WORLD TRADE
ORGANIZATIONG/SCM/N/1/EEC/2/Suppl.1
6 November 1998
(98-4345)
Committee on Subsidies
and Countervailing MeasuresOriginal:  English/
French/Spanish
NOTIFICATIONS PURSUANT TO ARTICLE XVI:1 OF THE GATT 1994
AND ARTICLE 25 OF THE AGREEMENT ON SUBSIDIES AND
COUNTERVAILING MEASURES
EUROPEAN COMMUNITIES
Supplement
The following communication, dated 22 September 1998, has been received from the
Permanent Delegation of the European Commission.
_______________
COMMISSION DECISION No. 1889/98/ECSC
of 3 September 1998
on protection against subsidized imports from countries not members of the European
Coal and Steel Community
THE COMMISSION OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Coal and Steel Community, and in particular
Articles 74 and 86 thereof,
(1) Whereas, the Commission, by Decision No 2424/88/ECSC1 adopted common rules for
protection against dumped or subsidized imports from countries which are not members of the
European Coal and Steel Community;
(2) Whereas, those rules were adopted in accordance with existing international obligations, in
particular those arising from Article VI of the General Agreement on Tariffs and Trade
(hereinafter referred to as "GATT"), from the Agreement on Implementation of Article VI ofthe GATT ("the 1979 Anti-Dumping Code") and from the Agreement on Interpretation and
Application of Articles VI, XVI and XXIII of the GATT (Code on Subsidies and
Countervailing Duties);
(3) Whereas, the conclusion of the Uruguay Round of multilateral trade negotiations has led to
the establishment of the World Trade Organization ("the WTO");
(4) Whereas, Annex 1A to the Agreement establ ishing the WTO approved by Council Decision
94/800/EC
2 ("the WTO Agreement") contains, inter alia , the General Agreement on Tariffs
and Trade 1994 ("the GATT 1994"), a new Agreement on implementation of Article VI of the
                                                     
1 OJ No L 209, 2.8.1988, p.18 (Corrigendum O.J. L273, 5.10.88, p.19)
2 OJ No L 336, 21.12.1994, p.1.G/SCM/N/1/EEC/2/Suppl.1
Page 2
GATT 1994 (hereinafter referred to as "the 1994 Anti-Dumping Agreement"), and a new
Agreement on Subsidies and Countervailing Measures ("the Subsidies Agreement");
(5) Whereas the multilateral trade negotiations concluded in 1994 have led to new Agreements on
the implementation of Article VI of GATT and it is therefore appropriate to amend the
Community rules in the light of those new Agreem ents; whereas it is also desirable, in the
light of the different nature of the new rules for dumping and subsidies respectively, to have a
separate body of Community rules in each of those two areas; whereas, consequently, new
rules on protection against dumped imports are contained in a separate Decision
No 2277/96/ECSC3;
(6) Whereas, it is therefore appropriate to amend Community rules governing the application of
countervailing measures in the light of the new multilateral rules, with regard inter alia  to the
procedures for initiation of proceedings and the conduct of subsequent investigations,including the establishment and treatment of the facts, the imposition of provisional measures,
the imposition and collection of countervailing duties, the duration and review of
countervailing measures, and the public disclosure of information relating to countervailing
investigations;
(7) Whereas, in view of the extent of the changes brought about by the new Agreements and to
ensure a proper and transparent application of the new rules, the language of the new
Agreements should be brought into Community legislation as far as possible;
(8) Whereas the Subsidies Agreement has been implemented by the European Community
through Council Regulation (EC) No 2026/97
4, whereas it is therefore appropriate to provide
for the analogous application by the European Coal and Steel Community of the principlesand definitions contained in Regulation (EC) No 2026/97 to ensure the homogeneity of the
external trade legislation of the European Communities, whilst taking account of the decision
making processes of the European Coal and Steel Community;
(9) Whereas, furthermore, it seems advisable to explain, in adequate detail, when a subsidy shall
be deemed to exist, according to which principles it shall be countervailable (in particularwhether the subsidy has been granted specifically), and according to which criteria the
amount of the countervailable subsidy is to be calculated;
(10) Whereas, in determining the existence of a subsidy, it is necessary to demonstrate that there
has been a financial contribution by a government or any public body within the territory of a
country, or that there has been any form of income or price support within the meaning of
Article XVI of the GATT 1994, and that a benefit has thereby been conferred on the recipient
enterprise;
(11) Whereas, it is necessary to explain in sufficient detail which kind of subsidies are not
countervailable and which procedure shall be followed if during an investigation, it is
determined that an enterprise undergoing investigation has received non-countervailable
subsidies;
(12) Whereas, the Subsidies Agreement states that the provisions concerning non-countervailable
subsidies shall cease to apply five years after the date of entry into force of the WTO
Agreement, unless they are extended by mutual agreement of the Members of the WTO ;
whereas it may therefore be necessary to amend this Decision accordingly, if the validity of
those provisions is not so extended;
                                                     
3  OJ No L 308, 29.11.96, p.11.
4  OJ No L 288, 21.10.97, p.1.G/SCM/N/1/EEC/2/Suppl.1
Page 3
(13) Whereas, it is desirable to lay down clear and detailed guidance as to the factors which may
be relevant for the determination of whether the subsidized imports have caused material
injury or are threatening to cause injury; wher eas, in demonstrating that the volume and price
levels of the imports concerned are responsible for injury sustained by a Community industry,
attention should be given to the effect of other factors and in particular prevailing marketconditions in the Community;
(14) Whereas, it is advisable to define the term 'Community industry' and to provide that parties
related to exporters may be excluded from such industry and to define the term "related";
whereas it is also necessary to provide for countervailing duty action to be taken on behalf of
producers in a region of the Community and to lay down guidelines on the definition of such
region;
(15) Whereas, it is necessary to lay down who may lodge a countervailing duty complaint,
including the extent to which it should be supported by the Community industry, and the
information on countervailable subsidies, injury and causation which such complaint should
contain; whereas it is also expedient to specify the procedures for the rejection of complaints
or the initiation of proceedings;
(16) Whereas, it is necessary to lay down the manner in which interested parties should be given
notice of the information which the authorities require, and should have ample opportunity to
present all relevant evidence and to defend their interests; whereas, it is also desirable to set
out clearly the rules and procedures to be followed during the investigation, in particular the
rules whereby interested parties are to make themselves known, present their views and
submit information within specified time limits, if  such views and information are to be taken
into account; whereas it is also appropriate to set out the conditions under which an interested
party may have access to, and comment on, information presented by other interested parties;
whereas there should also be cooperation between the Member States and the Commission in
the collection of information;
(17) Whereas, it is necessary to lay down the conditions under which provisional duties may be
imposed, including that they may be imposed no earlier than 60 days from initiation and not
later than nine months thereafter; whereas, such duties may in all cases be imposed by the
Commission only for a four-month period;
(18) Whereas, it is necessary to specify procedures for the acceptance of undertakings eliminating
or offsetting the countervailable subsidies and injury in lieu of the imposition of provisional
or definitive duties; whereas, it is also appropriate to lay down the consequences of breach or
withdrawal of undertakings and that provisiona l duties may be imposed in cases of suspected
violation or where further investigation is necessary to supplement the findings; whereas, in
accepting undertakings, care should be taken that the proposed undertakings, and their
enforcement, do not lead to anti-competitive behaviour;
(19) Whereas, it is necessary to provide that the termination of cases should, irrespective of
whether definitive measures are adopted or not , normally take place within 12 months, and in
no case later than 13 months, from the initiation of the investigation;
(20) Whereas, an investigation or proceeding should be terminated whenever the amount of the
subsidy is found to be de minimis  or if, particularly in case of imports originating in
developing countries, the volume of subsidized imports or the injury is negligible, and it is
appropriate to define those criteria; whereas, where measures are to be imposed, it isnecessary to provide for the termination of investigations and to lay down that measures
should be less than the amount of countervailable subsidies if such lesser amount wouldG/SCM/N/1/EEC/2/Suppl.1
Page 4
remove the injury, and also to specify the method of calculating the level of measures in cases
of sampling;
(21) Whereas, it is necessary to provide for the retroactive collection of provisional duties if that is
deemed appropriate and to define the circumstances which may trigger the retroactive
application of duties in order to avoid the undermining of the definitive measures to beapplied; whereas it is also necessary to provide that duties may be applied retroactively in
cases of breach or withdrawal of undertakings;
(22) Whereas, it is necessary to provide that measures are to lapse after five years unless a review
indicates that they should be maintained; whereas, it is also necessary to provide, in cases
where sufficient evidence is submitted of changed circumstances, for interim reviews or for
investigations to determine whether refunds of countervailing duties are warranted;
(23) Whereas, even though the Subsidies Agreement does not contain provisions concerning
circumvention of countervailing measures, the possibility of such circumvention exists, in
terms similar, albeit not identical, to the circumvention of anti-dumping measures; whereas, it
appears therefore appropriate to enact an anti-circumvention provision in this Decision;
(24) Whereas, it is expedient to permit the suspension of countervailing measures where there is a
temporary change in market conditions which makes the continued imposition of suchmeasures temporarily inappropriate;
(25) Whereas, it is necessary to provide that imports under investigation may be made subject to
registration upon importation to enable measures to be subsequently applied against such
imports;
(26) Whereas, in order to ensure proper enforcement of measures, it is necessary that Member
States monitor, and report to the Commission, the import trade of products subject to
investigation or subject to measures and also the amount of duties collected under this
Decision;
(27) Whereas, it is necessary to provide for consultation of an Advisory Committee at regular and
specified stages of the investigation; whereas, the Committee should consist of representativesof Member States with a representative of the Commission as chairman;
(28) Whereas, it is expedient to provide for verification visits to check information submitted on
countervailable subsidies and injury, such visits being, however, conditional on proper replies
to questionnaires being received;
(29) Whereas, it is essential to provide for sampling in cases where the number of parties or
transactions is large in order to permit completion of investigations within the appointed time-
limits;
(30) Whereas, it is necessary to provide that, where parties do not cooperate satisfactorily, other
information may be used to establish findings and that such information may be less
favourable to the parties than if they had cooperated;
(31) Whereas, provision should be made for the treatment of confidential information so that
business or governmental secrets are not divulged;
(32) Whereas, it is essential that provision be made for proper disclosure of essential facts and
considerations to parties which qualify for such treatment and that such disclosure be made,G/SCM/N/1/EEC/2/Suppl.1
Page 5
with due regard to the decision-making proce ss in the Community, within a time period which
permits parties to defend their interests;
(33) Whereas, it is prudent to provide for an administrative system under which arguments can be
presented as to whether measures are in the Community interest, including the interests of
consumers, and to lay down the time periods within which such information has to be
presented as well as the disclosure rights of the parties concerned;
(34) Whereas, in applying the rules of the Subsidies Agreement it is essential, in order to maintain
the balance of rights and obligations which this Agreement sought to establish, that the
Community take account of their interpretation by the Community's major trading partners, as
reflected in legislation or established practice,
HAS ADOPTED THIS DECISION:
Article 1
Principles
1. A countervailing duty may be imposed for the purpose of offsetting any subsidy granted,
directly or indirectly, for the manufacture, production, export or transport of any product
whose release for free circulation in the Community causes injury.
