Agreement Establishing the World Trade Organization
(Continued)
Agreement on Subsidies and Countervailing Measures
Article 13: Consultations
13.1 As soon as possible after an application under Article 11 is accepted,
and in any event before the initiation of any investigation, Members the
products of which may be subject to such investigation shall be invited
for consultations with the aim of clarifying the situation as to the matters
referred to in paragraph 2 of Article 11 and arriving at a mutually agreed
solution.
13.2 Furthermore, throughout the period of investigation, Members the
products of which are the subject of the investigation shall be afforded
a reasonable opportunity to continue consultations, with a view to clarifying
the factual situation and to arriving at a mutually agreed solution.
44
13.3 Without prejudice to the obligation to afford reasonable opportunity
for consultation, these provisions regarding consultations are not intended
to prevent the authorities of a Member from proceeding expeditiously with
regard to initiating the investigation, reaching preliminary or final determinations,
whether affirmative or negative, or from applying provisional or final
measures, in accordance with the provisions of this Agreement.
13.4 The Member which intends to initiate any investigation or is conducting
such an investigation shall permit, upon request, the Member or Members
the products of which are subject to such investigation access to nonconfidential
evidence, including the nonconfidential summary of confidential data being
used for initiating or conducting the investigation.
Article 14: Calculation of the Amount of a Subsidy in Terms of the
Benefit to the Recipient
For the purpose of Part V, any method used by the investigating authority
to calculate the benefit to the recipient conferred pursuant to paragraph
1 of Article 1 shall be provided for in the national legislation or implementing
regulations of the Member concerned and its application to each particular
case shall be transparent and adequately explained. Furthermore, any such
method shall be consistent with the following guidelines:
(a) government provision of equity capital shall not be considered as
conferring a benefit, unless the investment decision can be regarded as
inconsistent with the usual investment practice (including for the provision
of risk capital) of private investors in the territory of that Member;
(b) a loan by a government shall not be considered as conferring a benefit,
unless there is a difference between the amount that the firm receiving
the loan pays on the government loan and the amount the firm would pay
on a comparable commercial loan which the firm could actually obtain on
the market. In this case the benefit shall be the difference between these
two amounts;
(c) a loan guarantee by a government shall not be considered as conferring
a benefit, unless there is a difference between the amount that the firm
receiving the guarantee pays on a loan guaranteed by the government and
the amount that the firm would pay on a comparable commercial loan absent
the government guarantee. In this case the benefit shall be the difference
between these two amounts adjusted for any differences in fees;
(d) the provision of goods or services or purchase of goods by a government
shall not be considered as conferring a benefit unless the provision is
made for less than adequate remuneration, or the purchase is made for more
than adequate remuneration. The adequacy of remuneration shall be determined
in relation to prevailing market conditions for the good or service in
question in the country of provision or purchase (including price, quality,
availability, marketability, transportation and other conditions of purchase
or sale).
Article 15: Determination of Injury45
15.1 A determination of injury for purposes of Article VI of GATT 1994
shall be based on positive evidence and involve an objective examination
of both (a) the volume of the subsidized imports and the effect
of the subsidized imports on prices in the domestic market for like products
46and (b) the consequent impact of these imports on the domestic producers of such products.
15.2 With regard to the volume of the subsidized imports, the investigating
authorities shall consider whether there has been a significant increase
in subsidized imports, either in absolute terms or relative to production
or consumption in the importing Member. With regard to the effect of the
subsidized imports on prices, the investigating authorities shall consider
whether there has been a significant price undercutting by the subsidized
imports as compared with the price of a like product of the importing Member,
or whether the effect of such imports is otherwise to depress prices to
a significant degree or to prevent price increases, which otherwise would
have occurred, to a significant degree. No one or several of these factors
can necessarily give decisive guidance.
15.3 Where imports of a product from more than one country are simultaneously
subject to countervailing duty investigations, the investigating authorities
may cumulatively assess the effects of such imports only if they determine
that (a) the amount of subsidization established in relation to
the imports from each country is more than de minimis as defined
in paragraph 9 of Article 11 and the volume of imports from each country
is not negligible and (b) a cumulative assessment of the effects
of the imports is appropriate in light of the conditions of competition
between the imported products and the conditions of competition between
the imported products and the like domestic product.
15.4 The examination of the impact of the subsidized imports on the
domestic industry shall include an evaluation of all relevant economic
factors and indices having a bearing on the state of the industry, including
actual and potential decline in output, sales, market share, profits, productivity,
return on investments, or utilization of capacity; factors affecting domestic
prices; actual and potential negative effects on cash flow, inventories,
employment, wages, growth, ability to raise capital or investments and,
in the case of agriculture, whether there has been an increased burden
on government support programmes. This list is not exhaustive, nor can
one or several of these factors necessarily give decisive guidance.
15.5 It must be demonstrated that the subsidized imports are, through
the effects47 of subsidies, causing injury within the meaning of this
Agreement. The demonstration of a causal relationship between the subsidized
imports and the injury to the domestic industry shall be based on an examination
of all relevant evidence before the authorities. The authorities shall
also examine any known factors other than the subsidized imports which
at the same time are injuring the domestic industry, and the injuries caused
by these other factors must not be attributed to the subsidized imports.
