WORLD TRADE
ORGANIZATIONG/ADP/Q1/CHN/31
G/SCM/Q1/CHN/31
17 October 2003
(03-5520)
Committee on Anti-Dumping Practices
Committee on Subsidies and Countervailing MeasuresOriginal:  English
NOTIFICATIONS OF LAWS AND REGULATIONS UNDER
ARTICLE 18.5 AND ARTICLE 32.6 OF THE AGREEMENTS
Questions posed by JAPAN
Regarding the Notification of CHINA1
The following communication, dated 17 October 2003, has been received from the Permanent
Mission of Japan.
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Japan hereby submits the following questions regarding the rules on countervailing measures
provided by China.
Standing of Applicant:
1. Article 16 of the “Provisional Rules for Initiation of Countervailing Investigations” states that
“the description of the alleged subsidy shall include information regarding the existence, nature, and
amount of the subsidy in question, as well as an estimated per-unit measure of the alleged subsidy”.
Article 11.2 of the SCM Agreement sets forth a similar rule but states that the application must include
“sufficient evidence”, not merely  “information” as provided for in China’s regulation.
Please explain why China substituted the lower standard of “information” for the Agreement’s
standard of “sufficient evidence” in implementing Article 11.2.
Initiation:
2. Article 41 of the “Provisional Rules for Initiation of Countervailing Investigations” lists the
information the public notice of initiation of a countervailing duty investigation must contain.
However, Article 41 does not include “a description of the subsidy practice or practices to beinvestigated”, which is expressly mentioned in Article 22.2.(iii) of the SCM Agreement.
Please explain why China does not include a description of the subsidy practice or practices to
be investigated and whether China intends to include a “description of the subsidy practice or
practices to be investigated” in its public notices of the initiation of countervailing duty investigations
in the future.
                                                     
1 G/SCM/N/1/CHN/1/Suppl.1 and G/SCM/N/1/CHN/1/Suppl.2G/ADP/Q1/CHN/31
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Facts Available:
3. Article 30 of the “ Provisional Rules for Questionnaires in Countervailing Duty
Investigations” sets forth the conditions under which MOFTEC may use facts available in makingtheir preliminary or final determinations. Furthe r, Article 30 provides that MOFTEC may “draw
adverse inferences with respect thereto”.
Please explain the rationale for MOFTEC to include “draw adverse inferences” in using facts
available, since Article 12.7 of the SCM Agreement does not contemplate any adverse inferences.
4. Article 25 of the “ Provisional Rules for Questionnaires in Countervailing Duty Investigation”
states that “[T]he responding company is responsible for ensuring  that all data submitted in an
electronic format is free of viruses.  Failure to undertake reasonable measures to avoid transmitting
viruses may be deemed to impede the investig ation.  In such a case, MOFTEC may make its
determination on the basis of facts available”.  However, the SCM Agreement does not contemplate
any such provision.  This provision seems open to abuse, in that any viruses may come fromMOFTEC’s own system or third sources.
(a) Please explain the rationale for this provision in the context of the SCM Agreement.(b) Why would it not be possible to ask the interested parties simply to re-submit the data within
a reasonable period as provided in Article 12.7?
Undertakings:
5. Articles 37 to 41 of the “Rules on Investigations and Determinations of Industry Injury for
Countervailing Measures” set forth the rules governing the proposal and acceptance of undertakings
by interested parties and governments.  In relation to undertakings, none of those articles implement
the requirement “price increases under such undertakings shall not be higher than necessary to
eliminate the amount of the subsidy”, as provided in Article 18.1.(b) of the SCM Agreement .  Further,
Article 18.1.(b) of the SCM Agreement  provides that “[I]t is desirable that the price increases be less
than the amount of the subsidy if such increases would be adequate to remove the injury to the
domestic industry”.
Please explain how China will ensure that undertakings do not set prices at a level higher than
necessary to eliminate the amount of the subsidy.   Why does China’s CVD regulation not require that
a preliminary affirmative determination of subsidiza tion and injury be made before an undertaking is
sought or accepted?  Would preliminary determinat ions not assist MOFTEC in determining the level
of undertaking “necessary to eliminate the amount of the subsidy” (Article 18.1.(b) of the SCM
Agreement )?
6. Article 18.2 of the SCM Agreement  provides that “[U]ndertakings shall not be sought or
accepted unless the authorities of the importing Member have made a preliminary determination ofsubsidization and injury caused by such subsidization and, in case of undertakings from exporters,
have obtained the consent of the exporting Member.”   There is no corresponding provision in China’s
CVD regulation.
Please explain how China will ensure that unde rtakings will be sought or accepted in a
manner consistent with Article 18.2.
7. Article 18.3 of the SCM Agreement  states that “should the case arise and where practicable,
the authorities shall provide to the exporter the reasons which have led them to consider acceptance ofG/ADP/Q1/CHN/31
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an undertaking as inappropriate, and shall, to the extent possible, give the exporter an opportunity to
make comments thereon”.  There is no corresponding provision in China’s CVD regulations.
Please explain how China intends to implement your regulations in the context of the
Article18, especially Article 18.3 of the SCM Agreement .
Injury:
8. Article 6.(5) of China’s “Rules on Investigations and Determinations of Industry Injury for
Countervailing Measures” includes “the export capacity and inventories of the exporting countries
(regions) or the countries (regions) of origin of the subsidized imports”.  The production capacity andinventories of the exporting industries are factors that under the SCM Agreement  (Articles 15.7.(iii)
and (v), respectively) are to be considered in future-oriented determinations of threat of material
injury, rather than in present material injury determinations.  The SCM Agreement distinguishes
factors taken into account between present material injury and threat of material injury, China’s rule,
however, does not.
Please clarify that China expects to apply these factors in the context of the SCM Agreement.
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