WORLD TRADE G/SCM/N/1/EEC/2
19January 1998
ORGANIZATION(98-0162)
Committee onSubsidies Original: English/
andCountervailing Measures French/
Spanish
NOTIFICATION OFLAWS AND REGULATIONS
UNDER ARTICLE 32.6OFTHE AGREEMENT
EUROPEAN COMMUNITIES
Thefollowing communication, dated 17December 1997, hasbeenreceived fromthePermanent
Delegation oftheEuropean Commission.
_______________
Pursuant totheCommunity 'sobligation tonotify itsrelevant lawsandregulations under the
captioned provisions, Iampleased toattach copies inthree WTO official languages of:
- Council Regulation (EC) No.2026/97 of6December 1997 onprotection against
subsidized imports from countries notmembers oftheEuropean Community which
waspublishedintheOfficialJournaloftheEuropeanCommunitieson21October1997.
Please noteforeaseofreference, thatRegulation 2026/97 replaces Council Regulation
(EC)No.3284/94 which wasnotified totheWTO on19March 1995andcirculated toMembers under
codeG/SCM/N/1/EEC/1.G/SCM/N/1/EEC/2
Page2
COUNCIL REGULATION (EC) No.2026/97
of6October 1997
onprotection against subsidized imports from countries notmembers ofthe
European Community
THE COUNCIL OFTHE EUROPEAN UNION,
Having regard totheTreaty establishing theEuropean Community, andinparticular Article 113
thereof,
Having regard totheRegulations establishing thecommon organization ofagricultural markets
andtheRegulations adopted pursuant toArticle 235oftheTreaty applicable togoods manufactured
from agricultural products, andinparticular theprovisions ofthose Regulations which allow for
derogation fromthegeneral principle thatprotective measures atfrontiers maybereplaced solely by
themeasures provided forinthose Regulations,
Having regard totheproposal from theCommission1,
(1) Whereas, byRegulation (EEC) No2423/882,theCouncil adopted common rulesforprotection
against dumped orsubsidized imports fromcountries which arenotmembers oftheEuropean
Community;
(2) Whereas those rules were adopted inaccordance withexisting international obligations, in
particular those arising fromArticle VIoftheGeneral Agreement onTariffs andTrade ('the
GATT '),from theAgreement onImplementation ofArticle VIoftheGATT ('the1979
Anti-Dumping Code')andfromtheAgreement onInterpretation andApplication ofArticles VI,
XVIandXXIII oftheGATT (Code onSubsidies andCountervailing Duties);
(3) Whereas theconclusion oftheUruguay Round ofmultilateral trade negotiations hasledto
theestablishment oftheWorld Trade Organization ('theWTO ');
(4) Whereas Annex 1AtotheAgreement establishing theWTO ('theWTO Agreement '),approved
byDecision 94/800/EC3,contains, interalia,theGeneral Agreement onTariffs andTrade 1994
('theGATT 1994'),anAgreement onAgriculture ('theAgreement onAgriculture '),an
Agreement onimplementation ofArticle VIoftheGATT 1994 (hereinafter referred toas
'the1994Anti-Dumping Agreement ')andanewAgreement onSubsidies andCountervailing
Measures ('theSubsidies Agreement ');
(5) Whereas, inorder toreach greater transparency andeffectiveness intheapplication bythe
Community oftherules laiddown inthe1994 Anti-Dumping Agreement andtheSubsidies
Agreement respectively, itisconsidered necessary toadopt twoseparate Regulations which
willlaydown insufficient detail therequirements fortheapplication ofeachofthesecommercial
defence instruments;
1OJC99,26.3.1997, p.1.
2OJL209,2.8.1988, p.1. Regulation aslastamended byRegulation (EC) No.522/94 (OJL66,10.3.1994, p.10).
3OJL336, 23.12.1994, p.1.G/SCM/N/1/EEC/2
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(6) Whereas itistherefore appropriate toamend Community rules governing theapplication of
countervailing measures inthelightofthenewmultilateral rules, withregard interaliatothe
procedures forinitiation ofproceedings andtheconduct ofsubsequent investigations, including
theestablishment andtreatment ofthefacts, theimposition ofprovisional measures, the
imposition andcollection ofcountervailing duties, theduration andreview ofcountervailing
measures, andthepublic disclosure ofinformation relating tocountervailing investigations;
(7) Whereas, inviewoftheextent ofthechanges brought about bythenewAgreements andto
ensureanadequateandtransparentimplementationofthenewrules,itisappropriatetotranspose
thelanguage ofthenewAgreements intoCommunity legislation totheextent possible;
(8) Whereas, furthermore, itseems advisable toexplain, inadequate detail, when asubsidy shall
bedeemed toexist, according towhich principles itshall becountervailable (inparticular
whether thesubsidy hasbeengranted specifically), andaccording towhich criteria theamount
ofthecountervailable subsidy istobecalculated;
(9) Whereas, indetermining theexistence ofasubsidy, itisnecessary todemonstrate thatthere
hasbeenafinancial contribution byagovernment oranypublic body within theterritory of
acountry, orthatthere hasbeensome form ofincome orprice support within themeaning
ofArticle XVIoftheGATT 1994, andthatabenefit hasthereby beenconferred ontherecipient
enterprise;
(10) Whereas itisnecessary toexplain insufficient detail which kind ofsubsidies arenot
countervailableandwhichprocedureshallbefollowedif,duringaninvestigation,itisdetermined
thatanenterprise undergoing investigation hasreceived non-countervailable subsidies;
(11) Whereas theSubsidies Agreement states thattheprovisions concerning non-countervailable
subsidies shallcease toapply fiveyears afterthedateofentryintoforceoftheWTO Agreement,
unless theyareextended bymutual agreement ofthemembers oftheWTO; whereas itmay
therefore benecessary toamend thisRegulation accordingly ifthevalidity ofthose provisions
isnotsoextended;
(12) Whereas themeasures listed inAnnex 2totheAgreement onAgriculture are
non-countervailable, totheextent provided forinthatAgreement;
(13) Whereas itisdesirable tolaydown clear anddetailed guidance astothefactors which may
berelevant forthedetermination ofwhether thesubsidized imports havecaused material injury
orarethreatening tocause injury; whereas, indemonstrating thatthevolume andpricelevels
oftheimportsconcernedareresponsibleforinjurysustainedbyaCommunityindustry,attention
should begiven totheeffect ofother factors andinparticular prevailing market conditions
intheCommunity;
(14) Whereas itisadvisable todefine theterm'Community industry 'andtoprovide thatparties
related toexporters maybeexcluded from suchindustry, andtodefine theterm'related ';
whereas itisalsonecessary toprovide forcountervailing dutyaction tobetaken onbehalf
ofproducers inaregion oftheCommunity andtolaydown guidelines onthedefinition of
suchregion;
(15) Whereas itisnecessary tolaydown whomaylodge acountervailing dutycomplaint, including
theextent towhich itshould besupported bytheCommunity industry, andtheinformation
oncountervailablesubsidies,injuryandcausationwhichsuchcomplaintshouldcontain;whereasG/SCM/N/1/EEC/2
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itisalsoexpedient tospecify theprocedures fortherejection ofcomplaints ortheinitiation
ofproceedings;
(16) Whereas itisnecessary tolaydown themanner inwhich interested parties should begiven
notice oftheinformation which theauthorities require, andshould haveample opportunity
topresent allrelevant evidence andtodefend theirinterests; whereas itisalsodesirable to
setoutclearly therulesandprocedures tobefollowed during theinvestigation, inparticular
therules whereby interested parties aretomake themselves known, present theirviews and
submit information within specified timelimits, ifsuchviews andinformation aretobetaken
intoaccount; whereas itisalsoappropriate tosetouttheconditions under which aninterested
party mayhaveaccess to,andcomment on,information presented byother interested parties;
whereas there should alsobecooperation between theMember States andtheCommission in
