WORLD TRADE WT/TC/NOTIF/SCM/1
9September 1996
ORGANIZATION(96-3463)
Original: English
TECHNICAL COOPERATION HANDBOOK ONNOTIFICATION REQUIREMENTS
Agreement onSubsidies andCountervailing Measures
1. Thissection oftheHandbook onNotification Requirements covers thenotification obligations
under theAgreement onSubsidies andCountervailing Measures (SCM). Itconsists ofthefollowing
fiveparts:
PartI: Overview ofnotification requirements
PartII: Listing ofthenotification obligations
PartIII: Document(s) concerning guidelines andformats
PartIV: "Mock" examples ofnotifications
PartV: TextoftheAgreement
2. Foracceding countries, thedeadlines forthesubmission oftheirnotifications willbegoverned
bytheirrespective Protocols ofAccession.
Note: TheHandbook onNotification Requirements doesnotconstitute alegalinterpretation of
thenotification obligations under therespective Agreement(s). Ithasbeen prepared bythe
Secretariat toassist Members incomplying withtheirnotification obligations.SCM-I -Page1
SCM-I
AGREEMENT ONSUBSIDIES AND
COUNTERVAILING MEASURES
OVERVIEW OFNOTIFICATION REQUIREMENTSSCM-I -Page2
AGREEMENT ONSUBSIDIES AND COUNTERVAILING MEASURES
I. Purpose ofNotifications intheAgreement
TheWTO SCM Agreement contains anumber ofnotification requirements intheareas of
subsidies andcountervailing measures. Inseveral cases, notification entitles thenotifier to
certain benefits thatitotherwise would notenjoy. Generally, aMember failing tonotify runs
theriskthatanother Member willraiseissues about itsprogrammes, etc.,intheCommittee,
andpotentially institute dispute settlement proceedings. Thus, Members should comply fully
withallnotification obligations under theAgreement, bythedatesestablished intheAgreement
orbytheCommittee. Even where nosuchdates exist, itisintheinterests ofallMembers
tomake therequired notifications attheearliest possible date.
II. Nature oftheNotifications
There arethree basic areas forwhich notifications arerequired under theSCM Agreement:
(1)subsidies, (2)authorities/procedures/legislation; and(3)countervailing measures.
1. Subsidies:
(a) Thebasic subsidies notification requirement iscontained inArticle 25.2 ofthe
Agreement andinGATT 1994 Article XVI:1. Article 25.2requires notification of
anysubsidy asdefined intheAgreement, which isspecific, asalsodefined inthe
Agreement. Exempt fromnotification aregenerally-available subsidies (infrastructure,
other programs notlimited tospecific sectors, industries, orregions, etc.). GATT
Art.XVI:1 requires notification ofanysubsidy (whether ornotspecific) thatdirectly
orindirectly causes trade effects.
Theformat forsubsidy notifications iscontained inaquestionnaire inG/SCM/6. Full
notifications weredueby30June1995, andaredueevery thirdyearthereafter, with
updating notifications dueinthetwointervening years. Aninvitation toallMembers
tosubmit fullnotifications by30June1995 wascirculated inG/SCM/N/3, andan
invitation tosubmit updating notifications by30June 1996 wascirculated in
G/SCM/N/16. TheSCM Committee heldaspecial meeting inJuly1996 toreview
the1995 fullnotifications, andasecond suchmeeting willbeheldinOctober 1996.
Atsuchmeetings, Members mayraisequestions regarding anotified programme, the
failure tonotify aprogramme, orthefailure tosubmit anynotification.
(b) "Green" non-actionable subsidies (Article 8.3). IfaMember wishes toobtain insured
non-actionable status forregional assistance, environmental measures orR&D subsidies
thatfulfil thecriteria ofArticle 8.2,itmust notify theprogramme prior to
implementation. These notifications aresubject topotential Committee review and
challenge prior toimplementation.
Thenotification format iscontained inPC/IPL/11, Annex 1.Detailed information is
required astothepurpose oftheprogram andcontrols toensure thatvarious thresholds
andlimits setforthintheAgreement willbemetandrespected oncetheprogramme
isimplemented. Allprograms notified under Article 8.3aresubject toannual update
notifications under thesame Article onceimplemented. Aformat forannual updates
isbeing developed.SCM-I -Page3
(c) Somespecialanddifferentialtreatmentisdependentoncertainadditionalnotifications.
i. Developing Country Members
(a) Higherdeminimussubsidizationrate(Article27.11).Ifadeveloping
countryeliminatesexportsubsidiesbeforethestandard8-yeartransition
period applicable tosuch countries, itisentitled toademinimis
subsidization rateinCVD investigations of3%,rather thanthe2%
ratetowhich itotherwise would beentitled. Notification ofdetails
ofanysuchearly elimination isrequired. Theformat isfound in
PC/IPL/11, Annex 2.
(b) Privatization programmes (Article 27.13) .Ifdirect forgiveness of
debt,subsidies tocover social costs, and/or other transfer ofliabilities
aregranted within andarelinked toasuccessful privatization
programme ofadeveloping country (i.e., theprogramme actually
results inprivatization oftheenterprise concerned), andsuchsubsidies
arelimited intime, PartIIIoftheAgreement shallnotapply. This
means thatsuchsubsidies shallnotbesubject tomultilateral challenge
asprovided forinPartIII(however, thisprovision doesnotprotect
aMemberfromcountervailingdutyactionswithrespecttothesubsidy).
Toqualify forthisexemption, anysuchprivatization programme must
benotified, following theformat ofPC/IPL/11, Annex 3.There are
notime limits ortiming provisions intheAgreement regarding
submission ofsuchnotifications. However, bynotifying assoonas
possible,countriesinoculatethemselvesagainstthepossibilitythatother
Members could seekaWTO dispute settlement panel against themwith
respect tosuchprograms. Thus, prompt notification could savethe
notifier much potential trouble defending against others 'actions.
(c) Export competitiveness (Articles 27.5and27.6).Ifadeveloping
country Member achieves export competitiveness inaproduct, the
phase-out period foritsexport subsidies tothatproduct isshortened
to2years (8years forleast developed countries). Export
competitiveness isdefined asatleasta3.25% share ofworld trade
inaproduct during 2consecutive years. "Product" isdefined very
broadly asasection heading ofHSnomenclature.
Export competitiveness isestablished inoneoftwoways: (a)
notificationbythedevelopingcountryMemberthathasachievedexport
competitiveness; (b)calculation bytheWTO secretariat attherequest
ofanyMember. Anysuch notification byadeveloping country
Memberisthereforevoluntary.Nostandardformathasbeendeveloped
forsuchnotifications.
ii. Members inTransition toMarket Economies
Seven-year transition period forotherwise prohibited subsidies
(Article 29.3).Aseven-year transition period from theentry intoforce of
theAgreement (i.e.through 1January 2002) forsubsidies falling within
Article 3(i.e.prohibited subsidies) isprovided ifsuchsubsidies havebeen
notified. Theformat forsuchnotifications isinPC/IPL/11, Annex 5.
Thedeadline forsuchnotifications isthe"earliest practicable date"
aftertheentry intoforce oftheWTO Agreement (i.e.1January 1995). TheSCM-I -Page4
Committee agreed toanindicative dateof30June1995forsuchnotifications.
However, since eligibility fortheseven-year transition period forthese
otherwise prohibited subsidies iscontingent uponnotification, itisintheclear
interest ofallsuchcountries tonotify assoonaspossible. Moreover, thelonger
suchanotification isdelayed, thegreater thechance thatanother Member may
challenge useofthespecial transition period onthebasis thatthenotification
wasnotmade attheearliest practicable date. Inaddition, allsuchprograms
aresubjecttothebasicnotificationobligationunderArticle25oftheAgreement
andGATT Article XVI.
2. Authorities/Procedures/Legislation
(a) Domestic authorities anddomestic procedures (Article 25.12) .ThisArticle calls
fornotification of(a)domestic authorities competent toinitiate andconduct CVD
investigations; and(b)domestic procedures governing theinitiation andconduct of
suchinvestigations.Part(a)ofthisnotificationrequirementcanbefulfilledbyproviding
thename, address, telephone, faxande-mail numbers (ifapplicable) oftheinvestigating
authority totheCommittee.
(b) Laws andregulations (Article 32.6).Thenotification istobemade once, uponentry
intoforce oftheWTO Agreement forthenotifying Member forexisting lawsand
regulations, andthereafter onanadhocbasis, asandwhen laws/regulations are
established orchanges effected.
(i) Members mustnotify thefullintegrated text(s) oftheirlaws, regulations and
administrative procedures inoneoftheWTO languages (English, French or
Spanish).
(ii) Anymodification tothelaws, regulations oradministrative procedures must
benotified promptly.
(iii) Anotification must bemade evenwhere aMember doesnotmaintain such
laws/regulations.
Theinvitation tosubmit notifications wascirculated inG/SCM/N/1 andSuppl. 1.Four
special jointmeetings oftheADandSCM Committees toreview these legislations
havealready beenheld.
3. Countervailing Measures
(a) Preliminary andfinalcountervailing dutyactions (Article 25.11) .Allsuchactions
taken shall bereported "without delay" totheCommittee. Document G/SCM/3
identifies theminimum information thatshould beprovided insuchreports. Ifofficial
notice oftheaction, aspublished inthecountry taking action, contains suchinformation
andisinanofficial WTO language, theMember maysubmit thisofficial notice. If
not,theMember should provide theinformation described intheformat.
(b) Semi-annual report onallcountervailing dutyactions (Article 25.11) .AllMembers
must, twice ayearsubmit asemi-annual report oncountervailing dutyactions (whether
provisional orfinal) taken within thepreceding sixmonths, regardless ofwhether they
havetaken anysuchactions. Members mustalsoprovide alistofallcountervailing
measures inforce.
(i) Semi-annual reports arerequested bytheCommittee twice eachyear. One
request isissued inJanuary, forthesemi-annual report covering theperiod
1Julythrough 31December oftheprevious year, andestablishing adeadlineSCM-I -Page5
forsubmission ofthose reports attheendofFebruary. Thesecond request
isissued inJuly, forthesemi-annual report covering theperiod 1January
through 30Juneofthatsame year, andestablishing adeadline forsubmission
ofthose reports attheendofAugust. (Document G/SCM/N/19 contains an
invitation tosubmit reports for1January through 30June1996notlaterthan
30August 1996).
(ii) Thereports aretobemade onanagreed standard form (G/SCM/2).
Forcountries becoming Members after1January 1995, thefirstsemi-annual report
shallcover themostrecent period (January-June orJuly-December) prior totheentry
intoforce oftheWTO Agreement foreachMember. Document PC/IPL/11, Annex
7,reflects thisunderstanding.SCM-II -Page1
SCM-II
AGREEMENT ONSUBSIDIES AND
COUNTERVAILING MEASURES
LIST OFALL NOTIFICATION OBLIGATIONS
UNDER THE AGREEMENTSCM-II -Page2
SUBSIDIES AND COUNTERVAILING MEASURES
NOTIFICATION OBLIGATIONS
Item Notification requirement Type ofmeasure Periodicity Format Members notifying ToWhom
1. Agreement onSubsidies and
Countervailing Measures,
Art.8.3-adhocAnysubsidy programme for
which theprovisions of
ASCM Art.8.2areinvokedAdhoc(inadvance
ofimplementation
ofasubsidy
programme)PC/IPL/11,
Annex 1WTO Members Committee on
Subsidies and
Countervailing
Measures
2. Agreement onSubsidies and
Countervailing Measures,
Art.8.3-annualAnysubsidy programme for
which theprovisions of
ASCM Art.8.2areinvokedAnnual (updates
once initial
notification ismade)WGcurrently
examining formatWTO Members Committee on
Subsidies and
Countervailing
Measures
3. Agreement onSubsidies and
Countervailing Measures,
Art.25.1 -triennial; GATT
1994, Art.XVI:1 -triennialAnysubsidy asdefined in
ASCM Art.1:1 which is
specific within themeaning of
ASCM Art.2 aswellasany
other subsidy which causes
increased exports ordecreased
imports within themeaning of
GATT 1994, Article XVI:1Triennial (full
notification)G/SCM/6 WTO Members Committee on
Subsidies and
Countervailing
Measures
4. Agreement onSubsidies and
Countervailing Measures,
Art.25.1 -annual;
GATT 1994,
Art.XVI:1 -annualAnysubsidy asdefined in
ASCM Art.1:1which is
specific within themeaning of
ASCM Art.2aswellasany
other subsidy which causes
increased exports ordecreased
imports within themeaning of
GATT 1994, Article XVI:1Annual (changes) G/SCM/6 WTO Members Committee on
Subsidies and
Countervailing
MeasuresSCM-II -Page3
SUBSIDIES AND COUNTERVAILING MEASURES
NOTIFICATION OBLIGATIONS
Item Notification requirement Type ofmeasure Periodicity Format Members notifying ToWhom
5. Agreement onSubsidies and
Countervailing Measures,
Art.25.11 -adhocCountervailing dutyactions
(preliminary andfinal)Adhoc(without
delay once anaction
hasbeen taken)G/SCM/3 WTO Members Committee on
Subsidies and
Countervailing
Measures
6. Agreement onSubsidies and
Countervailing Measures,
Art.25.11 -biannualCountervailing dutyactions
(taken within thepreceding
6months)Biannual G/SCM/2 WTO Members Committee on
Subsidies and
Countervailing
MeasuresSCM-II -Page4
SUBSIDIES AND COUNTERVAILING MEASURES
NOTIFICATION OBLIGATIONS
Item Notification requirement Type ofmeasure Periodicity Format Members notifying ToWhom
7. Agreement onSubsidies and
Countervailing Measures,
Art.25.12Authorities competent to
initiate andconduct
countervailing duty
investigations referred toin
ASCM Art.11anddomestic
procedures governing the
initiation andconduct ofsuch
investigationsOnce upon entry
intoforce ofthe
WTO Agreement
forexisting
authorities and
procedures; adhoc
asandwhen a
Member establishes
such authorities and
proceduresG/SCM/N/18 WTO Members Committee on
Subsidies and
Countervailing
Measures
8. Agreement onSubsidies and
Countervailing Measures,
Art.27.11Elimination ofexport
subsidiesAdhoc PC/IPL/11,
Annex 2WTO Members -
developing countries
wishing toinvoke the
provisions ofASCM Art.
27.11Committee on
Subsidies and
Countervailing
MeasuresSCM-II -Page5
SUBSIDIES AND COUNTERVAILING MEASURES
NOTIFICATION OBLIGATIONS
Item Notification requirement Type ofmeasure Periodicity Format Members notifying ToWhom
9. Agreement onSubsidies and
Countervailing Measures,
Art.27.13Debt relief (direct forgiveness
ofdebt) andsubsidies to
cover social costs, in
whatever form (including
relinquishment ofgovernment
revenue andother transfer of
liabilities) when such
subsidies aregranted within
anddirectly linked toa
privatization programme ofa
developing country Member
thatresults ineventual
privatization.Adhoc PC/IPL/11,
Annex 3WTO Members
-developing countries
wishing toinvoke the
provisions ofASCM
Art.27.13Committee on
Subsidies and
Countervailing
Measures
10. Agreement onSubsidies and
Countervailing Measures,
Art.28.1Subsidy programmes which
areinconsistent withthe
provisions oftheASCMOnce, notlater than
90days after the
dateofentry into
force oftheWTO
Agreement forthe
Member notifyingPC/IPL/11
Annex 4WTO Members Committee on
Subsidies and
Countervailing
MeasuresSCM-II -Page6
SUBSIDIES AND COUNTERVAILING MEASURES
NOTIFICATION OBLIGATIONS
Item Notification requirement Type ofmeasure Periodicity Format Members notifying ToWhom
11. Agreement onSubsidies and
Countervailing Measures,
Art.29.3Subsidy programmes falling
within thescope of
ASCM Art.3Once, attheearliest
practicable date
after thedateof
entry intoforce of
theWTO
AgreementPC/IPL/11,
Annex 5WTO Members inthe
process oftransformation
from acentrally-planned to
amarket, free-enterprise
economy wishing to
invoke theprovisions of
ASCM Art.29.2Committee on
Subsidies and
Countervailing
Measures
12. Agreement onSubsidies and
Countervailing Measures,
Art.32.6Laws/regulations andchanges
thereto, including changes in
theadministration ofsuch
laws (concerning the
languages ofnotification for
Article 32.6, seedocument
G/SCM/N/1)Thefulltextonce at
thedateofentry
intoforce ofthe
WTO Agreement
forexisting laws
andregulations;
adhocasandwhen
aMember
establishes such
laws and
regulations, or
makes changes in
existing laws and
regulations orinthe
administration
thereofPC/IPL/11,
Annex 6WTO Members Committee on
Subsidies and
Countervailing
MeasuresSCM-III -Page 1
SCM-III
AGREEMENT ONSUBSIDIES AND
COUNTERVAILING MEASURES
DOCUMENTS
G/SCM/2
G/SCM/3
G/SCM/6
G/SCM/N/1
G/SCM/N/1/Suppl.1
G/SCM/N/3
G/SCM/N/18
PC/IPL/11WORLD TRADE G/SCM/2
22June1995
ORGANIZATION(95-1661)
Committee onSubsidies andCountervailing Measures
GUIDELINES FOR INFORMATION
PROVIDED INTHE SEMI-ANNUAL REPORTS
Adopted bytheCommittee on13June1995
1. Theinformation should always make clearwhich country1issubject tothemeasure reported.
2. Inorder tosystematically present datainthesemi-annual reports, thenames ofthecountries
whose imports aresubject toaction shallbeorganized inalphabetical order.
3. Ifanysingle country, e.g.Alpha intheillustrative report intheAnnex, issubject tomore
thanonecase, thedifferent cases forthiscountry shallbeorganized inchronological order.
4. When imports ofanyparticular product frommorethanonecountry areinvestigated, thenames
ofthecountries concerned should beprovided separately, i.e.eachproduct-country combination should
betreated asonecase. Thisisshown, forexample, fortheproduct category "machine tufted carpeting"
intheillustrative report intheAnnex.
5. Asindicated bythetitlesforcolumns 4,5and6inthesemi-annual report, thedatewhen the
measure istaken should always beprovided.
6. Columns 4,5and6inthesemi-annual reports should contain thedates onwhich measures
entered intoforce rather thanthedates onwhich findings were made.
7. Thetitlesforcolumns 4,5and6alsoindicate thattheamount ofsubsidization, expressed as
apercentage oramount perunit,mustbeprovided along withthedates forthemeasures reported in
these columns. When theamount ofsubsidization differs, arange oftheamounts ofsubsidization
could beprovided.
8. Iftherateofdutyimposed islessthantheamount ofsubsidization, thentherateofdutyshould
alsobeprovided along withtheamount ofsubsidization. Ifthelower dutyratecannot beprovided,
thisshould beindicated byafootnote.
9. Fortheinformation incolumn 11,thereporting country should clarify thecoverage ofthe
dataon"Trade volume" thatisprovided, i.e.whether thisdatarefers tothetotaltrade volume ofthe
subject product fromthecountry under investigation, ortototaltradevolume fromthecountry which
isdetermined tobesubsidized, orsome other notion oftrade volume. TheCommittee could reach
anagreement onthesymbols tobeusedforindicating thecoverage ofsuchdata.
10. When noinformation isprovided under columns 11or12,thenthereporting country should
giveareason fornotproviding suchdata. Inthiscontext, newsymbols which could beusedare"CF"
todenote confidentiality and"n/a" todenote thatthedataisnotprovided because itmaynotbeavailable
orrelevant inasituation ofareview.
1Inthisnote, theterm"country" includes customs territories.G/SCM/2
Page2
11. Incolumns 11and12,whenever relevant information isavailable itshould beprovided from
thetimewhen provisional measures aretaken, andtheinformation inthesecolumns should beupdated
inorder toprovide themostrecent relevant datapertinent tothelatest decision point covered bythe
report, e.g.provisional measures ordefinitive duties.
12. Fortheinformation provided incolumns 11and12,itwould bedesirable toindicate thetime
period forwhich theinformation isprovided.
13. Aninitiation ofacompletely newinvestigation should bedistinguished from thereopening
ofasuspended investigation ortheopening ofaninvestigation inthecontext ofareview ofanexisting
subsidization measure. Thisshould bedonebyusing thesymbol (R)afterthedateofinitiation for
reviews orforreopening ofasuspended investigation.
14. Forfurther improving thetransparency ofcountervailing investigations, information onall
cases pending attheendoftheperiod should bereported evenifthere wasnoaction taken during
theperiod forwhich thereport isprovided.
15. Listsofdefinitive duties andundertakings inforce asoftheendofthereporting period should
beprovided along withtheother information inthisreport.
16. Thelistsofdefinitive duties andundertakings inforce should contain measures inforce atthe
endofthereporting period, i.e.measures inforce on30Juneor31December, rather thanmeasures
inforce atthetimeofthesubmission ofthereport totheCommittee.
17. Theinformation onthemeasures inplace attheendofthereporting period should include
thedateonwhich themeasures were putinplace.2
18. Alistofcountervailing measures revoked during thereporting period should alsobeprovided.
19. Nothinginthisformatrequiresthenotificationofconfidentialinformation,includingconfidential
business information.
2Theformat forreview investigations willbediscussed bytheCommittee.G/SCM/2
Page3
Reporting Party: Illustrative
ANNEX
ILLUSTRATIVE SEMI-ANNUAL REPORT OFCOUNTERVAILING DUTY ACTIONS
Fortheperiod 1July-31December 1994
FINAL MEASURES NOFINAL MEASURES
Country
orcustoms
territoryProduct Initiation* Provisional
measures/
determinationsDefinitive
dutyPrice
under-
takingNo
subsidizationNo
injuryCase
w/drawnOther Trade
volume
**Subsidized
imports as
%of
domestic
consump-
tion
1 2 3 4 5 6 7 8 9 10 11 12
Date Date,
amount of
subsidiza-
tion1Date,
amount of
subsidization1Date, amount
ofsubsidiza-
tion1Date Date Date Date
Alpha Coated
groundwood
paper1.1.1994 4.5.1994
8-21%8.10.1994
5-18%32,000
M.T.12%
Alpha Machine tufted
carpeting3.2.1994 29.7.1994
4-45%4.10.1994
3-34%14million
square m.37%
Alpha Printcloth 1.4.1994 4.8.1994
12%20.12.1994
Beta Coated
groundwood paper1.1.1994 4.5.1994
12-18%7.8.1994
12-15%23,000
M.T.8%G/SCM/2
Page4
1 2 3 4 5 6 7 8 9 10 11 12
Delta Machine tufted
carpeting3.2.1994 29.7.1994
35-52%20.12.1994
20-42%CF CF
Delta Video tapes in
cassettes1.6.1994 (R) 12.12.1994
55%CF CF
Delta Barium chloride 7.4.1994 15.11.1994
23%n/a n/a
Gamma Pureandalloy
magnesium4.3.1994 5.7.1994
35%15.12.1994
20%15Mil.Kg. n/a
_______________
*Thesymbol (R)should beusedifaninvestigation isopened inthecontext ofareview ofanexisting countervailing measure, orafteranallegation ofabreach ofanundertaking.
**Trade volume based onstatistical dataforthelatest available calendar yearprior toinitiation (1993 forthedataprovided inthisreport). Thedataontrade volume isprovided for
thetotaltrade volume ofthesubject product from thecountry/customs territory under investigation.
1Percentage oramount perunitifappropriate.
