ASCM

The Agreement on Subsidies and Countervailing Measures (ASCM) is one of the multilateral agreements annexed to the Marrakesh Agreement establishing the World Trade Organization, in force since 1 January 1995. It replaced and substantially tightened the looser subsidies code negotiated in the GATT Tokyo Round.

The ASCM does two things at once. First, it defines what counts as a subsidy and disciplines the use of subsidies by WTO members. Second, it sets procedural and substantive rules for the unilateral remedy of countervailing duties (CVDs) that importing countries may impose to offset injurious subsidized imports.

Article 1 defines a subsidy as a financial contribution by a government (or any public body) that confers a benefit on the recipient. Article 2 adds that the subsidy must be specific to an enterprise, industry, or group to be actionable.

The agreement originally created a "traffic light" structure:

• Prohibited (red light) subsidies under Article 3: export subsidies and import-substitution (local content) subsidies. These are banned outright.
• Actionable (amber light) subsidies under Article 5: permitted unless they cause adverse effects to another member's interests (injury, nullification of benefits, or serious prejudice).
• Non-actionable (green light) subsidies under Article 8: covered certain R&D, regional development, and environmental aid. This category lapsed at the end of 1999 because members did not agree to extend it.

Part V of the agreement governs domestic CVD investigations, requiring evidence of subsidization, injury to the domestic industry, and a causal link, mirroring the structure of the Anti-Dumping Agreement.

The ASCM has generated some of the WTO's most prominent disputes, including the long-running EC – Aircraft (Airbus) and US – Aircraft (Boeing) cases between the European Union and the United States. Special and differential treatment provisions in Part VIII give developing countries longer transition periods and higher de minimis thresholds.