2. For the purpose of this Decision, a product is considered as being subsidized if it benefits
from a countervailable subsidy as defined in Articles 2 and 3.
3. Such subsidy may be granted by the government of the country of origin of the imported
product, or by the government of an intermediate country from which the product is exported
to the Community, known for the purpose of this Decision as "the country of export".
The term "government" is defined, for the purposes of this Decision as a government or any
public body within the territory of the country of origin or export.
4. Notwithstanding paragraphs 1, 2 and 3, where products are not directly imported from the
country of origin but are exported to the Community from an intermediate country, the
provisions of this Decision shall be fully applicable and the transaction or transactions shall,
where appropriate, be regarded as having taken place between the country of origin and theCommunity.
5. For the purpose of this Decision the term "like product" shall be interpreted to mean a product
which is identical, that is to say, alike in all respects, to the product under consideration, or in
the absence of such a product, another product which although not alike in all respects, has
characteristics closely resembling those of the product under consideration.G/SCM/N/1/EEC/2/Suppl.1
Page 6
Article 2
Definition of a subsidy
A subsidy shall be deemed to exist if:
1. (a) there is a financial contribution by a government in the country of origin or export, that
is to say, where:
(i) a government practice involves a direct transfer of funds (for example, grants,
loans, equity infusion), potential direct transfers of funds or liabilities (for
example, loan guarantees);
(ii) government revenue that is otherwise due is forgone or not collected (for
example, fiscal incentives such as tax credits); in this regard, the exemption of an
exported product from duties or taxes borne by the like product when destined
for domestic consumption, or the remission of such duties or taxes in amountsnot in excess of those which have been accrued, shall not be deemed to be a
subsidy, provided that such an exemp tion is granted in accordance with the
provisions of Annexes I to III;
(iii) a government provides goods or services other than general infrastructure, or
purchases goods;
(iv) a government:
- makes payments to a funding mechanism, or
- entrusts or directs a private body to carry out one or more of the type of
functions illustrated in points (i) (ii) and (iii) which would normally be
vested in the government, and the practice, in no real sense, differs frompractices normally followed by governments; or
(b) there is any form of income or price support within the meaning of Article XVI of the
GATT 1994; and
2. a benefit is thereby conferred.
Article 3
Countervailable subsidies
1. Subsidies shall be subject to countervailing measures only if they are specific, as defined in
paragraphs 2 ,3 and 4.
2. In order to determine whether a subsidy is specific to an enterprise or industry or group of
enterprises or industries (hereinafter referred to as "certain enterprises") within the jurisdiction
of the granting authority, the following principles shall apply:
(a) Where the granting authority, or the legislation pursuant to which the granting authority
operates, explicitly limits access to a subsidy to certain enterprises, such subsidy shall
be specific;G/SCM/N/1/EEC/2/Suppl.1
Page 7
(b) Where the granting authority, or the legislation pursuant to which the granting authority
operates, establishes objective criteria or conditions governing the eligibility for, and
the amount of, a subsidy, specificity shall not exist, provided that the eligibility is
automatic and that such criteria and conditions are strictly adhered to.
For the purpose of this Article, objective criteria or conditions mean criteria or
conditions which are neutral, which do not favour certain enterprises over others, and
which are economic in nature and horizontal in application, such as number of
employees or size of enterprise.
The criteria or conditions must be clearly spelled out by law, regulation, or other
official document, so as to be capable of verification;
(c) If, notwithstanding any appearance of non- specificity resulting from the application of
the principles laid down in subparagraphs (a) and (b), there are reasons to believe that
the subsidy may in fact be specific, other factors may be considered. Such factors are:
use of a subsidy programme by a limited number of certain enterprises, predominantuse by certain enterprises, the granting of disproportionately large amounts of subsidy
to certain enterprises, and the manner in which discretion has been exercised by the
granting authority in the decision to grant a subsidy. In this regard, information on the
frequency with which applications for a subsidy are refused or approved and the
reasons for such decisions shall, in particular, be considered.
In applying the first sub-paragraph, account shall be taken of the extent of
diversification of economic activities within the jurisdiction of the granting authority,
as well as of the length of time during which the subsidy programme has been in
operation.
3. A subsidy which is limited to certain enterprises located within a designated geographical
region within the jurisdiction of the granting authority shall be specific. The setting or change
of generally applicable tax rates by all levels of government entitled to do so shall not be
deemed to be a specific subsidy for the purposes of this Decision.
4.  Notwithstanding paragraphs 2 and 3, the following subsidies shall be deemed to be specific:
(a) Subsidies contingent, in law or in fact, whether solely or as one of several other
conditions, upon export performance, including those illustrated in Annex I.
Subsidies shall be considered to be contingent in fact upon export performance when
the facts demonstrate that the granting of a subsidy, without having been made legally
contingent upon export performance, is in fact tied to actual or anticipated exportation
or export earnings.  The mere fact that a subsidy is accorded to enterprises whichexport shall not for that reason alone be considered to be an export subsidy within the
meaning of this provision.
(b) Subsidies contingent, whether solely or as one of several other conditions, upon the
use of domestic over imported goods.
5. Any determination of specificity under the provisions of this Article shall be clearly
substantiated on the basis of positive evidence.G/SCM/N/1/EEC/2/Suppl.1
Page 8
Article 4
Non-countervailable subsidies
1. The following subsidies shall not be subjected to countervailing measures:
(a) Subsidies which are not specific within the meaning of Article 3(2) and (3).
(b) Subsidies which are specific, within the meaning of Article 3(2) and (3), but which
meet the conditions provided for in paragraphs 2, 3 or 4 of this article.
2. Subsidies for research activities conducted by firms or by higher education or research
establishments on a contract basis with firms shall not be subject to countervailing measures,
if the subsidies cover not more than 75% of the costs of industrial research or 50°% of the
costs of pre-competitive development activity, and provided that such subsidies are limited
exclusively to:
(a) personnel costs (researchers, technicians and other supporting staff employed
exclusively in the research activity);
(b) costs of instruments, equipment, land and buildings used exclusively and permanently
(except when disposed of on a commercial basis) for the research activity;
(c) costs of consultancy and equivalent services used exclusively for the research activity,
including bought-in research, technical knowledge, patents, etc.;
(d) additional overhead costs incurred directly as a result of the research activity;
(e) other running costs (such as those of materials, supplies and the like), incurred
directly as a result of the research activity.
For the purpose of the first sub-paragraph :
(a) the allowable levels of non-countervailable subsidy referred to in this paragraph shall
be established by reference to the total eligible costs incurred over the duration of an
individual project.
In the case of programmes which span both 'industrial research' and 'pre-competitive
development activity', the allowable level of non-countervailable subsidy shall not
exceed the simple average of the allowable levels of non-countervailable subsidyapplicable to the above two categories, calculated on the basis of all eligible costs as
set forth in points (a) to (e) of the first sub-paragraph;
(b) the term 'industrial research' means planned search or critical investigation aimed at
discovery of new knowledge, with the objective that such knowledge may be useful in
developing new products, processes or services, or in bringing about a significant
improvement to existing products, processes or services;
(c) the term 'pre-competitive development activity' means the translation of industrial
research findings into a plan, blueprint or design for new, modified or improved
products, processes or services whether intended for sale or use, including the
creation of a first prototype which would not be capable of commercial use.  It may
further include the conceptual formulation and design of products, processes or
services alternatives and initial demonstration or pilot projects, provided that theseG/SCM/N/1/EEC/2/Suppl.1
Page 9
same projects cannot be converted or used for industrial application or commercial
exploitation.  It does not include routine or periodic alterations to existing products,
production lines, manufacturing process, services, and other on-going operations even
though those alterations may represent improvements.
3. Subsidies to disadvantaged regions within the territory of the country of origin and/or export,
given pursuant to a general framework of regional development, and which would be non-
specific if the criteria laid down in Article 3(2) and (3) were applied to each eligible region
concerned, shall not be subject to countervailing measures, provided that:
(a) each disadvantaged region is a clearly designated contiguous geographical area with a
definable economic and administrative identity;
(b) the region is considered as disadvantaged on the basis of neutral and objective
criteria, indicating that the region's difficulties arise out of more than temporarycircumstances; such criteria must be clea rly spelled out by law, regulation, or other
official document, so as to be capable of verification;
(c) the criteria mentioned under (b) include a measurement of economic development
which shall be based on at least one of the following factors:
- either income per capita or household income per capita, or GDP per capita,
which must not be above 85% of the average for the territory of the country of
origin or export concerned,
-  unemployment rate, which must be at least 110% of the average for the
territory of the country of origin or export concerned;
as measured over a three-year period; such measurement, however, may be a
composite one and may include other factors.
For the purpose of the first sub-paragraph :
(a) a 'general framework of regional development' means that regional subsidy
programmes are part of an internally consistent and generally applicable regional
development policy and that regional development subsidies are not granted inisolated geographical points having no, or virtually no, influence on the development
of a region;
(b) 'neutral and objective criteria' means criteria which do not favour certain regions
beyond what is appropriate for the elimination or reduction of regional disparities
within the framework of the regional development policy.  In this regard, regional
subsidy programmes shall include ceilings on the amount of subsidy which can be
granted to each subsidized project.  Such ceilings must be differentiated according to
the different levels of development of eligible regions and must be expressed in terms
of investment costs or the cost of job creation.  Within such ceilings, the distribution
of subsidy shall be sufficiently broad and even to avoid the predominant use of a
subsidy by, or the granting of disproportionately large amounts of subsidy to, certain
enterprises.
This provision shall be applied in the light of the criteria set out in Article 3(2) and (3).G/SCM/N/1/EEC/2/Suppl.1
Page 10
4. Subsidies to promote adaptation of existing facilities to new environmental requirements
imposed by law and/or regulations which result in greater constraints and financial burden on
firms, shall not be subject to countervailing measures, provided that the subsidy:
(a) is a one-time non-recurring measure; and
(b) is limited to 20% of the cost of adaptation; and(c) does not cover the cost of replacing and operating the subsidized investment, which
must be fully borne by firms; and
(d) is directly linked to and proportionate to a firm's planned reduction of nuisances and
pollution, and does not cover any manufacturing cost savings which may be achieved;
and
(e) is available to all firms which can adopt the new equipment and/or production
processes.
For the purpose of the first sub-paragraph the term 'existing facilities' means facilities having
been in operation for at least two years at the time when new environmental requirements are
imposed.