CF=Information notprovided forreasons ofconfidentiality.
n/a=Notavailable.G/SCM/2
Page5
OUTSTANDING COUNTERVAILING MEASURES
DEFINITIVE DUTIES INFORCE
(Asof31December 1994)
Country/Customs Territory Product DateofImposition
Alpha Widgets 10.12.1992
Theta Snub-nosed screwdrivers 17.06.1993
UNDERTAKINGS INFORCE
(Asof31December 1994)
Country/Customs Territory Product DateofUndertaking
Gamma Stuffed rabbits 08.06.92
REVOCATION OFCOUNTERVAILING MEASURES
(1July-31December 1994)
Country/Customs Territory Product DateofRevocation
Sigma Oatbran 11.11.94WORLD TRADE G/SCM/3
22June1995
ORGANIZATION(95-1664)
Committee onSubsidies andCountervailing Measures
MINIMUM INFORMATION TOBEPROVIDED UNDER
ARTICLE 25.11 OFTHE AGREEMENT INTHE REPORTS
ONALL PRELIMINARY ORFINAL COUNTERVAILING ACTIONS
Adopted bytheCommittee on13June1995
1. Titleofthepublic notice regarding theaction.
2. Dateandplace ofpublication.
3. Investigation (Regulation) number andother notices relating tothesame
investigation (e.g.forinitiation, provisional measure).
4. Foreachsubsidy investigated, (a)theform ofsubsidy (e.g., grant, loan, equity
infusion), (b)nature ofsubsidy (export orother) (c)identity ofthegranting
authority, (d)thebasis forthedetermination ofspecificity, and(e)amount of
subsidization (percentage oramount perunit,asappropriate).
5. Where countervailing measures areimposed, theproduct (including customs
classification),origin(country/customsterritory/firm),rateofdutyandtheeffective
dateforeachsource ofimports.
6. Where anundertaking isinvolved, theproduct, country/customs territory/firm,
andeffective dateoftheundertaking.
7. Theperiod ofinvestigation (subsidization, injury).
8. Dateofthesubsidization determination.
9. Dateoftheinjury determination.
10. Type ofinjury found (material injury, threat, material retardation).
11. Volume andimport penetration ofsubsidized imports.
12. Effect ondomestic prices ofthelikeproduct (whether there wassignificant price
undercutting/price suppression ordepression).
13. Evidence ontheimpact regarding thedomestic industry (i.e.thefactors mentioned
inArticle 15.4oftheAgreement which werethebasis forthefinding regarding
theimpact onthedomestic industry).
./.G/SCM/3
Page2
14. Evidence ofcausation ofinjury todomestic industry (thebasis fordetermining
thecausation ofinjury, andother factors which might atthesame timebecausing
injury tothedomestic industry).RESTRICTED
WORLD TRADE G/SCM/6
9August 1995
ORGANIZATION(95-2357)
Committee onSubsidies andCountervailing Measures
QUESTIONNAIRE FORMAT FOR SUBSIDY NOTIFICATIONS
UNDER ARTICLE 25OFTHE AGREEMENT ONSUBSIDIES
AND COUNTERVAILING MEASURES AND UNDER
ARTICLE XVIOFGATT 1994
Adopted bytheCommittee on21July19953
General Rules
1. Thefollowing subsidies aresubject tonotification under Article 25ofthe
Agreement onSubsidies andCountervailing Measures andunder Article XVIof
GATT 1994:
(a) allspecific subsidies, asdefined inArticles 1and2oftheAgreement on
Subsidies andCountervailing Measures ("the SCM Agreement"), shall
benotified pursuant toArticle 25.2oftheSCM Agreement;
and
(b) allothersubsidies (i.e.,inaddition tothosedescribed in(a)),which operate
directly orindirectly toincrease exports ofanyproduct from, ortoreduce
imports ofanyproduct into, theterritory oftheMember granting or
maintaining thesubsidies, shallbenotified pursuant toArticle XVI:1 of
GATT 1994.
2. Itisunderstood thatnotifications made inaccordance with thefollowing
questionnaire format willsatisfy thenotification requirements ofbothArticle 25
oftheSCM Agreement andArticle XVIofGATT 1994.
3. AnyMember considering thatthere arenomeasures initsterritory requiring
notification under theSCM Agreement andArticle XVIofGATT 1994 shallso
inform theSecretariat inwriting.
4. Thecontent ofnotifications should besufficiently specific toenable otherMembers
toevaluate thetrade effects andtounderstand theoperation ofnotified subsidies.
5. Itisrecognized thatnotification ofameasure doesnotprejudge either itslegal
status under GATT 1994 andtheSCM Agreement, theeffects under theSCM
Agreement, orthenature ofthemeasure itself.
3TheCommittee agreed that,inlightofthefactthatthisformat replaces anexisting format for
notifications under Article XVI:1 oftheGATT 1947 approved bytheCONTRACTING PARTIES
(BISD, 9S/193-194), itshould bereferred totheCouncil forTrade inGoods forapproval bythatbody.G/SCM/6
Page2
6. Totheextentthatsubsidiesareprovidedtospecificproductsorsectors,notifications
ofthose subsidies should beorganized byproduct orsector.
7. Totheextent thatinformation called forinanyquestion isnotprovided, the
response tothatquestion shallexplain whynot.
8. Inaccordance withArticle 25.1oftheSCM Agreement, subsidy notifications shall
besubmitted nolaterthan30Juneofeachyear.
9. Members shall submit newandfullnotifications eachthird year(with 1995
understood tobetheyearforthefirstnewandfullnotifications under Article 25
oftheSCM Agreement andunder Article XVIofGATT 1994), andshallsubmit
updating notifications intheintervening years.
Information tobeProvided4
1. Titleofthesubsidy programme, ifrelevant, orbriefdescription oridentification
ofthesubsidy.
2. Period covered bythenotification.
3. Policy objective and/or purpose ofthesubsidy.
4. Background andauthority forthesubsidy (including identification ofthelegislation
under which itisgranted).
5. Form ofthesubsidy (i.e., grant, loan, taxconcession, etc.).
6. Towhom andhowthesubsidy isprovided (whether toproducers, toexporters,
orothers; through whatmechanism; whether afixed orfluctuating amount per
unit;ifthelatter, howdetermined).
7. Subsidy perunit,orincases where thisisnotpossible, thetotalamount orthe
annualamountbudgetedforthatsubsidy(indicating,ifpossible,theaveragesubsidy
perunitintheprevious year). Where provision ofperunitsubsidy information
(fortheyearcovered bythenotification, fortheprevious year, orboth) isnot
possible, afullexplanation.
8. Duration ofthesubsidy and/or anyother timelimits attached toit,including date
ofinception/commencement.
9. Statistical datapermitting anassessment ofthetrade effects ofthesubsidy. The
specific nature andscope ofsuchstatistics islefttothejudgement ofthenotifying
Member. Totheextent possible, relevant and/or determinable, however, itis
4Theinformation requested inpoints 1-9below must beprovided infull:
(a) forallsubsidies inthecaseoffullnotifications
(b) forsubsidies notified forthefirsttimeinupdate notifications.
Inthecaseofsubsidies which havepreviously beennotified, theinformation provided inupdate
notifications under points 3,4,5,6and8maybelimited toindicating anymodifications (ortheabsence
thereof) from theprevious notification.G/SCM/6
Page3
desirable thatsuchinformation include statistics ofproduction, consumption,
imports andexports ofthesubsidized product(s) orsector(s):
(a) forthethree most recent years forwhich statistics areavailable;
(b) foraprevious representative year,which, where possible andmeaningful,
should bethelatest yearpreceding theintroduction ofthesubsidy or
preceding thelastmajor change inthesubsidy.RESTRICTED
WORLD TRADE G/SCM/N/1
30January 1995
ORGANIZATION
(95-0165)
Committee onSubsidies andCountervailing Measures
NOTIFICATION OFLAWS AND REGULATIONS
UNDER ARTICLE 32.6OFTHE AGREEMENT
1. Under Article 32.6oftheAgreement onSubsidies andCountervailing Measures,
Members shallinform theCommittee ofanychanges intheirlawsandregulations relevant
totheAgreement andintheadministration ofsuchlawsandregulations.
2. ThePreparatory Committee fortheWorld Trade Organization approved (PC/R,
paragraph 45)theagreement reached bytheInformal Contact Group onAnti-Dumping,
Subsidies andSafeguards thatthefirstnotification byaWTO Member ofcountervailing
dutylegislation would cover thefulltextofrelevant lawsandregulations (PC/IPL/11,
Annex 6).
3. Members aretherefore invited tosubmit, inaworking language oftheWTO, the
fulltextoflawsandregulations relevant tocountervailing duties. Members which have
nosuchlawsorregulations areinvited tonotify theCommittee accordingly.
4. Thelawsandregulationsreceivedinresponsetotheaboverequestwillbecirculated
asaddenda tothisdocument.WORLD TRADE G/SCM/N/1/Suppl.1
2March 1995
ORGANIZATION(95-0447)
Committee onSubsidies andCountervailing Measures
NOTIFICATION OFLAWS AND REGULATIONS
UNDER ARTICLE 32.6OFTHE AGREEMENT
Supplement
TheCommitteedecidedinitsspecialmeetingof22February1995thatallMembers
which haveneworexisting legislation and/or regulations which apply inwhole orinpart
tocountervailing dutyinvestigations orreviews covered bytheAgreement shallnotify
thefullandintegrated textofthatlegislation and/or regulations totheCommittee by
15March 1995.Ifsuchlegislation and/or regulations donotexistorarenotyetavailable,
theMember willinform theCommittee ofthisfact,willexplain thereasons therefore,
andwillprovide anindicative datebywhich timeanotification isexpected. Asfurther
agreed bytheCommittee, these notifications willbetreated asunrestricted documents.
TheCommitteealsoadoptedthefollowingdecisionregardingObservergovernments:
AnObserver government shallprovide theCommittee withanyinformation the
Observer government considers relevant tomatters within thepurview ofthe
Agreement, including thetextofitslawsandregulations regarding countervailing
duties, andinformation regarding anycountervailing measures taken bythe
Observer government. Attherequest ofanyMember ortheObserver government
itself, anymatter contained insuchinformation maybebrought totheattention
oftheCommittee aftergovernments havebeenallowed sufficient timetoexamine
theinformation.
Laws andregulations submitted byObserver governments inresponse tothisinvitation
willbecirculated asaddenda toG/SCM/N/1.RESTRICTED
WORLD TRADE G/SCM/N/3
30January 1995
ORGANIZATION
(95-0167)
Committee onSubsidies andCountervailing Measures
SUBSIDIES
NOTIFICATIONS PURSUANT TOARTICLE XVI:1 OFTHE GATT 1994
AND ARTICLE 25OFTHE AGREEMENT ONSUBSIDIES
AND COUNTERVAILING MEASURES
1. Pursuant toArticle XVI:1 oftheGATT 1994andArticle 25.2oftheAgreement
onSubsidies andCountervailing Measures, Members shallnotify anysubsidy asdefined
inparagraph 1ofArticle 1oftheAgreement onSubsidies andCountervailing Measures
which isspecific within themeaning ofArticle 2ofthatAgreement, granted ormaintained
within theirterritories.
2. InaccordancewiththeDecisionoftheCONTRACTINGPARTIESattheirtwentieth
session (BISD 11S/58), Members should submit every thirdyearnewandfullsubsidies
notifications andbring thesenotifications uptodateintheintervening years. AstheWTO
Agreement entered intoforce thisyear, Members areinvited tosubmit for1995newand
fullsubsidies notifications.
3. Members arereminded thatthequestionnaire regarding notifications pursuant to
Article XVI:1 maybefound inBISD 9S/193. Article 25:3oftheAgreement onSubsidies
andCountervailing Measures further provides that,without prejudice tothecontent and
formofthequestionnaire onsubsidies, Members shallensure thattheirnotifications contain
certain information.
4. Members willrecall thattheCONTRACTING PARTIES totheGATT 1947have
decided that,ifameasure issubject toanotification obligation bothunder theWTO
Agreement andtheGATT 1947, thenotification ofsuchameasure totheWTO shall,
unless otherwise indicated inthenotification, bedeemed tobealsoanotification ofthat
measure under theGATT 1947 (L/7582, dated 13December 1994). Accordingly, the
notification ofasubsidy pursuant tothisinvitation would bedeemed tobeanotification
responding totherequest fornotifications under Article XVI:1 oftheGATT 1947(L/7611).
5. Notifications received inreply totheabove request willbeissued inaddenda to
thisdocument.RESTRICTED
WORLD TRADE G/ADP/N/14
G/SCM/N/18
ORGANIZATION 22May1996
(96-1947)
Original: English Committee onAnti-Dumping Practices
Committee onSubsidies andCountervailing Measures
NOTIFICATION OFCOMPETENT AUTHORITIES
1. Article 16.5oftheAgreement onImplementation ofArticle VIoftheGATT 1994
andArticle 25.12 oftheAgreement onSubsidies andCountervailing Measures provide
thatMembers shallnotify therespective Committees regarding theirauthorities competent
toinitiate andconduct anti-dumping andcountervailing investigations.
2. Pursuant totheabove provisions, theCommittees onAnti-Dumping Practices and
onSubsidies andCountervailing Measures decided, attheirregular meetings of29April
and1-2May1996 respectively, thattheSecretariat shall establish andcirculate alist
identifying thename, address, telephone andfaxnumber, ande-mail address (ifapplicable)
oftheirinvestigating authorities.
3. According, Members which haveaninvestigating authority, andwhich havenot
already provided theabove information regarding thatinvestigating authority inthecontext
oftheirnotification oflegislation andregulations, arerequested todosoby30June1996.
Theresulting listwillbecirculated asanaddendum tothisdocument.
4. Members arefurther requested toupdate orcorrect theirnotification asnecessary,
sothatthelistmaybeperiodically revised.RESTRICTED
PREPARATORY COMMITTEE PC/IPL/11
FOR THE 2December 1994
WORLD TRADE ORGANIZATION
(94-2629)
SUB-COMMITTEE ONINSTITUTIONAL ,
PROCEDURAL AND LEGAL MATTERS
INFORMAL CONTACT GROUP ONANTI-DUMPING
SUBSIDIES AND SAFEGUARDS
Report bytheChairman
asapproved bytheSub-Committee on28November
1. Thisreport ofthework oftheInformal Contact Group onAnti-Dumping, Subsidies
andSafeguards isbeing submitted totheSub-Committee ontheresponsibility oftheChairman
oftheContact Group, Mr.OleLundby.
2. TheContact Group meton22July, 20September, 30September, 11October, 27-
28October, 2November, 11November, 17November and21November 1994.
3. TheContact Group reached agreement onrecommended standard formats for
notifications under Articles 8.3,27.11, 27.13, 28.1and29.3oftheAgreement onSubsidies
andCountervailing Measures. These recommended formats areattached inAnnexes 1-5.
Itisunderstood thatthese recommended formats aredesigned tofacilitate theeffective
operation oftheAgreement anddonotconstitute authoritative interpretations ofrights and
obligations ofWTO Members. Itisalsounderstood thattheseformats mayhavetoberevised
bytherelevant WTO body inlightoftheexperience withtheiruse.
4. WithregardtothestandardformatfornotificationsunderArticle8.3oftheAgreement
onSubsidies andCountervailing Measures, itshould benoted thatthisformat pertains only
toinitial notifications ofsubsidy programmes asprovided forinthefirstsentence of
Article 8.3.Itwasagreed thatfurther work isnecessary withrespect totheformat forannual
updates ofsuchnotifications provided forinthethirdsentence ofArticle 8.3.
5. With regard tonotifications under Article 29.3oftheAgreement onSubsidies and
Countervailing Measures, itwasnoted thatitmight beuseful fortheWTO Committee on
Subsidies andCountervailing Measures toconsider thequestion ofwhen these notifications
aretobeprovided.
6. TheContact Group alsoreached anunderstanding oncertain aspects ofthe
implementation oftheprovisions intheAgreement onAnti-Dumping andtheAgreement
onSubsidies andCountervailing Measures regarding thesubmission ofsemi-annual reports
onanti-dumping andcountervailing dutyactions andthenotification ofrelevant lawsand
regulations. Therelevant textsareattached inAnnexes 6and7.
7. TheGroup hasbegun toconsider thequestion ofprocedural arrangements for
arbitration proceedings under Article 8.5oftheAgreement onSubsidies andCountervailing
Measures. TheGroup intends tocontinue thiswork andwillreport theresults ofthiswork
asappropriate.PC/IPL/11
Page2
ANNEX 1
Notifications under Article 8.3oftheAgreement
onSubsidies andCountervailing Measures
Introduction
Thepurpose ofthisstandard format istoassist WTO Members inmaking notifications
under thefirstsentence ofArticle 8.3oftheAgreement onSubsidies andCountervailing
Measures ("SCM Agreement"). Inviewofthestatement inArticle 8.3thatnotifications
under thisprovision mustbe"sufficiently precise toenable other Members toevaluate the
consistency oftheprogramme withtheconditions andcriteria provided forintherelevant
provisions ofparagraph 2",thequestions inthisstandard format seekinformation relevant
toanassessment ofnotified assistance inlightoftherelevant legalrequirements inArticle
8.2anddonotseekinformation ontrade effects ofsubsidies oronstatistics onproduction,
consumption, imports andexports. Itshould benoted inthisregard thatthestandard format
pertains onlytonotifications under thefirstsentence ofArticle 8.3andnottoannual updates
ofthese notifications referred tointhethirdsentence ofthatprovision.
Each section below includes several questions ofageneral nature onissues suchas
theobjectives ofaprogramme, thelevel ofgovernment involved andtheinstitutional
framework fortheimplementation oftheprogramme andthefinancing instruments usedin
theprogramme.Inaddition,therearemorespecificquestionsdesignedtogenerateinformation
relevant toanevaluation ofwhether assistance under aparticular programme meets the
conditions ofArticle 8.2oftheSCM Agreement.
Withregard tothequestions inthisstandard format onarrangements which mayexist
formonitoring, auditing andevaluation ofassistance under anotified programme, itshould
bestressed that thisstandard format doesnotaddtoordetract from therelevant legal
requirements inArticle 8.2oftheSCM Agreement.
Asprovided infootnote 34toArticle 8.3,Members arenotrequired toprovide
confidential information, including confidential business information.PC/IPL/11
Page3
I. Assistance forresearch activities
(a) Describe thepolicy objectives oftheassistance, including, ifapplicable, anysectoral
objectives.
(b) Provide acopyofthelaw,regulation and/or other legalinstrument under which the
assistance isprovided. Ifthese documents arenotinaWTO language, provide a
translation inEnglish, French orSpanish of(i)thespecific legalprovisions which
arerelated tothesubsidies granted forresearch activities, including theconditions
under which those subsidies aregranted, and(ii)thetable ofcontents orchapter
headings ofthelaw,regulation and/or other legalinstrument.
(c) Identify thelevel(s) ofgovernment involved intheprovision ofassistance forresearch
activities which isnotified andprovide adetailed description oftheinstitutional
framework fortheimplementation oftheprogramme, including, ifapplicable, a
description oftheroleofnon-governmental entities.
(d) Identify thespecific financing instrument(s) usedintheprogramme andprovide a
detailed description oftheincidence andduration ofassistance under eachinstrument.
(e) Identify theassisted research areas and,ifpossible, theassisted research projects.
Provide atechnical description ofthespecific goals oftheresearch activities and
explain howthese activities fallwithin thedefinitions of"industrial research" and
"pre-competitive development activity" infootnotes 28and29oftheSCM
Agreement.
(f) Inthecaseofindustrial research, totheextent practicable inthecontext ofanadvance
notification ofaprogramme, explain whatnewknowledge isbeing sought andwhat
newproducts, processes orservices orimprovements inexisting products, processes
orservices areintended tobedeveloped using thisknowledge. Totheextent possible
describe theendresult oftheindustrial research.
(g) Inthecaseofpre-competitive development activity, totheextent practicable inthe
context ofanadvance notification ofaprogramme, describe theendresult ofthe
pre-competitive development activity andexplain howexisting products, production
lines, manufacturing processes, services orotheron-going operations willbeaffected
asaresult ofthisactivity.
(h) Ifaprototype isbeing developed, totheextent practicable inthecontext ofanadvance
notification ofaprogramme, describe howtheprototype willbedeveloped and
describe what modifications areforeseen which would berequired tomake the
prototype capable ofcommercial use.
(i) Describe theindustries andentities, totheextent known, whose research activities
willbeeligible under theprogramme.
(j) Iftheprogramme covers research activities conducted onacontract basis, explain,
totheextent practicable inthecontext ofanadvance notification ofaprogramme,
thenature ofthecontractual arrangements inquestion. Ifpossible, provide amodel
contract (inEnglish, French orSpanish).
(k) Specify thetotalamount ofassistance budgeted under theprogramme.PC/IPL/11
Page4
(l) Provide abreakdown ofexpenditure byproject, or,ifnotpossible, byresearch area.
(m) Specify theamounts ofassistance permitted under theprogramme for(a)industrial
research and(b)pre-competitive development activity.
(n) Explain howitisensured thattheassistance doesnotcover more than75percent
ofthecosts ofindustrial research, 50percentofthecosts ofpre-competitive
development activity or,insituations referred toinfootnote 30,62.5percentof
bothofthese costs. Describe themethodology usedincalculating these costs.
(o) Describe thespecific types ofcosts covered bytheassistance. Explain howitis
ensured thattheassistance islimited exclusively tothecostsmentioned initems (i)-(v)
ofArticle 8.2(a) oftheSCM Agreement. Describe themethodology used in
calculating these costs.
(p) Describe anyarrangements which mayexistformonitoring, auditing andevaluation.
II. Assistance todisadvantaged regions within theterritory ofaMember
(a) Describe thegeneral framework ofregional development, asprovided forinfootnote
31,pursuant towhich theassistance isgranted. Inthisconnection, explain howthe
regionaldevelopmentpolicyofwhichtheprogrammeformspartisinternallyconsistent
andgenerally applicable anddescribe howtheprogramme isintended tocontribute
toregional development.
(b) Provide acopyofthelaw,regulation and/or other legalinstrument under which the
assistance isprovided. Ifthese documents arenotinaWTO language, provide a
translation inEnglish, French orSpanish of(i)thespecific legalprovisions which
arerelated tothesubsidies granted todisadvantaged regions, including theconditions
under which those subsidies aregranted, and(ii)thetable ofcontents orchapter
headings ofthelaw,regulation and/or other legalinstrument.
(c) Identify thelevel(s) ofgovernment involved intheimplementation oftheregional
assistanceprogrammeandprovideadetaileddescriptionoftheinstitutionalframework
fortheimplementation oftheprogramme, including, ifapplicable, adescription of
theroleofnon-governmental entities.
(d) Identify theregions eligible forassistance under theprogramme. Explain howthese
regionsarecontiguousgeographicalareaswithadefinableeconomicandadministrative
identity.
(e) Identify thecriteria onthebasis ofwhich theregions have been designated as
disadvantaged. Provide acopy oftherelevant law,regulation orother official
document inwhich suchcriteria arespelled out.
(f) Describe themeasurements ofeconomic development which havebeenincluded in
these criteria. Explain howanycomposite measurement ofeconomic development
wasdetermined andcalculated. Provide foraperiod ofthree years therelevant
statistical datafortheregion andfortheterritory asawhole oftheMember used
indetermining thataregion isdisadvantaged.
(g) Identify thespecific financing instrument(s) usedintheprogramme andprovide a
detailed description oftheincidence andduration ofassistance under eachinstrument.PC/IPL/11
Page5
(h) Describethecriteriafordeterminingtheeligibilityofthebeneficiariesoftheassistance
andtheprocedures regarding applications forassistance under theprogramme.
Provide (inEnglish, French orSpanish) acopy ofastandard application form or
instructions, ifany.
(i) Specify thetotalamount ofassistance budgeted under theprogramme. Describe the
specific types ofcosts covered bytheassistance.
(j) Specify theceilings, expressed interms ofinvestment costsorcostsofjobcreation,
ontheamount ofassistance toindividual projects. Explain themethodology used
forcalculating theinvestment costsandthecostsofjobcreation. Explain howsuch
ceilings havebeendifferentiated according tothedifferent levels ofdevelopment
oftheassisted regions.
