OAS

PROTOCOL AMENDING THE TREATY ESTABLISHING
THE CARIBBEAN COMMUNITY

(Protocol VIII: Competition Policy, Consumer Protection, Dumping and Subsidies)

(Continuation)

Article 30(j)
Determination of Dominant Position

For the purposes of this Protocol:

(a) an enterprise holds a dominant position in a market if by itself or together with an interconnected company, it occupies such a position of economic strength as
will enable it to operate in the market without effective constraints from its competitors or potential competitors;

(b) any two companies shall be treated as interconnected companies if one of them is a subsidiary of the other or both of them are subsidiaries of the same parent company.

Article 30(k)
Abuse of a Dominant Position

1. Subject to paragraph 2 of this Article, an enterprise abuses its dominant position in a market if it prevents, restricts or distorts competition in the market and, in particular but without prejudice to the generality of the foregoing, it:

(a) restricts the entry of any enterprise into a market;

(b) prevents or deters any enterprise from engaging in competition in a market;

(c) eliminates or removes any enterprise from a market;

(d) directly or indirectly imposes unfair purchase or selling prices or other restrictive practices;

(e) limits the production of goods or services for a market to the prejudice of consumers;

(f) as a party to an agreement, makes the conclusion of such agreement subject to acceptance by another party of supplementary obligations which, by their nature
or according to commercial usage, have no connection with the subject of the agreement;

(g) engages in any business conduct that results in the exploitation of its customers or suppliers,

so as to frustrate the benefits expected from the establishment of the CSME.

2. In determining whether an enterprise has abused its dominant position, consideration shall be given to:

(a) the relevant market defined in terms of the product and the geographic context;

(b) the concentration level before and after the relevant activity of the enterprise measured in terms of annual sales volume, the value of assets and the value of the
transaction;

(c) the level of competition among the participants in terms of number of competitors, production capacity and product demand;

(d) the barriers to entry of competitors; and

(e) the history of competition and rivalry between participants in the sector of activity.

3. An enterprise shall not be treated as abusing its dominant position if it is established that:

(a) its behaviour was directed exclusively to increasing efficiency in the production, provision or distribution of goods or services or to promoting technical or economic progress and that consumers were allowed a fair share of the resulting benefit;

(b) the enterprise reasonably enforces or seeks to enforce a right under or existing by virtue of a copyright, patent, registered trade mark or design; or

(c) the effect or likely effect of its behaviour on the market is the result of superior competitive performance of the enterprise concerned.

Article 30(l)
Negative Clearance Rulings

1. In any case where a Member State is uncertain whether business conduct is prohibited by paragraph 1 of Article 30(i), such a Member State may apply to the Commission for a ruling on the matter. If the Commission determines that such conduct is not prohibited by paragraph 1 of Article 30(i), it shall issue a negative clearance ruling to this effect.

2. A negative clearance ruling shall be conclusive of the matters stated therein in any judicial proceedings in the Community.

Article 30(m)
De Minimis Rule

The Commission may exempt from the provisions of this Part any business conduct referred to it if it considers that the impact of such conduct on competition and trade in the CSME is minimal.

Article 30(n)
Powers of the COTED Respecting Community
Competition Policy and Rules

Subject to the Treaty, the COTED shall develop and establish appropriate policies and rules of competition within the Community including special rules for particular sectors.

Article 30(o)
Exemptions

1. Where the COTED determines, pursuant to Article 30(n), that special rules shall apply to specific sectors of the Community, it may suspend or exclude the application of Article 30(i) to such sectors pending adoption of the relevant rules.

2. The COTED may, on its own initiative or pursuant to an application by a Member State in that behalf, exclude or suspend the application of Article 30(i) to any sector or any enterprise or group of enterprises in the public interest.

