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3.7: AGREEMENT ON SUBSIDIES & COUNTERVAILING

MEASURES

1. Subsidy shall be deemed to exist if there is a financial contribution by a

government or any public body within the territory of a Member, i.e. where agovernment practice involves a direct transfer of funds or a potential direct

transfer of funds or liabilities.

Ans. T pg. 115 pt. 1.1

2. To determine the specificity of a subsidy, one need to see whether the granting

authority had established any objective criteria/ conditions governing the

eligibility for and the amount of a subsidy.Ans. T pg. 115 pt. 2.1 (b)

3. Subsidy which is limited to certain enterprises located within a designatedgeographical region within the jurisdiction of the granting authority shall be

treated as specific.Ans. T pg. 115 pt. 2.2

4. Whenever a member finds out that a prohibited subsidy is being granted or 

maintained by another member, such member does not have a right to request

consultation with other member concerning the nature of subsidy.Ans. F pg. 116 pt. 4.1

5. Members are allowed to cause injury to the domestic industry of another member through the use of subsidy.

Ans. F pg. 117 Article V

6. Serious prejudice arises in cases where the effect of the subsidy is to displace or 

impede the imports of a like product of another member into the market of the

subsidizing Member.

Ans. T pg. 117 pt. 6.3 (a)

7. The displacement or impeding of exports shall include any case in which it has

 been demonstrated that there has been a change in relative shares of the market tothe advantage of the non-subsidized like product.

Ans. F pg. 117 pt. 6.4

8. Displacement or impediment resulting in serious prejudice also arise in caseswhere natural disasters, strikes, transport disruptions or other force had

substantially affected the production, qualities, quantities or prices of the product

available for export from the complaining member.Ans. F pg. 118 pt. 6.7 (c)

9. A subsidy is considered to be non-actionable if the subsidy is granted in order to provide assistance for research activities conducted by firms or by higher 

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education or research establishments on a contract basis with firms, provided that

such assistance covers not more than 75% of the costs of individual research or 

50% of the cost of pre-competitive development activity.Ans. T pg. 119 pt. 8.2

10. Subsidy granted to regulate assistance to promote adaptation of existing facilitiesto new environmental requirements imposed by law and/or regulations which

result in greater constraints and financial burden on firms are treated as non-

actionable.Ans. T pg. 119 pt. 8.2 (c)

11. In order to terminate the investigation against a subsidy, the amount of the

subsidy should be de minimis, i.e., more than 1% ad-valorem.Ans. F pg. 121 pt. 11.9

12. The Member which intends to initiate any investigation must not be given access

to non-confidential evidence, including the non-confidential summary of confidential data being used for initiating or conducting the investigation.

Ans. F pg. 123 pt. 13.4

13. While calculating the amount of a subsidy in terms of the benefit to the recipient,

the provision of goods or services or purchase of goods by a government shall not be considered as conferring a benefit unless the provision is made for less than

adequate remuneration, or the purchase is made for more than adequate

remuneration.

Ans. T pg. 124 Article 14 (d) 

14. In order to determine the injury with regard to the volume of the subsidized

import, the investigating authorities shall consider whether there has been asignificant decrease in subsidized imports, either in absolute terms or relative to

 production or consumption in the importing Member.

Ans. F pg. 124 pt. 15.2

15. The examination of the impact of the subsidized imports on the domestic industry

shall exclude an evaluation of all relevant economic factors and indices having a

 bearing on the state of the industry.Ans. F pg. 124 pt. 15.4

16. Where the domestic industry refers to the producers in a certain area,countervailing duties shall be levied on the products consigned for final

consumption to that area.

Ans. T pg. 125 pt. 16.3

17. Provisional measures may take the form of provisional countervailing duties

guaranteed by cash deposits or bonds equal to the amount of the provisionally

calculated amount of subsidization.

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Ans. T pg. 125 pt. 17.2

18. Proceedings shall not be suspended even upon receipt of satisfactory voluntaryundertakings under which the exporter agrees to revise its prices so that the

investigating authorities are satisfied that the injurious effect of the subsidy is

eliminated.Ans. F pr. 126 pt. 18.1 (b)

19. Price undertakings must be suggested by the authorities of the importing Member,and it should be made mandatory for an exporter to enter into such undertakings.

Ans. F pg. 126 pt. 18.5

20. The decisions concerning imposition of a countervailing duty must be made bythe authorities of the exporting member.

Ans. F pg. 126 pt. 19.2

21. No countervailing duty shall be levied on any imported product in excess of theamount of the subsidy found to exist.

Ans. T pg. 127 pt. 19.4

22. If the definitive countervailing duty is higher than the amount guaranteed by the

cash deposit or bond, the difference shall be collected and if it is less than theamount guaranteed by the cash deposit or bond, the excess amount shall not be

reimbursed.

