AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES
Members hereby agree as follows:
PART I - GENERAL PROVISIONS
Article 1 - Definition of a Subsidy
1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if:
(a)(1) there is a financial contribution by a government or any public
body within the territory of a Member (referred to in this Agreement as
"government"), i.e. where:
(i) a government practice involves a direct transfer of funds (e.g.
grants, loans, and equity infusion), potential direct transfers of funds
or liabilities (e.g. loan guarantees);
(ii) government revenue that is otherwise due is foregone or not collected
(e.g. fiscal incentives such as tax credits)[1];
(iii) a government provides goods or services other than general
infrastructure, or purchases goods;
(iv) a government makes payments to a funding mechanism, or entrusts or
directs a private body to carry out one or more of the type of functions
illustrated in (i) to (iii) above which would normally be vested in the
government and the practice, in no real sense, differs from practices
normally followed by governments;
or
(a)(2) there is any form of income or price support in the sense of
Article XVI of GATT 1994;
and
(b) a benefit is thereby conferred.
1.2 A subsidy as defined in paragraph 1 shall be subject to the provisions
of Part II or shall be subject to the provisions of Part III or V only if
such a subsidy is specific in accordance with the provisions of Article 2.
Article 2 - Specificity
2.1 In order to determine whether a subsidy, as defined in paragraph 1 of
Article 1, is specific to an enterprise or industry or group of
enterprises or industries (referred to in this Agreement as "certain
enterprises") within the jurisdiction of the granting authority, the
following principles shall apply:
(a) Where the granting authority, or the legislation pursuant to which the
granting authority operates, explicitly limits access to a subsidy to
certain enterprises, such subsidy shall be specific.
(b) Where the granting authority, or the legislation pursuant to which the
granting authority operates, establishes objective criteria or
conditions[2] governing the eligibility for, and the amount of, a subsidy,
specificity shall not exist, provided that the eligibility is automatic
and that such criteria and conditions are strictly adhered to. The
criteria or conditions must be clearly spelled out in law, regulation, or
other official document, so as to be capable of verification.
(c) If, notwithstanding any appearance of non-specificity resulting from
the application of the principles laid down in subparagraphs (a) and (b),
there are reasons to believe that the subsidy may in fact be specific,
other factors may be considered. Such factors are: use of a subsidy
programme by a limited number of certain enterprises, predominant use by
certain enterprises, the granting of disproportionately large amounts of
subsidy to certain enterprises, and the manner in which discretion has
been exercised by the granting authority in the decision to grant a
subsidy.[3] In applying this subparagraph, account shall be taken of the
extent of diversification of economic activities within the jurisdiction
of the granting authority, as well as of the length of time during which
the subsidy programme has been in operation.
2.2 A subsidy which is limited to certain enterprises located within a
designated geographical region within the jurisdiction of the granting
authority shall be specific. It is understood that the setting or change
of generally applicable tax rates by all levels of government entitled to
do so shall not be deemed to be a specific subsidy for the purposes of
this Agreement.
2.3 Any subsidy falling under the provisions of Article 3 shall be deemed
to be specific.
2.4 Any determination of specificity under the provisions of this Article
shall be clearly substantiated on the basis of positive evidence.
PART II - PROHIBITED SUBSIDIES
Article 3 - Prohibition
3.1 Except as provided in the Agreement on Agriculture, the following
subsidies, within the meaning of Article 1, shall be prohibited:
(a) subsidies contingent, in law or in fact[4], whether solely or as one
of several other conditions, upon export performance, including those
illustrated in Annex I[5];
(b) subsidies contingent, whether solely or as one of several other
conditions, upon the use of domestic over imported goods.
3.2 A Member shall neither grant nor maintain subsidies referred to in
paragraph 1.
Article 4 - Remedies
4.1 Whenever a Member has reason to believe that a prohibited subsidy is
being granted or maintained by another Member, such Member may request
consultations with such other Member.
4.2 A request for consultations under paragraph 1 shall include a
statement of available evidence with regard to the existence and nature of
the subsidy in question.
4.3 Upon request for consultations under paragraph 1, the Member believed
to be granting or maintaining the subsidy in question shall enter into
such consultations as quickly as possible. The purpose of the
consultations shall be to clarify the facts of the situation and to arrive
at a mutually agreed solution.
4.4 If no mutually agreed solution has been reached within 30 days[6] of
the request for consultations, any Member party to such consultations may
refer the matter to the Dispute Settlement Body ("DSB") for the immediate
establishment of a panel, unless the DSB decides by consensus not to
establish a panel.
4.5 Upon its establishment, the panel may request the assistance of the
Permanent Group of Experts[7] (referred to in this Agreement as the "PGE")
with regard to whether the measure in question is a prohibited subsidy. If
so requested, the PGE shall immediately review the evidence with regard to
the existence and nature of the measure in question and shall provide an
opportunity for the Member applying or maintaining the measure to
demonstrate that the measure in question is not a prohibited subsidy. The
PGE shall report its conclusions to the panel within a time-limit
determined by the panel. The PGE's conclusions on the issue of whether or
not the measure in question is a prohibited subsidy shall be accepted by
the panel without modification.
4.6 The panel shall submit its final report to the parties to the dispute.
The report shall be circulated to all Members within 90 days of the date
of the composition and the establishment of the panel's terms of
reference.
4.7 If the measure in question is found to be a prohibited subsidy, the
panel shall recommend that the subsidizing Member withdraw the subsidy
without delay. In this regard, the panel shall specify in its
recommendation the time-period within which the measure must be withdrawn.
4.8 Within 30 days of the issuance of the panel's report to all Members,
the report shall be adopted by the DSB unless one of the parties to the
dispute formally notifies the DSB of its decision to appeal or the DSB
decides by consensus not to adopt the report.
4.9 Where a panel report is appealed, the Appellate Body shall issue its
decision within 30 days from the date when the party to the dispute
formally notifies its intention to appeal. When the Appellate Body
considers that it cannot provide its report within 30 days, it shall
inform the DSB in writing of the reasons for the delay together with an
estimate of the period within which it will submit its report. In no case
shall the proceedings exceed 60 days. The appellate report shall be
adopted by the DSB and unconditionally accepted by the parties to the
dispute unless the DSB decides by consensus not to adopt the appellate
report within 20 days following its issuance to the Members.[8]
4.10 In the event the recommendation of the DSB is not followed within the
time-period specified by the panel, which shall commence from the date of
adoption of the panel's report or the Appellate Body's report, the DSB
shall grant authorization to the complaining Member to take appropriate[9]
countermeasures, unless the DSB decides by consensus to reject the
request.
4.11 In the event a party to the dispute requests arbitration under
paragraph 6 of Article 22 of the Dispute Settlement Understanding ("DSU"),
the arbitrator shall determine whether the countermeasures are
appropriate.[10]
4.12 For purposes of disputes conducted pursuant to this Article, except
for time-periods specifically prescribed in this Article, time-periods
applicable under the DSU for the conduct of such disputes shall be half
the time prescribed therein.
PART III - ACTIONABLE SUBSIDIES
Article 5 - Adverse Effects
No Member should cause, through the use of any subsidy referred to in
paragraphs 1 and 2 of Article 1, adverse effects to the interests of other
Members, i.e.:
(a) injury to the domestic industry of another Member[11];
(b) nullification or impairment of benefits accruing directly or
indirectly to other Members under GATT 1994 in particular the benefits of
concessions bound under Article II of GATT 1994[12];
(c) serious prejudice to the interests of another Member.[13]
This Article does not apply to subsidies maintained on agricultural
products as provided in Article 13 of the Agreement on Agriculture.
Article 6 - Serious Prejudice
6.1 Serious prejudice in the sense of paragraph (c) of Article 5 shall be
deemed to exist in the case of:
(a) the total ad valorem subsidization[14] of a product exceeding 5 per
cent[15];
(b) subsidies to cover operating losses sustained by an industry;
(c) subsidies to cover operating losses sustained by an enterprise, other
than one-time measures which are non-recurrent and cannot be repeated for
that enterprise and which are given merely to provide time for the
development of long-term solutions and to avoid acute social problems;
(d) direct forgiveness of debt, i.e. forgiveness of government-held debt,
and grants to cover debt repayment.[16]
6.2 Notwithstanding the provisions of paragraph 1, serious prejudice shall
not be found if the subsidizing Member demonstrates that the subsidy in
question has not resulted in any of the effects enumerated in paragraph 3.
6.3 Serious prejudice in the sense of paragraph (c) of Article 5 may arise
in any case where one or several of the following apply:
(a) the effect of the subsidy is to displace or impede the imports of a
like product of another Member into the market of the subsidizing Member;
(b) the effect of the subsidy is to displace or impede the exports of a
like product of another Member from a third country market;
(c) the effect of the subsidy is a significant price undercutting by the
subsidized product as compared with the price of a like product of another
Member in the same market or significant price suppression, price
depression or lost sales in the same market;
(d) the effect of the subsidy is an increase in the world market share of
the subsidizing Member in a particular subsidized primary product or
commodity[17] as compared to the average share it had during the previous
period of three years and this increase follows a consistent trend over a
period when subsidies have been granted.
6.4 For the purpose of paragraph 3(b), the displacement or impeding of
exports shall include any case in which, subject to the provisions of
paragraph 7, it has been demonstrated that there has been a change in
relative shares of the market to the disadvantage of the non-subsidized
like product (over an appropriately representative period sufficient to
demonstrate clear trends in the development of the market for the product
concerned, which, in normal circumstances, shall be at least one year).
"Change in relative shares of the market" shall include any of the
following situations: (a) there is an increase in the market share of the
subsidized product; (b) the market share of the subsidized product remains
constant in circumstances in which, in the absence of the subsidy, it
would have declined; (c) the market share of the subsidized product
declines, but at a slower rate than would have been the case in the
absence of the subsidy.