thecollection ofinformation;
(17) Whereas itisnecessary tolaydown theconditions under which provisional duties maybe
imposed, including conditions whereby theymaybeimposed noearlier than60daysfrom
initiation andnotlaterthanninemonths thereafter; whereas suchduties mayinallcases be
imposed bytheCommission onlyforafour-month period;
(18) Whereas itisnecessary tospecify procedures fortheacceptance ofundertakings eliminating
oroffsetting thecountervailable subsidies andinjury inlieuoftheimposition ofprovisional
ordefinitive duties; whereas itisalsoappropriate tolaydown theconsequences ofbreach or
withdrawal ofundertakings andthatprovisional duties maybeimposed incases ofsuspected
violation orwhere further investigation isnecessary tosupplement thefindings; whereas, in
accepting undertakings, careshould betaken thattheproposed undertakings, andtheir
enforcement, donotleadtoanti-competitive behaviour;
(19) Whereas itisnecessary toprovide thatthetermination ofcases should, irrespective ofwhether
definitive measures areadopted ornot,normally takeplace within 12months, andinnocase
laterthan13months, from theinitiation oftheinvestigation;
(20) Whereasaninvestigationorproceedingshouldbeterminatedwhenevertheamountofthesubsidy
isfound tobedeminimis orif,particularly inthecaseofimports originating indeveloping
countries, thevolume ofsubsidized imports ortheinjury isnegligible, anditisappropriate
todefine those criteria; whereas, where measures aretobeimposed, itisnecessary toprovide
forthetermination ofinvestigations andtolaydown thatmeasures should belessthanthe
amount ofcountervailable subsidies ifsuchlesser amount would remove theinjury, andalso
tospecify themethod ofcalculating thelevelofmeasures incases ofsampling;
(21) Whereas itisnecessary toprovide fortheretroactive collection ofprovisional duties ifthat
isdeemed appropriate andtodefine thecircumstances which maytrigger theretroactive
application ofduties inorder toavoid theundermining ofthedefinitive measures tobeapplied;
whereas itisalsonecessary toprovide thatduties maybeapplied retroactively incasesofbreach
orwithdrawal ofundertakings;
(22) Whereas itisnecessary toprovide thatmeasures aretolapse afterfiveyears unless areview
indicates thattheyshould bemaintained; whereas itisalsonecessary toprovide, incases where
sufficient evidence issubmitted ofchanged circumstances, forinterim reviews orfor
investigations todetermine whether refunds ofcountervailing duties arewarranted;
(23) Whereas, even though theSubsidies Agreement does notcontain provisions concerning
circumvention ofcountervailing measures, thepossibility ofsuchcircumvention exists, intermsG/SCM/N/1/EEC/2
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similar, albeit notidentical, tothecircumvention ofanti-dumping measures; whereas itappears
therefore appropriate toenact ananti-circumvention provision inthisRegulation;
(24) Whereas itisexpedient topermit thesuspension ofcountervailing measures where there is
atemporarychangeinmarketconditionswhichmakesthecontinuedimpositionofsuchmeasures
temporarily inappropriate;
(25) Whereas itisnecessary toprovide thatimports under investigation maybemade subject to
registration upon importation inorder toenable measures tobesubsequently applied against
suchimports;
(26) Whereas, inorder toensure proper enforcement ofmeasures, itisnecessary thatMember States
monitor, andreport totheCommission, theimport trade inproducts subject toinvestigation
orsubject tomeasures, andalsotheamount ofduties collected under thisRegulation;
(27) Whereas itisnecessary toprovide forconsultation ofanAdvisory Committee atregular and
specified stages oftheinvestigation; whereas theCommittee should consist ofrepresentatives
ofMember States witharepresentative oftheCommission aschairman;
(28) Whereas itisexpedient toprovide forverification visits tocheck information submitted on
countervailable subsidies andinjury, suchvisits being, however, conditional onproper replies
toquestionnaires being received;
(29) Whereas itisessential toprovide forsampling incases where thenumber ofparties or
transactions islargeinorder topermit completion ofinvestigations within theappointed time
limits;
(30) Whereas, itisnecessary toprovide that,where parties donotcooperate satisfactorily, other
information maybeusedtoestablish findings andthatsuchinformation maybelessfavourable
totheparties thaniftheyhadcooperated;
(31) Whereas provision should bemade forthetreatment ofconfidential information sothatbusiness
orgovernmental secrets arenotdivulged;
(32) Whereas itisessential thatprovision bemade forproper disclosure ofessential factsand
considerations toparties which qualify forsuchtreatment andthatsuchdisclosure bemade,
withdueregard tothedecision-making process intheCommunity, within atimeperiod which
permits parties todefend theirinterests;
(33) Whereas itisprudent toprovide foranadministrative system under which arguments canbe
presented astowhether measures areintheCommunity interest, including theinterests of
consumers, andtolaydown thetimeperiods within which suchinformation hastobepresented,
together withthedisclosure rights oftheparties concerned;
(34) Whereas inapplying therulesoftheSubsidies Agreement itisessential, inorder tomaintain
thebalance ofrights andobligations which thisAgreement sought toestablish, thatthe
Community takeaccount oftheirinterpretation bytheCommunity 'smajor trading partners,
asreflected inlegislation orestablished practice;G/SCM/N/1/EEC/2
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(35) Whereas,byRegulation(EC)No3284/94of22December1994onprotectionagainstsubsidized
imports from countries notmembers oftheEuropean Community4,theCouncil replaced
Regulation(EEC)No2423/88andinstitutedanewcommonsystemofdefenceagainstsubsidized
imports from countries notmembers oftheEuropean Community;
(36) Whereas drafting problems inthetextofRegulation (EC) No3284/94 became apparent on
publication; whereas, moreover, theRegulation hasalready beenamended;
(37) Whereas, intheinterests ofclarity, transparency andlegalcertainty, thatRegulation should
therefore berepealed andreplaced, without prejudice tothecountervailing proceedings already
initiated under itorunder Regulation (EEC) No2423/88,
HAS ADOPTED THIS REGULATION:
Article 1
Principles
1. Acountervailing dutymaybeimposed forthepurpose ofoffsetting anysubsidy granted, directly
orindirectly, forthemanufacture, production, export ortransport ofanyproduct whose release for
freecirculation intheCommunity causes injury.
2. Forthepurpose ofthisRegulation, aproduct isconsidered tobesubsidized ifitbenefits from
acountervailable subsidy asdefined inArticles 2and3.
3. Suchsubsidymaybegrantedbythegovernmentofthecountryoforiginoftheimportedproduct,
orbythegovernment ofanintermediate country fromwhich theproduct isexported totheCommunity,
known forthepurpose ofthisRegulation as'thecountry ofexport '.
Theterm'government 'isdefined, forthepurposes ofthisRegulation asagovernment orany
public body within theterritory ofthecountry oforigin orexport.
4. Notwithstanding paragraphs 1,2and3,where products arenotdirectly imported from the
country oforigin butareexported totheCommunity from anintermediate country, theprovisions
ofthisRegulation shallbefullyapplicable andthetransaction ortransactions shall, where appropriate,
beregarded ashaving taken place between thecountry oforigin andtheCommunity.
5. Forthepurpose ofthisRegulation theterm'likeproduct 'shallbeinterpreted tomean aproduct
which isidentical, thatistosay,alikeinallrespects, totheproduct under consideration, orinthe
absence ofsuchaproduct, another product which although notalikeinallrespects, hascharacteristics
closely resembling those oftheproduct under consideration.