Ans. F pg. 127 pt. 20.3

23. A countervailing duty shall remain in force only till it counteracts the

subsidization causing injury.

Ans. T pg. 127 pt. 21.1

24. If subsidies are granted to specific products or sectors, the notifications should be

organized by product or sector.Ans. T pg. 129 pt. 25.5

25. Members recognize that subsidies may play an important role in economic

development programmes of developing country members.Ans. T pt. 130 pt. 27.1

26. Export subsidies include government provision of direct subsidies to a firm or anindustry contingent upon export performance.

Ans. T pg. 133 Annex I (a)

27. Indirect tax rebate schemes does not allow for exemption, remission or deferral of 

 prior-stage cumulative indirect taxes levied on inputs that are consumed in the

 production of the exported product.

Ans. F pg. 134 Annex II (I), pt. 1

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28. In determining the amount of a particular input that is consumed in the production

of the exported product, a "normal allowance for waste" should not be taken intoaccount, and such waste should not be treated as consumed in the production of 

the exported product.

Ans. F pg. 135 Annex II (II), pt. 4

29. Where it is alleged that a substitution drawback system conveys a subsidy, the

investigating authorities should first determine if the government of the exportingmember has in place and is applying a verification system/ procedure or not.

Ans. T pg. 135 Annex III (II), pt. 2

30. Calculation of the amount of a subsidy for calculation of the total ad-valoremsubsidization shall be done in terms of the cost to the granting government.

Ans. T pg. 136 Annex IV, pt. 1

31. Subsidies granted prior to the date of entry into force of the WTO Agreement, the benefits of which are allocated to future production, shall not be included in the

overall rate of subsidization.Ans. F pg. 136 Annex IV, pt. 7

32. Non-actionable subsidies shall also be included while calculating the amount of the subsidy for the purpose of calculation of the total ad-valorem subsidization.

Ans. F pg. 136 Annex IV, pt. 8

33. Nothing in the information-gathering process shall limit the ability of the panel toseek additional information it deems essential to a proper resolution to the

dispute, and which was not adequately sought or developed during that process.

Ans. T pg. 137 Annex V, pt. 9

FILL IN THE BLANKS:

34. Developing country member are required to phase out their export subsidies

within ____________, preferably in a progressive manner.

Ans. 8-years pg. 130 pt. 27.4

35. Provisional measures shall not be applied sooner than ___________ from the date

of initiation of the investigation.

Ans. 60-days pg.125 pt. 17.3

36. Any definitive countervailing duty shall be terminated on a date not later than

 ______________ from its imposition.Ans. 5-years pg. 127 pt. 21.3

37. Committee on Subsidies & Countervailing measures may establish a Permanent

group of experts composed of ________ independent persons.

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Ans. Five pg. 129 pt. 24.3

38. Export competitiveness in a product is said to exist if a developing countryMember's exports of that product have reached a share of at least

 ________________ in world trade of that product for two consecutive calendar 

years.Ans. 3.25% pg. 131 pt. 27.6

39. A developing country Member which has reached export competitiveness in anygiven product shall phase out its export subsidies for such product(s) over a

 period of _____________.

Ans. 2-years pg. 131 pt. 27.5

40. Any countervailing duty investigation of a product originating in a developing

country Member shall be terminated when authorities concerned determine that

the overall level of subsidies granted upon the product in question does not

exceed ______________ of its value calculated on a per unit basis.Ans. 2% pg. 131 pt. 27.10 (a)

41. The information-gathering process concerning a disputed subsidy shall be

completed within ____________ of the date on which the matter has been

referred to the DSB.Ans. 60-days pg. 137 Article V, pt. 5

MULTIPLE CHOICE QUESTIONS:

42. A public notice concerning initiation of an investigation shall contain which of the

following information:

a. Name of the exporting country. b. Date of initiation of an investigation.

c. Description of the subsidy under investigation.

d. Summary of the factors supporting the allegation of injury.e. All of the above.

Ans. E pg. 128 pt. 22.2

43. A public notice concerning the imposition of provisional measures shall consist of which of the following information:

a. Name of the supplier involved.

 b. Description of the product for customs purposes.c. Amount of subsidy established & basis of its existence

d. Considerations relevant to injury determination.

e. All of the above.Ans. E pg. 128 pt. 22.4

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