RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/Q1/EEC/16
G/SCM/Q1/EEC/16
17 June 1998
(98-2457)
Committee on Anti-Dumping Practices
Committee on Subsidies and Countervailing MeasuresOriginal:  English
NOTIFICATION OF LAWS AND REGULATIONS UNDER
ARTICLES 18.5 AND 32.6 OF THE AGREEMENTS
Replies of the EEC to Questions from
the UNITED STATES1
The following communication, dated 9 June 1998, has been received from the Permanent
Delegation of the European Commission.
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It should be noted that these questions concern only the European Community's
countervailing duty legislation (Council Regulation 2026/97 of 6 October 1997).  The US questionsare reproduced in their original order.
Question
1. Article 8(5) of Council Regulation (EC) No. 2026/97 of 6 October 1997 on protection
against subsidized imports from countries not members of the European Community (EC) (“theSubsidies Regulation”) lists seve ral economic factors that the EC will consider in examining the
impact of subsidized imports on the Community indus try.  The first factor listed is “the fact that
an industry is still in the pro cess of recovering from the e ffects of past subsidization or
dumping.”
(a) This factor, unlike most of the factors listed in Article 8(5) of the Subsides
Regulation, is not one expressly referenced in Article 15.4 of the WTOAgreement on Subsidies and Counter vailing Measu res (“SCM Agreement”).
What is the EC’s rationale for considering this factor, especially as it concernspast dumping?
Answer
Article 15.4 of the SCM Agreement requires that the examination of the impact of the
subsidized imports on the domestic industry shall include an evaluation of all relevant economicfactors and indices having a bearing on the state of the industry, and then lists a number of suchfactors which have to be included in such an evaluation.  While it is correct that "the fact that anindustry is still in the process of recovering from past subsidization or dumping" is not expressly
                                                     
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mentioned in this list, the last sentence of Article 15.4 specifies that the list is not exhaustive.  It is
permissible for the Community to consider all relevant economic factors, including those notexpressly mentioned in the list.
The rationale for including this factor in the injury examination is that domestic industries
which are still in the process of recovering from previously established dumping or subsidization maybe in a weaker position (e.g. with regard to profitability) than would be normal in the light of theircompetitiv eness and the current state of the economic cy cle.  In these circumstances, the impact of
current subsidized imports may be felt more quickly and may be particularly intensive, given that thedomestic industry, through no fault of its own, has ye t to fully recover its co mpetitive position.  The
fact that an industry in suffering from the effects of past dumping and subsidization may lead to asituation where a flat or even positive trend in certain indicators does not always mean that injury isabsent.  The past impact of subsidization and dumping is equally relevant here, since both can have asimilar adverse effect on the domestic industry.
Question
(b) Would this rationale also support the EC’s examination of current  dumping as an
economic factor to consider in examining the impact of subsidized imports on theCommunity industry?  Does the EC engage in such an examination?
Answer
If by "current" dumping the question refers to dumping found in an anti-dumping
investigation concerning the same product and covering the same investigation period as the anti-
subsidy investigation, the answer is no.  Article  8(5) of Regulation 2026/97 refers to the continuing
effects of previously established dumping on the state of the domestic industry.  The impact ofcurrently dumped and subsidized imports on the domestic industry is assessed separately, since theyare the subject of different proceedings.  In any event "current dumping" cannot be construed as arelevant economic factor within the meaning of Article 15.4 of the SCM Agreement, since it has no
bearing on the past state of the domestic industry.
Question
2. How does the EC define the term “interested parties” used in Article 10(14) of the
Subsidies Regulation?  Subsequent provisions of the Subsidies Regulation suggest divergentdefinitions of this term.  For example, Article 11(7) suggests that the government of theexporting country, users, and consumer organizations are considered “interested parties,” butArticle 11(6) suggests that these entities are not considered “interested parties”.
Answer
Article 12.9 of the SCM Agreement specifies which parties shall be included as "interested
parties", but does not preclude Members from including other domestic or foreign parties in thedefinition.
Article 11.7 of Regulation 2026/97 specifies the interested parties which may inspect non-
confidential information, while Article 11.6 lists those interested parties which may requestconfrontation meetings.  These two provisions reflect the eligibility of various parties to participate inG/ADP/Q1/EEC/16
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different aspects of the investigation, but do not imply different definitions of interested parties, which
are invited to make themselves known under Article 10.14.
