WORLD TRADE  
ORGANIZATION  TN/RL/GEN/96 
19 January 2006 
 (06-0245) 
Negotiating Group on Rules Original:   English 
  
COUNTERVAILING MEASURES 
 
Comments and Proposal from the Separate Customs Territory of
 
Taiwan, Penghu, Kinmen and Ma tsu on the Paper Submitted  
by the European Communities on Countervailing Measures  
 
 
 The following communication, dated 13 January 2 006, is being circulated at the request of the 
Delegation of the Separate Customs Territo ry of Taiwan, Penghu, Kinmen and Matsu. 
  The submitting delegation has requested that th is paper, which was submitted to the Rules 
Negotiation Group as an informal document (JOB(06)/6 ), also be circulated as a formal document. 
 
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Introduction 
 
 The Separate Customs Territory of Taiwan , Penghu, Kinmen and Matsu welcomes the Paper 
submitted by the European Communities with respect to Countervailing Measures.
1  The EC Paper 
proposes to modify the ASCM regarding various issu es.  The Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu would like to make the following comments and proposal thereon:2 
 
1. Facts available 
 
(a) Explanation   Article 12.7 ASCM provides that “ in case in which any interested Member or any interested 
party refuses access to, or otherwise does not pr ovide, necessary informa tion within a reasonable 
period or significantly impedes the investigation, preliminary and final determinations, affirmative or 
negative, may be made on the basis of the facts available .”  However, as correctly pointed out by the 
EC, the ASCM does not contain any further discip line on the use of facts available and therefore 
proposes to introduce rules regulating the use of f acts available similar to the ones included in 
Annex II of the ADA. 
  In Mexico – Definitive Anti-Dumping Measures on Beef and Rice , which was decided and 
adopted after the EC submitted its proposal, the Appe llate Body noted that even if there was no such 
detailed rule in the ASCM, “it would be anomalous if Article 12.7 of the SCM Agreement were to 
permit the use of "facts available" in counter vailing duty investigations in a manner markedly 
different from that in anti-dumping investigations.”
3  
                                                      
1 TN/RL/GEN/74.  
2 The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu reserves the right to submit 
further contributions on the issues discussed in this Paper and on other issues of the ASCM. 
3 Mexico – Definitive Anti-Dumping Measures on Beef and Rice , Appellate Body Report, 
WT/DS295/AB/R, 29 November 2005, para. 295. TN/RL/GEN/96 
Page 2  
 
   
(b) Comments and Proposals 
 While the Separate Customs Territory of Taiw an, Penghu, Kinmen and Matsu considers that 
the finding of the Appellate Body in the foregoing case is welcome as it establishes that, despite the 
absence of detailed provisions in the ASCM, the use of facts available in countervailing investigations 
should not be markedly different from the use of f acts available in anti-dumping investigations, it still 
considers that introducing further discipline con cerning the use of facts available would introduce 
more certainty for all concerned parties.  In that  respect, the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu considers that Annex II of  the ADA could form an adequate basis even if 
it appears necessary to amend these provisions in or der to take into account the specificities of 
countervailing investigations and to avoid the side effects created by the Annex II.  Toward this end, 
the rules as proposed in a Paper submitted regard ing “facts available” in the framework of the ADA
4 
should also be considered.  2. Sunset reviews 
 
(a) Explanation   Article 21.3 ASCM provides that any definitiv e countervailing duty shall be terminated not 
later than five years from its imposition, unless the au thorities determine, in a sunset review, that the 
expiry of the duty would be likely to lead to cont inuation or recurrence of subsidization and injury. 
 (b) Comments and Proposal   In its Proposal, the EC argues that the concepts  of “continuation” and “recurrence” need to be 
specifically defined for application under the ASCM.  In particular, the EC argues that it is frequent 
that subsidies have a predetermined period of validity  or a period of validity attributed to it by the 
investigating authorities. In such cases, specific account  should be taken of such allocation periods in 
any sunset review.   
The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu  has the following 
comments in this respect: 
 -  First of all, it may not always be obvious to  predetermine the period of validity of a subsidy 
since subsidies are often complex schemes. 
 