Article 5
Calculation of the amount of the countervailable subsidy
The amount of countervailable subsidies, for the purposes of this Decision shall be calculated
in terms of the benefit conferred on the recipient which is found to exist during the investigation
period for subsidization.  Normally this period shall be the most recent accounting year of the
beneficiary, but may be any other period of at least six months prior to the initiation of the
investigation for which reliable financial and other relevant data are available.
Article 6
Calculation of benefit to the recipient
As regards the calculation of benefit to th e recipient, the following rules shall apply:
(a) Government provision of equity capital shall not be considered as conferring a
benefit, unless the investment can be regarded as inconsistent with the usualinvestment practice (including for the provision of risk capital) of private investors in
the territory of the country of origin and/or export;
(b) A loan by a government shall not be considered to confer a benefit, unless there is a
difference between the amount that the firm receiving the loan pays on the
government loan and the amount that the firm would pay for a comparable
commercial loan which the firm could actually obtain on the market.  In this case the
benefit shall be the difference between these two amounts;
(c) A loan guarantee by a government shall not be considered to confer a benefit, unless
there is a difference between the amount that  the firm receiving the guarantee pays on
a loan guaranteed by the government and the amount that the firm would pay for a
comparable commercial loan in the absence of the government guarantee.  In this case
the benefit shall be the difference be tween these two amounts adjusted for any
differences in fees;G/SCM/N/1/EEC/2/Suppl.1
Page 11
(d) The provision of goods or services or purchase of goods by a government shall not be
considered to confer a benefit, unless the provision is made for less than adequate
remuneration or the purchase is made for more than adequate remuneration.  The
adequacy of remuneration shall be determined in relation to prevailing market
conditions for the product or service in question in the country of provision orpurchase (including price, quality, availability, marketability, transportation and other
conditions of purchase or sale).
Article 7
General provisions on calculation
1. The amount of the countervailable subsidies shall be determined per unit of the subsidized
product exported to the Community.
In establishing this amount the following elem ents may be deducted from the total subsidy:
(a) any application fee, or other costs necessari ly incurred in order to qualify for, or to
obtain, the subsidy;
(b) export taxes, duties or other charges levied on the export of the product to the
Community specifically intended to offset the subsidy.
Where an interested party claims a deduction, it must prove that the claim is justified.
2. Where the subsidy is not granted by reference to the quantities manufactured, produced,
exported or transported, the amount of countervailable subsidy shall be determined by
allocating the value of the total subsidy, as appropriate, over the level of production, sales or
exports of the products concerned during the investigation period for subsidization.
3.  Where the subsidy can be linked to the acquisition or future acquisition of fixed assets, the
amount of the countervailable subsidy shall be calculated by spreading the subsidy across a
period which reflects the normal depreciation of such assets in the industry concerned.  The
amount so calculated which is attributable to the investigation period, including that which
derives from fixed assets acquired before this period, shall be allocated as described in
paragraph 2.
Where the assets are non-depreciating, the subsidy shall be valued as an interest-free loan, and
be treated in accordance with Article 6(b).
4. Where a subsidy cannot be linked to the acquisition of fixed assets, the amount of the benefit
received during the investigation period shall in principle be attributed to this period, and
allocated as described in paragraph 2, unless special circumstances arise justifying attribution
over a different period.G/SCM/N/1/EEC/2/Suppl.1
Page 12
Article 8
Determination of injury
1. For the purposes of this Decision, the term 'injury' shall, unless otherwise specified, be taken
to mean material injury to the Community i ndustry, threat of material injury to the
Community industry or material retardation of the establishment of such an industry and shallbe interpreted in accordance with the provisions of this Article.
2. A determination of injury shall be based on positive evidence and shall involve an objective
examination of both:
(a) the volume of the subsidized imports and the effect of the subsidized imports on
prices in the Community market for like products, and
(b) the consequent impact of those imports on the Community industry.
3. With regard to the volume of the subsidized imports, consideration shall be given to whether
there has been a significant increase in subsidized imports, either in absolute terms or relative
to production or consumption in the Community.  With regard to the effect of the subsidized
imports on prices, consideration shall be given to whether there has been significant price
undercutting by the subsidized imports as compared with the price of a like product of the
Community industry, or whether the effect of such  imports is otherwise to depress prices to a
significant degree or prevent price increases which would otherwise have occurred, to a
significant degree.  No one or more of these factors can necessarily give decisive guidance.
4. Where imports of a product from more than one country are simultaneously subject to
countervailing duty investigations, the effects of such imports shall be cumulatively assessed
only if it is determined that:
(a) the amount of countervailable subsidies established in relation to the imports from
each country is more than de minimis  as defined in Article 14(5) and that the volume
of imports from each country is not negligible; and
(b) a cumulative assessment of the effects of the imports is appropriate in light of the
conditions of competition between imported products and the conditions ofcompetition between the imported products and the like Community product.
5. The examination of the impact of the su bsidized imports on the Community industry
concerned shall include an evaluation of all relevant economic factors and indices having a
bearing on the state of the industry, including: the fact that an industry is still in the process of
recovering from the effects of past subsidization or dumping, the magnitude of the amount of
countervailable subsidies, actual and potential decline in sales, profits, output, market share,
productivity, return on investments, utilization of capacity; factors affecting Communityprices; actual and potential negative effects on cash flow, inventories, employment, wages,
growth and ability to raise capital or investments.  This list is not exhaustive, nor can any one
or more of these factors necessarily give decisive guidance.
6. It must be demonstrated, from all the relevant evidence presented in relation to paragraph 2,
that the subsidized imports are causing injury within the meaning of this Decision.Specifically, this shall entail a demonstration that the volume and/or price levels identified
pursuant to paragraph 3 are responsible for an impact on the Community industry as provided
for in paragraph 5, and that this impact exists to a degree which enables it to be classified as
material.G/SCM/N/1/EEC/2/Suppl.1
Page 13
7. Known factors other than the subsidized imports which at the same time are injuring the
Community industry shall also be examined to en sure that injury caused by these other factors
is not attributed to the subsidized imports pursuant to paragraph 6.  Factors which may be
considered in this respect include the volume and prices of non-subsidized imports,
contraction in demand or changes in the patterns of consumption, restrictive trade practices of,and competition between, third country and Community producers, developments in
technology and the export performance and productivity of the Community industry.
8. The effect of the subsidized imports shall be assessed in relation to the production of the
Community industry of the like product when available data permit the separate identification
of that production on the basis of such criteria as the production process, producers' sales and
profits.  If such separate identification of that production is not possible, the effects of the
subsidized imports shall be assessed by examination of the production of the narrowest groupor range of products, which includes the like product, for which the necessary information can
be provided.
9. A determination of a threat of material injury shall be based on facts and not merely on
allegation, conjecture or remote possibility.  The change in circumstances which would create
a situation in which the subsidy would cause injury must be clearly foreseen and imminent.
In making a determination regarding the existence of a threat of material injury, consideration
should be given to, inter alia, such factors as:
(a) the nature of the subsidy or subsidies in question and the trade effects likely to arise
therefrom;
(b) a significant rate of increase of subsidized imports into the Community market
indicating the likelihood of substantially increased imports;
(c) sufficient freely disposable capacity of the exporter or an imminent substantial
increase in such capacity indicating the likelihood of substantially increased
subsidized exports to the Community, account being taken of the availability of other
export markets to absorb any additional exports;
(d) whether imports are entering at prices that would, to a significant degree, depress
prices or prevent price increases which otherwise would have occurred, and would
probably increase demand for further imports; and
(e) inventories of the product being investigated.
No one of the factors listed above by itself can necessarily give decisive guidance but the
totality of the factors considered must lead to the conclusion that further subsidized exports
are imminent and that, unless protective action is taken, material injury will occur.
Article 9
Definition of Community industry
1. For the purposes of this Decision, the term 'Community industry' shall be interpreted as
referring to the Community producers as a whole of the like products or to those of them
whose collective output of the products constitutes a major proportion, as defined inArticle 10(8), of the total Community production of those products, except that:G/SCM/N/1/EEC/2/Suppl.1
Page 14
(a) when producers are related to the exporters or importers or are themselves importers
of the allegedly subsidized product, the term 'Community industry' may be interpreted
as referring to the rest of the producers;
(b) in exceptional circumstances the territory  of the Community may, for the production
in question, be divided into two or more competitive markets and the producerswithin each market may be regarded as a separate industry if :
(i) the producers within such a market sell all or almost all of their production of
the product in question in that market, and
(ii) the demand in that market is not to any substantial degree supplied by
producers of the product in question located elsewhere in the Community.
In such circumstances, injury may be found to exist even where a major portion of the total
Community industry is not injured, provided there is a concentration of subsidized imports into suchan isolated market and provided further that the subsidized imports are causing injury to the producers
of all or almost all of the production within such a market.
2. For the purpose of paragraph 1, producers shall be considered to be related to exporters or
importers only if:
(a) one of them directly or indirectly controls the other; or(b) both of them are directly or indirectly controlled by a third person; or
(c) together they directly or indirectly control a third person provided that there are
grounds for believing or suspecting that the effect of the relationship is such as to
cause the producer concerned to behave differently from non-related producers.
For the purpose of this paragraph, one shall be deemed to control another when the former is
legally or operationally in a position to exercise restraint or direction over the latter.
3. Where the Community industry has been interpreted as referring to the producers in a certain
region, the exporters or the government granting countervailable subsidies shall be given an
opportunity to offer undertakings pursuant to Article 13 in respect of the region concerned.  In
such cases, when evaluating the Community interest of the measures, special account shall betaken of the interest of the region.  If an adequate undertaking is not offered promptly or if the
situations set out in Article 13(9) and (10) apply, a provisional or definitive countervailing
duty may be imposed in respect of the Community as a whole.  In such cases the duties may,
if practicable, be limited to specific producers or exporters.
4. The provisions of Article 8(8) shall apply to this Article.
Article 10
Initiation of proceedings
1. Except as provided for in paragraph 10, an in vestigation to determine the existence, degree
and effect of any alleged subsidy shall be initiated upon a written complaint by any natural or
legal person, or any association not having legal personality, acting on behalf of the
Community industry.G/SCM/N/1/EEC/2/Suppl.1
Page 15
The complaint may be submitted to the Commission, or to a Member State, which shall
forward it to the Commission.  The Commission shall send Member States a copy of any
complaint it receives.  The complaint shall be  deemed to have been lodged on the first
working day following its delivery to the Commission by registered mail or the issuing of an
acknowledgement of receipt by the Commission.
Where, in the absence of any complaint, a Member State is in possession of sufficient
evidence of subsidization and of resultant injury to the Community industry, it shall
immediately communicate such evidence to the Commission.
