RESTRICTEDWORLD TRADE
ORGANIZATIONG/SCM/W/503
19 March 2002
(02-1427)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English
IMPLEMENTATION RELATED ISSUES REFERRED TO THE
COMMITTEE BY MINISTERS
Replies from INDIA to Questions from AUSTRALIA1, EUROPEAN COMMUNITIES2,
UNITED STATES3, JAPAN4 and CANADA5
I. REPLIES TO QUESTIONS FROM AUSTRALIA
Topic 2:  Facts Available
• Clarify that all verifiable and timely submitted information should be taken into account, and that
if a portion of information is not verifiable or timely submitted, facts available may be used forthat portion of the information.  (India) (paras 29-30 of G/SCM/W/462)
Q1. How would India define a “reasonable period”?
Reply
A reasonable period would depend on facts of the specific case under consideration.
However following could be used as possible guideline for determining a reasonable period: the
period that allows the information to be verifi ed and used in the determination taking into
consideration the time required by the investigating authorities to do so.  If a new information which
would not require extensive verification is submitted beyond pre-determined deadlines but within atime to allow its verification, then such information should be considered to have been submitted
within a reasonable period.
Topic 4:  Review Procedures
• Review need for continued imposition of measure upon submission of positive information
concerning procedural mistake or manifest error of appreciation by authorities (India) (paras 25-26 of G/SCM/W/462).
Q2. The last sentence of paragraph 25 of G/SCM/W/462 refers to opportunities other than
judicial remedies.  Is India recommending that the Subsidies and Countervailing MeasuresCommittee should decide that the investigat ing authorities shall review the need for a
countervailing duty where an interested party submits positive evidence of a procedural mistake
or error, or should the investigatin g authorities carry out the review?
                                                     
1 G/SCM/W/494
2 G/SCM/W/495
3 G/SCM/W/496
4 G/SCM/W/497
5 G/SCM/W/498G/SCM/W/503
Page 2
Q3. If India is recommending a role for the Subsidies and Countervailing Measures
Committee, does India consider that the Subsidies and Countervailing Measures Committee
would have the factual eviden ce in order to make an assessment of whether or not a
countervailing duty should apply?  Does India consider that the Subsidies and CountervailingMeasures Committee could enforce or impose its findings on the importing Member?
Q4. Is India suggesting that the same inve stigating authority review the need for a
countervailing duty or would it be an independent source of review?
Reply
India does not envisage any role for th e SCM Committee regarding factual evidence
submitted during course of countervailing duty investigations.  As stated in paragraph 25 of India’s
proposal if after the final determination is made a doubt arises regarding the veracity of the evidence
the interested party has no opportunity to seek redressal apart from a judicial review.  By requiring the
investigating authority to review the need for continued imposition of countervailing duty the
interested party should be given an opportunity of providing information regarding the procedural
mistake or manifest error of appreciation committed by the investigating authorities.
• Clarify Article 21.2 to provide for automatic adjustment of countervailing duties for schemes
withdrawn (India) (paras 27-28 of G/SCM/W/462).
Q5. Could India explain more precisely its proposal?  What does “automatic” mean?  What
administrative processes would need to be in place?  What would be the standard or basis of
evidence taken by authorities to automa tically adjust the countervailing duty?
Reply
India’s contention is that if certain schemes, which at the time of investigation were
determined to have conferred benefit to the recipi ents, were subsequently withdrawn then there should
be a procedure for automatically adjusting the amount of benefit to the recipient and the
countervailing duties.  While the details of the administrative process would be worked duringsubsequent meetings of the Subsidies Committee the following could be considered in this regard:
The affected exporters seeking automatic adjustment would be required to submit a copy of
the relevant government notification withdrawing the benefit conferring scheme.  Such a notification
should be considered by the investigating authoriti es who may also satisfy themselves that subsidy
scheme has been withdrawn and it has not otherwise being reformulated under another scheme.
Subsequently the amount of benefit attributable to the subsidy scheme withdrawn should be reduced
from the amount of benefit to the recipient and comm ensurate adjustment made to the countervailing
duty.