(k) Describe anyprovisions which mayexist under theprogramme toavoid the
predominant useofasubsidy by,orthegranting ofdisproportionately largeamounts
ofsubsidy to,certain enterprises asprovided forinArticle 2.
(l) Explain howitisensured thattheamount oftheassistance doesnotexceed the
ceilings.
(m) Describe anyarrangements which mayexistformonitoring, auditing andevaluation.
III. Assistance topromote adaptation ofexisting facilities tonewenvironmental
requirements
(a) Describe thepolicy objectives oftheprogramme, including, ifapplicable, anysectoral
objectives.
(b) Provide acopyofthelaw,regulation and/or other legalinstrument under which the
assistance isgranted. Ifthese documents arenotinaWTO language, provide a
translation inEnglish, French orSpanish of(i)thespecific legalprovisions which
arerelated tothesubsidies granted topromote adaptation ofexisting facilities tonew
environmental requirements, including theconditions under which those subsidies
aregranted, and(ii)thetableofcontents orchapter headings ofthelaw,regulation
and/or other legalinstrument.
(c) Identify thelevel(s) ofgovernment involved intheimplementation ofthe
environmental assistance programme andprovide adetailed description ofthe
institutional framework fortheimplementation oftheprogramme, including, if
applicable, adescription oftheroleofnon-governmental entities.
(d) Explain howtheenvironmental requirements inquestion are"new" requirements.
Provide acopy ofthelaworregulation which imposes thenewenvironmental
requirements. Explain which nuisances andpollutants areintended tobereduced
bytheserequirements. Identify thelevelofgovernment atwhich theserequirements
areimposed.
(e) Describe thetimeframe fortheapplication ofthenewenvironmental requirements
toexisting facilities.
(f) Totheextent practicable inthecontext ofanadvance notification ofaprogramme,
provide atechnical description oftheadaptation ofexisting facilities necessary to
meetthenewenvironmental requirements andidentify those facilities. Explain howPC/IPL/11
Page6
theserequirements would result inareduction ofthespecific nuisances orpollutants
andexplain howtheserequirements result ingreater constraints andfinancial burdens
onfirms.
(g) Identify thespecific financing instrument(s) usedintheprogramme andprovide a
detailed description oftheincidence andduration ofassistance under eachinstrument.
(h) Explain whether theassistance isprovided onthetotalcostofthereduction ofthe
nuisances orpollutants oronanindividual phase ofimplementation ofthenew
environmentalrequirements.Identifyanylegalprovisionand/orprovideotherrelevant
information which explains howtheonetime, non-recurring condition ismet.
(i) Specify thetotalamount ofassistance budgeted under theprogramme.
(j) Describe thecriteria fordetermining theeligibility ofbeneficiaries ofthe
environmental assistance andtheprocedures regarding applications forenvironmental
assistance. Provide (inEnglish, French orSpanish )acopyofastandard application
form orinstructions, ifany.
(k) Explain howitisensured thattheassistance islimited totheadaptation ofexisting
facilities. Describe themethodology usedforcalculating thecosts ofadaptation of
existing facilities tothenewenvironmental requirements. Describe thespecific types
ofcosts covered bytheassistance. Explain howitisensured thattheassistance
doesnotcover more than20percentofthecosts ofthisadaptation.
(l) Explain howitisensured thattheassistance isdirectly linked andproportionate to
afirm'splanned reduction ofnuisances andpollution andthattheassistance does
notcover anymanufacturing costsavings which maybeachieved.
(m) Describe anyarrangements which mayexistformonitoring, auditing andevaluation.PC/IPL/11
Page7
ANNEX 2
Notifications under Article 27.11 oftheAgreement
onSubsidies andCountervailing Measures
1. Indicate thedateonwhich export subsidies covered byArticle 3were eliminated.
2. Listtheexport subsidies covered byArticle 3which havebeeneliminated afterthe
entry intoforceoftheWTO Agreement5andidentify themeans bywhich theexport subsidies
were eliminated.
5Itisunderstood thatinnotifying theelimination ofcertain export subsidies under Article 27.11,
Members maymake reference totherelevant information provided innotifications submitted pursuant
toArticle 25.PC/IPL/11
Page8
ANNEX 3
Notifications under Article 27.13 oftheAgreement
onSubsidies andCountervailing Measures
1. Provide acopyofthelaw,regulation and/or other legalinstrument establishing the
privatization programme under which subsidies referred toinArticle 27.13 aregranted.
Ifthese documents arenotinaWTO language, provide atranslation inEnglish, French or
Spanish ofthetableofcontents orchapter headings ofthelegalinstrument inquestion and
ofanyprovision which directly relates tothesubsidies notified under paragraph 3below.
2. Provide information ontheobjectives andimplementation oftheprivatization
programme referred toinparagraph 1above andtheenterprises concerned. Submit acopy
ofthisprogramme andprovide suchadditional explanation asmaybenecessary. Ifthese
documents arenotinaWTO language, provide atranslation inEnglish, French orSpanish
of(i)thespecific legalprovisions which show thatsubsidies aregranted within anddirectly
linked tothisprogramme, and(ii)thetableofcontents orchapter headings ofthisprogramme.
3. Provide acopyofthelaw,regulation and/or other legalinstrument under which the
subsidies aregranted. Ifthese documents arenotinaWTO language, provide atranslation
inEnglish, French orspanish of(i)thespecific legal provisions which arerelated tothe
subsidies inquestion, including theconditions under which those subsidies aregranted, and
(ii)thetable ofcontents orchapter headings ofthelaw,regulation and/or other legal
instrument.
4. Describe thespecific form ofthesubsidies. Where applicable, explain howthe
subsidies cover social costs.
5. Specify thelimited period oftimeoftheprivatization programme andofthesubsidies
granted inconnection therewith.
6. Explain howthesubsidies aregranted within anddirectly linked totheprivatization
programme.PC/IPL/11
Page9
ANNEX 4
Notifications under Article 28.1oftheAgreement
onSubsidies andCountervailing Measures
1. Listallexisting subsidy programmes referred toinArticle 28.1oftheAgreement.
2. Describethepolicyobjectivesofeachprogramme,including,ifapplicable,anysectoral
objectives.
3. Specify thedateofestablishment oftheprogrammes andanyexpiry dateprovided
fortherein.
4. Provide acopyofthelaw,regulations and/or other legalinstruments under which
thesubsidies aregranted. Ifthesedocuments arenotinaWTO language, provide atranslation
inEnglish, French orSpanish of(i)thespecific legalprovisions which arerelated tothe
subsidies inquestion, including theconditions under which those subsidies aregranted, and
(ii)thetable ofcontents orchapter headings ofthelaw,regulation and/or other legal
instrument.
5. Identify thelevel(s)of government involved intheimplementation oftheprogrammes.
6. Describe thefinancing instruments(s) usedineachprogramme.
7. Totheextent possible atthetimeofthenotification, explain foreachprogramme
howitisintended tobring theprogramme intoconformity withtheAgreement within the
period ofthree years referred toinArticle 28.1(b)oftheAgreement.
8. Explain foreachprogramme howitisensured thatthescope oftheprogramme will
notbeextended andthattheprogramme willnotberenewed upon itsexpiry.PC/IPL/11
Page10
ANNEX 5
Notifications under Article 29.3oftheAgreement
onSubsidies andCountervailing Measures
1. Listallsubsidy programmes falling within thescope ofArticle 3.
2. Describethepolicyobjectivesofeachprogramme,including,ifapplicable,anysectoral
objectives.
3. Specify thedateofestablishment oftheprogrammes.
4. Provide acopyofthelaws, regulations and/or other legalinstruments under which
thesubsidies aregranted. Ifthesedocuments arenotinaWTO language, provide atranslation
inEnglish, French orSpanish of(i)thespecific legal provisions which arerelated tothe
subsidies inquestion, including theconditions under which those subsidies aregranted, and
(ii)thetable ofcontents orchapter headings ofthelaw,regulation and/or other legal
instrument.
5. Identifythelevel(s)ofgovernmentinvolvedintheimplementationoftheprogrammes.
6. Describe thefinancing instrument(s) usedineachprogramme.
7. Totheextent possible atthetimeofthenotification, indicate foreachprogramme
when theprogramme willbephased outorhowitwillbebrought intoconformity with
Article 3within aperiod ofseven years from thedateofentry intoforce oftheWTO
Agreement.PC/IPL/11
Page11
ANNEX 6
Notification oflegislation
With regard toArticle 18.5oftheAgreement onImplementation ofArticle VIof
theGeneral Agreement onTariffs andTrade 1994 andArticle 32.6oftheAgreement on
Subsidies andCountervailing Measures, itisunderstood thatthefirstnotification byaWTO
Member ofanti-dumping andcountervailing dutylegislation willcover thefulltextofrelevant
lawsandregulations.PC/IPL/11
Page12
ANNEX 7
Semi-Annual Reports ofAnti-Dumping
andCountervailing Duty Actions
With regard tosemi-annual reports required under Article 16.4oftheAgreement
onImplementation ofArticle VIoftheGeneral Agreement onTariffs andTrade 1994 and
under Article 25.11 oftheAgreement onSubsidies andCountervailing Measures, itis
understood thatthefirstreport submitted byeachWTO Member willcover theperiod July-
December orJanuary-June, whichever ismore recent, prior tothedateofentry intoforce
oftheWTO Agreement fortheMember.SCM-IV -Page1
SCM-IV
AGREEMENT ONSUBSIDIES AND
COUNTERVAILING MEASURES
"MOCK" EXAMPLESSCM-IV -Page2
"MOCK" EXAMPLE OFNOTIFICATIONS UNDER ARTICLE 25.1
Thefollowing matrix canbeusedtodetermine whattypeofnotification must bemade1:
Does your Government
oranypublic body
grant anysubsidy (as
defined inArticle 1.1of
theAgreement)Isthesubsidy specific within
themeaning ofArticle 2of
theAgreement ordoesit
operate directly orindirectly
toincrease exports from or
reduce imports intoits
territory (within themeaning
ofArticle XVI:1 ofthe
GATT 1994)Type ofnotification tobemade
NO - Letter stating thisfact.
EXAMPLE:
"Inaccordance withArticle 25.2oftheAgreement onSubsidies
andCountervailing Measures andArticle XVI:1 ofthe
GATT 1994, thegovernment of[name ofMember] wishes to
inform youthat[name ofMember] doesnotgrant ormaintain
within itsterritory anysubsidy within themeaning ofArticle 1.1
oftheAgreement onSubsidies andCountervailing Measures
which isspecific within themeaning ofArticle 2ofthe
Agreement, orwhich operates directly orindirectly toincrease
exports from orreduce imports intoitsterritory within the
meaning ofArticle XVI:1 oftheGATT 1994."
YES NO Letter stating thisfact.
EXAMPLE:
"Inaccordance withArticle 25.2oftheAgreement onSubsidies
andCountervailing Measures andArticle XVI:1 ofthe
GATT 1994, thegovernment of[name ofMember] wishes to
inform youthat[name ofMember] doesnotgrant ormaintain
within itsterritory anysubsidy within themeaning ofArticle 1.1
oftheAgreement onSubsidies andCountervailing Measures
which isspecific within themeaning ofArticle 2ofthe
Agreement, orwhich operates directly orindirectly toincrease
exports from orreduce imports intoitsterritory within the
meaning ofArticle XVI:1 oftheGATT 1994."
YES YES Fullresponse totheQuestionnaire (Annex IV)
Case 1: Your country didnotnotify anysubsidy under Article 25oftheAgreement inthe
previous year.
Asimple letter stating thefactthatyourcountry hasnotintroduced anysubsidy since thefull
notification in[document number] wassubmitted issufficient.
EXAMPLE:
"Inaccordance withArticle 25.6oftheAgreement onSubsidies andCountervailing
Measures andArticle XVI:1 oftheGATT 1994, thegovernment of[name ofMember]
wishes toinform youthat[name ofMember] hasnotintroduced intoitsterritory any
subsidy within themeaning ofArticle 1.1oftheAgreement which isspecific within
themeaning ofArticle 2oftheAgreement, orwhich operates directly orindirectly
toincrease exports from orreduce imports intoitsterritory within themeaning of
Article XVI:1 oftheGATT 1994, since thefullnotification circulated in[document
number] wassubmitted."
1For"mock" examples ofnotifiable subsidies, seepages 4through 6ofthissection.SCM-IV -Page3
Case 2: Your country didnotify asubsidy/subsidies under Article 25oftheAgreement inthe
previous year.
Theinformation contained inthefullnotification isthebasis fortheupdating notification.
(a) Foreachofitems 1through 8ofinformation inthefullnotification forwhich
there hasbeennochange, itshould bestated:
"Nochange since lastfullnotification."
(b) Foritem9(statistical dataontrade effects), updated datamust beprovided in
eachannual notification.SCM-IV -Page4
"MOCK" EXAMPLES OFNOTIFIABLE SUBSIDIES UNDER ARTICLE 25.1
OFTHE AGREEMENT ONSUBSIDIES AND COUNTERVAILING MEASURES
Thefirstsection iscomprised oftheIllustrative ListofExport Subsidies, which isAnnex I
oftheAgreement onSubsidies andCountervailing Measures. Thesecond section, dealing withdomestic
subsidies, iscomprised ofexamples taken fromactual notifications made since theimplementation of
theWTOAgreement.Thesesectionsprovideonlyanillustrationofsuchsubsidies,andnotanexhaustive
list.
I. Subsidies Identified intheWTO Illustrative ListofExport Subsidies:
Annex IoftheAgreement on
Subsidies andCountervailing Measures
ILLUSTRATIVE LIST OFEXPORT SUBSIDIES
(a) Theprovision bygovernments ofdirect subsidies toafirmoranindustry contingent upon
export performance.
(b) Currency retention schemes oranysimilar practices which involve abonus onexports.
(c) Internal transport andfreight charges onexport shipments, provided ormandated by
governments, onterms more favourable thanfordomestic shipments.
(d) Theprovisionbygovernmentsortheiragencieseitherdirectlyorindirectlythroughgovernment-
mandated schemes, ofimported ordomestic products orservices foruseintheproduction
ofexported goods, onterms orconditions morefavourable thanforprovision oflikeordirectly
competitive products orservices foruseintheproduction ofgoods fordomestic consumption,
if(inthecaseofproducts)suchtermsorconditionsaremorefavourablethanthosecommercially
available2onworld markets totheirexporters.
2Theterm"commercially available" means thatthechoice between domestic andimported products
isunrestricted anddepends onlyoncommercial considerations.SCM-IV -Page5
(e) Thefullorpartial exemption, remission, ordeferral specifically related toexports, ofdirect
taxes3orsocial welfare charges paidorpayable byindustrial orcommercial enterprises.4
(f) Theallowance ofspecial deductions directly related toexports orexport performance, over
andabove those granted inrespect toproduction fordomestic consumption, inthecalculation
ofthebaseonwhich direct taxes arecharged.
(g) Theexemption orremission inrespect oftheproduction anddistribution ofexported products,
ofindirect taxes3inexcess ofthose levied inrespect oftheproduction anddistribution oflike
products when soldfordomestic consumption.
(h) Theexemption, remission ordeferral ofprior stage cumulative indirect taxes3ongoods or
services usedintheproduction ofexported products inexcess oftheexemption, remission
ordeferral oflikeprior stage cumulative indirect taxes ongoods orservices usedinthe
production oflikeproducts when soldfordomestic consumption; provided, however, that
priorstagecumulativeindirecttaxesmaybeexempted,remittedordeferredonexportedproducts
even when notexempted, remitted ordeferred onlikeproducts when soldfordomestic
consumption, ifthepriorstagecumulative indirect taxesarelevied oninputs thatareconsumed
intheproduction oftheexported product (making normal allowance forwaste).5Thisitem
shallbeinterpreted inaccordance withtheguidelines onconsumption ofinputs intheproduction
process contained inAnnex II.
3Forthepurpose ofthisAgreement:
Theterm"direct taxes" shallmean taxes onwages, profits, interests, rents, royalties, and
allother forms ofincome, andtaxes ontheownership ofrealproperty;
Theterm"import charges" shallmean tariffs, duties, andother fiscal charges notelsewhere
enumerated inthisnotethatarelevied onimports;
Theterm"indirect taxes" shallmean sales, excise, turnover, value added, franchise, stamp,
transfer, inventory andequipment taxes, border taxes andalltaxes other thandirect taxes andimport
charges;
"Prior stage" indirect taxes arethose levied ongoods orservices useddirectly orindirectly
inmaking theproduct;
"Cumulative" indirect taxes aremulti-staged taxes levied where there isnomechanism for
subsequent crediting ofthetaxifthegoods orservices subject totaxatonestage ofproduction are
usedinasucceeding stage ofproduction;
"Remission" oftaxes includes therefund orrebate oftaxes;
"Remission ordrawback" includes thefullorpartial exemption ordeferral ofimport charges.
4TheMembers recognize thatdeferral neednotamount toanexport subsidy where, forexample,
appropriate interest charges arecollected. TheMembers reaffirm theprinciple thatprices forgoods
intransactions between exporting enterprises andforeign buyers under theirorunder thesame control
should fortaxpurposes betheprices which would becharged between independent enterprises acting
atarm'slength. AnyMember maydraw theattention ofanother Member toadministrative orother
practices which maycontravene thisprinciple andwhich result inasignificant saving ofdirect taxes
inexport transactions. Insuchcircumstances theMembers shallnormally attempt toresolve their
differences using thefacilities ofexisting bilateral taxtreaties orotherspecific international mechanisms,
without prejudice totherights andobligations ofMembers under theGATT 1994, including theright
ofconsultation created inthepreceding sentence.
Paragraph (e)isnotintended tolimitaMember from taking measures toavoid thedouble
taxation offoreign source income earned byitsenterprises ortheenterprises ofanother Member.
5Paragraph (h)doesnotapply tovalue-added taxsystems andborder-tax adjustment inlieuthereof;
theproblem oftheexcessive remission ofvalue-added taxes isexclusively covered byparagraph (g).SCM-IV -Page6
(i) Theremission ordrawback ofimport charges3inexcess ofthose levied onimported inputs
thatareconsumed intheproduction oftheexported product (making normal allowance for
waste); provided, however, thatinparticular cases afirmmayuseaquantity ofhome market
inputs equal to,andhaving thesame quality andcharacteristics as,theimported inputs asa
substitute fortheminorder tobenefit fromthisprovision iftheimport andthecorresponding
export operations bothoccur within areasonable timeperiod, nottoexceed twoyears. This
itemshallbeinterpreted inaccordance withtheguidelines onconsumption ofinputs inthe
production process contained inAnnex IIandtheguidelines inthedetermination ofsubstitution
drawback systems asexport subsidies contained inAnnex III.
(j) Theprovision bygovernments (orspecial institutions controlled bygovernments) ofexport
credit guarantee orinsurance programmes, ofinsurance orguarantee programmes against
increases inthecostofexported products orofexchange riskprogrammes, atpremium rates
which areinadequate tocover thelong-term operating costs andlosses oftheprogrammes.
(k) Thegrantbygovernments (orspecial institutions controlled byand/or acting under theauthority
ofgovernments) ofexport credits atratesbelow those which theyactually havetopayfor
thefunds soemployed (orwould havetopayiftheyborrowed oninternational capital markets
inorder toobtain funds ofthesame maturity andother credit terms anddenominated inthe
samecurrency astheexport credit), orthepayment bythemofallorpartofthecostsincurred
byexporters orfinancial institutions inobtaining credits, insofarastheyareusedtosecure
amaterial advantage inthefieldofexport credit terms.
Provided, however, thatifaMember isapartytoaninternational undertaking onofficial export
credits towhich atleast twelve original Members tothisAgreement areparties asof
1January1979(orasuccessorundertakingwhichhasbeenadoptedbythoseoriginalMembers),
orifinpractice aMember applies theinterest ratesprovisions oftherelevant undertaking,
anexport credit practice which isinconformity withthose provisions shallnotbeconsidered
anexport subsidy prohibited bythisAgreement.
(l) Anyother charge onthepublic account constituting anexport subsidy inthesense of
Article XVIoftheGATT 1994.
II. Domestic Subsidies Notified byMembers intheRecent Past
Grants
(a) Cashpaymentsbythegovernmenttolocalmanufacturersofcomputerscalculatedasapercentage
ofthecompanies 'in-house value-added.
Reimbursable advances
(b) Government advances foraerospace R&D tobereimbursed where certain conditions aremet.
Equity infusions
(c) Regional government purchase ofshare incapital inpromoted companies.
Loans
(d) Government loans tofishermen atbelow-market ratesfortheacquisition offishing vessels
andequipment.SCM-IV -Page7
Interest subsidies
(e) Government subsidies ofinterest paidonloans tothemining sector.
Loan-guarantees
(f) Government guarantees ofloans topriority sectors.
Taxconcessions
(g) Reduced customs duties onimported parts usedtoproduce aircraft andships.
(h) Corporate income taxexemptions and/or reductions forincome generated byinvestments in
promoted regions.
(i) Reduced social security contributions forcompanies operating inspecified regions.
Purchase ofgoods
(j) Thepurchase bythegovernment ofoilseeds atanabove-market price designed tosupport
farmers 'income, withresale toconsumers oftheproduct ataloss.
Saleofland
(k) Provincial government saleoflandatlessthanfairmarket value topriority industries.SCM-IV -Page8
"MOCK" EXAMPLE OFNOTIFICATIONS UNDER ARTICLE 32.6
Case 1: Your country doesnothaveanycountervailing dutylawsand/or regulations.
Asimple letter stating thisfactissufficient.6
EXAMPLE:
"With reference toArticle 32.6oftheAgreement onSubsidies andCountervailing
Measures, theGovernment of[name ofMember] notifies theCommittee onSubsidies
andCountervailing Measures thatithasnolawsand/or regulations relevant tothe
Agreement."
Case 2: Your country hasnospecific countervailing dutylawsand/or regulations BUT the
Agreement is(a)incorporated intonational lawor(b)hasforce oflaw.
Thenotification should stateeither (a)or(b),andinthecasethat(a)applies, should be
accompanied byacopy ofthedomestic legal instrument incorporating theAgreement into
national law,ifsuchexists.
EXAMPLES:
(a) "With reference toArticle 32.6oftheAgreement onSubsidies andCountervailing
Measures, theGovernment of[name ofMember] notifies theCommittee on
Subsidies andCountervailing Measures thatithasnolawsand/or regulations
relevant totheAgreement. TheAgreement wasincorporated innational law
byActNumber ___of[date], published intheOfficial Gazette on[date]. Acopy
ofthatActisenclosed."
(b) "With reference toArticle 32.6oftheAgreement onSubsidies andCountervailing
Measures, theGovernment of[name ofMember] notifies theCommittee on
Subsidies andCountervailing Measures thatithasnolawsand/or regulations
relevant totheAgreement. TheAgreement isapplied withforce oflawin[name
ofMember]."
Case 3: Yourcountry hasnocountervailing dutylawsand/or regulations BUTisintheprocess
ofdeveloping suchlawsand/or regulations .
Thenotification should statethisfact,andshould stateanestimated datewhen suchlawsand/or
regulations willtakeeffect andwillbenotified totheCommittee.
EXAMPLE:
"With reference toArticle 32.6oftheAgreement onSubsidies andCountervailing
Measures, theGovernment of[name ofMember] notifies theCommittee onSubsidies
andCountervailing Measures thatithasnolawsand/or regulations relevant tothe
Agreement. Such lawsand/or regulations arecurrently being drafted andenactment
isexpected in[month, year] atwhich timeatranslation intoaWTO language willbe
prepared andthelawwillbenotified totheCommittee."
6Thefactthatnocountervailing dutylawsorregulations areinexistence atthetimethenotification
ismade doesnotmean thatsuchlegislation cannot beintroduced infuture andinnowaycircumscribes
theMember 'srighttodevelop suchlegislation.SCM-IV -Page9
Case 4: Yes,there arecurrently countervailing lawsand/or regulations inexistence inyour
country.