6.5 For the purpose of paragraph 3(c), price undercutting shall include
any case in which such price undercutting has been demonstrated through a
comparison of prices of the subsidized product with prices of a
non-subsidized like product supplied to the same market. The comparison
shall be made at the same level of trade and at comparable times, due
account being taken of any other factor affecting price comparability.
However, if such a direct comparison is not possible, the existence of
price undercutting may be demonstrated on the basis of export unit values.
6.6 Each Member in the market of which serious prejudice is alleged to
have arisen shall, subject to the provisions of paragraph 3 of Annex V,
make available to the parties to a dispute arising under Article 7, and to
the panel established pursuant to paragraph 4 of Article 7, all relevant
information that can be obtained as to the changes in market shares of the
parties to the dispute as well as concerning prices of the products
involved.
6.7 Displacement or impediment resulting in serious prejudice shall not
arise under paragraph 3 where any of the following circumstances exist[18]
during the relevant period:
(a) prohibition or restriction on exports of the like product from the
complaining Member or on imports from the complaining Member into the
third country market concerned;
(b) decision by an importing government operating a monopoly of trade or
state trading in the product concerned to shift, for non-commercial
reasons, imports from the complaining Member to another country or
countries;
(c) natural disasters, strikes, transport disruptions or other force
majeure substantially affecting production, qualities, quantities or
prices of the product available for export from the complaining Member;
(d) existence of arrangements limiting exports from the complaining
Member;
(e) voluntary decrease in the availability for export of the product
concerned from the complaining Member (including, inter alia, a situation
where firms in the complaining Member have been autonomously reallocating
exports of this product to new markets);
(f) failure to conform to standards and other regulatory requirements in
the importing country.
6.8 In the absence of circumstances referred to in paragraph 7, the
existence of serious prejudice should be determined on the basis of the
information submitted to or obtained by the panel, including information
submitted in accordance with the provisions of Annex V.
6.9 This Article does not apply to subsidies maintained on agricultural
products as provided in Article 13 of the Agreement on Agriculture.
Article 7 - Remedies
7.1 Except as provided in Article 13 of the Agreement on Agriculture,
whenever a Member has reason to believe that any subsidy referred to in
Article 1, granted or maintained by another Member, results in injury to
its domestic industry, nullification or impairment or serious prejudice,
such Member may request consultations with such other Member.
7.2 A request for consultations under paragraph 1 shall include a
statement of available evidence with regard to (a) the existence and
nature of the subsidy in question, and (b) the injury caused to the
domestic industry, or the nullification or impairment, or serious
prejudice[19] caused to the interests of the Member requesting
consultations.
7.3 Upon request for consultations under paragraph 1, the Member believed
to be granting or maintaining the subsidy practice in question shall enter
into such consultations as quickly as possible. The purpose of the
consultations shall be to clarify the facts of the situation and to arrive
at a mutually agreed solution.
7.4 If consultations do not result in a mutually agreed solution within 60
days[20], any Member party to such consultations may refer the matter to
the DSB for the establishment of a panel, unless the DSB decides by
consensus not to establish a panel. The composition of the panel and its
terms of reference shall be established within 15 days from the date when
it is established.
7.5 The panel shall review the matter and shall submit its final report to
the parties to the dispute. The report shall be circulated to all Members
within 120 days of the date of the composition and establishment of the
panel's terms of reference.
7.6 Within 30 days of the issuance of the panel's report to all Members,
the report shall be adopted by the DSB[21] unless one of the parties to
the dispute formally notifies the DSB of its decision to appeal or the DSB
decides by consensus not to adopt the report.
7.7 Where a panel report is appealed, the Appellate Body shall issue its
decision within 60 days from the date when the party to the dispute
formally notifies its intention to appeal. When the Appellate Body
considers that it cannot provide its report within 60 days, it shall
inform the DSB in writing of the reasons for the delay together with an
estimate of the period within which it will submit its report. In no case
shall the proceedings exceed 90 days. The appellate report shall be
adopted by the DSB and unconditionally accepted by the parties to the
dispute unless the DSB decides by consensus not to adopt the appellate
report within 20 days following its issuance to the Members.[22]
7.8 Where a panel report or an Appellate Body report is adopted in which
it is determined that any subsidy has resulted in adverse effects to the
interests of another Member within the meaning of Article 5, the Member
granting or maintaining such subsidy shall take appropriate steps to
remove the adverse effects or shall withdraw the subsidy.
7.9 In the event the Member has not taken appropriate steps to remove the
adverse effects of the subsidy or withdraw the subsidy within six months
from the date when the DSB adopts the panel report or the Appellate Body
report, and in the absence of agreement on compensation, the DSB shall
grant authorization to the complaining Member to take countermeasures,
commensurate with the degree and nature of the adverse effects determined
to exist, unless the DSB decides by consensus to reject the request.
7.10 In the event that a party to the dispute requests arbitration under
paragraph 6 of Article 22 of the DSU, the arbitrator shall determine
whether the countermeasures are commensurate with the degree and nature of
the adverse effects determined to exist.
PART IV - NON-ACTIONABLE SUBSIDIES
Article 8 - Identification of Non-Actionable Subsidies
8.1 The following subsidies shall be considered as non-actionable[23]:
(a) subsidies which are not specific within the meaning of Article 2;
(b) subsidies which are specific within the meaning of Article 2 but which
meet all of the conditions provided for in paragraphs 2(a), 2(b) or 2(c)
below.
8.2 Notwithstanding the provisions of Parts III and V, the following
subsidies shall be non-actionable:
(a) assistance for research activities conducted by firms or by higher
education or research establishments on a contract basis with firms
if:[24], [25], [26]
the assistance covers[27] not more than 75 per cent of the costs of
industrial research[28] or 50 per cent of the costs of pre-competitive
development activity[29], [30];
and provided that such assistance is limited exclusively to:
(i) costs of personnel (researchers, technicians and other supporting
staff employed exclusively in the research activity);
(ii) costs of instruments, equipment, land and buildings used exclusively
and permanently (except when disposed of on a commercial basis) for the
research activity;
(iii) costs of consultancy and equivalent services used exclusively for
the research activity, including bought-in research, technical knowledge,
patents, etc.;
(iv) additional overhead costs incurred directly as a result of the
research activity;
(v) other running costs (such as those of materials, supplies and the
like), incurred directly as a result of the research activity.
(b) assistance to disadvantaged regions within the territory of a Member
given pursuant to a general framework of regional development[31] and
non-specific (within the meaning of Article 2) within eligible regions
provided that:
(i) each disadvantaged region must be a clearly designated contiguous
geographical area with a definable economic and administrative identity;
(ii) the region is considered as disadvantaged on the basis of neutral and
objective criteria[32], indicating that the region's difficulties arise
out of more than temporary circumstances; such criteria must be clearly
spelled out in law, regulation, or other official document, so as to be
capable of verification;
(iii) the criteria shall include a measurement of economic development
which shall be based on at least one of the following factors:
- one of either income per capita or household income per capita, or GDP
per capita, which must not be above 85 per cent of the average for the
territory concerned;
- unemployment rate, which must be at least 110 per cent of the average
for the territory concerned;
as measured over a three-year period; such measurement, however, may be a
composite one and may include other factors.
(c) assistance to promote adaptation of existing facilities[33] to new
environmental requirements imposed by law and/or regulations which result
in greater constraints and financial burden on firms, provided that the
assistance:
(i) is a one-time non-recurring measure; and
(ii) is limited to 20 per cent of the cost of adaptation; and
(iii) does not cover the cost of replacing and operating the assisted
investment, which must be fully borne by firms; and
(iv) is directly linked to and proportionate to a firm's planned reduction
of nuisances and pollution, and does not cover any manufacturing cost
savings which may be achieved; and
(v) is available to all firms which can adopt the new equipment and/or
production processes.
8.3 A subsidy programme for which the provisions of paragraph 2 are
invoked shall be notified in advance of its implementation to the
Committee in accordance with the provisions of Part VII. Any such
notification shall be sufficiently precise to enable other Members to
evaluate the consistency of the programme with the conditions and criteria
provided for in the relevant provisions of paragraph 2. Members shall also
provide the Committee with yearly updates of such notifications, in
particular by supplying information on global expenditure for each
programme, and on any modification of the programme. Other Members shall
have the right to request information about individual cases of
subsidization under a notified programme.[34]
8.4 Upon request of a Member, the Secretariat shall review a notification
made pursuant to paragraph 3 and, where necessary, may require additional
information from the subsidizing Member concerning the notified programme
under review. The Secretariat shall report its findings to the Committee.
The Committee shall, upon request, promptly review the findings of the
Secretariat (or, if a review by the Secretariat has not been requested,
the notification itself), with a view to determining whether the
conditions and criteria laid down in paragraph 2 have not been met. The
procedure provided for in this paragraph shall be completed at the latest
at the first regular meeting of the Committee following the notification
of a subsidy programme, provided that at least two months have elapsed
between such notification and the regular meeting of the Committee. The
review procedure described in this paragraph shall also apply, upon
request, to substantial modifications of a programme notified in the
yearly updates referred to in paragraph 3.
8.5 Upon the request of a Member, the determination by the Committee
referred to in paragraph 4, or a failure by the Committee to make such a
determination, as well as the violation, in individual cases, of the
conditions set out in a notified programme, shall be submitted to binding
arbitration. The arbitration body shall present its conclusions to the
Members within 120 days from the date when the matter was referred to the
arbitration body. Except as otherwise provided in this paragraph, the DSU
shall apply to arbitrations conducted under this paragraph.
Article 9 - Consultations and Authorized Remedies
9.1 If, in the course of implementation of a programme referred to in
paragraph 2 of Article 8, notwithstanding the fact that the programme is
consistent with the criteria laid down in that paragraph, a Member has
reasons to believe that this programme has resulted in serious adverse
effects to the domestic industry of that Member, such as to cause damage
which would be difficult to repair, such Member may request consultations
with the Member granting or maintaining the subsidy.
9.2 Upon request for consultations under paragraph 1, the Member granting
or maintaining the subsidy programme in question shall enter into such
consultations as quickly as possible. The purpose of the consultations
shall be to clarify the facts of the situation and to arrive at a mutually
acceptable solution.
