Preventing Systematic Circumvention of the SCM Agreement: Beyond the Mandatory/Discretionary Distinction

Haneul Jung and Jeongmeen Suh

World Trade Review, 2016, vol. 15, issue 3, 475-493

Abstract: Under the prevailing WTO jurisprudence, the mandatory/discretionary distinction is applied to Article 1.1(b) of the SCM Agreement whenever a Member's measure is challenged ‘as such’ pursuant to the SCM Agreement. However, applying the mandatory/discretionary distinction vis-à-vis Article 1.1(b) may render the entire SCM Agreement vulnerable against certain subsidies designed to confer benefits systematically through private intermediaries. In order to prevent such vulnerability, Article 1.1(b) of the SCM Agreement should be construed to cover benefits conferred as consequences of underlying financial contributions, without being limited by the mandatory/discretionary distinction.

Date: 2016
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