PART IV
DUMPING AND SUBSIDIES

Article 30(p)
Determination of a Subsidy

For the purposes of this Part, a subsidy shall be deemed to exist if there is a financial contribution by a Government or any public body within the territory of a Member State (hereinafter referred to as "government") where:

(a) government practice involves direct transfer of funds (e.g., grants, loans and equity infusion) or potential direct transfer of funds or liabilities (e.g., loan guarantees);

(b) government revenue that is otherwise due is foregone or not collected (e.g., fiscal incentives, such as tax credits);

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

(d) a government makes payments to a funding mechanism, or directs or entrusts to a private body the conduct of activities mentioned in sub-paragraphs (a), (b) and (c) which are normally conducted by governments; or

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

and a benefit is thereby conferred.

Article 30(p)(bis)
Types of Subsidies

1. Member States may take action against products from another Member State which benefit from a subsidy within the meaning of Article 30(p) being -

(a) a prohibited subsidy;

(b) a subsidy which:

(i) causes injury to a domestic industry; or

(ii) results in nullification or impairment of benefits accruing directly or indirectly to any Member State; or

(iii) seriously prejudices the interests of any Member State; or

(c) a subsidy which causes serious adverse effects to a domestic industry of any Member State such as to cause damage which would be difficult to repair:

Provided that the subsidy is specific to an enterprise or industry or group of enterprises or industries within the jurisdiction of the granting Member State.

2. For the purpose of this Protocol a determination of whether a subsidy as defined in Article 30(p) is specific shall be governed by the following principles:

(a) in order to determine whether a subsidy referred to in paragraph 1 of this Article is specific to an enterprise or industry or group of enterprises or industries (referred to in this Protocol as "certain enterprises") within the jurisdiction of the granting authority, the following principles shall apply:

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

(ii) where the granting authority, or the legislation pursuant to which the granting authority operates, establishes objective criteria or conditions governing the eligibility for, and the amount of, a subsidy, specificity shall not exist, provided that the eligibility is automatic and that such criteria and conditions are strictly adhered to. The criteria or conditions must be clearly spelled out in law, regulation, or other official document, so as to be capable of verification;

(iii) if, notwithstanding any appearance of non-specificity resulting from the application of the principles laid down in sub-sub-paragraphs (i) and (ii), there are reasons to believe that the subsidy may in fact be specific, other factors may be considered. Such factors are: use of a subsidy programme by a limited number of certain enterprises, predominant use of certain enterprises, the granting of disproportionately large amounts of subsidy to certain enterprises, and the manner in which discretion has been exercised by the granting authority in the decision to grant a subsidy. In applying this sub-paragraph, account shall be taken of the extent of diversification of economic activities within the jurisdiction of the granting authority, as well as of the length of time during which the subsidy programme has been in operation;

(b) a subsidy which is limited to certain enterprises located within a designated geographical region within the jurisdiction of the granting authority shall be specific. It is understood that the setting or change of generally applicable tax rates by all levels of government entitled to do so shall not be deemed to be a specific subsidy for the purposes of this Protocol;

(c) any subsidy falling under the provisions of Article 30(p)(quater) shall be deemed to be specific;

(d) any determination of specificity under the provisions of this Article shall be clearly substantiated on the basis of positive evidence.

Article 30(p)(ter)
Entitlement to Take Action
Against Subsidised Products

1. A Member State may take action against subsidised products where:

(a) the products have benefitted from a prohibited subsidy;

(b) the subsidy is specific and has caused any of the effects referred to in Article 30(t); and

(c) the subsidy is specific and does not conform to the provisions of Article 30(z)

2. Notwithstanding the provisions of paragraph 1, a Member State shall not take definitive action against products which are believed to be benefitting from subsidies referred to in Article 30(p)(bis)) if the Member State aggrieved thereby has not:

(a) promulgated legislation to permit the introduction of counter measures or countervailing duties against subsidised imports;

(b) consulted with the Member State which is alleged to have introduced or to be maintaining subsidies identified in Article 30(p)(bis);

(c) notified the COTED of the alleged subsidisation based on preliminary investigations and failure of consultations; and

(d) received authorisation from the COTED to introduce countervailing duties or countermeasures as a result of a definitive determination of the existence of
prohibited subsidies which cause nullification, impairment, serious prejudice or adverse effects caused by subsidisation.