TheMember should submit totheCommittee, inEnglish, French, orSpanish, thefulltext
ofthelaws and/or regulations regardless ofthedateofenactment ofsuch laws and/or
regulations.
Case 5: Yes,there arecurrently countervailing lawsand/or regulations inexistence inyour
country, BUT thetextofthelawsand/or regulations isinalanguage other than
English, French, orSpanish .
TheMember should translate thetext(s) intoEnglish, French, orSpanish andsubmit thefull
translated text(s) totheCommittee. Inthemeantime, aletter stating theexistence ofsuch
lawsand/or regulations, andthedateonwhich theCommittee canexpect toreceive the
translated text(s), should besenttotheCommittee.
EXAMPLE:
"With reference toArticle 32.6oftheAgreement onSubsidies andCountervailing
Measures, theGovernment of[name ofMember] notifies theCommittee onSubsidies
andCountervailing Measures thatithaslaws and/or regulations relevant tothe
Agreement. Such laws and/or regulations arecurrently being translated into
[English][French][Spanish], anditisanticipated thatthefulltext(s) willbenotified to
theCommittee in[month, year]."
Case 6: Yes,there arecurrently countervailing lawsand/or regulations inexistence inyour
country, BUT newlawsand/or regulations arebeing drafted .
TheMember should submit totheCommittee, inEnglish, French, orSpanish, thefulltext(s)
ofthecurrently existing lawsand/or regulations regardless ofthedateofenactment ofsuch
lawsand/or regulations. Inaddition, aletter stating thefactthatnewlawsand/or regulations
arebeing drafted, andstating anestimated datewhen suchlawsand/or regulations willtake
effect andwillbenotified totheCommittee, should besenttotheCommittee.
EXAMPLE:
"With reference toArticle 32.6oftheAgreement onSubsidies andCountervailing
Measures, theGovernment of[name ofMember] submits theenclosed lawsand/or
regulations relevant totheAgreement. Inaddition, theGovernment of[name of
Member] wishes toinform theCommittee thatnewlawsand/or regulations arecurrently
being drafted. Enactment isexpected in[month, year], atwhich timeatranslation into
aWTO language willbeprepared andthelawwillbenotified totheCommittee."SCM-IV -Page10
"MOCK" EXAMPLE OFNOTIFICATIONS UNDER ARTICLE 25.11
Case 1: Your Government hasnottaken anycountervailing dutyactions during theperiod
January through June 1996.
Asimple letter stating thisfactissufficient.
EXAMPLE:
"Inaccordance withArticle 25.11 oftheAgreement onSubsidies andCountervailing
Measures, andinresponse totherequest forsemi-annual reports contained indocument
G/SCM/N/19,theGovernmentof[nameofMember]notifiestheCommitteeonSubsidies
andCountervailing Measures thatithastaken nocountervailing dutyactions during
theperiod 1January through 30June1996."
Case 2: Your Government hastaken countervailing dutyactions during theperiod January
through June 1996.
Theformat contained inG/SCM/2 should becompleted andsubmitted. Itshould bereceived
bytheSecretariat notlaterthanthedatesetforthintherequest forsemi-annual reports issued
bytheCommittee.SCM-V -Page1
SCM-V
AGREEMENT ONSUBSIDIES
AND COUNTERVAILING MEASURES
TEXT OFTHE AGREEMENTSCM-V -Page2
AGREEMENT ONSUBSIDIES AND COUNTERVAILING MEASURES
Members hereby agree asfollows:
PART I:GENERAL PROVISIONS
Article 1
Definition ofaSubsidy
1.1 Forthepurpose ofthisAgreement, asubsidy shallbedeemed toexistif:
(a)(1) thereisafinancial contribution byagovernment oranypublic bodywithin theterritory
ofaMember (referred tointhisAgreement as"government"), i.e.where:
(i) agovernment practice involves adirect transfer offunds (e.g. grants, loans,
andequity infusion), potential direct transfers offunds orliabilities (e.g.loan
guarantees);
(ii) government revenue thatisotherwise dueisforegone ornotcollected (e.g.fiscal
incentives suchastaxcredits)1;
(iii) agovernment provides goods orservices other thangeneral infrastructure, or
purchases goods;
(iv) agovernment makes payments toafunding mechanism, orentrusts ordirects
aprivate body tocarry outoneormore ofthetypeoffunctions illustrated in
(i)to(iii)above which would normally bevested inthegovernment andthe
practice, innorealsense, differs from practices normally followed by
governments;
or
(a)(2) thereisanyformofincome orpricesupport inthesense ofArticle XVIofGATT 1994;
and
(b) abenefit isthereby conferred.
1.2 Asubsidy asdefined inparagraph 1shallbesubject totheprovisions ofPartIIorshallbe
subject totheprovisions ofPartIIIorVonlyifsuchasubsidy isspecific inaccordance withthe
provisions ofArticle 2.
1Inaccordance withtheprovisions ofArticle XVIofGATT 1994 (Note toArticle XVI) andthe
provisions ofAnnexes Ithrough IIIofthisAgreement, theexemption ofanexported product from
duties ortaxes borne bythelikeproduct when destined fordomestic consumption, ortheremission
ofsuchduties ortaxes inamounts notinexcess ofthose which haveaccrued, shallnotbedeemed
tobeasubsidy.SCM-V -Page3
Article 2
Specificity
2.1 Inorder todetermine whether asubsidy, asdefined inparagraph 1ofArticle 1,isspecific
toanenterprise orindustry orgroup ofenterprises orindustries (referred tointhisAgreement as"certain
enterprises") within thejurisdiction ofthegranting authority, thefollowing principles shallapply:
(a) Where thegranting authority, orthelegislation pursuant towhich thegranting authority
operates, explicitly limits access toasubsidy tocertain enterprises, suchsubsidy shall
bespecific.
(b) Where thegranting authority, orthelegislation pursuant towhich thegranting authority
operates, establishes objective criteria orconditions2governing theeligibility for,and
theamount of,asubsidy, specificity shall notexist, provided thattheeligibility is
automatic andthatsuchcriteria andconditions arestrictly adhered to.Thecriteria or
conditions mustbeclearly spelled outinlaw,regulation, orother official document,
soastobecapable ofverification.
(c) If,notwithstanding anyappearance ofnon-specificity resulting fromtheapplication of
theprinciples laiddown insubparagraphs (a)and(b),there arereasons tobelieve that
thesubsidy mayinfactbespecific, other factors maybeconsidered. Suchfactors are:
useofasubsidy programme byalimited number ofcertain enterprises, predominant
usebycertain enterprises, thegranting ofdisproportionately large amounts ofsubsidy
tocertain enterprises, andthemanner inwhich discretion hasbeenexercised bythe
granting authority inthedecision togrant asubsidy.3Inapplying thissubparagraph,
account shallbetaken oftheextent ofdiversification ofeconomic activities within the
jurisdiction ofthegranting authority, aswellasofthelength oftimeduring which the
subsidy programme hasbeeninoperation.
2.2 Asubsidy which islimited tocertain enterprises located within adesignated geographical region
within thejurisdiction ofthegranting authority shallbespecific. Itisunderstood thatthesetting or
change ofgenerally applicable taxratesbyalllevels ofgovernment entitled todososhallnotbedeemed
tobeaspecific subsidy forthepurposes ofthisAgreement.
2.3 Anysubsidy falling under theprovisions ofArticle 3shallbedeemed tobespecific.
2.4 AnydeterminationofspecificityundertheprovisionsofthisArticleshallbeclearlysubstantiated
onthebasis ofpositive evidence.
2Objective criteria orconditions, asusedherein, mean criteria orconditions which areneutral,
which donotfavour certain enterprises overothers, andwhich areeconomic innature andhorizontal
inapplication, suchasnumber ofemployees orsizeofenterprise.
3Inthisregard, inparticular, information onthefrequency withwhich applications forasubsidy
arerefused orapproved andthereasons forsuchdecisions shall beconsidered.SCM-V -Page4
PART II:PROHIBITED SUBSIDIES
Article 3
Prohibition
3.1 ExceptasprovidedintheAgreementonAgriculture,thefollowingsubsidies,withinthemeaning
ofArticle 1,shallbeprohibited:
(a) subsidies contingent, inlaworinfact4,whether solely orasoneofseveral other
conditions, upon export performance, including those illustrated inAnnex I5;
(b) subsidies contingent, whether solely orasoneofseveral other conditions, upon the
useofdomestic overimported goods.
3.2 AMember shallneither grant normaintain subsidies referred toinparagraph 1.
Article 4
Remedies
4.1 Whenever aMember hasreason tobelieve thataprohibited subsidy isbeing granted or
maintained byanother Member, suchMember mayrequest consultations withsuchother Member.
4.2 Arequest forconsultations under paragraph 1shallinclude astatement ofavailable evidence
withregard totheexistence andnature ofthesubsidy inquestion.
4.3 Upon request forconsultations under paragraph 1,theMember believed tobegranting or
maintaining thesubsidy inquestion shallenter intosuchconsultations asquickly aspossible. The
purpose oftheconsultations shallbetoclarify thefactsofthesituation andtoarrive atamutually
agreed solution.
4.4 Ifnomutually agreed solution hasbeenreached within 30days6oftherequest forconsultations,
anyMember party tosuchconsultations mayreferthematter totheDispute Settlement Body ("DSB")
fortheimmediate establishment ofapanel, unless theDSBdecides byconsensus nottoestablish a
panel.
4.5 Upon itsestablishment, thepanel mayrequest theassistance ofthePermanent Group ofExperts7
(referred tointhisAgreement asthe"PGE") withregard towhether themeasure inquestion isa
prohibited subsidy. Ifsorequested, thePGEshallimmediately review theevidence withregard to
theexistence andnature ofthemeasure inquestion andshallprovide anopportunity fortheMember
4Thisstandard ismetwhen thefactsdemonstrate thatthegranting ofasubsidy, without having
beenmade legally contingent uponexport performance, isinfacttiedtoactual oranticipated exportation
orexport earnings. Themere factthatasubsidy isgranted toenterprises which export shallnotfor
thatreason alone beconsidered tobeanexport subsidy within themeaning ofthisprovision.
5Measures referred toinAnnex Iasnotconstituting export subsidies shallnotbeprohibited under
thisoranyother provision ofthisAgreement.
6Anytime-periods mentioned inthisArticle maybeextended bymutual agreement.
7Asestablished inArticle 24.SCM-V -Page5
applying ormaintaining themeasure todemonstrate thatthemeasure inquestion isnotaprohibited
subsidy. ThePGEshallreport itsconclusions tothepanel within atime-limit determined bythepanel.
ThePGE'sconclusions ontheissue ofwhether ornotthemeasure inquestion isaprohibited subsidy
shallbeaccepted bythepanel without modification.
4.6 Thepanel shallsubmit itsfinalreport totheparties tothedispute. Thereport shallbecirculated
toallMembers within 90daysofthedateofthecomposition andtheestablishment ofthepanel'sterms
ofreference.
4.7 Ifthemeasure inquestion isfound tobeaprohibited subsidy, thepanel shallrecommend that
thesubsidizing Member withdraw thesubsidy without delay. Inthisregard, thepanel shallspecify
initsrecommendation thetime-period within which themeasure must bewithdrawn.
4.8 Within 30daysoftheissuance ofthepanel'sreport toallMembers, thereport shallbeadopted
bytheDSBunless oneoftheparties tothedispute formally notifies theDSBofitsdecision toappeal
ortheDSBdecides byconsensus nottoadopt thereport.
4.9 Where apanel report isappealed, theAppellate Body shallissue itsdecision within 30days
fromthedatewhen theparty tothedispute formally notifies itsintention toappeal. When theAppellate
Body considers thatitcannot provide itsreport within 30days, itshallinform theDSBinwriting of
thereasons forthedelay together withanestimate oftheperiod within which itwillsubmit itsreport.
Innocaseshalltheproceedings exceed 60days. Theappellate report shallbeadopted bytheDSB
andunconditionally accepted bytheparties tothedispute unless theDSBdecides byconsensus not
toadopt theappellate report within 20daysfollowing itsissuance totheMembers.8
4.10 Intheevent therecommendation oftheDSBisnotfollowed within thetime-period specified
bythepanel, which shallcommence from thedateofadoption ofthepanel’sreport ortheAppellate
Body’sreport, theDSB shall grant authorization tothecomplaining Member totakeappropriate9
countermeasures, unless theDSBdecides byconsensus toreject therequest.
4.11 Intheevent aparty tothedispute requests arbitration under paragraph 6ofArticle 22ofthe
Dispute Settlement Understanding ("DSU"), thearbitrator shalldetermine whether thecountermeasures
areappropriate.10
4.12 Forpurposes ofdisputes conducted pursuant tothisArticle, except fortime-periods specifically
prescribed inthisArticle, time-periods applicable under theDSUfortheconduct ofsuchdisputes shall
behalfthetimeprescribed therein.
8Ifameeting oftheDSBisnotscheduled during thisperiod, suchameeting shallbeheldforthis
purpose.
9Thisexpression isnotmeant toallow countermeasures thataredisproportionate inlightofthe
factthatthesubsidies dealtwithunder these provisions areprohibited.
10Thisexpression isnotmeant toallow countermeasures thataredisproportionate inlightofthe
factthatthesubsidies dealtwithunder these provisions areprohibited.SCM-V -Page6
PART III:ACTIONABLE SUBSIDIES
Article 5
Adverse Effects
NoMember should cause, through theuseofanysubsidy referred toinparagraphs 1and2
ofArticle 1,adverse effects totheinterests ofother Members, i.e.:
(a) injury tothedomestic industry ofanother Member11;
(b) nullification orimpairment ofbenefits accruing directly orindirectly toother Members
under GATT 1994 inparticular thebenefits ofconcessions bound under Article IIof
GATT 199412;
(c) serious prejudice totheinterests ofanother Member.13
ThisArticle doesnotapply tosubsidies maintained onagricultural products asprovided inArticle 13
oftheAgreement onAgriculture.
Article 6
Serious Prejudice
6.1 Serious prejudice inthesense ofparagraph (c)ofArticle 5shallbedeemed toexistinthe
caseof:
(a) thetotaladvalorem subsidization14ofaproduct exceeding 5percent15;
(b) subsidies tocover operating losses sustained byanindustry;
(c) subsidies tocover operating losses sustained byanenterprise, other thanone-time
measures which arenon-recurrent andcannot berepeated forthatenterprise andwhich
aregiven merely toprovide timeforthedevelopment oflong-term solutions andto
avoid acute social problems;
11Theterm"injury tothedomestic industry" isusedhereinthesame sense asitisusedinPart
V.
12Theterm"nullification orimpairment" isusedinthisAgreement inthesame sense asitisused
intherelevant provisions ofGATT 1994, andtheexistence ofsuchnullification orimpairment shall
beestablished inaccordance withthepractice ofapplication ofthese provisions.
13Theterm"serious prejudice totheinterests ofanother Member" isusedinthisAgreement in
thesamesense asitisusedinparagraph 1ofArticle XVIofGATT 1994, andincludes threat ofserious
prejudice.
14Thetotaladvalorem subsidization shall becalculated inaccordance withtheprovisions of
Annex IV.
15Since itisanticipated thatcivilaircraft willbesubject tospecific multilateral rules, thethreshold
inthissubparagraph doesnotapply tocivilaircraft.SCM-V -Page7
(d) direct forgiveness ofdebt,i.e.forgiveness ofgovernment-held debt,andgrants tocover
debtrepayment.16
6.2 Notwithstanding theprovisions ofparagraph 1,serious prejudice shall notbefound ifthe
subsidizing Member demonstrates thatthesubsidy inquestion hasnotresulted inanyoftheeffects
enumerated inparagraph 3.
6.3 Serious prejudice inthesense ofparagraph (c)ofArticle 5mayariseinanycasewhere one
orseveral ofthefollowing apply:
(a) theeffect ofthesubsidy istodisplace orimpede theimports ofalikeproduct ofanother
Member intothemarket ofthesubsidizing Member;
(b) theeffect ofthesubsidy istodisplace orimpede theexports ofalikeproduct ofanother
Member from athirdcountry market;
(c) theeffect ofthesubsidy isasignificant price undercutting bythesubsidized product
ascompared withtheprice ofalikeproduct ofanother Member inthesame market
orsignificant price suppression, price depression orlostsalesinthesame market;
(d) theeffect ofthesubsidy isanincrease intheworld market share ofthesubsidizing
Member inaparticular subsidized primary product orcommodity17ascompared tothe
average share ithadduring theprevious period ofthreeyears andthisincrease follows
aconsistent trend overaperiod when subsidies havebeengranted.
6.4 Forthepurpose ofparagraph 3(b),thedisplacement orimpeding ofexports shallinclude any
caseinwhich, subject totheprovisions ofparagraph 7,ithasbeendemonstrated thatthere hasbeen
achange inrelative shares ofthemarket tothedisadvantage ofthenon-subsidized likeproduct (over
anappropriately representative period sufficient todemonstrate cleartrends inthedevelopment ofthe
market fortheproduct concerned, which, innormal circumstances, shallbeatleastoneyear). "Change
inrelative shares ofthemarket" shallinclude anyofthefollowing situations: (a)there isanincrease
inthemarket share ofthesubsidized product; (b)themarket share ofthesubsidized product remains
constant incircumstances inwhich, intheabsence ofthesubsidy, itwould havedeclined; (c)the
market share ofthesubsidized product declines, butataslower ratethanwould havebeenthecase
intheabsence ofthesubsidy.
6.5 Forthepurpose ofparagraph 3(c),price undercutting shallinclude anycaseinwhich such
price undercutting hasbeendemonstrated through acomparison ofprices ofthesubsidized product
withprices ofanon-subsidized likeproduct supplied tothesame market. Thecomparison shallbe
made atthesame leveloftrade andatcomparable times, dueaccount being taken ofanyother factor
affecting price comparability. However, ifsuchadirect comparison isnotpossible, theexistence of
price undercutting maybedemonstrated onthebasis ofexport unitvalues.
6.6 EachMember inthemarket ofwhich serious prejudice isalleged tohavearisen shall, subject
totheprovisions ofparagraph 3ofAnnex V,make available totheparties toadispute arising under
Article 7,andtothepanel established pursuant toparagraph 4ofArticle 7,allrelevant information
thatcanbeobtained astothechanges inmarket shares oftheparties tothedispute aswellasconcerning
prices oftheproducts involved.
16Members recognize thatwhere royalty-based financing foracivilaircraft programme isnotbeing
fullyrepaid duetothelevelofactual salesfalling below thelevelofforecast sales, thisdoesnotin
itself constitute serious prejudice forthepurposes ofthissubparagraph.
17Unless other multilaterally agreed specific rulesapply tothetrade intheproduct orcommodity
inquestion.SCM-V -Page8
6.7 Displacement orimpediment resulting inserious prejudice shallnotariseunder paragraph 3
where anyofthefollowing circumstances exist18during therelevant period:
(a) prohibition orrestriction onexports ofthelikeproduct fromthecomplaining Member
oronimports fromthecomplaining Member intothethirdcountry market concerned;
(b) decision byanimporting government operating amonopoly oftrade orstatetrading
intheproduct concerned toshift, fornon-commercial reasons, imports from the
complaining Member toanother country orcountries;
(c) natural disasters, strikes, transport disruptions orother force majeure substantially
affecting production, qualities, quantities orprices oftheproduct available forexport
from thecomplaining Member;
(d) existence ofarrangements limiting exports from thecomplaining Member;
(e) voluntary decrease intheavailability forexport oftheproduct concerned from the
complaining Member (including, interalia,asituation where firms inthecomplaining
Member havebeenautonomously reallocating exports ofthisproduct tonewmarkets);
(f) failure toconform tostandards andother regulatory requirements intheimporting
country.
6.8 Intheabsence ofcircumstances referred toinparagraph 7,theexistence ofserious prejudice
should bedetermined onthebasisoftheinformation submitted toorobtained bythepanel, including
information submitted inaccordance withtheprovisions ofAnnex V.
6.9 ThisArticle doesnotapply tosubsidies maintained onagricultural products asprovided in
Article 13oftheAgreement onAgriculture.
Article 7
Remedies
7.1 Except asprovided inArticle 13oftheAgreement onAgriculture, whenever aMember has
reason tobelieve thatanysubsidy referred toinArticle 1,granted ormaintained byanother Member,
results ininjury toitsdomestic industry, nullification orimpairment orserious prejudice, suchMember
mayrequest consultations withsuchother Member.
7.2 Arequest forconsultations under paragraph 1shallinclude astatement ofavailable evidence
withregard to(a)theexistence andnature ofthesubsidy inquestion, and(b)theinjury caused tothe
domestic industry, orthenullification orimpairment, orserious prejudice19caused totheinterests of
theMember requesting consultations.
7.3 Upon request forconsultations under paragraph 1,theMember believed tobegranting or
maintaining thesubsidy practice inquestion shallenter intosuchconsultations asquickly aspossible.
18Thefactthatcertain circumstances arereferred tointhisparagraph doesnot,initself, confer
upon them anylegalstatus interms ofeither GATT 1994 orthisAgreement. These circumstances
must notbeisolated, sporadic orotherwise insignificant.
19Intheevent thattherequest relates toasubsidy deemed toresult inserious prejudice interms
ofparagraph 1ofArticle 6,theavailable evidence ofserious prejudice maybelimited totheavailable
evidence astowhether theconditions ofparagraph 1ofArticle 6havebeenmetornot.SCM-V -Page9
Thepurpose oftheconsultations shallbetoclarify thefactsofthesituation andtoarrive atamutually
agreed solution.
7.4 Ifconsultations donotresult inamutually agreed solution within 60days20,anyMember party
tosuchconsultations mayreferthematter totheDSBfortheestablishment ofapanel, unless theDSB
decides byconsensus nottoestablish apanel. Thecomposition ofthepanel anditsterms ofreference
shallbeestablished within 15daysfrom thedatewhen itisestablished.
7.5 Thepanel shallreview thematter andshallsubmit itsfinalreport totheparties tothedispute.
Thereport shall becirculated toallMembers within 120daysofthedateofthecomposition and
establishment ofthepanel’sterms ofreference.
7.6 Within 30daysoftheissuance ofthepanel’sreport toallMembers, thereport shallbeadopted
bytheDSB21unless oneoftheparties tothedispute formally notifies theDSBofitsdecision toappeal
ortheDSBdecides byconsensus nottoadopt thereport.
7.7 Where apanel report isappealed, theAppellate Body shallissue itsdecision within 60days
fromthedatewhen theparty tothedispute formally notifies itsintention toappeal. When theAppellate
Body considers thatitcannot provide itsreport within 60days, itshallinform theDSBinwriting of
thereasons forthedelay together withanestimate oftheperiod within which itwillsubmit itsreport.
Innocaseshalltheproceedings exceed 90days. Theappellate report shallbeadopted bytheDSB
andunconditionally accepted bytheparties tothedispute unless theDSBdecides byconsensus not
toadopt theappellate report within 20daysfollowing itsissuance totheMembers.22
7.8 Where apanel report oranAppellate Body report isadopted inwhich itisdetermined that
anysubsidy hasresulted inadverse effects totheinterests ofanother Member within themeaning of
Article 5,theMember granting ormaintaining suchsubsidy shalltakeappropriate steps toremove
theadverse effects orshallwithdraw thesubsidy.
7.9 Intheevent theMember hasnottaken appropriate steps toremove theadverse effects ofthe
subsidy orwithdraw thesubsidy within sixmonths fromthedatewhen theDSBadopts thepanel report
ortheAppellate Body report, andintheabsence ofagreement oncompensation, theDSBshallgrant
authorization tothecomplaining Member totakecountermeasures, commensurate withthedegree and
nature oftheadverse effects determined toexist, unless theDSBdecides byconsensus toreject the
request.
7.10 Intheevent thataparty tothedispute requests arbitration under paragraph 6ofArticle 22
oftheDSU, thearbitrator shalldetermine whether thecountermeasures arecommensurate withthe
degree andnature oftheadverse effects determined toexist.
