(b) aid to less-favoured regions situated in the territory of a Member State which is granted within the framework of a general regional development framework (31) and non-specific (within the meaning of Article 2) within eligible regions, subject to (b) grants to cover operating losses in an economic sector; 7.10 In the event that a disputing party requests arbitration under Article 22(6) of the DSU, the arbitrator shall determine whether the counter-measures are proportionate to the scale and nature of the adverse effects found. The Procedural Rules, Part V, of the SCM Convention lay down detailed rules concerning the initiation and implementation of countervailing investigations, the imposition of provisional and definitive measures, the use of undertakings and the duration of measures. One of the key objectives of these rules is to ensure that investigations are conducted in a transparent manner, that all interested parties have a full opportunity to defend their interests and that investigating authorities correctly explain the basis for their findings. The following are some of the major novelties of the WTO Subsidies Agreement: 7.8 When a panel report or an Appellate Body report is adopted that establishes that a subsidy has had adverse effects on the interests of another Member within the meaning of Article 5, the Member granting or maintaining that subsidy shall take appropriate measures to eliminate its injurious effects, or withdraw the subsidy. 8.2 Notwithstanding the provisions of Parts III and V, the following subsidies are not open to doubt: developing countries The grant agreement recognizes three categories of developing countries: least developed members (LDCs), members with a per capita GNP of less than $1000 per year and listed in Annex VII to the subsidies agreement, and other developing countries. The lower a member`s level of development, the more favourably it is treated with regard to subsidy disciplines. For example, least developed countries and Annex VII members, whose per capita GNP is less than $1,000 per year, are exempt from the export subsidy ban. Other developing countries have eight years to end their export subsidies (they cannot increase the level of their export subsidies during this period). With regard to import subsidies, the least developed countries have eight years and other developing countries five years to end such subsidies. There is also more favourable treatment with regard to countervailable subsidies.

For example, some subsidies related to privatization programmes of member States of developing countries cannot be implemented multilaterally. As regards countervailing measures, exporters from Member States of developing countries are entitled to more favourable treatment when investigations are concluded when subsidies or the volume of imports are low. For an internal financial contribution to be a grant, it must be paid by or on the instructions of a government or public body in the territory of a member. Therefore, the SCM Convention applies not only to measures taken by national governments, but also to measures taken by governments and subnational public bodies such as state-owned enterprises. Agricultural aid Article 13 of the Agreement on Agriculture lays down special rules for subsidies on agricultural products during the period of application of this Agreement (until 1 January 2003). . . .