The Agreement on Subsidies and Countervailing Measures (SCM) is a crucial document that governs the international trade in goods and services. It is one of the agreements that form a part of the World Trade Organization (WTO), which is an intergovernmental organization that regulates international trade.

The SCM Agreement lays down rules for the use of subsidies by governments and their impact on trade relations between countries. The main objective of the agreement is to ensure that subsidies do not distort the market by giving an unfair advantage to certain domestic industries or companies.

The agreement defines a subsidy as any financial contribution, including grants, loans, tax benefits, and other incentives, provided by a government to its domestic industries or companies. The SCM Agreement requires member countries to notify the WTO of any subsidies they provide and to allow other WTO members to examine these subsidies and their impact on trade.

Countervailing measures are actions taken by one country to offset the effects of subsidies provided by another country on the imports of affected goods and services. These measures may include imposing additional duties or tariffs on such goods and services.

The SCM Agreement also establishes a dispute settlement mechanism to resolve any disputes arising from the application of the agreement. Under this mechanism, WTO members can file a complaint against other members for violating the agreement. The complaint then goes through a process of consultation, mediation, and adjudication, with the WTO panel issuing a binding decision.

The SCM Agreement has been the subject of several negotiations and revisions since its inception in 1995. One of the most significant changes to the agreement came in 2015 with the adoption of the Nairobi Package, which included new rules governing agricultural subsidies and provisions to enhance transparency and monitoring of subsidies.

In conclusion, the Agreement on Subsidies and Countervailing Measures is a vital agreement that helps ensure fair and open competition in international trade. By regulating the use of subsidies and providing for countervailing measures, it helps prevent the distortion of the market and promotes a level playing field for all countries. As a result, the SCM Agreement plays a critical role in maintaining the stability and growth of the global economy.