Topic 5:  Definition of domestic industry and injury analysis
• Clarify “major proportion of the total domestic production”, and clarify whether defining
domestic industry as those who supported the petition cannot be construed as impermissibleinterpretation of the major proportion requirement (India) (paras 3-5 of G/SCM/W/462).
Q6. Does India consider that the definition of “domestic industry” contained in the SCM
Agreement should be in harmony with the definition in the Anti-Dumping Agreement?G/SCM/W/503
Page 3
Q7. How does India define “major proportion”?
Reply
In view of the textual similarity between provisions of Article 4 of the Anti-Dumping
Agreement and Article 16 of the ASCM, India considers that the definition of domestic industry
should be in harmony in these two agreements.  While India does not offer any specific definition of
“major proportion” and expects the deliberation in the SCM Committee to result in agreed definition
the following could be considered:
(a) “Major proportion” should also not be confined to include only those producers who
have supported the petition seeking initiation of the investigation:
(b) “Major proportion” could be defined by indicating producers whose output constitute
at least X % of the total domestic production of the concerned product.  The exact
numeric value of X could be agreed upon by members during deliberations in the
SCM Committee.
• In determining likeness of products, account should be taken of differentiated nature of products
even where they have closely resembling characteristics, inter alia  through consideration of price
comparison, substitutability and whether in direct competition (India) (paras 6-8 of
G/SCM/W/462).
Q8. Does India consider that its position as set out in paragraph 7 of G/SCM/W/462 goes
beyond the commonly accepted understanding of like goods for dumping purposes?
Reply
India’s position as set out in paragraph 7 of G/SCM/W/462 does not go beyond the common
understanding of like goods for purposes of anti dum ping and countervailing duty investigations.  If
differentiated nature of the product under consideration and the different end use which the various
constituents of the product group can be put to are not taken into consideration then this would lead to
a comparison between products not having closely resembling characteristics.  This would not resultin a fair and balanced analysis of the injury suffered by the domestic industry of the importing country
due to alleged subsidized exports.
II. REPLIES TO QUESTIONS FROM THE EUROPEAN COMMUNITY
Topic 2:  Facts Available
• Introduce provisions of "facts available" such as those in Annex II of the AD Agreement (Brazil)
• Clarify that all verifiable and timely submitted information should be taken into account, and that
if a portion of information is not verifiable or timely submitted, facts available may be used for
that portion of the information (India)
Q1. Can Brazil and India please clarify whether such changes would have any bearing on
the guidelines for investigating authorities under Annexes II and III of the ASCM, in particular
concerning those provisions which shift the bur den of proof on to the government of the
exporting country (e.g. Annex II, section II paragraph 2 ASCM)?.G/SCM/W/503
Page 4
Reply
India is of the view that the changes suggested would not have a bearing upon the burden of
proof on the exporting country.  India’s limited submission is that investigating authority shall not
reject all the information submitted, on the plea that some portion of it may not have been providedwithin a reasonable of time or which may not be ve rifiable.  In such situations, the investigation
authority shall not reject all the information submitt ed and shall not resort to facts available for the
entire information.  Instead the investigating authority should use that portion of information which is
submitted within a reasonable period of time and which is verifiable.
Topic 4:  Review Procedures
• Review need for continued imposition of measure upon submission of positive information
concerning procedural mistake or manifest error of appreciation by authorities (India)
Q5. Article 23 ASCM already provides for judicial review where redress can be found in the
circumstances cited by India.  Please explain why there is a need for an additional remedy
under the ASCM.
Reply
The process of judicial review is time consuming and hence the need for an additional remedy
under the ASCM.
Q6. Can India please explain why it would be desirable to allow for requests for review of
procedural mistakes to be addressed to the same institution which allegedly has made this
mistake?
Reply
In India’s view there could be a situation in which doubts about the veracity of the evidence
relied upon during the underlying investigation may arise after the final determination has been made.
Under a hypothetical example the export price could be based on forged vouchers and in case theinterested party becomes aware of this fact after the final determination, then he has no remedy
available apart from a judicial review.  It is to take into consideration such situations that India has
proposed an additional remedy whereby the inves tigating authority could themselves review such
errors in a time-bound manner.