9.3 If no mutually acceptable solution has been reached in consultations
under paragraph 2 within 60 days of the request for such consultations,
the requesting Member may refer the matter to the Committee.
9.4 Where a matter is referred to the Committee, the Committee shall
immediately review the facts involved and the evidence of the effects
referred to in paragraph 1. If the Committee determines that such effects
exist, it may recommend to the subsidizing Member to modify this programme
in such a way as to remove these effects. The Committee shall present its
conclusions within 120 days from the date when the matter is referred to
it under paragraph 3. In the event the recommendation is not followed
within six months, the Committee shall authorize the requesting Member to
take appropriate countermeasures commensurate with the nature and degree
of the effects determined to exist.
PART V - COUNTERVAILING MEASURES
Article 10 - Application of Article VI of GATT 1994[35]
Members shall take all necessary steps to ensure that the imposition of a
countervailing duty[36] on any product of the territory of any Member
imported into the territory of another Member is in accordance with the
provisions of Article VI of GATT 1994 and the terms of this Agreement.
Countervailing duties may only be imposed pursuant to investigations
initiated[37] and conducted in accordance with the provisions of this
Agreement and the Agreement on Agriculture.
Article 11 - Initiation and Subsequent Investigation
11.1 Except as provided in paragraph 6, an investigation to determine the
existence, degree and effect of any alleged subsidy shall be initiated
upon a written application by or on behalf of the domestic industry.
11.2 An application under paragraph 1 shall include sufficient evidence of
the existence of (a) a subsidy and, if possible, its amount, (b) injury
within the meaning of Article VI of GATT 1994 as interpreted by this
Agreement, and (c) a causal link between the subsidized imports and the
alleged injury. Simple assertion, unsubstantiated by relevant evidence,
cannot be considered sufficient to meet the requirements of this
paragraph. The application shall contain such information as is reasonably
available to the applicant on the following:
(i) the identity of the applicant and a description of the volume and
value of the domestic production of the like product by the applicant.
Where a written application is made on behalf of the domestic industry,
the application shall identify the industry on behalf of which the
application is made by a list of all known domestic producers of the like
product (or associations of domestic producers of the like product) and,
to the extent possible, a description of the volume and value of domestic
production of the like product accounted for by such producers;
(ii) a complete description of the allegedly subsidized product, the names
of the country or countries of origin or export in question, the identity
of each known exporter or foreign producer and a list of known persons
importing the product in question;
(iii) evidence with regard to the existence, amount and nature of the
subsidy in question;
(iv) evidence that alleged injury to a domestic industry is caused by
subsidized imports through the effects of the subsidies; this evidence
includes information on the evolution of the volume of the allegedly
subsidized imports, the effect of these imports on prices of the like
product in the domestic market and the consequent impact of the imports on
the domestic industry, as demonstrated by relevant factors and indices
having a bearing on the state of the domestic industry, such as those
listed in paragraphs 2 and 4 of Article 15.
11.3 The authorities shall review the accuracy and adequacy of the
evidence provided in the application to determine whether the evidence is
sufficient to justify the initiation of an investigation.
11.4 An investigation shall not be initiated pursuant to paragraph 1
unless the authorities have determined, on the basis of an examination of
the degree of support for, or opposition to, the application expressed[38]
by domestic producers of the like product, that the application has been
made by or on behalf of the domestic industry.[39] The application shall
be considered to have been made "by or on behalf of the domestic industry"
if it is supported by those domestic producers whose collective output
constitutes more than 50 per cent of the total production of the like
product produced by that portion of the domestic industry expressing
either support for or opposition to the application. However, no
investigation shall be initiated when domestic producers expressly
supporting the application account for less than 25 per cent of total
production of the like product produced by the domestic industry.
11.5 The authorities shall avoid, unless a decision has been made to
initiate an investigation, any publicizing of the application for the
initiation of an investigation.
11.6 If, in special circumstances, the authorities concerned decide to
initiate an investigation without having received a written application by
or on behalf of a domestic industry for the initiation of such
investigation, they shall proceed only if they have sufficient evidence of
the existence of a subsidy, injury and causal link, as described in
paragraph 2, to justify the initiation of an investigation.
11.7 The evidence of both subsidy and injury shall be considered
simultaneously (a) in the decision whether or not to initiate an
investigation and (b) thereafter, during the course of the investigation,
starting on a date not later than the earliest date on which in accordance
with the provisions of this Agreement provisional measures may be applied.
11.8 In cases where products are not imported directly from the country of
origin but are exported to the importing Member from an intermediate
country, the provisions of this Agreement shall be fully applicable and
the transaction or transactions shall, for the purposes of this Agreement,
be regarded as having taken place between the country of origin and the
importing Member.
11.9 An application under paragraph 1 shall be rejected and an
investigation shall be terminated promptly as soon as the authorities
concerned are satisfied that there is not sufficient evidence of either
subsidization or of injury to justify proceeding with the case. There
shall be immediate termination in cases where the amount of a subsidy is
de minimis, or where the volume of subsidized imports, actual or
potential, or the injury, is negligible. For the purpose of this
paragraph, the amount of the subsidy shall be considered to be de minimis
if the subsidy is less than 1 per cent ad valorem.
11.10 An investigation shall not hinder the procedures of customs
clearance.
11.11 Investigations shall, except in special circumstances, be concluded
within one year, and in no case more than 18 months, after their
initiation.
Article 12 - Evidence
12.1 Interested Members and all interested parties in a countervailing
duty investigation shall be given notice of the information which the
authorities require and ample opportunity to present in writing all
evidence which they consider relevant in respect of the investigation in
question.
12.1.1 Exporters, foreign producers or interested Members receiving
questionnaires used in a countervailing duty investigation shall be given
at least 30 days for reply.[40] Due consideration should be given to any
request for an extension of the 30-day period and, upon cause shown, such
an extension should be granted whenever practicable.
12.1.2 Subject to the requirement to protect confidential information,
evidence presented in writing by one interested Member or interested party
shall be made available promptly to other interested Members or interested
parties participating in the investigation.
12.1.3 As soon as an investigation has been initiated, the authorities
shall provide the full text of the written application received under
paragraph 1 of Article 11 to the known exporters[41] and to the
authorities of the exporting Member and shall make it available, upon
request, to other interested parties involved. Due regard shall be paid to
the protection of confidential information, as provided for in paragraph
4.
12.2. Interested Members and interested parties also shall have the right,
upon justification, to present information orally. Where such information
is provided orally, the interested Members and interested parties
subsequently shall be required to reduce such submissions to writing. Any
decision of the investigating authorities can only be based on such
information and arguments as were on the written record of this authority
and which were available to interested Members and interested parties
participating in the investigation, due account having been given to the
need to protect confidential information.
12.3 The authorities shall whenever practicable provide timely
opportunities for all interested Members and interested parties to see all
information that is relevant to the presentation of their cases, that is
not confidential as defined in paragraph 4, and that is used by the
authorities in a countervailing duty investigation, and to prepare
presentations on the basis of this information.
12.4 Any information which is by nature confidential (for example, because
its disclosure would be of significant competitive advantage to a
competitor or because its disclosure would have a significantly adverse
effect upon a person supplying the information or upon a person from whom
the supplier acquired the information), or which is provided on a
confidential basis by parties to an investigation shall, upon good cause
shown, be treated as such by the authorities. Such information shall not
be disclosed without specific permission of the party submitting it.[42]
12.4.1 The authorities shall require interested Members or interested
parties providing confidential information to furnish non-confidential
summaries thereof. These summaries shall be in sufficient detail to permit
a reasonable understanding of the substance of the information submitted
in confidence. In exceptional circumstances, such Members or parties may
indicate that such information is not susceptible of summary. In such
exceptional circumstances, a statement of the reasons why summarization is
not possible must be provided.
12.4.2 If the authorities find that a request for confidentiality is not
warranted and if the supplier of the information is either unwilling to
make the information public or to authorize its disclosure in generalized
or summary form, the authorities may disregard such information unless it
can be demonstrated to their satisfaction from appropriate sources that
the information is correct.[43]
12.5 Except in circumstances provided for in paragraph 7, the authorities
shall during the course of an investigation satisfy themselves as to the
accuracy of the information supplied by interested Members or interested
parties upon which their findings are based.
12.6 The investigating authorities may carry out investigations in the
territory of other Members as required, provided that they have notified
in good time the Member in question and unless that Member objects to the
investigation. Further, the investigating authorities may carry out
investigations on the premises of a firm and may examine the records of a
firm if (a) the firm so agrees and (b) the Member in question is notified
and does not object. The procedures set forth in Annex VI shall apply to
investigations on the premises of a firm. Subject to the requirement to
protect confidential information, the authorities shall make the results
of any such investigations available, or shall provide disclosure thereof
pursuant to paragraph 8, to the firms to which they pertain and may make
such results available to the applicants.
12.7 In cases in which any interested Member or interested party refuses
access to, or otherwise does not provide, necessary information within a
reasonable period or significantly impedes the investigation, preliminary
and final determinations, affirmative or negative, may be made on the
basis of the facts available.
12.8 The authorities shall, before a final determination is made, inform
all interested Members and interested parties of the essential facts under
consideration which form the basis for the decision whether to apply
definitive measures. Such disclosure should take place in sufficient time
for the parties to defend their interests.
12.9 For the purposes of this Agreement, "interested parties" shall
include:
(i) an exporter or foreign producer or the importer of a product subject
to investigation, or a trade or business association a majority of the
members of which are producers, exporters or importers of such product;
and
(ii) a producer of the like product in the importing Member or a trade and
business association a majority of the members of which produce the like
product in the territory of the importing Member.
This list shall not preclude Members from allowing domestic or foreign
parties other than those mentioned above to be included as interested
parties.
12.10 The authorities shall provide opportunities for industrial users of
the product under investigation, and for representative consumer
organizations in cases where the product is commonly sold at the retail
level, to provide information which is relevant to the investigation
regarding subsidization, injury and causality.
