Subsidies and Countervailing Measures Regulations Feb 2004

7/25/2019 Subsidies and Countervailing Measures Regulations Feb 2004

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ANNEX V

EAST AFRICAN COMMUNITY

CUSTOMS UNION

(SUBSIDIES AND COUNTERVAILING MEASURES)

REGULATIONS


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EAST AFRICAN COMMUNITY CUSTOMS UNION

(SUBSIDIES AND COUNTERVAILING MEASURES)

REGULATIONS

TABLE OF CONTENTS

PART I PRELIMINARY PROVISIONS

REGULATIONS TITLE

PART I PRELIMINARY PROVISIONS1

Citation2 Purpose of the Regulations3

Interpretation4

Application of the Regulations5 Interim Provisions6

Conditions for Applying Countervailing Measures

PART II GENERAL PROVISIONS7

Definition of Subsidy8 Specificity

PART III PROHIBITED SUBSIDIES9

Prohibition10 Remedies on Prohibited Subsidies

PART IV ACTIONABLE SUBSIDIES

11 Adverse Effects

12

Serious Prejudice13 Remedies on Actionable Subsidies

PART V NON - ACTIONABLE SUBSIDIES

14 Identification of Non-Actionable Subsidies


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Consultations on Non-Actionable Subsidies

PART VI COUNTERVAILING MEASURES

16

Application of Article 18 of the Protocol17 Initiation and Subsequent Investigations18

Evidence19 Consultations on Countervailing Measures20

Calculation of the Amount of Subsidy in Terms of theBenefits to the Recipient

21

Determination of Injury22

Definition of Domestic Industry23 Provisional Measures24

Price Undertakings25 Imposition and Collection of Countervailing Duties26 Retroactivity27 Duration and Review of Countervailing Duties and Price

Undertakings28 Public Notice and Explanation of Determinations

PART VII NOTIFICATIONS AND SURVEILLANCE

29 Notifications30 Surveillance

PART VIII DEVELOPING AND LEAST DEVELOPED

PARTNER STATES

31 Special and Differential Treatment for Developing and

Least Developed Partner States.

PART IX MISCELLANEOUS PROVISIONS32 Existing Programmes33 Consultations and Dispute Settlement


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34 Other Miscellaneous Provisions

SCHEDULES


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PART 1PRELIMINARY PROVISIONS

REGULATION 1

Citation

These Regulations may be cited as the East African Community CustomsUnion (Subsidies and Countervailing Measures) Regulations.

REGULATION 2Purpose of the Regulations

The purpose of these Regulations is to implement the provisions ofArticles 17 and 18 of the Protocol and to ensure that there is uniformityamong the Partner States in the application of subsidies andcountervailing measures and that to the extent possible the process istransparent, accountable, fair, predictable and consistent with provisionsof the Protocol.

REGULATION 3

Interpretation

In these Regulations, unless the context otherwise requires

"Committee"means the East African Community Committee on TradeRemedies;

"Council"means the Council of Ministers established under Article 9 of

the Treaty;

"countervailing duty" means a special duty levied for the purpose ofoffsetting any subsidy bestowed directly or indirectly upon themanufacture, production or export of any merchandise as provided for inparagraph 3 of Article VI of the General Agreement on Tariff and Trade,1994;


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"countervailing measures"means actions taken to counteract the effectof injurious subsidies;

"Court" means the East African Court of Justice established underArticle 9 of the Treaty;

"cumulative indirect taxes" means multi-staged taxes levied wherethere is no mechanism for subsequent crediting of the tax if the goods orservices subject to tax at one stage of production are used in a succeeding

stage of production;

"Customs Union"means the East African Community Customs Union;

"direct taxes"means taxes on wages, profits, interests, rents, royalties,and all other forms of income, and taxes on the ownership of realproperty;

"granting authority" means a Partner State, a foreign country or theiragents granting a subsidy;

"import charges" means tariffs, duties, and other fiscal charges notelsewhere enumerated in these Regulations that are levied on imports;

"indirect taxes" means sales, excise, turnover, value added, franchise,stamp, transfer, inventory and equipment taxes, border taxes and all taxesother than direct taxes and import charges;

"prior-stage indirect taxes" means taxes levied on goods or servicesused directly or indirectly in making the product;

"injury" unless otherwise specified under these Regulations, meansmaterial injury to a domestic industry, threat of material injury to adomestic industry or material retardation of the establishment of such anindustry and shall be interpreted in accordance with the provisions ofthese Regulations;


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"interested parties"includes:

(a) an exporter or foreign producer or the importer of a productsubject to investigations, or a trade or business association amajority of the members of which are producers, or exporters ofsuch product;

(b) the government of the exporting country; and

(c)

a producer of the like product in a Partner State or a trade and

business association a majority of the members which producelike products in the Partner States;

"investigating authority"means the national authority charged with theresponsibility of conducting investigations on subsidies in a Partner Stateon behalf of the Committee;

"levy"means the definitive or final legal assessment or collection of aduty or tax;

"like product"means a product which is identical, is alike in all respectsto the product under consideration, or in the absence of such product,another product which, although not alike in all respects, hascharacteristics closely resembling those of the product underconsideration;

"Protocol"means the Protocol on the Establishment of the East AfricanCommunity Customs Union;

"remission of taxes" means the waiver of duty or refrainment from

exacting of duty;

"subsidy" means a subsidy referred to in Regulation 7 of theseRegulations;

"Secretariat" means the Secretariat of the East African Communityestablished under Article 9 of the Treaty;


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"WTO Agreement" means the WTO Agreement on subsidies andcountervailing measures.

REGULATION 4

Application of the Regulations

1. These Regulations shall apply to investigations or reviews initiated underexisting national legislation of Partner States upon coming into force ofthe Protocol.

2. These Regulations shall be applied in conjunction with the existingnational legislation of each Partner State for the conduct of investigationsand reviews in each Partner State to determine the existence and effect ofsubsidies.

3. Where an investigation is initiated by a Partner State against anotherPartner State during the transitional period, the provisions of theseRegulations shall apply.

4. The provisions of paragraph 1 of Regulation 12 and the provisions ofRegulation 14 and 15 shall apply remain in force as long as they are inforce under the WTO Agreement.

5. Where an investigation is initiated by a Partner State against a foreigncountry, the provisions of the WTO Agreement shall apply.

REGULATION 5

Interim Provisions


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1. A Partner State which does not have national legislation on subsidies andcountervailing measures undertakes to enact legislation to provide for theformation of an investigating authority for the conduct of investigations toreflect the provisions of these Regulations, within such period as theCouncil may determine.

2. Where there is national legislation, the Partner States undertake toharmonise such legislation with these Regulations.

REGULATION 6Conditions for Applying Countervailing Measures

1. A countervailing measure shall be applied only under the circumstancesprovided for in Articles 17 and 18 of the Protocol.

2. A Partner State may apply countervailing measures pursuant toinvestigations initiated and conducted in accordance with the provisions ofthese Regulations.

PART IIGENERAL PROVISIONS


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REGULATION 7Definition of Subsidy

1. For purposes of these Regulations, a subsidy shall be deemed to existwhere there is a financial contribution by a government or any publicbody within the territory of a Partner State or a foreign country (referredto in this Regulation as government") and where as a result of thefinancial contribution a benefit is conferred in situations where:

(a) a government practice involves a direct transfer of funds such as

grants, loans, and equity infusion, potential direct transfers of fundsor liabilities such as loan guarantees;

(b) government revenue that is otherwise due is foregone or notcollected, such as fiscal incentives, the exemption of an exportedproduct from duties or taxes borne by a like product destined fordomestic consumption, or the remission of such duties or taxes inamounts not in excess of those which have accrued, shall not bedeemed to be a subsidy;

(c) a government provides goods or services other than generalinfrastructure or purchases goods;

(d) a government makes payments to a funding mechanism, or entrustsor directs a private body to carry out one or more of the type offunctions illustrated in sub-paragraphs (a), (b) and (c) which wouldnormally be vested in the government and the practice, in no realsense, differs from practices normally followed by governments; or

(e) there is any form of income or price support.

