WORLD TRADE G/SCM/N/1/EEC/1
31March 1995
ORGANIZATION(95-0750)
Committee onSubsidies andCountervailing Measures Original: English/
French/
Spanish
NOTIFICATION OFLAWS AND REGULATIONS
UNDER ARTICLE 32.6OFTHE AGREEMENT
EUROPEAN COMMUNITIES
Thefollowing communication, dated 19March 1995, hasbeenreceived fromthePermanent
Mission oftheEuropean Communities.
_______________
Pursuant totheCommunity 'sobligation tonotify itsrelevant lawsandregulations under the
captioned provisions, Iampleased totransmit totheWTO Secretariat acopyof:
- Council Regulation (EC) No.3284 of22December 1994 onprotection against
subsidized imports from countries notmembers oftheEuropean Community.G/SCM/N/1/EEC/1
Page2
COUNCIL REGULATION (EC) No.3284/94
of22December 1994
onprotection against subsidized imports from countries notmembers oftheEuropean
Community
THE COUNCIL OFTHE EUROPEAN UNION,
Having regard totheTreaty establishing theEuropean Community, andinparticular Article 113
thereof,
Having regard totheRegulations establishing thecommon organization ofagricultural markets
andtheRegulations adopted pursuant toArticle 235oftheTreaty applicable togoods manufactured
from agricultural products, andinparticular theprovisions ofthose Regulations which allow for
derogation fromthegeneral principle thatprotective measures atfrontiers maybereplaced solely by
themeasures provided forinthose Regulations,
Having regard totheproposal from theCommission,
Having regard totheOpinion oftheEuropean Parliament1,
Whereas, byRegulation (EEC) No2423/882,theCouncil adopted common rulesforprotection
against dumped orsubsidized imports from countries which arenotmembers oftheEuropean
Community;
Whereas, these rules were adopted inaccordance withexisting international obligations, in
particular those arising fromArticle VIoftheGeneral Agreement onTariffs andTrade ("theGATT"),
fromtheAgreement onImplementation ofArticle VIoftheGATT ("the1979Anti-Dumping Code")
andfromtheAgreement onInterpretation andApplication ofArticles VI,XVIandXXIII oftheGATT
("the 1979 Subsidies Code");
Whereas, theconclusion oftheUruguay Round ofmultilateral trade negotiations hasledto
theestablishment oftheWorld Trade Organization ("the WTO");
Whereas, Annex 1AtotheAgreement establishing theWTO ("theWTO Agreement") contains,
interalia,theGeneral Agreement onTariffs andTrade 1994 ("the GATT 1994"), anAgreement on
Agriculture ("the Agreement onAgriculture"), anewAgreement onimplementation ofArticle VIof
theGATT1994("theAnti-DumpingAgreement"),andanewAgreementonSubsidiesandCountervailing
Measures ("the Subsidies Agreement");
Whereas, inorder toreach greater transparency andeffectiveness intheapplication bythe
Community oftherules laiddown intheAnti-Dumping Agreement andtheSubsidies Agreement
respectively, itisconsidered necessary toadopt twoseparate Regulations which willlaydown in
sufficient detail therequirements fortheapplication ofeachofthese commercial defence instruments;
1Opinion delivered on14December 1994 (notyetpublished intheOfficial Journal).
2OJNo.L209,2.8.1988, p.1.Regulation asamended byRegulation (EC) No521/94 (OJNo.L66,10.
3.1994, p.7)andRegulation (EC) No.522/94 (OJNo.L66,10.3.1994, p.10).G/SCM/N/1/EEC/1
Page3
Whereas, itistherefore appropriate toamend Community rules governing theapplication of
countervailing measures inthelightofthenewmultilateral rules, withregard interaliatotheprocedures
forinitiation ofproceedings andtheconduct ofsubsequent investigations, including theestablishment
andtreatment ofthefacts, theapplication ofprovisional measures, theimposition andcollection of
countervailing duties, theduration andreview ofcountervailing measures, andthepublic disclosure
ofinformation relating tocountervailing investigations;
Whereas, inviewoftheextent ofthechanges brought about bythenewAgreements andto
ensure anadequate andtransparent implementation ofthenewrules, itisappropriate totranspose the
language ofthenewAgreements intoCommunity legislation totheextent possible;
Whereas, furthermore, itseems advisable toexplain, inadequate detail, when asubsidy shall
bedeemed toexist, according towhich principles itshallbecountervailable (inparticular whether
thesubsidy hasbeen granted specifically), andaccording towhich criteria theamount ofthe
countervailable subsidy istobecalculated;
Whereas, itisclearthatindetermining theexistence ofasubsidy itisnecessary todemonstrate
thattherehasbeenafinancial contribution byagovernment oranypublic authority within theterritory
ofacountry, orthatthere hasbeenanyform ofincome orprice support inthesense ofArticle XVI
oftheGATT 1994, andthatabenefit hasthereby beenconferred totherecipient enterprise;
Whereas, itisnecessary toexplain insufficient detail which kind ofsubsidies arenot
countervailable andwhich procedure shallbefollowed ifduring aninvestigation itisdetermined that
aninvestigated enterprise hasreceived non-countervailable subsidies;
Whereas, theSubsidies Agreement states thattheprovisions concerning non-countervailable
subsidies shallcease toapply fiveyears afterthedateofentry intoforceoftheWTO Agreement, unless
theyareextended bymutual agreement oftheMembers oftheWTO, andthatitmaytherefore be
necessary toamend thisRegulation accordingly, ifthevalidity ofthose provisions isnotsoextended;
Whereas, themeasures listed inAnnex 2totheAgreement onAgriculture arenon-
countervailable, totheextent provided forinthatAgreement;
Whereas, itisdesirable tolaydown clearanddetailed guidance onthefactors which maybe
relevant forthedetermination ofwhether thesubsidized imports havecaused material injury orare
threatening tocause injury; andwhereas, indemonstrating thatthevolume andprice levels ofthe
imports concerned areresponsible forinjury sustained byaCommunity industry, attention should be
given totheeffect ofother factors andinparticular existing market conditions intheCommunity;
Whereas,itisadvisabletodefinetheterm"Communityindustry"andprovidethatpartiesrelated
toexporters maybeexcluded from suchindustry andtodefine theterm'related ';andwhereas itis
alsonecessary toprovide forcountervailing dutyaction tobetaken withregard toproducers inaregion
oftheCommunity andtolaydown guidelines onthedefinition ofsucharegion;
Whereas, itisnecessary tosetdown whomaylodge acountervailing dutycomplaint, including
theextent towhich itshould besupported bytheCommunity industry, andtheinformation on
countervailable subsidies, injury andcausality which suchcomplaint should contain; andwhereas it
isalsoexpedient tospecify theprocedures withregard totherejection ofcomplaints ortheinitiation
ofproceedings;
Whereas, itisnecessary tolaydown howinterested parties shall begiven notice ofthe
information which theauthorities require, ample opportunity topresent allrelevant evidence andaG/SCM/N/1/EEC/1
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fullopportunity forthedefence oftheirinterests; whereas, itisalsodesirable tosetoutclearly the
rulesandprocedures tobefollowed during theinvestigation, inparticular thatinterested parties have
tomake themselves known present theirviews andsubmit information within specified timelimits,
ifsuchviews andinformation aretobetaken intoaccount; andwhereas itisalsoappropriate toset
outtheconditions under which aninterested party mayhaveaccess to,andcomment oninformation
presented byother interested parties, whereas there should alsobecooperation between theMember
States andtheCommission withregard tothecollection ofinformation;
Whereas, itisnecessary tolaydown theconditions under which provisional duties maybe
imposed, including thattheymaynotbeimposed sooner than60daysfrominitiation andnolaterthan
ninemonths from initiation; whereas, suchduties mayinallcases beimposed bytheCommission
onlyforafour-month period;
Whereas,itisnecessarytospecifyproceduresfortheacceptanceofundertakingswhicheliminate
oroffset thecountervailable subsidies andinjury instead oftheimposition ofprovisional ordefinitive
duties; whereas itisalsoappropriate tolaydown theconsequences ofviolation orwithdrawal 'of
undertakings andthatprovisional duties maybeimposed incasesofsuspected violation orwhere further
investigation isnecessary tocomplete thefindings; whereas, inaccepting undertakings, careshould
betakenthattheproposedundertakings,andtheirenforcement,donotleadtoanti-competitivebehaviour;
Whereas, itisnecessary toprovide forthetermination ofcases, bytermination without measures
orbyconclusion withdefinitive measures, normally within 12months, andinnocaselaterthan13
months, from theinitiation oftheinvestigation;
Whereas, aninvestigation should beterminated incasetheamount ofthesubsidy isfound to
bedeminimis orif,particularly incaseofimports originating indeveloping countries, thevolume
ofsubsidized imports ortheinjury isnegligible, anditisappropriate todefine thesecriteria; whereas,
where measures aretobeimposed, itisnecessary toprovide forthetermination ofinvestigations and
tolaydown thatmeasures should belessthantheamount ofcountervailable subsidies ifsuchlesser
amount would remove ininjury, aswellastospecify themethod ofcalculating thelevelofmeasures
incases ofsampling;
Whereas, itisnecessary toprovide fortheretroactive collection ofprovisional duties asdeemed
appropriate andtodefine thecircumstances which maytrigger theretroactive application ofduties
toavoid theundermining ofthedefinitive measures tobeapplied; whereas itisalsonecessary, to
provide thatduties maybeapplied retroactively incases ofviolation orwithdrawal ofundertakings;
Whereas, itisnecessary toprovide thatmeasures shalllapse afterfiveyears unless areview
investigation indicates thattheyshould bemaintained; whereas, itisalsonecessary toprovide, in
cases where sufficient evidence issubmitted ofchanged circumstances, forinterim reviews orfor
investigations todetermine whether refunds ofcountervailing duties arewarranted;
Whereas, even though theSubsidies Agreement does notcontain provisions concerning
circumvention ofcountervailing measures, thepossibility ofsuchcircumvention exists, interms similar,
albeit notidentical, tothecircumvention ofanti-dumping measures; whereas itappears therefore
appropriate toenact ananti-circumvention provision inthisRegulation;
Whereas, itisexpedient topermit thesuspension ofcountervailing measures where there is
atemporary change inmarket conditions which make thecontinued imposition ofsuchmeasures
temporarily inappropriate;G/SCM/N/1/EEC/1
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Whereas, itisnecessary toprovide thatimports under investigation maybemade subject to
registration upon importation toenable measures tobesubsequently applied against suchimports;
Whereas,toensureaproperenforcementofmeasures,itisnecessarythatMemberStatesmonitor
andreporttotheCommissiontheimporttradeinproductssubjecttoinvestigationandsubjecttomeasures
andtheamount ofduties collected pursuant toRegulation;
Whereas, itisnecessary toprovide forconsultations ofanAdvisory Committee atregular and
specified stages oftheinvestigation; whereas theCommittee shallconsist ofrepresentatives ofMember
States witharepresentative oftheCommission aschairman;
Whereas, itisexpedient toprovide forverification visits tocheck information submitted on
countervailable subsidies andinjury, though suchvisits should bedependent onproper replies to
questionnaires being received;
Whereas, itisessential toprovide forsampling incases where thenumber ofparties or
transactions arelarge inorder topermit atimely completion ofinvestigations;
Whereas, itisnecessary toprovide thatforparties whodonotcooperate satisfactorily other
information maybeusedtoestablish findings andsuchinformation maybelessfavourable totheparty
thanifithadcooperated;
Whereas, provision should bemade forthetreatment ofconfidential information sothatbusiness
orgovernmental secrets arenotdivulged;
Whereas, itisessential thatprovision ismade fortheproper disclosure oftheessential facts
andconsiderations toparties which qualify forsuchtreatment andthatsuchdisclosure ismade, with
dueregard tothedecision-making process intheCommunity, within atimeperiod which permits
parties todefend theirinterests;
Whereas, itisprudent toprovide foranadministrative system under which arguments canbe
presented inrelation towhether measures areintheCommunity interest, including theinterests of
consumers, andtolaydown thetimeperiods within which suchinformation hastobepresented as
wellasthedisclosure rights oftheparties concerned;
Whereas, itisimperative tolinktheimplementation oftimelimits totheestablishment ofthe
necessary administrative structure within theCommission 'sservices; whereas theCouncil, therefore,
should specify, inadecision tobeadopted byqualified majority nolaterthan1April 1995, when these
timelimits shallapply;
Whereas, inapplying therulesoftheSubsidies Agreement itisessential, inorder tomaintain
thebalance ofrights andobligations which thisAgreement sought toestablish, thattheCommunity
takeaccount oftheirinterpretation bytheCommunity 'smajor trading partners, asreflected inlegislation
orestablished practice,G/SCM/N/1/EEC/1
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HAS ADOPTED THIS REGULATION:
Article 1
Principles
1. ThisRegulation laysdown provisions forprotection against subsidized imports fromcountries
notmembers oftheEuropean Community. Acountervailing dutymaybeimposed forthepurpose
ofoffsetting anysubsidy granted, directly orindirectly, forthemanufacture, production, export or
transport ofanyproduct whose release forfreecirculation intheCommunity causes injury.
2. Forthepurpose ofthisRegulation, aproduct isconsidered asbeing subsidized ifitbenefits
from acountervailable subsidy asdefined inArticles 2and3ofthisRegulation.
3. Suchsubsidymaybegrantedbythegovernmentofthecountryoforiginoftheimportedproduct,
orbythegovernment ofanintermediate country fromwhich theproduct isexported totheCommunity,
known forthepurpose ofthisRegulation as"thecountry ofexport". Theterm"government" isdefined,
forthepurposes ofthisRegulation asagovernment oranypublic bodywithin theterritory ofthecountry
oforigin orexport.
4. Notwithstanding theabove, where products arenotdirectly imported fromthecountry oforigin
butareexported totheCommunity from anintermediate country, theprovisions ofthisRegulation
shallbefullyapplicable andthetransaction ortransactions shall, where appropriate, beregarded as
having taken place between thecountry oforigin andtheCommunity.
5. Forthepurpose ofthisRegulation theterm"likeproduct" shallbeinterpreted tomean aproduct
which isidentical, i.e.alike inallrespects totheproduct under consideration, orintheabsence of
suchaproduct, another product which although notalike inallrespects, hascharacteristics closely
resembling those oftheproduct under consideration.
