4.12 Subsidies (excluding export subsidies)
The accepted definition of a ‘subsidy’ is found in Articles 1 and 2 of the WTO’s Agreement on Subsidies and Countervailing Measures, and includes three elements: (1) a financial contribution, or income or price support, by a government; (2) which confers a benefit; and (3) that is specific.
The term financial contribution includes direct or potential direct transfers of funds, government revenue foregone, provisions of goods or services, and payments to a funding mechanism. Additionally, this financial contribution by a government may also include public bodies or the government entrustment or direction to a private body.
A benefit is present when the financial contribution makes the recipient ‘better off’.
A financial contribution is specific if it is available only to a particular enterprise or industry, or a limited geographic area.