2. A subsidy shall also be deemed to exist where there is any form ofincome or price support and a benefit is conferred as a result.

3. A subsidy as defined in paragraph 1 of this Regulation shall be subject tothe provisions of Part III, IV or VI only where a subsidy is specific inaccordance with the provisions of Regulation 8 of these Regulations.


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REGULATION 8

Specificity

1. In order to determine whether a subsidy, as defined in paragraph 1 ofRegulation 7, is specific to an enterprise or industry or group ofenterprises or industries (referred to in these Regulations as "certainenterprises") within the jurisdiction of the granting authority, thefollowing principles shall apply:

(a) where the granting authority, or the legislation pursuant to whichthe granting authority operates, explicitly limits access to a subsidyto certain enterprises, such subsidy shall be specific;

(b) where the granting authority, or the legislation pursuant to whichthe granting authority operates, establishes objective criteria orconditions governing the eligibility for, and the amount of asubsidy, specificity shall not exist, provided that the eligibility isautomatic and that such criteria and conditions are strictly adhered

to. The criteria or conditions must be clearly spelled out in laws,regulations, or other official documents, so as to be capable ofverification.

(c ) In sub-paragraph (b), "objective criteria or conditions" means,criteria or conditions which are neutral, which do not favour certainenterprises over others, and which are economic in nature andhorizontal in application, such as the number of employees or sizeof an enterprise; and

(d) where, notwithstanding any appearance of non-specificity resultingfrom the application of the principles laid down in sub-paragraphs(a) and (b), there are reasons to believe that the subsidy may in factbe specific, the following factors may be considered:

(i)

use of a subsidy programme by a limited number of certainenterprises;


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(ii)

predominant use by certain enterprises, the granting ofdisproportionately large amounts of subsidy to certainenterprises; and

(iii) the manner in which discretion has been exercised by thegranting authority in the decision to grant a subsidy. Inparticular, information on the frequency with whichapplications for a subsidy are refused or approved and thereasons for such decisions shall be considered; and

(e) In applying sub-paragraph (d) or account shall be taken of theextent of diversification of economic activities within thejurisdiction of the granting authority, as well as of the length oftime during which the subsidy programme has been in operation.

2. A subsidy that is limited to certain enterprises located within a designatedgeographical region within the jurisdiction of the granting authority shallbe specific. The setting or change of generally applicable tax rates set bygovernment shall not be deemed to be a specific subsidy for the purposes

of these Regulations.

3. Any subsidy falling under the provisions of Regulation 9 shall be deemedto be specific.

4. Any determination of specificity under the provisions of this Regulationshall be clearly substantiated on the basis of positive evidence.

PART III

PROHIBITED SUBSIDIES

REGULATION 9

Prohibition


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1. Except as provided in the WTO Agreement on Agriculture, the followingsubsidies, within the meaning of Regulation 7, shall be prohibited:

(a) subsidies contingent, in law or in fact, whether solely or as one ofseveral other conditions, upon export performance, including thoseillustrated in the First Schedule to these Regulations, provided thatthe standard shall be met when the facts demonstrate that thegranting of a subsidy is tied to actual or anticipated exportation orexport earnings. The mere fact that a subsidy is granted toenterprises which export shall not for that reason alone be

considered to be an export subsidy within the meaning of thisprovision; and

(b) subsidies contingent, in law or fact whether solely or as one ofseveral other conditions, upon the use of domestic over importedgoods.

2. Except as specified on Part VIII and the Seventh Schedule of theseRegulations, a Partner State shall not grant or maintain subsidies referredto in paragraph 1(a) of this Regulation.

REGULATION 10

Remedies on Prohibited Subsidies

1. Whenever a Partner State has reason to believe that a prohibited subsidyis being granted or maintained by another Partner State or foreigncountry, the Partner State may request for consultations with the otherPartner States or foreign country. All such requests for consultations shallbe notified to the Committee.

2. A request for consultations under paragraph 1 shall include a statement ofavailable evidence with regard to the existence and nature of the subsidyin question.

3. Upon request for consultations under paragraph 1, the Partner State orforeign country believed to be granting or maintaining the subsidy in


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question shall enter into consultations as quickly as possible to clarify thefacts of the situation and to arrive at a mutually agreed solution.

4. Where no mutually agreed solution is reached within thirty days of therequest for consultations, or such other time as may be mutually agreedupon, any Partner State which is aparty to the consultations may refer thematter to the Committee for consideration.

5. The Committee shall immediately review the evidence with regard to theexistence and nature of the measure in question and shall provide an

opportunity for the Partner State applying or maintaining the measure todemonstrate that the measure in question is not a prohibited subsidy.

6. The Committee shall submit its final report to the parties to the disputeand circulate it to all Partner States within ninety days of the date ofrequest by the Partner State.

7. Where the measure in question is found to be a prohibited subsidy, theCommittee shall recommend that the subsidising Partner State or foreigncountry withdraw the subsidy without delay. In this regard, the

Committee shall specify in its recommendation the time-period withinwhich the measure must be withdrawn.

8. Within thirtydays of the issuance of the Committees report to all PartnerStates, the report shall be adopted by the Council unless one of the partiesto the dispute formally notifies the Council of its intention to appeal to itfor review of the decisions of Committee or where the Council decides byconsensus not to adopt the report.

9. (1) Where a Committees report is appealed against, the Council shall

issue its decision within thirty days from the date when a party to adispute formally notifies its intention to appeal. Where the Councilconsiders that it cannot provide its report within thirty days, it shallinform the parties in writing of the reasons for the delay togetherwith an estimate of the period within which it will submit its report.In no case shall the proceedings exceed forty-five days.


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(2) Where the Council reaches a decision by consensus, it shall issueits decision in the form of a directive.

(3) Where the Council fails to reach a decision by consensus, theaggrieved party may refer the matter to Court within twenty daysof notification of the decision by the Council.

10. Where no reference is made within twenty days or where the parties donot implement the directive within the period specified by the Council,the Council shall grant authorisation to the complaining Partner State to

take appropriate counter measures.

PART IV

ACTIONABLE SUBSIDIES

REGULATION 11

Adverse Effects

1. No Partner State or a foreign country shall cause, through the use of anysubsidy referred to in Regulation 9, adverse effects to the interests ofPartner States.

2. Adverse effects shall include:


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(a)

injury to the domestic industry of a Partner State;

(b)

nullification or impairment of benefits accruing directly orindirectly to other Partner States under the GeneralAgreement on Tariffs and Trade, 1994 in particular thebenefits of concessions bound under Article II of thatAgreement. The term "nullification or impairment" is used inthese Regulations in the same sense as it is used in therelevant provisions of the General Agreement on Tariff andTrade, 1994, and the existence of such nullification orimpairment shall be established in accordance with thepractice of application of the provisions of the GeneralAgreement on Tariffs and Trade, 1994; and

(c)

serious prejudice to the interests of another Partner State.

3. The term "serious prejudice to the interests of another Partner State" isused in these Regulations in the same sense as it is used in the Fifth

Schedule to these Regulations, and includes threat of serious prejudice.

4 This Regulation does not apply to subsidies maintained on agriculturalproducts as provided in Article 13 of the WTO Agreement onAgriculture.

REGULATION 12

Serious Prejudice

1. "Serious prejudice" in the context of paragraph 2 (c) of Regulation 11shall be deemed to exist in the case of:

(a) the total ad valorem subsidisation of a product exceedingfive per cent which is calculated in accordance with theprovisions of the Fourth Schedule of these Regulations;

(b) subsidies to cover operating losses sustained by an industry;


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(c) subsidies to cover operating losses sustained by anenterprise, other than one-time measures which arenon-recurrent and cannot be repeated for that enterprise andwhich are given merely to provide time for the developmentof long-term solutions and to avoid acute social problems;and

(d) direct cancellation of debts including the cancellation ofgovernment-held debts and grants to cover debt repayment.