Article 2
Definition ofaSubsidy
Asubsidy shallbedeemed toexistif:
1. (a) there isafinancial contribution byagovernment (asdefined inArticle 1(3))inthe
country oforigin orexport, thatistosay,where:
(i) agovernment practice involves adirect transfer offunds (forexample grants,
loans, equity infusion), potential direct transfers offunds orliabilities (for
example, loanguarantees);
(ii) government revenue thatisotherwise due,isforegone ornotcollected (for
example, fiscal incentives suchastaxcredits); inthisregard, theexemption
ofanexported product from duties ortaxes borne bythelikeproduct when
destined fordomestic consumption, ortheremission ofsuchduties ortaxes
inamount notinexcess ofthose which havebeenaccrued, shallnotbedeemed
tobeasubsidy, provided thatsuchanexemption isgranted inaccordance with
theprovisions ofAnnexes ItoIIItothisRegulation;G/SCM/N/1/EEC/1
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(iii) agovernment provides goods orservices other thangeneral infrastructure,
orpurchases goods;
(iv) agovernment:
- makes payments toafunding mechanism; or
- entrusts ordirects aprivate bodytocarry outoneormore ofthetype
offunctions illustrated inpoints (i)to(iii)which would normally be
vested inthegovernment, andthepractice, innorealsense, differs
from practices normally followed bygovernments; or
(b) there isanyform ofincome orprice support within themeaning ofArticle XVIof
theGATT 1994; and
2. abenefit isthereby conferred.
Article 3
Countervailability ofSubsidies
A.PRINCIPLE
1. Subsidies asdefined inArticle 2shallbesubject tocountervailing measures onlyiftheyare
specific, asdefined inparagraphs 2to4.
B.SPECIFICITY
2. Inorder todetermine whether asubsidy, asdefined inArticle 2isspecific toanenterprise
orindustry orgroup ofenterprises orindustries (hereinafter referred toas"certain enterprises") within
thejurisdiction ofthegranting authority, thefollowing principles shallapply:
(a) Where thegranting authority, orthelegislation pursuant towhich thegranting authority
operates, explicitly limits access toasubsidy tocertain enterprises, suchsubsidy shall
bespecific.
(b) Where thegranting authority, orthelegislation pursuant towhich thegranting authority
operates, establishes objective criteria orconditions governing theeligibility for,and
theamount of,asubsidy, specificity shallnotexist, provided thattheeligibility is
automatic andthatsuchcriteria andconditions arestrictly adhered to.
Forthepurpose ofthisArticle, objective criteria orconditions mean criteria or
conditions which areneutral, which donotfavour certain enterprises overothers, and
which areeconomic innature andhorizontal inapplication, such asnumber of
employees orsizeofenterprise.
Thecriteria orconditions mustbeclearly spelled outbylaw,regulation, orotherofficial
document, soastobecapable ofverification.G/SCM/N/1/EEC/1
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(c) If,notwithstanding anyappearance ofnon-specificity resulting from theapplication
oftheprinciples laiddown insubparagraphs (a)and(b),there arereasons tobelieve
thatthesubsidy mayinfactbespecific, other factors maybeconsidered. Suchfactors
are: useofasubsidy programme byalimited number ofcertain enterprises,
predominant usebycertain enterprises, thegranting ofdisproportionately largeamounts
ofsubsidy tocertain enterprises, andthemanner inwhich discretion hasbeenexercised
bythegranting authority inthedecision togrant asubsidy. Inthisregard, information
onthefrequency withwhich applications forasubsidy arerefused orapproved and
thereasons forsuchdecisions shall, inparticular, beconsidered.
Inapplying thisprovision, account shallbetaken oftheextent ofdiversification of
economic activities within thejurisdiction ofthegranting authority, aswellasofthe
length oftimeduring which thesubsidy programme hasbeeninoperation.
3. Asubsidy which islimited tocertain enterprises located within adesignated geographical region
within thejurisdiction ofthegranting authority shallbespecific. Thesetting orchange ofgenerally
applicable taxratesbyalllevels ofgovernment entitled todososhallnotbedeemed tobeaspecific
subsidy forthepurposes ofthisRegulation.
4. Irrespective oftheprovisions ofparagraphs 2and3,thefollowing subsidies shallbedeemed
tobespecific:
(a) Subsidies contingent, inlaworinfact,whether solely orasoneofseveral other
conditions, upon export performance, including those illustrated inAnnex Itothis
Regulation.
Subsidies shallbeconsidered tobecontingent infactuponexport performance when
thefactsdemonstrate thatthegranting ofasubsidy, without having beenmade legally
contingent uponexport performance, isinfacttiedtoactual oranticipated exportation
orexport earnings. Themerefactthatasubsidy isaccorded toenterprises which export
shallnotforthatreason alone beconsidered tobeanexport subsidy within themeaning
ofthisprovision.
(b) Subsidies contingent, whether solely orasoneofseveral other conditions, upon the
useofdomestic overimported goods.
5. AnydeterminationofspecificityundertheprovisionsofthisArticleshallbeclearlysubstantiated
onthebasis ofpositive evidence.
C.NON-COUNTERVAILABLE SUBSIDIES
6. Thefollowing subsidies shallnotbesubjected tocountervailing measures:
(a) Subsidies which arenotspecific within themeaning ofparagraphs 2and3.
(b) Subsidies which arespecific, within themeaning ofparagraphs 2and3,butwhich
meettheconditions provided forinparagraphs 7,8or9.
(c) Theelement ofsubsidy which mayexistinanyofthemeasures listed inAnnex IV
tothisRegulation.G/SCM/N/1/EEC/1
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7. Subsidies forresearch activities conducted byfirms orbyhigher education orresearch
establishments onacontract basis withfirms shallnotbesubject tocountervailing measures, ifthe
subsidies cover notmore than75percentofthecostsofindustrial research or50percentofthecosts
ofpre-competitive development activity, andprovided thatsuchsubsidies arelimited exclusively to:
(i) Personnelcosts(researchers,techniciansandothersupportingstaffemployedexclusively
intheresearch activity);
(ii) costsofinstruments, equipment, landandbuildings usedexclusively andpermanently
(except when disposed ofonacommercial basis) fortheresearch activity;
(iii) costsofconsultancy andequivalent services usedexclusively fortheresearch activity;
including bought-in research, technical knowledge, patents, etc.;
(iv) additional overhead costs incurred directly asaresult oftheresearch activity;
(v) other running costs(such asthose ofmaterials, supplies andthelike), incurred directly
asaresult oftheresearch activity.
Forthepurpose ofthisparagraph:
(a) theallowable levels ofnon-countervailable subsidy referred tointhisparagraph shall
beestablished byreference tothetotaleligible costs incurred overtheduration ofan
individual project.
Incaseofprogrammes which spanboth"industrial research" and"pre-competitive
development activity", theallowable level ofnon-countervailable subsidy shallnot
exceed thesimple average oftheallowable levels ofnon-countervailable subsidy
applicable totheabove twocategories, calculated onthebasis ofalleligible costs as
setforth inpoints (i)to(v)ofthisparagraph;
(b) theterm"industrial research" means planned search orcritical investigation aimed
atdiscovery -ofnewknowledge, withtheobjective thatsuchknowledge maybeuseful
indeveloping newproducts, processes orservices, orinbringing about asignificant
improvement toexisting products, processes orservices;
(c) theterm"pre-competitive development activity" means thetranslation ofindustrial
research findings intoaplan, blueprint ordesign fornew, modified orimproved
products, processes orservices whether intended forsaleoruse,including thecreation
ofafirstprototype which would notbecapable ofcommercial use. Itmayfurther
include theconceptual formulation anddesign ofproducts, processes orservices
alternatives andinitial demonstration orpilotprojects, provided thatthesesameprojects
cannot beconverted orusedforindustrial application orcommercial exploitation.
Itdoesnotinclude routine orperiodic alterations toexisting products, production lines,
manufacturing process, services, andother on-going operations eventhough those
alterations mayrepresent improvements.
Theprovisions ofthisparagraph shall notapply tocivilaircraft (asdefined inthe1979
Agreement onTrade inCivil Aircraft, asamended, orinanylaterAgreement amending orreplacing
suchAgreement).G/SCM/N/1/EEC/1
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8. Subsidies todisadvantaged regions within theterritory ofthecountry oforigin and/or export,
given pursuant toageneral framework ofregional development, andwhich would benon-specific if
thecriteria laiddown inparagraphs 2and3wereapplied toeacheligible region concerned, shallnot
besubject tocountervailing measures provided that:
(i) eachdisadvantaged region isaclearly designated contiguous geographical areawith
adefinable economic andadministrative identity;
(ii) theregion isconsidered asdisadvantaged onthebasisofneutral andobjective criteria,
indicating thattheregion 'sdifficulties ariseoutofmorethantemporary circumstances;
suchcriteria mustbeclearly spelled outbylaw,regulation, orother official document,
soastobecapable ofverification;
(iii) thecriteria include ameasurement ofeconomic development which shallbebased on
atleastoneofthefollowing factors:
- oneofeither income percapita orhousehold income percapita, orGDP per
capita, which must notbeabove 85percentoftheaverage fortheterritory
ofthecountry oforigin orexport concerned;
- unemployment rate,which must beatleast110percentoftheaverage for
theterritory ofthecountry oforigin orexport concerned;
asmeasured overathree-year period; suchmeasurement, however, maybeacomposite oneandmay
include other factors.
Forthepurpose ofthisparagraph:
(a) A"general framework ofregional development" means thatregional subsidy
programmes arepartofaninternally consistent andgenerally applicable regional
development policy andthatregional development subsidies arenotgranted inisolated
geographical points having no,orvirtually noinfluence onthedevelopment ofaregion;
(b) "neutral andobjective criteria" means criteria which donotfavour certain regions
beyond whatisappropriate fortheelimination orreduction ofregional disparities within
theframework oftheregional development policy. Inthisregard, regional subsidy
programmes shallinclude ceilings ontheamount ofsubsidy which canbegranted to
eachsubsidized project. Suchceilings mustbedifferentiated according tothedifferent
levels ofdevelopment ofeligible regions andmustbeexpressed interms ofinvestment
costsorthecostofjobcreation. Within suchceilings, thedistribution ofsubsidy shall
besufficiently broad andeventoavoid thepredominant useofasubsidy by,orthe
granting ofdisproportionately large amounts ofsubsidy to,certain enterprises. This
subparagraph shallbeapplied inthelightofthecriteria setoutinparagraphs 2and
3.
9. Subsidiestopromoteadaptationofexistingfacilitiestonewenvironmentalrequirementsimposed
bylawand/or regulations which result ingreater constraints andfinancial burden onfirms, shallnot
besubject tocountervailing measures, provided thatthesubsidy:
(i) isaone-time non-recurring measure;
(ii) islimited to20percentofthecostofadaptation;G/SCM/N/1/EEC/1
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(iii) doesnotcover thecostofreplacing andoperating thesubsidized investment, which
must befullyborne byfirms;
(iv) isdirectly linked toandproportionate toafirm'splanned reduction ofnuisances and
pollution, anddoesnotcover anymanufacturing costsavings which maybeachieved;
and
(v) isavailabletoallfirmswhichcanadoptthenewequipmentand/orproductionprocesses.
Forthepurpose ofthisparagraph theterm"existing facilities" means facilities having beeninoperation
foratleasttwoyears atthetimewhen newenvironmental requirements areimposed.
Article 4
Calculation oftheAmount oftheCountervailable
Subsidy
A.PRINCIPLE
1. Theamount ofcountervailable subsidies, forthepurpose ofthisRegulation, shallbecalculated
interms ofthebenefit conferred totherecipient which isfound toexistduring theinvestigation period
forsubsidization. Normally thisperiod shallbethemost recent accounting yearofthebeneficiary,
butmaybeanyother period ofatleastsixmonths prior totheinitiation oftheinvestigation forwhich
reliable financial andother relevant dataareavailable.
B.CALCULATION OFBENEFIT TOTHE RECIPIENT
2. Asregards thecalculation ofbenefit totherecipient, thefollowing rules shallapply:
(a) Government provision ofequity capital shallnotbeconsidered asconferring abenefit,
unless theinvestment canberegarded asinconsistent withtheusual investment practice
(including fortheprovision ofriskcapital) ofprivate investors intheterritory ofthe
country oforigin and/or export.
(b) Aloanbyagovernment shallnotbeconsidered asconferring abenefit, unless there
isadifference between theamount thatthefirmreceiving theloanpays onthe
government loanandtheamount thatthefirmwould payforacomparable commercial
loanwhich thefirmcould actually obtain onthemarket. Inthiscasethebenefit shall
bethedifference between thetwoamounts.
(c) Aloanguarantee byagovernment shallnotbeconsidered asconferring abenefit, unless
there isadifference between theamount thatthefirmreceiving theguarantee pays
onaloanguaranteed bythegovernment andtheamount thatthefirmwould payfor
acomparable commercial loanintheabsence ofthegovernment guarantee. Inthis
casethebenefit shallbethedifference between these twoamounts adjusted forany
differences infees.
(d) Theprovision ofgoods orservices orpurchases ofgoods byagovernment shallnot
beconsidered asconferring abenefit unless theprovision ismade forlessthanadequate
remuneration, orthepurchase ismade formore thanadequate remuneration. TheG/SCM/N/1/EEC/1
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adequacyofremunerationshallbedeterminedinrelationtoprevailingmarketconditions
fortheproduct orservice inquestion inthecountry ofprovision orpurchase (including
price,quality,availability,marketability,transportationandotherconditionsofpurchase
orsale).
C.GENERAL PROVISIONS ONCALCULATION
3. Theamount ofcountervailable subsidies shall bedetermined according tothefollowing
provisions:
(a) Theamount ofthecountervailable subsidies shall bedetermined perunitofthe
subsidized product exported totheCommunity.
(b) Inestablishing thisamount thefollowing elements maybededucted from thetotal
subsidy:
(i) anyapplication fee,orother costsnecessarily incurred inorder toqualify for,
ortoobtain, thesubsidy;
(ii) export taxes, duties orother charges levied ontheexport oftheproduct to
theCommunity specifically intended tooffset thesubsidy.
Where aninterested party claims adeduction, itmust prove thattheclaim isjustified.
(c) Where thesubsidy isnotgranted byreference tothequantities manufactured, produced,
exported ortransported, theamount ofcountervailable subsidy shallbedetermined
byallocating thevalue ofthetotalsubsidy, asappropriate, overthelevelofproduction,
sales orexports oftheproducts concerned during theinvestigation period for
subsidization.
(d) Where thesubsidy canbelinked totheacquisition orfuture acquisition offixedassets,
theamount ofthecountervailable subsidy shallbecalculated byspreading thesubsidy
across aperiod which reflects thenormal depreciation ofsuchassets intheindustry
concerned. Theamount socalculated which isattributable totheinvestigation period,
including thatwhich derives from fixed assets acquired before thisperiod, shallbe
allocated asdescribed insubparagraph (c).
Where theassets arenon-depreciating, thesubsidy shallbevalued asaninterest-free
loan, andbetreated inaccordance withparagraph 2(b).
(e) Where asubsidy cannot belinked totheacquisition offixed assets, theamount ofthe
benefit received during theinvestigation period shallinprinciple beattributed tothis
period, andallocated asdescribed insubparagraph 3(c),unless special circumstances
arisejustifying attribution overadifferent period.