Article 2
Definition ofasubsidy
Asubsidy shallbedeemed toexistif:
1. (a) there isafinancial contribution byagovernment inthecountry oforigin orexport,
thatistosay,where:
4OJL349,31.12.1994, p.22. Regulation asamended byRegulation (EC) No.1252/95 (OJL122,2.6.1995, p.2).G/SCM/N/1/EEC/2
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(i) agovernment practice involves adirect transfer offunds (forexample, grants,
loans, equity infusion), potential direct transfers offunds orliabilities (for
example, loanguarantees);
(ii) government revenue thatisotherwise dueisforgone ornotcollected (for
example, fiscal incentives suchastaxcredits); inthisregard, theexemption
ofanexported product from duties ortaxes borne bythelikeproduct when
destined fordomestic consumption, ortheremission ofsuchduties ortaxes
inamounts notinexcess ofthose which havebeenaccrued, shallnotbedeemed
tobeasubsidy, provided thatsuchanexemption isgranted inaccordance with
theprovisions ofAnnexes ItoIII;
(iii) agovernment provides goods orservices other thangeneral infrastructure,
orpurchases goods;
(iv) agovernment:
- makes payments toafunding mechanism; or
- entrusts ordirects aprivate bodytocarry outoneormore ofthetype
offunctions illustrated inpoints (i),(ii)and(iii)which would normally
bevested inthegovernment, andthepractice, innorealsense, differs
from practices normally followed bygovernments; or
(b) there isanyform ofincome orprice support within themeaning ofArticle XVIof
theGATT 1994; and
2. abenefit isthereby conferred.
Article 3
Countervailable subsidies
1. Subsidies shallbesubject tocountervailing measures onlyiftheyarespecific, asdefined in
paragraphs 2,3and4.
2. Inorder todetermine whether asubsidy isspecific toanenterprise orindustry orgroup of
enterprises orindustries (hereinafter referred toas'certain enterprises ')within thejurisdiction ofthe
granting authority, thefollowing principles shallapply:
(a) where thegranting authority, orthelegislation pursuant towhich thegranting authority
operates, explicitly limits access toasubsidy tocertain enterprises, suchsubsidy shall
bespecific;
(b) where thegranting authority, orthelegislation pursuant towhich thegranting authority
operates, establishes objective criteria orconditions governing theeligibility for,and
theamount of,asubsidy, specificity shallnotexist, provided thattheeligibility is
automatic andthatsuchcriteria andconditions arestrictly adhered to.
Forthepurpose ofthisArticle, objective criteria orconditions mean criteria or
conditions which areneutral, which donotfavour certain enterprises overothers, andG/SCM/N/1/EEC/2
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which areeconomic innature andhorizontal inapplication, such asnumber of
employees orsizeofenterprise.
Thecriteria orconditions mustbeclearly setoutbylaw,regulation, orother official
document, soastobecapable ofverification;
(c) if,notwithstanding anyappearance ofnon-specificity resulting from theapplication
oftheprinciples laiddown insubparagraphs (a)and(b),there arereasons tobelieve
thatthesubsidy mayinfactbespecific, other factors maybeconsidered. Suchfactors
are:useofasubsidyprogrammebyalimitednumberofcertainenterprises;predominant
usebycertain enterprises; thegranting ofdisproportionately largeamounts ofsubsidy
tocertain enterprises; andthemanner inwhich discretion hasbeenexercised bythe
granting authority inthedecision togrant asubsidy. Inthisregard, information on
thefrequency withwhich applications forasubsidy arerefused orapproved andthe
reasons forsuchdecisions shall, inparticular, beconsidered.
Inapplying thefirstsubparagraph, account shallbetaken oftheextent ofdiversification of
economic activities within thejurisdiction ofthegranting authority, aswellasofthelength oftime
during which thesubsidy programme hasbeeninoperation.
3. Asubsidy which islimited tocertain enterprises located within adesignated geographical region
within thejurisdiction ofthegranting authority shallbespecific. Thesetting orchanging ofgenerally
applicable taxratesbyalllevels ofgovernment entitled todososhallnotbedeemed tobeaspecific
subsidy forthepurposes ofthisRegulation.
4. Notwithstanding paragraphs 2and3,thefollowing subsidies shallbedeemed tobespecific:
(a) subsidies contingent, inlaworinfact,whether solely orasoneofseveral other
conditions, upon export performance, including those illustrated inAnnex I.
Subsidies shallbeconsidered tobecontingent infactuponexport performance when
thefactsdemonstrate thatthegranting ofasubsidy, without having beenmade legally
contingent uponexport performance, isinfacttiedtoactual oranticipated exportation
orexport earnings. Themerefactthatasubsidy isaccorded toenterprises which export
shallnotforthatreason alone beconsidered tobeanexport subsidy within themeaning
ofthisprovision;
(b) subsidies contingent, whether solely orasoneofseveral other conditions, upon the
useofdomestic overimported goods.
5. AnydeterminationofspecificityundertheprovisionsofthisArticleshallbeclearlysubstantiated
onthebasis ofpositive evidence.
Article 4
Non-countervailable subsidies
1. Thefollowing subsidies shallnotbesubjected tocountervailing measures:
(a) subsidies which arenotspecific within themeaning ofArticle 3(2)and(3);G/SCM/N/1/EEC/2
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(b) subsidies which arespecific, within themeaning ofArticle 3(2)and(3),butwhich
meettheconditions provided forinparagraphs 2,3or4ofthisArticle;
(c) theelement ofsubsidy which mayexistinanyofthemeasures listed inAnnex IV.
2. Subsidies forresearch activities conducted byfirms orbyhigher education orresearch
establishments onacontract basis withfirms shallnotbesubject tocountervailing measures, ifthe
subsidies cover notmore than75percentofthecostsofindustrial research or50percentofthecosts
ofpre-competitive development activity, andprovided thatsuchsubsidies arelimited exclusively to:
(a) personnelcosts(researchers,techniciansandothersupportingstaffemployedexclusively
intheresearch activity);
(b) costsofinstruments, equipment, landandbuildings usedexclusively andpermanently
(except when disposed ofonacommercial basis) fortheresearch activity;
(c) costsofconsultancy andequivalent services usedexclusively fortheresearch activity,
including bought-in research, technical knowledge, patents, etc.;
(d) additional overhead costs incurred directly asaresult oftheresearch activity;
(e) other running costs(such asthose ofmaterials, supplies andthelike), incurred directly
asaresult oftheresearch activity.
Thefirstsubparagraph shallnotapply tocivilaircraft (asdefined inthe1979 Agreement on
Trade inCivilAircraft, asamended, orinanylaterAgreement amending orreplacing suchAgreement).
Forthepurpose ofthefirstsubparagraph:
(a) theallowable levels ofnon-countervailable subsidy shallbeestablished byreference
tothetotaleligible costs incurred overtheduration ofanindividual project.