2. Notwithstanding the provisions of paragraph 1, serious prejudice shall notbe found where the subsidising Partner State or a foreign countrydemonstrates that the subsidy in question has not resulted in any of theeffects provided in paragraph 3.

3 "Serious prejudice" in the context of paragraph 2(c) of Regulation 11 mayarise in any case where one or several of the following apply:

(a) the effect of the subsidy is to displace or impede the imports

of a like product of a Partner State or foreign country intothe market of the subsidising Partner State;

(b) the effect of the subsidy is to displace or impede the exportsof a like product of a Partner State from a market of aforeign country;

(c) the effect of the subsidy is a significant price undercutting bythe subsidized product as compared with the price of a likeproduct of a Partner State in the same market or significant

price suppression, price depression or lost sales in the samemarket; or

(d) the effect of the subsidy is an increase in the world marketshare of the subsidising country in a particular subsidisedprimary product or commodity unless other multilaterallyagreed specific rules apply to the trade in the product or


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commodity in question as compared to the average share ithad during the previous period of three years and thisincrease follows a consistent trend over a period whensubsidies have been granted.

4. (1) For purposes of paragraph 3(b) of this Regulation the displacementor impeding of exports shall include any case in which, subjectto the provisions of paragraph 7 of this Regulation, it has beendemonstrated that there has been a change in relative shares of themarket to the disadvantage of the non-subsidised like product (over

an appropriately representative period sufficient to demonstrateclear trends in the development of the market for the productconcerned, which, in normal circumstances, shall be at least oneyear.

(2) For purposes of sub-paragraph (1), "change in relative shares of themarket" shall include any of the following situations:

(a) where there is an increase in the market share of thesubsidised product;

(b)

the market share of the subsidized product remains constantin circumstances in which, in the absence of the subsidy, itwould have declined; or

(c ) where the market share of the subsidised product declines,but at a slower rate than would have been the case in theabsence of the subsidy.

5. For purposes of paragraph 3(c) of this Regulation , price undercutting

shall include any case in which a price undercutting has beendemonstrated through a comparison of prices of the subsidised productwith prices of a non-subsidised like product supplied to the same market.The comparison shall be made at the same level of trade and atcomparable times and due account shall be taken of any other factoraffecting price comparability. However, where such a direct comparison


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is not possible, the existence of price undercutting may be demonstratedon the basis of export unit values.

6. Each Partner State in whose market serious prejudice is alleged to havearisen shall, subject to the provisions of paragraph 3 of the FifthSchedule, make available to the parties to a dispute arising underRegulation 13 and to the Committee all relevant information that can beobtained as to the changes in market shares of the parties to the disputeand prices of the products involved.

7. Displacement or impediment resulting in serious prejudice shall not ariseunder paragraph 3 of this Regulation where any of the followingcircumstances exist during the relevant period:

(a) prohibition or restriction on exports of the like product fromthe complaining Partner States on imports from thecomplaining Partner States into the foreign marketconcerned;

(b) decision by an importing government operating a monopoly

of trade or state trading in the product concerned, to shift fornon-commercial reasons, imports from the complainingPartner State to another country or countries;

(c) natural disasters, strikes, transport disruptions or other forcemajeure substantially affecting production, qualities,quantities or prices of the product available for export fromthe complaining Partner State;

(d) existence of arrangements limiting exports from the

complaining Partner State;

(e) voluntary decrease in the availability for export of theproduct concerned from the complaining Partner Stateincluding, inter alia, a situation where firms in thecomplaining Partner State have been autonomouslyreallocating exports of this product to new markets; and


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(f) failure to conform to standards and other regulatoryrequirements in the importing country.

8. In the absence of circumstances referred to in paragraph 7 of thisRegulation, the existence of serious prejudice shall be determined on thebasis of the information submitted to or obtained by the Committee,including information submitted in accordance with the provisions of theFifth Schedule to these Regulations.

9. This Regulation does not apply to subsidies maintained on agriculturalproducts as provided in Article 13 of the WTO Agreement onAgriculture.

REGULATION 13

Remedies on Actionable Subsidies

1. Except as provided in Article 13 of the WTO Agreement on Agriculture,whenever a Partner State has reason to believe that any subsidy referredto in Regulation 7, granted or maintained by another Partner State orforeign country, results in injury to its domestic industry, nullification orimpairment or serious prejudice, the Partner State may request forconsultations with the other Partner States or foreign country.

2. A request for consultations under paragraph 1 shall include a statement ofavailable evidence with regard to:

(a) the existence and nature of the subsidy in question, and

(b) the injury caused to the domestic industry, or the nullification orimpairment, or serious prejudice caused to the interests of thePartner State requesting consultations. In this sub-paragraph theavailable evidence of serious prejudice may be limited to the


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available evidence on whether the conditions of paragraph 1 ofRegulation 12 have been met.

3 Upon request for consultations under paragraph 1 of this Regulation, thePartner State or foreign country believed to be granting or maintainingthe subsidy practice in question shall enter into such consultations withinfourteen days. The purpose of the consultations shall be to clarify thefacts of the situation and to arrive at a mutually agreed solution. All suchrequests for consultation shall be notified to the Committee.

4. Where consultations do not result in a mutually agreed solution withinsixty days, or any other period agreed upon by the parties, any party tosuch consultations may refer the matter to the Committee forconsideration.

5. Where a matter is referred to the Committee for consideration, theCommittee may immediately review the evidence with regard to theissues in question and shall provide an opportunity for the Partner Stateapplying or maintaining the measure to demonstrate that the measure inquestion does not cause injury to the domestic industry, or the

nullification or impairment or serious prejudice to the interests of thePartner State requesting consultations. The Committee shall submit itsfinal report to the parties to the dispute and the report shall be circulatedto all Partner States within 120 days of the request.

6. Within thirty days of the issuance of the Committees report to all PartnerStates, the report shall be adopted by the Council unless one of the partiesto the dispute formally notifies the Council of its intention to appeal to itfor review of the decision of the Committee or the Council decides byconsensus not to adopt the report.

7. (1) Where the Committees report is appealed against, the Councilshall issue its decision within sixty days from the date a party tothe dispute formally notifies its intention to appeal. Where theCouncil considers that it cannot provide its report within sixtydays, it shall inform the parties in writing of the reasons for thedelay together with an estimate of the period within which it shall


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submit its report. In no case shall the proceedings exceed ninetydays.

(2) Where the Council makes a decision by consensus, it shall issue itsdecisions in form of a directive.

(3) Where the Council fails to reach a decision by consensus, the partymay refer the matter to Court within twentydays.

8. Where no reference is made to Court within twenty days or where the

parties to a dispute do not implement the directive within the periodspecified by the Council, the Council shall grant authorisation to thecomplaining Partner State to take appropriate counter measurescommensurate with the degree and nature of the adverse effectsdetermined to exist.


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PART V

NON-ACTIONABLE SUBSIDIES

REGULATION 14

Identification of Non-Actionable

Subsidies

1. The following subsidies shall be considered as non-actionable:

(a) subsidies which are not specific within the meaning ofRegulation 8; and

(b) subsidies which are specific within the meaning ofRegulation 8 but which meet all of the conditions providedfor in paragraph 2 of this Regulation.