Article 5
Determination ofInjury
1. Pursuant tothisRegulation, theterm"injury" shall, unless otherwise specified, betaken to
mean material injury totheCommunity industry, threat ofmaterial injury totheCommunity industryG/SCM/N/1/EEC/1
Page13
ormaterial retardation oftheestablishment ofsuchanindustry, andshallbeinterpreted inaccordance
withtheprovisions ofthisArticle.
2. Adetermination ofinjury shall bebased onpositive evidence andinvolve anobjective
examination ofboth(a)thevolume ofthesubsidized imports andtheeffect ofthesubsidized imports
onprices intheCommunity market forlikeproducts, and(b)theconsequent impact ofthese imports
ontheCommunity industry.
3. Withregard tothevolume ofthesubsidized imports, consideration shallbegiven astowhether
there hasbeenasignificant increase insubsidized imports, either inabsolute terms orrelative to
production orconsumption intheCommunity. With regard totheeffect ofthesubsidized imports
onprices, consideration shallbegiven astowhether there hasbeenasignificant price undercutting
bythesubsidized imports ascompared withtheprice ofalikeproduct oftheCommunity, orwhether
theeffect ofsuchimports isotherwise todepress prices toasignificant degree orprevent priceincreases,
which otherwise would haveoccurred, toasignificant degree. Nooneorseveral ofthese factors can
necessarily givedecisive guidance.
4. Where imports ofaproduct from more thanonecountry aresimultaneously subject to
countervailing dutyinvestigations, theeffects ofsuchimports shallbecumulatively assessed onlyif
itisdetermined that: (1)theamount ofcountervailable subsidies established inrelation totheimports
fromeachcountry ismore thandeminimis asdefined inArticle 11(5)andthatthevolume ofimports
from eachcountry isnotnegligible; and(2)acumulative assessment oftheeffects oftheimports is
appropriate inlightoftheconditions ofcompetition between imported products andtheconditions
ofcompetition between theimported products andthelikeCommunity product.
5. Theexamination oftheimpact ofthesubsidized imports ontheCommunity industry concerned
shallinclude anevaluation ofallrelevant economic factors andindices having abearing onthestate
oftheindustry, including: thefactthatanindustry isstillintheprocess ofrecovering fromtheeffects
ofpastsubsidization ordumping, themagnitude oftheamount ofcountervailable subsidies, actual
andpotential decline insales, profits, output, market share, productivity, return oninvestments,
utilization ofcapacity; factors affecting Community prices; actual andpotential negative effects on
cashflow, inventories, employment, wages, growth, ability toraisecapital orinvestments and,inthe
caseofagriculture, whether therehasbeenanincreased burden onGovernment support programmes.
Thislistisnotexhaustive, norcanoneorseveral ofthese factors necessarily givedecisive guidance.
6. Itmustbedemonstrated, from alltherelevant evidence presented inrelation toparagraph 2,
thatthesubsidized imports arecausing injury within themeaning ofthisRegulation. Specifically,
thisshallentail ademonstration thatthevolume and/or pricelevels identified pursuant toparagraph 3
areresponsible foranimpact ontheCommunity industry asprovided forinparagraph 5,andthatthis
impact exists toadegree which enables ittobeclassified asmaterial.
7. Known factors other thanthesubsidized imports which atthesame timeareinjuring the
Community industry shallalsobeexamined toensure thatinjury caused bythese other factors isnot
attributed tothesubsidized imports pursuant toparagraph 6.Factors which maybeconsidered inthis
respect include, interalia,thevolume andprices ofnon-subsidized imports, contraction indemand
orchanges inthepatterns ofconsumption, trade restrictive practices ofandcompetition between the
foreign andCommunity producers, developments intechnology andtheexport performance and
productivity oftheCommunity industry.
8. Theeffect ofthesubsidized imports shall beassessed inrelation totheproduction ofthe
Community industry ofthelikeproduct when available datapermit theseparate identification ofthat
production onthebasisofsuchcriteria astheproduction process, producers salesandprofits. IfsuchG/SCM/N/1/EEC/1
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separate identification ofthatproduction isnotpossible, theeffects ofthesubsidized imports shall
beassessed bytheexamination oftheproduction ofthenarrowest group orrange ofproducts, which
includes thelikeproduct, forwhich thenecessary information canbeprovided.
9. Adetermination ofathreat ofmaterial injury shallbebased onfactsonnotmerely onallegation,
conjecture orremote possibility. Thechange incircumstances which would create asituation inwhich
thesubsidy would cause injury must beclearly foreseen andimminent.
10. Inmaking adetermination regarding theexistence ofathreat ofmaterial injury, consideration
should begiven to,interalia,suchfactors as:
(i) Thenature ofthesubsidy orsubsidies inquestion andthetrade effects likely toarise
therefrom;
(ii) asignificantrateofincreaseofsubsidizedimportsintotheCommunitymarketindicating
thelikelihood ofsubstantially increased imports;
(iii) sufficient freely disposable oranimminent, substantial increase incapacity ofthe
exporter indicating thelikelihood ofsubstantially increased subsidized exports tothe
Communitymarket,takingintoaccounttheavailabilityofotherexportmarketstoabsorb
anyadditional exports;
(iv) whether imports areentering atprices thatwould, toasignificant degree, depress prices
orprevent price increases which otherwise would haveoccurred, andwould likely
increase demand forfurther import; and
(v) inventories oftheproduct being investigated.
11. Nooneofthefactors listed above byitselfcannecessarily givedecisive guidance butthetotality
ofthefactors considered mustleadtotheconclusion thatfurther subsidized exports areimminent and
that,unless protective action istaken material injury would occur.
Article 6
Definition ofCommunity Industry
1. Forthepurposes ofthisRegulation, theterm"Community" industry shallbeinterpreted as
referring totheCommunity producers asawhole ofthelikeproduct ortothose ofthemwhose collective
output oftheproducts constitutes amajor proportion, asdefined inArticle 7(8),ofthetotalCommunity
production ofthose products, except that:
(i) when producers arerelated totheexporters orimporters orarethemselves importers
oftheallegedly subsidized product, theterm "theCommunity industry" maybe
interpreted asreferring totherestoftheproducers;
(ii) inexceptional circumstances theterritory oftheCommunity may, fortheproduction
inquestion, bedivided intotwoormore competitive markets andtheproducers within
eachmarket mayberegarded asaseparate industry if(a)theproducers within such
market sellalloralmost alloftheirproduction oftheproduct inquestion inthatmarket,
and(b)thedemand inthatmarket isnottoanysubstantial degree supplied byproducers
oftheproduct inquestion located elsewhere intheCommunity. Insuchcircumstances,G/SCM/N/1/EEC/1
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injury maybefound toexistevenwhere amajor proportion ofthetotalCommunity
industry isnotinjured, provided there isaconcentration ofsubsidized imports into
suchanisolated market andprovided further thatthesubsidized imports arecausing
injury totheproducers ofalloralmost alloftheproduction within suchmarket.
2. Forthepurpose ofparagraph l,producers shallbeconsidered toberelated toexporters or
importers onlyif(a)oneofthemdirectly orindirectly controls theother; or(b)bothofthemaredirectly
orindirectly controlled byathirdperson; or(c)together theydirectly orindirectly control athird
person, provided thatthere aregrounds forbelieving orsuspecting thattheeffect oftherelationship
issuchastocause theproducer concerned tobehave differently fromnon-related producers. Forthe
purpose ofthisparagraph, oneshall bedeemed tocontrol another when theformer islegally or
operationally inaposition toexercise restraint ordirection thelatter.
3. Where theCommunity industry hasbeeninterpreted asreferring totheproducers inacertain
region, theexporters ortheGovernment granting countervailable subsidies shallbegiven anopportunity
toofferundertakings pursuant toArticle 10inrespect oftheregion concerned. Insuchcases, when
evaluating whether themeasures areintheCommunity interest, special account shallbetaken ofthe
interest oftheregion. Ifanadequate undertaking isnotoffered promptly orthesituations setoutin
Article 10(9)and(10)apply, aprovisional ordefinitive countervailing dutymaybeimposed inrespect
oftheCommunity asawhole. Insuchcases theduties may, ifpracticable, belimited tospecific
producers orexporters.
4. Theprovisions ofArticle 5(8)shallapply tothisArticle.
Article 7
Initiation ofProceedings
1. Except asprovided forinparagraph 10,aninvestigation todetermine theexistence, degree
andeffect ofanyalleged subsidy shallbeinitiated upon awritten complaint byanynatural orlegal
person, oranyassociation nothaving legalpersonality, acting onbehalf oftheCommunity industry:
(i) Thecomplaint maybesubmitted totheCommission, oraMember State, which shall
forward ittotheCommission. TheCommission shallsendMember States acopyof
anycomplaint itreceives. Thecomplaint shallbedeemed tohavebeenlodged onthe
firstworking dayfollowing itsdelivery totheCommission byregistered mailorthe
issuing ofanacknowledgement ofreceipt bytheCommission.
(ii) Where, intheabsence ofanycomplaint, aMember Stateisinpossession ofsufficient
evidence ofsubsidization andofinjury resulting therefrom fortheCommunity industry
itshallimmediately communicate suchevidence totheCommission.
2. Acomplaint pursuant toparagraph Ishall include sufficient evidence oftheexistence of
countervailable subsidies (including, ifpossible, oftheiramount), injury andacausal linkbetween
theallegedly subsidized imports andthealleged injury. Thecomplaint shallcontain suchinformation
asisreasonably available tothecomplainant onthefollowing:
(i) identity ofthecomplainant andadescription ofthevolume andvalue oftheCommunity
production ofthelikeproduct bythecomplainant. Where awritten complaint ismade
onbehalf oftheCommunity industry, thecomplaint shallidentify theindustry onbehalf
ofwhich thecomplaint ismade byalistofallknown Community producers orlikeG/SCM/N/1/EEC/1
Page16
product (orassociations ofCommunity producers ofthelikeproduct) and,totheextent
possible, adescription ofthevolume andvalue ofCommunity production ofthelike
product accounted forbysuchproducers;
(ii) acomplete description oftheallegedly subsidized product, thenames ofthecountry
orcountries oforigin and/or export inquestion, theidentity ofeachknown exporter
orforeign producer andalistofknown persons importing theproduct inquestion;
(iii) evidence withregard totheexistence, amount, nature andcountervailability ofthe
subsidies inquestion;
(iv) information ontheevolution ofthevolume oftheallegedly subsidized imports, the
effect ofthese imports onprices ofthelikeproduct intheCommunity market andthe
consequent impact oftheimports ontheCommunity industry, asdemonstrated by
relevant factors andindices having abearing onthestateoftheCommunity industry,
suchasthose listed inArticle 5(3)and(5).
3. TheCommissionshall,tothedegreepossible,examinetheaccuracyandadequacyoftheevidence
provided inthecomplaint todetermine whether there issufficient evidence tojustify theinitiation of
aninvestigation.
4. Aninvestigation maybeinitiated inorder todetermine whether ornotthealleged subsidies
arespecific within themeaning ofArticle 3(2)and(3)ofthisRegulation.
5. Aninvestigation mayalsobeinitiated inrespect ofsubsidies non-countervailable according
toArticle 3(7),(8)or(9)inorder todetermine whether ornottheconditions laiddown inthose
paragraphs havebeenmet.
6. Ifasubsidy isgranted pursuant toasubsidy programme which hasbeennotified inadvance
ofitsimplementation totheWTO Committee onSubsidies andCountervailing Measures inaccordance
withtheprovision ofArticle 8oftheSubsidies Agreement, andinrespect ofwhich theCommittee
hasfailed todetermine thattherelevant conditions laiddown inArticle 8oftheSubsidies Agreement
havenotbeenmet,aninvestigation shallnotbeinitiated inrespect ofasubsidy granted pursuant to
suchaprogramme, unless aviolation ofArticle 8oftheSubsidies Agreement hasbeenascertained
bythecompetent WTO Dispute Settlement Body orthrough arbitration asprovided inArticle 8(5)
oftheSubsidies Agreement.
7. Aninvestigation mayalsobeinitiated inrespect ofmeasures ofthetypelisted inAnnex IV
tothisRegulation, totheextent thattheycontain anelement ofsubsidy asdefined byArticle 2,in
order todetermine whether themeasures inquestion fullyconform totheprovisions ofAnnex IV.
8. Aninvestigation shallnotbeinitiated pursuant toparagraph 1unless ithasbeendetermined,
onthebasisofanexamination ofthedegree ofsupport for,oropposition to,thecomplaint expressed
byCommunity producers ofthelikeproduct, thatthecomplaint hasbeenmade byoronbehalf of
theCommunity industry. Thecomplaint shallbeconsidered tohavebeenmade byoronbehalf of
theCommunity industry ifitissupported bythose Community producers whose collective output
constitutes more than50percentofthetotalproduction ofthelikeproduct produced bythatportion
oftheCommunity industry expressing either support fororopposition tothecomplaint. However,
noinvestigationshallbeinitiatedwhenCommunityproducersexpresslysupportingthecomplaintaccount
forlessthan25percentoftotalproduction ofthelikeproduct produced bytheCommunity industry.G/SCM/N/1/EEC/1
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9. TheCommission shallavoid, unless adecision hasbeenmade toinitiate aninvestigation, any
publicising ofthecomplaint fortheinitiation ofaninvestigation. However, assoonaspossible after
thereceipt ofaproperly documented complaint pursuant tothisArticle, andinanyevent before the
initiation ofaninvestigation, theCommission shallnotify thegovernment ofthecountry oforigin and/or
export concerned, andthisgovernment shallbeinvited forconsultations withtheaimofclarifying
thesituation astomatters referred toinparagraph 2andarriving atamutually agreed solution.
10. Ifinspecial circumstances, theCommission decides toinitiate aninvestigation without having
received awritten complaint byoronbehalf oftheCommunity industry fortheinitiation ofsuch
investigation, thisshallbedoneonthebasis ofsufficient evidence oftheexistence ofcountervailable
subsidies, injury andcausal link,asdescribed inparagraph 2,tojustify theinitiation ofaninvestigation.
11. Theevidence ofbothsubsidies andinjury shallbeconsidered simultaneously inthedecision
whether ornottoinitiate aninvestigation. Acomplaint shallberejected where there isinsufficient
evidence ofeither countervailable subsidies orofinjury tojustify proceeding withthecase. Pursuant
tothisArticle, proceedings shallnotbeinitiated against countries whose imports represent amarket
share ofbelow 1percent, unless suchcountries collectively account for3percent, ormore, of
Community consumption.
12. Thecomplaint maybewithdrawn prior toinitiation, inwhich caseitshallbeconsidered not
tohavebeenlodged.
13. Where, afterconsultation, itisapparent thatthere issufficient evidence tojustify initiating
proceedings theCommission shallinitiate proceedings within 45daysofthelodging ofthecomplaint
andpublish anotice intheOfficial Journal oftheEuropean Communities. Where insufficient evidence
hasbeenpresented, thecomplainant shall, afterconsultation, besoinformed within 45daysofthe
dateonwhich thecomplaint islodged withtheCommission.