2. A complaint as referred to in paragraph 1 sha ll include sufficient evidence of the existence of
countervailable subsidies (including, if possible, of their amount), injury and a causal link
between the allegedly subsidized imports and the alleged injury.  The complaint shall contain
such information as is reasonably available to the complainant on the following:
(a) identity of the complainant and a description of the volume and value of the
Community production of the like product by the complainant.  Where a written
complaint is made on behalf of the Commun ity industry, the complaint shall identify
the industry on behalf of which the complaint is made by a list of all known
Community producers of the like product (or associations of Community producers ofthe like product) and, to the extent possible, a description of the volume and value of
Community production of the like product accounted for by such producers;
(b)  a complete description of the allegedly subsidized product, the names of the country
or countries of origin and/or export in question, the identity of each known exporter or
foreign producer and a list of known persons importing the product in question;
(c) evidence with regard to the existence, amount, nature and countervailability of the
subsidies in question;
(d)  information on changes in the volume of the allegedly subsidized imports, the effect
of those imports on prices of the like product in the Community market and the
consequent impact of the imports on the Community industry, as demonstrated byrelevant factors and indices having a bearing on the state of the Community industry,
such as those listed in Article 8(3) and (5).
3. The Commission shall, as far as possible, examine the accuracy and adequacy of the evidence
provided in the complaint to determine whether there is sufficient evidence to justify the
initiation of an investigation.
4. An investigation may be initiated in order to  determine whether or not the alleged subsidies
are ‘specific’ within the meaning of Article 3(2) and (3).
5. An investigation may also be initiated in respect of subsidies which are non-countervailable
according to Article 4(2), (3) or (4) in order to determine whether or not the conditions laid
down in those paragraphs have been met.
6. If a subsidy is granted pursuant to a subsidy programme which has been notified in advance
of its implementation to the WTO Committee on Subsidies and Countervailing Measures inaccordance with the provision of Article 8 of the Subsidies Agreement, and in respect of
which the Committee has failed to determine that the relevant conditions laid down in
Article 8 of the Subsidies Agreement have not been met, an investigation shall not be initiated
in respect of a subsidy granted pursuant to such a programme, unless a violation of Article 8G/SCM/N/1/EEC/2/Suppl.1
Page 16
of the Subsidies Agreement has been ascertained by the competent WTO Dispute Settlement
Body or through arbitration as provided in Article 8(5) of the Subsidies Agreement.
7. An investigation shall not be initiated pursuant to paragraph 1 unless it has been determined,
on the basis of an examination as to the degree of support for, or opposition to, the complaint
expressed by Community producers of the like product, that the complaint has been made byor on behalf of the Community industry.  The complaint shall be considered to have been
made by or on behalf of the Community industry if it is supported by those Community
producers whose collective output constitutes more than 50% of the total production of the
like product produced by that portion of the Community industry expressing either support for
or opposition to the complaint.  However, no investigation shall be initiated when Community
producers expressly supporting the complaint account for less than 25% of total production of
the like product produced by the Community industry.
8. The authorities shall avoid, unless a decision has been made to initiate an investigation, any
publicising of the complaint seeking the initiation of an investigation.  However, as soon as
possible after the receipt of a properly documented complaint pursuant to this Article, and in
any event before the initiation of an investigation, the Commission shall notify the country of
origin and/or export concerned, which shall be invited for consultations with the aim ofclarifying the situation as to matters referred to in paragraph 2 and arriving at a mutually
agreed solution.
9. If, in special circumstances, the Commission decides to initiate an investigation without
having received a written complaint by or on behalf of the Community industry for the
initiation of such investigation, this shall be done on the basis of sufficient evidence of theexistence of countervailable subsidies, injury and causal link, as described in paragraph 2, to
justify such initiation.
10. The evidence of both subsidies and injury shall be considered simultaneously in the decision
on whether or not to initiate an investigation.  A complaint shall be rejected where there is
insufficient evidence of either countervailable s ubsidies or of injury to justify proceeding with
the case.  Proceedings shall not be initiated against countries whose imports represent a
market share of below 1%, unless such countries collectively account for 3% or more of
Community consumption.
11. The complaint may be withdrawn prior to initiation, in which case it shall be considered not to
have been lodged.
12. Where, after consultation, it is apparent that there is sufficient evidence to justify initiating a
proceeding the Commission shall do so within 45 days of the lodging of the complaint andshall publish a notice in the Official Jour nal of the European Communities.  Where
insufficient evidence has been presented, the complainant shall, after consultation, be so
informed within 45 days of the date on which the complaint is lodged with the Commission.
13. The notice of initiation of the proceedings shall announce the initiation of an investigation,
indicate the product and countries concerned, give a summary of the information received andprovide that all relevant information is to be communicated to the Commission; it shall state
the periods within which interested parties may make themselves known, present their views
in writing and submit information, if such vi ews and information are to be taken into account
during the investigation; it shall also state the period within which interested parties may
apply to be heard by the Commission in accordance with Article 11(5).
14. The Commission shall advise the exporters, importers and representative associations of
importers or exporters known to it to be concerned, as well as the country of origin and/orG/SCM/N/1/EEC/2/Suppl.1
Page 17
export and the complainants, of the initiation of the proceedings and, with due regard to the
protection of confidential information, provide the full text of the written complaint referred
to in paragraph 1 to the known exporters and to the authorities of the country of origin and/or
export, and make it available upon request to other interested parties involved.  Where the
number of exporters involved is particularly high, the full text of the written complaint mayinstead be provided only to the authorities of the country of origin and/or export or to the
relevant trade association.
15. A countervailing duty investigation shall not hinder the procedures of customs clearance.
Article 11
The investigation
1. Following the initiation of the proceeding, the Commission, acting in cooperation with the
Member States, shall commence an investigatio n at Community level.  Such investigation
shall cover both subsidization and injury and thes e shall be investigated simultaneously.  For
the purpose of a representative finding, an investigation period shall be selected which, in the
case of subsidization shall, normally, cover the investigation period provided for in Article 5.
Information relating to a period subsequent to the investigation period shall, normally, not be
taken into account.
2. Parties receiving questionnaires used in a countervailing duty investigation shall be given at
least 30 days to reply.  The time limit for exporters shall be counted from the date of receipt
of the questionnaire, which for this purpose shall be deemed to have been received one week
from the day on which it was sent to the respondent or transmitted to the appropriate
diplomatic representative of the country of origin and/or export.  An extension to the 30 dayperiod may be granted, due account being taken of the time limits of the investigation,
provided that the party shows due cause for such extension, in terms of its particular
circumstances.
3. The Commission may request Member States to  supply information, and Member States shall
take whatever steps are necessary in order to give effect to such requests.  They shall send tothe Commission the information requested together with the results of all inspections, checks
or investigations carried out.  Where this information is of general interest or where its
transmission has been requested by a Member State, the Commission shall forward it to the
Member States, provided it is not confidential, in which case a non-confidential summary
shall be forwarded.
4. The Commission may request Member States to carry out all necessary checks and
inspections, particularly amongst importers, traders and Community producers, and to carryout investigations in third countries, provided that the firms concerned give their consent and
that the government of the country in question has been officially notified and raises no
objection.  Member States shall take whatever steps are necessary in order to give effect to
such requests from the Commission.  Officials of the Commission shall be authorized, if the
Commission or a Member State so requests, to assist the officials of Member States incarrying out their duties.
5. The interested parties which have made themselves known in accordance with Article 10(13),
shall be heard if they have, within the period prescribed in the notice published in the Official
Journal of the European Communities, made a written request for a hearing showing that they
are an interested party likely to be affected by the result of the proceeding and that there areparticular reasons why they should be heard.G/SCM/N/1/EEC/2/Suppl.1
Page 18
6. Opportunities shall, on request, be provided for the importers, exporters and the complainants,
which have made themselves known in accord ance with Article 10(13), and the government
of the country of origin and/or export, to meet those parties with adverse interests, so that
opposing views may be presented and rebuttal arguments offered.  Provision of such
opportunities must take account of the need to preserve confidentiality and of the convenienceto the parties.  There shall be no obligation on any party to attend a meeting, and failure to do
so shall not be prejudicial to that party's case.  Oral information provided under this paragraph
shall be taken into account by the Commission in so far as it is subsequently confirmed in
writing.
7. The complainants, the government of the country of origin and/or export, importers and
exporters and their representative associations, users and consumer organizations, which have
made themselves known in accordance with Article 10(13), may, upon written request,inspect all information made available to the Commission by any party to an investigation, as
distinct from internal documents prepared by the authorities of the Community or its Member
States, which is relevant to the presentation of their cases and not confidential within the
meaning of Article 29, and that it is used in the investigation.  Such parties may respond to
such information and their comments shall be taken into consideration, wherever they aresufficiently substantiated in the response.
8. Except in circumstances provided for in Article 28, the information which is supplied by
interested parties and upon which findings are based shall be examined for accuracy as far as
possible.
9. For proceedings initiated pursuant to Article 10(12), an investigation shall, whenever
possible, be concluded within one year.  In any event, such investigations shall in all cases by
concluded within 13 months of initiation, in accordance with the findings made pursuant to
Article 13 for undertakings or the findings made pursuant to Article 15 for definitive action.
10. Throughout the investigation the Commission shall afford the country of origin and/or export
a reasonable opportunity to continue consultations with a view to clarifying the factualsituation and arriving at a mutually agreed solution.
Article12
Provisional measures
1. Provisional duties may be imposed if :
(a) proceedings have been initiated in accordance with Article10,
(b) a notice has been given to that effect and interested parties have been given adequate
opportunities to submit information and make comments in accordance withArticle 10(13),
(c) a provisional affirmative determination has been made that the imported product
benefits from countervailable subsidies and of consequent injury to the Community
industry, and
(d) the Community interest calls for intervention to prevent such injury.
The provisional duties shall be imposed no earlier than 60 days from the initiation of the
proceedings but no later than nine months from the initiation of the proceedings.G/SCM/N/1/EEC/2/Suppl.1
Page 19
The amount of the provisional countervailing duty shall not exceed the total amount of
countervailable subsidies as provisionally established but it should be less than this amount, if such
lesser duty would be adequate to remove the injury to the Community industry.
2. Provisional duties shall be secured by a guarantee and the release of the products concerned
for free circulation in the Community shall be conditional upon the provision of suchguarantee.
3. The Commission shall take provisional action after consultation or, in cases of extreme
urgency, after informing the Member States.  In this latter case, consultations shall take place
10 days, at the latest, after notification to the Member States of the action taken by the
Commission.
4. Where a Member State requests immediate intervention by the Commission and where the
conditions of the first and second sub-paragraphs of paragraph 1 are met, the Commissionshall, within a maximum of five working days of receipt of the request, decide whether a
provisional countervailing duty shall be imposed.
5. The Commission shall forthwith inform the Member States of any decision taken under
paragraphs 1 to 4.
