GlossaryEN1 min readUpdated: Jun 26, 2026
Subsidies and compensatory measures
Countervailing measures are trade remedies that offset the competitive advantage which government subsidies confer on foreign producers.
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Source: https://www.wto.org/english/tratop_e/scm_e/scm_e.htm
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Definition & Explanation
Countervailing measures are trade remedies that offset the competitive advantage which government subsidies confer on foreign producers. Subsidies encompass financial contributions or other benefits granted by a state to companies or industries – typical examples include agricultural support payments, preferential loans, and export incentives. The standard countervailing instrument is the countervailing duty, levied on subsidised imports to neutralise the artificial cost advantage. The WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement) sets the conditions under which such duties may be applied: a formal investigation must establish that the subsidy causes material injury to the domestic industry. Not all state support is actionable – the SCM Agreement distinguishes between prohibited, actionable, and non-actionable categories of subsidies.
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