The historical development of the subsidies and countervailing duties is traced as one of the three contingent protection instruments of the WTO. The chapter discusses the two types of prohibited subsidies (local content and export subsidies) and the principle that members should avoid causing adverse effects to other WTO members through the use of other subsidies. Further it discusses the appropriate situations and process for imposing countervailing duties under the Subsidies and Countervailing Measures Agreement.
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