6. Provisional countervailing duties shall have a maximum period of validity of four months.
Article13
Undertakings
1. Investigations may be terminated without the imposition of provisional or definitive duties
upon receipt of satisfactory voluntary undertakings under which:
(a) the country of origin and/or export agrees to eliminate or limit the subsidy or take
other measures concerning its effects; or
(b) any exporter undertakes to revise its prices or to cease exports to the area in question
as long as such exports benefit from countervailable subsidies, so that the
Commission, after consultation, is satisfied that the injurious effect of the subsidies is
eliminated.  Price increases under such undertakings shall not be higher thannecessary to offset the amount of countervailable subsidies, and should be less than
the amount of countervailable subsidies if such increases would be adequate to
remove the injury to the Community industry.
2. Undertakings may be suggested by the Commission, but no country or exporter shall be
obliged to enter into such an undertaking.  The fact that countries or exporters do not offer
such undertakings, or do not accept an invitation to do so, shall in no way prejudice
consideration of the case.  However, it may be determined that a threat of injury is more likelyto be realized if the subsidized imports co ntinue.  Undertakings shall not be sought or
accepted from countries or exporters unless a provisional affirmative determination of
subsidization and injury caused by such subsidization has been made.  Save in exceptional
circumstances, undertakings may not be offered later than the end of the period during which
representations may be made pursuant to Article 30(5).
3. Undertakings offered need not be accepted if their acceptance is considered impractical, such
as where the number of actual or potential exporters is too great, or for other reasons,
including reasons of general policy.  The exporter and/or the country of origin and/or exportG/SCM/N/1/EEC/2/Suppl.1
Page 20
concerned may be provided with the reasons for which it is proposed to reject the offer of an
undertaking and may be given an opportunity to make comments thereon.  The reasons for
rejection shall be set out in the definitive decision.
4. Parties which offer an undertaking shall be required to provide a non-confidential version of
such undertaking, so that it may be made available to interested parties to the investigation.
5. Where undertakings are, after consultation, accepted, the investigation shall be terminated by
the Commission.
6. If the undertakings are accepted, the investigation of subsidization and injury shall normally
be completed.  In such a case, if a negative determination of subsidization or injury is made,
the undertaking shall automatically lapse, except in cases where such a determination is due in
large part to the existence of an undertaking.  In such cases, it may be required that an
undertaking be maintained for a reasonable period.  In the event that an affirmativedetermination of subsidization and injury is made, the undertaking shall continue consistent
with its terms and the provisions of this  Decision.
7. The Commission shall require any country or exporter from whom undertakings have been
accepted to provide, periodically, information relevant to the fulfilment of such undertaking,
and to permit verification of pertinent data.  Non-compliance with such requirements shall beconstrued as a breach of the undertaking.
8. Where undertakings are accepted from certain exporters during the course of an investigation,
they shall, for the purpose of Articles 18, 19, 20 and 22, be deemed to take effect from the
date on which the investigation is concluded for the country of origin and/or export.
9. In case of breach or withdrawal of undertakings by any party, a definitive duty shall be
imposed in accordance with Article 15, on the basis of the facts established within the context
of the investigation which led to the undertaking, provided that such investigation was
concluded with a final determination as to subsidization and injury, and that the exporter
concerned, or the country of origin and/or export,  has, except in the case of withdrawal of the
undertaking by the exporter or such country , been given an opportunity to comment.
10. A provisional duty may, after consultation, be imposed in accordance with Article 12 on the
basis of the best information available, where there is reason to believe that an undertaking is
being breached, or in case of breach or withdrawal of an undertaking where the investigation
which led to the undertaking has not been concluded.G/SCM/N/1/EEC/2/Suppl.1
Page 21
Article14
Termination without measures
1. Where the complaint is withdrawn, the proceedin g may be terminated unless such termination
would not be in the Community interest.
2. Where, after consultation, protective measures are unnecessary the investigation or
proceeding shall be terminated by the Commission.
3. There shall be immediate termination of th e proceeding where it is determined that the
amount of countervailable subsidies is de minimis , in accordance with the provisions of
paragraph 5, or where the volume of subsidized imports, actual or potential, or the injury, is
negligible.
4. For a proceeding initiated pursuant to Article 10(12), injury shall normally be regarded as
negligible where the market share of the imports is less than the amounts set out inArticle 10(10).  With regard to investigations concerning imports from developing countries,
the volume of subsidized imports shall also be co nsidered negligible if it represents less than
4% of the total imports of the like product in the Community, unless imports from developing
countries whose individual shares of total imports represent less than 4% collectively account
for more than 9% of the total imports of the like product in the Community.
5. The amount of the countervailable subsidies shall be considered to be de minimis  if such
amount is less than 1% ad valorem , except that
(a) as regards investigations concerning imports from developing countries the de
minimis  threshold shall be 2% ad valorem ; and
(b)  for those developing countries Members of the WTO referred to in Annex VII to the
Subsidies Agreement as well as for developing countries Members of the WTO which
have completely eliminated export subsidies as defined in Article 3(4)(a) of this
Decision, the de minimis  subsidy threshold shall be 3% ad valorem ; where the
application of this provision depends on the elimination of export subsidies, it shall
apply from the date on which the elimination of export subsidies is notified to theWTO Committee on Subsidies and Countervailing Measures, and for so long as
export subsidies are not granted by the developing country concerned; this provision
shall expire eight years from the date of entry into force of the WTO Agreement;
provided that it is only the investigation th at shall be terminated where the amount of the
countervailable subsidies is below the relevant de minimis  level for individual exporters, who
shall remain subject to the proceedings and may be re-investigated in any subsequent review
carried out for the country concerned pursuant to Articles 18 and 19.
Article 15
Imposition of definitive duties
1. Where the facts as finally established show the existence of countervailable subsidies and
injury caused thereby, and the Community inte rest calls for intervention in accordance with
Article 31 a definitive countervailing duty shall be imposed by the Commission afterconsultation of the Advisory Committee, unless the subsidy or subsidies are withdrawn or it
has been demonstrated that the subsidies no longer confer any benefit on the exporters
involved.  The amount of the countervailing duty shall not exceed the amount ofG/SCM/N/1/EEC/2/Suppl.1
Page 22
countervailable subsidies from which the exporters have been found to benefit, established
pursuant to this Decision, but should be less than the total amount of countervailable
subsidies, if such lesser duty would be ade quate to remove the injury to the Community
industry.
2. A countervailing duty shall be imposed in the appropriate amounts in each case, on a non-
discriminatory basis, on imports of a product from all sources found to benefit from
countervailable subsidies and causing injury, except as to imports from those sources from
which undertakings under the terms of this Decision have been accepted.  The Decision
imposing the duty shall specify the duty for each supplier, or, if that is impracticable, the
supplying country concerned.
3. When the Commission has limited its examination in accordance with Article 27, any
countervailing duty applied to imports from exporters or producers which have madethemselves known in accordance with Article 27  but were not included in the examination
shall not exceed the weighted average amount of countervailable subsidies established for the
parties in the sample.  For the purpose of this paragraph, the Commission shall disregard any
zero and de minimis  amounts of countervailable subsidies and amounts of countervailable
subsidies established in the circumstances referred to in Article 28.  Individual duties shall beapplied to imports from any exporter or producer for which an individual amount of
subsidization has been calculated as provided for in Article 27.
Article16
Retroactivity
1. Provisional measures and definitive countervailing duties shall only be applied to products
which enter free circulation after the time when the measure taken pursuant to Article 12(1) or
Article 15(1), as the case may be, enters into force, subject to the exceptions set out in this
Decision.
2. Where a provisional duty has been applied and the facts as finally established show the
existence of countervailable subsidies and injury, the Commission shall decide, irrespective ofwhether a definitive countervailing duty is to be  imposed, what proportion of the provisional
duty is to be definitively collected.  For this purpose, 'injury' shall not include material
retardation of the establishment of a Community industry, nor threat of material injury, except
where it is found that this would, in the absence of provisional measures, have developed into
material injury.  In all other cases involving such threat or retardation, any provisional
amounts shall be released and definitive duties can only be imposed from the date that a final
determination of threat or material retardation is made.
3. If the definitive countervailing duty is higher than the provisional duty, the difference shall
not be collected.  If the definitive duty is lower than the provisional duty, the duty shall be
recalculated.  Where a final determination is negative, the provisional duty shall not be
confirmed.
4. A definitive countervailing duty may be levied on products which were entered for
consumption not more than 90 days prior to the date of application of provisional measures
but not prior to the initiation of the investigation, provided that the imports have been
registered in accordance with Article 24(5), the importers concerned have been given an
opportunity to comment by the Commission, and:G/SCM/N/1/EEC/2/Suppl.1
Page 23
(a) there exist critical circumstances where for the subsidized product in question injury
which is difficult to repair is caused by massive imports in a relatively short period of a
product benefiting from countervailable subsidies under the terms of this Decision; and,
(b) it is deemed necessary, in order to preclude the recurrence of such injury, to assess
countervailing duties retroactively on those imports.
5. In cases of breach or withdrawal of undert akings, definitive duties may be levied on goods
entered for free circulation not more than 90 days before the application of provisional
measures, provided that the imports have been registered in accordance with Article 24(5) and
that any such retroactive assessment shall not apply to imports entered before the breach or
withdrawal of the undertaking.
Article17
Duration
A countervailing measure shall remain in force only as long as, and to the extent that, it is
necessary to counteract the countervailable subsidies which are causing injury.
Article 18
Expiry reviews
1. A definitive countervailing measure shall expire five years from its imposition or five years
from the date of the most recent review whic h has covered both subsidization and injury,
unless it is determined in a review that the expiry would be likely to lead to a continuation or
recurrence of subsidization and injury.  Such an expiry review shall be initiated on the
initiative of the Commission, or upon a request made by or on behalf of Community
producers, and the measure shall remain in force pending the outcome of such review.
2. An expiry review shall be initiated where the request contains sufficient evidence that the
expiry of the measures would be likely to result in a continuation or recurrence of
subsidization and injury.  Such a likelihood may, for example, be indicated by evidence of
continued subsidization and injury or evidence that the removal of injury is partly or solelydue to the existence of measures or evidence that the circumstances of the exporters, or
market conditions, are such that they would indicate the likelihood of further injurious
subsidization.
3. In carrying out investigations under this Article, the exporters, importers, the country of origin
and/or export and the Community producers shall be provided with the opportunity to
amplify, rebut or comment on the matters set out in the review request, and conclusions shall
be reached with due account taken of all relevant and duly documented evidence presented inrelation to the question as to whether the expiry of measures would be likely, or unlikely, to
lead to the continuation or recurrence of subsidization and injury.