12.11 The authorities shall take due account of any difficulties
experienced by interested parties, in particular small companies, in
supplying information requested, and shall provide any assistance
practicable.
12.12 The procedures set out above are not intended to prevent the
authorities of a Member from proceeding expeditiously with regard to
initiating an investigation, reaching preliminary or final determinations,
whether affirmative or negative, or from applying provisional or final
measures, in accordance with relevant provisions of this Agreement.
Article 13 - Consultations
13.1 As soon as possible after an application under Article 11 is
accepted, and in any event before the initiation of any investigation,
Members the products of which may be subject to such investigation shall
be invited for consultations with the aim of clarifying the situation as
to the matters referred to in paragraph 2 of Article 11 and arriving at a
mutually agreed solution.
13.2 Furthermore, throughout the period of investigation, Members the
products of which are the subject of the investigation shall be afforded a
reasonable opportunity to continue consultations, with a view to
clarifying the factual situation and to arriving at a mutually agreed
solution.[44]
13.3 Without prejudice to the obligation to afford reasonable opportunity
for consultation, these provisions regarding consultations are not
intended to prevent the authorities of a Member from proceeding
expeditiously with regard to initiating the investigation, reaching
preliminary or final determinations, whether affirmative or negative, or
from applying provisional or final measures, in accordance with the
provisions of this Agreement.
13.4 The Member which intends to initiate any investigation or is
conducting such an investigation shall permit, upon request, the Member or
Members the products of which are subject to such investigation access to
non-confidential evidence, including the non-confidential summary of
confidential data being used for initiating or conducting the
investigation.
Article 14 - Calculation of the Amount of a Subsidy in Terms - of the
Benefit to the Recipient
For the purpose of Part V, any method used by the investigating authority
to calculate the benefit to the recipient conferred pursuant to paragraph
1 of Article 1 shall be provided for in the national legislation or
implementing regulations of the Member concerned and its application to
each particular case shall be transparent and adequately explained.
Furthermore, any such method shall be consistent with the following
guidelines:
(a) government provision of equity capital shall not be considered as
conferring a benefit, unless the investment decision can be regarded as
inconsistent with the usual investment practice (including for the
provision of risk capital) of private investors in the territory of that
Member;
(b) a loan by a government shall not be considered as conferring a
benefit, unless there is a difference between the amount that the firm
receiving the loan pays on the government loan and the amount the firm
would pay on a comparable commercial loan which the firm could actually
obtain on the market. In this case the benefit shall be the difference
between these two amounts;
(c) a loan guarantee by a government shall not be considered as conferring
a benefit, unless there is a difference between the amount that the firm
receiving the guarantee pays on a loan guaranteed by the government and
the amount that the firm would pay on a comparable commercial loan absent
the government guarantee. In this case the benefit shall be the difference
between these two amounts adjusted for any differences in fees;
(d) the provision of goods or services or purchase of goods by a
government shall not be considered as conferring a benefit unless the
provision is made for less than adequate remuneration, or the purchase is
made for more than adequate remuneration. The adequacy of remuneration
shall be determined in relation to prevailing market conditions for the
good or service in question in the country of provision or purchase
(including price, quality, availability, marketability, transportation and
other conditions of purchase or sale).
Article 15 - Determination of Injury[45]
15.1 A determination of injury for purposes of Article VI of GATT 1994
shall be based on positive evidence and involve an objective examination
of both (a) the volume of the subsidized imports and the effect of the
subsidized imports on prices in the domestic market for like products[46]
and (b) the consequent impact of these imports on the domestic producers
of such products.
15.2 With regard to the volume of the subsidized imports, the
investigating authorities shall consider whether there has been a
significant increase in subsidized imports, either in absolute terms or
relative to production or consumption in the importing Member. With regard
to the effect of the subsidized imports on prices, the investigating
authorities shall consider whether there has been a significant price
undercutting by the subsidized imports as compared with the price of a
like product of the importing Member, or whether the effect of such
imports is otherwise to depress prices to a significant degree or to
prevent price increases, which otherwise would have occurred, to a
significant degree. No one or several of these factors can necessarily
give decisive guidance.
15.3 Where imports of a product from more than one country are
simultaneously subject to countervailing duty investigations, the
investigating authorities may cumulatively assess the effects of such
imports only if they determine that (a) the amount of subsidization
established in relation to the imports from each country is more than de
minimis as defined in paragraph 9 of Article 11 and the volume of imports
from each country is not negligible and (b) a cumulative assessment of the
effects of the imports is appropriate in light of the conditions of
competition between the imported products and the conditions of
competition between the imported products and the like domestic product.
15.4 The examination of the impact of the subsidized imports on the
domestic industry shall include an evaluation of all relevant economic
factors and indices having a bearing on the state of the industry,
including actual and potential decline in output, sales, market share,
profits, productivity, return on investments, or utilization of capacity;
factors affecting domestic prices; actual and potential negative effects
on cash flow, inventories, employment, wages, growth, ability to raise
capital or investments and, in the case of agriculture, whether there has
been an increased burden on government support programmes. This list is
not exhaustive, nor can one or several of these factors necessarily give
decisive guidance.
15.5 It must be demonstrated that the subsidized imports are, through the
effects[47] of subsidies, causing injury within the meaning of this
Agreement. The demonstration of a causal relationship between the
subsidized imports and the injury to the domestic industry shall be based
on an examination of all relevant evidence before the authorities. The
authorities shall also examine any known factors other than the subsidized
imports which at the same time are injuring the domestic industry, and the
injuries caused by these other factors must not be attributed to the
subsidized imports. Factors which may be relevant in this respect include,
inter alia, the volumes and prices of non-subsidized imports of the
product in question, contraction in demand or changes in the patterns of
consumption, trade restrictive practices of and competition between the
foreign and domestic producers, developments in technology and the export
performance and productivity of the domestic industry.
15.6 The effect of the subsidized imports shall be assessed in relation to
the domestic production of the like product when available data permit the
separate identification of that production on the basis of such criteria
as the production process, producers' sales and profits. If such separate
identification of that production is not possible, the effects of the
subsidized imports shall be assessed by the examination of the production
of the narrowest group or range of products, which includes the like
product, for which the necessary information can be provided.
15.7 A determination of a threat of material injury shall be based on
facts and not merely on allegation, conjecture or remote possibility. The
change in circumstances which would create a situation in which the
subsidy would cause injury must be clearly foreseen and imminent. In
making a determination regarding the existence of a threat of material
injury, the investigating authorities should consider, inter alia, such
factors as:
(i) nature of the subsidy or subsidies in question and the trade effects
likely to arise therefrom;
(ii) a significant rate of increase of subsidized imports into the
domestic market indicating the likelihood of substantially increased
importation;
(iii) sufficient freely disposable, or an imminent, substantial increase
in, capacity of the exporter indicating the likelihood of substantially
increased subsidized exports to the importing Member's market, taking into
account the availability of other export markets to absorb any additional
exports;
(iv) whether imports are entering at prices that will have a significant
depressing or suppressing effect on domestic prices, and would likely
increase demand for further imports; and
(v) inventories of the product being investigated.
No one of these factors by itself can necessarily give decisive guidance
but the totality of the factors considered must lead to the conclusion
that further subsidized exports are imminent and that, unless protective
action is taken, material injury would occur.
15.8 With respect to cases where injury is threatened by subsidized
imports, the application of countervailing measures shall be considered
and decided with special care.
Article 16 - Definition of Domestic Industry
16.1 For the purposes of this Agreement, the term "domestic industry"
shall, except as provided in paragraph 2, be interpreted as referring to
the domestic producers as a whole of the like products or to those of them
whose collective output of the products constitutes a major proportion of
the total domestic production of those products, except that when
producers are related[48] to the exporters or importers or are themselves
importers of the allegedly subsidized product or a like product from other
countries, the term "domestic industry" may be interpreted as referring to
the rest of the producers.
16.2. In exceptional circumstances, the territory of a Member may, for the
production in question, be divided into two or more competitive markets
and the producers within each market may be regarded as a separate
industry if (a) the producers within such market sell all or almost all of
their production of the product in question in that market, and (b) the
demand in that market is not to any substantial degree supplied by
producers of the product in question located elsewhere in the territory.
In such circumstances, injury may be found to exist even where a major
portion of the total domestic industry is not injured, provided there is a
concentration of subsidized imports into such an isolated market and
provided further that the subsidized imports are causing injury to the
producers of all or almost all of the production within such market.
16.3 When the domestic industry has been interpreted as referring to the
producers in a certain area, i.e. a market as defined in paragraph 2,
countervailing duties shall be levied only on the products in question
consigned for final consumption to that area. When the constitutional law
of the importing Member does not permit the levying of countervailing
duties on such a basis, the importing Member may levy the countervailing
duties without limitation only if (a) the exporters shall have been given
an opportunity to cease exporting at subsidized prices to the area
concerned or otherwise give assurances pursuant to Article 18, and
adequate assurances in this regard have not been promptly given, and (b)
such duties cannot be levied only on products of specific producers which
supply the area in question.
16.4 Where two or more countries have reached under the provisions of
paragraph 8(a) of Article XXIV of GATT 1994 such a level of integration
that they have the characteristics of a single, unified market, the
industry in the entire area of integration shall be taken to be the
domestic industry referred to in paragraphs 1 and 2.
16.5 The provisions of paragraph 6 of Article 15 shall be applicable to
this Article.
Article 17 - Provisional Measures
17.1 Provisional measures may be applied only if:
(a) an investigation has been initiated in accordance with the provisions
of Article 11, a public notice has been given to that effect and
interested Members and interested parties have been given adequate
opportunities to submit information and make comments;
(b) a preliminary affirmative determination has been made that a subsidy
exists and that there is injury to a domestic industry caused by
subsidized imports; and
(c) the authorities concerned judge such measures necessary to prevent
injury being caused during the investigation.