2. Notwithstanding the provisions of Parts III and VI of these Regulations,the following subsidies shall be non-actionable:

(a) assistance for research activities conducted by firms or by highereducation or research establishments on a contract basis with firms,other than fundamental research activities which are anenlargement of general scientific and technical knowledge not


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linked to industrial or commercial objectives if the assistancecovers not more than seventy five per centum of the costs ofindustrial research or fifty per centum of the costs ofpre-competitive development activity, provided that thesepercentages may be varied by the Council from time to time; andthat the assistance referred to in this paragraph is limitedexclusively to:

(i) costs of personnel such as researchers, technicians andother supporting staff employed exclusively in the

research activity;

(ii) costs of instruments, equipment, land and buildingsused exclusively and permanently, except whendisposed of on a commercial basis, for the researchactivity;

(iii) costs of consultancy and equivalent services usedexclusively for the research activity, includingbought-in research, technical knowledge and patents;

(iv) additional overhead costs incurred directly as a result

of the research activity; and

(v) other running costs such as costs of materials, suppliesand the like, incurred directly as a result of theresearch activity;

(b) assistance to disadvantaged regions within the territory of a PartnerState given pursuant to a general framework of regional

development and which is non-specific within the meaning ofRegulation 8 within eligible regions provided that:

(i) each disadvantaged region must be a clearlydesignated contiguous geographical area with adefinable economic and administrative identity;


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(ii) the region is considered as disadvantaged on the basisof neutral and objective criteria indicating that theregion's difficulties arise out of more than temporarycircumstances and that such criteria must be clearlyspelled out in law, regulation or other officialdocument, so as to be capable of verification; and

(iii) the criteria shall include a measurement of economicdevelopment which shall be based on at least one ofthe following factors:

(a) income per capita, household income per capita,or gross domestic product per capita, whichmust not be above eighty five per centum of theaverage for the territory concerned; and

(b) unemployment rate, which must be at least onehundred and ten per centum of the average forthe territory concerned;

as measured over a three-year period; suchmeasurement, however, may be a composite one andmay include other factors; and

(c) assistance to promote adaptation of existing facilities to newenvironmental requirements imposed by law which result in greaterconstraints and financial burden on firms, provided that theassistance:

(i) is a one-time non-recurring measure;

(ii) is limited to twenty per centum of the cost ofadaptation;

(iii) does not cover the cost of replacing and operating theassisted investment, which must be fully borne byfirms;


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(iv) is directly linked to and proportionate to a firm'splanned reduction of nuisances and pollution, anddoes not cover any manufacturing cost savings whichmay be achieved; and

(iv)

is available to all firms which can adopt the newequipment and production processes.

3 A subsidy programme for which the provisions of paragraph 2 of this

Regulation are invoked shall be notified in advance of its implementationto the Committee in accordance with the provisions of Part VII. Anysuch notification shall be sufficiently precise to enable other PartnerStates to evaluate the consistency of the programme with the conditionsand criteria provided for in the relevant provisions of this Regulation.The Partner States shall also provide the Committee with yearly updatesof any notifications, in particular by supplying information on globalexpenditure for each programme, and on any modification of theprogramme. Other Partner States shall have the right to requestinformation about individual cases of subsidization under a notified

programme.

4. Upon the request of a Partner State, the Committee shall review anotification made pursuant to paragraph 3 of this Regulation and, wherenecessary, may require additional information from the subsidizingPartner State or foreign country concerning the notified programme underreview. The procedure provided for in this paragraph shall be completedat the latest at the first regular meeting of the Committee following thenotification of a subsidy programme, provided that at least two monthsshall elapse between the notification and the regular meeting of the

Committee. The review procedure described in this paragraph shall alsoapply, upon request, to substantial modifications of a programme notifiedin the yearly updates referred to in paragraph 3 of this Regulation.

5. For purposes of this Regulation:


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(a) the allowable levels of non-actionable assistance shall beestablished by reference to the total eligible costs incurred over theduration of an individual project;

(b) in the case of programmes which span industrial research and pre-competitive development activities the allowable level of non-actionable assistance shall not exceed the simple average of theallowable levels of non-actionable assistance applicable toindustrial research and pre-competitive development activities,calculated on the basis of all eligible costs as set out in paragraph 2

(a) of this Regulation.

6. In this Regulation:

"existing facilities"means facilities which have been in operation for atleast two years at the time new environmental requirements are imposed;

"industrial research" means planned research or critical investigationsaimed at the discovery of new knowledge, with the objective that such

knowledge may be useful in developing new products, processes orservices, or in bringing about a significant improvement to existingproducts, processes or services;

"general framework of regional development"means regional subsidyprogrammes which are part of an internally consistent and generallyapplicable regional development policy and regional developmentsubsidies which are not granted in isolated geographical points having no,or virtually no, influence on the development of a region;

"neutral and objective criteria"means the criteria which do not favourcertain regions beyond what is appropriate for the elimination or reductionof regional disparities within the framework of the regional developmentpolicy. In this regard, regional subsidy programmes shall include ceilingson the amount of assistance, which can be granted to each subsidizedproject. The ceilings shall be differentiated according to the differentlevels of development of assisted regions and expressed in terms of


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investment costs or cost of job creation. Within the ceilings, thedistribution of assistance shall be sufficiently broad and even to avoid thepredominant use of a subsidy by, or the granting of disproportionatelylarge amounts of subsidy to, certain enterprises as provided for inRegulation 8;

"pre-competitive development activity" means the translation ofindustrial research findings into a plan, blueprint or design for new,modified or improved products, processes or services whether intended forsale or use, including the creation of a first prototype which would not be

capable of commercial use. Pre-competitive development activity mayfurther include the conceptual formulation and design of products,processes or services alternatives and initial demonstration or pilotprojects, provided that these projects cannot be converted or used forindustrial application or commercial exploitation and does not includeroutine or periodic alterations to existing products, production lines,manufacturing processes, services, and other on-going operations eventhough those alterations may represent improvements.

.

REGULATION 15Consultations on Non-Actionable Subsidies

1. Where, in the course of implementation of a programme referred to inparagraph 2 of Regulation 14, notwithstanding the fact that theprogramme is consistent with the criteria laid down in that paragraph, aPartner State has reasons to believe that the programme has resulted inserious adverse effects to the domestic industry of that Partner State, suchas to cause damage which would be difficult to repair, the Partner Statemay request consultations with the Partner State or foreign country

granting or maintaining the subsidy.

2. Upon request for consultations under paragraph 1 of this Regulation, thePartner States or foreign country granting or maintaining the subsidyprogramme in question shall enter into such consultations within fourteendays. The purpose of the consultations shall be to clarify the facts of thesituation and to arrive at a mutually acceptable solution.


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3. Where no mutually acceptable solution is reached in consultations underparagraph 2, within sixty days of the request for consultations, therequesting Partner State may refer the matter to the Committee.

4. (1) Where a matter is referred to the Committee for consideration,the Committee shall immediately review the facts involved and theevidence of the effects referred to in paragraph 1 of thisRegulation. Where the Committee determines that such effectsexist, it may recommend to the subsidising Partner State or foreign

country to modify this programme to remove these effects.

(2) The Committee shall present its conclusions within one hundredand twenty days from the date when the matter is referred to itunder paragraph 3 of this Regulation. In the event that therecommendation is not followed within six months, the Committeeshall authorize the requesting Partner State to take appropriatecountermeasures commensurate with the nature and degree of theeffects determined to exist.


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PART VI

COUNTERVAILING MEASURES

REGULATION 16

Application of Article 18 of the Protocol

1. The Partner States shall take all necessary steps to ensure that theimposition of a countervailing duty on any product in a Partner Stateimported into its territory or the territory of another Partner State is inaccordance with the provisions of Article 18 of the Protocol and theseRegulations.

2. Countervailing duties may only be imposed pursuant to investigationsinitiated and conducted in accordance with the provisions of theseRegulations.

REGULATION 17

Initiation and Subsequent Investigations

1. Except as provided in paragraph 7 of this Regulation, an investigation todetermine the existence, degree and effect of any alleged subsidy shall beinitiated upon a written application by or on behalf of the domesticindustry.

2. An application under paragraph 1 of this Regulation shall include

sufficient evidence of the existence of:

(a) a subsidy and, where possible, its amount;(b) injury within the meaning of these Regulations; and(c) a causal link between the subsidised imports and the alleged injury.

3. Simple assertion, unsubstantiated by relevant evidence shall not beconsidered sufficient to meet the requirements of this Regulation.


