Subsidies To Legal Issues Of Interest To Study Under The Wto Framework

The benefit of subsidy defines a key constituent element under SCM Agreement with which government action may fall under the category of subsidy. It is of great importance for China to respond to countervailing investigations launched by other countries. Currently, however, the theoretical realm has not yet seen a systematic and overall research and combing of the benefit of subsides, which means no effective guidance will be given to the practical field. This article, with WTO legal texts as the underpinning, by reviewing existing WTO cases and with treaty interpretation, pragmatic research and comparison as its approaches, renders a comprehensive analysis of benefit of subsidies, in hopes of being conducive to both the theoretical and practical realms.This paper includes three parts, namely introduction, main body and conclusion. Introduction expounds on the raising of the issues and the thought trails of reasoning.The main body is divided into four parts:The first part is the introduction of benefit of subsidies. In this part, the definition of subsidies from both economic and legal perspectives has been analysed, followed by the analysis of the constituent elements of subsidies. On the basis of the analysis, benefit of subsidies has been defined, so as to lay a solid foundation for its differentiation from other concepts in the following parts.The second part, based on the method of treaty interpretation and reviewing the relevant cases, differentiates benefit of subsidies from financial contribution, discusses the benchmark of determining the benefit and distinguish between benefit of subsidies and specificity. This part serves as the basis on which the pass though of benefit will be analysed.The third part deals with the pass-through of benefit.The existing cases concerning benefit is categorized and reviewed in this part. Based on these analysis, the legal basis of pass-through of benefit, no assumption before investigation and how the benefit is passed through are analysed. Focus also goes to issues still being negotiated during the Doha Round. The fourth part advises on how China should respond to the countervailing investigations based on the analysis of statue quo.Based on the aforesaid analysis, the following conclusions is drawn: benefit of subsidies is the constituent element of subsidies independent of financial contribution, the relationship being the form and the effect; specificity defines the object of benefit; the benchmark of determing the benefit is market; the pass-through of benefit cannot be assumed, it depends on arm's length transaction and fair price. China should take full advantage of the principles established by DSB in response to the investigations launched by other countries.