International-Business-Dr-R-Chandran-E-book

AGREEMENTS OBJECTIVE OF
AGREEMENT
1.g. Agreement
on Subsidies and
Countervailing
Measures (SCM)
• Prohibits export
subsidies;
allows
permissible
subsidies
• Requires
developing
countries to
phase them out
by 2003 (with
some
exceptions) and
to freeze their
level and
coverage during
transitional
period.
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International Business- Dr. R. Chandran
IMPACT ON
INDIAN
POLICY/ LAWS
complaint
terming it as
‘subsidy’
#prohibited as
per GATT
• India may have
scrap IT waiver
on export
earnings by
2003. Foreign
Trade Policy is
following the
GATT
directives
cautiously in
introducing the
Duty
Exemptions
schemes and is
suitably
modifying
them to make
them WTO
compatible
Also see : Indian
Imports Regime to
be further
liberalized
BUSINESS
IMPLICATIONS
study, Indian
exports suffer
from cost
disability of
16.3% over their
overseas
counterparts due
to absence of
VAT, inadequate
financing and
infrastructure
bottlenecks.
• Business will
have to
understand what
is permissible
and what is not.
E.g. subsidies
given by Govts.
to small
businesses are
usually
permissible (nonactionable)
or
given for R&D or
for adaptation to
new environment
requirements.
• Even during
transition period
(upto 2003).
Importing
countervail
‘subsidies’ by
increasing duties.
• Export subsidies
Only for Private Circulation