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4. An application under paragraph 1 of this Regulation shall contain suchinformation as is reasonably available to the applicant on the following:

(a) the identity of the applicant, the physical and postal addresses of theapplicantand a description of the volume and value of the domesticproduction of the like product by the applicant. Where a writtenapplication is made on behalf of the domestic industry, theapplication shall identify the industry on whose behalf theapplication is made by listing all known domestic producers of the

like product or associations of domestic producers of the likeproduct and, to the extent possible, a description of the volume andvalue of domestic production of the like product accounted for bysuch producers;

(b) a complete description of the product allegedly subsidised inquestion, the name of the country of origin or of export, the identityof each known exporter or foreign producer and a list of knownpersons importing the product in question;

(c) evidence with regard to the existence and nature of thecountervailing measure in question; and

(d) evidence that the alleged injury to a domestic industry is caused bysubsidised imports through the effects of the subsidies. Thisevidence shallinclude information on the evolution of the volumeof the allegedly subsidized imports, the effect of these imports onprices of the like product in the domestic market and theconsequent impact of the imports on the domestic industry, asdemonstrated by relevant factors and indices having a bearing on

the state of the domestic industry, such as those listed inparagraphs 2 and 4 of Regulation 21.

5. The investigating authority shall review the accuracy and adequacy of theevidence provided in the application to determine whether the evidence issufficient to justify the initiation of an investigation.


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6. An investigation shall not be initiated pursuant to paragraph 1 of thisRegulation unless the investigating authority has determined, on the basisof an examination of the degree of support for, or opposition to theapplication expressed by domestic producers of the like product, that theapplication has been made by or on behalf of the domestic industry. Theapplication shall be considered to have been made "by or on behalf of thedomestic industry" where it is supported by those domestic producerswhose collective output constitutes more than fifty per centum of thetotal production of the like product produced by that portion of thedomestic industry expressing either support for or opposition to the

application. No investigation shall be initiated where domestic producersexpressly supporting the application account for less than twenty five percentum of the total production of the like product produced by thedomestic industry.

7. The investigating authority shall not publish an application for theinitiation of an investigation, unless a decision has been made to initiatethe investigation.

8. Where, in special circumstances, the investigating authority concerned

decides to initiate an investigation without receiving a written applicationby or on behalf of a domestic industry for the initiation of suchinvestigation, the investigating authority shall proceed with theinvestigations only where there is sufficient evidence of the existence of asubsidy, injury and causal link, as described in paragraph 2 of thisRegulation, to justify the initiation of an investigation.

9. The evidence of both subsidy and injury shall be consideredsimultaneously:

(a)

in the decision whether or not to initiate an investigation;and

(b)

during the course of the investigation, starting on a date notlater than the earliest date on which in accordance with theprovisions of these Regulations, provisional measures maybe applied.


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10. Where products are not imported directly from the country of origin butare exported to the importing Partner State from an intermediate country,the provisions of these Regulations shall be fully applicable and thetransaction or transactions shall, for the purposes of these Regulations, beregarded as having taken place between the country of origin and theimporting Partner State.

11. (1) An application under paragraph 1 of this Regulation shall be rejectedand an investigation shall be terminated promptly as soon as the

investigating authority concerned is satisfied that there is notsufficient evidence of either subsidization or of injury to justifyproceeding with the case.

(2) There shall be immediate termination of investigations where theamount of a subsidy is de minimis, or where the volume ofsubsidized imports, actual or potential, or the injury, is negligible.

(3) For purposes of this paragraph, the amount of the subsidy shall beconsidered to be de minimis wherethe subsidy is less than one per

centum ad valorem.

12. An investigation shall not hinder the procedures of customs clearance.

13. Investigations shall, except in special circumstances, be concluded withinone year, and shall not in any case exceed eighteen months, afterinitiation.

REGULATION 18

Evidence

1. All interested parties in an investigation on subsidies and countervailingmeasures shall be given notice of the information which the investigatingauthority requires and an ample opportunity to present in writing allevidence which they consider relevant in respect of the investigation inquestion.


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2. (1) Exporters or foreign producers receiving questionnaires used ininvestigations on subsides and countervailing measures shall begiven at least thirty days to reply, after receipt of the questionnaire.Due consideration shall be given to any request for an extension ofthe thirty day period and, upon cause shown, such an extension shallbe granted whenever practicable.

(2) Subject to the requirement to protect confidential information,evidence presented in writing by one interested party shall be made

available promptly to other interested parties participating in theinvestigation.

(3)

As soon as an investigation has been initiated, the investigatingauthority shall provide the full text of the written applicationreceived under paragraph 1 of Regulation 17 to the known exportersand to the investigating authority of the exporting country and shallmake it available, upon request, to other interested parties involved.Where the number of exporters involved is particularly high, thefull text of the written application shall instead be provided only to

the investigating authority of the exporting country or to therelevant trade association.

(4) Due regard shall be had to the requirement for the protection ofconfidential information, as provided in paragraph 6 of thisRegulation.

3. All interested parties shall have full opportunity to defend their intereststhroughout investigations on subsidies and countervailing measures andthe investigating authority shall, on request, provide opportunities to all

interested parties to meet and present their views to each other taking intoaccount the need to preserve confidentiality and the convenience for theparties. There shall be no obligation on any party to attend a meeting, andfailure to do so shall not be prejudicial to that party's case. Interestedparties shall have the right, upon good cause determined by theinvestigating authority, to present other information orally.


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4. Oral information provided under paragraph 3 of this Regulation shall betaken into account by the investigating authority only in so far as it issubsequently reproduced in writing and made available to other interestedparties, as provided for in paragraph 2(1) of this Regulation.

5. The investigating authority shall whenever practicable provide timelyopportunities for all interested parties to access all information that isrelevant to the presentation of their cases, that is not confidential as definedin paragraph 6 of this Regulation, and that is used by the investigatingauthority in an investigation on subsidies and countervailing measures, and

to prepare presentations on the basis of this information.

6. Any information the disclosure of which would be of significantcompetitive advantage to a competitor or whosedisclosure would have asignificantly adverse effect upon a person supplying the information orupon a person from whom that person acquired the information, or whichis provided in confidence to an investigating authority, shall upon goodcause shown, be treated as such by the investigating authority. Theinformation shall not be disclosed without specific permission of theparty submitting it.

7. (1) The investigating authority shall require interested parties providingconfidential information to furnish non-confidential summaries ofthe information. These summaries shall be in sufficient detail topermit a reasonable understanding of the substance of theinformation submitted in confidence. In exceptional circumstances,such parties may indicate that such information is not susceptible tosummarisation. In such exceptional circumstances, a statement ofthe reasons why summarisation is not possible must be provided.

(2)

Where the investigating authority finds that a request forconfidentiality is not warranted and where the supplier of theinformation is either unwilling to make the information public or toauthorize its disclosure in generalised or summary form, theinvestigating authority may disregard such information unless it canbe demonstrated to the satisfaction of the investigating authority


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from appropriate sources that the information is correct. Requestsfor confidentiality shall not be arbitrarily rejected.

8. Except in circumstances provided for in paragraph 10 of this Regulation,the investigating authority shall during the course of an investigationsatisfy itself as to the accuracy of the information supplied by theinterested parties.

9. (1) In order to verify information provided or to obtain further details,the investigating authority may carry out investigations in the

territory of other Partner States or foreign country as required,provided prior consent of the firms concerned is obtained andrepresentatives of the government of the Partner States and foreigncountry in question, do not object to the investigations.

(2) The procedures set out in the Sixth Schedule to these Regulationsshall apply to Investigations carried out in the territory of otherPartner States or foreign country. Subject to the requirement toprotect confidential information, the investigating authority shallmake the findings of such investigations available, or shall disclose

the information pursuant to paragraph 11 of this Regulation, to thefirms to which they pertain and may make such results available tothe applicants.

10. Where an interested party refuses access to, or does not provide necessaryinformation within a reasonable period or significantly impedes theinvestigation, preliminary and final determinations, affirmative or negative,may be made on the basis of the facts available. The provisions of theSecond Schedule to these Regulations shall apply to this paragraph.

