committee on SMEs and Subsidies

One of the current limitations of providing subsidies for legal fees or procedures for SMEs to enter with more ease in the international trade framework is the existing WTO agreement on subsidies and countervailing measures. The Agreement follows a traffic light approach for subsidies. While “red-light” or prohibited subsidies represent those industries where the latter shall not be allowed under any circumstances, actionable and non-actionable subsidies (“orange and green-light” subsidies respectively) are those in which member countries can under certain circumstances implement subsidies but such measures can be disputed or questioned by other member parties through consultation or dispute settlement. (WTO , 2003; Bigdeli, 2011)

Developments in the last few years, have made non-actionable subsidies completely disappear and actionable subsidies almost be reduced to extinction. However, the “reintroduction” or “revival” of such could prove useful especially for small and medium enterprises which due to their relatively small size (compared to big corporations) and smaller income, cannot afford entrance into international trade and even less to international disputes (Bigdeli, 2011). One of the major question for subsidies is: Can capital support which is provided to SMEs of a country in general really be considered a subsidy? Article 2 of the SCM agreement could provide the answer for this (Mah & Tamulaitis, 2000). Some member countries could however find the reintroduction of such actionable or non-actionable subsidies unfair or unfavorable. The main reason for this is that not all countries have the financial means to support their whole SMEs industry which would mean that they would have to limit their financial support to certain industries. Such actions however, would go against the Agreement on Subsidies and Countervailing Measures and would be open for international dispute (WTO , 2003).

As part of the committee on Subsidies and Countervailing Measures, you shall discuss on the existing Subsidies and Countervailing Measures agreement and on the possible (but not necessary) expansion or inclusion of SMEs subsidies as part of the actionable or non-actionable subsidies. Furthermore, you shall discuss how to avoid such rules being a setback to already existing agreement and if this would require an addition to the definition of a subsidy. At last, possibilities for special and differential treatment for LDCs and possibly developing countries, should be discussed within the scope of the SCM agreement. These negotiations shall not contradict any of the existing rules of other Agreements at the WTO and shall take into consideration the basic principles as is the most-favored nation treatment and the national treatment principles.


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