Inthecaseofprogrammes which spanboth'industrial research 'and'pre-competitive
developmentactivity',theallowablelevelofnon-countervailablesubsidyshallnotexceed
thesimple average oftheallowable levels ofnon-countervailable subsidy applicable
totheabove twocategories, calculated onthebasis ofalleligible costs assetforth
inpoints (a)to(e)ofthefirstsubparagraph;
(b) theterm'industrial research 'means planned search orcritical investigation aimed at
discovery ofnewknowledge, withtheobjective thatsuchknowledge maybeuseful
indeveloping newproducts, processes orservices, orinbringing about asignificant
improvement toexisting products, processes orservices;
(c) theterm'pre-competitive development activity 'means thetranslation ofindustrial
research findings intoaplan, blueprint ordesign fornew, modified orimproved
products, processes orservices, whether intended forsaleorforuse,including the
creation ofafirstprototype which would notbecapable ofcommercial use.Itmay
further include theconceptual formulation anddesign ofproducts, processes orservices
alternatives andinitial demonstration orpilotprojects, provided thatthesesameprojects
cannot beconverted orusedforindustrial application orcommercial exploitation. It
doesnotinclude routine orperiodic alterations toexisting products, production lines,G/SCM/N/1/EEC/2
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manufacturing process, services, andother ongoing operations even though those
alterations mayrepresent improvements.
3. Subsidies todisadvantaged regions within theterritory ofthecountry oforigin and/or export,
given pursuant toageneral framework ofregional development, which would benon-specific ifthe
criteria laiddown inArticle 3(2)and(3)were applied toeacheligible region concerned, shallnot
besubject tocountervailing measures, provided that:
(a) eachdisadvantaged region isaclearly designated contiguous geographical areawith
adefinable economic andadministrative identity;
(b) theregion isregarded asdisadvantaged onthebasis ofneutral andobjective criteria,
indicating thattheregion 'sdifficulties ariseoutofmore thantemporary circumstances;
suchcriteria mustbeclearly spelled outbylaw,regulation, orother official document,
soastobecapable ofverification;
(c) thecriteria mentioned under (b)include ameasurement ofeconomic development which
shallbebased onatleastoneofthefollowing factors:
- either income percapita, orhousehold income percapita, orGDP percapita,
which must notbeabove 85percentoftheaverage fortheterritory ofthe
country oforigin orexport concerned,
- unemployment rate,which must beatleast110percentoftheaverage for
theterritory ofthecountry oforigin orexport concerned;
asmeasured overathree-year period; suchmeasurement, however, maybeacomposite
oneandmayinclude other factors.
Forthepurpose ofthefirstsubparagraph:
(a) a'generalframeworkofregionaldevelopment'meansthatregionalsubsidyprogrammes
arepartofaninternally consistent andgenerally applicable regional development policy
andthatregional development subsidies arenotgranted inisolated geographical points
having no,orvirtually no,influence onthedevelopment ofaregion;
(b) 'neutralandobjectivecriteria'meanscriteriawhichdonotfavourcertainregionsbeyond
whatisappropriate fortheelimination orreduction ofregional disparities within the
framework oftheregional development policy. Inthisregard, regional subsidy
programmes shallinclude ceilings ontheamount ofsubsidy which canbegranted to
eachsubsidized project. Suchceilings mustbedifferentiated according tothedifferent
levels ofdevelopment ofeligible regions andmustbeexpressed interms ofinvestment
costsorthecostofjobcreation. Within suchceilings, thedistribution ofsubsidy shall
besufficiently broad andeventoavoid thepredominant useofasubsidy by,orthe
granting ofdisproportionately large amounts ofsubsidy to,certain enterprises.
Thisprovision shallbeapplied inthelightofthecriteria setoutinArticle 3(2)and(3).
4. Subsidiestopromoteadaptationofexistingfacilitiestonewenvironmentalrequirementsimposed
bylawand/or regulation which result ingreater constraints andfinancial burden onfirms shallnot
besubject tocountervailing measures, provided thatthesubsidy:G/SCM/N/1/EEC/2
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(a) isaone-off non-recurring measure; and
(b) islimited to20percentofthecostofadaptation; and
(c) doesnotcover thecostofreplacing andoperating thesubsidized investment, which
must befullyborne bythefirms; and
(d) isdirectly linked toandproportionate toafirm'splanned reduction ofnuisances and
pollution, anddoesnotcover anymanufacturing costsavings which maybeachieved;
and
(e) isavailabletoallfirmswhichcanadoptthenewequipmentand/orproductionprocesses.
Forthepurpose ofthefirstsubparagraph theterm'existing facilities 'means facilities having
beeninoperation foratleasttwoyears atthetimewhen newenvironmental requirements areimposed.
Article 5
Calculation oftheamount ofthecountervailable subsidy
Theamount ofcountervailable subsidies, forthepurposes ofthisRegulation, shallbecalculated
interms ofthebenefit conferred ontherecipient which isfound toexistduring theinvestigation period
forsubsidization. Normally thisperiod shallbethemost recent accounting yearofthebeneficiary,
butmaybeanyother period ofatleastsixmonths prior totheinitiation oftheinvestigation forwhich
reliable financial andother relevant dataareavailable.
Article 6
Calculation ofbenefit totherecipient
Asregards thecalculation ofbenefit totherecipient, thefollowing rules shallapply:
(a) government provision ofequity capital shallnotbeconsidered toconfer abenefit, unless
theinvestment canberegarded asinconsistent withtheusual investment practice
(including fortheprovision ofriskcapital) ofprivate investors intheterritory ofthe
country oforigin and/or export;
(b) aloanbyagovernment shallnotbeconsidered toconfer abenefit, unless there isa
difference between theamount thatthefirmreceiving theloanpaysonthegovernment
loanandtheamount thatthefirmwould payforacomparable commercial loanwhich
thefirmcould actually obtain onthemarket. Inthatevent thebenefit shall bethe
difference between these twoamounts;
(c) aloanguarantee byagovernment shallnotbeconsidered toconfer abenefit, unless
there isadifference between theamount thatthefirmreceiving theguarantee pays
onaloanguaranteed bythegovernment andtheamount thatthefirmwould payfor
acomparable commercial loanintheabsence ofthegovernment guarantee. Inthis
casethebenefit shallbethedifference between these twoamounts, adjusted forany
differences infees;
(d) theprovision ofgoods orservices orpurchase ofgoods byagovernment shallnot
beconsidered toconfer abenefit, unless theprovision ismade forlessthanadequateG/SCM/N/1/EEC/2
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remuneration orthepurchase ismade formore thanadequate remuneration. The
adequacyofremunerationshallbedeterminedinrelationtoprevailingmarketconditions
fortheproduct orservice inquestion inthecountry ofprovision orpurchase (including
price,quality,availability,marketability,transportationandotherconditionsofpurchase
orsale).
Article 7
General provisions oncalculation
1. Theamountofthecountervailablesubsidiesshallbedeterminedperunitofthesubsidizedproduct
exported totheCommunity.
Inestablishing thisamount thefollowing elements maybededucted from thetotalsubsidy:
(a) anyapplication fee,orother costs necessarily incurred inorder toqualify for,orto
obtain, thesubsidy;
(b) export taxes, duties orother charges levied ontheexport oftheproduct tothe
Community specifically intended tooffset thesubsidy.
Where aninterested party claims adeduction, itmust prove thattheclaim isjustified.
2. Wherethesubsidyisnotgrantedbyreferencetothequantitiesmanufactured,produced,exported
ortransported, theamount ofcountervailable subsidy shallbedetermined byallocating thevalue of
thetotalsubsidy, asappropriate, overthelevelofproduction, salesorexports oftheproducts concerned
during theinvestigation period forsubsidization.
3. Where thesubsidy canbelinked totheacquisition orfuture acquisition offixed assets, the
amount ofthecountervailable subsidy shallbecalculated byspreading thesubsidy across aperiod which
reflects thenormal depreciation ofsuchassets intheindustry concerned. Theamount socalculated
which isattributable totheinvestigation period, including thatwhich derives fromfixedassets acquired
before thisperiod, shallbeallocated asdescribed inparagraph 2.
Where theassets arenon-depreciating, thesubsidy shallbevalued asaninterest-free loan,
andbetreated inaccordance withArticle 6(b).