3. Consultations for the purposes of this Part shall follow the procedures set out in Annex II to this Protocol.

Article 30(p)(quater)
Prohibited Subsidies

1. Subject to the Treaty, a Member State shall neither grant nor maintain subsidies referred to in paragraph 2.

2. The following subsidies within the meaning of Article 30(p)(bis) shall be prohibited:

(a) subsidies contingent, in law or in fact, whether solely or as one of several other conditions, upon export performance, including those listed in Schedule 5 of
Protocol IV - Trade Policy; and

(b) subsidies contingent, whether solely or as one of several other conditions, upon the use of domestic over imported goods.

3. Nothing in this Article shall be construed as applying to agricultural commodities produced in the Community.

Article 30(p)(quinquies)
Preliminary Investigation of Prohibited Subsidies

1. An application for an investigation may be made in writing by or on behalf of a domestic industry to its competent authority where the industry has reason to believe that a prohibited subsidy referred to in Article 30(p)(quater) has been granted or maintained by another Member State. The authority shall examine the application and determine, on the basis of the facts available, whether to initiate an investigation.

2. An investigation initiated pursuant to paragraph 1 of this Article shall be deemed to be a preliminary investigation. The authority shall give public notice of the preliminary investigation to inform the concerned Member State, other Member States and the interested parties all of whom shall be afforded adequate time to submit information required and to make comments.

3. The authority shall make a preliminary determination whether a prohibited subsidy has been granted or maintained and, where the determination is affirmative, invite the concerned Member States and interested parties to defend their interests.

4. Wherever the term "domestic industry" is used in this Protocol, it shall mean domestic industry as defined in Annex 1. A request for investigation by the domestic industry under this Article or under Article 30(u) or 30(aa) be accompanied by information set out in the Illustrative List at Annex 111(a).

Article 30(p)(sex)
Request for Consultations Relating
to Prohibited Subsidies

1. Whenever a Member State has reason to believe, pursuant to Article 30(p)(quater) that a prohibited subsidy has been granted or is maintained by a Member State, the aggrieved or any other Member State may request consultations with the Member State believed to be granting or maintaining the subsidy. The aggrieved Member State shall notify the COTED of the request for consultations. A request for consultations shall include a statement of the available evidence with regard to the existence and nature of the alleged prohibited subsidy.

2. Upon receipt of a request for consultations under paragraph 1, the Member State believed to be granting or maintaining the subsidy shall reply within 10 days and shall furnish the relevant information requested and shall promptly enter into consultations which shall be concluded within 30 days of the date of request for such consultations unless the parties agree to extend the consultations to a mutually agreed date. The purpose of the consultations shall be to clarify the facts relating to the existence and type of the alleged subsidy and to arrive at a mutually agreed solution.

Article 30(q)
Reference to COTED to Investigate
Prohibited Subsidies

1. If no mutually agreed solution is reached at the completion of 30 days from the date of the request for the consultations referred to in Article 30(p)(sex), or at such time as the parties agree, or if the Member State believed to be granting or maintaining the subsidy refuses to co-operate, the Member State requesting consultations or any other Member State interested in such consultations may refer the matter to the COTED which shall carry out an investigation to establish whether the subsidy in question is a prohibited subsidy.

2. The referral of the matter to the COTED for an investigation shall not prevent the aggrieved Member State from taking, on a provisional basis, which shall not be sooner than 60 days from the date of initiation of investigations under paragraph 1 of Article 30(p)(quinquies), countermeasures to forestall injury or to prevent further injury to its domestic industry.

Article 30(r)
Investigation by COTED of
Prohibited Subsidies

1. Whenever the COTED decides to carry out an investigation pursuant to Article 30(q), such an investigation by the COTED shall proceed as expeditiously as possible. The COTED may appoint competent experts to advise whether the subsidy falls to be classified as a prohibited subsidy, in which case the COTED shall set a time limit for the examination of the evidence by the competent experts. The COTED shall make its determination and issue its report which shall, unless extenuating circumstances arise, not exceed 90 days from the date of receipt of request for the investigation.

2. The results of an investigation carried out pursuant to Article 30(q) shall be made available to all Member States for information and to afford the concerned Member States an opportunity to arrive at a mutually agreed solution within 30 days from the date of issue of the report failing which the COTED shall adopt the recommendations of the report.