4. A notice of impending expiry shall be published in the Official Journal of the European
Communities at an appropriate time in the final year of the period of application of the
measures as defined in this Article.  Thereafter, the Community producers shall, no later thanthree months before the end of the five-year period, be entitled to lodge a review request in
accordance with paragraph 2.  A notice announcing the actual expiry of measures under this
Article shall also be published.G/SCM/N/1/EEC/2/Suppl.1
Page 24
Article 19
Interim reviews
1. The need for the continued imposition of measures may also be reviewed, where warranted,
on the initiative of the Commission or at the request of a Member State or, provided that a
reasonable period of time of at least one year has elapsed since the imposition of the definitivemeasure, upon a request by any exporter, importer or by the Community producers or the
country of origin and/or export which contains sufficient evidence substantiating the need for
such an interim review.
2. An interim review shall be initiated where the request contains sufficient evidence that the
continued imposition of the measure is no longer necessary to offset the countervailable
subsidy and/or that the injury would be unlik ely to continue or recur if the measure were
removed or varied, or that the existing measure is not, or is no longer, sufficient to counteractthe countervailable subsidy which is causing injury.
3. Where the countervailing duties imposed are less than the amount of countervailable subsidies
found, an interim review shall be initiated if the Community producers provide sufficient
evidence that the duties have led to no movement, or insufficient movement, of resale prices
of the imported product in the Community.  If the investigation proves the allegations to becorrect, countervailing duties may be increased to achieve the price increase required to
remove injury; however, the increased duty level shall not exceed the amount of the
countervailable subsidies.
4. In carrying out investigations pursuant to this Article, the Commission may, inter alia,
consider whether the circumstances with regard to subsidization and injury have changedsignificantly, or whether existing measures are achieving the intended results in removing the
injury previously established under Article 8.  In these respects, account shall be taken in the
final determination of all relevant and duly documented evidence.
Article 20
Accelerated reviews
Any exporter whose exports are subject to a definitive countervailing duty but who was not
individually investigated during the original investigation for reasons other than a refusal to cooperate
with the Commission, shall be entitled, upon request, to an accelerated review in order that the
Commission may promptly establish an individual countervailing duty rate for that exporter.  Such a
review shall be initiated after consultation of the Advisory Committee and after Community producers
have been given an opportunity to comment.
Article 21
Refunds
1. Notwithstanding Article 18, an importer may request reimbursement of duties collected where
it is shown that the amount of countervailable subsidies, on the basis of which duties were
paid, has been eliminated or reduced to a level which is below the level of the duty in force.
2. In requesting a refund of countervailing duties, the importer shall submit an application to the
Commission.  The application shall be submitted via the Member State in the territory of
which the products were released for free circulation, within six months of the date on which
the amount of the definitive duties to be levied was duly determined by the competentG/SCM/N/1/EEC/2/Suppl.1
Page 25
authorities or of the date on which a decision was made definitively to collect the amounts
secured by way of provisional duty.  Member States shall forward the request to the
Commission forthwith.
3. An application for refund shall be considered to be duly supported by evidence only where it
contains precise information on the amount of refund of countervailing duties claimed and allcustoms documentation relating to the calculation and payment of such amount.  It shall also
include evidence, for a representative period, of the amount of countervailable subsidies for
the exporter or producer to which the duty applies.  In cases where the importer is not
associated with the exporter or producer concerned and such information is not immediately
available, or where the exporter or producer is unwilling to release it to the importer, the
application shall contain a statement from the exporter or producer that the amount of
countervailable subsidies has been reduced or eliminated, as specified in this Article, and thatthe relevant supporting evidence will be provided to the Commission.  Where such evidence
is not forthcoming from the exporter or producer within a reasonable period of time the
application shall be rejected.
4. The Commission shall, after consultation of the Advisory Committee, decide whether and to
what extent the application should be granted, or it may decide at any time to initiate aninterim review, whereupon the information and findings from such review, carried out in
accordance with the provisions applicable for such reviews, shall be used to determine
whether and to what extent a refund is justified.  Refunds of duties shall normally take place
within 12 months, and in no circumstances more than 18 months after the date on which a
request for a refund, duly supported by evidence, has been made by an importer of the productsubject to the countervailing duty.  The payment of any refund authorized should normally be
made by Member States within 90 days of the above-mentioned decision.
Article 22
General provisions on reviews and refunds
1. The relevant provisions of Articles 10 and 11, excluding those relating to time limits, shall
apply to any review carried out pursuant to Articles 18, 19 and 20.  Any such review shall be
carried out expeditiously and shall normally be concluded within 12 months of the date of
initiation of the review.
2. Reviews pursuant to Articles 18, 19 and 20 shall be initiated by the Commission after
consultation of the Advisory Committee.  Where warranted by reviews, measures shall be
repealed or maintained pursuant to Article 18, or repealed, maintained or amended pursuant to
Articles 19 and 20 by the Commission .  Where measures are repealed for individualexporters, but not for the country as a whole, such exporters shall remain subject to the
proceeding and maybe re-investigated in any subsequent review carried out for that country
pursuant to Articles 18 and 19.
3. Where a review of measures pursuant to Article 19 is in progress at the end of the period of
application of measures as defined in Article 18, the measures shall also be investigated underthe provisions of Article 18.
4. In all review or refund investigations carried out pursuant to Articles 18 to 21, the
Commission shall, provided that circumstances have not changed, apply the same
methodology as in the investigation which led to the duty, with due account being taken of
Articles 5, 6, 7 and 27.G/SCM/N/1/EEC/2/Suppl.1
Page 26
Article 23
Circumvention
1. Countervailing duties imposed pursuant to this Decision may be extended to imports from
third countries of like products, or parts thereof, when circumvention of the measures in force
is taking place.  Circumvention shall be defined as a change in the pattern of trade betweenthird countries and the Community which stems from a practice, process or work for which
there is insufficient due cause or economic justification other than the imposition of the duty,
and where there is evidence that the remedial effects of the duty are being undermined in
terms of the prices and/or quantities of the like products and that the imported like product
and/or parts thereof still benefit from the subsidy.
2. Investigations shall be initiated pursuant to this Article where the request contains sufficient
evidence regarding the factors set out in paragraph 1.  Initiations shall be made, afterconsultation of the Advisory Committee, by Commission Decision which shall also instruct
the customs authorities to make imports subject to registration in accordance with
Article 24(5) or to request guarantees.  Investigations shall be carried out by the Commission,
which may be assisted by customs authorities, and shall be concluded within nine months.
When the facts as finally ascertained justify the extension of measures, this shall be done bythe Commission, after consultation of the Advisory Committee, from the date on which
registration was imposed pursuant to Article 24(5) or on which guarantees were requested.
The relevant procedural provisions of this Decision with regard to initiations and the conduct
of investigations shall apply pursuant to this Article.
3. Products shall not be subject to registration pursuant to Article 24(5) or measures where they
are accompanied by a customs certificate declaring that the importation of the goods does not
constitute circumvention.  These certificates may be issued to importers, upon written
application following authorization by decision of the Commission after consultation of the
Advisory Committee,  and they shall remain valid for the period, and under the conditions, set
down therein.
4. Nothing in this Article shall preclude the normal application of the provisions in force
concerning customs duties.
Article 24
General provisions
1. Provisional or definitive countervailing duties shall be imposed by a Commission Decision
and collected by Member States in the form, at the rate specified and according to the other
criteria laid down in the Decision imposing such  duties.  Such duties shall also be collected
independently of the customs duties, taxes and other charges normally imposed on imports.
No product shall be subject to both anti-dumping and countervailing duties for the purpose of
dealing with one and the same situation arising from dumping or from export subsidization.
2. Decisions imposing provisional or definitive countervailing duties, and Decisions accepting
undertakings or terminating investigations or proceedings, shall be published in the OfficialJournal of the European Communities.  Such Decisions shall contain in particular and with
due regard to the protection of confidential information, the names of the exporters, if
possible, or of the countries involved, a description of the product and a summary of the facts
and considerations relevant to the subsidy and injury determinations.  In each case, a copy of
the Decision shall be sent to known interested parties.  The provisions of this paragraph shallapply mutatis mutandis to reviews.G/SCM/N/1/EEC/2/Suppl.1
Page 27
3. Special provisions, in particular with regard to the common definition of the concept of
origin, as contained in Council Regulation (EEC) No 2913/921 may be adopted pursuant to
this Decision.
4. In the Community interest, measures imposed pursuant to this Decision may, after
consultation of the Advisory Committee, be suspended by a decision of the Commission for aperiod of nine months.  The suspension may be extended for a further period, not exceeding
one year, if the Commission, after consultation, so decides.  Measures may only be suspended
where market conditions have temporarily change d to an extent that injury would be unlikely
to resume as a result of the suspension, and provided that the Community industry has been
given an opportunity to comment and these comments have been taken into account.
Measures may, at any time and after consultation, be reinstated if the reason for suspension is
no longer applicable.
5. The Commission may, after consultation of the Advisory Committee, direct the customs
authorities to take the appropriate steps to register imports, so that measures may
subsequently be applied against those imports from the date of such registration.  Imports may
be made subject to registration following a request from the Community industry which
contains sufficient evidence to justify such action.  Registration shall be introduced by aCommission Decision which shall specify the purpose of the action and, if appropriate, the
estimated amount of possible future liability.  Imports shall not be made subject to registration
for a period longer than nine months.
6. Member States shall report to the Commissi on every month on the import trade of products
subject to investigation and to measures, and on the amount of duties collected pursuant tothis Decision.
Article 25
Consultations
1. Any consultations provided for in this Decision, except those referred to in Articles 10(8) and
11 (10), shall take place within an Advisory Committee, which shall consist of representativesof each Member State, with a representative of the Commission as chairman.  Consultations
shall be held immediately on request by a Member State or on the initiative of the
Commission, and in any event within a period of  time which allows the time limits set by this
Decision to be adhered to.
2. The Committee shall meet when convened by its chairman.  He shall provide the Member
States, as promptly as possible, with all relevant information.
3. Where necessary, consultation may be in writing only; in that event, the Commission shall
notify the Member States and shall specify a period within which they shall be entitled to
express their opinions or to request an oral consultation which the chairman shall arrange,
provided that such oral consultation can be held within a period of time which allows the time
limits set by this Decision to be adhered to.
4. Consultation shall cover, in particular:
(a) the existence of countervailable subsidies and the methods of establishing their
amount;
                                                     
1 OJ No L 302, 19.10.1992, p.1, as last amended by European Parliament and Council Regulation (EC)
No 82/97 (OJ No L 17, 21.1.97, p.1).G/SCM/N/1/EEC/2/Suppl.1
Page 28
(b) the existence and extent of injury;
(c) the causal link between the subsidized imports and injury;
(d) the measures which, in the circumstances, are appropriate to prevent or remedy the
injury caused by the countervailable subsidies and the ways and means of putting
such measures into effect.
Article 26
Verification visits
1. The Commission shall, where it considers it appropriate, carry out visits to examine the
records of importers, exporters, traders, agents, producers, trade associations and
organizations, to verify information provided on subsidization and injury.  In the absence of a
proper and timely reply a verification visit may not be carried out.