4. Where asubsidy cannot belinked totheacquisition offixed assets, theamount ofthebenefit
received during theinvestigation period shallinprinciple beattributed tothisperiod, andallocated
asdescribed inparagraph 2,unless special circumstances arisejustifying attribution overadifferent
period.
Article 8
Determination ofinjury
1. Forthepurposes ofthisRegulation, theterm'injury 'shall, unless otherwise specified, betaken
tomean material injury totheCommunity industry, threat ofmaterial injury totheCommunity industry
ormaterial retardation oftheestablishment ofsuchanindustry andshallbeinterpreted inaccordance
withtheprovisions ofthisArticle.G/SCM/N/1/EEC/2
Page13
2. Adetermination ofinjury shallbebased onpositive evidence andshallinvolve anobjective
examination ofboth:
(a) thevolume ofthesubsidized imports andtheeffect ofthesubsidized imports onprices
intheCommunity market forlikeproducts; and
(b) theconsequent impact ofthose imports ontheCommunity industry.
3. Withregard tothevolume ofthesubsidized imports, consideration shallbegiven towhether
there hasbeenasignificant increase insubsidized imports, either inabsolute terms orrelative to
production orconsumption intheCommunity. With regard totheeffect ofthesubsidized imports on
prices, consideration shallbegiven towhether there hasbeensignificant price undercutting bythe
subsidized imports ascompared withthepriceofalikeproduct oftheCommunity industry, orwhether
theeffect ofsuchimports isotherwise todepress prices toasignificant degree orprevent priceincreases
which would otherwise haveoccurred, toasignificant degree. Nooneormore ofthese factors can
necessarily givedecisive guidance.
4. Where imports ofaproduct from more thanonecountry aresimultaneously subject to
countervailing dutyinvestigations, theeffects ofsuchimports shallbecumulatively assessed onlyif
itisdetermined that:
(a) theamount ofcountervailable subsidies established inrelation totheimports fromeach
country ismore thandeminimis asdefined inArticle 14(5)andthatthevolume of
imports from eachcountry isnotnegligible; and
(b) acumulative assessment oftheeffects oftheimports isappropriate inlightofthe
conditions ofcompetition between imported products andtheconditions ofcompetition
between theimported products andthelikeCommunity product.
5. Theexamination oftheimpact ofthesubsidized imports ontheCommunity industry concerned
shallinclude anevaluation ofallrelevant economic factors andindices having abearing onthestate
oftheindustry, including: thefactthatanindustry isstillintheprocess ofrecovering fromtheeffects
ofpastsubsidization ordumping, themagnitude oftheamount ofcountervailable subsidies, actual
andpotential decline insales, profits, output, market share, productivity, return oninvestments,
utilization ofcapacity; factors affecting Community prices; actual andpotential negative effects on
cashflow, inventories, employment, wages, growth, ability toraisecapital orinvestments and,inthe
caseofagriculture, whether there hasbeenanincreased burden ongovernment support programmes.
Thislistisnotexhaustive, norcananyoneormore ofthesefactors necessarily givedecisive guidance.
6. Itmustbedemonstrated, fromalltherelevant evidence presented inrelation toparagraph 2,
thatthesubsidized imports arecausing injury within themeaning ofthisRegulation. Specifically, this
shallentail ademonstration thatthevolume and/or price levels identified pursuant toparagraph 3are
responsible foranimpact ontheCommunity industry asprovided forinparagraph 5,andthatthis
impact exists toadegree which enables ittobeclassified asmaterial.
7. Known factors other thanthesubsidized imports which areinjuring theCommunity industry
atthesametimeshallalsobeexamined toensure thatinjury caused bytheseotherfactors isnotattributed
tothesubsidized imports pursuant toparagraph 6.Factors which maybeconsidered inthisrespect
includethevolumeandpricesofnon-subsidizedimports,contractionindemandorchangesinthepatterns
ofconsumption, restrictive tradepractices of,andcompetition between, thirdcountry andCommunity
producers, developments intechnology andtheexport performance andproductivity oftheCommunity
industry.G/SCM/N/1/EEC/2
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8. Theeffect ofthesubsidized imports shall beassessed inrelation totheproduction ofthe
Community industry ofthelikeproduct when available datapermit theseparate identification ofthat
production onthebasisofsuchcriteria astheproduction process, producers 'salesandprofits. Ifsuch
separate identification ofthatproduction isnotpossible, theeffects ofthesubsidized imports shall
beassessed byexamination oftheproduction ofthenarrowest group orrange ofproducts including
thelikeproduct, forwhich thenecessary information canbeprovided.
9. Adeterminationofathreatofmaterialinjuryshallbebasedonfactsandnotmerelyonallegation,
conjecture orremote possibility. Thechange incircumstances which would create asituation inwhich
thesubsidy would cause injury must beclearly foreseen andimminent.
Inmaking adetermination regarding theexistence ofathreat ofmaterial injury, consideration
should begiven to,interalia,suchfactors as:
(a) thenature ofthesubsidy orsubsidies inquestion andthetrade effects likely toarise
therefrom;
(b) asignificantrateofincreaseofsubsidizedimportsintotheCommunitymarketindicating
thelikelihood ofsubstantially increased imports;
(c) sufficient freely disposable capacity oftheexporter oranimminent substantial increase
insuchcapacity indicating thelikelihood ofsubstantially increased subsidized exports
totheCommunity, account being taken oftheavailability ofother export markets to
absorb anyadditional exports;
(d) whether imports areentering atprices thatwould, toasignificant degree, depress prices
orprevent priceincreases which otherwise would haveoccurred, andwould probably
increase demand forfurther imports; and
(e) inventories oftheproduct being investigated.
Nooneofthefactors listed above byitselfcannecessarily givedecisive guidance butthetotality
ofthefactors considered mustleadtotheconclusion thatfurther subsidized exports areimminent and
that,unless protective action istaken, material injury willoccur.
Article 9
Definition ofCommunity industry
1. Forthepurposes ofthisRegulation, theterm'Community industry 'shallbeinterpreted as
referringtotheCommunityproducersasawholeofthelikeproductsortothoseofthemwhosecollective
output oftheproducts constitutes amajor proportion, asdefined inArticle 10(8),ofthetotalCommunity
production ofthose products, except that:
(a) when producers arerelated totheexporters orimporters orarethemselves importers
oftheallegedly subsidized product, theterm'Community industry 'maybeinterpreted
asreferring totherestoftheproducers;
(b) inexceptional circumstances theterritory oftheCommunity may, fortheproduction
inquestion, bedivided intotwoormore competitive markets andtheproducers within
eachmarket mayberegarded asaseparate industry if:G/SCM/N/1/EEC/2
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(i) theproducers within suchamarket sellalloralmost alloftheirproduction
oftheproduct inquestion inthatmarket, and
(ii) thedemand inthatmarket isnottoanysubstantial degree metbyproducers
oftheproduct inquestion located elsewhere intheCommunity.
Insuchcircumstances, injury maybefound toexistevenwhere amajor portion ofthetotal
Community industry isnotinjured, provided thatthere isaconcentration ofsubsidized imports into
suchanisolated market andprovided further thatthesubsidized imports arecausing injury tothe
producers ofalloralmost alloftheproduction within suchamarket.
2. Forthepurpose ofparagraph 1,producers shallbeconsidered toberelated toexporters or
importers onlyif:
(a) oneofthem directly orindirectly controls theother; or
(b) bothofthem aredirectly orindirectly controlled byathirdperson; or
(c) togethertheydirectlyorindirectlycontrolathirdperson,providedthattherearegrounds
forbelieving orsuspecting thattheeffect oftherelationship issuchastocause the
producer concerned tobehave differently from non-related producers.