3. If the COTED is satisfied, based on the results of the investigation, that the subsidy in question is a prohibited subsidy and that the concerned Member States cannot reach a mutually agreed solution, it shall subject to Article 30(s), require the offending Member State to withdraw the subsidy within a specified time-frame.

Where the offending Member State fails to comply, the COTED shall authorise the aggrieved Member State to take counter-measures on the products which benefit from such a subsidy.

Article 30(s)
Withdrawal of Prohibited Subsidies

1. Notwithstanding the investigation confirming the existence of a prohibited subsidy in paragraph 3 of Article 30(r), the COTED shall not impose a requirement for Member States to withdraw such a subsidy sooner than specified in this paragraph as follows:

(a) with respect to subsidies contingent upon export performance:

(i) Member States with per capita GNP of less than one thousand United States dollars shall be allowed to maintain such subsidies; and

(ii) other Member States shall be allowed to maintain such subsidies until 1 January 2003;

(b) with respect to subsidies contingent upon the use of domestic over imported inputs, Member States with per capita GNP of less than one thousand United States dollars shall be allowed to maintain such subsidies until 2003.

2. Whenever the results of an investigation by the COTED prove that the alleged subsidy is not a prohibited subsidy, any provisional countervailing measures which might have been imposed shall be promptly withdrawn and any bond or deposit which might have been effected, released or refunded, as the case may be. If the provisional measures referred to in this paragraph have materially retarded the exports of the Member State which was wrongfully alleged to have introduced or maintained prohibited subsidies, the COTED shall, upon application from such a Member State, assess the effects of the provisionally applied measures and determine the nature and extent of compensation which is warranted and recommend compensation in accordance with its assessment.

3. From the date of entry into force of this Protocol until the expiration of the dates mentioned in paragraph 1, no provisional measures shall be imposed where it has been determined by preliminary investigations that prohibited subsidies are maintained.

Article 30(t)
Subsidies Causing Injury, Nullification,
Impairment or Serious Prejudice

A Member State may take action against subsidised imports from any other Member State where it can be established, based on an investigation, that the effect of the subsidy has been:

(a) injury to its domestic industry;

(b) nullification or impairment of benefits which it expects under this Treaty; or

(c) serious prejudice to its interests.

2. Serious prejudice shall be deemed to exist in the case of:

(a) the total ad valorem subsidisation of a product exceeding 5 per cent;

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

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

(d) forgiveness of government-held debt and government grants to cover debt repayment.

3. Notwithstanding the provisions of this Article, serious prejudice shall not be found if the Member State granting the subsidy in question demonstrates that the effect of the subsidy has not been:

(a) to displace or impede the imports of like products from the Member State exporting to the Member State which has introduced or maintains the subsidy;

(b) to displace or impede the exports of a like product from the affected exporting Member State into the market of a third Member State;

(c) a significant price undercutting by the subsidised product as compared with the price of a like product of another Member State in the same market or a
significant price suppression or price depression;

(d) lost sales of another Member State in the same market; or

(e) an increase in its market share within the CSME.

4. The provisions of this Article shall not apply to Part V.

Article 30(u)
Preliminary Investigation of Subsidies Causing Injury,
Nullification, Impairment or Serious Prejudice

1. An application for an investigation may be made in writing by or on behalf of a domestic industry to the national authority where the industry has reason to believe that a subsidy referred to in Article 30(t) has been granted or is maintained by another Member State and has caused injury, or resulted in nullification, impairment or serious prejudice to its interests.

2. An application under paragraph 1 shall include sufficient information about the existence of a subsidy and, if possible, its amount, injury and a causal link between the subsidised products and the alleged injury.

3. An application to initiate an investigation shall be considered to have been made by or on behalf of a domestic industry if it is supported by those domestic producers whose collective output constitutes more than 50 per cent of the total production of the like product by that proportion of the domestic industry expressing support for or opposition to the application. The investigation shall not be initiated where the domestic producers expressly supporting the application account for less than 25 per cent of the total production of the like product produced by the domestic industry.