11. The investigating authority shall, before a final determination is made,inform all interested parties of the essential facts under considerationwhich form the basis for the decision whether to apply definitive measures.Such disclosure shall be made in sufficient time for the parties to defendtheir interests.


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12. The investigating authority shall provide opportunities for industrial usersof the product under investigation, and for representative consumerorganisations in cases where the product is commonly sold at the retaillevel, to provide information which is relevant to the investigationregarding subsidisation, injury and causality.

13. The investigating authority shall take due account of any difficultiesexperienced by interested parties, in particular small companies, insupplying information requested, and shall provide any assistancepracticable.

14. The procedures set out in this Regulation shall not prevent theinvestigating authority from proceeding expeditiously with regard toinitiating an investigation, reaching preliminary or final determinations,whether affirmative or negative, or from applying provisional or finalmeasures, in accordance with relevant provisions of these Regulations.

REGULATION 19

Consultations on Countervailing

Measures

1. As soon as possible after an application under Regulation 17 is accepted,and in any event before the initiation of any investigation, a Partner Stateor foreign country whose products may be subject to such investigationshall be invited for consultations to clarify on the matters referred to inparagraph 2 of Regulation 17 and to arrive at a mutually agreed solution.

2. Throughout the period of investigation, a Partner State or third countrywhose products are the subject of the investigation shall be afforded a

reasonable opportunity to continue consultations, with a view toclarifying the factual situation and to arriving at a mutually agreedsolution.

3. Without prejudice to the obligation to afford reasonable opportunity forconsultation, these provisions regarding consultations are not intended toprevent the investigating authority of a Partner State from proceeding


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expeditiously to initiating an investigation, reaching preliminary or finaldeterminations, whether affirmative or negative, or from applyingprovisional or final measures, in accordance with the provisions of theseRegulations.

4. The Partner State which intends to initiate any investigation or whichconducts an investigation shall permit, upon request, the Partner State orPartner States or foreign country whose products are subject to suchinvestigation access to non-confidential evidence, including thenon-confidential summary of confidential data being used for initiating or

conducting the investigation.

REGULATION 20

Calculation of the Amount of a Subsidy

in Terms of the Benefits to the Recipient

For purposes of this Part of the Regulations, any method used by theinvestigating authority to calculate the benefit conferred to the recipientpursuant to paragraph 1 of Regulation 7 shall be provided for in the

national legislation or implementing regulations of the Partner Stateconcerned and its application to each particular case shall be transparentand adequately explained and shall be consistent with the followingguidelines:

(a) government provision of equity capital shall not beconsidered as conferring a benefit, unless the investmentdecision can be regarded as inconsistent with the usualinvestment practice including the provision of risk capital ofprivate investors in the territory of that Partner State;

(b) a loan by a government shall not be considered as conferringa benefit, unless there is a difference between the amountthat the firm receiving the loan pays on the government loanand the amount the firm would pay on a comparablecommercial loan which the firm could actually obtain on the


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market. In this case the benefit shall be the differencebetween these two amounts;

(c) a loan guarantee by a government shall not be considered asconferring a benefit, unless there is a difference between theamount that the firm receiving the guarantee pays on a loanguaranteed by the government and the amount that the firmwould pay on a comparable commercial loan without thegovernment guarantee. In this case the benefit shall be thedifference between these two amounts adjusted for any

differences in fees; and

(d) the provision of goods or services or purchase of goods by agovernment shall not be considered as conferring a benefitunless the provision is made for less than adequateremuneration, or the purchase is made for more thanadequate remuneration. The adequacy of remuneration shallbe determined in relation to prevailing market conditions forthe goods or services in question in the country of provisionor purchase including, price, quality, availability,

marketability, transportation and other conditions ofpurchase or sale.

REGULATION 21

Determination of Injury

1. For purposes of these Regulations a determination of injury shall be basedon evidence and shall involve an objective examination of both:

(a)

the volume of the subsidised imports and the effect of thesubsidised imports on prices in the domestic market for like

products; and

(b) the consequent impact of the subsidised imports on domesticproducers of like products.

2. With regard to the volume of the subsidised imports, the investigatingauthority shall consider whether there has been a significant increase in


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subsidised imports, either in absolute terms or relative to production orconsumption in the importing Partner State. With regard to the effect ofthe subsidised imports on prices, the investigating authority shall considerwhether there has been a significant price undercutting by the subsidisedimports as compared with the price of a like product of the importingPartner State, or whether the effect of such imports is otherwise todepress prices to a significant degree or prevent price increases, whichwould have occurred, to a significant degree.

3. No individual or several of these factors may necessarily give decisive

guidance on the determination of injury but the totality of the factorsconsidered must lead to the conclusion that there has been a significantincrease in subsidised imports or price undercutting by the subsidisedimports.

4. Where imports of a product from more than one country aresimultaneously subject to countervailing duty investigations, theinvestigating authority may cumulatively assess the effects of such importsonly if they determine that:

(a)

the amount of subsidisation established in relation to theimports from each country is more than de minimisas definedin paragraph 11 of Regulation 17 and the volume of importsfrom each country is not negligible; and

(b)

a cumulative assessment of the effects of the imports isappropriate in light of the conditions of competition betweenthe imported products and the like domestic products.

5. The examination of the impact of the subsidised imports on the domestic

industry concerned shall include an evaluation of all relevant economicfactors and indices with a bearing on the state of the industry, includingactual and potential decline in sales, profits, output, market share,productivity, return on investments, utilisation of capacity, factorsaffecting domestic prices, the magnitude of the margin of subsidisation,actual and potential negative effects on cash flow, inventories,employment, wages, growth and the ability to raise capital or investments.


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This list is not exhaustive, and no individual or several of these factors maynecessarily give decisive guidanceon the determination of injury.

6. It must be demonstrated that the subsidised imports are, through the effectsof subsidisation as set forth in paragraphs 2 and 4 of this Regulations,causing injury within the meaning of these Regulations. Thedemonstration of a causal relationship between the subsidised imports andthe injury to the domestic industry shall be based on an examination of allrelevant evidence before the investigating authority. An investigatingauthority shall also examine any known factors other than the subsidised

imports which at the same time injure the domestic industry, and theinjuries caused by these other factors must not be attributed to thesubsidised imports. Factors which may be relevant in this respect includethe volume and prices of non-subsidised imports' prices, contraction indemand or changes in the patterns of consumption, trade restrictivepractices of and competition between the foreign and domestic producers,developments in technology and the export performance and productivityof the domestic industry.

7. The effect of the subsidised imports shall be assessed in relation to the

domestic production of the like product when available data permits theseparate identification of that production on the basis of such criteria as theproduction process, producers' sales and profits. Where separateidentification of that production is not possible, the effects of thesubsidised imports shall be assessed by the examination of the productionof the narrowest group or range of products, which includes the likeproduct, for which the necessary information can be provided.

8. A determination of a threat of material injury shall be based on facts andnot merely on allegation, conjecture or remote possibility. The change in

circumstances which would create a situation in which the subsidisationwould cause injury must be clearly foreseen and imminent. In making adetermination regarding the existence of a threat of material injury, theinvestigating authority shall consider, inter alia, such factors as:

(a) the nature of a subsidy or subsidies in question and the trade effectslikely to arise from the subsidy or subsidies;


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(b) a significant rate of increase of subsidised imports into the domesticmarket indicating the likelihood of substantially increasedimportation;

(c) sufficient freely disposable, or an imminent substantial increase inthe capacity of the exporter indicating the likelihood of substantiallyincreased subsidised exports to the importing Partner State's market,taking into account the availability of other export markets to absorbany additional exports;

(d) whether imports are entering at prices that will have a significantdepressing or suppressing effect on domestic prices, and wouldlikely increase demand for further imports; and

(e) inventories of the product being investigated.

9. None of the factors in paragraph 8 may individually give decisive guidanceto the determination of injury and the totality of the factors consideredshall lead to the conclusion that further subsidised exports are imminent

and that, unless protective action is taken, material injury shall occur.

