The Question of the ‘Benefit’

Abstract

The latest decision of the Appellate Body in Canada - Renewable Energy (412, 426) 1 establishes criteria for the determination of a subsidy granted through public procurement. In particular, the decision establishes criteria for the determination of whether the supplier of goods or services to the government has received a 'benefit', which is a prerequisite for the existence of a subsidy pursuant to Article 1.1 (b) of the Agreement on Subsidies and Countervailing Measures of the WTO ('SCM Agreement'). Although the dispute was about a prohibited subsidy scheme with a local content requirement, in its discussion, the Appellate Body relies heavily on the rule established under Article 14.1(d) of this agreement, which applies to the calculation of a 'benefit' for the purpose of a countervailing duty investigation. This provision reads in relevant part as follows: [A]ny . . . method [for the calculation of a benefit in countervailing duty investigation] shall be consistent with the following guidelines: (d) the . . . purchase of goods by a government shall not be considered as conferring a benefit unless . . . the purchase is made for more than adequate remuneration. The adequacy of remuneration shall be determined in relation to prevailing market conditions for the good . . . in question in the country of . . . purchase (including price, quality, availability, marketability, transportation and other conditions of purchase or sale).