RESTRICTEDWORLD TRADE
ORGANIZATIONG/ADP/Q1/EEC/20
G/SCM/Q1/EEC/20
2 May 2001
(01-2227)
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 to Questions Posed by BRAZIL1
Regarding the Notification of the EUROPEAN COMMUNITIES2
The following communication, dated 27 April 2001, has been received from the Permanent
Delegation of the European Commission.
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“Questions on EC document  G/SCM/N/1/EEC/2/Suppl.1
Q1. Article 27 of the Commission Decision  No. 1889/98/ECSC dated 3 September 1998,
established that:
"In cases where the number of complainants, exporters or importers, types of product or
transactions is large, the investigation may be limited to:
(a) a reasonable number of parties, products or transactions by using samples which
are statistically valid on the basis of information available at the time of selection;or
(b) the largest representative volume of the production, sales or exports which can
reasonably be investigated within the time available".
Could the EC clarify whether the reference to a large number of complainants would
permit the Commission, in its determination of injury, to analyse the situation of the domestic
industry, as defined in Article 16 of the SCM Agreement?  Would not the EC be restricting its
analysis to a sample of domestic producers (petitioners) of the like product, which would
represent less than a major proportion of total domestic production of the like product?  Howwould the EC explain the compatibility of this  practice with Article 16 of the SCM Agreement?
Reply
The Community has never used the above provisions in the course of an investigation
conducted under Decision 1889/98/ECSC.  If these provisions were to be used, the Community would
fully abide by its obligations under the WTO Subsidies Agreement.
                                                     
1 G/ADP/Q1/EEC/19-G/SCM/Q1/EEC/19
2 G/SCM/N/1/EEC/2/Suppls.1 and 2G/ADP/Q1/EEC/20
G/SCM/Q1/EEC/20
Page 2
Q2. Article 30.4 of the Commission Decision  No. 1889/98/ECSC dated 3 September 1998,
established that:
"Final disclosure shall be given in writin g.  It shall be made, due regard being had
to the protection of confidential information, as soon as possible and, normally, not
later than one month prior to a definiti ve decision or the submission by the
Commission of any proposal for final action pursuant to Articles 14 and 15.  Where
the Commission is not in a position to disclose certain facts or considerations at
that time, these shall be disclosed as soon as possible thereafter.  Disclosure shall
not prejudice any subsequent decision which may be taken by the Commission but
where such decision is based on any diff erent facts and considerations, these shall
be disclosed as soon as possible."
Could the EC clarify the precise meaning of the last two phrases in the above article,
especially to what extent the presentation of essential facts would not "prejudice" a decision by
the Commission?
Taking into consideration that the use of th e expression "as soon as possible", is used
without any reference to the fact that the presentation of essential facts should be made before
the final determination, is it possible that a Member and interested parties would only be aware
of the facts used in the final determination aft er the decision is taken?  Could the EC explain
whether this interpretation is correct?
Reply
It is not possible that disclosure could take place only after the final determination is made.
In this respect, the Community is bound by Article 12.8 of the WTO Subsidies Agreement, which
requires such disclosure to be made before the final determination, and in sufficient time for the
parties to defend their interests.
Questions on EC document G/SCM/N/1/EEC/2/Suppl.2
In example No. 1 (ii) it is stressed that:"Where rebates vary on a seasonal basis, and the investigation establishes that this
is a regular procedure, the weighted-average amount should be used.   If, however,
the investigation showed that the ECU 20 per tonne rebate was to be maintained on
a permanent basis, this amount, and not the weighted-average, should form the
basis of the subsidy amount, because this constitutes the actual benefit to the
exporter on current shipments."
If a compensatory measure was determined ba sed on data from the second semester and
the result was a higher duty than the one based on calculations on data from the whole year
under investigation, this would constitute a violation of Article 19 of the SCM Agreement.
Could the EC clarify how this measure would not be in violation of the provisions of Article 19
of the SCM Agreement, which determine that the compensatory duty must be equal or less than
the calculated subsidy?
Could the EC clarify if, in the above hypo thesis, the injury determination caused by
imports of the subsidized product will also be based on the second semester, a period in which
there is a decrease of the imports under analysis?G/ADP/Q1/EEC/20
G/SCM/Q1/EEC/20
Page 3
Reply
The action described above would not be a violation of Article 19 of the WTO Subsidies
Agreement.  Article 19.4 specifies that a countervailing duty should not be in excess of the amount ofsubsidy found to exist.  In this case, given that the rate of 20 ECU per tonne had applied for the
second six months of the investigation period and would continue to apply, the amount of
countervailing duty required to offset the injurious ef fects of subsidized imports into the EC would be
20 ECU per tonne (see also Article VI:3 of GATT 1994).
It should be noted that this rule would also apply in cases where the amount of subsidy was reduced
during the investigation period.
This approach is also in line with Article 15.1 of Decision 1889/98, under which countervailing duties
may not be imposed if the subsidies no longer confer a benefit to the exporters at the time the final
determination is made, even if such benefits were conferred in the investigation period.  It does, of
course, represent a departure from the Community’s normal practice of calculating the weighted-average amount of subsidy found during the investigation period, and therefore is strictly limited to
situations where the change in the amount of subsidy during this period is demonstrated to be of a
permanent or long-lasting nature.  In this respect, it is in line with the provisions of Article 5 of
Decision 1889/98.
It follows from the above, that this approach doe s not affect the methodology used in determining
whether subsidized imports have caused material injury.
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