-  Second, even though the authorities may ha ve enacted a specific subsidy scheme for a 
predetermined period, the act may be amended in  such a way that the validity period of this 
subsidy mechanism is le ngthened or shortened. 
 -  Third, the modification proposed by the EC could be interpreted as if meaning that any 
definitive countervailing duty shall be terminated  EITHER not later than five years OR in 
cases where it has been found that the subsidy expires after or has been allocated over a 
certain period of time, at the end of the said period of time.  This would maybe imply that the countervailing duty could be left in place w ithout any review being undertaken even after 
5 years in case it would have been established in  the initial investigation that the subsidy 
would expire, e.g., after 8 years.  In addition, it is not clear whether the EC proposes that the 
period of validity of a subsidy should be take n into account in the framework of the sunset 
review in order to determine whether there is  likelihood of continuation or recurrence of 
subsidisation or whether the countervailing measu res should stop when the period of validity 
                                                     
 
4 TN/RL/GEN/64  TN/RL/GEN/96 
 Page 3 
 
 
  of the subsidy is terminated.  The Separate  Customs Territory of Taiwan, Penghu, Kinmen 
and Matsu  therefore considers it necessary to  propose the following new language to be 
added to the end of the current Article 21.3:5 
 
 In order to determine whether there is likelihood of continuation or recurrence 
of subsidization in the framework of paragraphs 2 and 3, the investigating 
authorities shall take into account the p eriod of validity of the subsidy which led 
to the imposition of the initial measures. In particular, if  during an investigation 
under Article 11 or a review under paragraph 2 of this Article, it was found that the subsidy expires after, or has been allocated over a certain time period, 
measures should be terminated or amended once the end of such period has been 
reached.  
 
3. Sampling 
 (a) Explanation 
 
The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu supports the proposal 
made by the EC to include in the ASCM a specifi c provision stating that the authorities should, as a 
rule, determine an individual margin of subsid ization for each known exporter or producer.  A 
weighted average margin of subsidization would only be used in case the number of such known 
exporters or producers is so large that it w ould make such individual margin determination 
impracticable.   The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu considers that the 
introduction of a provision similar to the one included  in Article 6.10 ADA is a good solution.  In that 
respect, the Separate Customs Territory of Taiwan , Penghu, Kinmen and Matsu considers that it is 
important to include a provision similar to Ar ticle 6.10.2 ADA which strongly encourages authorities 
to accept companies’ voluntary submissions to get an individual margin, permitting the authorities to 
disregard such submissions only if it is impracticab le in the light of the number of other companies 
examined. 
 
 As regards the level of duty , the EC suggests that, in case of sampling, the countervailing duty 
to be applied to the imported product corresponds to  the “weighted average margin of subsidization 
established with respect to the sel ected exporters or producers”.  Th e weighted average margin of 
subsidization would thus be applicable for those pa rties which are not included in the sample as well 
as for those parties which are included in the samp le.  The Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu , however, considers it is  important that companies, involved in the 
sample, keep the possibility to have their individual level of countervailing duty applied. Indeed, it 
appears that not all subsidy programmes are necess arily widely available and that, as a result, the 
subsidisation margins may vary largely between se veral producers.  Applying an average duty would 
not reflect the differences which may exist betwee n such producers and would actually benefit to 
those exporters who are the largest beneficiaries of the subsidy. 
 
 Finally, The Separate Customs Territory of  Taiwan, Penghu, Kinmen and Matsu  considers 
that a new provision should mirror Article 9.4 ADA.   
 
                                                     
 
5 The amendment aimed to address the particular issue of period of validity of subsidy and its 
relationship with the review under this subparagraph.  We reserve the right to express our view on the whole 
sunset review provision in the future. TN/RL/GEN/96 
Page 4  
 
  (b) Proposal 
  Include the following new provisions:  1. The authorities shall, as a rule, determine an  individual margin of subsidisation for each 
known exporter or producer concerned of the pr oduct under investigation.  In cases where the 
number of exporters, producers, im porters or types of products involved is so large as to make 
such a determination impracticable, the authorities may limit their examination either to a reasonable number of interested parties or pr oducts by using samples which are statistically 
valid on the basis of information available to the authorities at the time of the selection, or to 
the largest percentage of the volume of the e xports from the country in question which can 
reasonably be investigated. 
 
