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Chapter Summary

This chapter presents cases to concern the application of the SCM Agreement. The Australian government had concluded two separate agreements – a grant contract and a loan contract – with an automotive leather exporter. The grant contract provided for a series of three payments totalling up to a maximum of A$30 million, based on the company’s performance against the targets set out in the contract. The performance targets consisted of sales targets and capital expenditure targets. The loan contract provided for a fifteen-year $A25 million government loan on concessionary terms. During the first five years, the beneficiary was not required to pay either principal or interest. Several issues were raised before the Panel. During the stage in which the measure had to be brought into conformity, the Panel addressed the question of the possible “retrospective effect” of repayment of the prohibited subsidy.

Keywords: Australia; automotive leather exporter; SCM Agreement



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