The Agreement on Subsidies and Countervailing Measures (ASCM) is one of three World Trade Organisation (WTO) principal trade defence agreements. The UK and the European Community (EC) are party to all the agreements, which are and can be applied across all European Union (EU) member states.
ASCM covers two separate but closely related topics:
- Anti-subsidy measures allow importing countries to take banning action against certain kinds of subsidised imports. 'Subsidies' are defined as financial assistance from the government of a third country to a company or group of companies in that country.
- Other types of subsidy that are 'actionable'. This means that the importing country must investigate and be able to demonstrate how the subsidised imports have caused damage to domestic industry before it imposes any countervailing duties on the subsidised products.
The issue of subsidies is complex and is handled at government level with disputes being settled by the WTO. A system of notification and reviews of measures allows for transparency.
The agreement does not apply to trade in agricultural products, where export subsidies are common in some countries.
There are also special rules for developing countries to provide some scope for maintaining export subsidies under certain conditions.
For more information on the other two trade defence measures that the EC uses to protect its domestic industries from unfair competition from third countries, see the pages in this guide on anti-dumping duty measures and safeguard measures.