• Any selection of exporters, producers, importe rs or type of products made under this 
paragraph shall preferably be chosen in c onsultation with and with the consent of the 
exporters, producers or importers concerned. 
 
• In cases where the authorities have limited th eir examination, as provided for in this 
paragraph, they shall nevertheless determine an  individual margin of subsidization for any 
exporter or producer not initially selected who submits the necessary information in time for that information to be considered during the course of the investigation, except where the 
number of exporters or producers is so large that individual examinations would be unduly 
burdensome to the authorities and prevent the timely completion of the investigation. 
Voluntary responses shall not be discouraged. 
 2. When the authorities have limited their ex amination in accordance with [the sampling 
provision], the countervailing duty applied to  imports from exporters or producers not 
included in the examination shall not exceed th e weighted average margin of subsidization 
established with respect to the selected exporters or producers. 
 
The authorities shall apply individual duties to  imports from any exporter or producer not 
included in the examination who has provided th e necessary information during the course of the 
investigation and was granted individual treatment , as provided for in [the sampling provision].  
4. New shipper reviews 
 
(a) Explanation   Article 19.3 of the ASCM provides that “ any exporter whose exports are subject to a 
definitive countervailing duty but who was not actually  investigated for reasons other than a refusal 
to cooperate, shall be entitled to an expedited review in order that the investigating authorities 
promptly establish an individual countervailing duty rate for that exporter .”  The language of this 
provision is substantially less detailed than its counterpart in Article 9.5 of the ADA. 
  While The Separate Customs Territory of Ta iwan, Penghu, Kinmen and Matsu  agrees that 
there may be some ground to further elaborate on th e conditions in which a new exporter is entitled to 
request a new shipper review, such conditions need to  be balanced.  In particular, while it may be 
legitimate to require evidence that the new exporter which requests the review has actually started to 
export after the period of investigation, it seems exce ssive to require evidence that such exports have 
been made in substantive quantities . 
  TN/RL/GEN/96 
 Page 5 
 
 
  The EC proposes a fast-track system for “new exporters” according to which the individual 
margin of subsidization of the ne w exporters will automatically corr espond to the weighted average of 
the margins established for the investigated producer s.  While The Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu  considers that it may be relevant to introduce a fast track new 
shipper review system resulting in an average c ountervailing duty being imposed, in order to avoid 
the burdens of an investigation, this should onl y constitute an alternative solution as each exporter 
should keep the right to ask for an individual examination and the imposition of an individual countervailing duty irrespective of whether or not sampling was used.  (b) Proposal 
 
 To include a new provision as follows:  1. Any exporter whose exports are subject to a definitive countervailing duty but who was not 
actually investigated for reasons other than a refusal to cooperate, shall be entitled to an 
expedited review in order that the investiga ting authorities promptly establish an individual 
countervailing duty rate for that exporter, provided that this exporter or producer can show 
that it is not related to any of the exporter s or producers in the exporting country who are 
subject to the countervailing duties on the produc t and provided that it has exported or has 
committed to export the product concerned to the importing Member after the period of 
investigation. 
 
2. Such a review shall be initiated and carried out on an accelerated basis, compared to normal 
duty assessment and review proceedings in th e importing Member.  No countervailing duties 
shall be levied on imports from such exporters or  producers while the review is being carried 
out.  The authorities may, however, withhold appraisement and/or request guarantees to 
ensure that, should such a review result in a dete rmination of subsidization in respect of such 
producers or exporters, countervailing duties can be  levied retroactively to the date of the 
initiation of the review. 
 3. Upon simple request of the producer or expor ter referred to in paragraphs 1 and 2, the 
individual margin of subsidization shall corr espond to the weighted average of the margins 
established for investigated producers. 
 
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