WORLD TRADE
ORGANIZATIONG/ADP/Q1/CHN/8
G/SCM/Q1/CHN/8
18 October 2002
(02-5692)
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
Questions Posed by the UNITED STATES Regarding
the Notification of THE PEOPLE'S REPUBLIC OF CHINA
The following communication, dated 17 October 2002, has been received from the Permanent
Mission of the United States.
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The United States thanks China for its recent notification of its countervailing duty
regulations.1  As referenced in its notification, China has also implemented provisional rules regarding
the notified regulations, which, to our knowledge,  have not yet been notified to the Committee on
Subsidies and Countervailing Measures as required by Article 32.6 of the Agreement on Subsidies
and Countervailing Measures ("ASCM").2
• When does China intend to notify these provisional rules?
• Does the State Economic and Trade Commissi on (SETC) plan to issue provisional
rules governing its responsibilities under the notified regulations?  If so, when will
such rules be issued?
Apart from the provisional rules that have already been issued, what other level of rulemaking, if
any, is required or contemplated to implement these notified regulations?  Are there other forms of
guidance or official interpretation, such as case precedent ( stare decisis ) that will influence decisions
by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), SETC and the State
Council?
Article 1 of the notified regulations specifies that they are "formulated in accordance with the
Foreign Trade Law of the People’s Republic of China…".  Does "Foreign Trade Law" referexclusively to Law No. 19-586 adopted 12 May 1994 by the Seventh Session of the Standing
Committee of the Eighth National People’s Congress?  If not, what other laws apply to the notifiedregulations?
China’s language in Paragraph 4 of Article 3 of the notified regulations appears overly broad.
It effectively states that any funding given by  the Government through a private body will be
                                                     
1 G/SCM/N/1/CHN/1 (11 September 2002)
2 We understand that provisional rules issued by Ch ina that apply to countervailing measures address (1)
petitions and initiations; (2) hearings; (3) verifications; and (4) questionnaires.G/ADP/Q1/CHN/8
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considered a subsidy.  Please explain how Para graph 4 conforms with ASCM Art. 1.1(iv), and
whether funding by a private body in circumstances  other than those described in ASCM Art. 1.1(iv)
is considered a subsidy under this paragraph.
Paragraph 2 of Article 4 of the notified regulations appears to consider as specific any subsidies
provided by law or regulation in the exporting country.  ASCM Art. 2.1(a) requires that the
underlying law or regulation explicitly limit access to a subsidy in order for a specificity
determination to be made.  Please explain how Paragraph 2 is consistent with ASCM Art. 2.1(a).
The illustrative list of export subsidies attached to the notified regulations does not match
precisely Annex I to the ASCM (e.g., none of the foot notes are provided).  Is China’s intent to follow
Annex I of the ASCM?
With regard to Article 6 of the notified regulations,
• Paragraphs 2 and 3 reflect the calculation methods described in ASCM Arts. 14(b)
and 14(c), but omit the statements in the ASCM articles that loans and loan
guarantees are not considered benefits unless there is a difference in what would have
been paid for a comparable loan or loan gu arantee that the firm could actually obtain
from commercial sources (plus fees, in the case of loan guarantees).  Is the intent of
Paragraphs 2 and 3 to mirror the requirements of ASCM Arts. 14(b) and 14(c)?
• The measurement standards set forth in ASCM Arts. 14(b) and 14(c) refer to the kind
of loan the exporter or producer could actually obtain.  As written, Paragraphs 2 and 3
would seem to permit any commercial loan to be used as a benchmark, regardless of
whether the exporter or producer would actually qualify for such a loan.  Is this
correct and, if so, how does it reconcile with the standards set forth in the ASCM?
• How is Paragraph 4 consistent with the requirement of ASCM Art. 14(a) that for an
equity infusion to be considered as conferring a benefit, the investment decision mustbe regarded as inconsistent with the usual investment practice of private investors in
the territory of the Member?
• How does Paragraph 5 take into account the standards for determining the market
price specified in ASCM Art. 14(d)?
Paragraph 2 of Article 8 of the notified regulations states that, in examining the volume of
subsidized imports, the competent authority should examine whether the volume "has been increasing
significantly, or the possibility of a significant increase in dumped imports."
• Is Paragraph 2 of Article 8 applicable to analysis of current material injury, threat of
material injury, or both?
• If Paragraph 2 of Article 8 is applicable to analysis of current material injury, how is
examination of "the possibility of a significant increase in subsidized imports"consistent with ASCM Art. 15.2?