Forthepurpose ofthisparagraph, oneshallbedeemed tocontrol another when theformer
islegally oroperationally inaposition toexercise restraint ordirection overthelatter.
3. Where theCommunity industry hasbeeninterpreted asreferring totheproducers inacertain
region, theexporters orthegovernment granting countervailable subsidies shallbegiven anopportunity
toofferundertakings pursuant toArticle 13inrespect oftheregion concerned. Insuchcases, when
evaluating theCommunity interest ofthemeasures, special account shallbetaken oftheinterest of
theregion. Ifanadequate undertaking isnotoffered promptly orifthesituations setoutinArticle 13(9)
and(10)apply, aprovisional ordefinitive countervailing dutymaybeimposed inrespect ofthe
Community asawhole. Insuchcases theduties may, ifpracticable, belimited tospecific producers
orexporters.
4. Theprovisions ofArticle 8(8)shallapply tothisArticle.
Article 10
Initiation ofproceedings
1. Except asprovided forinparagraph 10,aninvestigation todetermine theexistence, degree
andeffect ofanyalleged subsidy shallbeinitiated upon awritten complaint byanynatural orlegal
person, oranyassociation nothaving legalpersonality, acting onbehalf oftheCommunity industry.
Thecomplaint maybesubmitted totheCommission, ortoaMember State, which shallforward
ittotheCommission. TheCommission shallsendMember States acopyofanycomplaint itreceives.
Thecomplaint shallbedeemed tohavebeenlodged onthefirstworking dayfollowing itsdelivery
totheCommission byregistered mail ortheissuing ofanacknowledgement ofreceipt bythe
Commission.G/SCM/N/1/EEC/2
Page16
Where, intheabsence ofanycomplaint, aMember Stateisinpossession ofsufficient evidence
ofsubsidization andofresultant injury totheCommunity industry, itshallimmediately communicate
suchevidence totheCommission.
2. Acomplaint asreferred toinparagraph 1shallinclude sufficient evidence oftheexistence
ofcountervailable subsidies (including, ifpossible, oftheiramount), injury andacausal linkbetween
theallegedly subsidized imports andthealleged injury. Thecomplaint shallcontain suchinformation
asisreasonably available tothecomplainant onthefollowing:
(a) identity ofthecomplainant andadescription ofthevolume andvalue oftheCommunity
production ofthelikeproduct bythecomplainant. Where awritten complaint ismade
onbehalf oftheCommunity industry, thecomplaint shallidentify theindustry onbehalf
ofwhich thecomplaint ismade byalistofallknown Community producers ofthe
likeproduct (orassociations ofCommunity producers ofthelikeproduct) and,tothe
extent possible, adescription ofthevolume andvalue ofCommunity production of
thelikeproduct accounted forbysuchproducers;
(b) acomplete description oftheallegedly subsidized product, thenames ofthecountry
orcountries oforigin and/or export inquestion, theidentity ofeachknown exporter
orforeign producer andalistofknown persons importing theproduct inquestion;
(c) evidence withregard totheexistence, amount, nature andcountervailability ofthe
subsidies inquestion;
(d) information onchanges inthevolume oftheallegedly subsidized imports, theeffect
ofthose imports onprices ofthelikeproduct intheCommunity market andthe
consequent impact oftheimports ontheCommunity industry, asdemonstrated by
relevant factors andindices having abearing onthestateoftheCommunity industry,
suchasthose listed inArticle 8(3)and(5).
3. TheCommission shall, asfaraspossible, examine theaccuracy andadequacy oftheevidence
provided inthecomplaint, inorder todetermine whether there issufficient evidence tojustify the
initiation ofaninvestigation.
4. Aninvestigation maybeinitiated inorder todetermine whether ornotthealleged subsidies
are'specific 'within themeaning ofArticle 3(2)and(3).
5. Aninvestigation mayalsobeinitiated inrespect ofsubsidies which arenon-countervailable
according toArticle 4(2),(3)or(4),inorder todetermine whether ornottheconditions laiddown
inthose paragraphs havebeenmet.
6. Ifasubsidy isgranted pursuant toasubsidy programme which hasbeennotified inadvance
ofitsimplementation totheWTO Committee onSubsidies andCountervailing Measures inaccordance
withArticle 8oftheSubsidies Agreement, andinrespect ofwhich theCommittee hasfailed todetermine
thattherelevant conditions laiddown inArticle 8oftheSubsidies Agreement havenotbeenmet,an
investigation shallnotbeinitiated inrespect ofasubsidy granted pursuant tosuchaprogramme, unless
aninfringement ofArticle 8oftheSubsidies Agreement hasbeenascertained bythecompetent WTO
Dispute Settlement Body orthrough arbitration asprovided inArticle 8(5)oftheSubsidies Agreement.
7. Aninvestigation mayalsobeinitiated inrespect ofmeasures ofthetypelisted inAnnex IV,
totheextent thattheycontain anelement ofsubsidy asdefined byArticle 2,inorder todetermine
whether themeasures inquestion fullyconform totheprovisions ofthatAnnex.G/SCM/N/1/EEC/2
Page17
8. Aninvestigation shallnotbeinitiated pursuant toparagraph 1unless ithasbeendetermined,
onthebasisofanexamination astothedegree ofsupport for,oropposition to,thecomplaint expressed
byCommunity producers ofthelikeproduct, thatthecomplaint hasbenmade byoronbehalf ofthe
Community industry. Thecomplaint shallbeconsidered tohavebeenmade byoronbehalf ofthe
CommunityindustryifitissupportedbythoseCommunityproducerswhosecollectiveoutputconstitutes
more than50percentofthetotalproduction ofthelikeproduct produced bythatportion ofthe
Community industry expressing either support fororopposition tothecomplaint. However, no
investigation shallbeinitiated when Community producers expressly supporting thecomplaint account
forlessthan25percentoftotalproduction ofthelikeproduct produced bytheCommunity industry.
9. Theauthorities shall, unless adecision hasbeenmade toinitiate aninvestigation, avoid any
publicizing ofthecomplaint seeking theinitiation ofaninvestigation. However, assoonaspossible
afterreceipt ofaproperly documented complaint pursuant tothisArticle, andinanyevent before the
initiation ofaninvestigation, theCommission shallnotify thecountry oforigin and/or export concerned,
which shallbeinvited forconsultations withtheaimofclarifying thesituation astomatters referred
toinparagraph 2andarriving atamutually agreed solution.
10. If,inspecial circumstances, theCommission decides toinitiate aninvestigation without having
received awritten complaint byoronbehalf oftheCommunity industry fortheinitiation ofsuch
investigation, thisshallbedoneonthebasis ofsufficient evidence oftheexistence ofcountervailable
subsidies, injury andcausal link,asdescribed inparagraph 2,tojustify suchinitiation.
11. Theevidence bothofsubsidies andofinjury shallbeconsidered simultaneously inthedecision
onwhether ornottoinitiate aninvestigation. Acomplaint shallberejected where there isinsufficient
evidence ofeither countervailable subsidies orofinjury tojustify proceeding withthecase.Proceedings
shallnotbeinitiated against countries whose imports represent amarket share ofbelow 1percent,
unless suchcountries collectively account for3percentormore ofCommunity consumption.
12. Thecomplaint maybewithdrawn prior toinitiation, inwhich caseitshallbeconsidered not
tohavebeenlodged.