20Anytime-periods mentioned inthisArticle maybeextended bymutual agreement.
21Ifameeting oftheDSBisnotscheduled during thisperiod, suchameeting shallbeheldfor
thispurpose.
22Ifameeting oftheDSBisnotscheduled during thisperiod, suchameeting shallbeheldfor
thispurpose.SCM-V -Page10
PART IV:NON-ACTIONABLE SUBSIDIES
Article 8
Identification ofNon-Actionable Subsidies
8.1 Thefollowing subsidies shallbeconsidered asnon-actionable23:
(a) subsidies which arenotspecific within themeaning ofArticle 2;
(b) subsidies which arespecific within themeaning ofArticle 2butwhich meetallofthe
conditions provided forinparagraphs 2(a),2(b)or2(c)below.
8.2 NotwithstandingtheprovisionsofPartsIIIandV,thefollowingsubsidiesshallbenon-actionable:
(a) assistance forresearch activities conducted byfirms orbyhigher education orresearch
establishments onacontract basis withfirms if:24,25,26
theassistance covers27notmore than75percentofthecosts ofindustrial research28
or50percentofthecosts ofpre-competitive development activity29,30;
23Itisrecognized thatgovernment assistance forvarious purposes iswidely provided byMembers
andthatthemere factthatsuchassistance maynotqualify fornon-actionable treatment under the
provisions ofthisArticle doesnotinitselfrestrict theability ofMembers toprovide suchassistance.
24Since itisanticipated thatcivilaircraft willbesubject tospecific multilateral rules, theprovisions
ofthissubparagraph donotapply tothatproduct.
25Notlaterthan18months afterthedateofentry intoforceoftheWTO Agreement, theCommittee
onSubsidies andCountervailing Measures provided forinArticle 24(referred tointhisAgreement
as"theCommittee") shallreview theoperation oftheprovisions ofsubparagraph 2(a)withaview
tomaking allnecessary modifications toimprove theoperation oftheseprovisions. Initsconsideration
ofpossible modifications, theCommittee shallcarefully review thedefinitions ofthecategories set
forth inthissubparagraph inthelightoftheexperience ofMembers intheoperation ofresearch
programmes andthework inother relevant international institutions.
26Theprovisions ofthisAgreement donotapply tofundamental research activities independently
conducted byhigher education orresearch establishments. Theterm"fundamental research" means
anenlargement ofgeneral scientific andtechnical knowledge notlinked toindustrial orcommercial
objectives.
27Theallowablelevelsofnon-actionableassistancereferredtointhissubparagraphshallbeestablished
byreference tothetotaleligible costs incurred overtheduration ofanindividual project.
28Theterm"industrial research" means planned search orcritical investigation aimed atdiscovery
ofnewknowledge, withtheobjective thatsuchknowledge maybeuseful indeveloping newproducts,
processes orservices, orinbringing about asignificant improvement toexisting products, processes
orservices.
29Theterm"pre-competitive development activity" means thetranslation ofindustrial research
findings intoaplan,blueprint ordesign fornew,modified orimproved products, processes orservices
whether intended forsaleoruse,including thecreation ofafirstprototype which would notbecapable
ofcommercial use.Itmayfurther include theconceptual formulation anddesign ofproducts, processes
orservices alternatives andinitial demonstration orpilotprojects, provided thatthese same projects
(continued...)SCM-V -Page11
andprovided thatsuchassistance islimited exclusively to:
(i) costsofpersonnel (researchers, technicians andother supporting staffemployed
exclusively intheresearch activity);
(ii) costs ofinstruments, equipment, land andbuildings used exclusively and
permanently (except when disposed ofonacommercial basis) fortheresearch
activity;
(iii) costs ofconsultancy andequivalent services usedexclusively fortheresearch
activity, including bought-in research, technical knowledge, patents, etc.;
(iv) additional overhead costs incurred directly asaresult oftheresearch activity;
(v) other running costs (such asthose ofmaterials, supplies andthelike), incurred
directly asaresult oftheresearch activity.
(b) assistance todisadvantaged regions within theterritory ofaMember given pursuant
toageneral framework ofregional development31andnon-specific (within themeaning
ofArticle 2)within eligible regions provided that:
(i) eachdisadvantaged region mustbeaclearly designated contiguous geographical
areawithadefinable economic andadministrative identity;
(ii) theregion isconsidered asdisadvantaged onthebasis ofneutral andobjective
criteria32,indicating thattheregion 'sdifficulties ariseoutofmorethantemporary
circumstances; suchcriteria must beclearly spelled outinlaw,regulation, or
other official document, soastobecapable ofverification;
29(...continued)
cannot beconverted orusedforindustrial application orcommercial exploitation. Itdoesnotinclude
routine orperiodic alterations toexisting products, production lines, manufacturing processes, services,
andother on-going operations eventhough those alterations mayrepresent improvements.
30Inthecaseofprogrammeswhichspanindustrialresearchandpre-competitivedevelopmentactivity,
theallowable levelofnon-actionable assistance shallnotexceed thesimple average oftheallowable
levels ofnon-actionable assistance applicable totheabove twocategories, calculated onthebasis of
alleligible costs assetforth initems (i)to(v)ofthissubparagraph.
31A"general framework ofregional development" means thatregional subsidy programmes are
partofaninternally consistent andgenerally applicable regional development policy andthatregional
developmentsubsidiesarenotgrantedinisolatedgeographicalpointshavingno,orvirtuallyno,influence
onthedevelopment ofaregion.
32"Neutral andobjective criteria" means criteria which donotfavour certain regions beyond what
isappropriatefortheeliminationorreductionofregionaldisparitieswithintheframeworkoftheregional
development policy. Inthisregard, regional subsidy programmes shallinclude ceilings ontheamount
ofassistance which canbegranted toeachsubsidized project. Such ceilings must bedifferentiated
according tothedifferent levels ofdevelopment ofassisted regions andmust beexpressed interms
ofinvestment costs orcostofjobcreation. Within suchceilings, thedistribution ofassistance shall
besufficiently broad andeven toavoid thepredominant useofasubsidy by,orthegranting of
disproportionately large amounts ofsubsidy to,certain enterprises asprovided forinArticle 2.SCM-V -Page12
(iii) thecriteria shallinclude ameasurement ofeconomic development which shall
bebased onatleastoneofthefollowing factors:
- oneofeither income percapita orhousehold income percapita, orGDP
percapita, which must notbeabove 85percentoftheaverage forthe
territory concerned;
- unemployment rate,which must beatleast110percentoftheaverage
fortheterritory concerned;
asmeasured overathree-year period; suchmeasurement, however, maybea
composite oneandmayinclude other factors.
(c) assistancetopromoteadaptationofexistingfacilities33tonewenvironmentalrequirements
imposedbylawand/orregulationswhichresultingreaterconstraintsandfinancialburden
onfirms, provided thattheassistance:
(i) isaone-time non-recurring measure; and
(ii) islimited to20percentofthecostofadaptation; and
(iii) doesnotcover thecostofreplacing andoperating theassisted investment, which
must befullyborne byfirms; and
(iv) isdirectly linked toandproportionate toafirm'splanned reduction ofnuisances
andpollution, anddoesnotcover anymanufacturing costsavings which may
beachieved; and
(v) isavailable toallfirms which canadopt thenewequipment and/or production
processes.
8.3 Asubsidy programme forwhich theprovisions ofparagraph 2areinvoked shallbenotified
inadvance ofitsimplementation totheCommittee inaccordance withtheprovisions ofPartVII.Any
suchnotification shallbesufficiently precise toenable other Members toevaluate theconsistency of
theprogramme withtheconditions andcriteria provided forintherelevant provisions ofparagraph 2.
Members shallalsoprovide theCommittee withyearly updates ofsuchnotifications, inparticular by
supplying information onglobal expenditure foreachprogramme, andonanymodification ofthe
programme. Other Members shallhavetheright torequest information about individual cases of
subsidization under anotified programme.34
8.4 Upon request ofaMember, theSecretariat shall review anotification made pursuant to
paragraph 3and,where necessary, mayrequire additional information fromthesubsidizing Member
concerning thenotified programme under review. TheSecretariat shall report itsfindings tothe
Committee. TheCommittee shall, uponrequest, promptly review thefindings oftheSecretariat (or,
ifareview bytheSecretariat hasnotbeenrequested, thenotification itself), withaviewtodetermining
whether theconditions andcriteria laiddown inparagraph 2havenotbeenmet.Theprocedure provided
forinthisparagraph shallbecompleted atthelatest atthefirstregular meeting oftheCommittee
following thenotification ofasubsidy programme, provided thatatleasttwomonths haveelapsed
between suchnotification andtheregular meeting oftheCommittee. Thereview procedure described
33Theterm"existing facilities" means facilities which havebeeninoperation foratleasttwoyears
atthetimewhen newenvironmental requirements areimposed.
34Itisrecognized thatnothing inthisnotification provision requires theprovision ofconfidential
information, including confidential business information.SCM-V -Page13
inthisparagraph shallalsoapply, uponrequest, tosubstantial modifications ofaprogramme notified
intheyearly updates referred toinparagraph 3.
8.5 Upon therequest ofaMember, thedetermination bytheCommittee referred toinparagraph 4,
orafailure bytheCommittee tomake suchadetermination, aswellastheviolation, inindividual cases,
oftheconditions setoutinanotified programme, shallbesubmitted tobinding arbitration. The
arbitration bodyshallpresent itsconclusions totheMembers within 120daysfromthedatewhen the
matter wasreferred tothearbitration body. Except asotherwise provided inthisparagraph, theDSU
shallapply toarbitrations conducted under thisparagraph.
Article 9
Consultations andAuthorized Remedies
9.1 If,inthecourse ofimplementation ofaprogramme referred toinparagraph 2ofArticle 8,
notwithstanding thefactthattheprogramme isconsistent withthecriteria laiddown inthatparagraph,
aMember hasreasons tobelieve thatthisprogramme hasresulted inserious adverse effects tothe
domestic industry ofthatMember, suchastocause damage which would bedifficult torepair, such
Member mayrequest consultations withtheMember granting ormaintaining thesubsidy.
9.2 Upon request forconsultations under paragraph 1,theMember granting ormaintaining the
subsidy programme inquestion shallenterintosuchconsultations asquickly aspossible. Thepurpose
oftheconsultations shallbetoclarify thefactsofthesituation andtoarrive atamutually acceptable
solution.
9.3 Ifnomutually acceptable solution hasbeenreached inconsultations under paragraph 2within
60daysoftherequest forsuchconsultations, therequesting Member mayrefer thematter tothe
Committee.
9.4 Where amatter isreferred totheCommittee, theCommittee shallimmediately review the
factsinvolved andtheevidence oftheeffects referred toinparagraph 1.IftheCommittee determines
thatsucheffects exist, itmayrecommend tothesubsidizing Member tomodify thisprogramme in
suchawayastoremove these effects. TheCommittee shallpresent itsconclusions within 120days
from thedatewhen thematter isreferred toitunder paragraph 3.Intheevent therecommendation
isnotfollowed within sixmonths, theCommittee shall authorize therequesting Member totake
appropriate countermeasures commensurate withthenature anddegree oftheeffects determined to
exist.SCM-V -Page14
PART V:COUNTERVAILING MEASURES
Article 10
Application ofArticle VIofGATT 199435
Members shalltakeallnecessary stepstoensure thattheimposition ofacountervailing duty36
onanyproduct oftheterritory ofanyMember imported intotheterritory ofanother Member isin
accordance with theprovisions ofArticle VIofGATT 1994 andtheterms ofthisAgreement.
Countervailing duties mayonlybeimposed pursuant toinvestigations initiated37andconducted in
accordance withtheprovisions ofthisAgreement andtheAgreement onAgriculture.
Article 11
Initiation andSubsequent Investigation
11.1 Except asprovided inparagraph 6,aninvestigation todetermine theexistence, degree and
effect ofanyalleged subsidy shallbeinitiated uponawritten application byoronbehalf ofthedomestic
industry.
11.2 Anapplication under paragraph 1shallinclude sufficient evidence oftheexistence of(a)a
subsidy and,ifpossible, itsamount, (b)injury within themeaning ofArticle VIofGATT 1994 as
interpreted bythisAgreement, and(c)acausal linkbetween thesubsidized imports andthealleged
injury. Simple assertion, unsubstantiated byrelevant evidence, cannot beconsidered sufficient tomeet
therequirements ofthisparagraph. Theapplication shallcontain suchinformation asisreasonably
available totheapplicant onthefollowing:
(i) theidentity oftheapplicant andadescription ofthevolume andvalue ofthedomestic
production ofthelikeproduct bytheapplicant. Where awritten application ismade
onbehalf ofthedomestic industry, theapplication shallidentify theindustry onbehalf
ofwhich theapplication ismade byalistofallknown domestic producers ofthelike
product (orassociations ofdomestic producers ofthelikeproduct) and,totheextent
35Theprovisions ofPartIIorIIImaybeinvoked inparallel withtheprovisions ofPartV;however,
withregard totheeffects ofaparticular subsidy inthedomestic market oftheimporting Member,
onlyoneform ofrelief (either acountervailing duty, iftherequirements ofPartVaremet,ora
countermeasure under Articles 4or7)shallbeavailable. Theprovisions ofParts IIIandVshallnot
beinvoked regarding measures considered non-actionable inaccordance withtheprovisions ofPart
IV.However, measures referred toinparagraph 1(a)ofArticle 8maybeinvestigated inorder to
determine whether ornottheyarespecific within themeaning ofArticle 2.Inaddition, inthecase
ofasubsidy referred toinparagraph 2ofArticle 8conferred pursuant toaprogramme which hasnot
beennotified inaccordance withparagraph 3ofArticle 8,theprovisions ofPartIIIorVmaybeinvoked,
butsuchsubsidy shallbetreated asnon-actionable ifitisfound toconform tothestandards setforth
inparagraph 2ofArticle 8.
36Theterm"countervailing duty" shallbeunderstood tomean aspecial dutylevied forthepurpose
ofoffsetting anysubsidy bestowed directly orindirectly upon themanufacture, production orexport
ofanymerchandise, asprovided forinparagraph 3ofArticle VIofGATT 1994.
37Theterm"initiated" asusedhereinafter means procedural action bywhich aMember formally
commences aninvestigation asprovided inArticle 11.SCM-V -Page15
possible,adescriptionofthevolumeandvalueofdomesticproductionofthelikeproduct
accounted forbysuchproducers;
(ii) acomplete description oftheallegedly subsidized product, thenames ofthecountry
orcountries oforigin orexport inquestion, theidentity ofeachknown exporter or
foreign producer andalistofknown persons importing theproduct inquestion;
(iii) evidence withregard totheexistence, amount andnature ofthesubsidy inquestion;
(iv) evidence thatalleged injury toadomestic industry iscaused bysubsidized imports
through theeffects ofthesubsidies; thisevidence includes information ontheevolution
ofthevolume oftheallegedly subsidized imports, theeffect ofthese imports onprices
ofthelikeproduct inthedomestic market andtheconsequent impact oftheimports
onthedomestic industry, asdemonstrated byrelevant factors andindices having a
bearing onthestateofthedomestic industry, suchasthose listed inparagraphs 2and
4ofArticle 15.
11.3 Theauthorities shall review theaccuracy andadequacy oftheevidence provided inthe
application todetermine whether theevidence issufficient tojustify theinitiation ofaninvestigation.
11.4 Aninvestigation shall notbeinitiated pursuant toparagraph 1unless theauthorities have
determined, onthebasisofanexamination ofthedegree ofsupport for,oropposition to,theapplication
expressed38bydomestic producers ofthelikeproduct, thattheapplication hasbeenmade byoron
behalf ofthedomestic industry.39Theapplication shallbeconsidered tohavebeenmade "byoron
behalf ofthedomestic industry" ifitissupported bythose domestic producers whose collective output
constitutes more than50percentofthetotalproduction ofthelikeproduct produced bythatportion
ofthedomestic industry expressing either support fororopposition totheapplication. However, no
investigation shallbeinitiated when domestic producers expressly supporting theapplication account
forlessthan25percentoftotalproduction ofthelikeproduct produced bythedomestic industry.
11.5 Theauthorities shallavoid, unless adecision hasbeenmade toinitiate aninvestigation, any
publicizing oftheapplication fortheinitiation ofaninvestigation.
11.6 If,inspecial circumstances, theauthorities concerned decide toinitiate aninvestigation without
having received awritten application byoronbehalf ofadomestic industry fortheinitiation ofsuch
investigation, theyshallproceed onlyiftheyhavesufficient evidence oftheexistence ofasubsidy,
injury andcausal link,asdescribed inparagraph 2,tojustify theinitiation ofaninvestigation.
11.7 Theevidence ofbothsubsidy andinjury shallbeconsidered simultaneously (a)inthedecision
whether ornottoinitiate aninvestigation and(b)thereafter, during thecourse oftheinvestigation,
starting onadatenotlaterthantheearliest dateonwhich inaccordance withtheprovisions ofthis
Agreement provisional measures maybeapplied.
11.8 Incases where products arenotimported directly fromthecountry oforigin butareexported
totheimporting Member fromanintermediate country, theprovisions ofthisAgreement shallbefully
applicable andthetransaction ortransactions shall, forthepurposes ofthisAgreement, beregarded
ashaving taken place between thecountry oforigin andtheimporting Member.
38Inthecaseoffragmented industries involving anexceptionally large number ofproducers,
authorities maydetermine support andopposition byusing statistically valid sampling techniques.
39Members areaware thatintheterritory ofcertain Members employees ofdomestic producers
ofthelikeproduct orrepresentatives ofthose employees maymake orsupport anapplication foran
investigation under paragraph 1.SCM-V -Page16
11.9 Anapplication under paragraph 1shallberejected andaninvestigation shallbeterminated
promptly assoonastheauthorities concerned aresatisfied thatthereisnotsufficient evidence ofeither
subsidization orofinjury tojustify proceeding withthecase. There shallbeimmediate termination
incases where theamount ofasubsidy isdeminimis ,orwhere thevolume ofsubsidized imports, actual
orpotential, ortheinjury, isnegligible. Forthepurpose ofthisparagraph, theamount ofthesubsidy
shallbeconsidered tobedeminimis ifthesubsidy islessthan1percentadvalorem.
11.10 Aninvestigation shallnothinder theprocedures ofcustoms clearance.
11.11 Investigations shall, except inspecial circumstances, beconcluded within oneyear, andin
nocasemore than18months, aftertheirinitiation.
Article 12
Evidence
12.1 Interested Members andallinterested parties inacountervailing dutyinvestigation shallbe
given notice oftheinformation which theauthorities require andample opportunity topresent inwriting
allevidence which theyconsider relevant inrespect oftheinvestigation inquestion.
12.1.1 Exporters, foreign producers orinterested Members receiving questionnaires used
inacountervailing dutyinvestigation shallbegiven atleast30daysforreply.40
Dueconsideration should begiven toanyrequest foranextension ofthe30-day
period and,upon cause shown, suchanextension should begranted whenever
practicable.
12.1.2 Subject totherequirement toprotect confidential information, evidence presented
inwriting byoneinterested Member orinterested party shallbemade available
promptly toother interested Members orinterested parties participating inthe
investigation.
12.1.3 Assoonasaninvestigation hasbeeninitiated, theauthorities shallprovide the
fulltextofthewritten application received under paragraph 1ofArticle 11to
theknown exporters41andtotheauthorities oftheexporting Member andshall
make itavailable, uponrequest, toother interested parties involved. Dueregard
shallbepaidtotheprotection ofconfidential information, asprovided forin
paragraph 4.
12.2. Interested Members andinterested parties alsoshallhavetheright, uponjustification, topresent
information orally. Where suchinformation isprovided orally, theinterested Members andinterested
parties subsequently shallberequired toreduce suchsubmissions towriting. Anydecision ofthe
investigating authorities canonlybebased onsuchinformation andarguments aswereonthewritten
record ofthisauthority andwhich were available tointerested Members andinterested parties
40Asageneral rule,thetime-limit forexporters shallbecounted from thedateofreceipt ofthe
questionnaire, which forthispurpose shallbedeemed tohavebeenreceived oneweek fromthedate
onwhich itwassenttotherespondent ortransmitted totheappropriate diplomatic representatives of
theexporting Member or,inthecaseofaseparate customs territory Member oftheWTO, anofficial
representative oftheexporting territory.
41Itbeing understood thatwhere thenumber ofexporters involved isparticularly high, thefull
textoftheapplication should instead beprovided onlytotheauthorities oftheexporting Member or
totherelevant trade association whothenshould forward copies totheexporters concerned.SCM-V -Page17
participating intheinvestigation, dueaccount having beengiven totheneedtoprotect confidential
information.
12.3 TheauthoritiesshallwheneverpracticableprovidetimelyopportunitiesforallinterestedMembers
andinterested parties toseeallinformation thatisrelevant tothepresentation oftheircases, thatis
notconfidential asdefined inparagraph 4,andthatisusedbytheauthorities inacountervailing duty
investigation, andtoprepare presentations onthebasis ofthisinformation.
12.4 Anyinformation which isbynature confidential (forexample, because itsdisclosure would
beofsignificantcompetitiveadvantagetoacompetitororbecauseitsdisclosurewouldhaveasignificantly
adverse effect upon aperson supplying theinformation orupon aperson from whom thesupplier
acquired theinformation), orwhich isprovided onaconfidential basis byparties toaninvestigation
shall, upon good cause shown, betreated assuchbytheauthorities. Such information shallnotbe
disclosed without specific permission oftheparty submitting it.42
12.4.1 Theauthorities shallrequire interested Members orinterested parties providing
confidential information tofurnish non-confidential summaries thereof. These
summaries shallbeinsufficient detail topermit areasonable understanding of
thesubstance oftheinformation submitted inconfidence. Inexceptional
circumstances, suchMembers orparties mayindicate thatsuchinformation is
notsusceptible ofsummary. Insuchexceptional circumstances, astatement of
thereasons whysummarization isnotpossible must beprovided.
12.4.2 Iftheauthorities findthatarequest forconfidentiality isnotwarranted andif
thesupplier oftheinformation iseither unwilling tomake theinformation public
ortoauthorize itsdisclosure ingeneralized orsummary form, theauthorities
maydisregard suchinformation unless itcanbedemonstrated totheirsatisfaction
from appropriate sources thattheinformation iscorrect.43
12.5 Except incircumstances provided forinparagraph 7,theauthorities shallduring thecourse
ofaninvestigation satisfy themselves astotheaccuracy oftheinformation supplied byinterested
Members orinterested parties upon which theirfindings arebased.
12.6 Theinvestigating authorities maycarry outinvestigations intheterritory ofother Members
asrequired,providedthattheyhavenotifiedingoodtimetheMemberinquestionandunlessthatMember
objects totheinvestigation. Further, theinvestigating authorities maycarry outinvestigations onthe
premises ofafirmandmayexamine therecords ofafirmif(a)thefirmsoagrees and(b)theMember
inquestion isnotified anddoesnotobject. Theprocedures setforth inAnnex VIshall apply to
investigations onthepremises ofafirm. Subject totherequirement toprotect confidential information,
theauthorities shallmake theresults ofanysuchinvestigations available, orshallprovide disclosure
thereof pursuant toparagraph 8,tothefirms towhich theypertain andmaymake suchresults available
totheapplicants.
12.7 Incases inwhich anyinterested Member orinterested party refuses access to,orotherwise
does notprovide, necessary information within areasonable period orsignificantly impedes the
investigation, preliminary andfinaldeterminations, affirmative ornegative, maybemade onthebasis
ofthefactsavailable.
42MembersareawarethatintheterritoryofcertainMembersdisclosurepursuanttoanarrowly-drawn
protective order mayberequired.
