./.WORLD TRADE
ORGANIZATIONTN/RL/W/1
15 April 2002
(02-2050)
Negotiating Group on Rules Original:  English
IMPROVED DISCIPLINES UNDER THE AGREEMENT ON SUBSIDIES AND
COUNTERVAILING MEASURES AND THE ANTI-DUMPING AGREEMENT
Communication from Canada
The following communication, dated 12 April 2002, has been received from the Permanent
Mission of Canada.
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Effective rules/disciplines on the use of trade remedies and government subsidies are critical
to the reduction of distortions to trade and investment and to the promotion of  global competition.
While the Uruguay Round represented a significant achievement, our collective experience since then
suggests that there are certain gaps/deficiencies in the fabric of WTO trade remedy rules that have led
to divergent interpretations and practices.  While dispute settlement has attempted to address some ofthese issues, the continuing lack of clarity in the rules has impaired the ability of governments to
formulate trade and economic policies and programmes that fully conform to their WTO obligations.
Canada believes that clarification of the issues outlined in this paper would benefit developing and
developed countries alike.
This submission touches on some of the area s in which the SCM and AD Agreements might
be usefully clarified and improved.  In this regard, it does not purport to be an exhaustive enumerationof negotiating issues nor should it be regarded as Canada’s final position on any of these issues.
Rather, it is intended to establish some preliminary markers on broad issues where we would expect
negotiations.  Canada intends, at a later date, to table a more detailed paper dealing with these and
other trade remedy issues.
Subsidies
Recent dispute settlement decisions on factors relevant to the assessment of contingency on
export performance have placed certain economies at an apparent disadvantage vis-à-vis  those with
large domestic markets.  This issue will grow in importance with the increasing integration ofinternational markets.  As such, clarification of prohibited subsidies provisions is required to, among
other things, ensure the equitable application of SCM Agreement rules/disciplines among WTO
Members.
The serious prejudice provisions of the SCM Agreement are an important complement to
WTO rules/disciplines in respect of prohibited subsidies and countervailing duties.  However, the
practical difficulty of Members’ recourse to these provisions and the lapse of the deemed serious
prejudice provision at the end of 1999 point to shortcomings in the Agreement.  The importance of
access to third country markets, especially for Members with relatively small domestic markets and
for certain specialized industries, suggests a need to consider a more viable serious prejudice remedy.
The lapsing of the non-actionable subsidies category at the end of 1999 has compromised the so-
called traffic light framework of the SCM Agreement.  WTO Members will need to consider whetherTN/RL/W/1
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this framework remains viable and whether a non-actionable subsidy category should again be
pursued.
Canada’s preference has been to support generic subsidy disciplines rather than a sectoral
approach.  The issue of fisheries  subsidies has been specifically referred to in the Ministerial
Declaration, and Members must consider whether they should address the subsidies issues on a
sectoral basis or whether these sector-specific issues are more appropriately addressed under generic
rules/disciplines.  Canada remains concerned about efforts to fragment subsidy disciplines on a sector-
by-sector basis.  In tackling sectoral subsidy issues, the first question to be asked is whether the SCM
Agreement is deficient in some way in providing an effective means to address the trade-distorting
effects of subsidies in that sector.  In assessing whether there is a need for new sector-specific subsidy
rules/disciplines, the logical approach, in Canada’s view, is to examine an identified sectoral issue inthe light of generally applicable rules/disciplines to determine the extent of any deficiency in existing
rules.
Anti-Dumping and Countervailing Duties
We have witnessed the proliferation of anti -dumping and countervailing duty actions among
Members as traditional barriers to trade are reduced.  Canada believes that improvements and
clarifications to the rules governing dumping and subsidy investigations  and the application of such
measures are required in order to achieve greater convergence in interpretation and to prevent
unnecessary restrictions on trade, while ensuring that  these measures provide an effective, predictable
remedy to deal with the injurious effects of dumped and subsidized imports.
Among the areas that would benefit from clarification are rules/disciplines pertaining to the
initiation of investigations; transparency and procedural fairness; the calculation of dumping marginsand amounts of subsidy; injury determinations; anti-dumping and countervailing duty enforcement;
the consideration of the broader public interest; and the review of existing anti-dumping and
countervailing measures.
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