• Clarify Article 21.2 to provide for automatic adjustment of countervailing duties for schemes
withdrawn (India)
Q7. Would such an automatic adjustment be  required only if th ere was a change in
circumstances resulting in a permanent change of the circumstances regarding subsidization?
Reply
India’s contention is that if certain schemes, which at the time of investigation were
determined to have conferred benefit to the recipients, are subsequently withdrawn, then there should
be a procedure for automatically adjusting the amount of benefit to the recipient and the
countervailing duties. The following could be considered as constituting changed circumstances
regarding subsidization:G/SCM/W/503
Page 5
The affected exporters seeking automatic adjustment would be required to submit a copy of
the relevant government notification withdrawing the benefit conferring scheme.  Such a notification
should be considered by the investigating authorities  who may also satisfy themselves that the subsidy
scheme has been withdrawn and that it has not otherwise being reformulated under another scheme.
Subsequently the amount of benefit attributable to the subsidy scheme should be reduced from theamount of benefit to the recipient and commensurate adjustment made to the countervailing duty.
Q8. Can India please indicate whether the automatic adjustment would also be required if
the exporter benefited not from the original scheme but from a scheme which was not
investigated in the original investigation?
Q9. Would such an automatic adjustment also  cover situations where schemes are added
and subsidization increases?
Replies to 8 & 9
In India’s view the automatic adjustment should be limited to those subsidy schemes which
were examined by investigating authority in detail during underlying investigation.  Since this would
be an expedited process it may not be appropriate to bring within its ambit schemes, which were not
investigated earlier.
Q10. Can India please explain why review procedures under Article 21.2 would not
sufficiently address this issue?
Reply
In India’s view the main reason why the review procedures under Article 21.2 may not
sufficiently address the issue is that no time lim it has been prescribed for completing a review under
this Article. Due to this reason for a considerable time the countervailing duty would continue to be
imposed in excess of amount of subsidy.  Hence the need for an expedited process of automatic
adjustment for schemes withdrawn.
Topic 5:  Definition of domestic industry and injury analysis
• Clarify "major proportion of the total domestic production", and clarify whether defining
domestic industry as those who supported the petition cannot be construed as impermissibleinterpretation of the major proportion requirement (India)
Q10. Can India please indicate in which instances the major proportion requirement was
considered to be fulfilled only by reference to support of the petition regardless of whether themajor proportion test was in fact met?
Reply
In India’s view this question assumes that the investigating authorities are already applying
“the major proportion test” in the injury analysis, as distinct from the standing requirement while
initiating the investigation. India would welcome details of any such test, which may have been
applied in any countervailing duty investigation.  The point which India is making is that injury
analysis should not be limited to producers who support the petition requesting initiation of the
investigation, but in the interest of a balance assessment and objective examination of the impact ofsubsidized imports on the domestic producers, should also include other domestic producers.  In
India’s experience the investigating authorities have limited their injury analysis to the domestic
procedures who supported the petition requesting initiation of investigation.G/SCM/W/503
Page 6
• In determining likeness of products, account should be taken of differentiated nature of product
even where they have closely resembling characteristics, inter alia through consideration of price
comparison, substitutability and whether in direct competition (India)
Q11. Does India consider that issues of price,  substitutability and competitive relationship
must be addressed in establishing whether products have "closely resembling characteristics"?
Or would such issues have to be addressed as co nditions in addition to the requirements already
set out in footnote 46 of the ASCM for establishing "likeness" of products?
Reply
Footnote 46 needs to be clarified so that issues of price, substitutability and competitive
relationship are taken into consideration in establishing whether products have “closely resembling
characteristics”.
III. REPLIES TO QUESTIONS FROM THE UNITED STATES
Topic 2:  Facts Available
Clarify that all verifiable and timely submitte d information should be taken into account and
that if a portion of information is not verifiable  or timely submitted, facts available may be used
for that  portion of the information
Q3. To what extent would India’s proposal require a change to the ASCM?  If a change to
the agreement is not required, please explain, in India’s view, how this proposal should be
effectuated.