43Members agree thatrequests forconfidentiality should notbearbitrarily rejected. Members
further agree thattheinvestigating authority mayrequest thewaiving ofconfidentiality onlyregarding
information relevant totheproceedings.SCM-V -Page18
12.8 Theauthorities shall, before afinaldetermination ismade, inform allinterested Members and
interested parties oftheessential factsunder consideration which formthebasisforthedecision whether
toapply definitive measures. Such disclosure should takeplace insufficient timefortheparties to
defend theirinterests.
12.9 Forthepurposes ofthisAgreement, "interested parties" shallinclude:
(i) anexporter orforeign producer ortheimporter ofaproduct subject toinvestigation,
oratrade orbusiness association amajority ofthemembers ofwhich areproducers,
exporters orimporters ofsuchproduct; and
(ii) aproducer ofthelikeproduct intheimporting Member oratrade andbusiness
association amajority ofthemembers ofwhich produce thelikeproduct intheterritory
oftheimporting Member.
ThislistshallnotprecludeMembersfromallowingdomesticorforeignpartiesotherthanthosementioned
above tobeincluded asinterested parties.
12.10 Theauthoritiesshallprovideopportunitiesforindustrialusersoftheproductunderinvestigation,
andforrepresentative consumer organizations incases where theproduct iscommonly soldattheretail
level, toprovide information which isrelevant totheinvestigation regarding subsidization, injury and
causality.
12.11 Theauthorities shalltakedueaccount ofanydifficulties experienced byinterested parties,
inparticular small companies, insupplying information requested, andshallprovide anyassistance
practicable.
12.12 Theprocedures setoutabove arenotintended toprevent theauthorities ofaMember from
proceeding expeditiously withregard toinitiating aninvestigation, reaching preliminary orfinal
determinations, whether affirmative ornegative, orfrom applying provisional orfinalmeasures, in
accordance withrelevant provisions ofthisAgreement.
Article 13
Consultations
13.1 Assoonaspossible afteranapplication under Article 11isaccepted, andinanyevent before
theinitiation ofanyinvestigation, Members theproducts ofwhich maybesubject tosuchinvestigation
shallbeinvited forconsultations withtheaimofclarifying thesituation astothematters referred to
inparagraph 2ofArticle 11andarriving atamutually agreed solution.
13.2 Furthermore, throughout theperiod ofinvestigation, Members theproducts ofwhich arethe
subject oftheinvestigation shallbeafforded areasonable opportunity tocontinue consultations, with
aviewtoclarifying thefactual situation andtoarriving atamutually agreed solution.44
13.3 Without prejudice totheobligation toafford reasonable opportunity forconsultation, these
provisions regarding consultations arenotintended toprevent theauthorities ofaMember from
proceeding expeditiously withregard toinitiating theinvestigation, reaching preliminary orfinal
44Itisparticularly important, inaccordance withtheprovisions ofthisparagraph, thatnoaffirmative
determination whether preliminary orfinalbemade without reasonable opportunity forconsultations
having beengiven. Suchconsultations mayestablish thebasis forproceeding under theprovisions of
PartII,IIIorX.SCM-V -Page19
determinations, whether affirmative ornegative, orfrom applying provisional orfinalmeasures, in
accordance withtheprovisions ofthisAgreement.
13.4 TheMember which intends toinitiate anyinvestigation orisconducting suchaninvestigation
shall permit, upon request, theMember orMembers theproducts ofwhich aresubject tosuch
investigation access tonon-confidential evidence, including thenon-confidential summary ofconfidential
databeing usedforinitiating orconducting theinvestigation.
Article 14
Calculation oftheAmount ofaSubsidy inTerms
oftheBenefit totheRecipient
Forthepurpose ofPartV,anymethod usedbytheinvestigating authority tocalculate the
benefit totherecipient conferred pursuant toparagraph 1ofArticle 1shallbeprovided forinthenational
legislation orimplementing regulations oftheMember concerned anditsapplication toeachparticular
caseshallbetransparent andadequately explained. Furthermore, anysuchmethod shallbeconsistent
withthefollowing guidelines:
(a) government provision ofequity capital shallnotbeconsidered asconferring abenefit,
unless theinvestment decision canberegarded asinconsistent withtheusual investment
practice (including fortheprovision ofriskcapital) ofprivate investors intheterritory
ofthatMember;
(b) aloanbyagovernment shallnotbeconsidered asconferring abenefit, unless there
isadifference between theamount thatthefirmreceiving theloanpays onthe
government loanandtheamount thefirmwould payonacomparable commercial loan
which thefirmcould actually obtain onthemarket. Inthiscasethebenefit shallbe
thedifference between these twoamounts;
(c) aloanguarantee byagovernment shallnotbeconsidered asconferring abenefit, unless
there isadifference between theamount thatthefirmreceiving theguarantee payson
aloanguaranteed bythegovernment andtheamount thatthefirmwould payona
comparable commercial loanabsent thegovernment guarantee. Inthiscasethebenefit
shallbethedifference between these twoamounts adjusted foranydifferences infees;
(d) theprovision ofgoods orservices orpurchase ofgoods byagovernment shallnotbe
considered asconferring abenefit unless theprovision ismade forlessthanadequate
remuneration, orthepurchase ismade formore thanadequate remuneration. The
adequacy ofremuneration shallbedetermined inrelation toprevailing market conditions
forthegood orservice inquestion inthecountry ofprovision orpurchase (including
price,quality,availability,marketability,transportationandotherconditionsofpurchase
orsale).SCM-V -Page20
Article 15
Determination ofInjury45
15.1 Adetermination ofinjury forpurposes ofArticle VIofGATT 1994shallbebased onpositive
evidence andinvolve anobjective examination ofboth(a)thevolume ofthesubsidized imports and
theeffect ofthesubsidized imports onprices inthedomestic market forlikeproducts46and(b)the
consequent impact ofthese imports onthedomestic producers ofsuchproducts.
15.2 Withregard tothevolume ofthesubsidized imports, theinvestigating authorities shallconsider
whether therehasbeenasignificant increase insubsidized imports, either inabsolute terms orrelative
toproduction orconsumption intheimporting Member. With regard totheeffect ofthesubsidized
imports onprices, theinvestigating authorities shallconsider whether therehasbeenasignificant price
undercutting bythesubsidized imports ascompared withtheprice ofalikeproduct oftheimporting
Member, orwhether theeffect ofsuchimports isotherwise todepress prices toasignificant degree
ortoprevent price increases, which otherwise would haveoccurred, toasignificant degree. Noone
orseveral ofthese factors cannecessarily givedecisive guidance.
15.3 Where imports ofaproduct from more thanonecountry aresimultaneously subject to
countervailing dutyinvestigations, theinvestigating authorities maycumulatively assess theeffects of
suchimports onlyiftheydetermine that(a)theamount ofsubsidization established inrelation tothe
imports from eachcountry ismore thandeminimis asdefined inparagraph 9ofArticle 11andthe
volume ofimports from eachcountry isnotnegligible and(b)acumulative assessment oftheeffects
oftheimports isappropriate inlightoftheconditions ofcompetition between theimported products
andtheconditions ofcompetition between theimported products andthelikedomestic product.
15.4 Theexamination oftheimpact ofthesubsidized imports onthedomestic industry shallinclude
anevaluation ofallrelevant economic factors andindices having abearing onthestateoftheindustry,
including actual andpotential decline inoutput, sales, market share, profits, productivity, return on
investments, orutilization ofcapacity; factors affecting domestic prices; actual andpotential negative
effects oncashflow, inventories, employment, wages, growth, ability toraisecapital orinvestments
and,inthecaseofagriculture, whether there hasbeenanincreased burden ongovernment support
programmes. Thislistisnotexhaustive, norcanoneorseveral ofthesefactors necessarily givedecisive
guidance.
15.5 Itmust bedemonstrated thatthesubsidized imports are,through theeffects47ofsubsidies,
causinginjurywithinthemeaningofthisAgreement.Thedemonstrationofacausalrelationshipbetween
thesubsidized imports andtheinjury tothedomestic industry shallbebased onanexamination ofall
relevant evidence before theauthorities. Theauthorities shallalsoexamine anyknown factors other
thanthesubsidized imports which atthesame timeareinjuring thedomestic industry, andtheinjuries
caused bythese other factors must notbeattributed tothesubsidized imports. Factors which may
berelevant inthisrespect include, interalia,thevolumes andprices ofnon-subsidized imports ofthe
product inquestion, contraction indemand orchanges inthepatterns ofconsumption, traderestrictive
45UnderthisAgreementtheterm"injury"shall,unlessotherwisespecified,betakentomeanmaterial
injury toadomestic industry, threat ofmaterial injury toadomestic industry ormaterial retardation
oftheestablishment ofsuchanindustry andshallbeinterpreted inaccordance withtheprovisions of
thisArticle.
46Throughout thisAgreement theterm"likeproduct" ("produit similaire") shallbeinterpreted to
mean aproduct which isidentical, i.e.alikeinallrespects totheproduct under consideration, orin
theabsence ofsuch aproduct, another product which, although notalike inallrespects, has
characteristics closely resembling those oftheproduct under consideration.
47Assetforth inparagraphs 2and4.SCM-V -Page21
practices ofandcompetition between theforeign anddomestic producers, developments intechnology
andtheexport performance andproductivity ofthedomestic industry.
15.6 Theeffect ofthesubsidized imports shallbeassessed inrelation tothedomestic production
ofthelikeproduct when available datapermit theseparate identification ofthatproduction onthebasis
ofsuchcriteria astheproduction process, producers 'salesandprofits. Ifsuchseparate identification
ofthatproduction isnotpossible, theeffects ofthesubsidized imports shall beassessed bythe
examination oftheproduction ofthenarrowest group orrange ofproducts, which includes thelike
product, forwhich thenecessary information canbeprovided.
15.7 Adetermination ofathreat ofmaterial injury shall bebased onfacts andnotmerely on
allegation, conjecture orremote possibility. Thechange incircumstances which would create asituation
inwhich thesubsidy would cause injury must beclearly foreseen andimminent. Inmaking a
determination regarding theexistence ofathreat ofmaterial injury, theinvestigating authorities should
consider, interalia,suchfactors as:
(i) nature ofthesubsidy orsubsidies inquestion andthetrade effects likely toarisethere
from;
(ii) asignificant rateofincrease ofsubsidized imports intothedomestic market indicating
thelikelihood ofsubstantially increased importation;
(iii) sufficient freely disposable, oranimminent, substantial increase in,capacity ofthe
exporter indicating thelikelihood ofsubstantially increased subsidized exports tothe
importing Member 'smarket, taking intoaccount theavailability ofotherexport markets
toabsorb anyadditional exports;
(iv) whether imports areentering atprices thatwillhave asignificant depressing or
suppressing effect ondomestic prices, andwould likely increase demand forfurther
imports; and
(v) inventories oftheproduct being investigated.
Nooneofthese factors byitself cannecessarily givedecisive guidance butthetotality ofthefactors
considered must leadtotheconclusion thatfurther subsidized exports areimminent andthat,unless
protective action istaken, material injury would occur.
15.8 With respect tocases where injury isthreatened bysubsidized imports, theapplication of
countervailing measures shallbeconsidered anddecided withspecial care.
Article 16
Definition ofDomestic Industry
16.1 Forthepurposes ofthisAgreement, theterm"domestic industry" shall, except asprovided
inparagraph 2,beinterpreted asreferring tothedomestic producers asawhole ofthelikeproducts
ortothose ofthem whose collective output oftheproducts constitutes amajor proportion ofthetotal
domestic production ofthose products, except thatwhen producers arerelated48totheexporters or
48Forthepurpose ofthisparagraph, producers shallbedeemed toberelated toexporters orimporters
onlyif(a)oneofthem directly orindirectly controls theother; or(b)bothofthem aredirectly or
indirectly controlled byathirdperson; or(c)together theydirectly orindirectly control athirdperson,
provided thatthere aregrounds forbelieving orsuspecting thattheeffect oftherelationship issuch
(continued...)SCM-V -Page22
importers orarethemselves importers oftheallegedly subsidized product oralikeproduct fromother
countries, theterm"domestic industry" maybeinterpreted asreferring totherestoftheproducers.
16.2. Inexceptional circumstances, theterritory ofaMember may, fortheproduction inquestion,
bedivided intotwoormore competitive markets andtheproducers within eachmarket mayberegarded
asaseparate industry if(a)theproducers within suchmarket sellalloralmost alloftheirproduction
oftheproduct inquestion inthatmarket, and(b)thedemand inthatmarket isnottoanysubstantial
degree supplied byproducers oftheproduct inquestion located elsewhere intheterritory. Insuch
circumstances, injury maybefound toexistevenwhere amajor portion ofthetotaldomestic industry
isnotinjured, provided thereisaconcentration ofsubsidized imports intosuchanisolated market and
provided further thatthesubsidized imports arecausing injury totheproducers ofalloralmost all
oftheproduction within suchmarket.
16.3 When thedomestic industry hasbeeninterpreted asreferring totheproducers inacertain area,
i.e.amarket asdefined inparagraph 2,countervailing duties shallbelevied onlyontheproducts in
question consigned forfinalconsumption tothatarea. When theconstitutional lawoftheimporting
Member doesnotpermit thelevying ofcountervailing duties onsuchabasis, theimporting Member
maylevythecountervailing duties without limitation onlyif(a)theexporters shallhavebeengiven
anopportunity tocease exporting atsubsidized prices totheareaconcerned orotherwise giveassurances
pursuant toArticle 18,andadequate assurances inthisregard havenotbeenpromptly given, and(b)such
duties cannot belevied onlyonproducts ofspecific producers which supply theareainquestion.
16.4 Where twoormore countries have reached under theprovisions ofparagraph 8(a)of
Article XXIV ofGATT 1994suchalevelofintegration thattheyhavethecharacteristics ofasingle,
unified market, theindustry intheentire areaofintegration shallbetaken tobethedomestic industry
referred toinparagraphs 1and2.
16.5 Theprovisions ofparagraph 6ofArticle 15shallbeapplicable tothisArticle.
Article 17
Provisional Measures
17.1 Provisional measures maybeapplied onlyif:
(a) aninvestigation hasbeeninitiated inaccordance withtheprovisions ofArticle 11,a
public notice hasbeengiven tothateffect andinterested Members andinterested parties
havebeengiven adequate opportunities tosubmit information andmake comments;
(b) apreliminary affirmative determination hasbeenmade thatasubsidy exists andthat
there isinjury toadomestic industry caused bysubsidized imports; and
(c) theauthorities concerned judge suchmeasures necessary toprevent injury being caused
during theinvestigation.
17.2 Provisional measures maytaketheform ofprovisional countervailing duties guaranteed by
cashdeposits orbonds equal totheamount oftheprovisionally calculated amount ofsubsidization.
48(...continued)
astocause theproducer concerned tobehave differently fromnon-related producers. Forthepurpose
ofthisparagraph, oneshallbedeemed tocontrol another when theformer islegally oroperationally
inaposition toexercise restraint ordirection overthelatter.SCM-V -Page23
17.3 Provisional measures shallnotbeapplied sooner than60daysfrom thedateofinitiation of
theinvestigation.
17.4 Theapplication ofprovisional measures shallbelimited toasshort aperiod aspossible, not
exceeding fourmonths.
17.5 TherelevantprovisionsofArticle19shallbefollowedintheapplicationofprovisionalmeasures.
Article 18
Undertakings
18.1 Proceedings may49besuspended orterminated without theimposition ofprovisional measures
orcountervailing duties upon receipt ofsatisfactory voluntary undertakings under which:
(a) thegovernment oftheexporting Member agrees toeliminate orlimitthesubsidy
ortakeother measures concerning itseffects; or
(b) theexporter agrees torevise itsprices sothattheinvestigating authorities are
satisfied thattheinjurious effect ofthesubsidy iseliminated. Price increases
under suchundertakings shallnotbehigher thannecessary toeliminate the
amount ofthesubsidy. Itisdesirable thattheprice increases belessthan
theamount ofthesubsidy ifsuch increases would beadequate toremove the
injury tothedomestic industry.
18.2 Undertakings shallnotbesought oraccepted unless theauthorities oftheimporting Member
have made apreliminary affirmative determination ofsubsidization andinjury caused bysuch
subsidization and,incaseofundertakings fromexporters, haveobtained theconsent oftheexporting
Member.
18.3 Undertakings offered neednotbeaccepted iftheauthorities oftheimporting Member consider
theiracceptance impractical, forexample ifthenumber ofactual orpotential exporters istoogreat,
orforother reasons, including reasons ofgeneral policy. Should thecaseariseandwhere practicable,
theauthorities shallprovide totheexporter thereasons which haveledthem toconsider acceptance
ofanundertaking asinappropriate, andshall, totheextent possible, givetheexporter anopportunity
tomake comments there on.
18.4 Ifanundertaking isaccepted, theinvestigation ofsubsidization andinjury shallnevertheless
becompleted iftheexporting Member sodesires ortheimporting Member sodecides. Insuchacase,
ifanegative determination ofsubsidization orinjury ismade, theundertaking shallautomatically lapse,
except incases where suchadetermination isdueinlarge parttotheexistence ofanundertaking.
Insuchcases, theauthorities concerned mayrequire thatanundertaking bemaintained forareasonable
period consistent withtheprovisions ofthisAgreement. Intheevent thatanaffirmative determination
ofsubsidization andinjury ismade, theundertaking shallcontinue consistent withitsterms andthe
provisions ofthisAgreement.
18.5 PriceundertakingsmaybesuggestedbytheauthoritiesoftheimportingMember,butnoexporter
shallbeforced toenter intosuchundertakings. Thefactthatgovernments orexporters donotoffer
suchundertakings, ordonotaccept aninvitation todoso,shallinnowayprejudice theconsideration
ofthecase. However, theauthorities arefreetodetermine thatathreat ofinjury ismore likely to
berealized ifthesubsidized imports continue.
49Theword "may" shallnotbeinterpreted toallow thesimultaneous continuation ofproceedings
withtheimplementation ofundertakings, except asprovided inparagraph 4.SCM-V -Page24
18.6 Authorities ofanimporting Member mayrequire anygovernment orexporter from whom
anundertaking hasbeenaccepted toprovide periodically information relevant tothefulfilment ofsuch
anundertaking, andtopermit verification ofpertinent data. Incaseofviolation ofanundertaking,
theauthorities oftheimporting Member maytake, under thisAgreement inconformity withits
provisions, expeditious actions which mayconstitute immediate application ofprovisional measures
using thebestinformation available. Insuchcases, definitive duties maybelevied inaccordance with
thisAgreement onproducts entered forconsumption notmore than90daysbefore theapplication of
suchprovisional measures, except thatanysuchretroactive assessment shallnotapply toimports entered
before theviolation oftheundertaking.
Article 19
Imposition andCollection ofCountervailing Duties
19.1 If,afterreasonable efforts havebeenmade tocomplete consultations, aMember makes afinal
determination oftheexistence andamount ofthesubsidy andthat,through theeffects ofthesubsidy,
thesubsidized imports arecausing injury, itmayimpose acountervailing dutyinaccordance withthe
provisions ofthisArticle unless thesubsidy orsubsidies arewithdrawn.
19.2 Thedecision whether ornottoimpose acountervailing dutyincases where allrequirements
fortheimposition havebeenfulfilled, andthedecision whether theamount ofthecountervailing duty
tobeimposed shallbethefullamount ofthesubsidy orless,aredecisions tobemade bytheauthorities
oftheimporting Member. Itisdesirable thattheimposition should bepermissive intheterritory of
allMembers, thatthedutyshould belessthanthetotalamount ofthesubsidy ifsuchlesser dutywould
beadequate toremove theinjury tothedomestic industry, andthatprocedures should beestablished
which would allow theauthorities concerned totakedueaccount ofrepresentations made bydomestic
interested parties50whose interests might beadversely affected bytheimposition ofacountervailing
duty.
19.3 When acountervailing dutyisimposed inrespect ofanyproduct, suchcountervailing duty
shallbelevied, intheappropriate amounts ineachcase, onanon-discriminatory basis onimports of
suchproduct from allsources found tobesubsidized andcausing injury, except astoimports from
those sources which haverenounced anysubsidies inquestion orfromwhich undertakings under the
terms ofthisAgreement havebeenaccepted. Anyexporter whose exports aresubject toadefinitive
countervailing dutybutwhowasnotactually investigated forreasons other thanarefusal tocooperate,
shallbeentitled toanexpedited review inorder thattheinvestigating authorities promptly establish
anindividual countervailing dutyrateforthatexporter.
19.4 Nocountervailing dutyshallbelevied51onanyimported product inexcess oftheamount of
thesubsidy found toexist, calculated interms ofsubsidization perunitofthesubsidized andexported
product.
50Forthepurpose ofthisparagraph, theterm"domestic interested parties" shallinclude consumers
andindustrial users oftheimported product subject toinvestigation.
51AsusedinthisAgreement "levy" shallmean thedefinitive orfinallegalassessment orcollection
ofadutyortax.SCM-V -Page25
Article 20
Retroactivity
20.1 Provisional measures andcountervailing duties shallonlybeapplied toproducts which enter
forconsumption afterthetimewhen thedecision under paragraph 1ofArticle 17andparagraph 1
ofArticle 19,respectively, enters intoforce, subject totheexceptions setoutinthisArticle.
20.2 Where afinaldetermination ofinjury (butnotofathreat thereof orofamaterial retardation
oftheestablishment ofanindustry) ismade or,inthecaseofafinaldetermination ofathreat ofinjury,
where theeffect ofthesubsidized imports would, intheabsence oftheprovisional measures, have
ledtoadetermination ofinjury, countervailing duties maybelevied retroactively fortheperiod for
which provisional measures, ifany,havebeenapplied.
20.3 Ifthedefinitive countervailing dutyishigher thantheamount guaranteed bythecashdeposit
orbond, thedifference shallnotbecollected. Ifthedefinitive dutyislessthantheamount guaranteed
bythecashdeposit orbond, theexcess amount shallbereimbursed orthebondreleased inanexpeditious
manner.
20.4 Except asprovided inparagraph 2,where adetermination ofthreat ofinjury ormaterial
retardation ismade (butnoinjury hasyetoccurred) adefinitive countervailing dutymaybeimposed
onlyfromthedateofthedetermination ofthreat ofinjury ormaterial retardation, andanycashdeposit
made during theperiod oftheapplication ofprovisional measures shallberefunded andanybonds
released inanexpeditious manner.
20.5 Where afinaldetermination isnegative, anycashdeposit made during theperiod ofthe
application ofprovisional measures shallberefunded andanybonds released inanexpeditious manner.
20.6 Incritical circumstances where forthesubsidized product inquestion theauthorities findthat
injury which isdifficult torepair iscaused bymassive imports inarelatively short period ofaproduct
benefiting from subsidies paidorbestowed inconsistently withtheprovisions ofGATT 1994 andof
thisAgreement andwhere itisdeemed necessary, inorder topreclude therecurrence ofsuchinjury,
toassess countervailing duties retroactively onthose imports, thedefinitive countervailing duties may
beassessed onimports which wereentered forconsumption notmore than90daysprior tothedate
ofapplication ofprovisional measures.
Article 21
Duration andReview ofCountervailing Duties andUndertakings
21.1 Acountervailing dutyshallremain inforce onlyaslongasandtotheextent necessary to
counteract subsidization which iscausing injury.
21.2 Theauthorities shallreview theneedforthecontinued imposition oftheduty, where warranted,
ontheirowninitiative or,provided thatareasonable period oftimehaselapsed since theimposition
ofthedefinitive countervailing duty, upon request byanyinterested party which submits positive
information substantiating theneedforareview. Interested parties shallhavetherighttorequest the
authorities toexamine whether thecontinued imposition ofthedutyisnecessary tooffset subsidization,
whether theinjury would belikely tocontinue orrecur ifthedutywereremoved orvaried, orboth.
If,asaresult ofthereview under thisparagraph, theauthorities determine thatthecountervailing duty
isnolonger warranted, itshallbeterminated immediately.