13. Where, afterconsultation, itisapparent thatthere issufficient evidence tojustify initiating
aproceeding, theCommission shalldosowithin 45daysofthelodging ofthecomplaint andshall
publish anotice intheOfficial Journal oftheEuropean Communities. Where insufficient evidence
hasbeenpresented, thecomplainant shall, afterconsultation, besoinformed within 45daysofthe
dateonwhich thecomplaint islodged withtheCommission.
14. Thenotice ofinitiation oftheproceedings shallannounce theinitiation ofaninvestigation,
indicate theproduct andcountries concerned, giveasummary oftheinformation received, andprovide
thatallrelevant information istobecommunicated totheCommission; itshallstatetheperiods within
which interested parties maymake themselves known, present their views inwriting andsubmit
information, ifsuchviews andinformation aretobetaken intoaccount during theinvestigation; it
shallalsostatetheperiod within which interested parties mayapply tobeheard bytheCommission
inaccordance withArticle 11(5).
15. TheCommissionshalladvisetheexporters,importersandrepresentativeassociationsofimporters
orexporters known toittobeconcerned, aswellasthecountry oforigin and/or export andthe
complainants, oftheinitiation oftheproceedings and,withdueregard totheprotection ofconfidential
information, provide thefulltextofthewritten complaint referred toinparagraph 1totheknown
exporters andtotheauthorities ofthecountry oforigin and/or export, andmake itavailable uponrequest
toother interested parties involved. Where thenumber ofexporters involved isparticularly high, theG/SCM/N/1/EEC/2
Page18
fulltextofthewritten complaint mayinstead beprovided onlytotheauthorities ofthecountry oforigin
and/or export ortotherelevant trade association.
16. Acountervailing dutyinvestigation shallnothinder theprocedures ofcustoms clearance.
Article 11
Theinvestigation
1. Following theinitiation oftheproceeding, theCommission, acting incooperation withthe
Member States, shallcommence aninvestigation atCommunity level. Suchinvestigation shallcover
bothsubsidization andinjury, andthese shallbeinvestigated simultaneously. Forthepurpose ofa
representative finding, aninvestigation period shallbeselected which, inthecaseofsubsidization shall,
normally, cover theinvestigation period provided forinArticle 5.Information relating toaperiod
subsequent totheinvestigation period shallnot,normally, betaken intoaccount.
2. Parties receiving questionnaires usedinacountervailing dutyinvestigation shallbegiven at
least30daystoreply. Thetimelimitforexporters shallbecounted from thedateofreceipt ofthe
questionnaire, which forthispurpose shallbedeemed tohavebeenreceived oneweek from theday
onwhich itwassenttotherespondent ortransmitted totheappropriate diplomatic representative of
thecountry oforigin and/or export. Anextension tothe30-day period maybegranted, dueaccount
being taken ofthetimelimits oftheinvestigation, provided thattheparty shows duecause forsuch
extension, interms ofitsparticular circumstances.
3. TheCommission mayrequest Member States tosupply information, andMember States shall
takewhatever steps arenecessary inorder togiveeffect tosuchrequests. They shall sendtothe
Commissiontheinformationrequestedtogetherwiththeresultsofallinspections,checksorinvestigations
carried out.Where thisinformation isofgeneral interest orwhere itstransmission hasbeenrequested
byaMemberState,theCommissionshallforwardittotheMemberStates,provideditisnotconfidential,
inwhich caseanon-confidential summary shallbeforwarded.
4. TheCommission mayrequest Member States tocarry outallnecessary checks andinspections,
particularly amongst importers, traders andCommunity producers, andtocarry outinvestigations in
thirdcountries, provided thatthefirms concerned givetheirconsent andthatthegovernment ofthe
countryinquestionhasbeenofficiallynotifiedandraisesnoobjection.MemberStatesshalltakewhatever
steps arenecessary inorder togiveeffect tosuchrequests from theCommission. Officials ofthe
Commission shallbeauthorized, iftheCommission oraMember Statesorequests, toassist theofficials
ofMember States incarrying outtheirduties.
5. Theinterested parties which havemade themselves known inaccordance withArticle 10(14),
shallbeheard iftheyhave, within theperiod prescribed inthenotice published intheOfficial Journal
oftheEuropean Communities, made awritten request forahearing showing thattheyareaninterested
party likely tobeaffected bytheresult oftheproceeding andthatthere areparticular reasons why
theyshould beheard.
6. Opportunities shall, onrequest, beprovided fortheimporters, exporters andthecomplainants,
which havemade themselves known inaccordance withArticle 10(14), andthegovernment ofthe
country oforigin and/or export, tomeetthose parties having adverse interests, sothatopposing views
maybepresented andrebuttal arguments offered. Provision ofsuchopportunities musttakeaccount
oftheneedtopreserve confidentiality andoftheconvenience totheparties. There shallbenoobligation
onanyparty toattend ameeting, andfailure todososhallnotbeprejudicial tothatparty'scase.OralG/SCM/N/1/EEC/2
Page19
information provided under thisparagraph shallbetaken intoaccount bytheCommission insofar
asitissubsequently confirmed inwriting.
7. Thecomplainants,thegovernmentofthecountryoforiginand/orexport,importersandexporters
andtheirrepresentative associations, users andconsumer organizations, which havemade themselves
known inaccordance withArticle 10(14), may, upon written request, inspect allinformation made
availabletotheCommissionbyanypartytoaninvestigation,asdistinctfrominternaldocumentsprepared
bytheauthorities oftheCommunity oritsMember States, which isrelevant tothepresentation of
theircasesandisnotconfidential within themeaning ofArticle 29,andthatitisusedintheinvestigation.
Such parties mayrespond tosuchinformation andtheircomments shallbetaken intoconsideration
wherever theyaresufficiently substantiated intheresponse.
8. Except incircumstances provided forinArticle 28,theinformation which issupplied by
interested parties anduponwhich findings arebased shallbeexamined foraccuracy asfaraspossible.
9. Forproceedings initiated pursuant toArticle 10(13),aninvestigation shall, whenever possible,
beconcluded within oneyear. Inanyevent, suchinvestigations shallinallcases beconcluded within
13months ofinitiation, inaccordance withthefindings made pursuant toArticle 13forundertakings
orthefindings made pursuant toArticle 15fordefinitive action.
10. Throughout theinvestigation, theCommission shallafford thecountry oforigin and/or export
areasonable opportunity tocontinue consultations withaviewtoclarifying thefactual situation and
arriving atamutually agreed solution.
Article 12
Provisional measures
1. Provisional duties maybeimposed if:
(a) proceedings havebeeninitiated inaccordance withArticle 10;
(b) anotice hasbeengiven tothateffect andinterested parties havebeengiven adequate
opportunities tosubmit information andmake comments inaccordance with
Article 10(14);
(c) aprovisionalaffirmativedeterminationhasbeenmadethattheimportedproductbenefits
fromcountervailable subsidies andofconsequent injury totheCommunity industry;
and
(d) theCommunity interest callsforintervention toprevent suchinjury.
Theprovisional duties shall beimposed noearlier than60daysfrom theinitiation ofthe
proceedings butnolaterthanninemonths from theinitiation oftheproceedings.
Theamount oftheprovisional countervailing dutyshall notexceed thetotalamount of
countervailable subsidies asprovisionally established butitshould belessthanthisamount, ifsuch
lesser dutywould beadequate toremove theinjury totheCommunity industry.
2. Provisional duties shallbesecured byaguarantee andtherelease oftheproducts concerned
forfreecirculation intheCommunity shallbeconditional upon theprovision ofsuchguarantee.G/SCM/N/1/EEC/2
Page20
3. TheCommission shalltakeprovisional action afterconsultation or,incasesofextreme urgency,
afterinforming theMember States. Inthislatter case, consultations shalltakeplace 10days, atthe
latest, afternotification totheMember States oftheaction taken bytheCommission.