4. Upon receipt of a request for such an investigation, the authority shall examine the application and determine, on the basis of the facts available, whether to initiate
an investigation. If the authority decides to initiate an investigation, it shall issue a public notice to that effect, invite the concerned Member State, other interested Member States and interested parties to submit required information and comments.

5. An investigation initiated pursuant to paragraph 2 shall be deemed to be a preliminary investigation. The authority shall inform the concerned Member State and all interested parties of the results of the investigation.

Article 30(v)
Request for Consultations Relating to Subsidies Causing
Injury, Nullification, Impairment or Serious Prejudice

1. Whenever a Member State has reason to believe that a subsidy within the meaning of Article 30(p) has been granted or is maintained by another Member State, and that imports from such a Member State have resulted in any of the effects mentioned in paragraph 1(b) of Article 30(p)(bis), the first-mentioned Member State may approach the Member States believed to be granting a subsidy with a request for consultations..

2. A request for consultations shall include a statement of available evidence with regard to -

(a) the existence and nature of the subsidy; and

(b) the injury caused to the domestic industry; or

(c) the impairment or nullification of benefits of exporting to other Member States in the Community; or

(d) serious prejudice to its interests.

3. Upon receipt of a request for consultations under paragraph 1, the Member State believed to be granting or maintaining the subsidy shall reply within 10 days, furnish relevant information, and enter into consultations within 30 days of the date of the request. The purpose of the consultations shall be to clarify the facts relating to the existence, type and effect of the alleged subsidy and to arrive at a mutually agreed solution.

Article 30(w)
Reference to COTED to Investigate Subsidies Causing
Injury, Nullification, Impairment or Serious Prejudice

1. If no mutually agreed solution is reached at the completion of 60 days from the date of request for consultations, or on a date mutually agreed, the Member State requesting consultations may refer the matter to the COTED which shall initiate an investigation, make a determination to resolve the dispute and issue a report within 120 days of the date of the request for an investigation by the aggrieved Member State.

2. A decision by the COTED to initiate an investigation shall not prevent the aggrieved Member State from taking, on a provisional basis, countermeasures which shall not be sooner than 60 days from the date of initiation of a preliminary investigation by the national authority to forestall or prevent further adverse effects.

Article 30(x)
Investigation by COTED of Subsidies Causing Injury,
Nullification, Impairment or Serious Prejudice

1. In order to arrive at a determination of the existence, degree and effect of subsidisation, and remedial action which may be taken pursuant to the referral of a complaint of alleged subsidisation mentioned in Article 30(w), the COTED shall -

(a) carry out an investigation into the circumstances relating to the alleged grant or maintenance of the subsidy by the offending Member State; the investigation is to
be completed within 120 days of the date of receipt of a complaint regarding alleged subsidisation by an offending Member State; and

(b) upon receipt of the report arising from the investigation, promptly make available the report to the concerned Member States to facilitate consultation and to
permit the Member states concerned to arrive at a mutually acceptable solution.

Article 30(y)
Consequences of Failure to Remove Subsidies Causing
Injury, Nullification, Impairment or Serious Prejudice

1. If no mutually acceptable solution is reached within 30 days of the date of issue of the report by the COTED, and the COTED is satisfied:

(a) of the existence of a subsidy within the meaning of Article 30(t); and

(b) that the subsidy has caused injury to the enterprise in the complaining Member State; or

(c) that the subsidy has impaired or nullified benefits expected of the complaining Member State with respect to its exports to the Community; or

(d) that the effect of the subsidy was to seriously prejudice the interests of the Member State,

then in such a case, the COTED shall request the Member State which has granted or maintained the subsidy to take appropriate steps to remedy the effects of the subsidy within six months of the date of the issue of the report by the COTED.

2. If, at the end of the period of six months allowed by COTED to the Member State granting or maintaining the subsidy to remedy the effects of the subsidy, the Member State fails to comply and in the absence of agreement on compensation the COTED shall authorise the aggrieved Member State to impose countervailing duties at a rate equivalent to the amount of subsidisation for such time and under such conditions as the COTED may prescribe.

Continue on to Article 30(z)