Question
3. How does the EC implement the requirement of Article 22.5 of the SCM Agreement that
a public notice of conclusion of an investigatio n in the case of an affirmative determination
contain or make available through a separate report, among other things, “the reasons for theacceptance or rejection of relevant arguments or claims made by interested Members and by theexporters and importers”?
Article 24(2) of the Subsidies Regulation does not expressly require that regulations
imposing definitive countervailing duties address such arguments or claims.
Answer
The Community is aware of its obligation to respect the SCM Agreement.  Although there is
no express requirement in Article 24(2), the Community systematically addresses all relevantarguments and claims, in accordance with Article 22.5 of the SCM Agreement, in Regulationsimposing definitiv e duties or Decisions accepting undertakings.
Question
4. How does the EC implement the requirement of Article 23 of the SCM Agreement
concerning the availability of judicial review?  The Subsidies Regulation does not appear to
contain any provision concerning review of countervailing duty determinations.
Answer
All parties determined to be directly affected by the Community's determination in a
countervailing duty investigat ion have recourse to j udicial review, initially in the Court of First
Instance and subsequently on appeal to the Court of Justice, on the basis of Article 173(4) of theEC Treaty.
Question
5. How does the EC construe the term “essential facts and considerations” used in
Article 30 of the Subsidies Regulation?
Answer
This corresponds to the "essential facts under consideration" required to be disclosed under
Article 12.8 of the SCM Agreement.  The Comm unity under Article 30 of Regulation 2026/97 goes
beyond the requirements of the SCM Agreement by giving two disclosures, the first at the time ofprovisional measures and the second in advance of a definitive determination.
The disclosure of "essential facts and considerations" would normally include:
(a) Facts established on subsidy, injury and causality.G/ADP/Q1/EEC/16
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(b) The analysis of these facts and the conclusions reached.
(c) Replies to relevant arguments and claims raised so far in the investigation.
(d) Proposed measures.
(e) Individual subsidy and injury margin calculations.
Question
6. How are the provisions of Article 30(3) of the Subsidies Regulation, in so far as they
indicate that “essential facts and considerations” will be disclosed to parties only when theymake a written request at a specific time, consistent with the requirements of Article 12.8 of theSCM Agreement?
Answer
The Community systematically informs all interested Members and interested parties of the
essential facts and considerations, irrespective of whether a request has been made.
Question
7. How is information that parties submit pursuant to Article 31(2) of the Subsidies
Regulation “made available to the other parties”?  Must these parties make a request for theinformation pursuant to Article 11(7) of the Subsidies Regulation?
Answer
The parties specified in Article 31(2) may inspect the information at any time during the
proceeding.  Article 11(7) does not apply to this provision, since the participation in the examinationof Community interest is restricted to those parties specified in Article 31(2).  Normal practiceinvolves a request being made prior to inspection.
Undertakings  Article 13 of the EU Regulation (CVD) addresses undertakings to terminate
investigations.  Article 13.5 requires the investigation to be terminated if there is no objection by
the Advisory Committee; however, Article 13.6 states that the EU will normally complete aninvestigation after an undertaking is accepted, and that the undertaking shall lapse if there is anegative determination of dumping or injury.
Question
8. Please explain how Articles 13.5 and 13.6 operate together. If an undertaking is accepted
by the EU, is the presumption that the investigation will be terminated or that it will becompleted?
Answer
Article 13.6 states that if undertakings are accepted, the investigation of subsidization and
injury shall normally be completed.  One purpose of this practice (on the basis of Article 18.4 of theG/ADP/Q1/EEC/16
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SCM Agreement) is to confirm whether there is a positive determination of subsidization and injury;
if the determination is negative the undertaking will lapse.
If undertakings are accepted from one or more exporters, the investigation will be terminated
under Article 13.5 with regard to those exporters, but a duty still ha s to be determined for imposition
in case of a violation.  For exporters which do not offer acceptable undertakings, the investigationshall be completed and if definitive duties are imposed, the residual duty will normally form the basisfor the imposition of measures in case of violations of undertakings, those exporters which have notoffered undertakings are given a company-specific duty, provided that it is appropriate to establishduties on this basis.  If an undertaking is given by all exporters or by the government of the exportingcountry, the investigation will be completed in order to determine a residual duty to be imposed incases of violation.
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