17.2 Provisional measures may take the form of provisional countervailing
duties guaranteed by cash deposits or bonds equal to the amount of the
provisionally calculated amount of subsidization.
17.3 Provisional measures shall not be applied sooner than 60 days from
the date of initiation of the investigation.
17.4 The application of provisional measures shall be limited to as short
a period as possible, not exceeding four months.
17.5 The relevant provisions of Article 19 shall be followed in the
application of provisional measures.
Article 18 - Undertakings
18.1 Proceedings may[49] be suspended or terminated without the imposition
of provisional measures or countervailing duties upon receipt of
satisfactory voluntary undertakings under which:
(a) the government of the exporting Member agrees to eliminate or limit
the subsidy or take other measures concerning its effects; or
(b) the exporter agrees to revise its prices so that the investigating
authorities are satisfied that the injurious effect of the subsidy is
eliminated. Price increases under such undertakings shall not be higher
than necessary to eliminate the amount of the subsidy. It is desirable
that the price increases be less than the amount of the subsidy if such
increases would be adequate to remove the injury to the domestic industry.
18.2 Undertakings shall not be sought or accepted unless the authorities
of the importing Member have made a preliminary affirmative determination
of subsidization and injury caused by such subsidization and, in case of
undertakings from exporters, have obtained the consent of the exporting
Member.
18.3 Undertakings offered need not be accepted if the authorities of the
importing Member consider their acceptance impractical, for example if the
number of actual or potential exporters is too great, or for other
reasons, including reasons of general policy. Should the case arise and
where practicable, the authorities shall provide to the exporter the
reasons which have led them to consider acceptance of an undertaking as
inappropriate, and shall, to the extent possible, give the exporter an
opportunity to make comments thereon.
18.4 If an undertaking is accepted, the investigation of subsidization and
injury shall nevertheless be completed if the exporting Member so desires
or the importing Member so decides. In such a case, if a negative
determination of subsidization or injury is made, the undertaking shall
automatically lapse, except in cases where such a determination is due in
large part to the existence of an undertaking. In such cases, the
authorities concerned may require that an undertaking be maintained for a
reasonable period consistent with the provisions of this Agreement. In the
event that an affirmative determination of subsidization and injury is
made, the undertaking shall continue consistent with its terms and the
provisions of this Agreement.
18.5 Price undertakings may be suggested by the authorities of the
importing Member, but no exporter shall be forced to enter into such
undertakings. The fact that governments or exporters do not offer such
undertakings, or do not accept an invitation to do so, shall in no way
prejudice the consideration of the case. However, the authorities are free
to determine that a threat of injury is more likely to be realized if the
subsidized imports continue.
18.6 Authorities of an importing Member may require any government or
exporter from whom an undertaking has been accepted to provide
periodically information relevant to the fulfilment of such an
undertaking, and to permit verification of pertinent data. In case of
violation of an undertaking, the authorities of the importing Member may
take, under this Agreement in conformity with its provisions, expeditious
actions which may constitute immediate application of provisional measures
using the best information available. In such cases, definitive duties may
be levied in accordance with this Agreement on products entered for
consumption not more than 90 days before the application of such
provisional measures, except that any such retroactive assessment shall
not apply to imports entered before the violation of the undertaking.
Article 19 - Imposition and Collection of Countervailing Duties
19.1 If, after reasonable efforts have been made to complete
consultations, a Member makes a final determination of the existence and
amount of the subsidy and that, through the effects of the subsidy, the
subsidized imports are causing injury, it may impose a countervailing duty
in accordance with the provisions of this Article unless the subsidy or
subsidies are withdrawn.
19.2 The decision whether or not to impose a countervailing duty in cases
where all requirements for the imposition have been fulfilled, and the
decision whether the amount of the countervailing duty to be imposed shall
be the full amount of the subsidy or less, are decisions to be made by the
authorities of the importing Member. It is desirable that the imposition
should be permissive in the territory of all Members, that the duty should
be less than the total amount of the subsidy if such lesser duty would be
adequate to remove the injury to the domestic industry, and that
procedures should be established which would allow the authorities
concerned to take due account of representations made by domestic
interested parties[50] whose interests might be adversely affected by the
imposition of a countervailing duty.
19.3 When a countervailing duty is imposed in respect of any product, such
countervailing duty shall be levied, in the appropriate amounts in each
case, on a non-discriminatory basis on imports of such product from all
sources found to be subsidized and causing injury, except as to imports
from those sources which have renounced any subsidies in question or from
which undertakings under the terms of this Agreement have been accepted.
Any exporter whose exports are subject to a definitive countervailing duty
but who was not actually investigated for reasons other than a refusal to
cooperate, shall be entitled to an expedited review in order that the
investigating authorities promptly establish an individual countervailing
duty rate for that exporter.
19.4 No countervailing duty shall be levied[51] on any imported product in
excess of the amount of the subsidy found to exist, calculated in terms of
subsidization per unit of the subsidized and exported product.
Article 20 - Retroactivity
20.1 Provisional measures and countervailing duties shall only be applied
to products which enter for consumption after the time when the decision
under paragraph 1 of Article 17 and paragraph 1 of Article 19,
respectively, enters into force, subject to the exceptions set out in this
Article.
20.2 Where a final determination of injury (but not of a threat thereof or
of a material retardation of the establishment of an industry) is made or,
in the case of a final determination of a threat of injury, where the
effect of the subsidized imports would, in the absence of the provisional
measures, have led to a determination of injury, countervailing duties may
be levied retroactively for the period for which provisional measures, if
any, have been applied.
20.3 If the definitive countervailing duty is higher than the amount
guaranteed by the cash deposit or bond, the difference shall not be
collected. If the definitive duty is less than the amount guaranteed by
the cash deposit or bond, the excess amount shall be reimbursed or the
bond released in an expeditious manner.
20.4 Except as provided in paragraph 2, where a determination of threat of
injury or material retardation is made (but no injury has yet occurred) a
definitive countervailing duty may be imposed only from the date of the
determination of threat of injury or material retardation, and any cash
deposit made during the period of the application of provisional measures
shall be refunded and any bonds released in an expeditious manner.
20.5 Where a final determination is negative, any cash deposit made during
the period of the application of provisional measures shall be refunded
and any bonds released in an expeditious manner.
20.6 In critical circumstances where for the subsidized product in
question the authorities find that injury which is difficult to repair is
caused by massive imports in a relatively short period of a product
benefiting from subsidies paid or bestowed inconsistently with the
provisions of GATT 1994 and of this Agreement and where it is deemed
necessary, in order to preclude the recurrence of such injury, to assess
countervailing duties retroactively on those imports, the definitive
countervailing duties may be assessed on imports which were entered for
consumption not more than 90 days prior to the date of application of
provisional measures.
Article 21 - Duration and Review of Countervailing Duties and Undertakings
21.1 A countervailing duty shall remain in force only as long as and to
the extent necessary to counteract subsidization which is causing injury.
21.2 The authorities shall review the need for the continued imposition of
the duty, where warranted, on their own initiative or, provided that a
reasonable period of time has elapsed since the imposition of the
definitive countervailing duty, upon request by any interested party which
submits positive information substantiating the need for a review.
Interested parties shall have the right to request the authorities to
examine whether the continued imposition of the duty is necessary to
offset subsidization, whether the injury would be likely to continue or
recur if the duty were removed or varied, or both. If, as a result of the
review under this paragraph, the authorities determine that the
countervailing duty is no longer warranted, it shall be terminated
immediately.
21.3 Notwithstanding the provisions of paragraphs 1 and 2, any definitive
countervailing duty shall be terminated on a date not later than five
years from its imposition (or from the date of the most recent review
under paragraph 2 if that review has covered both subsidization and
injury, or under this paragraph), unless the authorities determine, in a
review initiated before that date on their own initiative or upon a duly
substantiated request made by or on behalf of the domestic industry within
a reasonable period of time prior to that date, that the expiry of the
duty would be likely to lead to continuation or recurrence of
subsidization and injury.[52] The duty may remain in force pending the
outcome of such a review.
21.4 The provisions of Article 12 regarding evidence and procedure shall
apply to any review carried out under this Article. Any such review shall
be carried out expeditiously and shall normally be concluded within 12
months of the date of initiation of the review.
21.5 The provisions of this Article shall apply mutatis mutandis to
undertakings accepted under Article 18.
Article 22 - Public Notice and Explanation of Determinations
22.1 When the authorities are satisfied that there is sufficient evidence
to justify the initiation of an investigation pursuant to Article 11, the
Member or Members the products of which are subject to such investigation
and other interested parties known to the investigating authorities to
have an interest therein shall be notified and a public notice shall be
given.
22.2 A public notice of the initiation of an investigation shall contain,
or otherwise make available through a separate report[53], adequate
information on the following:
(i) the name of the exporting country or countries and the product
involved;
(ii) the date of initiation of the investigation;
(iii) a description of the subsidy practice or practices to be
investigated;
(iv) a summary of the factors on which the allegation of injury is based;
(v) the address to which representations by interested Members and
interested parties should be directed; and
(vi) the time-limits allowed to interested Members and interested parties
for making their views known.
22.3 Public notice shall be given of any preliminary or final
determination, whether affirmative or negative, of any decision to accept
an undertaking pursuant to Article 18, of the termination of such an
undertaking, and of the termination of a definitive countervailing duty.
Each such notice shall set forth, or otherwise make available through a
separate report, in sufficient detail the findings and conclusions reached
on all issues of fact and law considered material by the investigating
authorities. All such notices and reports shall be forwarded to the Member
or Members the products of which are subject to such determination or
undertaking and to other interested parties known to have an interest
therein.
22.4 A public notice of the imposition of provisional measures shall set
forth, or otherwise make available through a separate report, sufficiently
detailed explanations for the preliminary determinations on the existence
of a subsidy and injury and shall refer to the matters of fact and law
which have led to arguments being accepted or rejected. Such a notice or
report shall, due regard being paid to the requirement for the protection
of confidential information, contain in particular:
(i) the names of the suppliers or, when this is impracticable, the
supplying countries involved;
(ii) a description of the product which is sufficient for customs
purposes;
(iii) the amount of subsidy established and the basis on which the
existence of a subsidy has been determined;
(iv) considerations relevant to the injury determination as set out in
Article 15;
(v) the main reasons leading to the determination.
