Also known as: Export support, Government export incentive
Financial support granted by a government to its producers or exporters to artificially reduce the cost or price of their goods in international markets, considered an unfair trade practice.
An export subsidy is any form of financial support a government provides to its domestic producers, contingent on exporting their products. This support can take the form of direct payments, tax credits, preferential financing, provision of inputs at below-market prices, or any other benefit that reduces production or export costs, allowing goods to be sold abroad at artificially low prices.
The WTO Agreement on Subsidies and Countervailing Measures (SCM) classifies subsidies into three categories: prohibited (contingent on exports), actionable (cause injury to another member), and non-actionable (permitted, such as research subsidies).
When an importing country demonstrates that subsidized imports cause injury to its domestic industry, it can impose countervailing duties (different from anti-dumping duties). The investigation procedure is similar to dumping, but instead of comparing prices, the subsidy amount is quantified.
Dumping
An unfair trade practice of exporting goods at a price lower than their normal value in the domestic market of the country of origin, causing or threatening to cause injury to the domestic industry of the importing country.
TariffsCountervailing Duty
An additional duty levied on imported goods that are subject to dumping or foreign government subsidies, designed to protect domestic industry from unfair trade practices.
TradeNon-Tariff Barriers
Restrictions on international trade other than tariffs, including quotas, permits, technical standards, sanitary requirements, and other obstacles that hinder or increase the cost of importing goods.
TradeFree Trade Agreement (FTA)
International agreement that eliminates or reduces tariffs and trade barriers between signatory countries.