• If Paragraph 2 of Article 8 is applicable to analysis of threat of material injury, how is
examination of "the possibility of a significant increase in subsidized imports"consistent with ASCM Art. 15.7(i), which requires a finding of a "likelihood" of
substantially increased importation?G/ADP/Q1/CHN/8
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• Paragraph 3 of Article 8 of the notified regulations discusses the competent
authority’s examination of pricing and indicates that the authority should examine"price undercutting" of the subsidized imports.  Please explain how this language is
consistent with ASCM Art. 15.2, under which the investigating authorities are "toconsider whether there has been a significant price undercutting by the subsidized
imports as compared with the price of a like product of the importing Member..."
• Paragraph 4 of Article 8 of the notified regulations similarly seeks to provide for an
examination of the impact of subsidized imports on the domestic industry.  In this
respect, consistent with ASCM Art. 15.4, such an examination must include an
evaluation of "all relevant economic factors and indices having a bearing on the state
of the industry."  These factors include but are not limited to the enumerated factorslisted in ASCM Art. 15.4.  However, not all of the factors referenced in ASCM
Art. 15.4 are provided in Article 8 of the notified regulations.  How does China intend
to implement the requirements of ASCM Art. 15.4?
• Paragraph 4 of Article 8 of the notified regulations could also be interpreted as
referring to certain factors that, according to ASCM Art. 15.7, should be examined by
a competent authority in determining the threat of material injury.  Is Article 8
principally or partially directed to a threat analysis?  If so, Article 8, Paragraph 4 fails
to list the factors specified in ASCM Arts. 15.7(i) and (iii).
• This article also does not contain the requirement in ASCM Art. 15.7 that an
affirmative determination of threat of material injury by reason of subsidized imports
must be based on a belief that further subsidized imports are "imminent," and that
material injury by reason of the subsidized imports would occur unless a
countervailing measure were applied.  How does China intend to implement these
requirements of the ASCM?
Footnote 48 to ASCM Art. 16.1 provides a specific definition of related parties, which is not
included in Article 11 of the notified regulations.  How does China define a related party?
What entities would China consider to be a "relevant organization" for purposes of filing an
application to initiate a countervailing measure investigation, as described in Article 13 of the notifiedregulations?
Article 21 of the notified regulations provides for the use of "facts available."  Please clarify
how such use of facts available will be applied.
With regard to Article 22 of the notified regulations,
• What procedures will China follow to provide interested parties reasonable and
timely access to information submitted during the course of the proceeding,consistent with ASCM Art. 12.3 and 13.4?
• What procedures (including penalties for violators) do the Chinese authorities have in
place to guarantee the confidentiality of information submitted in countervailing
measure proceedings?G/ADP/Q1/CHN/8
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• How does China intend to address ASCM Art. 12.4 which requires parties submitting
confidential information to provide sufficient detail in the non-confidential
summaries to permit a reasonable understanding of the substance of the confidential
submission?
Article 30 of the notified regulations indicates that any decision to apply provisional measures
is proposed by MOFTEC, but decided by the State Council Tariff Commission.  The same
requirement applies to final determinations, as specified in Article 39, and changes to countervailing
measures, as specified in Article 49.  Does the Tariff Commission have the authority to overrule a
MOFTEC proposal?  If so, what oversight rules govern the Commission’s decisions?  What discretion
does the Commission have in setting subsidy margins or otherwise modifying MOFTEC’s
recommendations?
Under Article 46 of the notified regulations, when provisional countervailing duties are to be
refunded following a negative final determination, what actions will be required of importers to obtain
the refunds?  How quickly will such refunds be made?  Will interest be paid on refunds of duties that
were originally paid in cash?
What are the specific bodies to which the appeals referred to in Article 52 of the notified
regulations may be made?  To which body are requests for "administrative review" made?  What are
the procedures for requesting and conducting such reviews?  Which courts have jurisdiction over
appeals of countervailing measure decisions?  What laws and regulations govern such actions andwhat standard of evidence is required for the appeal?
Article 54 of the notified regulations specifies that MOFTEC and SETC may take
"appropriate measures" to prevent the circumvention of countervailing measures.  What constitutes
circumvention of countervailing measures?  Could you please describe how the authorities willdetermine whether such circumvention has occurred, and the types of measures the authorities may
take if such circumvention has occurred?
Article 55 of the notified regulations specifies that China may take "corresponding measures"
when any country "discriminatorily" imposes countervailing measures against exports from China.Based on what authority in the ASCM could China take such action?  Under what circumstances does
China foresee applying this provision (i.e., what w ould be considered as  "discriminatorily imposing"
within the meaning of Article 55)?  What sorts of actions would be taken against another country?
Please explain the differentiation between the terms "country" and "region" as used in the
notified regulations (e.g., Article 4).
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