| Countervailing measure is one of the three main trade remedy measures of WTO, which can be taken by WTO members under certain conditions. Compared with anti-dumping measure and safeguard measure, countervailing measure relates to the activities of governments, so it is more sensitive in political term. Moreover, WTO members cautiously take countervailing measures because the methodology of calculation on subsidy is not perfect. As a result, countervailing cases are on a low level in recent years. There has been a precedent that the countervailing regulations do not apply to non-market economy country, which has been mostly followed in practice. As to the subsidy issues, China has accepted to be treated as a non-market economy country when it entered WTO so that studies on subsidy are relatively inefficient in China. However, with the fast development of Chinese foreign trade and investment, some of the major developed countries are going to initiate countervailing measures to protect their domestic industry and home market against China. In a certain long period from now on, Chinese companies will face more complicated international trade and investment climate. In 2004, Canada Border Services Agency (CBSA) initiated three separate countervailing investigations on Outdoor Barbeques, Carbon Steel and Stainless Steel Fasteners, as well as laminate flooring from China, which triggered the countervailing remedy measure against Chinese exports in the world.Based on SCM and practices in other countries, this thesis studies on legal issuesof subsidy in China under WTO legal system, in which the author introduces many methods such as the method of historic analysis, of legal analysis, of comparative study and of pragmatic analysis. Based on the detailed analysis of the basic legal issues on subsidy under WTO and the trend that WTO member will apply countervailing measures to non-market country, as well as China' s related subsidies and the above three countervailing cases initiated by Canada, this thesis points out that countervailing measure will be another trade remedy measure to China in the near future. Furthermore, this thesis raised some suggestions on how to improve our subsidy system and how to deal with the possible countervailing investigationsagainst China' s exports.The whole thesis contains four chapters, roughly 40,000 words.Chapter 1, on the basis of analyzing the evolution and two sides' functions of the subsidy in international trade, mainly introduces the basic legal issues on subsidy under WTO system. This chapter focuses on basic legal issues on subsidy including the definition and classifications of subsidy under SCM, which is the footstone and the start of studying the whole SCM.Chapter 2 briefly introduces how USA, EU and Canada - some of the major developed countries conducted countervailing regulations and practice. Especially, it introduces and analyses the practice and trend as to how these countries deal with the subsidies of non-market country.Chapter 3 is the core chapter of this thesis. It discusses the current subsidy situation in China, and analyses some typical practices at present. With China's transition from a non-market economy to a market economy, some of the developed countries begun to adjust their attitude to this issue. They started to apply countervailing measures to some market oriented industries in China. Meanwhile, this chapter introduces and studies the three countervailing cases against China, which are initiated by Canada.Chapter 5 brings forward some specific suggestions on how to improve subsidy system in China to prevent other WTO member using countervailing measures against China, and how to make preparation for dealing with those actions with the aim to reduce the possible damage to the minimum level.
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