22.5 A public notice of conclusion or suspension of an investigation in
the case of an affirmative determination providing for the imposition of a
definitive duty or the acceptance of an undertaking shall contain, or
otherwise make available through a separate report, all relevant
information on the matters of fact and law and reasons which have led to
the imposition of final measures or the acceptance of an undertaking, due
regard being paid to the requirement for the protection of confidential
information. In particular, the notice or report shall contain the
information described in paragraph 4, as well as the reasons for the
acceptance or rejection of relevant arguments or claims made by interested
Members and by the exporters and importers.
22.6 A public notice of the termination or suspension of an investigation
following the acceptance of an undertaking pursuant to Article 18 shall
include, or otherwise make available through a separate report, the
non-confidential part of this undertaking.
22.7 The provisions of this Article shall apply mutatis mutandis to the
initiation and completion of reviews pursuant to Article 21 and to
decisions under Article 20 to apply duties retroactively.
Article 23 - Judicial Review
Each Member whose national legislation contains provisions on
countervailing duty measures shall maintain judicial, arbitral or
administrative tribunals or procedures for the purpose, inter alia, of the
prompt review of administrative actions relating to final determinations
and reviews of determinations within the meaning of Article 21. Such
tribunals or procedures shall be independent of the authorities
responsible for the determination or review in question, and shall provide
all interested parties who participated in the administrative proceeding
and are directly and individually affected by the administrative actions
with access to review.
PART VI - INSTITUTIONS
Article 24 - Committee on Subsidies and Countervailing Measures and
Subsidiary Bodies
24.1 There is hereby established a Committee on Subsidies and
Countervailing Measures composed of representatives from each of the
Members. The Committee shall elect its own Chairman and shall meet not
less than twice a year and otherwise as envisaged by relevant provisions
of this Agreement at the request of any Member. The Committee shall carry
out responsibilities as assigned to it under this Agreement or by the
Members and it shall afford Members the opportunity of consulting on any
matter relating to the operation of the Agreement or the furtherance of
its objectives. The WTO Secretariat shall act as the secretariat to the
Committee.
24.2 The Committee may set up subsidiary bodies as appropriate.
24.3 The Committee shall establish a Permanent Group of Experts composed
of five independent persons, highly qualified in the fields of subsidies
and trade relations. The experts will be elected by the Committee and one
of them will be replaced every year. The PGE may be requested to assist a
panel, as provided for in paragraph 5 of Article 4. The Committee may also
seek an advisory opinion on the existence and nature of any subsidy.
24.4 The PGE may be consulted by any Member and may give advisory opinions
on the nature of any subsidy proposed to be introduced or currently
maintained by that Member. Such advisory opinions will be confidential and
may not be invoked in proceedings under Article 7.
24.5 In carrying out their functions, the Committee and any subsidiary
bodies may consult with and seek information from any source they deem
appropriate. However, before the Committee or a subsidiary body seeks such
information from a source within the jurisdiction of a Member, it shall
inform the Member involved.
PART VII - NOTIFICATION AND SURVEILLANCE
Article 25 - Notifications
25.1 Members agree that, without prejudice to the provisions of paragraph
1 of Article XVI of GATT 1994, their notifications of subsidies shall be
submitted not later than 30 June of each year and shall conform to the
provisions of paragraphs 2 through 6.
25.2 Members shall notify any subsidy as defined in paragraph 1 of Article
1, which is specific within the meaning of Article 2, granted or
maintained within their territories.
25.3 The content of notifications should be sufficiently specific to
enable other Members to evaluate the trade effects and to understand the
operation of notified subsidy programmes. In this connection, and without
prejudice to the contents and form of the questionnaire on subsidies[54],
Members shall ensure that their notifications contain the following
information:
(i) form of a subsidy (i.e. grant, loan, tax concession, etc.);
(ii) subsidy per unit or, in cases where this is not possible, the total
amount or the annual amount budgeted for that subsidy (indicating, if
possible, the average subsidy per unit in the previous year);
(iii) policy objective and/or purpose of a subsidy;
(iv) duration of a subsidy and/or any other time-limits attached to it;
(v) statistical data permitting an assessment of the trade effects of a
subsidy.
25.4 Where specific points in paragraph 3 have not been addressed in a
notification, an explanation shall be provided in the notification itself.
25.5 If subsidies are granted to specific products or sectors, the
notifications should be organized by product or sector.
25.6 Members which consider that there are no measures in their
territories requiring notification under paragraph 1 of Article XVI of
GATT 1994 and this Agreement shall so inform the Secretariat in writing.
25.7 Members recognize that notification of a measure does not prejudge
either its legal status under GATT 1994 and this Agreement, the effects
under this Agreement, or the nature of the measure itself.
25.8 Any Member may, at any time, make a written request for information
on the nature and extent of any subsidy granted or maintained by another
Member (including any subsidy referred to in Part IV), or for an
explanation of the reasons for which a specific measure has been
considered as not subject to the requirement of notification.
25.9 Members so requested shall provide such information as quickly as
possible and in a comprehensive manner, and shall be ready, upon request,
to provide additional information to the requesting Member. In particular,
they shall provide sufficient details to enable the other Member to assess
their compliance with the terms of this Agreement. Any Member which
considers that such information has not been provided may bring the matter
to the attention of the Committee.
25.10 Any Member which considers that any measure of another Member having
the effects of a subsidy has not been notified in accordance with the
provisions of paragraph 1 of Article XVI of GATT 1994 and this Article may
bring the matter to the attention of such other Member. If the alleged
subsidy is not thereafter notified promptly, such Member may itself bring
the alleged subsidy in question to the notice of the Committee.
25.11 Members shall report without delay to the Committee all preliminary
or final actions taken with respect to countervailing duties. Such reports
shall be available in the Secretariat for inspection by other Members.
Members shall also submit, on a semi-annual basis, reports on any
countervailing duty actions taken within the preceding six months. The
semi-annual reports shall be submitted on an agreed standard form.
25.12 Each Member shall notify the Committee (a) which of its authorities
are competent to initiate and conduct investigations referred to in
Article 11 and (b) its domestic procedures governing the initiation and
conduct of such investigations.
Article 26 - Surveillance
26.1 The Committee shall examine new and full notifications submitted
under paragraph 1 of Article XVI of GATT 1994 and paragraph 1 of Article
25 of this Agreement at special sessions held every third year.
Notifications submitted in the intervening years (updating notifications)
shall be examined at each regular meeting of the Committee.
26.2 The Committee shall examine reports submitted under paragraph 11 of
Article 25 at each regular meeting of the Committee.
PART VIII - DEVELOPING COUNTRY MEMBERS
Article 27 - Special and Differential Treatment of Developing Country
Members
27.1 Members recognize that subsidies may play an important role in
economic development programmes of developing country Members.
27.2 The prohibition of paragraph 1(a) of Article 3 shall not apply to:
(a) developing country Members referred to in Annex VII.
(b) other developing country Members for a period of eight years from the
date of entry into force of the WTO Agreement, subject to compliance with
the provisions in paragraph 4.
27.3 The prohibition of paragraph 1(b) of Article 3 shall not apply to
developing country Members for a period of five years, and shall not apply
to least developed country Members for a period of eight years, from the
date of entry into force of the WTO Agreement.
27.4 Any developing country Member referred to in paragraph 2(b) shall
phase out its export subsidies within the eight-year period, preferably in
a progressive manner. However, a developing country Member shall not
increase the level of its export subsidies[55], and shall eliminate them
within a period shorter than that provided for in this paragraph when the
use of such export subsidies is inconsistent with its development needs.
If a developing country Member deems it necessary to apply such subsidies
beyond the 8-year period, it shall not later than one year before the
expiry of this period enter into consultation with the Committee, which
will determine whether an extension of this period is justified, after
examining all the relevant economic, financial and development needs of
the developing country Member in question. If the Committee determines
that the extension is justified, the developing country Member concerned
shall hold annual consultations with the Committee to determine the
necessity of maintaining the subsidies. If no such determination is made
by the Committee, the developing country Member shall phase out the
remaining export subsidies within two years from the end of the last
authorized period.
27.5 A developing country Member which has reached export competitiveness
in any given product shall phase out its export subsidies for such
product(s) over a period of two years. However, for a developing country
Member which is referred to in Annex VII and which has reached export
competitiveness in one or more products, export subsidies on such products
shall be gradually phased out over a period of eight years.
27.6 Export competitiveness in a product exists if a developing country
Member's exports of that product have reached a share of at least 3.25 per
cent in world trade of that product for two consecutive calendar years.
Export competitiveness shall exist either (a) on the basis of notification
by the developing country Member having reached export competitiveness, or
(b) on the basis of a computation undertaken by the Secretariat at the
request of any Member. For the purpose of this paragraph, a product is
defined as a section heading of the Harmonized System Nomenclature. The
Committee shall review the operation of this provision five years from the
date of the entry into force of the WTO Agreement.
27.7 The provisions of Article 4 shall not apply to a developing country
Member in the case of export subsidies which are in conformity with the
provisions of paragraphs 2 through 5. The relevant provisions in such a
case shall be those of Article 7.
27.8 There shall be no presumption in terms of paragraph 1 of Article 6
that a subsidy granted by a developing country Member results in serious
prejudice, as defined in this Agreement. Such serious prejudice, where
applicable under the terms of paragraph 9, shall be demonstrated by
positive evidence, in accordance with the provisions of paragraphs 3
through 8 of Article 6.
27.9 Regarding actionable subsidies granted or maintained by a developing
country Member other than those referred to in paragraph 1 of Article 6,
action may not be authorized or taken under Article 7 unless nullification
or impairment of tariff concessions or other obligations under GATT 1994
is found to exist as a result of such a subsidy, in such a way as to
displace or impede imports of a like product of another Member into the
market of the subsidizing developing country Member or unless injury to a
domestic industry in the market of an importing Member occurs.
