5.69 In this regard, Canada argues, in response to a panel question, that its argument that it is not possible to find a Section 1 subsidy if no net cost to the public purse of the producing country can be proven is not a finding based on point (k), but a statement explaining the elements to be created under Article 1. Canada argues that there is a similarity between the structure of point k and section 1, and asserts that this similarity is the reason why Canada, in its first written opinion in point k, refers to the contextual interpretation of Article 1 of the SCM Convention. 5.66 Canada refers to a second contextual element, Article 3.1 b), which “contingent… The use of imported goods indoors. In Canada`s view, Brazil`s interpretation of “contingency” as a “inclination,” if brought to its logical conclusion in Article 3.1 (b), would lead to a ban on subsidies to domestic industries with “inclination” or “orientation” domestic content. For Canada, if Brazil`s article 3.1 argument is correct, it would at least be prohibited from subsidizing the following sectors or concerns: 16 The Uruguay Round agriculture negotiations have not been easy and have gone beyond traditional import access problems [6]. Negotiators discussed disciplines with respect to all measures related to agricultural trade, including domestic agricultural policy and agricultural export subsidies. The agricultural agreement includes specific commitments to reduce aid and protection in the areas of domestic support, export subsidies and market access. In the event of a conflict between the WTO agreements and the agricultural agreement, the provisions of the WTO agreement apply. It should be customary to obtain explicit consent from the companies concerned before the planned participation of the companies concerned in the Export Member State. 5 The EC has introduced significant changes to subsidies.

The agricultural agreement required WTO members to reduce direct export subsidies. In the “rule-setting agreements,” negotiators reformulated the rules of action set out in the original GATT. Subsequently, the new agreement on subsidies and countervailing measures (“SCM agreement”) was adopted. 5.64 First, according to Canada, the SCM agreement makes a fundamental distinction between prohibited and non-prohibited subsidies: export subsidies are highlighted for a ban, as well as subsidies for domestic content under Part II, while other Part III or non-applyable subsidies in Part IV. According to Canada, this distinction is essential to the legal structure of the SCM Convention, which has three discrete subsidy categories. Canada argues that a Section 3 subsidy is prohibited, regardless of its actual or expected effects on international trade or on the interests of other WTO members; and that trade-distorting effects are presumed only under certain conditions (in accordance with Article 6) and that even then, unlike prohibited subsidies, presumptions are rebutted (Article 6.2); and that subsidies that fall into the category of “unenforceable” subsidies are only granted in the rare case where they “cause damage that would be difficult to repair” (Article 9.1). 49 The first, launched in March 2003, was prepared by Mr Harbinson, Chairman of the WTO Agriculture Committee. In mid-August 2003, the EU and the United States jointly proposed a framework for further agricultural reforms. This proposal reflected a compromise between previous US and European proposals [12]. The joint proposal has provoked reactions from other WTO members. The counter-proposal was submitted by 16 developing countries in September 2003 and received support from four other developing countries. On the other hand, a revised draft ministerial text of WTO ministers was put into circulation at the end of August.

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