Reply
India’s proposal could be given effect to eith er through a clarification of Article 12.7 of the
SCM Agreement or by introducing a more detailed “facts available” provision in the SCM
Agreement.
Q4. If this proposal were adopted, what  would prevent responding companies from
selectively providing information?
Reply
In India’s view responding companies would be prevented from selectively providing
information in view of provisions of Article 12.7 which provides that determinations may be made on
the basis of facts available.
Topic 4:  Review procedures
Review need for continued imposition of measure upon submission of positive information
concerning procedural mistakes or manife st error of appreciation by authorities
Q10. To what extent would India’s proposal require a change to the ASCM?  If a change to
the agreement is not required, please explain, in India’s view, how this proposal should beeffectuated.G/SCM/W/503
Page 7
Reply
India’s proposal can be effectuated by having additional disciplines under Article 21.2 for
providing an additional remedy not presently available in the Subsidies Agreement.
Q11. Could India please specifically explain precisely what types of information and under
what instances such a review should be conducted?
Reply
India would illustrate its proposal through the following hypothetical example:
There could be a situation in which doubts about the veracity of the evidence relied upon
during the underlying investigation may arise after the final determinations are made.  Say, the export
price could be based on forged vouchers and in case the interested party becomes aware of this fact
after the final determination then he has no remedy available apart from a judicial review.  It is to take
into consideration such situations that India has proposed an additional remedy whereby theinvestigating authority could themselves review such errors.
Clarify Article 21.2 to provide for automatic adjustment of countervailing duties for schemes
withdrawn
Q12. To what extent would India’s proposal require a change to the ASCM?  If a change to
the agreement is not required, please explain, in India’s view, how this proposal should be
effectuated.
Reply
India’s proposal can be effectuated by having additional disciplines under Article 21.2 for
automatic adjustment of countervailing duties for schemes withdrawn.
Q13. Could India please explain what is meant by an automatic adjustment?  Would such an
adjustment for schemes withdrawn be cont ingent upon review and verification?
Reply
India’s contention is that if certain schemes, which at the time of investigation were
determined to have conferred benefit to the recipients, are subsequently withdrawn then there should
be a procedure for automatically adjusting the amount of benefit to the recipient and thecountervailing duties.  While the details of the administrative process would be worked during
subsequent meetings of the Subsidies Committee the following could be considered in this regard:
The affected exporters seeking automatic adjustment would be required to submit a copy of
the relevant government notification withdrawing the benefit conferring scheme.  Such a notificationshould be considered by the investigating authorities  who may also satisfy themselves that the subsidy
scheme has been withdrawn and that it has not otherwise being reformulated under another scheme.
Subsequently the amount of benefit attributable to the subsidy scheme should be reduced from the
amount of benefit to the recipient and commensurate adjustment made to the countervailing duty.
Q14. If the subsidy under an existing programme is increased, or if a new programme is
introduced, should there be an upward adjustment of the countervailing duty?  If not, please
explain why.G/SCM/W/503
Page 8
Reply
In India’s view the automatic adjustment should be limited to those subsidy schemes which
were examined by investigating authority in detail during underlying investigation.  Since this would
be an expedited process it may not be appropriate to bring within its ambit schemes which were notinvestigated earlier as establishment of essential elements like financial contribution, existence of
benefit to the recipient, the amount of subsidy and injury analysis could be time consuming. Issues of
upward or downward revision of countervailing dutie s consequent to increase or decrease of subsidy
under a scheme would need to be addressed in the normal course as provided for under provisions of
Article 21.2.
Topic 5:  Definition of Domestic Industry and Injury Analysis
In determining likeness of products, account should be taken of differentiated nature of
products even where they have closely resembling characteristics inter alia through
consideration of price comparison substitu tability and whether in direct competition.
Q16. To what extent would India ’s proposal require a change to the ASCM?  If a change to
the agreement is not required, please explain, in India’s view, how this proposal should be
effectuated.
Reply
In India’s view footnote 46 needs to be clarified so that issues of price, substitutability and
competitive relationship where relevant are taken into consideration in establishing whether products
have “closely resembling characteristics”.