REGULATION 22

Definition of Domestic Industry

1. For purposes of these Regulations, the term "domestic industry" shall beinterpreted as referring to the domestic producers as a whole of likeproducts or to domestic producers whose collective output of the productsconstitutes a major proportion of the total domestic production of thoseproducts, except that:

(a)

where producers are related to the exporters or importers orare themselves importers of the allegedly subsidised product,the term "domestic industry" may be interpreted as referringto the rest of the producers; and


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(b) in exceptional circumstances the territory of the Partner Statesmay, for the production in question, be divided into two ormore competitive markets and the producers within eachmarket may be regarded as a separate industry where:

(i) the producers within a competitive market sell all oralmost all of their production of the product inquestion in that market; and

(ii)

the demand in a competitive market is not to any

substantial degree supplied by producers of theproduct in question located elsewhere in the territory.In such circumstances, injury may be found to existeven where a major portion of the total domesticindustry is not injured, provided there is aconcentration of subsidised imports into such anisolated market and provided further that thesubsidised imports are causing injury to the producersof all or almost all of the production within thecompetitive market.

2. Where the domestic industry has been interpreted as referring to theproducers in a competitive market as defined in sub-paragraph 1(b) of thisRegulation, countervailing duties shall be levied only on the products inquestion consigned for final consumption to that competitive market.Where the law of the importing Partner State does not permit the levyingof countervailing duties on such a basis, the importing Partner State maylevy the countervailing duties without limitation only where:

(a) the exporters are given an opportunity to cease

exporting at subsidised prices to the area concerned orotherwise give assurances pursuant to Regulation 13 andadequate assurances in this regard have not been promptlygiven; and


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(b)

the countervailing duties cannot be levied only on products ofspecific producers which supply the competitive market inquestion.

3. The provisions of paragraph 7 of Regulation 21 shall apply to thisRegulation.

REGULATION 23

Provisional Measures

1.

In critical circumstances where delay would cause injury, the investigating

authority may in accordance with the provisions of this Regulation, applyprovisional measures pursuant to a preliminary determination that there isclear evidence of subsidisation and consequent injury or threat of seriousinjury.

2. Provisional measures may be applied only where:

(a)an investigation has been initiated in accordance with the provisionsof Regulation 17, a public notice has been given to that effect and theinterested Partner States and interested parties have been given

adequate opportunities to submit information and make comments;

(b)a preliminary affirmative determination has been made that a subsidyexists and that there is injury to a domestic industry caused bysubsidized imports; and


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(c)

the Committee, upon information by the investigating authority,determines that such measures are necessary to prevent injury beingcaused during the investigation.

3. Provisional measures may take the form of provisional countervailingduties guaranteed by cash deposits or bonds equal to the amount of theprovisionally calculated amount of subsidization.

4. Provisional measures shall not be applied sooner than 60 days from thedate of initiation of the investigation.

5. An application of provisional measures shall be limited to as short aperiod as possible and in any case shall not exceeding four months.

6. The relevant provisions of Regulation 25 shall be followed in theapplication of provisional measures.

REGULATION 24

Price Undertakings

1. Subject to the provisions of paragraph 4 of this Regulation, proceedingsmay be suspended or terminated without the imposition of provisionalmeasures or countervailing duties, upon receipt of satisfactory voluntaryprice undertakings under which:

(a) the government of the exporting country agrees to eliminate orlimit the subsidy or take other measures concerning its effects; or

(b) the exporter agrees to revise its prices so that the investigating

authorities are satisfied that the injurious effect of the subsidy iseliminated. Price increases under such undertakings shall not behigher than necessary to eliminate the amount of the subsidy. Itis desirable that the price increases be less than the amount of thesubsidy where such increases would be adequate to remove theinjury to a domestic industry.


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2. Price undertakings shall not be sought or accepted unless theinvestigating authority has made a preliminary affirmative determinationof subsidization and injury caused by such subsidization and, in case ofprice undertakings from exporters, has obtained the consent of theexporting country.

3. Price undertakings offered need not be accepted where the investigatingauthority considers their acceptance impractical, for example where thenumber of actual or potential exporters is very high, or for other reasons,including reasons of general policy. In such cases and where practicable,

the investigating authority shall give the exporter the reasons which haveled the investigating authority to consider acceptance of a priceundertaking as inappropriate, and shall, to the extent possible, give theexporter an opportunity to make comments on these reasons.

4. Where a price undertaking is accepted, the investigation of subsidizationand injury shall nevertheless be completed where the exporting countryso desires or the importing Partner State so decides. In such a case, if anegative determination of subsidization or injury is made, the priceundertaking shall automatically lapse, except in cases where such a

determination is due to a large extent to the existence of the priceundertaking. In such a case, the investigating authority concerned mayrequire that the price undertaking be maintained for a reasonable periodconsistent with the provisions of these Regulations. In the event that anaffirmative determination of subsidization and injury is made, the priceundertaking shall continue consistent with its terms and the provisions ofthese Regulations.

5. Price undertakings may be suggested by the investigating authority but noexporter shall be forced to enter into such price undertakings. The fact

that governments or exporters do not offer such price undertakings, or donot accept an invitation to do so, shall in no way prejudice theconsideration of the case. However, the investigating authority shall befree to determine that a threat of injury is more likely to be realized wherethe subsidized imports continue.


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6. The investigating authority may require any government or exporter fromwhom the price undertaking is accepted to provide periodicallyinformation relevant to the fulfilment of the price undertaking, and topermit verification of pertinent data. In case of violation of a priceundertaking, the investigating authority may take, under theseRegulations in conformity with its provisions, expeditious actions thatmay constitute immediate application of provisional measures using thebest information available. In such cases, definitive duties may be leviedin accordance with these Regulations on products entered forconsumption not more than ninety days before the application of the

provisional measures, except that any retroactive assessment shall notapply to imports entered before the violation of the price undertaking.

.

REGULATION 25

Imposition and Collection of Countervailing Duties

1. Where, after reasonable efforts have been made to completeconsultations, a Partner State makes a final determination of theexistence and amount of a subsidy or subsidies and that, through the

effects of the subsidy or subsidies, the subsidized imports are causinginjury, it may impose a countervailing duty in accordance with theprovisions of this Regulation unless the subsidy or subdies arewithdrawn.

2 The decision whether or not to impose a countervailing duty in caseswhere all requirements for the imposition have been fulfilled, and thedecision whether the amount of the countervailing duty to be imposedshall be the full amount of the subsidy or less, shall be made by theCommittee. It is desirable that the imposition shall be permissive in the

territory of all Partner States, that the duty shall be less than the totalamount of the subsidy where such lesser duty would be adequate toremove the injury to the domestic industry, and that procedures shall beestablished which would allow the investigating authority concerned totake due account of representations made by domestic interested partieswhose interests may be adversely affected by the imposition of acountervailing duty.


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3 Where a countervailing duty is imposed in respect of any product, suchcountervailing duty shall be levied, in the appropriate amounts in eachcase, on a non-discriminatory basis on imports of such product from allsources found to be subsidized and causing injury, except as to importsfrom those sources which have renounced any subsidies in question orfrom which price undertakings under these Regulations have beenaccepted. Any exporter whose exports are subject to a definitivecountervailing duty but who was not actually investigated for reasonsother than a refusal to co-operate, shall be entitled to an expedited review

in order that the investigating authority promptly establish an individualcountervailing duty rate for that exporter.

4.

Countervailing duty shall not be levied on any imported product in excessof the amount of the subsidy found to exist, calculated in terms ofsubsidization per unit of the subsidized and exported product.

REGULATION 26

Retroactivity

1. Provisional measures and countervailing duties shall only be applied toproducts which are entered for consumption after a decision underRegulation 23 and Regulation 25, respectively, comes into force, subjectto the exceptions set out in this Regulation.

