. /.   WORLD TRADE  
ORGANIZATION  TN/RL/GEN/166 
22 April 2010 
 (10-2099) 
Negotiating Group on Rules Original:   English 
  
 
BENCHMARK FOR EXPORT FINANCE IN DEVELOPING COUNTRIES  
FOR CVD INVESTIGATIONS UNDER ASCM 
 
Submission by India
 
 
 
 The following communication, dated 21 April 2010,  is being circulated at the request of the 
Delegation of India.    
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 1. In one of the earlier submissions (TN/RL/W/120 dated 16 June 2003) India had highlighted the issue of use of unreasonable benchmarks for th e purpose of calculation of amount of subsidy in 
the case of loan by a government in a CVD inve stigation in respect of exports of developing 
countries.  It needs to be recognised that export cr edits can be provided for either in the currency of 
the exporting country or in foreign currency in  accordance with the circ umstances of each case.  
Generally for developing countries the interest rate for loans in the currency of the exporting country 
is considerably higher than the interest rate  for loans in foreign-denominated currency.   
 2. As per the current provisions of Article 14(b):   
 
"a loan by a government shall not be considered as conferring a benefit, unless there 
is a difference between the amount that the firm receiving the loan pays on the government loan and the amount the firm would pay on 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." 
 
3. The words "the amount the firm would pay on a comparable commercial loan which the 
firm could actually obtain on the market"  require use of appropriate benchmark.  In India's 
experience the investigating authorities have wide di scretion in interpreting this provision and this has 
led to the use of unreasonable benchmarks for the ca lculation of subsidy in the case of export credit of 
a period less than 2 years.  India also recalls the submission made by Brazil on 'Benchmark 
Estimation'.
1   
 4. Under the provisions of item(k) of Annex I of  ASCM, the export credits at rates below those 
which governments/ government institu tions have to actually pay for th e funds so employed, is treated 
as export subsidy.  The export credits under item (k ) have been generally construed as those of a 
maturity of 2 years or more.  The OECD Arra ngements on Officially Supported Export Credits 
generally get covered by the provisions of item (k ).  These arrangements contain the guidelines for 
construction of Commercial Interest  Reference Rates (CIRR), which inter-alia  are based on three – 
year government bond yields for a repayment term of up to and including five years.  Further CIRRs are fixed at a fixed margin of 100 basis points above each Participant's base rate.   
                                                     
 
1 TN/RL/GEN/101/Rev.1 dated 6 June 2006.   TN/RL/GEN/166 
Page 2  
 
  5. In India's views, the provisions of CIRRs a pplicable in the Export Credit Arrangements can 
be suitably incorporated in the provisions of Article  14 to impart greater clarity and predictability to 
the provisions relating to calculati on of subsidy in the case of export cr edit of shorter duration of less 
than two years.  India proposes the following te xtual amendment in Article 14 of ASCM.   
 
6. India reserves its right to submit amendments  or modified proposals in this regard.   
 
Textual amendment to Article 14(b) 
 
"a loan by a government shall not be considered as conferring a benefit, unless 
there is a difference between the amount t hat the firm receiving the loan pays on the 
government loan and the amount the firm would pay on a comparable commercial loan which the firm could actually obtain on the market 
x.  In this case the benefit 
shall be the difference between these two amounts."   
 
footnote x  
 
In the case of countervailing duty invest igation in respect of exports from 
developing countries the rate of interest on a comparable commercial loan in 
the currency of the exporting country may be based on the benchmark of annual average government securities yiel ds of nearest maturity corresponding 
to the tenor of export credit plus the fixed margin of 100 basis points.   
 
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