Q17. Does India agree that there may be certain investigations in which it would be
unproductive for the authorities to use price as a criteria in determining the like product
because the price of the allegedly unfairly trad ed/subsidized import would, by its very nature,
be suspect and therefore incapable of providing a fair comparison?
Reply
India agrees with the United States that there may be certain investigations in which price
may not be a relevant criteria for determining “like products”.  Equally there may be situations in
which price may be a relevant criteria for determining “like products” and in such situations this
criteria must be used.
Q18. Does India believe that once an authority determines that certain products are identical
or closely resemble one another, this ends the au thority’s like product analysis, or does it believe
an authority must proceed, in addition, to co nsider price, substitutability, and whether the
products are in direct competition?
Reply
In India’s view an investigating authority must consider various criteria such as
substitutability, and whether the products are in direct competition while undertaking the “likeproduct” analysis. It is recognized that all these criteria may not be relevant in all the cases.G/SCM/W/503
Page 9
IV. REPLIES TO QUESTIONS FROM JAPAN
Topic 2:  Facts Available
Q2. Japan understands that this proposal intends that the use of "facts available" should be
more exceptionally permitted.  Japan shares In dia's intent that the use of "facts available"
should be qualified as the exceptional resort.
India states that "all verifiable and timely submitted information should  be taken into
account" (emphasis added).  Could India please explain in which meaning, mandatory or
exhortatory, the word "should" is used?
Reply
In India’s view all information which is submitted within a reasonable period of time and
which is verifiable and can be used without undue difficulty should mandatorily be taken into
consideration, unless the investigating authorities give  detailed reasons for rejecting such information.
• Review needed for continued imposition of measure upon submission of positive information
concerning procedural mistake or manifest error of appreciation by authorities (India).
Topic 4:  Review Procedures
Q5. Japan shares India's intent that the disc ipline should be enforced to ensure further
objectivity of the review procedures.
Could India please provide concrete exampl es which India conceives disadvantageous in
implementing the present provision of the ASCM?
Reply
There could be a situation in which doubts about the veracity of the evidence relied upon
during the underlying investigation may arise after the final determinations are made.  Say, the export
price could be based on forged vouchers and in case the interested party becomes aware of this factafter the final determination then he has no remedy available apart from a judicial review.  It is to take
into consideration such situations that India has proposed an additional remedy whereby the
investigating authority could themselves review such errors.
• Clarify Article 21.2 to provide for automatic adjustment of countervailing duties for schemes
withdrawn (India).
Q6. Could India please provide concrete exam ples which India conceives disadvantageous in
implementing the present provision of the ASCM?
Reply
India’s contention is that if certain schemes, which at the time of investigation were
determined to have conferred benefit to the recipi ents, were subsequently withdrawn then there should
be a procedure for automatically adjusting the amount of benefit to the recipient and the
countervailing duties. In India’s view the main reason why the review procedures under Article 21.2
may not sufficiently address the issue is that no time limit has been prescribed for completing a
review under this Article. Due to this reason for a considerable period the countervailing duty wouldG/SCM/W/503
Page 10
continue to be imposed in excess of the amount of subsidy.  Hence the need for an expedited process
of automatic adjustment for schemes withdrawn
Topic 5:  Definition of domestic industry and injury analysis
• Clarify "Major proportion of the total domestic production", and clarify whether defining
domestic industry as those who supported the petition cannot be construed as impermissibleinterpretation of the major proportion requirement (India).
V. REPLIES TO QUESTIONS FROM CANADA
Questions from  Canada relating to Facts Available, Review Procedures and Definition of
Domestic Industry and Industry Analysis Issues rais ed by Brazil and India concerning Countervailing
Duty Investigations
Topic 2:  Facts Available
Q3. India proposes that if a portion of information is not verifiable or timely submitted, facts
available may be used for that portion of the information. Does India have any suggested
guidelines as to the extent to which investigatin g authorities would be required to attempt to use
the information when there are significant po rtions of information which have not been
provided (i.e. when would the investigating au thority be justified in rejecting the entire
submission rather than having to deal with the missing portions)?
Reply
In India’s view as long as there is significant portion of the information which is verified,
timely submitted and can be used independently of other portion of information, such information
should be used by the investigating authorities irrespective of whether other portions of information
are verifiable and timely submitted or not.