14. Thenoticeofinitiationoftheproceedingshallannouncetheinitiationofaninvestigation,indicate
theproduct andcountries concerned, giveasummary oftheinformation received andprovide that
allrelevant information istobecommunicated totheCommission; itshallstatetheperiods within
which interested parties maymake themselves known, present their views inwriting andsubmit
information, ifsuchviews andinformation aretobetaken intoaccount during theinvestigation; it
shallalsostatetheperiod within which interested parties mayapply tobeheard bytheCommission
inaccordance withArticle 8(5).
15. TheCommissionshalladvisetheexporters,importersandrepresentativeassociationsofimporters
orexporters known toittobeconcerned, aswellasthegovernment ofthecountry oforigin and/or
export andthecomplainants, oftheinitiation oftheproceedings and,withdueregard totheprotection
ofconfidentialinformation,providethefulltextofthewrittencomplaintreceivedpursuanttoparagraph1
totheknown exporters, andtotheauthorities ofthecountry oforigin and/or export, andmake it
available, uponrequest, toother interested parties involved. Where thenumber ofexporters involved
isparticularly high, thefulltextofthewritten complaint should instead beprovided onlytothe
authorities ofthecountry oforigin and/or export ortotherelevant trade association.
16. Acountervailing dutyinvestigation shallnothinder theprocedures ofcustoms clearance.G/SCM/N/1/EEC/1
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Article 8
TheInvestigation
1. Following theinitiation oftheproceedings, theCommission, acting incooperation withthe
Member States, shallcommence aninvestigation atCommunity level. Suchinvestigation shallcover
bothsubsidization andinjury andthese shallbeinvestigated simultaneously. Forthepurpose ofa
representative finding, aninvestigation period shallbeselected which, inthecaseofsubsidization,
shallnormally cover theinvestigation period provided forinArticle 4(1).Information relating to
aperiod subsequent totheinvestigation period shall, normally, notbetaken intoaccount.
2. Parties receiving questionnaires usedinacountervailing dutyinvestigation shallbegiven at
least30daysforreply. Thetime-limit forexporters shallbecounted fromthedateofreceipt ofthe
questionnaire, which forthispurpose shallbedeemed tohavebeenreceived oneweek from theday
onwhich itwassenttotherespondent ortransmitted totheappropriate diplomatic representative of
thecountry oforigin and/or export. Anextension ofthe30-day period maybegranted, taking due
account ofthetime-limits oftheinvestigation andprovided theparty gives agood reason, interms
ofitsparticular circumstances, forsuchextension.
3. TheCommission mayrequest Member States tosupply information, andMember States shall
takewhatever steps arenecessary inorder togiveeffect tosuchrequests. They shallsendtothe
Commissiontheinformationrequestedtogetherwiththeresultsofallinspections,checksorinvestigations
carried out.Where thisinformation isofgeneral interest orwhere itstransmission hasbeenrequested
byaMemberState,theCommissionshallforwardittotheMemberStates,provideditisnotconfidential,
inwhich caseanon-confidential summary shallbeforwarded.
4. TheCommission many request Member States tocarryoutallnecessary checks andinspections,
particularly amongst importers, traders andCommunity producers, andtocarry outinvestigations in
thirdcountries, provided thefirms concerned givetheirconsent andthegovernment ofthecountry
inquestion hasbeenofficially notified andraises noobjection. Member States shalltakewhatever
steps arenecessary inorder togiveeffect tosuchrequests from theCommission. Officials ofthe
Commission shallbeauthorized, iftheCommission oraMember Statesorequests, toassist theofficials
ofMember States incarrying outtheirduties.
5. Theinterested parties, which havemade themselves known inaccordance withArticle 7(14),
shallbeheard iftheyhave, within theperiod prescribed inthenotice published intheOfficial Journal
oftheEuropean Communities, made awritten request forahearing showing thattheyareaninterested
party likely tobeaffected bytheresult oftheproceedings andthatthere areparticular reasons why
theyshould beheard.
6. Opportunities shall, onrequest, beprovided fortheimporters, exporters andthecomplainants,
whichhavemadethemselvesknowninaccordancewithArticle7(14),andthegovernmentofthecountry
oforigin and/or export, tomeetthose parties withadverse interests sothatopposing views maybe
presented andrebuttal arguments offered. Provision ofsuchopportunities must takeaccount ofthe
needtopreserve confidentiality andoftheconvenience totheparties. There shallbenoobligation
onanyparty toattend ameeting, andfailure todososhallnotbeprejudicial tothatparty'scase.
Oralinformation provided pursuant tothisparagraph shallbetaken intoaccount bytheCommission
insofarasitissubsequently reproduced inwriting.
7. Thecomplainants,thegovernmentofthecountryoforiginand/orexport,importersandexporters
andtheirrepresentative associations, users andconsumer organizations, which havemade themselves
known inaccordance withArticle 7(14), may, upon written request, inspect allinformation madeG/SCM/N/1/EEC/1
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availabletotheCommissionbyanypartytoaninvestigation,asdistinctfrominternaldocumentsprepared
bytheauthorities oftheCommunity oritsMember States, provided thatitisrelevant tothedefence
oftheirinterests andnotconfidential within themeaning ofArticle 20,andthatitisusedinthe
investigation. Such parties mayrespond tosuchinformation andtheircomments maybetaken into
consideration, totheextent thattheyaresufficiently substantiated intheresponse.
8. Except incircumstances provided forinArticle 19theinformation supplied byinterested parties
andupon which findings arebased shallbeexamined foraccuracy tothedegree possible.
9. Forproceedings initiated pursuant toArticle 7(13),aninvestigation shall, whenever possible,
beconcluded within oneyear. Inanyevent, suchinvestigations shallinallcases byconcluded within
13months ofinitiation, inaccordance withthefindings made pursuant toArticle 10forundertakings
orthefindings made pursuant toArticle 11fordefinitive action.
10. Throughout theinvestigation theCommission shallafford thegovernment ofthecountry of
origin and/or export areasonable opportunity tocontinue consultations withaviewtoclarifying the
factual situation andarriving atamutually agreed solution.
Article 9
Provisional Measures
1. Provisional measures maybeapplied ifproceedings havebeeninitiated inaccordance with
theprovisions ofArticle 7,apublic notice hasbeengiven tothateffect andinterested parties have
been given adequate opportunities tosubmit information andmake comments inaccordance with
paragraph 14ofArticle 7,aprovisional affirmative determination hasbeenmade thattheimported
product benefits fromcountervailable subsidies andofconsequent injury totheCommunity industry,
andtheCommunity interest callsforintervention toprevent suchinjury. Theprovisional measures
shallbeimposed nosooner than60daysfromtheinitiation oftheproceedings butnolaterthannine
months from theinitiation oftheproceedings.
2. Theamount oftheprovisional countervailing dutyshall notexceed thetotalamount of
countervailable subsidies asprovisionally established butitshould belessthanthisamount, ifsuch
lesser dutywould beadequate toremove theinjury totheCommunity industry.
3. Provisional measures shalltaketheformofasecurity andtherelease oftheproducts concerned
forfreecirculation intheCommunity shallbeconditional upon theprovision ofsuchsecurity.
4. TheCommission shalltakeprovisional action afterconsultation or,incasesofextreme urgency,
afterinforming theMember States. Inthislatter case, consultations shalltakeplace 10days, atthe
latest, afternotification totheMember States oftheaction taken bytheCommission.
5. Where aMember Staterequests immediate intervention bytheCommission andtheconditions
ofparagraph 1ofArticle 9aremet,theCommission shall, within amaximum offiveworking days
ofreceipt oftherequest, decide whether aprovisional countervailing dutyshould beimposed.
6. TheCommission shallforthwith inform theCouncil andtheMember States ofanydecision
taken pursuant tothisArticle. TheCouncil, acting byqualified majority, maydecide differently.
7. Provisional countervailing duties shallhaveamaximum period ofvalidity offourmonths.G/SCM/N/1/EEC/1
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Article 10
Undertakings
1. Investigations maybeterminated without theimposition ofprovisional ordefinitive duties upon
acceptance ofsatisfactory voluntary undertakings under which:
(i) thegovernment ofthecountry oforigin and/or export agrees toeliminate orlimitthe
subsidy ortakeother measures concerning itseffects; or
(ii) anyexporter undertakes torevise itsprices ortocease exports totheareainquestion
aslongassuchexports benefit fromcountervailable subsidies, sothattheCommission,
afterconsultation, issatisfied thattheinjurious effect ofthesubsidies iseliminated.
Price increases under suchundertakings shallnotbehigher thannecessary tooffset
theamount ofcountervailable subsidies, andshould belessthantheamount of
countervailable subsidies ifsuchincreases would beadequate toremove theinjury to
theCommunity industry.
2. Undertakings maybesuggested bytheCommission, butnogovernment orexporter shallbe
obliged toenter intosuchanundertaking. Thefactthatgovernments orexporters donotoffersuch
undertakings, ordonotaccept aninvitation todoso,shallinnowayprejudice theconsideration of
thecase. However, itmaybedetermined thatathreat ofinjury ismore likely toberealized ifthe
subsidizedimportscontinue.Undertakingsshallnotbesoughtoracceptedfromgovernmentsorexporters
unless aprovisional affirmative determination ofsubsidization andinjury caused bysuchsubsidization
hasbeenmade. Saveinexceptional circumstances, undertakings maynotbeoffered laterthanthe
endoftheperiod during which representations maybemade pursuant toArticle 21(5).
3. Undertakings offered neednotbeaccepted iftheiracceptance isconsidered impractical, for
example, ifthenumber ofactual orpotential exporters istoogreat, orforother reasons, including
reasons ofgeneral policy. Theexporter and/or thegovernment ofthecountry oforigin and/or export
concerned maybeprovided withthebasisonwhich itisintended topropose therejection oftheoffer
ofanundertaking andmaybegiven anopportunity tomake comments thereon. Thereason forrejection
shallbesetoutinthedefinitive decision.
4. Parties which offeranundertaking shallberequired toprovide anon-confidential version of
suchundertaking, sothatitmaybemade available tointerested parties totheinvestigation.
5. Where undertakings are,afterconsultation, accepted, andthere isnoobjection raised within
theAdvisory Committee, theinvestigation shallbeterminated. Inallother cases, theCommission
shallsubmit totheCouncil forthwith areport ontheresults oftheconsultation, together withaproposal
thattheproceedings beterminated. Theproceedings shallstand terminated if,within onemonth, the
Council, acting byqualified majority, hasnotdecided otherwise.
6. Iftheundertakings areaccepted, theinvestigation ofsubsidization andinjury shallnormally
becompleted. Insuchacase, ifanegative determination ofsubsidization orinjury ismade, the
undertaking shallautomatically lapse except incases where suchadetermination isdueinlarge part
totheexistence ofanundertaking. Insuchcases, theauthorities mayrequire thatanundertaking be
maintained forareasonable period. Intheevent thatanaffirmative determination ofsubsidization
andinjury ismade, theundertaking shallcontinue consistent withitsterms andtheprovisions ofthis
Regulation.G/SCM/N/1/EEC/1
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7. TheCommission shallrequire anygovernment orexporter fromwhom undertakings havebeen
accepted toprovide, periodically, information relevant tothefulfilment ofsuchundertaking, andto
permit verification ofpertinent data. Non-compliance withsuchrequirements shallbeconstrued as
aviolation oftheundertaking.
8. Where undertakings areaccepted fromcertain exporters during thecourse ofaninvestigation,
theyshall, forthepurpose ofArticle 13,bedeemed totakeeffect from thedateonwhich the
investigation isconcluded forthecountry oforigin and/or export.
9. Incaseofviolationorwithdrawalofundertakingsbyanyparty,adefinitivedutyshallbeimposed
inaccordance withArticle 11,onthebasisofthefactsestablished within thecontext oftheinvestigation
which ledtotheundertaking, provided thatsuchinvestigation wasconcluded withafinaldetermination
onsubsidization andinjury, andtheexporter concerned, orthegovernment ofthecountry oforigin
and/or export, except inthecaseofwithdrawal ofundertakings bytheexporter orsuchgovernment,
hasbeengiven anopportunity tocomment.
10. Aprovisional dutymay, afterconsultation, beimposed inaccordance withArticle 9onthe
basis ofthebestinformation available, where there isreason tobelieve thatanundertaking isbeing
violated, orincaseofviolation orwithdrawal ofundertakings where theinvestigation which ledto
theundertaking wasnotconcluded.
Article 11
Termination Without Measures andImposition of
Definitive Duties
1. Where thecomplaint iswithdrawn, proceedings maybeterminated unless suchtermination
would notbeintheCommunity interest.
2. Where, afterconsultation, protective measures areunnecessary andthereisnoobjection raised
within theAdvisory Committee, theinvestigation orproceedings shallbeterminated. Inallothercases,
theCommission shallsubmit totheCouncil forthwith areport ontheresults oftheconsultation, together
withaproposal thattheproceedings beterminated. Theproceedings shallstand terminated if,within
onemonth, theCouncil, acting byaqualified majority, hasnotdecided otherwise.
3. There shallbeimmediate termination oftheproceedings where itisdetermined thattheamount
ofcountervailable subsidies isdeminimis ,inaccordance withtheprovisions ofparagraph 5,orwhere
thevolume ofsubsidized imports, actual orpotential, ortheinjury, isnegligible.
4. Forallproceedings initiated pursuant toArticle 7(13),injury shallnormally beregarded as
negligible where themarket share oftheimports islessthantheamounts setoutinArticle 7(11).
Withregard toinvestigations concerning imports fromdeveloping countries, thevolume ofsubsidized
imports shallalsobeconsidered negligible ifitrepresents lessthan4percentofthetotalimports of
thelikeproduct intheCommunity, unless imports fromdeveloping countries whose individual shares
oftotalimports represent lessthan4percentcollectively account formore than9percentofthetotal
imports ofthelikeproduct intheCommunity.
5. Forthesame investigations, theamount ofthecountervailable subsidies shallbeconsidered
tobedeminimis ifsuchamount islessthan1percentadvalorem, except that:
(a) asregards investigations concerning imports fromdeveloping countries thedeminimis
threshold shallbe2percentadvalorem; andG/SCM/N/1/EEC/1
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(b) forthose developing countries Members ofthetworeferred toinAnnex VIIofthe
Subsidies Agreement aswellasfordeveloping countries Members oftheWTO which
havecompletely eliminated export subsidies asdefined inArticle 3(4)(a)ofthis
Regulation, deminimis subsidy threshold shallbe3percentadvalorem; where the
application ofthisprovision depends ontheelimination ofexport subsidies, itshall
apply from thedatethattheelimination ofexport subsidies isnotified totheWTO
Committee onSubsidies andCountervailing Measures, andforsolongasexport
subsidies arenotgranted bythedeveloping country concerned; thisprovision shall
expire eight years from thedateofentry intoforce ofWTO Agreement;
provided thatitisonlytheinvestigation thatshallbeterminated where theamount ofthecountervailable
subsidies isbelow therelevant deminimis levelforindividual exporters andtheyshallremain subject
totheproceedings andmaybere-investigated inanysubsequent review carried outforthecountry
concerned pursuant toArticle 13.