2 Where a final determination of injury, but not of a threat of injury or of amaterial retardation of the establishment of an industry, is made, or, in thecase of a final determination of a threat of injury, where the effect of thesubsidized imports would, in the absence of the provisional measures,

have led to a determination of injury, countervailing duties may be leviedretroactively for the period for which provisional measures, if any, havebeen applied.

3. where the definitive countervailing duty is higher than the amountguaranteed by the cash deposit or bond, the difference shall not becollected and where the definitive duty is less than the amount guaranteed


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by the cash deposit or bond, the excess amount shall be reimbursed or thebond released in an expeditious manner.

4. Except as provided in paragraph 2 of this Regulation, where adetermination of threat of injury or material retardation is made, but noinjury has yet occurred, a definitive countervailing duty may be imposedonly from the date of the determination of threat of injury or materialretardation, and any cash deposit made during the period of theapplication of provisional measures shall be refunded and any bondsreleased in an expeditious manner.

5. Where a final determination is negative, any cash deposit made during theperiod of the application of provisional measures shall be refunded andany bonds released in an expeditious manner.

6 In critical circumstances where, for the subsidized product in question,the investigating authority finds that injury which is difficult to repair iscaused by massive imports in a relatively short period of a productbenefiting from subsidies paid or bestowed inconsistently with theprovisions of these Regulations, and where necessary, in order to

preclude the recurrence of such injury, to assess countervailing dutiesretroactively on those imports, the definitive countervailing duties may beassessed on imports which were entered for consumption not more thanninety days prior to the date of application of provisional measures.

REGULATION 27

Duration and Review of Countervailing Duties

and Price Undertakings

1. A countervailing duty shall remain in force only as long as and to theextent necessary to counteract subsidisation which causes injury.

2. The investigating authority shall review the need for the continuedimposition of a countervailing duty, where warranted, on its own initiativeor, provided that a reasonable period of time has elapsed since theimposition of the definitive countervailing duty, upon request by any


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interested party which submits positive information substantiating the needfor a review. A determination of final liability for payment ofcountervailing duties, as provided for in Regulation 25, does not by itselfconstitute a review within the meaning of this Regulation. Interestedparties shall have the right to request the investigating authority to examinewhether the continued imposition of the duties is necessary to offsetsubsidies, whether injury is likely to continue or recur where the duty isremoved or varied, or both. Where, as a result of the review under thisparagraph, the investigating authority determines that the countervailingduty is no longer warranted, it shall be terminated immediately.

3. Notwithstanding the provisions of paragraphs 1 and 2 of this Regulation,any definitive countervailing duty shall be terminated within five yearsfrom the date of imposition, or from the date of the most recent reviewunder paragraph 2 of this Regulation where that review has covered bothsubsidisation and injury, or is made under this paragraph unless theinvestigating authority determines, in a review initiated before that dateon its own initiative or upon a duly substantiated request made by or onbehalf of the domestic industry within a reasonable period of time prior tothat date, that the expiry of the duty would be likely to lead to

continuation or recurrence of subsidisation and injury. Where the amountof the countervailing duty is assessed on a retrospective basis, a finding inthe most recent assessment proceeding under Regulation 25 that no dutyis to be levied shall not by itself require the investigating authority toterminate the definitive duty. The duty may remain in force pending theoutcome of such a review.

4. The provisions of Regulation 18 regarding evidence and procedure shallapply to any review carried out under this Regulation. Any such reviewshall be carried out expeditiously and shall normally be concluded within

twelve months of the date of initiation of the review.

5. The provisions of this Regulation shall apply mutatis mutandis to priceundertakings accepted under Regulation 24.


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REGULATION 28

Public Notice and Explanation of Determinations

1. Where the investigating authority is satisfied that there is sufficientevidence to justify the initiation of an investigation pursuant to Regulation17, the country whose products are subject to such investigation and otherinterested parties known to the investigating authority to have an interest inthe investigation, shall be notified and a public notice shall be given.

2. A public notice in the official gazette and any publication of widecirculation of the initiation of an investigation shall contain, adequateinformation on the following:

(a) the name of the exporting country or countries and the

product involved;

(b) the date of initiation of the investigation;

(c) a description of the subsidy practices to be invstigated;

(d) a summary of the factors on which the allegation of injury isbased;

(e) the address to which representations by interested parties

should be directed; and

(f)

the time-limits within which Partner States and interestedparties may present their views.

3. (1) A public notice shall be given of:


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(a)

any preliminary or final determination, whether affirmativeor negative,

(b)

any decision to accept a price undertaking pursuant toRegulation 24;

(c) the termination of such a price undertaking; and

(d) the termination of a definitive countervailing duty.

(2) Each public notice shall set out in sufficient detail the findings andconclusions reached on all issues of fact and law considered materialby the investigating authority. All public notices shall be forwardedto the country whose products are subject to such determination orundertaking and to other interested parties.

4. A public notice of the imposition of provisional measures shall set out,sufficiently detailed explanations for the preliminary determinations on theexistence of a subsidy and injury and shall make reference to matters of

fact and law which lead to the acceptance or rejection of arguments raised,due regard being paid to the requirement for the protection of confidentialinformation, contain in particular:

(a) the names of the suppliers, or when this is impracticable, thesupplying countries involved;

(b) a description of the product which is sufficient for customspurposes;

(c) the amount of subsidy established and the basis on which theexistence of the subsidy has been raised;

(d) considerations relevant to the determination of the injury asset out in Regulation 21; and

(e) the main reasons leading to the determination.


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5. A public notice of the conclusion or suspension of an investigation in thecase of an affirmative determination providing for the imposition of adefinitive duty or the acceptance of a price undertaking shall contain, allrelevant information and reasons which lead to the imposition of finalmeasures or the acceptance of a price undertaking, due regard being had tothe requirement for the protection of confidential information. The publicnotice shall contain the information required under paragraph 4 of thisRegulation, the reasons for the acceptance or rejection of relevantarguments or claims made by the exporters and importers.

6. A public notice of the termination or suspension of an investigationfollowing the acceptance of a price undertaking pursuant to Regulation 24shall include a non-confidential part of the price undertaking.

7. The provisions of this Regulation shall apply mutatis mutandis to theinitiation and completion of reviews pursuant to Regulation 27 and todecisions under Regulation 26 to apply countervailing duties retroactively.


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PART VII

NOTIFICATIONS AND SURVEILLANCE

REGULATION 29

Notifications

1. The Partner States shall submit their notifications of subsidies not laterthan the thirtieth day of June of each year in conformity with theprovisions of paragraphs 2 to 6of this Regulation.

2. The Partner States shall notify any subsidy which is specific within themeaning of Regulation 8, granted or maintained within their territories.

3. The content of notifications shall be sufficiently specific to enable otherPartner States evaluate the trade effects and to understand the operationof notified subsidy programmes. In this connection, and without

prejudice to the contents and form of the questionnaire on subsidies,Partner States shall ensure that their notifications contain the followinginformation:

(a) form of a subsidy such as grant, loan, tax concession;

(b) subsidy per unit or, in cases where this is not possible, thetotal amount or the annual amount budgeted for that subsidyindicating, if where possible, the average subsidy per unit inthe previous year;

(c) policy objective or purpose of a subsidy;

(d) duration of a subsidy and any other time-limits attached to it;and


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(e) statistical data permitting an assessment of the trade effectsof a subsidy.

4. Where specific issues in paragraph 3 have not been addressed in anotification, an explanation shall be provided in the notification itself.

5 Where subsidies are granted to specific products or sectors, thenotifications shall be organized by product or sector.

6. Partner States which consider that there are no measures in their

territories that require notification of these Regulations, shall inform theCommittee in writing.

7 Partner States recognize that notification of a measure does not prejudgetheir legal status under the General Agreement on Tariff and Trade, 1994and these Regulations, the effects under these Regulations, or the natureof the measure itself.

8. Any Partner State may, at any time, make a written request forinformation on the nature

Subsidies and Countervailing Measures Regulations Feb 2004

Documents

Transcript of Subsidies and Countervailing Measures Regulations Feb 2004