Q4. In terms of "facts available" would Brazil and India make any distinction between
information provided to the investigating authorities by producers and exporters versus the
government of the country of export? Would the sa me rules apply to both types of information
where it was not properly provided to the investigating authorities?
Reply
Normally the type of information required to be given by the exporters/producers are
company specific relating to details of exports etc.  The information sought from the governmentsrelates more to policies/ subsidy schemes which are already well documented and published.  There is
no reason, a priori, that any wrong  information will be provided by governments.  If there are gaps in
information then the investigating authorities may be justified in resorting to facts available.  On the
other hand if the exporter/producer refuses access to information or otherwise does not provide
necessary information within a reasonable period of time or significantly impedes the investigationfinal determinations may be made on the basis of facts available.
Topic 4:  Review Procedures
Q6. India is suggesting that a review should be undertaken regarding the need for the
continued imposition of countervailing duties when an interested party submits positive
information regarding procedural mistakes or a manifest error of appreciation committed by
the investigating authorities. Could India address the following questions:G/SCM/W/503
Page 11
(a) In such a situation, would the purpose of the review be to amend the
determination that was affected by these errors or only to review whether the
continued imposition of the duty is necessary (assuming the determination is still
based on these alleged errors)?
Reply
The purpose of the review would be to amend the determination that was affected by certain
errors and would not extend to reviewing whether the continued imposition of the duty is necessary.
(b) This proposal appears to presuppose that the administering authorities have
been unwilling for some reason to remedy  the alleged errors. As such, this would
appear to represent a dispute between the investigating authority and the parties
involved in the investigation. Accord ingly, is a review under Article 21 the
appropriate mechanism by which to resolve such disputes or would a more
appropriate remedy be available to the aggrieved party pursuant to judicialreview provided by Members under Article 23 or the dispute settlement process
provided for under Article 30 of the SCM Agreement?
Reply
It may not be correct to pre-suppose that the investigating authorities have been unwilling for
some reason to remedy the alleged errors.  It is possible that the interested part was not aware of the
errors which consequently could not be brought to the notice of investigating authority during the
underlying investigation.  In such situation, a review  by the investigating authority may be preferred
over a judicial review.
(c) India is suggesting that Article 21.2 of the SCM Agreement be clarified so that
investigating authorities would be req uired to "automatically" adjust the
countervailing duty corresponding to the subsidy margins for any subsidy
schemes which have been withdrawn by the government of the exporting
country. Could India address the following questions in this regard:
(d) Are we correct in assuming that invest igating authorities would have the right to
first investigate whether the subsidy scheme in question has been withdrawn and
that it has not otherwise been reformulated or reintroduced under the provisions
of another programme?
Reply
India confirms Canada’s understanding in this regard.
(e) In some cases, even though a subsidy scheme may have been withdrawn, there is
a continuing benefit stream to producers and exporters arising out of previously-
bestowed subsidies.  This would typica lly occur in cases where the subsidy has
been amortized over time.  Could India confirm that this benefit stream would
still constitute a countervailable subs idy even though the programme has been
withdrawn?
Reply
India confirms Canada’s understanding in this regard.G/SCM/W/503
Page 12
Topic 5:  Definition of Domestic Industry and Injury Analysis
Q1. Could India expand on its suggestion that "major proportion of total domestic
production" be clarified. Does this proposal only relate to its proposal clarifying that theindustry should not be defined as only those producers that supported the petition, or is India
suggesting further clarifications?
Reply
India’s proposal seeks to obtain a clarification that for the purpose of injury analysis the
domestic industry should not be confined to the producers who supported the petition.  In addition,India would also like some yardsticks to be de veloped for determining whether the investigating
authority has assessed the state of domestic industry by taking into consideration the producers who
constitute major proportion of total domestic production.
Q2. Is India proposing a list to give guidance to authorities in determining whether goods that
are not identical may still be "like products"? If so, what other factors would India suggest as
being appropriate?
Reply
India is proposing that various criteria such as price, substitutability and differentiated nature
of the product need to be taken into consideration during the like product analysis.
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