6. Where thefactsasfinally established show theexistence ofcountervailable subsidies andinjury
caused thereby, andtheCommunity interest callsforintervention inaccordance withArticle 22,a
definitive countervailing dutyshallbeimposed bytheCouncil, acting bysimple majority onaproposal
submitted bytheCommission afterconsultation oftheAdvisory Committee, unless thesubsidy or
subsidies arewithdrawn orithasbeendemonstrated thatthesubsidies nolonger confer anybenefit
ontheexporters involved. Where provisional duties areinforce, aproposal fordefinitive action shall
besubmitted totheCouncil notlaterthanonemonth before theexpiry ofsuchduties. Theamount
ofthecountervailing dutyshallnotexceed theamount ofcountervailable subsidies from which the
exporters havebeenfound tobenefit, established pursuant tothisRegulation, butshould belessthan
thetotalamount ofcountervailable subsidies, ifsuchlesser dutywould beadequate toremove theinjury
totheCommunity industry.
7. Acountervailing duty shall beimposed intheappropriate amounts ineach case, ona
non-discriminatory basis, onimports ofaproduct fromallsources found tobenefit fromcountervailable
subsidies andcausing injury, except astoimports fromthose sources fromwhich undertakings under
theterms ofthisRegulation havebeenaccepted. TheRegulation shallspecify, thedutyforeachsupplier,
or,ifthatisimpracticable, thesupplying country concerned.
8. When theCommission haslimited itsexamination inaccordance with Article 18,any
countervailing dutyapplied toimports fromexporters orproducers which havemade themselves known
inaccordance withArticle 18butwerenotincluded intheexamination shallnotexceed theweighted
average amount ofcountervailable subsidies established fortheparties inthesample. Forthepurpose
ofthisparagraph, theCommission shalldisregard anyzeroanddeminimis amounts ofcountervailable
subsidies andamounts ofcountervailable subsidies established under thecircumstances referred toin
Article 19.Theauthorities shallapply individual duties toimports from anyexporter orproducer
which isgranted individual treatment asprovided forinArticle 18.
Article 12
Retroactivity
1. Provisionalmeasuresanddefinitivecountervailingdutiesshallonlybyappliedtoproductswhich
enter forconsumption afterthetimewhen thedecision taken under Article 9(1)andArticle 11(6),
respectively, enters intoforce, subject totheexceptions setoutinthisRegulation.G/SCM/N/1/EEC/1
Page23
2. Where aprovisional dutyhasbeenapplied andthefactsasfinally established show theexistence
ofcountervailable subsidies andinjury, theCouncil shalldecide, irrespective ofwhether adefinitive
countervailing dutyistobeimposed, what proportion oftheprovisional dutyistobedefinitively
collected. Forthispurpose, injury shallnotinclude material retardation oftheestablishment ofa
Community industry, northreat ofmaterial injury, except where itisfound thatthiswould, inthe
absence ofprovisional measures, havedeveloped intomaterial injury. Inallother cases involving
suchthreat orretardation, anyprovisional amounts shallbereleased anddefinitive duties canonly
beimposed from thedatethatafinaldetermination ofthreat ormaterial retardation ismade.
3. Ifthedefinitive countervailing dutyishigher thantheprovisional duty, thedifference shall
notbecollected. Ifthedefinitive dutyislower thantheprovisional duty, thedutyshallberecalculated.
Where afinaldetermination isnegative, theprovisional duty, shallnotbeconfirmed.
4. Adefinitive countervailing dutymaybelevied onproducts which wereentered forconsumption
notmore than90daysprior tothedateofapplication ofprovisional measures butnotprior tothe
initiation oftheinvestigation, provided thattheimports havebeenregistered inaccordance withArticle
15(5),theimporters concerned havebeengiven anopportunity tocomment bytheCommission and
itisfound that:
(i) there existcritical circumstances where forthesubsidized product inquestion injury
which isdifficult torepair iscaused bymassive imports inarelatively short period
ofaproductbenefitingfromcountervailablesubsidiesunderthetermsofthisRegulation;
and,
(ii) where itisdeemed necessary, inorder topreclude therecurrence ofsuchinjury, to
assess countervailing duties retroactively onthose imports.
5. Incasesofviolation orwithdrawal ofundertakings definitive duties maybelevied inaccordance
withthisRegulation ongoods entered forconsumption notmore than90daysbefore theapplication
ofprovisional measures provided thattheimports havebeenregistered inaccordance withArticle 15
(5)andthatanysuchretroactive assessment shallnotapply toimports entered before theviolation
orwithdrawal oftheundertaking.
Article 13
Duration, Reviews andRefunds
1. Acountervailing measure shallremain inforce onlyaslongasandtotheextent necessary
tocounteract thecountervailable subsidies which arecausing injury.
A. Expiry reviews
2. Adefinitive countervailing measure shallexpire fiveyears from itsimposition orfiveyears
from thedateofthemost recent review which hascovered bothsubsidization andinjury, unless it
isdetermined inareview thattheexpiry would belikely toleadtocontinuation orrecurrence of
subsidization andinjury. Suchanexpiry review shallbeinitiated ontheinitiative oftheCommission
orupon arequest made byoronbehalf oftheCommunity producers andthemeasure shallremain
inforce pending theoutcome ofsuchreview.
3. Anexpiryreviewshallbeinitiatedwheretherequestcontainssufficientevidencethattheremoval
ofmeasures would belikely toresult inacontinuation orrecurrence ofsubsidization andinjury. SuchG/SCM/N/1/EEC/1
Page24
alikelihoodmay,forexample,beindicatedbyevidenceofcontinuedsubsidizationandinjuryorevidence
thattheremoval ofinjury ispartly orsolely duetotheexistence ofmeasures orevidence thatthe
circumstances oftheexporters, ormarket conditions, aresuchthattheywould indicate thelikelihood
offurther injurious subsidization.
4. Incarrying outinvestigations under thissection, theexporters, importers, thegovernment of
thecountry oforigin and/or export andthecomplainants shallbeprovided withtheopportunity to
amplify, rebut orcomment onthematters setoutinthereview request andconclusions shallbereached
withdueaccount taken ofallrelevant anddulysupported evidence presented inrelation tothequestion
ofwhether theremoval ofmeasures would belikely, orunlikely, toleadtothecontinuation orrecurrence
ofsubsidization andinjury.
5. Under thissection, anotice ofimpending expiry shallbepublished intheOfficial Journal of
theEuropean Communities atanappropriate timeasdefined inthisparagraph inthefinalyearofthe
period ofapplication ofthemeasures. Thereafter, theCommunity producers shall, nolaterthanthree
months before theendofthefive-year period, beentitled tolodge areview request inaccordance with
paragraph 3.Anotice announcing theactual expiry ofmeasures under thissection shall alsobe
published.
B. Interim reviews
6. Theneedforthecontinued imposition ofmeasures mayalsobereviewed, where warranted
ontheinitiative oftheCommission orattherequest ofaMember Stateor,provided thatareasonable
period oftimeofatleastoneyearhaselapsed since theimposition ofthedefinitive measure, upon
arequest byanyexporter, importer ortheCommunity producers orthegovernment ofthecountry
oforigin and/or export which contains sufficient evidence substantiating theneedforsuchaninterim
review.
7. Aninterim review shallbeinitiated where therequest contains sufficient evidence thatthe
continued imposition ofthemeasure isnolonger necessary tooffset thecountervailable subsidy and/or
theinjury would beunlikely tocontinue orrecur ifthemeasure wereremoved orvaried, orthatthe
existing measure isnot,orisnolonger, sufficient tocounteract thecountervailable subsidy which is
causing injury.
8. Where thecountervailing duties imposed arelessthantheamount ofcountervailable subsidies
found, aninterim review shallbeinitiated iftheCommunity producers provide sufficient evidence
thattheduties haveledtonomovement orinsufficient movement ofresale prices oftheimported product
intheCommunity. Iftheinvestigation proves theallegations tobecorrect, countervailing duties may
beincreased toachieve thepriceincrease required toremove injury, although theincreased dutylevel
shallnotexceed theamount ofthecountervailable subsidies.
9. Incarrying outinvestigations under thissection, theCommission may, interalia,consider
whether thecircumstances withregard tosubsidization andinjury havechanged significantly, orwhether
existing measures areachieving theintended results inremoving theinjury previously established in
accordance withArticle 5ofthisRegulation. Inthese respects, account shallbetaken ofallrelevant
anddulysupported evidence inthefinaldetermination.
C. Accelerated reviews
10. Anyexporter whose exports aresubject toadefinitive countervailing dutybutwhowasnot
individually investigated during theoriginal investigation forreasons other thanarefusal tocooperate
withtheCommission, shall beentitled, upon request, toanaccelerated review inorder thattheG/SCM/N/1/EEC/1
Page25
Commission promptly establish anindividual countervailing dutyrateforthatexporter. Suchareview
shallbeinitiated afterconsultation oftheAdvisory Committee andCommunity producers havebeen
given anopportunity tocomment.
D. General provisions onreviews
11. Therelevant provisions ofArticles 7and8,excluding those relating totime-limits, shallapply
toanyreview carried outpursuant toparagraphs 2to5,6to9and10.Anysuchreview shallbecarried
outexpeditiously andshallnormally beconcluded within 12months ofthedateofinitiation ofthe
review.
12. Reviews pursuant tothisArticle shallbeinitiated bytheCommission afterconsultation ofthe
Advisory Committee. Where warranted byreviews, measures shallberepealed ormaintained pursuant
toparagraphs 2to5,orrepealed, maintained oramended pursuant toparagraphs 6to9and10,by
theCommunityinstitutionresponsiblefortheirintroduction.Wheremeasuresarerepealedforindividual
exporters, butnotforthecountry asawhole, suchexporters shallremain subject totheproceedings
andmaybere-investigated inanysubsequent review carried outforthatcountry pursuant tothisArticle.
13. Where areview ofmeasures pursuant toparagraphs 6to9isinprogress attheendoftheperiod
ofapplication ofmeasures asdefined inparagraphs 2to5,themeasures shallalsobeinvestigated under
theprovisions ofparagraphs 2to5.
E. Refunds
14. Notwithstanding paragraphs 2to5,animporter mayrequest reimbursement ofduties collected
where itisshown thattheamount ofcountervailable subsidies, onthebasisofwhich duties werepaid,
hasbeeneliminated, orreduced toalevelwhich isbelow thelevelofthedutyinforce.
15. Inorder torequest arefund ofcountervailing duties, theimporter shallsubmit anapplication
totheCommission. Theapplication shallbesubmitted viatheMember Stateintheterritory ofwhich
theproducts werereleased forfreecirculation within sixmonths ofthedateonwhich theamount of
thedefinitive duties tobelevied wasdulydetermined bythecompetent authorities orthedateonwhich
adecision wasmade definitively tocollect theamounts secured bywayofprovisional duty. Member
States shallforward therequest totheCommission forthwith.
16. Anapplication forrefund shallonlybeconsidered tobedulysupported byevidence where
itcontains precise information ontheamount ofrefund ofcountervailing duties claimed andallcustoms
documentation relating tothecalculation andpayment ofsuchamount. Itshallalsoinclude evidence,
forarepresentative period, ontheamount ofcountervailable subsidies fortheexporter orproducer
towhich thedutyapplies. Incases where theimporter isnotassociated totheexporter orproducer
concerned andsuchinformation isnotimmediately available ortheexporter orproducer isunwilling
torelease ittotheimporter, theapplication shallcontain astatement from theexporter orproducer
thattheamount ofcountervailable subsidies hasbeenreduced oreliminated, asspecified inthisArticle,
andthattherelevant supporting evidence shallbeprovided totheCommission. Itshallbeunderstood
thatwhere suchevidence isnotforthcoming fromtheexporter orproducer, within areasonable period
oftime, theapplication shallberejected.
17. TheCommission shall, afterconsultation oftheAdvisory Committee, decide whether andto
whatextent theapplication should begranted oritmaydecide atanytimetoinitiate aninterim review
andtheinformation andfindings from suchreview, carried outinaccordance withtheprovisions
applicable forsuchreviews, shallbeusedtodetermine whether andtowhatextent arefund isjustified.
Refunds ofduties shallnormally takeplace within 12months, andinnocasemore than18monthsG/SCM/N/1/EEC/1
Page26
afterthedateonwhich arequest forarefund, dulysupported byevidence, hasbeenmade byanimporter
oftheproduct subject tothecountervailing duty. Thepayment ofanyrefund authorized should normally
bemade byMember States within 90daysoftheabove-noted decision.
F. Final provision
18. Inallreview orrefund investigations carried outpursuant tothisArticle, theCommission shall
apply, insofarascircumstances havenotchanged, thesamemethodology asintheinvestigation which
ledtotheduty, withdueaccount taken oftheprovisions setoutinArticle 4andArticle 18ofthis
Regulation.
Article 14
Circumvention
1. Countervailing duties imposed pursuant tothisRegulation maybeextended toapply toimports
from thirdcountries oflikeproducts, orparts thereof, when circumvention ofthemeasures inforce
istaking place. Circumvention shallbedefined asachange inthepattern oftrade between third
countriesandtheCommunitywhichstemsfromapractice,processorworkforwhichthereisinsufficient
duecause oreconomic justification, other thantheimposition oftheduty, andthere isevidence that
theremedial effects ofthedutyarebeing undermined, interms oftheprices and/or quantities ofthe
likeproducts, andtheimported likeproduct and/or parts thereof stillbenefit from thesubsidy.
2. Investigations shallbeinitiated pursuant tothisArticle where therequest contains sufficient
evidence onthefactors setoutinparagraph 1.Initiations shallbemade, afterconsultation ofthe
Advisory Committee, byCommission Regulation which shallalsoinstruct thecustoms authorities to
make imports subject toregistration inaccordance with Article 15(5)orrequest guarantees.
Investigations shallbecarried outbytheCommission, which maybeassisted bycustoms authorities,
andshallbeconcluded within ninemonths. Where thefacts, asfinely ascertained, justify theextension
ofmeasures thisshall bedone bytheCouncil, acting bysimple majority onaproposal from the
Commission, fromthedatethatregistration wasimposed pursuant toArticle IS(5)orguarantees were
requested. Therelevant procedural provisions ofthisRegulation withregard toinitiations andthe
conduct ofinvestigations shallapply pursuant tothisArticle.