2. The Commission may carry out investigations in third countries as required, provided that it
obtains the agreement of the firms concerned, that it notifies the country in question and that
the latter does not object to the investigation.  As soon as the agreement of the firms
concerned has been obtained the Commission should notify the country of origin and/or
export of the names and addresses of the firms to be visited and the dates agreed.
3. The firms concerned shall be advised of the nature of the information to be verified during
verification visits and of any further information which needs to be provided during such
visits, though this should not preclude requests made during the verification for further details
to be provided in the light of information obtained.
4. In investigations carried out pursuant to paragraphs 1, 2 and 3, the Commission shall be
assisted by officials of those Member States who so request.
Article 27
Sampling
1. 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 the selection; or
(b) the largest representative volume of the production, sales or exports which can
reasonably be investigated within the time available.
2. The selection of parties, types of products or transactions made under this Article shall rest
with the Commission, though preference shall be given to choosing a sample in consultation
with, and with the consent of, the parties concerned, provided that such parties make
themselves known and make sufficient information available, within three weeks of initiationof the investigation, to enable a representative sample to be chosen.
3. In cases where the examination has been limited in accordance with this Article, an individual
amount of countervailable subsidization shall, nevertheless, be calculated for any exporter or
producer not initially selected who submits the necessary information within the time limits
provided for in this Decision, except where the number of exporters or producers is so largeG/SCM/N/1/EEC/2/Suppl.1
Page 29
that individual examinations would be unduly burdensome and would prevent completion of
the investigation in good time.
4. Where it is decided to sample and there is a degree of non-cooperation by some or all of the
parties selected which is likely to materially affect the outcome of the investigation, a new
sample may be selected.  However, if a material degree of non-cooperation persists or there isinsufficient time to select a new sample, the relevant provisions of Article 28 shall apply.
Article 28
Non-cooperation
1. In cases in which any interested party refuses access to, or otherwise does not provide,
necessary information within the time limits provided in this Decision, or significantly
impedes the investigation, provisional or final findings, affirmative or negative, may be made
on the basis of the facts available.
Where it is found that any interested party has supplied false or misleading information, the
information shall be disregarded and use may be made of the facts available.
Interested parties should be made aware of the consequences of non-cooperation.
2. Failure to give a computerized response sha ll not be deemed to constitute non-cooperation,
provided that the interested party shows that presenting the response as requested would resultin an unreasonable extra burden or unreasonable additional cost.
3. Where the information submitted by an interested party is not ideal in all respects it should
nevertheless not be disregarded, provided that any deficiencies are not such as to cause undue
difficulty in arriving at a reasonably accurate finding and that the information is appropriately
submitted in good time and is verifiable, and that the party has acted to the best of its ability.
4. If evidence or information is not accepted, the supplying party shall be informed forthwith of
the reasons thereof and shall be granted an opportunity to provide further explanations within
the time limit specified.  If the explanations are considered unsatisfactory, the reasons for
rejection of such evidence or information shall be disclosed and given in published findings.
5. If determinations, including those regarding the amount of countervailable subsidies, are
based on the provisions of paragraph 1, including the information supplied in the complaint, it
shall, where practicable and with due regard to the time limits of the investigation, be checked
by reference to information from other independent sources which may be available, such as
published price lists, official import statistics and customs returns, or information obtained
from other interested parties during the investigation.
6. If an interested party does not cooperate, or cooperates only partially, so that relevant
information is thereby withheld, the result may be less favourable to the party than if it hadcooperated.G/SCM/N/1/EEC/2/Suppl.1
Page 30
Article 29
Confidentiality
1. Any information which is by nature confidential, (for example, because its disclosure would
be of significant competitive advantage to a competitor or would have a significantly adverse
effect upon a person supplying the information or upon a person from whom he has acquiredthe information) or which is provided on a conf idential basis by parties to an investigation
shall, if good cause is shown, be treated as such by the authorities.
2. Interested parties providing confidential information shall be required to furnish non-
confidential summaries thereof.  Those summari es shall be in sufficient detail to permit a
reasonable understanding of the substance of the information submitted in confidence.  In
exceptional circumstances, such parties may indicate that such information is not susceptible
of summary.  In such exceptional circumstances, a statement of the reasons whysummarization is not possible must be provided.
3. If it is considered that a request for confidentiality is not warranted and if the supplier of the
information is either unwilling to make the information available or to authorize its disclosure
in generalized or summary form, such information may be disregarded unless it can be
satisfactorily demonstrated from appropriate sources that the information is correct.  Requestsfor confidentiality shall not be arbitrarily rejected.
4. This Article shall not preclude the disclosure of general information by the Community
authorities and in particular of the reasons on which decisions taken pursuant to this Decision
are based, nor disclosure of the evidence relied on by the Community authorities in so far as is
necessary to explain those reasons in court proceedings.  Such disclosure must take intoaccount the legitimate interests of the parties concerned that their business or governmental
secrets should not be divulged.
5. The Commission, and the Member States, or the of ficials of any of these, shall not reveal any
information received pursuant to this Decision for which confidential treatment has been
requested by its supplier, without specific permission from the supplier.  Exchanges ofinformation between the Commission and Member States, or any information relating to
consultations made pursuant to Article 25, or consultations described in Articles 10(8) and
11(10), or any internal documents prepared by the authorities of the Community or its
Member States, shall be not be divulged except as specifically provided for in this Decision.
6. Information received pursuant to this Decision shall be used only for the purpose for which it
was requested.
Article 30
Disclosure
1. The complainants, importers and exporters and their representative associations, and the
country of origin and/or export, may request disclosure of the details underlying the essential
facts and considerations on the basis of which provisional measures have been imposed.
Requests for such disclosure shall be made in writing immediately following the imposition ofprovisional measures, and the disclosure shall be made in writing as soon as possible
thereafter.G/SCM/N/1/EEC/2/Suppl.1
Page 31
2. The parties mentioned in paragraph 1 may request final disclosure of the essential facts and
considerations on the basis of which it is intended to recommend the imposition of definitive
measures, or the termination of an investigation or proceedings without the imposition of
measures, particular attention being paid to the disclosure of any facts or considerations which
are different from those used for any provisional measures.
3.  Requests for final disclosure shall be addressed to the Commission in writing and be received,
in cases where a provisional duty has been applied, not later than one month after publication
of the imposition of that duty.  Where a provisional duty has not been applied, parties shall be
provided with an opportunity to request fina l disclosure within time limits set by the
Commission.
4. Final disclosure shall be given in writing.  It shall be made, due regard being had to the
protection of confidential information, as soon as possible and, normally, not later than onemonth prior to a definitive decision or the su bmission by the Commissi on 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 different facts andconsiderations, these shall be disclosed as soon as possible.
5. Representations made after final disclosure is given shall be taken into consideration only if
received within a period to be set by the Commission in each case, which shall be at least 10
days, due consideration being given to the urgency of the matter.
Article 31
Community interest
1. A determination as to whether the Community interest calls for intervention shall be based on
an appreciation of all the various interests taken as a whole, including the interests of the
domestic industry and users and consumers; a determination pursuant to this Article shall only
be made where all parties have been given the opportunity to make their views knownpursuant to paragraph 2.  In such an examinati on, the need to eliminate the trade distorting
effects of injurious subsidization and to restore effective competition shall be given special
consideration.  Measures, as determined on the basis of subsidization and injury found, may
not be applied where the authorities, on the basis of all the information submitted, can clearly
conclude that it is not in the Community interest to apply such measures.
2. In order to provide a sound basis on which the authorities can take account of all views and
information in the decision as to whether or not the imposition of measures is in theCommunity interest, the complainants, importers and their representative associations,
representative users and representative consumer organizations may, within the time limits
specified in the notice of initiation of the countervailing duty investigation, make themselves
known and provide information to the Commission.  Such information, or appropriate
summaries thereof, shall be made available to the other parties specified in this paragraph, andthey shall be entitled to respond to such information.
3. The parties which have acted in conformity with paragraph 2 may request a hearing.  Such
requests shall be granted when they are submitted within the time limits set in paragraph 2,
and when they set out the reasons, in terms of the Community interest, why the parties should
be heard.G/SCM/N/1/EEC/2/Suppl.1
Page 32
4. The parties which have acted in conformity with paragraph 2 may provide comments on the
application of any provisional duties imposed.  Such comments shall be received within one
month of the application of such measures if they are to be taken into account and they, or
appropriate summaries thereof, shall be made available to other parties who shall be entitled
to respond to such comments.
5. The Commission shall examine the information which is properly submitted and the extent to
which it is representative, and the results of such analysis, together with an opinion on its
merits, shall be transmitted to the Advisory Committee.
6. The parties which have acted in conformity with paragraph 2 may request the facts and
considerations on which final decisions are likely to be taken to be made available to them.
Such information shall be made available to the extent possible and without prejudice to any
subsequent decision taken by the Commission.
7. Information shall only be taken into account where it is supported by actual evidence which
substantiates its validity.
Article 32
Relationships between countervailing duty measures and multilateral remedies
If an imported product is made subject to any countermeasures imposed following recourse to
the dispute settlement procedures of the Subsidies Agreement, and such measures are appropriate to
remove the injury caused by the countervailable subsidies, any countervailing duty imposed with
regard to that product shall immediately be suspended, or repealed, as appropriate.
Article 33
Final provisions
This Decision shall not preclude the application of:
(a) any special rules laid down in agreements concluded between the Community and
third countries;
(b) special measures, provided that such action does not run counter to obligations under
the GATT.
Article 34
Repeal of existing legislation
Decision No 2424/88/ECSC is hereby repealed.
Where appropriate, references to the provisions of Decision No 2424/88/ECSC shall be
construed as either references to this Decision, as regards protection against subsidized imports from
countries not members of the European Coal and Steel Community, or as references to CommissionDecision No 2277/96/ECSC, as regards protection against dumped imports from countries not
members of the European Coal and Steel Community.G/SCM/N/1/EEC/2/Suppl.1
Page 33
Article 35
Entry into force
This Decision shall enter into force on the day following its publication in the Official Journal
of the European Communities and shall apply to proceedings initiated on or after this date.
This Decision shall be binding in its entirety and directly applicable in all Member States.
Done at Brussels,                         1998.
For the CommissionG/SCM/N/1/EEC/2/Suppl.1
Page 34
ANNEX I
ILLUSTRATIVE LIST OF EXPORT SUBSIDIES
(a) The provision by governments of direct subsidies to a firm or an industry contingent upon
export performance.
(b) Currency retention schemes or any similar practices which involve a bonus on exports.(c) Internal transport and freight charges on export shipments, provided or mandated by
governments, on terms more favourable than for domestic shipments.
