Part Four : Subsidies to Agriculture

1.         The Member States shall notify COTED of any subsidy programme pursuant to Article 117 prior to implementation.

2.         In addition to the notification to be submitted under this Article, any new subsidy or modification of an existing measure shall be notified promptly. This notification shall contain details of the new or modified subsidy and its conformity with the agreed criteria as set out in Article 116 and Article 120.

3.         Any Member State may bring to the attention of COTED any measure which it considers ought to have been notified by another Member State.

Where it has been determined that a subsidy causes injury or threatens to cause such injury, in accordance with the provisions of this Part, the aggrieved Member State shall exercise due restraint in initiating any action in retaliation.

1.         Each Member State shall ensure that any subsidy in favour of agricultural producers conforms with the provisions of Article 119 and Article 120.

2.         Any subsidy in favour of agricultural producers that cannot be shown to satisfy the provisions in Article 119 and Article 120, shall be subject to the provisions of Article 106 to Article 110 inclusive.

3.         A subsidies programme undertaken in conformity with the provisions of this Part shall be subject to action based on Article 106 to 110 inclusive where a determination of injury or threat thereof is made in accordance with the provisions of this Part.

4.         In the determination of a threat of injury, the investigating authorities shall consider, inter alia, such factors as:

(i) the nature of the subsidy or subsidies in question and the trade effects likely to arise therefrom;

(ii) a significant rate of increase of subsidised imports into the domestic market indicating the likelihood of substantially increased importations;

(iii) sufficient freely disposable or an imminent, substantial increase in capacity of the exporter indicating the likelihood of substantially increased subsidised exports to the importing country’s market, taking into account the availability of other export markets to absorb any additional exports;

(iv) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and are likely to increase demand for further imports;

(v)        inventories of the product being investigated.

 

1.         Any subsidy provided by a Member State in favour of the production of an agricultural product entering regional trade, except for the provision of general services programmes or direct payments satisfying the conditions stated in Article 119, shall not exceed 10 per cent of the total value of that Member State’s annual production of such tradeable agricultural product in any one year.

2.         Any subsidy provided by a Member State in favour of agricultural producers or processors in general, except for the provision of general services programmes or direct payments satisfying the conditions stated in Article 119, shall not exceed 10 per cent of the total value of that Member State’s annual total agricultural output, in any one year.

3.         Where a Member State provides a subsidy, except for the provision of general services programmes or direct payments satisfying the conditions stated in Article 119, in excess of the levels prescribed in paragraphs 1 and 2, such a subsidy shall be considered as a subsidy causing injury, nullification, impairment or serious prejudice.

1.         Notwithstanding the right to grant subsidies indicated in Article 118, a Member State shall not use such subsidies in a manner to distort the production of and intra-regional trade in the product or products benefiting from such subsidies.

2.         Accordingly, subsidies provided by a Member State to agriculture shall not involve transfers from consumers, or direct payments to producers or processors  which would  have the effect of providing price support to producers.

3.         Subsidies provided by a Member State to agriculture shall be made through publicly funded programmes which benefit the agricultural sector generally,  in areas such as research, training, extension and advisory services, pest and disease control, inspection services, marketing and promotion services and infrastructural services.

4.         Where a Member State makes direct payments of a subsidy to agricultural producers or processors through such schemes as crop insurance, disaster relief, income safety-net programmes, regional assistance programmes and structural adjustment assistance programmes, the Member State shall ensure that these payments, whether financial or otherwise,  have no or minimal production and trade distortion effect and do not constitute price support to producers of the product or products benefitting from the use of such schemes.

Having regard to the general use of subsidies in Member States to encourage agricultural and rural development, to promote investments in agriculture generally and to assist low- income or resource-poor producers, Member States may grant subsidies to meet those objectives, consistently with their obligations under international agreements and subject to the provisions of this Part.

1.         For the purpose of this Part, an agricultural subsidy means any form of domestic support, financial or otherwise, including revenue foregone, provided by government or any public agency in favour of the producers of a specific agricultural product or to the agricultural sector as a whole. This includes:

(a)        assistance  provided  by  government  or  any  public  agency  to foster agricultural and rural development or to assist low income producers or producers with deficient resources;

(b) financial concessions granted by government or a public agency to offset the cost of agricultural inputs or to encourage investments in agriculture;

(c) any other financial concession which has the effect of providing price or income support to producers of agricultural products which is administered either through direct payments to the producers or processors of an agricultural product or indirectly through government or other publicly funded programmes;

(d)        payments in kind to agricultural producers.

2.         “Agricultural products” refers to the products listed in Annex IV.