3. Products shallnotbesubject toregistration pursuant toArticle 15(5)ormeasures where they
areaccompanied byacustoms certificate declaring thattheimportation ofthegoods doesnotconstitute
circumvention.Thesecertificatesmaybeissuedtoimporters,uponwrittenapplication,bytheauthorities
following authorization byadecision oftheCommission, afterconsultation oftheAdvisory Committee,
orthedecision oftheCouncil imposing measures andtheyshallremain validfortheperiod, andunder
theconditions setdown therein.
4. NothinginthisArticleshallprecludethenormalapplicationoftheprovisionsinforceconcerning
customs duties.
Article 15
General Provisions
1. Provisional ordefinitive countervailing duties shallbeimposed byRegulation, andcollected
byMember States intheform, attheratespecified andaccording totheother criteria laiddown in
theRegulation imposing suchduties. Suchduties shallalsobecollected independently ofthecustoms
duties, taxes andother charges normally imposed onimports. Noproduct shallbesubject tobothG/SCM/N/1/EEC/1
Page27
anti-dumping andcountervailing duties tocompensate forthesame situation arising from dumping
orexport subsidization.
2. Regulationsimposingprovisionalordefinitivecountervailingduties,orRegulationsorDecisions
accepting undertakings orterminating investigations orproceedings, shallbepublished intheOfficial
Journal oftheEuropean Communities. Such Regulations orDecisions shallcontain, inparticular,
andwithdueregard totheprotection ofconfidential information thenames oftheexporters, ifpractical,
orcountries involved, adescription oftheproduct andasummary ofthefactsandconsiderations relevant
tothecountervailable subsidies andinjury determinations. Ineachcase, acopyoftheRegulation or
Decision shallbesenttoknown interested parties. Theprovisions ofthisparagraph shallapply mutatis
mutandis toreviews.
3. Special provisions, inparticular withregard tothecommon definition oftheconcept oforigin,
ascontained inCouncil Regulation (EEC) No2913/92 of12October 1992establishing theCommunity
Customs Code1,maybeadopted in,orpursuant tothisRegulation.
4. IntheCommunityinterest,measuresimposedpursuanttothisRegulationmay,afterconsultation
oftheAdvisory Committee, besuspended byadecision oftheCommission foraperiod ofninemonths.
Thesuspension maybeextended forafurther period, notexceeding oneyear,iftheCouncil sodecides,
bysimple majority, onaproposal from theCommission. Measures mayonlybesuspended where
market conditions havetemporarily changed toanextent thatinjury would beunlikely toresume as
aresult ofthesuspension, andprovided thattheCommunity industry hasbeengiven anopportunity
tocomment andthese comments havebeentaken intoaccount. Measures may, atanytimeandafter
consultation, bereinstated ifthereason forsuspension isnolonger applicable.
5. TheCommission may, after consultation oftheAdvisory Committee, direct thecustoms
authorities totaketheappropriate stepstoregister imports, sothatmeasures maysubsequently beapplied
against these imports fromthedateofsuchregistration. Imports maybemade subject toregistration
following arequest from theCommunity industry which contains sufficient evidence tojustify such
action. Registration shallbeintroduced byRegulation which shallspecify thepurpose oftheaction
and,ifappropriate, theestimated amount ofpossible future liability. Imports maynotbemade subject
toregistration foraperiod longer thanninemonths.
6. Member States shallreport totheCommission, onamonthly basis, theimport tradeofproducts
subject toinvestigation andsubject tomeasures, andtheamount ofduties collected pursuant tothis
Regulation.
Article 16
Consultations
1. Anyconsultations provided forinthisRegulation, except those referred toinArticle 7(9)
and8(10), shalltakeplace within anAdvisory Committee, which shallconsist ofrepresentatives of
eachMember State, witharepresentative oftheCommission aschairman. Consultations shallbeheld
immediately onrequest byaMember State orontheinitiative oftheCommission, andinanyevent
within atimeframe which allows thetimelimits setbythisRegulation toberespected.
2. TheCommittee shallmeetwhen convened byitschairman. Heshallprovide theMember States,
aspromptly aspossible, withallrelevant information.
1OJNo.L302, 19.10.1992, p.1.G/SCM/N/1/EEC/1
Page28
3. Where necessary, consultation maybeinwriting only; insuchcasetheCommission shall
notify theMember States andshallspecify aperiod within which theyshallbeentitled toexpress their
opinions ortorequest anoralconsultation, which thechairman shallarrange, provided thatsuchoral
consultation canbeheldwithin atimeframe which allows thetimelimits setbythisRegulation to
berespected.
4. Consultation shallinparticular cover:
(i) theexistence ofcountervailable subsidies andthemethods ofestablishing theiramount;
(ii) theexistence andextent ofinjury;
(iii) thecausal linkbetween thesubsidized imports andinjury;
(iv) themeasures which, inthecircumstances, areappropriate toprevent orremedy the
injury caused bythecountervailable subsidies andthewaysandmeans forputting such
measures intoeffect.
Article 17
Verification Visits
1. TheCommission shall, where itconsiders itappropriate, carry outvisits toexamine therecords
ofimporters, exporters, traders, agents, producers, trade associations andorganizations, toverify
information provided onsubsidization andinjury. Intheabsence ofaproper andtimely reply a
verification visitmaynotbecarried out.
2. TheCommission maycarry outinvestigations inthirdcountries asrequired, provided itobtains
theagreement ofthefirms concerned, itnotifies therepresentatives ofthegovernment ofthecountry
inquestion andthelatter doesnotobject totheinvestigation. Assoonastheagreement ofthefirms
concerned hasbeenobtained theCommission should notify theauthorities ofthecountry oforigin
and/or export ofthenames andaddresses ofthefirms tobevisited andthedates agreed.
3. Thefirms concerned shallbeadvised ofthenature oftheinformation tobeverified during
verification visits andofanyfurther information which needs tobeprovided during suchvisits, though
thisshould notpreclude requests being made during theverification forfurther details tobeprovided
inthelightofinformation obtained.
4. Ininvestigations carried outpursuant tothisparagraph, theCommission shallbeassisted by
officials ofthose Member States whosorequest.
Article 18
Sampling
1. Incases where thenumber ofcomplainants, exporters orimporters, types ofproduct or
transactions islarge, theinvestigation maybelimited toareasonable number ofparties, products or
transactions byusing samples which arestatistically valid onthebasis ofinformation available toit
atthetimeoftheselection, ortothelargest representative volume oftheproduction, salesorexports
which canreasonably beinvestigated within thetime-limit available.G/SCM/N/1/EEC/1
Page29
2. Thefinalselection ofparties, types ofproducts ortransactions made under these sampling
provisions shallrestwiththeCommission, though preference shallbegiven tochoosing asample in
consultation with, andwiththeconsent of,theparties concerned, provided suchparties make themselves
known andmake sufficient information available, within three weeks ofinitiation, toenable a
representative sample tobechosen.
3. Incases where theexamination hasbeenlimited inaccordance withthisArticle, anindividual
amount ofcountervailable subsidization shall, nevertheless, becalculated foranyexporter orproducer
notinitially selected whosubmits thenecessary information within thetime-limits provided forinthis
Regulation, except where thenumber ofexporters orproducers issolargethatindividual examinations
would beunduly burdensome andprevent thetimely completion oftheinvestigation.
4. Where itisdecided tosample andthere isadegree ofnon-cooperation bysome orallofthe
parties selected which islikely tomaterially affect theoutcome oftheinvestigation, anewsample may
beselected. However, ifamaterial degree ofnon-cooperation persists ofthere isinsufficient time
toselect anewsample therelevant provisions ofArticle 19shallapply.
Article 19
Non-cooperation
1. Incasesinwhich anyinterested partyrefuses access to,orotherwise doesnotprovide, necessary
information within thetime-limits asprovided forinthisRegulation, orsignificantly impedes the
investigation, preliminary orfinalfindings, affirmative ornegative, maybemade onthebasis ofthe
factsavailable. Where itisfound thatanyinterested party hassupplied falseormisleading information
theinformation shallbedisregarded andusemaybemade ofthefactsavailable. Interested parties
should bemade aware oftheconsequences ofnon-cooperation.
2. Alackofacomputerized response shallnotbedeemed toconstitute non-cooperation provided
thattheinterested partyshows thatpresenting theresponse asrequested would result inanunreasonable
extra burden orunreasonable additional cost.
3. Where theinformation presented byaninterested party maynotbeidealinallrespects itshould
notbedisregarded, provided thatanydeficiencies arenotsuchastocause undue difficulty inarriving
atareasonableaccuratefindingandprovidedtheinformationisappropriatelysubmittedintimelyfashion,
isverifiable andtheparty hasacted tothebestofitsability.
4. Ifevidence orinformation isnotaccepted, thesupplying party should beinformed forthwith
ofthereasons thereof andhaveanopportunity toprovide further explanations within thetime-limit
specified. Iftheexplanations areconsidered unsatisfactory, thereasons forrejection ofsuchevidence
orinformation should bedisclosed andgiven inanypublished findings.
5. Ifdeterminations, including those withrespect totheamount ofcountervailable subsidies, are
based ontheprovisions ofparagraph 1,including theinformation supplied inthecomplaint, itshould,
where practicable andwithdueregard tothetime-limits oftheinvestigation, bechecked byreference
toinformation fromother independent sources which maybeavailable, suchaspublished price lists,
official import statistics andcustoms returns, orinformation obtained from other interested parties
during theinvestigation.
6. Ifaninterested party does notcooperate, oronlycooperates partially, andthusrelevant
information isbeing withheld, theresult could belessfavourable totheparty thanifithadcooperated.G/SCM/N/1/EEC/1
Page30
Article 20
Confidentiality
1. Anyinformation which isbynature confidential, (forexample, because itsdisclosure would
beofsignificant competitive advantage toacompetitor orbecause itsdisclosure would have a
significantly adverse effect uponaperson supplying theinformation orupon aperson fromwhom he
acquired theinformation) orwhich isprovided onaconfidential basis byparties toaninvestigation
shall, upon good cause shown, betreated assuchbytheauthorities.
2. Interestedpartiesprovidingconfidentialinformationshallberequiredtofurnishnon-confidential
summaries thereof. These summaries shallbeinsufficient detail topermit areasonable understanding
ofthesubstance oftheinformation submitted inconfidence. Inexceptional circumstances, suchparties
mayindicate thatsuchinformation isnotsusceptible ofsummary. Insuchexceptional circumstances,
astatement ofthereasons whysummarization isnotpossible must beprovided.
3. Ifitisconsidered thatarequest forconfidentiality isnotwarranted andifthesupplier ofthe
information iseither unwilling tomake theinformation available ortoauthorize itsdisclosure in
generalized orsummary form, suchinformation maybedisregarded unless itcanbesatisfactorily
demonstrated from appropriate sources thattheinformation iscorrect. Requests forconfidentiality
should notbearbitrarily rejected.
4. ThisArticle shall notpreclude thedisclosure ofgeneral information bytheCommunity
authorities, andinparticular thereasons onwhich decisions taken pursuant tothisRegulation arebased,
nordisclosure oftheevidence relied onbytheCommunity authorities insofarasisnecessary toexplain
those reason incourt proceedings. Such disclosure must takeintoaccount thelegitimate interest of
theparties concerned thattheirbusiness orgovernmental secrets should notbedivulged.
5. TheCouncil, theCommission andtheMember States, ortheofficials ofanyofthese, shall
notreveal anyinformation received pursuant tothisRegulation forwhich confidential treatment has
beenrequested byitssupplier without specific permission fromthesupplier. Exchanges ofinformation
between theCommission andMember States, anyinformation relating toconsultations made pursuant
toArticle 16orconsultations described inArticles 7(9)and(10),oranyinternal documents prepared
bytheauthorities oftheCommunity oritsMember States, shallnotbedivulged except asspecifically
provided forinthisRegulation.
6. Information received pursuant tothisRegulation shallbeusedonlyforthepurpose forwhich
itwasrequested.
Article 21
Disclosure
1. Thecomplainants, importers andexporters andtheir representative associations, and
representatives ofthecountry oforigin and/or export mayrequest disclosure ofthedetails underlying
theessential factsandconsiderations, onthebasisofwhich provisional measures havebeenimposed.
Requestsforsuchdisclosureshallbemadeinwritingimmediatelyfollowingtheimpositionofprovisional
measures andthedisclosure shallbemade inwriting assoonaspossible thereafter.
2. Theparties mentioned inparagraph 1mayrequest finaldisclosure oftheessential factsand
considerations onthebasisofwhich itisintended torecommend theimposition ofdefinitive measures,
orthetermination ofaninvestigation orproceedings without theimposition ofmeasures, withparticularG/SCM/N/1/EEC/1
Page31
attention being paidtothedisclosure ofanyfactsorconsiderations which aredifferent fromthose used
foranyprovisional measures.
3. Requests forfinaldisclosure, asdefined inparagraph 2,shallbeaddressed totheCommission
inwriting andbereceived, incases where aprovisional dutyhasbeenapplied, notlaterthanonemonth
afterpublication oftheimposition ofthatduty. Where aprovisional dutyhasnotbeenapplied parties
shallbeprovidedwithanopportunitytorequestfinaldisclosurewithintimelimitssetbytheCommission.
4. Finaldisclosureshallbegiveninwriting.Itshallbemade,withdueregardpaidtotheprotection
ofbusiness orgovernmental secrets, assoonaspossible, andnormally, notlaterthanonemonth prior
toadefinitive decision orthesubmission bytheCommission ofanyproposal forfinalaction pursuant
toArticle 11.Where theCommission isnotinaposition todisclose certain factsorconsiderations
atthattime, these shallbedisclosed assoonaspossible thereafter. Disclosure shallnotprejudice any
subsequent decision which maybetaken bytheCommission ortheCouncil butwhere suchdecision
isbased onanydifferent factsandconsiderations these shallbedisclosed assoonaspossible.
5. Representations made afterfinaldisclosure isgiven shallbetaken intoconsideration onlyif
received within aperiod tobesetbytheCommission ineachcase, which shallbeatleast10days,
dueconsideration being given totheurgency ofthematter.
Article 22
Community Interest
1. Pursuant tothisRegulation, adetermination astowhether theCommunity interest callsfor
intervention shallbebased onanassessment ofallthevarious interests taken asawhole, including
theinterests ofthedomestic industry andusers andconsumers, andadetermination pursuant tothis
Article shallonlybemade where allparties havebeengiven theopportunity tomake theirviews known
pursuant toparagraph 2.Insuchanexamination, theneedtoeliminate thetrade distorting effects
ofinjurious subsidization andtorestore effective competition shallbegiven special consideration.
Measures, asdetermined onthebasis ofsubsidization andinjury found, maynotbeapplied where
theauthorities, onthebasis ofalltheinformation submitted, cansafely conclude thatitisnotinthe
Community interest toapply suchmeasures.
2. Inorder toprovide asound basis onwhich theauthorities cantakeaccount ofallviews and
information inthedecision onwhether, ornot,theimposition ofmeasures isintheCommunity interest,
thecomplainants, importers andtheirrepresentative associations, representative usersandrepresentative
consumer organizations may, within thetime limits specified inthenotice ofinitiation ofthe
countervailing dutyinvestigation, make themselves known andprovide information totheCommission.