(d) The provision by governments or their agencies either directly or indirectly through
government-mandated schemes, of imported or domestic products or services for use in the
production of exported goods, on terms or conditions more favourable than for provision of
like or directly competitive products or services for use in the production of goods for
domestic consumption, if (in the case of products) such terms or conditions are morefavourable than those commercially available (1) on world markets to their exporters.
(e) The full or partial exemption, remission, or deferral specifically related to exports, of direct
taxes (2) or social welfare charges paid or payable by industrial or commercial enterprises (3).
(f) The allowance of special deductions directly related to exports or export performance, over
and above those granted in respect of production for domestic consumption, in the calculationof the base on which direct taxes are charged.
                                                     
1The term 'commercially available' means that the choice between domestic and
imported products is unrestricted and depends only on commercial considerations.
2 For the purpose of Decision:
- the term 'direct taxes' shall mean taxes on  wages, profits, interests, rents, royalties,
and all other forms of income, and taxes on the ownership of real property,
- the term 'import charges' shall mean tariffs, duties, and other fiscal charges not
elsewhere enumerated in this note that are levied on imports,
- the term 'indirect taxes shall mean sales, excise, turnover, value added, franchise,
stamp, transfer, inventory and equipment taxes, border taxes and all taxes other than
direct taxes and import charges,
- 'prior-stage' indirect taxes are those levied on goods or services used directly or
indirectly in making the product,
- 'cumulative' indirect taxes are multi-staged taxes levied where there is no mechanism
for subsequent crediting of the tax if the goods or services subject to tax at one stageof production are used in a succeeding state of production,
- 'remission' of taxes includes the refund or rebate of taxes,
- 'remission or drawback' includes the full or partial exemption or deferral of import
charges.
3 Deferral may not amount to an export subsidy where, for example, appropriate
interest charges are collected.G/SCM/N/1/EEC/2/Suppl.1
Page 35
(g) The exemption or remission, in respect of the production and distribution of exported
products, of indirect taxes (2) in excess of those levied in respect of the production and
distribution of like products when sold for domestic consumption.
(h) The exemption, remission or deferral of prior-stage cumulative indirect taxes (2) on goods or
services used in the production of exported products in excess of the exemption, remission ordeferral of like prior-stage cumulative indirect taxes on goods or services used in the
production of like products when sold for domestic consumption; provided, however, that
prior-stage cumulative indirect taxes may be exempted, remitted or deferred on exported
products even when not exempted, remitted or deferred on like products when sold for
domestic consumption, if the prior-stage cumulative indirect taxes are levied on inputs that
are consumed in the production of the exported product (making normal allowance for
waste) (4) .  This item shall be interpreted in accordance with the guidelines on consumptionof inputs in the production process contained in Annex II.
(i) The remission or drawback of import charges(2) in excess of those levied on imported inputs
that are consumed in the production of the exported product (making normal allowance for
waste); provided,' however, that in particular cases a firm may use a quantity of home market
inputs equal to, and having the same quality and characteristics as, the imported inputs as asubstitute for them in order to benefit from this provision if the import and the corresponding
export operations both occur within a reasonable time period, not to exceed two years.  This
item shall be interpreted in accordance with th e guidelines on consumption of inputs in the
production process contained in Annex II and the guidelines in the determination of
substitution drawback systems as export subsidies contained in Annex III.
(j) The provision by governments (or special institutions controlled by governments) of export
credit guarantee or insurance programmes, of insurance or guarantee programmes against
increases in the cost of exported products or of exchange risk programmes, at premium rates
which are inadequate to cover the long-term operating costs and losses of the programmes.
(k) The grant by governments (or special institutions controlled by and/or acting under the
authority of governments) of export credits at rates below those which they actually have to
pay for the funds so employed (or would have to pay if they borrowed on international capital
markets in order to obtain funds of the same maturity and other credit terms and denominated
in the same currency as the export credit), or the payment by them of all or part of the costs
incurred by exporters or financial institutions in obtaining credits, in so far as they are used to
secure a material advantage in the field of export credit terms.
Provided, however, that if a Member of the WTO is a party to an international undertaking on
official export credits to which at least 12 original such Members are parties as of 1 January
1979 (or a successor undertaking which has been adopted by those original Members), or if in
practice a Member of the WTO applies the interest rates provisions of the relevant
undertaking, an export credit practice which is in conformity with those provisions shall not
be considered an export subsidy.
(l) Any other charge on the public account constituting an export subsidy in the sense of
Article XVI of GATT 1994.
                                                     
4 Paragraph (h) does not apply to value-a dded tax systems and border-tax adjustment
in lieu thereof; the problem of the excessive remission of value-added taxes is exclusivelycovered by paragraph (g).G/SCM/N/1/EEC/2/Suppl.1
Page 36
ANNEX II
GUIDELINES ON CONSUMPTION OF INPUTS IN THE PRODUCTION PROCESS(1)
I
1.  Indirect tax rebate schemes can allow for exemption, remission or deferral of prior-stage
cumulative indirect taxes levied on inputs that are consumed in the production of the exportedproduct (making normal allowance for waste).  Similarly, drawback schemes can allow for the
remission or drawback of import charges levied on inputs that are consumed in the production
of the exported product (making normal allowance for waste).
2.  The Illustrative list of export subsidies in Annex I makes reference to the term 'inputs that are
consumed in the production of the exported product' in paragraphs (h) and (i).  Pursuant to
paragraph (h), indirect tax rebate schemes can constitute an export subsidy to the extent that
they result in exemption, remission or deferr al of prior-stage cumulative indirect taxes in
excess of the amount of such taxes actually levied on inputs that are consumed in the
production of the exported product.  Pursuant to paragraph (i), drawback schemes can
constitute an export subsidy to the extent that they result in a remission or drawback of import
charges in excess of those actually levied on inputs that are consumed in the production of the
exported product.  Both paragraphs stipulate that normal allowance for waste must be made infindings regarding consumption of inputs in the production of the exported product.
Paragraph (i) also provides for substitution, where appropriate.
II
3.  In examining whether inputs are consumed in the production of the exported product, as part
of a countervailing duty investigation pursuant to this Decision, the Commission mustnormally proceed on the following basis:
4.  Where it is alleged that an indirect tax rebate scheme, or a drawback scheme, conveys a
subsidy by reason of over-rebate or excess drawback of indirect taxes or import charges on
inputs consumed in the production of the exported product, the Commission must normally
first determine whether the government of the exporting country has in place and applies asystem or procedure to confirm which inputs are consumed in the production of the exported
product and in what amounts.  Where such a system or procedure is determined to be applied,
the Commission must normally then examine the system or procedure to see whether it is
reasonable, effective for the purpose intended, and based on generally accepted commercial
practices in the country of export.  The Commission may deem it necessary to carry out, in
accordance with Article 26(2), certain practical tests in order to verify information or to
satisfy itself that the system or procedure is being effectively applied.
5.  Where there is no such system or procedure, where it is not reasonable, or where it is
instituted and considered reasonable but is found not to be applied or not to be applied
effectively, a further examination by the exporting country based on the actual inputs
involved will normally need to be carried out in the context of determining whether an excess
payment occurred.  If the Commission deems it necessary, a further examination may becarried out in accordance with paragraph 4.
                                                     
1 Inputs consumed in the production pro cess are inputs physically incorporated,
energy, fuels and oil used in the production pr ocess and catalysts which are consumed in the
course of their use to obtain the exported product.G/SCM/N/1/EEC/2/Suppl.1
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6.  The Commission must normally treat inputs as physically incorporated if such inputs are used
in the production process and are physically present in the product exported.  An input need
not be present in the final product in the same form in which it entered the production process.
7.  In determining the amount of a particular input that is consumed in the production of the
exported product, a "normal allowance for waste" must normally be taken into account, andsuch waste must normally be treated as consumed in the production of the exported product.
The term 'waste' refers to that portion of a given input which does not serve an independent
function in the production process, is not consumed in the production of the exported product
(for reasons such as inefficiencies) and is not recovered, used or sold by the same
manufacturer.
8.  The Commission's determination of whether the claimed allowance for waste is 'normal' must
normally take into account the production process, the average experience of the industry inthe country of export, and other technical factors, as appropriate.  The Commission must bear
in mind that an important question is whether the authorities in the exporting country have
reasonably calculated the amount of waste, when such an amount is intended to be included in
the tax or duty rebate or remission.G/SCM/N/1/EEC/2/Suppl.1
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ANNEX III
GUIDELINES IN THE DETERMINATION OF SUBSTITUTION DRAWBACK SYSTEMS
AS EXPORT SUBSIDIES
I
Drawback systems can allow for the refund or drawback of import charges on inputs which
are consumed in the production process of another pr oduct and where the export of this latter product
contains domestic inputs having the same quality and characteristics as those submitted for the
imported inputs.  Pursuant to paragraph (i) of Annex I, substitution drawback systems can constitute
an export subsidy to the extent that they result  in an excess drawback of the import charges levied
initially on the imported inputs for which drawback is being claimed.
II
In examining any substitution drawback system as part of a countervailing duty investigation
pursuant to this Decision, the Commission must normally proceed on the following basis:
1. Paragraph (i) of Annex I stipulates that home market inputs may be substituted for imported
inputs in the production of a product for export provided such inputs are equal in quantity to,
and have the same quality and characteristics as, the imported inputs being substituted.  Theexistence of a verification system or procedure is important because it enables the government
of the exporting country to ensure and demonstrate that the quantity of inputs for which
drawback is claimed does not exceed the quantity of similar products exported, in whatever
form, and that there is not drawback of import charges in excess of those originally levied on
the imported inputs in question.
2. Where it is alleged that a substitution drawback system conveys a subsidy, the Commission
must normally first proceed to determine whether the government of the exporting country
has in place and applies a verification system or procedure.  Where such a system or
procedure is determined to be applied, the Commission shall normally then examine theverification procedures to see whether they are reasonable, effective for the purpose intended,
and based on generally accepted commercial practices in the country of export.  To the extent
that the procedures are determined to meet this test and are effectively applied, no subsidy
will be presumed to exist.  It may be deemed necessary by the Commission to carry out, in
accordance with Article 26 (2), certain practical tests in order to verify information or to
satisfy itself that the verification procedures are being effectively applied.
3. Where there are no verification procedures, where they are not reasonable, or where such
procedures are instituted and considered reasonable but are found not to be actually applied or
not to be applied effectively, there may be a subsidy.  In such cases, further examination by
the exporting country based on the actual transactions involved would need to be carried out
to determine whether an excess payment occurred.  If the Commission deems it necessary, afurther examination may be carried out in accordance with paragraph 2.
4. The existence of a substitution drawback provision under which exporters are allowed to
select particular import shipments on which drawback is claimed should not of itself be
considered to convey a subsidy.
5. An excess drawback of import charges in the sense of paragraph (i) of Annex I would be
deemed to exist where governments paid interest on any monies refunded under their
drawback schemes, to the extent of th e interest actually paid or payable.
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