7.9 In the event that the member has not taken appropriate measures to eliminate the negative effects of the grant or to withdraw the subsidy within six months of the adoption of the panel`s report or the appellate body`s report, the DSB gives the complaining member permission to take action. , depending on the degree and nature of the adverse effects, unless the DSB agrees to reject the application. (b) subsidies which, alone or in the form of one of several other conditions, depend on the use of imported goods in the domestic market. 4.10 If the DSB`s recommendation does not follow within the time frame set by the body that begins on the date of adoption of the panel`s report or the appeals agency report, the DSB gives the requesting member permission to take appropriate counter-measures (9), unless the DSB agrees to reject the application. The SCM agreement creates two basic categories of subsidies: those that are prohibited, those that can be implemented (i.e. challenged in the WTO or that take countervailing measures). All specific grants fall into one of these categories. Prohibited Subsidies Two categories of subsidies are prohibited by Article 3 of the SCM Convention. The first category consists of subsidies that, legally or in fact, depend entirely or as conditions on export performance (export subsidies).
The SCM agreement is accompanied by a detailed list of export subsidies. The second category consists of subsidies which, alone or among other conditions, refer to the use of domestic imported goods (subsidies for local content). These two categories of subsidies are prohibited because they are supposed to directly affect trade and are therefore most likely to have a negative impact on the interests of other Members. For a financial participation to be a grant, it must be paid by or on the instruction of a government or public body located in the territory of a member. Therefore, the SCM agreement applies not only to measures taken by national governments, but also to actions taken by sub-national governments and public bodies such as state-owned enterprises. Rules of Procedure Part V of the SCM Convention contains detailed rules on the opening and implementation of counter-investigations, the establishment of interim and final measures, the use of companies and the duration of measures. One of the main objectives of these rules is to ensure that investigations are conducted in a transparent manner, that all interested parties have the full opportunity to defend their interests and that the investigating authorities adequately explain the basis of their conclusions.