27.10 Any countervailing duty investigation of a product originating in a
developing country Member shall be terminated as soon as the authorities
concerned determine that:
(a) the overall level of subsidies granted upon the product in question
does not exceed 2 per cent of its value calculated on a per unit basis; or
(b) the volume of the subsidized imports represents less than 4 per cent
of the total imports of the like product in the importing Member, unless
imports from developing country Members whose individual shares of total
imports represent less than 4 per cent collectively account for more than
9 per cent of the total imports of the like product in the importing
Member.
27.11 For those developing country Members within the scope of paragraph
2(b) which have eliminated export subsidies prior to the expiry of the
period of eight years from the date of entry into force of the WTO
Agreement, and for those developing country Members referred to in Annex
VII, the number in paragraph 10(a) shall be 3 per cent rather than 2 per
cent. This provision shall apply from the date that the elimination of
export subsidies is notified to the Committee, and for so long as export
subsidies are not granted by the notifying developing country Member. This
provision shall expire eight years from the date of entry into force of
the WTO Agreement.
27.12 The provisions of paragraphs 10 and 11 shall govern any
determination of de minimis under paragraph 3 of Article 15.
27.13 The provisions of Part III shall not apply to direct forgiveness of
debts, subsidies to cover social costs, in whatever form, including
relinquishment of government revenue and other transfer of liabilities
when such subsidies are granted within and directly linked to a
privatization programme of a developing country Member, provided that both
such programme and the subsidies involved are granted for a limited period
and notified to the Committee and that the programme results in eventual
privatization of the enterprise concerned.
27.14 The Committee shall, upon request by an interested Member, undertake
a review of a specific export subsidy practice of a developing country
Member to examine whether the practice is in conformity with its
development needs.
27.15 The Committee shall, upon request by an interested developing
country Member, undertake a review of a specific countervailing measure to
examine whether it is consistent with the provisions of paragraphs 10 and
11 as applicable to the developing country Member in question.
PART IX - TRANSITIONAL ARRANGEMENTS
Article 28 - Existing Programmes
28.1 Subsidy programmes which have been established within the territory
of any Member before the date on which such a Member signed the WTO
Agreement and which are inconsistent with the provisions of this Agreement
shall be:
(a) notified to the Committee not later than 90 days after the date of
entry into force of the WTO Agreement for such Member; and
(b) brought into conformity with the provisions of this Agreement within
three years of the date of entry into force of the WTO Agreement for such
Member and until then shall not be subject to Part II.
28.2 No Member shall extend the scope of any such programme, nor shall
such a programme be renewed upon its expiry.
Article 29 - Transformation into a Market Economy
29.1 Members in the process of transformation from a centrally-planned
into a market, free-enterprise economy may apply programmes and measures
necessary for such a transformation.
29.2 For such Members, subsidy programmes falling within the scope of
Article 3, and notified according to paragraph 3, shall be phased out or
brought into conformity with Article 3 within a period of seven years from
the date of entry into force of the WTO Agreement. In such a case, Article
4 shall not apply. In addition during the same period:
(a) Subsidy programmes falling within the scope of paragraph 1(d) of
Article 6 shall not be actionable under Article 7;
(b) With respect to other actionable subsidies, the provisions of
paragraph 9 of Article 27 shall apply.
29.3 Subsidy programmes falling within the scope of Article 3 shall be
notified to the Committee by the earliest practicable date after the date
of entry into force of the WTO Agreement. Further notifications of such
subsidies may be made up to two years after the date of entry into force
of the WTO Agreement.
29.4 In exceptional circumstances Members referred to in paragraph 1 may
be given departures from their notified programmes and measures and their
time-frame by the Committee if such departures are deemed necessary for
the process of transformation.
PART X - DISPUTE SETTLEMENT
Article 30
The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and
applied by the Dispute Settlement Understanding shall apply to
consultations and the settlement of disputes under this Agreement, except
as otherwise specifically provided herein.
PART XI - FINAL PROVISIONS
Article 31 - Provisional Application
The provisions of paragraph 1 of Article 6 and the provisions of Article 8
and Article 9 shall apply for a period of five years, beginning with the
date of entry into force of the WTO Agreement. Not later than 180 days
before the end of this period, the Committee shall review the operation of
those provisions, with a view to determining whether to extend their
application, either as presently drafted or in a modified form, for a
further period.
Article 32 - Other Final Provisions
32.1 No specific action against a subsidy of another Member can be taken
except in accordance with the provisions of GATT 1994, as interpreted by
this Agreement.[56]
32.2 Reservations may not be entered in respect of any of the provisions
of this Agreement without the consent of the other Members.
32.3 Subject to paragraph 4, the provisions of this Agreement shall apply
to investigations, and reviews of existing measures, initiated pursuant to
applications which have been made on or after the date of entry into force
for a Member of the WTO Agreement.
32.4 For the purposes of paragraph 3 of Article 21, existing
countervailing measures shall be deemed to be imposed on a date not later
than the date of entry into force for a Member of the WTO Agreement,
except in cases in which the domestic legislation of a Member in force at
that date already included a clause of the type provided for in that
paragraph.
32.5 Each Member shall take all necessary steps, of a general or
particular character, to ensure, not later than the date of entry into
force of the WTO Agreement for it, the conformity of its laws, regulations
and administrative procedures with the provisions of this Agreement as
they may apply to the Member in question.
32.6 Each Member shall inform the Committee of any changes in its laws and
regulations relevant to this Agreement and in the administration of such
laws and regulations.
32.7 The Committee shall review annually the implementation and operation
of this Agreement, taking into account the objectives thereof. The
Committee shall inform annually the Council for Trade in Goods of
developments during the period covered by such reviews.
32.8 The Annexes to this Agreement constitute an integral part thereof.
ANNEX I - ILLUSTRATIVE LIST OF EXPORT SUBSIDIES
(a) The provision by governments of direct subsidies to a firm or an
industry contingent upon export performance.
(b) Currency retention schemes or any similar practices which involve a
bonus on exports.
(c) Internal transport and freight charges on export shipments, provided
or mandated by governments, on terms more favourable than for domestic
shipments.
(d) The provision by governments or their agencies either directly or
indirectly through government-mandated schemes, of imported or domestic
products or services for use in the production of exported goods, on terms
or conditions more favourable than for provision of like or directly
competitive products or services for use in the production of goods for
domestic consumption, if (in the case of products) such terms or
conditions are more favourable than those commercially available[57] on
world markets to their exporters.
(e) The full or partial exemption remission, or deferral specifically
related to exports, of direct taxes [58] or social welfare charges paid or
payable by industrial or commercial enterprises.[59]
(f) The allowance of special deductions directly related to exports or
export performance, over and above those granted in respect to production
for domestic consumption, in the calculation of the base on which direct
taxes are charged.
(g) The exemption or remission, in respect of the production and
distribution of exported products, of indirect taxes [58] in excess of
those levied in respect of the production and distribution of like
products when sold for domestic consumption.
(h) The exemption, remission or deferral of prior-stage cumulative
indirect taxes [58] on goods or services used in the production of
exported products in excess of the exemption, remission or deferral of
like prior-stage cumulative indirect taxes on goods or services used in
the production of like products when sold for domestic consumption;
provided, however, that prior-stage cumulative indirect taxes may be
exempted, remitted or deferred on exported products even when not
exempted, remitted or deferred on like products when sold for domestic
consumption, if the prior-stage cumulative indirect taxes are levied on
inputs that are consumed in the production of the exported product (making
normal allowance for waste).[60] This item shall be interpreted in
accordance with the guidelines on consumption of inputs in the production
process contained in Annex II.
(i) The remission or drawback of import charges [58] in excess of those
levied on imported inputs that are consumed in the production of the
exported product (making normal allowance for waste); provided, however,
that in particular cases a firm may use a quantity of home market inputs
equal to, and having the same quality and characteristics as, the imported
inputs as a substitute for them in order to benefit from this provision if
the import and the corresponding export operations both occur within a
reasonable time period, not to exceed two years. This item shall be
interpreted in accordance with the guidelines on consumption of inputs in
the production process contained in Annex II and the guidelines in the
determination of substitution drawback systems as export subsidies
contained in Annex III.
(j) The provision by governments (or special institutions controlled by
governments) of export credit guarantee or insurance programmes, of
insurance or guarantee programmes against increases in the cost of
exported products or of exchange risk programmes, at premium rates which
are inadequate to cover the long-term operating costs and losses of the
programmes.
(k) The grant by governments (or special institutions controlled by and/or
acting under the authority of governments) of export credits at rates
below those which they actually have to pay for the funds so employed (or
would have to pay if they borrowed on international capital markets in
order to obtain funds of the same maturity and other credit terms and
denominated in the same currency as the export credit), or the payment by
them of all or part of the costs incurred by exporters or financial
institutions in obtaining credits, in so far as they are used to secure a
material advantage in the field of export credit terms.
Provided, however, that if a Member is a party to an international
undertaking on official export credits to which at least twelve original
Members to this Agreement are parties as of 1 January 1979 (or a successor
undertaking which has been adopted by those original Members), or if in
practice a Member applies the interest rates provisions of the relevant
undertaking, an export credit practice which is in conformity with those
provisions shall not be considered an export subsidy prohibited by this
Agreement.
(l) Any other charge on the public account constituting an export subsidy
in the sense of Article XVI of GATT 1994.
ANNEX II - GUIDELINES ON CONSUMPTION OF INPUTS IN THE PRODUCTION
PROCESS[61]
I
1. Indirect tax rebate schemes can allow for exemption, remission or
deferral of prior-stage cumulative indirect taxes levied on inputs that
are consumed in the production of the exported product (making normal
allowance for waste). Similarly, drawback schemes can allow for the
remission or drawback of import charges levied on inputs that are consumed
in the production of the exported product (making normal allowance for
waste).