Factors which may be relevant in this respect include, inter alia,
the volumes and prices of nonsubsidized imports of the product in question,
contraction in demand or changes in the patterns of consumption, trade
restrictive practices of and competition between the foreign and domestic
producers, developments in technology and the export performance and productivity of the domestic industry.
15.6 The effect of the subsidized imports shall be assessed in relation
to the domestic production of the like product when available data permit
the separate identification of that production on the basis of such criteria
as the production process, producers' sales and profits. If such separate
identification of that production is not possible, the effects of the subsidized imports shall be assessed by the examination of the production of the narrowest group or range of products, which includes the like product, for which the necessary information can be provided.
15.7 A determination of a threat of material injury shall be based on
facts and not merely on allegation, conjecture or remote possibility. The
change in circumstances which would create a situation in which the subsidy
would cause injury must be clearly foreseen and imminent. In making a determination
regarding the existence of a threat of material injury, the investigating
authorities should consider, inter alia, such factors as:
(i) nature of the subsidy or subsidies in question and the trade effects
likely to arise therefrom;
(ii) a significant rate of increase of subsidized imports into the domestic
market indicating the likelihood of substantially increased importation;
(iii) sufficient freely disposable, or an imminent, substantial increase
in, capacity of the exporter indicating the likelihood of substantially
increased subsidized exports to the importing Member's market, taking into
account the availability of other export markets to absorb any additional
exports;
(iv) whether imports are entering at prices that will have a significant
depressing or suppressing effect on domestic prices, and would likely increase
demand for further imports; and
(v) inventories of the product being investigated.
No one of these factors by itself can necessarily give decisive guidance
but the totality of the factors considered must lead to the conclusion
that further subsidized exports are imminent and that, unless protective
action is taken, material injury would occur.
No one of these factors by itself can necessarily give decisive guidance
but the totality of the factors considered must lead to the conclusion
that further subsidized exports are imminent and that, unless protective
action is taken, material injury would occur.
15.8 With respect to cases where injury is threatened by subsidized
imports, the application of countervailing measures shall be considered
and decided with special care.
Article 16: Definition of Domestic Industry
16.1 For the purposes of this Agreement, the term "domestic industry"
shall, except as provided in paragraph 2, be interpreted as referring to
the domestic producers as a whole of the like products or to those of them
whose collective output of the products constitutes a major proportion
of the total domestic production of those products, except that when producers
are related48 to the exporters or importers or are themselves importers
of the allegedly subsidized product or a like product from other countries,
the term "domestic industry" may be interpreted as referring
to the rest of the producers.
16.2. In exceptional circumstances, the territory of a Member may, for
the production in question, be divided into two or more competitive markets
and the producers within each market may be regarded as a separate industry
if (a) the producers within such market sell all or almost all of
their production of the product in question in that market, and (b)
the demand in that market is not to any substantial degree supplied by
producers of the product in question located elsewhere in the territory.
In such circumstances, injury may be found to exist even where a major
portion of the total domestic industry is not injured, provided there is
a concentration of subsidized imports into such an isolated market and
provided further that the subsidized imports are causing injury to the
producers of all or almost all of the production within such market.
16.3 When the domestic industry has been interpreted as referring to
the producers in a certain area, i.e. a market as defined in paragraph
2, countervailing duties shall be levied only on the products in question
consigned for final consumption to that area. When the constitutional law
of the importing Member does not permit the levying of countervailing duties
on such a basis, the importing Member may levy the countervailing duties
without limitation only if (a) the exporters shall have been given
an opportunity to cease exporting at subsidized prices to the area concerned
or otherwise give assurances pursuant to Article 18, and adequate assurances
in this regard have not been promptly given, and (b) such duties
cannot be levied only on products of specific producers which supply the
area in question.
16.4 Where two or more countries have reached under the provisions of
paragraph 8(a) of Article XXIV of GATT 1994 such a level of integration
that they have the characteristics of a single, unified market, the industry
in the entire area of integration shall be taken to be the domestic industry
referred to in paragraphs 1 and 2.
16.5 The provisions of paragraph 6 of Article 15 shall be applicable
to this Article.
Continue with the Agreement on Subsidies and Countervailing Measures
44 It is particularly important, in accordance with the provisions of this paragraph, that no affirmative determination whether preliminary or final be made without reasonable opportunity for consultations having been given. Such consultations may establish the basis for proceeding under the provisions of Part II, III or X.
45 Under this Agreement the term "injury" shall, unless otherwise specified, be taken to mean material injury to a domestic industry, threat of material injury to a domestic industry or material retardation of the establishment of such an industry and shall be interpreted in accordance with the provisions of this Article.
46 Throughout this Agreement the term "like product" ("produit similaire") shall be interpreted to mean a product which is identical, i.e. alike in all respects to the product under consideration, or in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration.
47 As set forth in paragraphs 2 and 4.
48 For the purpose of this paragraph, producers shall be deemed to be related to exporters or importers only if (a) one of them directly or indirectly controls the other; or (b) both of them are directly or indirectly controlled by a third person; or (c) together they directly or indirectly control a third person, provided that there are grounds for believing or suspecting that the effect of the relationship is such as to cause the producer concerned to behave differently from non-related producers. For the purpose of this paragraph, one shall be deemed to control another when the former is legally or operationally in a position to exercise restraint or direction over the latter.
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