General Agreement on Tariffs and Trade

Article XVI
Subsidies

Section A–Subsidies in General

1. If any contracting party grants or maintains any subsidy, including
any form of income or price support, which operates directly or
indirectly to increase exports of any product from, or to reduce imports
of any product into, its territory, it shall notify the CONTRACTING
PARTIES in writing of the extent and nature of the subsidization, of the
estimated effect of the subsidization on the quantity of the affected
product or products imported into or exported from its territory and of
the circumstances making the subsidization necessary. In any case in
which it is determined that serious prejudice to the interests of any
other contracting party is caused or threatened by any such
subsidization, the contracting party granting the subsidy shall, upon
request, discuss with the other contracting party or parties concerned,
or with the CONTRACTING PARTIES, the possibility of limiting the
subsidization.

Section B–Additional Provisions on Export Subsidies

2. The contracting parties recognize that the granting by a contracting
party of a subsidy on the export of any product may have harmful effects
for other contracting parties, both importing and exporting, may cause
undue disturbance to their normal commercial interests, and may hinder
the achievement of the objectives of this Agreement.

3. Accordingly, contracting parties should seek to avoid the use of
subsidies on the export of primary products. If, however, a contracting
party grants directly or indirectly any form of subsidy which operates to
increase the export of any primary product from its territory, such
subsidy shall not be applied in a manner which results in that
contracting party having more than an equitable share of world export
trade in that product, account being taken of the shares of the
contracting parties in such trade in the product during a previous
representative period, and any special factors which may have affected or
may be affecting such trade in the product.

4. Further, as from 1 January 1958 or the earliest practicable date
thereafter, contracting parties shall cease to grant either directly or
indirectly any form of subsidy on the export of any product other than a
primary product which subsidy results in the sale of such product for
export at a price lower than the comparable price charged for the like
product to buyers in the domestic market. Until 31 December 1957 no
contracting party shall extend the scope of any such subsidization beyond
that existing on 1 January 1955 by the introduction of new, or the
extension of existing, subsidies.

5. The CONTRACTING PARTIES shall review the operation of the provisions
of this Article from time to time with a view to examining its
effectiveness, in the light of actual experience, in promoting the
objectives of this Agreement and avoiding subsidization seriously
prejudicial to the trade or interests of contracting parties.

Article XVII
State Trading Enterprises

1. (a) Each contracting party undertakes that if it establishes or
maintains a State enterprise, wherever located, or grants to any
enterprise, formally or in effect, exclusive or special privileges, such
enterprise shall, in its purchases or sales involving either imports or
exports, act in a manner consistent with the general principles of
non-discriminatory treatment prescribed in this Agreement for
governmental measures affecting imports or exports by private traders.

(b) The provisions of sub-paragraph (a) of this paragraph shall be
understood to require that such enterprises shall, having due regard to
the Other provisions of this Agreement, make any such purchases or sales
solely in accordance with commercial considerations, including price,
quality, availability, marketability, transportation and other conditions
of purchase or sale, and shall afford the enterprises of the other
contracting parties adequate opportunity, in accordance with customary
business practice, to compete for participation in such purchases or
sales.

(c) No contracting party shall prevent any enterprise (whether or not
an enterprise described in sub-paragraph (a) of this paragraph) under its
jurisdiction from acting in accordance with the principles of
subparagraphs (a) and (b) of this paragraph.

2. The provisions of paragraph 1 of this Article shall not apply to
imports of products for immediate or ultimate consumption in governmental
use and not otherwise for resale or use in the production of goods for
sale. With respect to such imports, each contracting party shall accord
to the trade of the other contracting parties fair and equitable
treatment.

3. The contracting parties recognize that enterprises of the kind
described in paragraph 1 (a) of this Article might be operated so as to
create serious obstacles to trade; thus negotiations on a reciprocal and
mutually advantageous basis designed to limit or reduce such obstacles
are of importance to the expansion of international trade.

4. (a) Contracting parties shall notify the CONTRACTING PARTIES of the
products which arc imported into or exported from their territories by
enterprises of the kind described in paragraph 1 (a) of this Article.

(b) A contracting party establishing, maintaining or authorizing an
import monopoly of a product, which is not the subject of a concession
under Article II, shall, on the request of another contracting party
having a substantial trade in the product concerned, inform the
CONTRACTING PARTIES of the import mark-up on the product during a recent
representative period, or, when it is not possible to do so, of the price
charged on the resale of the product.

(c) The CONTRACTING PARTIES may, at the request of a contracting party
which has reason to believe that its interests under this Agreement are
being adversely affected by the operations of an enterprise of the kind
described in paragraph 1 (a), request the contracting party establishing,
maintaining or authorizing such enterprise to supply information about
its operations related to the carrying out of the provisions of this
Agreement.

(d) The provisions of this paragraph shall not require any contracting
party to disclose confidential information which would impede law
enforcement or otherwise be contrary to the public interest or would
prejudice the legitimate commercial interests of particular enterprises.

Author: international

Mentioned in these Entries

Other provisions.