Suchinformation,orappropriatesummariesthereof,shallbemadeavailabletotheotherpartiesspecified
inthisArticle, andtheyshallbeentitled torespond tosuchinformation.
3. Theparties which haveacted inconformity withparagraph 2mayrequest ahearing. Such
requests shallbegranted when theyaresubmitted within thetimelimits setinparagraph 2,andwhen
theysetoutthereasons, interms oftheCommunity interest, whytheparties should beheard.
4. Theparties which haveacted inconformity withparagraph 2mayprovide comments onthe
application ofanyprovisional duties imposed. Such comments shallbereceived within onemonths
oftheapplication ofsuchmeasures iftheyaretobetaken intoaccount andthey, orappropriate
summaries thereof, shallbemade available toother parties whoshallbeentitled torespond tosuch
comments.G/SCM/N/1/EEC/1
Page32
5. TheCommission shallexamine theinformation which isproperly, submitted, andtheextent
towhich itisrepresentative, andtheresults ofsuchanalysis, together withanopinion onitsmerits,
shallbetransmitted totheAdvisory Committee. Thebalance ofviews expressed intheCommittee
shallbetaken intoaccount bytheCommission inanyproposal made pursuant toArticle II.
6. Theparties which have acted inconformity withparagraph 2,mayrequest thefacts and
considerations onwhich finaldecisions arelikely tobetaken tobemade available tothem. Such
information shallbemade available totheextent possible andwithout prejudice toanysubsequent
decision taken bytheCommission ortheCouncil.
7. Pursuant tothisArticle, information shallonlybetaken intoaccount where itissupported
byactual evidence which substantiates itsvalidity.
Article 23
Relationships Between Countervailing Duty Measures and
Multilateral Remedies
Ifanimported product ismade subject toanycountermeasures imposed following recourse
tothedispute settlement procedures oftheSubsidies Agreement, andsuchmeasures areappropriate
toremove theinjury caused bythecountervailable subsidies, anycountervailing dutyimposed with
regard tothatproduct shallimmediately besuspended, orrepealed, asappropriate.
Article 24
Final Provisions
ThisRegulation shallnotpreclude theapplication of:
(i) anyspecial ruleslaiddown inagreements concluded between theCommunity andthird
countries;
(ii) theCommunity Regulations intheagricultural sector andCouncil Regulations
(EC) No.3448/93 laying down thetrade arrangements applicable tocertain goods
resulting fromtheprocessing ofagricultural products, Regulation (EEC) No.2730/75
oftheCouncil of29October 1975 onglucose andlactose2andRegulation
(EEC) No.2783/75 oftheCouncil of29October 1975onthecommon system oftrade
forovalbumin andlactalbumin3;thisRegulation shalloperate bywayofcomplement
tothose Regulations andinderogation from anyprovisions thereof which preclude
theapplication ofcountervailing duties;
(iii) special measures, provided thatsuchaction doesnotruncounter toobligations under
theGATT.
2OJNoL281,1.11.1975,p.20.RegulationaslastamendedbyRegulation(EEC)No.222/88(OJNo.L28,
1.2.1988, P.1).
3OJNo.L282, 1.11.1975, p.104. Regulation aslastamended byRegulation (EEC) No.4001/87
(OJNo.L377, 31.12.1987, P.44).G/SCM/N/1/EEC/1
Page33
Article 25
Repeal ofExisting Legislation
Regulation (EEC) No.2423/88 ishereby repealed. References totherepealed Regulation shall
beconstrued asreferences tothisRegulation.
Article 26
Entry IntoForce
ThisRegulation shallenter intoforce on1January 1995.
Itshallapply toproceedings andinterim review investigations initiated after1September 1994
andtoexpiry review investigations forwhich thenotice ofimpending expiry ofmeasures hasbeen
published afterthesame date. However, forproceedings initiated pursuant toArticle 7(13), the
references totime-limits shallonlyapply afteradatewhich theCouncil shallspecify inaDecision
tobeadopted byaqualified majority, nolaterthan1April 1995onthebasisofaCommission proposal
tobesubmitted totheCouncil oncethenecessary budgetary resources havebeenmade available.
ThisRegulation shallbebinding initsentirety anddirectly applicable inallMember States.
Done atBrussels, 22December 1994.
FortheCouncil
ThePresident
H.SeehoferG/SCM/N/1/EEC/1
Page34
ANNEX I
ILLUSTRATIVE OFEXPORT SUBSIDIES
(a) Theprovision bygovernments ofdirect subsidies toafirmoranindustry contingent upon
export performance.
(b) Currency retention schemes oranysimilar practices which involve abonus onexports.
(c) Internal transport andfreight charges onexport shipments, provided ormandated by
governments, onterms more favourable thanfordomestic shipments.
(d) Theprovision bygovernments ortheir agencies either directly orindirectly through
government-mandated schemes, ofimported ordomestic products orservices foruseinthe
production ofexported goods, onterms orconditions more favourable thanforprovision of
likeordirectly competitive products orservices foruseintheproduction ofgoods fordomestic
consumption, if(inthecaseofproducts) suchterms orconditions aremore favourably than
those commercially available1onworld markets totheirexporters.
(e) Thefullorpartial exemption, remission, ordeferral specifically related toexports, ofdirect
taxes1orsocial welfare charges paidorpayable byindustrial orcommercial enterprises.2
(f) Theallowance ofspecial deductions directly related toexports orexport performance, over
andabove those granted inrespect ofproduction fordomestic consumption, inthecalculation
ofthebaseonwhich taxes arecharged.
(g) Theexemption orremission, inrespect oftheproduction anddistribution ofexported products,
ofindirect taxes1inexcess ofthose levied inrespect oftheproduction anddistribution oflike
products when soldfordomestic consumption.
(h) Theexemption remission ordeferral ofprior-stage cumulative indirect taxes2ongoods or
services usedintheproduction ofexported products inexcess oftheexemption, remission
ordeferral oflikeprior-stage cumulative indirect taxes ongoods orservices usedinthe
production oflikeproducts when soldfordomestic consumption; provided, however, that
1Theterm "commercially available" means thatthechoice between domestic andimported products is
unrestricted anddepends onlyoncommercial considerations.
2Forthepurpose ofthisRegulation anditsAnnexes:
- theterm"direct taxes" shallmean taxonwages, profits, interests, rents, royalties, andallother
forms ofincome, andtaxes ontheownership ofrealproperty;
- theterm "import charges" shall mean tariffs, duties, andother fiscal charges notelsewhere
enumerated thatarelevied onimports;
- theterm "indirect taxes" shall mean sales, excise, turnover, value added, franchise, stamp,
transfer, inventory andequipment taxes, border taxes andalltaxes other thandirect taxes and
import charges;
- "prior-stage" indirect taxes arethose levied ongoods orservices useddirectly orindirectly
inmaking theproduct;
- "cumulative" indirect taxes aremulti-staged taxes levied where there isnomechanism for
subsequent crediting ofthetaxifthegoods orservices subject totaxatonestage ofproduction
areused inasucceeding state ofproduction;
- "remission" oftaxes includes therefund orrebate oftaxes;
- "remission ofdrawback" includes thefullorpartial exemption ordeferral ofimport charges.G/SCM/N/1/EEC/1
Page35
prior-stagecumulativeindirecttaxesmaybeexempted,remittedordeferredonexportedproducts
even when notexempted, remitted ordeferred onlikeproducts when soldfordomestic
consumption, iftheprior-stage cumulative indirect taxesarelevied oninputs thatareconsumed
intheproduction oftheexported product (making normal allowance forwaste).3Thisitem
shallbeinterpreted inaccordance withtheguidelines onconsumption ofinputs intheproduction
process contained inAnnex II4.
(i) Theremission ordrawback ofimport charges inexcess ofthose levied onimported inputs
thatareconsumed intheproduction oftheexported product (making normal allowance for
waste); provided, however, thatinparticular cases afirmmayuseaquantity ofhome market
inputs equal to,andhaving thesame quality andcharacteristics as,theimported inputs asa
substitute fortheminorder tobenefit fromthisprovision iftheimport andthecorresponding
export operations bothoccur within areasonable timeperiod, nottoexceed twoyears. This
itemshallbeinterpreted inaccordance withtheguidelines onconsumption ofinputs inthe
production process contained inAnnex IIandtheguidelines inthedetermination ofsubstitution
drawback systems asexport subsidies contained inAnnex III.
(j) Theprovision bygovernments (orspecial institutions controlled bygovernments) ofexport
credit guarantee orinsurance programmes, ofinsurance orguarantee programmes against
increases inthecostofexported products orofexchange riskprogrammes, atpremium rates
which areinadequate tocover thelong-term operating costs andlosses oftheprogrammes.
(k) Thegrantbygovernments (orspecial institutions controlled byand/or acting under theauthority
ofgovernments) ofexport credits atratesbelow those which theyactually havetopayforthe
funds soemployed (orwould havetopayiftheyborrowed oninternational capital markets
inorder toobtain funds ofthesame maturity andother credit terms anddenominated inthe
same currency attheexport credit), orthepayment bythemofallorpartofthecostsincurred
byexporters orfinancial institutions inobtaining credits, insofarastheyareusedtosecure
amaterial advantage inthefieldofexport credit terms.
Provided, however, thatifaMember oftheWTO isaparty toaninternational undertaking
onofficial export credits towhich atleast 12original such Members areparties asof
1January1979(orasuccessorundertakingwhichhasbeenadoptedbythoseoriginalMembers),
orifinpractice aMember oftheWTO applied theinterest ratesprovisions oftherelevant
undertaking, anexport credit practice which isinconformity withthose provisions shallnot
beconsidered anexport subsidy.
(l) AnyotherchargeonthepublicaccountconstitutinganexportsubsidyinthesenseofArticleXVI
ofGATT 1994.
3Deferral maynotamount toanexport subsidy where, forexample, appropriate interest charges arecollected.
4Paragraph(h)doesnotapplytovalue-addedtaxsystemsandborder-taxadjustmentinlieuthereof;theproblem
oftheexcessive remission ofvalue-added taxes isexclusively covered byparagraph (g).G/SCM/N/1/EEC/1
Page36
ANNEX II
GUIDELINES ONCONSUMPTION OFINPUTS INTHE PRODUCTION PROCESS1
I
1. Indirect taxrebate schemes canallow forexemption, remission ordeferral ofprior-stage
cumulative indirect taxes levied oninputs thatareconsumed intheproduction oftheexported
product (making normal allowance forwaste). Similarly, drawback schemes canallow for
theremissionordrawbackofimportchargesleviedoninputsthatareconsumedintheproduction
oftheexported product (making normal allowance forwaste).
2. TheIllustrative listofexport subsidies inAnnex Imakes reference totheterm'inputs that
areconsumed intheproduction oftheexported product inparagraphs (h)and(i).Pursuant
toparagraph (h),indirect taxrebate schemes canconstitute anexport subsidy totheextent
thattheyresult inexemption, remission ordeferral ofprior-stage cumulative indirect taxes
inexcess oftheamount ofsuchtaxes actually levied oninputs thatareconsumed inthe
production oftheexported product. Pursuant toparagraph (i),drawback schemes canconstitute
anexport subsidy totheextent thattheyresult inaremission ordrawback ofimport charges
inexcess ofthose actually levied oninputs thatareconsumed intheproduction oftheexported
product. Bothparagraphs stipulate thatnormal allowance forwaste mustbemade infindings
regarding consumption ofinputs intheproduction oftheexported product. Paragraph (i)also
provides forsubstitution, where appropriate.
II
3. Inexamining whether inputs areconsumed intheproduction oftheexported product, aspart
ofacountervailing dutyinvestigation, theCommission mustnormally proceed onthefollowing
basis:
4. Where itisalleged thatanindirect taxrebate scheme, oradrawback scheme, conveys asubsidy
byreason ofover-rebate orexcess drawback ofindirect taxes orimport charges oninputs
consumed intheproduction oftheexported product, theCommission must normally first
determine whether thegovernment oftheexporting country hasinplace andapplies asystem
orprocedure toconfirm which inputs areconsumed intheproduction oftheexported product
andinwhat amounts. Where suchasystem orprocedure isdetermined tobeapplied, the
Commissionmustnormallythenexaminethesystemorproceduretoseewhetheritisreasonable,
effective forthepurpose intended, andbased ongenerally accepted commercial practices in
thecountry ofexport. TheCommission maydeem itnecessary tocarry out,inaccordance
withArticle 17(2),certain practical testsinorder toverify information ortosatisfy itselfthat
thesystem orprocedure isbeing effectively applied.
5. Where thereisnosuchsystem orprocedure, where itisnotreasonable, orwhere itisinstituted
andconsidered reasonable butisfound nottobeapplied ornottobeapplied effectively, a
further examination bytheexporting country based ontheactual inputs involved willnormally
needtobecarried outinthecontext ofdetermining whether anexcess payment occurred.
IftheCommission deems itnecessary, afurther examination maybecarried outinaccordance
withparagraph 4.
1Inputs consumed intheproduction processes areinputs physically incorporated, energy, fuels andoilused
intheproductionprocessandcatalystswhichareconsumedinthecourseoftheirusetoobtaintheexportedproduct.G/SCM/N/1/EEC/1
Page37
6. TheCommission mustnormally treatinputs asphysically incorporated ifsuchinputs areused
intheproduction process andarephysically present intheproduct exported. Aninput need
notbepresent inthefinalproduct inthesame forminwhich itentered theproduction process.
7. Indetermining theamount ofaparticular input thatisconsumed intheproduction ofthe
exported product, a"normal allowance forwaste" mustnormally betaken intoaccount, and
suchwaste mustnormally betreated asconsumed intheproduction oftheexported product.
Theterm"waste" refers tothatportion ofagiven input which doesnotserve anindependent
function intheproduction process, isnotconsumed intheproduction oftheexported product
(forreasons suchasinefficiencies) andisnotrecovered, usedorsoldbythesamemanufacturer.
8. TheCommission 'sdetermination ofwhether theclaimed allowance forwaste is'normal 'must
normally takeintoaccount theproduction process, theaverage experience oftheindustry in
thecountry ofexport, andother technical factors, asappropriate. TheCommission mustbear
inmind thatanimportant question iswhether theauthorities intheexporting country have
reasonably calculated theamount ofwaste, when suchanamount isintended tobeincluded
inthetaxordutyrebate orremission.G/SCM/N/1/EEC/1
Page38
ANNEX III
GUIDELINES INTHE DETERMINATION OFSUBSTITUTION DRAWBACK
SYSTEMS ASEXPORT SUBSIDIES
I
1. Drawback systems canallow fortherefund ordrawback ofimport charges oninputs which
areconsumed intheproduction process ofanother product andwhere theexport ofthislatter
product contains domestic inputs having thesamequality andcharacteristics asthose submitted
fortheimported inputs. Pursuant toparagraph (i)oftheIllustrative listofexport subsidies
inAnnex I,substitution drawback systems canconstitute anexport subsidy totheextent that
theyresult inanexcess drawback oftheimport charges levied initially ontheimported inputs
forwhich drawback isbeing claimed.