2. The Illustrative List of Export Subsidies in Annex I of this Agreement
makes reference to the term "inputs that are consumed in the production of
the exported product" in paragraphs (h) and (i). Pursuant to paragraph
(h), indirect tax rebate schemes can constitute an export subsidy to the
extent that they result in exemption, remission or deferral of prior-stage
cumulative indirect taxes in excess of the amount of such taxes actually
levied on inputs that are consumed in the production of the exported
product. Pursuant to paragraph (i), drawback schemes can constitute an
export subsidy to the extent that they result in a remission or drawback
of import charges in excess of those actually levied on inputs that are
consumed in the production of the exported product. Both paragraphs
stipulate that normal allowance for waste must be made in findings
regarding consumption of inputs in the production of the exported product.
Paragraph (i) also provides for substitution, where appropriate.
II
In examining whether inputs are consumed in the production of the exported
product, as part of a countervailing duty investigation pursuant to this
Agreement, investigating authorities should proceed on the following
basis:
1. Where it is alleged that an indirect tax rebate scheme, or a drawback
scheme, conveys a subsidy by reason of over-rebate or excess drawback of
indirect taxes or import charges on inputs consumed in the production of
the exported product, the investigating authorities should first determine
whether the government of the exporting Member has in place and applies a
system or procedure to confirm which inputs are consumed in the production
of the exported product and in what amounts. Where such a system or
procedure is determined to be applied, the investigating authorities
should then examine the system or procedure to see whether it is
reasonable, effective for the purpose intended, and based on generally
accepted commercial practices in the country of export. The investigating
authorities may deem it necessary to carry out, in accordance with
paragraph 6 of Article 12, certain practical tests in order to verify
information or to satisfy themselves that the system or procedure is being
effectively applied.
2. Where there is no such system or procedure, where it is not reasonable,
or where it is instituted and considered reasonable but is found not to be
applied or not to be applied effectively, a further examination by the
exporting Member based on the actual inputs involved would need to be
carried out in the context of determining whether an excess payment
occurred. If the investigating authorities deemed it necessary, a further
examination would be carried out in accordance with paragraph 1.
3. Investigating authorities should treat inputs as physically
incorporated if such inputs are used in the production process and are
physically present in the product exported. The Members note that an input
need not be present in the final product in the same form in which it
entered the production process.
4. In determining the amount of a particular input that is consumed in the
production of the exported product, a "normal allowance for waste" should
be taken into account, and such waste should be treated as consumed in the
production of the exported product. The term "waste" refers to that
portion of a given input which does not serve an independent function in
the production process, is not consumed in the production of the exported
product (for reasons such as inefficiencies) and is not recovered, used or
sold by the same manufacturer.
5. The investigating authority's determination of whether the claimed
allowance for waste is "normal" should take into account the production
process, the average experience of the industry in the country of export,
and other technical factors, as appropriate. The investigating authority
should bear in mind that an important question is whether the authorities
in the exporting Member have reasonably calculated the amount of waste,
when such an amount is intended to be included in the tax or duty rebate
or remission.
ANNEX III - GUIDELINES IN THE DETERMINATION OF SUBSTITUTION DRAWBACK
SYSTEMS AS EXPORT SUBSIDIES
I
Drawback systems can allow for the refund or drawback of import charges on
inputs which are consumed in the production process of another product and
where the export of this latter product contains domestic inputs having
the same quality and characteristics as those substituted for the imported
inputs. Pursuant to paragraph (i) of the Illustrative List of Export
Subsidies in Annex I, substitution drawback systems can constitute an
export subsidy to the extent that they result in an excess drawback of the
import charges levied initially on the imported inputs for which drawback
is being claimed.
II
In examining any substitution drawback system as part of a countervailing
duty investigation pursuant to this Agreement, investigating authorities
should proceed on the following basis:
1. Paragraph (i) of the Illustrative List stipulates that home market
inputs may be substituted for imported inputs in the production of a
product for export provided such inputs are equal in quantity to, and have
the same quality and characteristics as, the imported inputs being
substituted. The existence of a verification system or procedure is
important because it enables the government of the exporting Member to
ensure and demonstrate that the quantity of inputs for which drawback is
claimed does not exceed the quantity of similar products exported, in
whatever form, and that there is not drawback of import charges in excess
of those originally levied on the imported inputs in question.
2. Where it is alleged that a substitution drawback system conveys a
subsidy, the investigating authorities should first proceed to determine
whether the government of the exporting Member has in place and applies a
verification system or procedure. Where such a system or procedure is
determined to be applied, the investigating authorities should then
examine the verification procedures to see whether they are reasonable,
effective for the purpose intended, and based on generally accepted
commercial practices in the country of export. To the extent that the
procedures are determined to meet this test and are effectively applied,
no subsidy should be presumed to exist. It may be deemed necessary by the
investigating authorities to carry out, in accordance with paragraph 6 of
Article 12, certain practical tests in order to verify information or to
satisfy themselves that the verification procedures are being effectively
applied.
3. Where there are no verification procedures, where they are not
reasonable, or where such procedures are instituted and considered
reasonable but are found not to be actually applied or not applied
effectively, there may be a subsidy. In such cases a further examination
by the exporting Member based on the actual transactions involved would
need to be carried out to determine whether an excess payment occurred. If
the investigating authorities deemed it necessary, a further examination
would be carried out in accordance with paragraph 2.
4. The existence of a substitution drawback provision under which
exporters are allowed to select particular import shipments on which
drawback is claimed should not of itself be considered to convey a
subsidy.
5. An excess drawback of import charges in the sense of paragraph (i)
would be deemed to exist where governments paid interest on any monies
refunded under their drawback schemes, to the extent of the interest
actually paid or payable.
ANNEX IV - CALCULATION OF THE TOTAL AD VALOREM SUBSIDIZATION (PARAGRAPH
1(A) OF ARTICLE 6)[62]
1. Any calculation of the amount of a subsidy for the purpose of paragraph
1(a) of Article 6 shall be done in terms of the cost to the granting
government.
2. Except as provided in paragraphs 3 through 5, in determining whether
the overall rate of subsidization exceeds 5 per cent of the value of the
product, the value of the product shall be calculated as the total value
of the recipient firm's[63] sales in the most recent 12-month period, for
which sales data is available, preceding the period in which the subsidy
is granted.[64]
3. Where the subsidy is tied to the production or sale of a given product,
the value of the product shall be calculated as the total value of the
recipient firm's sales of that product in the most recent 12-month period,
for which sales data is available, preceding the period in which the
subsidy is granted.
4. Where the recipient firm is in a start-up situation, serious prejudice
shall be deemed to exist if the overall rate of subsidization exceeds 15
per cent of the total funds invested. For purposes of this paragraph, a
start-up period will not extend beyond the first year of production.[65]
5. Where the recipient firm is located in an inflationary economy country,
the value of the product shall be calculated as the recipient firm's total
sales (or sales of the relevant product, if the subsidy is tied) in the
preceding calendar year indexed by the rate of inflation experienced in
the 12 months preceding the month in which the subsidy is to be given.
6. In determining the overall rate of subsidization in a given year,
subsidies given under different programmes and by different authorities in
the territory of a Member shall be aggregated.
7. Subsidies granted prior to the date of entry into force of the WTO
Agreement, the benefits of which are allocated to future production, shall
be included in the overall rate of subsidization.
8. Subsidies which are non-actionable under relevant provisions of this
Agreement shall not be included in the calculation of the amount of a
subsidy for the purpose of paragraph 1(a) of Article 6.
ANNEX V - PROCEDURES FOR DEVELOPING INFORMATION CONCERNING SERIOUS
PREJUDICE
1. Every Member shall cooperate in the development of evidence to be
examined by a panel in procedures under paragraphs 4 through 6 of Article
7. The parties to the dispute and any third-country Member concerned shall
notify to the DSB, as soon as the provisions of paragraph 4 of Article 7
have been invoked, the organization responsible for administration of this
provision within its territory and the procedures to be used to comply
with requests for information.
2. In cases where matters are referred to the DSB under paragraph 4 of
Article 7, the DSB shall, upon request, initiate the procedure to obtain
such information from the government of the subsidizing Member as
necessary to establish the existence and amount of subsidization, the
value of total sales of the subsidized firms, as well as information
necessary to analyze the adverse effects caused by the subsidized
product.[66] This process may include, where appropriate, presentation of
questions to the government of the subsidizing Member and of the
complaining Member to collect information, as well as to clarify and
obtain elaboration of information available to the parties to a dispute
through the notification procedures set forth in Part VII.[67]
3. In the case of effects in third-country markets, a party to a dispute
may collect information, including through the use of questions to the
government of the third-country Member, necessary to analyse adverse
effects, which is not otherwise reasonably available from the complaining
Member or the subsidizing Member. This requirement should be administered
in such a way as not to impose an unreasonable burden on the third-country
Member. In particular, such a Member is not expected to make a market or
price analysis specially for that purpose. The information to be supplied
is that which is already available or can be readily obtained by this
Member (e.g. most recent statistics which have already been gathered by
relevant statistical services but which have not yet been published,
customs data concerning imports and declared values of the products
concerned, etc.). However, if a party to a dispute undertakes a detailed
market analysis at its own expense, the task of the person or firm
conducting such an analysis shall be facilitated by the authorities of the
third-country Member and such a person or firm shall be given access to
all information which is not normally maintained confidential by the
government.
4. The DSB shall designate a representative to serve the function of
facilitating the information-gathering process. The sole purpose of the
representative shall be to ensure the timely development of the
information necessary to facilitate expeditious subsequent multilateral
review of the dispute. In particular, the representative may suggest ways
to most efficiently solicit necessary information as well as encourage the
cooperation of the parties.
5. The information-gathering process outlined in paragraphs 2 through 4
shall be completed within 60 days of the date on which the matter has been
referred to the DSB under paragraph 4 of Article 7. The information
obtained during this process shall be submitted to the panel established
by the DSB in accordance with the provisions of Part X. This information
should include, inter alia, data concerning the amo