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Red light subsidies
08/12/2022 06:45
Red light subsidies are subsidies whose very nature makes them intolerable and automatically actionable. Red light subsidies are deemed specific by law and are per se prohibited. They include export subsidies and import substitution subsidies. Annex I of the SCM Agreement provides a list of common types of export subsidies, which includes such items as direct subsidies based on export performance, and rebate or remission of direct and indirect taxes. Prohibited import substitution subsidies are subsidies contingent on the use of domestic goods over imported goods (whether solely or as one of several conditions). Both of these types of programmes are considered red light subsidies, which are clearly countervailable by WTO Members. United States law reflects this approach.