II
2. Inexamining anysubstitution drawback system aspartofacountervailing dutyinvestigation
pursuant tothisRegulation, theCommission mustnormally proceed onthefollowing basis:
3. Paragraph (i)oftheIllustrative liststipulates thathome market inputs maybesubstituted for
imported inputs intheproduction ofaproduct forexport provided suchinputs areequal in
quantity to,andhave thesame quality andcharacteristics as,theimported inputs being
substituted. Theexistence ofaverification system orprocedure isimportant because itenables
thegovernment oftheexporting country toensure anddemonstrate thatthequantity oninputs
forwhich drawback isclaimed doesnotexceed thequantity ofsimilar products exported, in
whatever form, andthatthere isnodrawback ofimport charges inexcess ofthose originally
levied ontheimported inputs inquestion.
4. Where itisalleged thatasubstitution drawback system conveys asubsidy, theCommission
must normally firstproceed todetermine whether thegovernment oftheexporting country
hasinplace andapplies averification system orprocedure. Where suchasystem orprocedure
isdetermined tobeapplied, theCommission shall normally thenexamine theverification
procedures toseewhether theyarereasonable, effective forthepurpose intended, andbased
ongenerally accepted commercial practices inthecountry ofexport. Totheextent thatthe
procedures aredetermined tomeet thistestandareeffectively applied, nosubsidy willbe
presumed toexist. Itmaybedeemed necessary bytheCommission tocarry out,inaccordance
withArticle 17(2),certain practical testsinorder toverify information ortosatisfy itselfthat
theverification procedures arebeing effectively applied.
5. Where there arenoverification procedures, where theyarenotreasonable, orwhere such
procedures areinstituted andconsidered reasonable butarefound nottobeactually applied
ornottobeapplied effectively, there maybeasubsidy. Insuchcases, further examination
bytheexporting country based ontheactual transactions involved would needtobecarried
outtodeterminate whether anexcess payment occurred. IftheCommission deems itnecessary,
afurther examination would becarried outinaccordance withparagraph 4.
6. Theexistence ofasubstitution drawback provision under which exporters areallowed toselect
particular import shipments onwhich drawback isclaimed should notofitself beconsidered
toconvey asubsidy.G/SCM/N/1/EEC/1
Page39
7. Anexcess drawback ofimport charges inthesense ofparagraph (i)would bedeemed toexist
where governments paidinterest onanymonies refunded under theirdrawback schemes to
theextent oftheinterest actually paidorpayable.G/SCM/N/1/EEC/1
Page40
ANNEX IV
(This Annex reproduces Annex 2totheAgreement onAgriculture. Anyterms orexpression
which arenotexplained herein orwhich arenotself-explanatory aretobeinterpreted inthecontext
ofthatAgreement)
DOMESTICSUPPORT:THEBASISOFEXEMPTIONFROMTHEREDUCTIONCOMMITMENTS
1. Domestic support measures forwhich exemption fromthereduction commitments isclaimed
shallmeetthefundamental requirement thattheyhaveno,oratmostminimal trade-distorting
effects ofeffects onproduction. Accordingly, allmeasures forwhich exemption isclaimed
shallconform tothefollowing basic criteria:
(a) thesupport inquestion shall beprovided through apublicly-funded government
programme (including government revenue foregone) notinvolving transfers from
consumers; and
(b) thesupport inquestion shallnothavetheeffect ofproviding pricesupport toproducers;
pluspolicy-specific criteria andconditions assetoutbelow.
Government service programmes
2. General services
Policies inthiscategory involve expenditures (orrevenue foregone) inrelation toprogrammes
which provide services tobenefits toagriculture ortheruralcommunity. They shallnotinvolve direct
payments toproducers orprocessors. Such programmes, which include butarenotrestricted tothe
following list,shallmeetthegeneral criteria inparagraph 1andpolicy-specific conditions where set
outbelow:
(a) Research, including general research, research inconnection withenvironmental
programmes, andresearch programmes relating toparticular products;
(b) pestanddisease control, including general andproduct-specific pestanddisease control
measures, suchasearly-warning systems, quarantine anderadication;
(c) training services, including bothgeneral andspecific training facilities;
(d) extension andadvisory services, including theprovision ofmeans tofacilitate the
transfer ofinformation andtheresults ofresearch toproducers andconsumers;
(e) inspectionservices,includinggeneralinspectionservicesandtheinspectionofparticular
products forhealth, safety, grading orstandardization purposes;
(f) marketing andpromotion services, including market information, advice andpromotion
relating toparticular products butexcluding expenditure forunspecified purposes that
could beusedbysellers toreduce theirselling priceorconfer adirect economic benefit
topurchasers; and
(g) infrastructural services, including: electricity reticulation, roads andother means of
transport,marketandportfacilities,watersupplyfacilities,damsanddrainageschemes,G/SCM/N/1/EEC/1
Page41
andinfrastructural works associated withenvironmental programmes. Inallcases the
expenditure shallbedirected totheprovision orconstruction ofcapital works only,
andshall exclude thesubsidized provision ofon-farm facilities other thanforthe
reticulation ofgenerally available public utilities. Itshallnotinclude subsidies toinputs
oroperating costs, orpreferential usercharges.
3. Public stockholding forfoodsecurity purposes1
Expenditures (orrevenue foregone) inrelation totheaccumulation andholding ofstocks of
products which form anintegral partofafoodsecurity programme identified innational legislation.
Thismayinclude government aidtoprivate storage ofproducts aspartofsuchaprogramme.
Thevolume andaccumulation ofsuchstocks shallcorrespond topredetermined targets related
solely tofoodsecurity. Theprocess ofstock accumulation anddisposal shallbefinancially transparent.
Food purchases bythegovernment shallbemade atcurrent market prices andsalesfromfoodsecurity
stocks shallbemade atnolessthanthecurrent domestic market price fortheproduct andquality in
question.
4. Domestic foodaid2
Expenditures (orrevenue foregone) inrelation totheprovision ofdomestic foodaidtosections
ofthepopulation inneed.
Eligibility toreceive thefoodaidshallbesubject toclearly-defined criteria related tonutritional
objectives. Suchaidshallbeintheformofdirect provision offoodtothose concerned ortheprovision
ofmeans toallow eligible recipients tobuyfoodeither atmarket oratsubsidized prices. Foodpurchases
bythegovernment shallbemade atcurrent market prices andthefinancing andadministration ofthe
aidshallbetransparent.
5. Direct payments toproducers
Support provided through direct payments (orrevenue foregone, including payments inkind)
toproducers forwhich exemption fromreduction commitments isclaimed shallmeetthebasic criteria
setoutinparagraph 1,plusspecific criteria applying toindividual types ofdirect payment assetout
inparagraphs 6through 13.Where exemption fromreduction isclaimed foranyexisting ornewtype
ofdirect payment other thanthose specified inparagraphs 6through 13,itshallconform tocriteria
(b)through (e)inparagraph 6,inaddition tothegeneral criteria setoutinparagraph 1.
1Forthepurpose ofparagraph 3ofthisAnnex, governmental stockholding programmes forfoodsecurity
purposes indeveloping countries whose operation istransparent andconducted inaccordance withofficially
published objective criteria orguidelines shall beconsidered tobeinconformity withtheprovisions ofthis
paragraph, including programmes under which stocks offoodstuffs forfoodsecurity purposes areacquired and
releasedatadministeredprices,providedthatthedifferencebetweentheacquisitionpriceandtheexternalreference
price isaccounted forintheAMS.
2Forthepurposes ofparagraphs 3and4ofthisAnnex, theprovision offoodstuffs atsubsidized prices with
theobjective ofmeeting foodrequirements ofurban andrural poor indeveloping countries onaregular basis
atreasonable prices shall beconsidered tobeinconformity withtheprovisions ofthisparagraph.G/SCM/N/1/EEC/1
Page42
6. Decoupled income support
(a) Eligibility forsuchpayments shallbedetermined byclearly-defined criteria suchas
income, status asaproducer orlandowner, factor useorproduction levelinadefined
andfixed baseperiod.
(b) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,
thetypeorvolume ofproduction (including livestock units) undertaken bytheproducer
inanyyearafterthebaseperiod.
(c) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,
theprices, domestic orinternational, applying toanyproduction undertaken inany
yearafterthebaseperiod.
(d) Theamount ofsuchpayments inanygiven years shallnotberelated to,orbased on,
thefactors ofproduction employed inanyyearafterthebaseperiod.
(e) Noproduction shallberequired inorder toreceive suchpayments.
7. Government financial participation inincome insurance andincome safety-net programmes
(a) Eligibility forsuchpayments shallbedetermined byanincome loss,taking intoaccount
onlyincome derived from agriculture, which exceeds 30percentofaverage gross
income ortheequivalent innetincome terms (excluding anypayments fromthesame
orsimilar schemes) inthepreceding three-year period orathree-year average based
onthepreceding five-year period, excluding thehighest andthelowest entry. Any
producer meeting thiscondition shallbeeligible toreceive thepayments.
(b) Theamount ofsuchpayments shall compensate forlessthan70percentofthe
producer 'sincome lossintheyeartheproducer becomes eligible toreceive this
assistance.
(c) Theamount ofanysuchpayments shallrelate solely toincome; itshallnotrelate to
thetypeorvolume ofproduction (including livestock units) undertaken bytheproducer;
ortotheprices, domestic orinternational, applying tosuchproduction; ortothefactors
ofproduction employed.
(d) Where aproducer receives inthesame yearpayments pursuant tothisparagraph and
pursuant toparagraph 8(relief fromnatural disasters), thetotalofsuchpayments shall
belessthan100percentoftheproducer 'stotalloss.
8. Payments (made either directly orbywayofagovernment financial participation incrop
insurance schemes) forrelief from natural disasters
(a) Eligibility forsuch payments shall arise onlyfollowing aformal recognition by
government authorities thatanatural orlikedisaster (including disease outbreaks, pest
infestations, nuclear accidents, andwarontheterritory oftheMember concerned)
hasoccurred orisoccurring; andshallbedetermined byaproduction losswhich
exceeds 30percentoftheaverage ofproduction inthepreceding three-year period
orathree-year average based onthepreceding five-year period, excluding thehighest
andthelowest entry.G/SCM/N/1/EEC/1
Page43
(b) Payments made following adisaster shallbeapplied onlyinrespect oflosses ofincome,
livestock (including payments inconnection withtheveterinary treatment ofanimals),
landorother production factors duetothenatural disaster inquestion.
(c) Payments shallcompensate fornotmore thanthetotalcostofreplacing suchlosses
andshallnotrequire orspecify thetypeorquantity offuture production.
(d) Payments made during adisaster shall notexceed thelevel required toprevent or
alleviate further lossasdefined incriterion (b).
(e) Where aproducer receives inthesame yearpayments pursuant tothisparagraph and
pursuant toparagraph 7(income insurance andincome safety-net programmes), the
totalofsuchpayments shallbelessthan100percentoftheproducer 'stotalloss.
9. Structural adjustment assistance provided through producer retirement programmes
(a) Eligibility forsuchpayments shallbedetermined byreference toclearly defined criteria
inprogrammes designed tofacilitate theretirement ofpersons engaged inmarketable
agricultural production, ortheirmovement tonon-agricultural activities.
(b) Payments shallbeconditional uponthetotalandpermanent retirement oftherecipients
from marketable agricultural production.
10. Structural adjustment assistance provided through resource retirement programmes
(a) Eligibility forsuchpayments shallbedetermined byreference toclearly defined criteria
inprogrammes designed toremove landorother resources, including livestock, from
marketable agricultural production.
(b) Payments shallbeconditional upontheretirement oflandfrommarketable agricultural
production foraminimum ofthree years, andinthecaseoflivestock onitsslaughter
ordefinitive permanent disposal.
(c) Payments shallnotrequire orspecify anyalternative useforsuchlandorotherresources
which involves theproduction ofmarketable agricultural products.
(d) Payments shallnotberelated toeither typeorquantity ofproduction ortotheprices,
domestic orinternational, applying toproduction undertaken using thelandorother
resources remaining inproduction.
11. Structural adjustment assistance provided through investment aids
(a) Eligibility forsuchpayments shallbedetermined byreference toclearly-defined criteria
ingovernment programmes designed toassist thefinancial orphysical restructuring
ofaproducer 'soperations inresponse toobjectively demonstrated structural
disadvantages. Eligibility forsuchprogrammes mayalsobebased onaclearly-defined
government programme forthereprivatization ofagricultural land.
(b) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on
thetypeorvolume ofproduction (including livestock units) undertaken bytheproducer
inanyyearafterthebaseperiod other thanasprovided forunder criterion (e).G/SCM/N/1/EEC/1
Page44
(c) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,
theprices, domestic orinternational, applying toanyproduction undertaken inann
yearafterthebaseperiod.
(d) Thepayments shallbegiven onlyfortheperiod oftimenecessary fortherealization
oftheinvestment inrespect ofwhich theyareprovided.
(e) Thepayments shallnotmandate orinanywaydesignate theagricultural products to
beproduced bytherecipients except torequire themnottoproduce aparticular product.
(f) Thepayments shallbelimited totheamount required tocompensate forthestructural
disadvantage.
12. Payments under environmental programmes
(a) Eligibilityforsuchpaymentsshallbedeterminedaspartofaclearly-definedgovernment
environmentalorconservationprogrammeandbedependentonthefulfilmentofspecific
conditionsunderthegovernmentprogramme,includingconditionsrelatedtoproduction
methods orinputs.
(b) Theamount ofpayment shallbelimited totheextra costs orlossofincome involved
incomplying withthegovernment programme.
13. Payments under regional assistance programmes
(a) Eligibility forsuchpayments shallbelimited toproducers indisadvantaged regions.
Each suchregion must beaclearly designated contiguous geographical areawitha
definable economic andadministrative identity, considered asdisadvantaged onthe
basis ofneutral andobjective criteria clearly spelt outinalaworregulation and
indicating thattheregion 'sdifficulties ariseoutofmore thantemporary circumstances.
(b) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,
thetypeorvolume ofproduction (including livestock units) undertaken bytheproducer
inanyyearafterthebaseperiod other thantoreduce thatproduction.
(c) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,
theprices, domestic orinternational, applying toanyproduction undertaken inany
yearafterthebaseperiod.
(d) Payments shallbeavailable onlytoproducers ineligible regions, butgenerally available
toallproducers within suchregions.
(e) Where related toproduction factors, payments shallbemade atadigressive rateabove
athreshold levelofthefactor concerned.
(f) Thepayments shall belimited totheextra costs oflossofincome involved in
undertaking agricultural production intheprescribed area.