Uruguay Round Agreement Deal With Subsidies Which Are
24 The introduction of production subsidies corresponding to import duties (i.e., if you compare Figures 1a and 1b/, shifts the supply curve to sd-s value, but the domestic price does not change. The result is an increase in domestic production (from 0q1 to 0q3), while domestic consumption remains unchanged. As a result, the surplus of production increases per area a, the consumer price does not change, while the budgetary cost corresponds to the area a-b (amount of periods of production of unit subsidies). Thus, the loss of net well-being corresponds to the area b (production effect). We can therefore conclude that production subsidies are less inefficient than import duties, since the loss of harm is greater in the latter case (b-> db). It should be noted that production subsidies lead to a decrease in imports (q1q3) relative to the corresponding tariff (q1q3-q4q2). This is why production subsidies, which are less damaging than import duties, are not applicable under the WTO SCM agreement. The service agreement, which is part of the final act, is based on three pillars. The first is a framework agreement that contains fundamental obligations that apply to all Member States. The second relates to national engagement plans, which contain other specific national commitments that will be subject to an ongoing liberalisation process. The third is a series of annexes dealing with the particular situation of the different service sectors.
The agreement covers the application of sanitary and plant health measures, i.e. food safety and veterinary and plant health legislation. The agreement recognizes that governments have the right to take health and plant health measures, but that they should only be applied to the extent necessary to protect human, animal or plant life or health, and that they should not be subject to arbitrary or unjustified discrimination between members if identical or similar conditions prevail. The agreement includes both general exceptions and security exceptions similar to GATT Articles XX and XXI. It also includes negotiations on the development of trade-distorting subsidy disciplines in the services sector. For 247 years, GATT has proven to be an effective international organization. In eight consecutive rounds of multilateral negotiations, the average level of tariffs in industrialized countries was reduced from 40% after the war to about 6% in the late 1980s. The largest tariff reductions – by almost 33 per cent – were agreed in the Kennedy (1964-67), Tokyo (1973-79) and Uruguay (1986-94) rounds. At the end of the last Uruguay round (UR), the final act transformed the former GATT into the WTO. The agreement sets deadlines for all protection measures. In general, the duration of a measure should not exceed four years, although it may be extended to a maximum of eight years, subject to the assertion of the continuing need by the competent national authorities and if there is evidence that the sector is adapting.
Any measure imposed for a period of more than one year should be progressively liberalized throughout its lifespan. No protective measures could be re-applied to a product for which such a measure had been imposed for a period equal to the duration of the previous measure, with a non-application period of at least two years. A protection measure of 180 days or less may be re-applied to the importation of a product if, since the date of the measure on that product, it has been at least one year and such a measure would not have been applied more than twice to the same product in the five-year period immediately preceding the date of the measure`s introduction.