21.3 Notwithstanding theprovisions ofparagraphs 1and2,anydefinitive countervailing dutyshall
beterminated onadatenotlaterthanfiveyears fromitsimposition (orfromthedateofthemostrecent
review under paragraph 2ifthatreview hascovered bothsubsidization andinjury, orunder thisSCM-V -Page26
paragraph), unless theauthorities determine, inareview initiated before thatdateontheirowninitiative
oruponadulysubstantiated request made byoronbehalf ofthedomestic industry within areasonable
period oftimeprior tothatdate, thattheexpiry ofthedutywould belikely toleadtocontinuation
orrecurrence ofsubsidization andinjury.52Thedutymayremain inforce pending theoutcome of
suchareview.
21.4 Theprovisions ofArticle 12regarding evidence andprocedure shallapply toanyreview carried
outunder thisArticle. Anysuchreview shall becarried outexpeditiously andshall normally be
concluded within 12months ofthedateofinitiation ofthereview.
21.5 Theprovisions ofthisArticle shallapply mutatis mutandis toundertakings accepted under
Article 18.
Article 22
Public Notice andExplanation of
Determinations
22.1 When theauthorities aresatisfied thatthere issufficient evidence tojustify theinitiation of
aninvestigation pursuant toArticle 11,theMember orMembers theproducts ofwhich aresubject
tosuchinvestigation andotherinterested parties known totheinvestigating authorities tohaveaninterest
therein shallbenotified andapublic notice shallbegiven.
22.2 Apublic notice oftheinitiation ofaninvestigation shallcontain, orotherwise make available
through aseparate report53,adequate information onthefollowing:
(i) thename oftheexporting country orcountries andtheproduct involved;
(ii) thedateofinitiation oftheinvestigation;
(iii) adescription ofthesubsidy practice orpractices tobeinvestigated;
(iv) asummary ofthefactors onwhich theallegation ofinjury isbased;
(v) theaddress towhich representations byinterested Members andinterested parties
should bedirected; and
(vi) thetime-limits allowed tointerested Members andinterested parties formaking
theirviews known.
22.3 Public notice shallbegiven ofanypreliminary orfinaldetermination, whether affirmative
ornegative, ofanydecision toaccept anundertaking pursuant toArticle 18,ofthetermination ofsuch
anundertaking, andofthetermination ofadefinitive countervailing duty. Each suchnotice shallset
forth, orotherwise make available through aseparate report, insufficient detail thefindings and
conclusions reached onallissues offactandlawconsidered material bytheinvestigating authorities.
Allsuchnotices andreports shallbeforwarded totheMember orMembers theproducts ofwhich are
subject tosuchdetermination orundertaking andtoother interested parties known tohaveaninterest
therein.
52When theamount ofthecountervailing dutyisassessed onaretrospective basis, afinding in
themostrecentassessmentproceedingthatnodutyistobeleviedshallnotbyitselfrequiretheauthorities
toterminate thedefinitive duty.
53Where authorities provide information andexplanations under theprovisions ofthisArticle in
aseparate report, theyshallensure thatsuchreport isreadily available tothepublic.SCM-V -Page27
22.4 Apublic notice oftheimposition ofprovisional measures shallsetforth, orotherwise make
available through aseparate report, sufficiently detailed explanations forthepreliminary determinations
ontheexistence ofasubsidy andinjury andshallrefertothematters offactandlawwhich haveled
toarguments being accepted orrejected. Such anotice orreport shall, dueregard being paidtothe
requirement fortheprotection ofconfidential information, contain inparticular:
(i) thenames ofthesuppliers or,when thisisimpracticable, thesupplying countries
involved;
(ii) adescription oftheproduct which issufficient forcustoms purposes;
(iii) theamount ofsubsidy established andthebasisonwhich theexistence ofasubsidy
hasbeendetermined;
(iv) considerations relevant totheinjury determination assetoutinArticle 15;
(v) themain reasons leading tothedetermination.
22.5 Apublic notice ofconclusion orsuspension ofaninvestigation inthecaseofanaffirmative
determination providing fortheimposition ofadefinitive dutyortheacceptance ofanundertaking
shallcontain, orotherwise make available through aseparate report, allrelevant information onthe
matters offactandlawandreasons which haveledtotheimposition offinalmeasures ortheacceptance
ofanundertaking,dueregardbeingpaidtotherequirementfortheprotectionofconfidentialinformation.
Inparticular, thenotice orreport shallcontain theinformation described inparagraph 4,aswellas
thereasons fortheacceptance orrejection ofrelevant arguments orclaims made byinterested Members
andbytheexporters andimporters.
22.6 Apublic notice ofthetermination orsuspension ofaninvestigation following theacceptance
ofanundertaking pursuant toArticle 18shallinclude, orotherwise make available through aseparate
report, thenon-confidential partofthisundertaking.
22.7 Theprovisions ofthisArticle shallapply mutatis mutandis totheinitiation andcompletion
ofreviews pursuant toArticle 21andtodecisions under Article 20toapply duties retroactively.
Article 23
Judicial Review
EachMember whose national legislation contains provisions oncountervailing dutymeasures
shallmaintain judicial, arbitral oradministrative tribunals orprocedures forthepurpose, interalia,
oftheprompt review ofadministrative actions relating tofinal determinations andreviews of
determinations within themeaning ofArticle 21.Such tribunals orprocedures shallbeindependent
oftheauthorities responsible forthedetermination orreview inquestion, andshallprovide allinterested
parties whoparticipated intheadministrative proceeding andaredirectly andindividually affected by
theadministrative actions withaccess toreview.SCM-V -Page28
PART VI:INSTITUTIONS
Article 24
Committee onSubsidies andCountervailing Measures
andSubsidiary Bodies
24.1 There ishereby established aCommittee onSubsidies andCountervailing Measures composed
ofrepresentatives fromeachoftheMembers. TheCommittee shallelectitsownChairman andshall
meetnotlessthantwice ayearandotherwise asenvisaged byrelevant provisions ofthisAgreement
attherequest ofanyMember. TheCommittee shallcarry outresponsibilities asassigned toitunder
thisAgreement orbytheMembers anditshallafford Members theopportunity ofconsulting onany
matter relating totheoperation oftheAgreement orthefurtherance ofitsobjectives. TheWTO
Secretariat shallactasthesecretariat totheCommittee.
24.2 TheCommittee maysetupsubsidiary bodies asappropriate.
24.3 TheCommittee shallestablish aPermanent Group ofExperts composed offiveindependent
persons, highly qualified inthefields ofsubsidies andtrade relations. Theexperts willbeelected by
theCommittee andoneofthem willbereplaced every year. ThePGEmayberequested toassist a
panel, asprovided forinparagraph 5ofArticle 4.TheCommittee mayalsoseekanadvisory opinion
ontheexistence andnature ofanysubsidy.
24.4 ThePGEmaybeconsulted byanyMember andmaygiveadvisory opinions onthenature
ofanysubsidy proposed tobeintroduced orcurrently maintained bythatMember. Such advisory
opinions willbeconfidential andmaynotbeinvoked inproceedings under Article 7.
24.5 Incarrying outtheirfunctions, theCommittee andanysubsidiary bodies mayconsult with
andseekinformation from anysource theydeem appropriate. However, before theCommittee or
asubsidiary body seeks suchinformation fromasource within thejurisdiction ofaMember, itshall
inform theMember involved.
PART VII: NOTIFICATION AND SURVEILLANCE
Article 25
Notifications
25.1 Members agree that,without prejudice totheprovisions ofparagraph 1ofArticle XVIof
GATT 1994, theirnotifications ofsubsidies shallbesubmitted notlaterthan30Juneofeachyearand
shallconform totheprovisions ofparagraphs 2through 6.
25.2 Members shallnotify anysubsidy asdefined inparagraph 1ofArticle 1,which isspecific
within themeaning ofArticle 2,granted ormaintained within theirterritories.
25.3 Thecontent ofnotifications should besufficiently specific toenable other Members toevaluate
thetradeeffects andtounderstand theoperation ofnotified subsidy programmes. Inthisconnection,
andwithout prejudice tothecontents andformofthequestionnaire onsubsidies54,Members shallensure
thattheirnotifications contain thefollowing information:
54TheCommitteeshallestablishaWorkingPartytoreviewthecontentsandformofthequestionnaire
ascontained inBISD 9S/193-194.SCM-V -Page29
(i) form ofasubsidy (i.e.grant, loan, taxconcession, etc.);
(ii) subsidy perunitor,incases where thisisnotpossible, thetotalamount orthe
annual amount budgeted forthatsubsidy (indicating, ifpossible, theaverage
subsidy perunitintheprevious year);
(iii) policy objective and/or purpose ofasubsidy;
(iv) duration ofasubsidy and/or anyother time-limits attached toit;
(v) statistical datapermitting anassessment ofthetrade effects ofasubsidy.
25.4 Where specific points inparagraph 3havenotbeenaddressed inanotification, anexplanation
shallbeprovided inthenotification itself.
25.5 Ifsubsidies aregranted tospecific products orsectors, thenotifications should beorganized
byproduct orsector.
25.6 Members which consider thatthere arenomeasures intheirterritories requiring notification
under paragraph 1ofArticle XVIofGATT 1994 andthisAgreement shallsoinform theSecretariat
inwriting.
25.7 Members recognize thatnotification ofameasure doesnotprejudge either itslegalstatus under
GATT 1994andthisAgreement, theeffects under thisAgreement, orthenature ofthemeasure itself.
25.8 AnyMember may,atanytime, make awritten request forinformation onthenature andextent
ofanysubsidy granted ormaintained byanother Member (including anysubsidy referred toinPartIV),
orforanexplanation ofthereasons forwhich aspecific measure hasbeenconsidered asnotsubject
totherequirement ofnotification.
25.9 Members sorequested shall provide such information asquickly aspossible andina
comprehensive manner, andshallbeready, upon request, toprovide additional information tothe
requesting Member. Inparticular, theyshallprovide sufficient details toenable theother Member
toassess theircompliance withtheterms ofthisAgreement. AnyMember which considers thatsuch
information hasnotbeenprovided maybring thematter totheattention oftheCommittee.
25.10 AnyMember which considers thatanymeasure ofanother Member having theeffects ofa
subsidy hasnotbeen notified inaccordance withtheprovisions ofparagraph 1ofArticle XVIof
GATT 1994andthisArticle maybring thematter totheattention ofsuchother Member. Ifthealleged
subsidy isnotthereafter notified promptly, suchMember mayitselfbring thealleged subsidy inquestion
tothenotice oftheCommittee.
25.11 Members shallreport without delay totheCommittee allpreliminary orfinalactions taken
withrespect tocountervailing duties. Suchreports shallbeavailable intheSecretariat forinspection
byother Members. Members shallalsosubmit, onasemi-annual basis, reports onanycountervailing
dutyactions taken within thepreceding sixmonths. Thesemi-annual reports shallbesubmitted on
anagreed standard form.
25.12 EachMember shallnotify theCommittee (a)which ofitsauthorities arecompetent toinitiate
andconduct investigations referred toinArticle 11and(b)itsdomestic procedures governing the
initiation andconduct ofsuchinvestigations.SCM-V -Page30
Article 26
Surveillance
26.1 TheCommittee shall examine newandfullnotifications submitted under paragraph 1of
Article XVIofGATT 1994andparagraph 1ofArticle 25ofthisAgreement atspecial sessions held
every third year. Notifications submitted intheintervening years (updating notifications) shallbe
examined ateachregular meeting oftheCommittee.
26.2 TheCommitteeshallexaminereportssubmittedunderparagraph11ofArticle25ateachregular
meeting oftheCommittee.
PART VIII: DEVELOPING COUNTRY MEMBERS
Article 27
Special andDifferential Treatment ofDeveloping Country Members
27.1 Members recognize thatsubsidies mayplayanimportant roleineconomic development
programmes ofdeveloping country Members.
27.2 Theprohibition ofparagraph 1(a)ofArticle 3shallnotapply to:
(a) developing country Members referred toinAnnex VII.
(b) other developing country Members foraperiod ofeight years from thedateofentry
intoforce oftheWTO Agreement, subject tocompliance withtheprovisions in
paragraph 4.
27.3 Theprohibition ofparagraph 1(b)ofArticle 3shallnotapply todeveloping country Members
foraperiod offiveyears, andshallnotapply toleastdeveloped country Members foraperiod ofeight
years, from thedateofentry intoforce oftheWTO Agreement.
27.4 AnydevelopingcountryMemberreferredtoinparagraph2(b)shallphaseoutitsexportsubsidies
within theeight-year period, preferably inaprogressive manner. However, adeveloping country
Member shallnotincrease thelevelofitsexport subsidies55,andshalleliminate themwithin aperiod
shorter thanthatprovided forinthisparagraph when theuseofsuchexport subsidies isinconsistent
withitsdevelopment needs. Ifadeveloping country Member deems itnecessary toapply suchsubsidies
beyond the8-year period, itshallnotlaterthanoneyearbefore theexpiry ofthisperiod enter into
consultation withtheCommittee, which willdetermine whether anextension ofthisperiod isjustified,
afterexamining alltherelevant economic, financial anddevelopment needs ofthedeveloping country
Member inquestion. IftheCommittee determines thattheextension isjustified, thedeveloping country
Member concerned shallholdannual consultations withtheCommittee todetermine thenecessity of
maintaining thesubsidies. Ifnosuchdetermination ismade bytheCommittee, thedeveloping country
Member shall phase outtheremaining export subsidies within twoyears from theendofthelast
authorized period.
27.5 Adeveloping country Member which hasreached export competitiveness inanygiven product
shallphase outitsexport subsidies forsuchproduct(s) overaperiod oftwoyears. However, fora
55Foradeveloping country Member notgranting export subsidies asofthedateofentry intoforce
oftheWTO Agreement, thisparagraph shallapply onthebasisofthelevelofexport subsidies granted
in1986.SCM-V -Page31
developing country Member which isreferred toinAnnex VIIandwhich hasreached export
competitiveness inoneormore products, export subsidies onsuchproducts shallbegradually phased
outoveraperiod ofeight years.
27.6 Export competitiveness inaproduct exists ifadeveloping country Member 'sexports ofthat
product havereached ashare ofatleast3.25percentinworld tradeofthatproduct fortwoconsecutive
calendar years. Export competitiveness shallexisteither (a)onthebasisofnotification bythedeveloping
country Member having reached export competitiveness, or(b)onthebasisofacomputation undertaken
bytheSecretariat attherequest ofanyMember. Forthepurpose ofthisparagraph, aproduct isdefined
asasectionheadingoftheHarmonizedSystemNomenclature.TheCommitteeshallreviewtheoperation
ofthisprovision fiveyears from thedateoftheentry intoforce oftheWTO Agreement.
27.7 Theprovisions ofArticle 4shallnotapply toadeveloping country Member inthecaseof
export subsidies which areinconformity withtheprovisions ofparagraphs 2through 5.Therelevant
provisions insuchacaseshallbethose ofArticle 7.
27.8 There shallbenopresumption interms ofparagraph 1ofArticle 6thatasubsidy granted by
adeveloping country Member results inserious prejudice, asdefined inthisAgreement. Suchserious
prejudice, where applicable under theterms ofparagraph 9,shallbedemonstrated bypositive evidence,
inaccordance withtheprovisions ofparagraphs 3through 8ofArticle 6.
27.9 Regarding actionable subsidies granted ormaintained byadeveloping country Member other
thanthose referred toinparagraph 1ofArticle 6,action maynotbeauthorized ortaken under Article 7
unless nullification orimpairment oftariffconcessions orother obligations under GATT 1994isfound
toexistasaresult ofsuchasubsidy, insuchawayastodisplace orimpede imports ofalikeproduct
ofanother Member intothemarket ofthesubsidizing developing country Member orunless injury
toadomestic industry inthemarket ofanimporting Member occurs.
27.10 Anycountervailing dutyinvestigation ofaproduct originating inadeveloping country Member
shallbeterminated assoonastheauthorities concerned determine that:
(a) theoverall level ofsubsidies granted upon theproduct inquestion doesnotexceed
2percentofitsvalue calculated onaperunitbasis; or
(b) thevolume ofthesubsidized imports represents lessthan4percentofthetotalimports
ofthelikeproduct intheimporting Member, unless imports fromdeveloping country
Members whose individual shares oftotal imports represent lessthan4percent
collectively account formore than9percentofthetotalimports ofthelikeproduct
intheimporting Member.
27.11 ForthosedevelopingcountryMemberswithinthescopeofparagraph2(b)whichhaveeliminated
export subsidies prior totheexpiry oftheperiod ofeight years from thedateofentry intoforce of
theWTO Agreement, andforthose developing country Members referred toinAnnex VII,thenumber
inparagraph 10(a) shallbe3percentrather than2percent. Thisprovision shallapply from the
datethattheelimination ofexport subsidies isnotified totheCommittee, andforsolongasexport
subsidies arenotgranted bythenotifying developing country Member. Thisprovision shallexpire
eight years from thedateofentry intoforce oftheWTO Agreement.
27.12 Theprovisions ofparagraphs 10and11shallgovern anydetermination ofdeminimis under
paragraph 3ofArticle 15.
27.13 Theprovisions ofPartIIIshallnotapply todirect forgiveness ofdebts, subsidies tocover
social costs, inwhatever form, including relinquishment ofgovernment revenue andother transfer
ofliabilities when suchsubsidies aregranted within anddirectly linked toaprivatization programme
ofadeveloping country Member, provided thatbothsuchprogramme andthesubsidies involved areSCM-V -Page32
granted foralimited period andnotified totheCommittee andthattheprogramme results ineventual
privatization oftheenterprise concerned.
27.14 TheCommittee shall, uponrequest byaninterested Member, undertake areview ofaspecific
export subsidy practice ofadeveloping country Member toexamine whether thepractice isinconformity
withitsdevelopment needs.
27.15 TheCommittee shall, upon request byaninterested developing country Member, undertake
areview ofaspecific countervailing measure toexamine whether itisconsistent withtheprovisions
ofparagraphs 10and11asapplicable tothedeveloping country Member inquestion.
PART IX:TRANSITIONAL ARRANGEMENTS
Article 28
Existing Programmes
28.1 Subsidy programmes which havebeenestablished within theterritory ofanyMember before
thedateonwhich suchaMember signed theWTO Agreement andwhich areinconsistent withthe
provisions ofthisAgreement shallbe:
(a) notified totheCommittee notlaterthan90daysafterthedateofentry intoforce of
theWTO Agreement forsuchMember; and
(b) brought intoconformity withtheprovisions ofthisAgreement within three years of
thedateofentry intoforce oftheWTO Agreement forsuchMember anduntilthen
shallnotbesubject toPartII.
28.2 NoMember shallextend thescope ofanysuchprogramme, norshallsuchaprogramme be
renewed upon itsexpiry.
Article 29
Transformation intoaMarket Economy
29.1 Membersintheprocessoftransformationfromacentrally-plannedintoamarket,free-enterprise
economy mayapply programmes andmeasures necessary forsuchatransformation.
29.2 ForsuchMembers, subsidy programmes falling within thescope ofArticle 3,andnotified
according toparagraph 3,shallbephased outorbrought intoconformity withArticle 3within aperiod
ofseven years from thedateofentry intoforce oftheWTO Agreement. Insuchacase, Article 4
shallnotapply. Inaddition during thesame period:
(a) Subsidy programmes falling within thescope ofparagraph 1(d)ofArticle 6shallnot
beactionable under Article 7;
(b) Withrespect toother actionable subsidies, theprovisions ofparagraph 9ofArticle 27
shallapply.
29.3 Subsidy programmes falling within thescope ofArticle 3shallbenotified totheCommittee
bytheearliest practicable dateafterthedateofentry intoforce oftheWTO Agreement. Further
notifications ofsuchsubsidies maybemade uptotwoyears afterthedateofentry intoforce ofthe
WTO Agreement.SCM-V -Page33
29.4 Inexceptional circumstances Members referred toinparagraph 1maybegiven departures
fromtheirnotified programmes andmeasures andtheirtime-frame bytheCommittee ifsuchdepartures
aredeemed necessary fortheprocess oftransformation.
PART X:DISPUTE SETTLEMENT
Article 30
Theprovisions ofArticles XXII andXXIII ofGATT 1994 aselaborated andapplied bythe
Dispute Settlement Understanding shallapply toconsultations andthesettlement ofdisputes under this
Agreement, except asotherwise specifically provided herein.
PART XI:FINAL PROVISIONS
Article 31
Provisional Application
Theprovisions ofparagraph 1ofArticle 6andtheprovisions ofArticle 8andArticle 9shall
apply foraperiod offiveyears, beginning withthedateofentry intoforce oftheWTO Agreement.
Notlaterthan180daysbefore theendofthisperiod, theCommittee shallreview theoperation ofthose
provisions, withaviewtodetermining whether toextend theirapplication, either aspresently drafted
orinamodified form, forafurther period.
Article 32
Other Final Provisions
32.1 Nospecific action against asubsidy ofanother Member canbetaken except inaccordance
withtheprovisions ofGATT 1994, asinterpreted bythisAgreement.56
32.2 Reservations maynotbeentered inrespect ofanyoftheprovisions ofthisAgreement without
theconsent oftheother Members.
32.3 Subject toparagraph 4,theprovisions ofthisAgreement shallapply toinvestigations, and
reviews ofexisting measures, initiated pursuant toapplications which havebeenmade onorafterthe
dateofentry intoforce foraMember oftheWTO Agreement.
32.4 Forthepurposes ofparagraph 3ofArticle 21,existing countervailing measures shallbedeemed
tobeimposed onadatenotlaterthanthedateofentry intoforce foraMember oftheWTO Agreement,
except incases inwhich thedomestic legislation ofaMember inforce atthatdatealready included
aclause ofthetypeprovided forinthatparagraph.
32.5 Each Member shalltakeallnecessary steps, ofageneral orparticular character, toensure,
notlaterthanthedateofentry intoforce oftheWTO Agreement forit,theconformity ofitslaws,
regulations andadministrative procedures withtheprovisions ofthisAgreement astheymayapply
totheMember inquestion.
56Thisparagraph isnotintended topreclude action under other relevant provisions ofGATT 1994,
where appropriate.SCM-V -Page34
32.6 EachMember shallinform theCommittee ofanychanges initslawsandregulations relevant
tothisAgreement andintheadministration ofsuchlawsandregulations.
32.7 TheCommittee shallreview annually theimplementation andoperation ofthisAgreement,
taking intoaccount theobjectives thereof. TheCommittee shallinform annually theCouncil forTrade
inGoods ofdevelopments during theperiod covered bysuchreviews.
32.8 TheAnnexes tothisAgreement constitute anintegral partthereof.SCM-V -Page35
ANNEX I
ILLUSTRATIVE LIST OFEXPORT SUBSIDIES
(a) Theprovision bygovernments ofdirect subsidies toafirmoranindustry contingent upon
export performance.
(b) Currency retention schemes oranysimilar practices which involve abonus onexports.
(c) Internal transport andfreight charges onexport shipments, provided ormandated by
governments, onterms more favourable thanfordomestic shipments.
(d) Theprovision bygovernments ortheir agencies either directly orindirectly through
government-mandated schemes, ofimported ordomestic products orservices foruseinthe
production ofexported goods, onterms orconditions more favourable thanforprovision of
likeordirectly competitive products orservices foruseintheproduction ofgoods fordomestic
consumption, if(inthecaseofproducts) suchterms orconditions aremore favourable than
those commercially available57onworld markets totheirexporters.
(e) Thefullorpartial exemption remission, ordeferral specifically related toexports, ofdirect
taxes58orsocial welfare charges paidorpayable byindustrial orcommercial enterprises.59
57Theterm"commercially available" means thatthechoice between domestic andimported products
isunrestricted anddepends onlyoncommercial considerations.
58Forthepurpose ofthisAgreement:
Theterm"direct taxes" shallmean taxes onwages, profits, interests, rents, royalties, and
allother forms ofincome, andtaxes ontheownership ofrealproperty;
Theterm"import charges" shallmean tariffs, duties, andother fiscal charges notelsewhere
enumerated inthisnotethatarelevied onimports;
Theterm"indirect taxes" shallmean sales, excise, turnover, value added, franchise, stamp,
transfer, inventory andequipment taxes, border taxes andalltaxes other thandirect taxes andimport
charges;
"Prior-stage" indirect taxes arethose levied ongoods orservices useddirectly orindirectly
inmaking theproduct;
"Cumulative" indirect taxes aremulti-staged taxes levied where there isnomechanism for
subsequent crediting ofthetaxifthegoods orservices subject totaxatonestage ofproduction are
usedinasucceeding stage ofproduction;
"Remission" oftaxes includes therefund orrebate oftaxes;
"Remission ordrawback" includes thefullorpartial exemption ordeferral ofimport charges.
59TheMembers recognize thatdeferral neednotamount toanexport subsidy where, forexample,
appropriate interest charges arecollected. TheMembers reaffirm theprinciple thatprices forgoods
intransactions between exporting enterprises andforeign buyers under theirorunder thesame control
should fortaxpurposes betheprices which would becharged between independent enterprises acting
atarm'slength. AnyMember maydraw theattention ofanother Member toadministrative orother
practices which maycontravene thisprinciple andwhich result inasignificant saving ofdirect taxes
inexport transactions. Insuchcircumstances theMembers shallnormally attempt toresolve their
differences using thefacilities ofexisting bilateral taxtreaties orotherspecific international mechanisms,
without prejudice totherights andobligations ofMembers under GATT 1994, including therightof
consultation created inthepreceding sentence.
Paragraph (e)isnotintended tolimitaMember from taking measures toavoid thedouble
taxation offoreign-source income earned byitsenterprises ortheenterprises ofanother Member.SCM-V -Page36
(f) Theallowance ofspecial deductions directly related toexports orexport performance, over
andabove those granted inrespect toproduction fordomestic consumption, inthecalculation
ofthebaseonwhich direct taxes arecharged.
(g) Theexemption orremission, inrespect oftheproduction anddistribution ofexported products,
ofindirect taxes58inexcess ofthose levied inrespect oftheproduction anddistribution of
likeproducts when soldfordomestic consumption.
(h) Theexemption, remission ordeferral ofprior-stage cumulative indirect taxes58ongoods or
services usedintheproduction ofexported products inexcess oftheexemption, remission
ordeferral oflikeprior-stage cumulative indirect taxes ongoods orservices usedinthe
production oflikeproducts when soldfordomestic consumption; provided, however, that
prior-stagecumulativeindirecttaxesmaybeexempted,remittedordeferredonexportedproducts
even when notexempted, remitted ordeferred onlikeproducts when soldfordomestic
consumption, iftheprior-stage cumulative indirect taxesarelevied oninputs thatareconsumed
intheproduction oftheexported product (making normal allowance forwaste).60Thisitem
shallbeinterpreted inaccordance withtheguidelines onconsumption ofinputs intheproduction
process contained inAnnex II.
(i) Theremission ordrawback ofimport charges58inexcess ofthose levied onimported inputs
thatareconsumed intheproduction oftheexported product (making normal allowance for
waste); provided, however, thatinparticular cases afirmmayuseaquantity ofhome market
inputs equal to,andhaving thesame quality andcharacteristics as,theimported inputs asa
substitute fortheminorder tobenefit fromthisprovision iftheimport andthecorresponding
export operations bothoccur within areasonable timeperiod, nottoexceed twoyears. This
itemshallbeinterpreted inaccordance withtheguidelines onconsumption ofinputs inthe
production process contained inAnnex IIandtheguidelines inthedetermination ofsubstitution
drawback systems asexport subsidies contained inAnnex III.
(j) Theprovision bygovernments (orspecial institutions controlled bygovernments) ofexport
credit guarantee orinsurance programmes, ofinsurance orguarantee programmes against
increases inthecostofexported products orofexchange riskprogrammes, atpremium rates
which areinadequate tocover thelong-term operating costs andlosses oftheprogrammes.
(k) Thegrantbygovernments (orspecial institutions controlled byand/or acting under theauthority
ofgovernments) ofexport credits atratesbelow those which theyactually havetopayfor
thefunds soemployed (orwould havetopayiftheyborrowed oninternational capital markets
inorder toobtain funds ofthesame maturity andother credit terms anddenominated inthe
samecurrency astheexport credit), orthepayment bythemofallorpartofthecostsincurred
byexporters orfinancial institutions inobtaining credits, insofarastheyareusedtosecure
amaterial advantage inthefieldofexport credit terms.
Provided, however, thatifaMember isapartytoaninternational undertaking onofficial export
credits towhich atleast twelve original Members tothisAgreement areparties asof
1January1979(orasuccessorundertakingwhichhasbeenadoptedbythoseoriginalMembers),
orifinpractice aMember applies theinterest ratesprovisions oftherelevant undertaking,
anexport credit practice which isinconformity withthose provisions shallnotbeconsidered
anexport subsidy prohibited bythisAgreement.
(l) Anyother charge onthepublic account constituting anexport subsidy inthesense of
Article XVIofGATT 1994.
60Paragraph (h)doesnotapply tovalue-added taxsystems andborder-tax adjustment inlieuthereof;
theproblem oftheexcessive remission ofvalue-added taxes isexclusively covered byparagraph (g).SCM-V -Page37
ANNEX II
GUIDELINES ONCONSUMPTION OFINPUTS INTHE PRODUCTION PROCESS61
I
1. Indirect taxrebate schemes canallow forexemption, remission ordeferral ofprior-stage
cumulative indirect taxes levied oninputs thatareconsumed intheproduction oftheexported product
(making normal allowance forwaste). Similarly, drawback schemes canallow fortheremission or
drawback ofimport charges levied oninputs thatareconsumed intheproduction oftheexported product
(making normal allowance forwaste).
2. TheIllustrative ListofExport Subsidies inAnnex IofthisAgreement makes reference tothe
term"inputs thatareconsumed intheproduction oftheexported product" inparagraphs (h)and(i).
Pursuant toparagraph (h),indirect taxrebate schemes canconstitute anexport subsidy totheextent
thattheyresult inexemption, remission ordeferral ofprior-stage cumulative indirect taxes inexcess
oftheamount ofsuchtaxesactually levied oninputs thatareconsumed intheproduction oftheexported
product. Pursuant toparagraph (i),drawback schemes canconstitute anexport subsidy totheextent
thattheyresult inaremission ordrawback ofimport charges inexcess ofthose actually levied oninputs
thatareconsumed intheproduction oftheexported product. Bothparagraphs stipulate thatnormal
allowance forwaste mustbemade infindings regarding consumption ofinputs intheproduction of
theexported product. Paragraph (i)alsoprovides forsubstitution, where appropriate.
II
Inexamining whether inputs areconsumed intheproduction oftheexported product, aspart
ofacountervailingdutyinvestigationpursuanttothisAgreement,investigatingauthoritiesshouldproceed
onthefollowing basis:
1. Where itisalleged thatanindirect taxrebate scheme, oradrawback scheme, conveys asubsidy
byreason ofover-rebate orexcess drawback ofindirect taxes orimport charges oninputs consumed
intheproduction oftheexported product, theinvestigating authorities should firstdetermine whether
thegovernment oftheexporting Member hasinplace andapplies asystem orprocedure toconfirm
which inputs areconsumed intheproduction oftheexported product andinwhatamounts. Where
suchasystem orprocedure isdetermined tobeapplied, theinvestigating authorities should thenexamine
thesystem orprocedure toseewhether itisreasonable, effective forthepurpose intended, andbased
ongenerally accepted commercial practices inthecountry ofexport. Theinvestigating authorities
maydeem itnecessary tocarry out,inaccordance withparagraph 6ofArticle 12,certain practical
testsinorder toverify information ortosatisfy themselves thatthesystem orprocedure isbeing
effectively applied.
2. Where thereisnosuchsystem orprocedure, where itisnotreasonable, orwhere itisinstituted
andconsidered reasonable butisfound nottobeapplied ornottobeapplied effectively, afurther
examination bytheexporting Member based ontheactual inputs involved would needtobecarried
outinthecontext ofdetermining whether anexcess payment occurred. Iftheinvestigating authorities
deemed itnecessary, afurther examination would becarried outinaccordance withparagraph 1.
3. Investigating authorities should treatinputs asphysically incorporated ifsuchinputs areused
intheproduction process andarephysically present intheproduct exported. TheMembers notethat
61Inputs consumed intheproduction process areinputs physically incorporated, energy, fuelsand
oilusedintheproduction process andcatalysts which areconsumed inthecourse oftheirusetoobtain
theexported product.SCM-V -Page38
aninput neednotbepresent inthefinalproduct inthesame form inwhich itentered theproduction
process.
4. Indeterminingtheamountofaparticularinputthatisconsumedintheproductionoftheexported
product, a"normal allowance forwaste" should betaken intoaccount, andsuchwaste should betreated
asconsumed intheproduction oftheexported product. Theterm"waste" refers tothatportion of
agiven input which doesnotserve anindependent function intheproduction process, isnotconsumed
intheproduction oftheexported product (forreasons suchasinefficiencies) andisnotrecovered, used
orsoldbythesame manufacturer.
5. Theinvestigating authority 'sdetermination ofwhether theclaimed allowance forwaste is
"normal" should takeintoaccount theproduction process, theaverage experience oftheindustry in
thecountry ofexport, andother technical factors, asappropriate. Theinvestigating authority should
bearinmind thatanimportant question iswhether theauthorities intheexporting Member have
reasonably calculated theamount ofwaste, when suchanamount isintended tobeincluded inthetax
ordutyrebate orremission.SCM-V -Page39
ANNEX III
GUIDELINES INTHE DETERMINATION OFSUBSTITUTION
DRAWBACK SYSTEMS ASEXPORT SUBSIDIES
I
Drawback systems canallow fortherefund ordrawback ofimport charges oninputs which
areconsumed intheproduction process ofanother product andwhere theexport ofthislatter product
contains domestic inputs having thesamequality andcharacteristics asthosesubstituted fortheimported
inputs. Pursuant toparagraph (i)oftheIllustrative ListofExport Subsidies inAnnex I,substitution
drawback systems canconstitute anexport subsidy totheextent thattheyresult inanexcess drawback
oftheimport charges levied initially ontheimported inputs forwhich drawback isbeing claimed.
II
Inexamining anysubstitution drawback system aspartofacountervailing dutyinvestigation
pursuant tothisAgreement, investigating authorities should proceed onthefollowing basis:
1. Paragraph (i)oftheIllustrative Liststipulates thathome market inputs maybesubstituted for
imported inputs intheproduction ofaproduct forexport provided suchinputs areequal inquantity
to,andhavethesamequality andcharacteristics as,theimported inputs being substituted. Theexistence
ofaverification system orprocedure isimportant because itenables thegovernment oftheexporting
Member toensure anddemonstrate thatthequantity ofinputs forwhich drawback isclaimed doesnot
exceed thequantity ofsimilar products exported, inwhatever form, andthatthere isnotdrawback
ofimport charges inexcess ofthose originally levied ontheimported inputs inquestion.
2. Where itisalleged thatasubstitution drawback system conveys asubsidy, theinvestigating
authorities should firstproceed todetermine whether thegovernment oftheexporting Member has
inplaceandapplies averification system orprocedure. Where suchasystem orprocedure isdetermined
tobeapplied, theinvestigating authorities should thenexamine theverification procedures toseewhether
theyarereasonable, effective forthepurpose intended, andbased ongenerally accepted commercial
practices inthecountry ofexport. Totheextent thattheprocedures aredetermined tomeetthistest
andareeffectively applied, nosubsidy should bepresumed toexist. Itmaybedeemed necessary
bytheinvestigating authorities tocarry out,inaccordance withparagraph 6ofArticle 12,certain
practical testsinorder toverify information ortosatisfy themselves thattheverification procedures
arebeing effectively applied.
3. Where there arenoverification procedures, where theyarenotreasonable, orwhere such
procedures areinstituted andconsidered reasonable butarefound nottobeactually applied ornotapplied
effectively, there maybeasubsidy. Insuchcases afurther examination bytheexporting Member
based ontheactual transactions involved would needtobecarried outtodetermine whether anexcess
payment occurred. Iftheinvestigating authorities deemed itnecessary, afurther examination would
becarried outinaccordance withparagraph 2.
4. Theexistence ofasubstitution drawback provision under which exporters areallowed toselect
particular import shipments onwhich drawback isclaimed should notofitselfbeconsidered toconvey
asubsidy.
5. Anexcess drawback ofimport charges inthesense ofparagraph (i)would bedeemed toexist
where governments paidinterest onanymonies refunded under theirdrawback schemes, totheextent
oftheinterest actually paidorpayable.SCM-V -Page40
ANNEX IV
CALCULATION OFTHE TOTAL ADVALOREM SUBSIDIZATION
(PARAGRAPH 1(A)OFARTICLE 6)62
1. Anycalculation oftheamount ofasubsidy forthepurpose ofparagraph 1(a)ofArticle 6shall
bedoneinterms ofthecosttothegranting government.
2. Except asprovided inparagraphs 3through 5,indetermining whether theoverall rateof
subsidization exceeds 5percentofthevalue oftheproduct, thevalue oftheproduct shallbecalculated
asthetotalvalue oftherecipient firm's63sales inthemost recent 12-month period, forwhich sales
dataisavailable, preceding theperiod inwhich thesubsidy isgranted.64
3. Where thesubsidy istiedtotheproduction orsaleofagiven product, thevalue oftheproduct
shallbecalculated asthetotalvalue oftherecipient firm'ssalesofthatproduct inthemostrecent 12-
month period, forwhich salesdataisavailable, preceding theperiod inwhich thesubsidy isgranted.
4. Where therecipient firmisinastart-up situation, serious prejudice shallbedeemed toexist
iftheoverall rateofsubsidization exceeds 15percentofthetotalfunds invested. Forpurposes of
thisparagraph, astart-up period willnotextend beyond thefirstyearofproduction.65
5. Where therecipient firmislocated inaninflationary economy country, thevalue oftheproduct
shallbecalculated astherecipient firm'stotalsales (orsalesoftherelevant product, ifthesubsidy
istied)inthepreceding calendar yearindexed bytherateofinflation experienced inthe12months
preceding themonth inwhich thesubsidy istobegiven.
6. Indetermining theoverall rateofsubsidization inagiven year, subsidies given under different
programmes andbydifferent authorities intheterritory ofaMember shallbeaggregated.
7. Subsidies granted prior tothedateofentry intoforce oftheWTO Agreement, thebenefits
ofwhich areallocated tofuture production, shallbeincluded intheoverall rateofsubsidization.
8. Subsidies which arenon-actionable under relevant provisions ofthisAgreement shallnotbe
included inthecalculation oftheamount ofasubsidy forthepurpose ofparagraph 1(a)ofArticle 6.
62Anunderstanding among Members should bedeveloped, asnecessary, onmatters which arenot
specifiedinthisAnnexorwhichneedfurtherclarificationforthepurposesofparagraph1(a)ofArticle6.
63Therecipient firmisafirmintheterritory ofthesubsidizing Member.
64Inthecaseoftax-related subsidies thevalue oftheproduct shallbecalculated asthetotalvalue
oftherecipient firm'ssalesinthefiscal yearinwhich thetax-related measure wasearned.
65Start-up situations include instances where financial commitments forproduct development or
construction offacilities tomanufacture products benefiting from thesubsidy havebeenmade, even
though production hasnotbegun.SCM-V -Page41
ANNEX V
PROCEDURES FOR DEVELOPING INFORMATION CONCERNING SERIOUS PREJUDICE
1. Every Member shallcooperate inthedevelopment ofevidence tobeexamined byapanel in
procedures under paragraphs 4through 6ofArticle 7.Theparties tothedispute andanythird-country
Member concerned shallnotify totheDSB, assoonastheprovisions ofparagraph 4ofArticle 7have
beeninvoked, theorganization responsible foradministration ofthisprovision within itsterritory and
theprocedures tobeusedtocomply withrequests forinformation.
2. Incases where matters arereferred totheDSBunder paragraph 4ofArticle 7,theDSBshall,
uponrequest, initiate theprocedure toobtain suchinformation fromthegovernment ofthesubsidizing
Member asnecessary toestablish theexistence andamount ofsubsidization, thevalue oftotalsales
ofthesubsidized firms, aswellasinformation necessary toanalyze theadverse effects caused bythe
subsidized product.66Thisprocess mayinclude, where appropriate, presentation ofquestions tothe
government ofthesubsidizing Member andofthecomplaining Member tocollect information, aswell
astoclarify andobtain elaboration ofinformation available totheparties toadispute through the
notification procedures setforth inPartVII.67
3. Inthecaseofeffects inthird-country markets, aparty toadispute maycollect information,
including through theuseofquestions tothegovernment ofthethird-country Member, necessary to
analyze adverse effects, which isnototherwise reasonably available from thecomplaining Member
orthesubsidizing Member. Thisrequirement should beadministered insuchawayasnottoimpose
anunreasonable burden onthethird-country Member. Inparticular, suchaMember isnotexpected
tomake amarket orprice analysis specially forthatpurpose. Theinformation tobesupplied isthat
which isalready available orcanbereadily obtained bythisMember (e.g.mostrecent statistics which
havealreadybeengatheredbyrelevantstatisticalservicesbutwhichhavenotyetbeenpublished,customs
dataconcerning imports anddeclared values oftheproducts concerned, etc.). However, ifaparty
toadispute undertakes adetailed market analysis atitsownexpense, thetaskoftheperson orfirm
conducting suchananalysis shallbefacilitated bytheauthorities ofthethird-country Member andsuch
aperson orfirmshallbegiven access toallinformation which isnotnormally maintained confidential
bythegovernment.
4. TheDSB shall designate arepresentative toserve thefunction offacilitating the
information-gathering process. Thesolepurpose oftherepresentative shallbetoensure thetimely
development oftheinformation necessary tofacilitate expeditious subsequent multilateral review of
thedispute. Inparticular, therepresentative maysuggest ways tomost efficiently solicit necessary
information aswellasencourage thecooperation oftheparties.
5. Theinformation-gathering process outlined inparagraphs 2through 4shallbecompleted within
60daysofthedateonwhich thematter hasbeenreferred totheDSBunder paragraph 4ofArticle 7.
Theinformation obtained during thisprocess shallbesubmitted tothepanel established bytheDSB
inaccordancewiththeprovisionsofPartX.Thisinformationshouldinclude,interalia,dataconcerning
theamount ofthesubsidy inquestion (and, where appropriate, thevalue oftotalsalesofthesubsidized
firms), prices ofthesubsidized product, prices ofthenon-subsidized product, prices ofother suppliers
tothemarket, changes inthesupply ofthesubsidized product tothemarket inquestion andchanges
inmarket shares. Itshould alsoinclude rebuttal evidence, aswellassuchsupplemental information
asthepanel deems relevant inthecourse ofreaching itsconclusions.
66Incases where theexistence ofserious prejudice hastobedemonstrated.
67Theinformation-gathering process bytheDSB shall takeintoaccount theneed toprotect
information which isbynature confidential orwhich isprovided onaconfidential basisbyanyMember
involved inthisprocess.SCM-V -Page42
6. Ifthesubsidizing and/or third-country Member failtocooperate intheinformation-gathering
process, thecomplaining Member willpresent itscaseofserious prejudice, based onevidence available
toit,together withfactsandcircumstances ofthenon-cooperation ofthesubsidizing and/or third-country
Member. Where information isunavailable duetonon-cooperation bythesubsidizing and/or
third-country Member, thepanel maycomplete therecord asnecessary relying onbestinformation
otherwise available.
7. Inmaking itsdetermination, thepanel should draw adverse inferences frominstances ofnon-
cooperation byanyparty involved intheinformation-gathering process.
8. Inmaking adetermination touseeither bestinformation available oradverse inferences, the
panel shall consider theadvice oftheDSB representative nominated under paragraph 4astothe
reasonableness ofanyrequests forinformation andtheefforts made byparties tocomply withthese
requests inacooperative andtimely manner.
9. Nothing intheinformation-gathering process shalllimittheability ofthepanel toseeksuch
additional information itdeems essential toaproper resolution tothedispute, andwhich wasnot
adequately sought ordeveloped during thatprocess. However, ordinarily thepanel should notrequest
additional information tocomplete therecord where theinformation would support aparticular party's
position andtheabsence ofthatinformation intherecord istheresult ofunreasonable non-cooperation
bythatparty intheinformation-gathering process.SCM-V -Page43
ANNEX VI
PROCEDURES FOR ON-THE-SPOT INVESTIGATIONS PURSUANT TO
PARAGRAPH 6OFARTICLE 12
1. Uponinitiationofaninvestigation,theauthoritiesoftheexportingMemberandthefirmsknown
tobeconcerned should beinformed oftheintention tocarry outon-the-spot investigations.
2. Ifinexceptional circumstances itisintended toinclude non-governmental experts inthe
investigating team, thefirms andtheauthorities oftheexporting Member should besoinformed. Such
non-governmental experts should besubject toeffective sanctions forbreach ofconfidentiality
requirements.
3. Itshouldbestandardpracticetoobtainexplicitagreementofthefirmsconcernedintheexporting
Member before thevisitisfinally scheduled.
4. Assoonastheagreement ofthefirms concerned hasbeenobtained, theinvestigating authorities
should notify theauthorities oftheexporting Member ofthenames andaddresses ofthefirms tobe
visited andthedates agreed.
5. Sufficient advance notice should begiven tothefirms inquestion before thevisitismade.
6. Visits toexplain thequestionnaire should onlybemade attherequest ofanexporting firm.
Incaseofsucharequest theinvestigating authorities mayplace themselves atthedisposal ofthefirm;
suchavisitmayonlybemade if(a)theauthorities oftheimporting Member notify therepresentatives
ofthegovernment oftheMember inquestion and(b)thelatter donotobject tothevisit.
7. Asthemain purpose oftheon-the-spot investigation istoverify information provided orto
obtain further details, itshould becarried outaftertheresponse tothequestionnaire hasbeenreceived
unless thefirmagrees tothecontrary andthegovernment oftheexporting Member isinformed by
theinvestigating authorities oftheanticipated visitanddoesnotobject toit;further, itshould bestandard
practice prior tothevisittoadvise thefirms concerned ofthegeneral nature oftheinformation tobe
verified andofanyfurther information which needs tobeprovided, though thisshould notpreclude
requests tobemade onthespotforfurther details tobeprovided inthelightofinformation obtained.
8. Enquiries orquestions putbytheauthorities orfirms oftheexporting Members andessential
toasuccessful on-the-spot investigation should, whenever possible, beanswered before thevisitis
made.SCM-V -Page44
ANNEX VII
DEVELOPING COUNTRY MEMBERS REFERRED TO
INPARAGRAPH 2(A)OFARTICLE 27
Thedeveloping country Members notsubject totheprovisions ofparagraph 1(a)ofArticle 3
under theterms ofparagraph 2(a)ofArticle 27are:
(a) Least-developed countries designated assuchbytheUnited Nations which areMembers
oftheWTO.
(b) Each ofthefollowing developing countries which areMembers oftheWTO shallbe
subject totheprovisions which areapplicable toother developing country Members
according toparagraph 2(b) ofArticle 27when GNP percapita hasreached
$1,000 perannum68:Bolivia, Cameroon, Congo, Côted'Ivoire, Dominican Republic,
Egypt, Ghana, Guatemala, Guyana, India, Indonesia, Kenya, Morocco, Nicaragua,
Nigeria, Pakistan, Philippines, Senegal, SriLanka andZimbabwe.
68Theinclusion ofdeveloping country Members inthelistinparagraph (b)isbased onthemost
recent datafrom theWorld Bank onGNP percapita.