4. Where aMember State requests immediate intervention bytheCommission andwhere the
conditions ofthefirstandsecond subparagraphs ofparagraph 1aremet,theCommission shall, within
amaximum offiveworking daysfromreceipt oftherequest, decide whether aprovisional countervailing
dutyshallbeimposed.
5. TheCommission shallforthwith inform theCouncil andtheMember States ofanydecision
taken under paragraphs 1to4.TheCouncil, acting byaqualified majority, maydecide differently.
6. Provisional countervailing duties shallbeimposed foramaximum period offourmonths.
Article 13
Undertakings
1. Investigations maybeterminated without theimposition ofprovisional ordefinitive duties upon
receipt ofsatisfactory voluntary undertakings under which:
(a) thecountry oforigin and/or export agrees toeliminate orlimit thesubsidy ortake
other measures concerning itseffects; or
(b) anyexporter undertakes torevise itsprices ortocease exports totheareainquestion
aslongassuchexports benefit fromcountervailable subsidies, sothattheCommission,
afterconsultation, issatisfied thattheinjurious effect ofthesubsidies iseliminated.
Price increases under suchundertakings shallnotbehigher thanisnecessary tooffset
theamount ofcountervailable subsidies, andshould belessthantheamount of
countervailable subsidies ifsuchincreases would beadequate toremove theinjury to
theCommunity industry.
2. Undertakings maybesuggested bytheCommission, butnocountry orexporter shallbeobliged
toenter intosuchanundertaking. Thefactthatcountries orexporters donotoffersuchundertakings,
ordonotaccept aninvitation todoso,shallinnowayprejudice consideration ofthecase. However,
itmaybedetermined thatathreat ofinjury ismore likely toberealized ifthesubsidized imports
continue. Undertakings shallnotbesought oraccepted fromcountries orexporters unless aprovisional
affirmative determination ofsubsidization andinjury caused bysuchsubsidization hasbeenmade. Save
inexceptional circumstances, undertakings maynotbeoffered laterthantheendoftheperiod during
which representations maybemade pursuant toArticle 30(5).
3. Undertakings offered neednotbeaccepted iftheiracceptance isconsidered impractical, such
aswhere thenumber ofactual orpotential exporters istoogreat, orforother reasons, including reasons
ofgeneral policy. Theexporter and/or thecountry oforigin and/or export concerned maybeprovided
withthereasons forwhich itisproposed toreject theoffer ofanundertaking andmaybegiven an
opportunity tomake comments thereon. Thereasons forrejection shallbesetoutinthedefinitive
decision.
4. Parties which offeranundertaking shallberequired toprovide anon-confidential version of
suchundertaking, sothatitmaybemade available tointerested parties totheinvestigation.G/SCM/N/1/EEC/2
Page21
5. Where undertakings are,afterconsultation, accepted, andwhere there isnoobjection raised
within theAdvisory Committee, theinvestigation shallbeterminated. Inallothercases, theCommission
shallsubmit totheCouncil forthwith areport ontheresults oftheconsultation, together withaproposal
thattheinvestigation beterminated. Theinvestigation shallbedeemed terminated if,within onemonth,
theCouncil, acting byqualified majority, hasnotdecided otherwise.
6. Iftheundertakings areaccepted, theinvestigation ofsubsidization andinjury shallnormally
becompleted. Insuchacase, ifanegative determination ofsubsidization orinjury ismade, the
undertaking shallautomatically lapse, except incases where suchadetermination isdueinlarge part
totheexistence ofanundertaking. Insuchcases, itmayberequired thatanundertaking bemaintained
forareasonable period. Intheevent thatanaffirmative determination ofsubsidization andinjury is
made, theundertaking shallcontinue consistent withitsterms andtheprovisions ofthisRegulation.
7. TheCommission shallrequire anycountry orexporter from whom undertakings havebeen
accepted toprovide, periodically, information relevant tothefulfilment ofsuchundertaking, andto
permit verification ofpertinent data. Non-compliance withsuchrequirements shallbeconstrued as
abreach oftheundertaking.
8. Where undertakings areaccepted fromcertain exporters during thecourse ofaninvestigation,
theyshall, forthepurpose ofArticles 18,19,20and22,bedeemed totakeeffect from thedateon
which theinvestigation isconcluded forthecountry oforigin and/or export.
9. Incaseofbreach orwithdrawal ofundertakings byanyparty, adefinitive dutyshallbeimposed
inaccordance withArticle 15,onthebasisofthefactsestablished within thecontext oftheinvestigation
which ledtotheundertaking, provided thatsuchinvestigation wasconcluded withafinaldetermination
astosubsidization andinjury, andthattheexporter concerned, orthecountry oforigin and/or export,
has,except inthecaseofwithdrawal oftheundertaking bytheexporter orsuchcountry, beengiven
anopportunity tocomment.
10. Aprovisional dutymay, afterconsultation, beimposed inaccordance withArticle 12onthe
basis ofthebestinformation available, where there isreason tobelieve thatanundertaking isbeing
breached, orincaseofbreach orwithdrawal ofanundertaking where theinvestigation which ledto
theundertaking hasnotbeenconcluded.
Article 14
Termination without measures
1. Where thecomplaint iswithdrawn, theproceeding maybeterminated unless suchtermination
would notbeintheCommunity interest.
2. Where, afterconsultation, protective measures areunnecessary andthereisnoobjection raised
within theAdvisory Committee, theinvestigation orproceeding shallbeterminated. Inallother cases,
theCommission shallsubmit totheCouncil forthwith areport ontheresults oftheconsultation, together
withaproposal thattheproceeding beterminated. Theproceeding shallbedeemed terminated if,within
onemonth, theCouncil, acting byaqualified majority, hasnotdecided otherwise.
3. There shallbeimmediate termination oftheproceeding where itisdetermined thattheamount
ofcountervailable subsidies isdeminimis ,inaccordance withparagraph 5,orwhere thevolume of
subsidized imports, actual orpotential, ortheinjury, isnegligible.G/SCM/N/1/EEC/2
Page22
4. Foraproceeding initiated pursuant toArticle 10(13), injury shallnormally beregarded as
negligible where themarket share oftheimports islessthantheamounts setoutinArticle 10(11).
Withregard toinvestigations concerning imports fromdeveloping countries, thevolume ofsubsidized
imports shallalsobeconsidered negligible ifitrepresents lessthan4percentofthetotalimports of
thelikeproduct intheCommunity, unless imports fromdeveloping countries whose individual shares
oftotalimports represent lessthan4percentcollectively account formore than9percentofthetotal
imports ofthelikeproduct intheCommunity.
5. Theamount ofthecountervailable subsidies shallbeconsidered tobedeminimis ifsuchamount
islessthan1percentadvalorem, except that:
(a) asregards investigations concerning imports fromdeveloping countries thedeminimis
threshold shallbe2percentadvalorem, and
(b) forthose developing countries Members oftheWTO referred toinAnnex VIItothe
Subsidies Agreement aswellasfordeveloping countries Members oftheWTO which
have completely eliminated export subsidies asdefined inArticle 3(4)(a)ofthis
Regulation, thedeminimis subsidy threshold shallbe3percentadvalorem; where
theapplication ofthisprovision depends ontheelimination ofexport subsidies, itshall
apply fromthedateonwhich theelimination ofexport subsidies isnotified totheWTO
Committee onSubsidies andCountervailing Measures, andforsolongasexport
subsidies arenotgranted bythedeveloping country concerned; thisprovision shall
expire eight years from thedateofentry intoforce oftheWTO Agreement,
provided thatitisonlytheinvestigation thatshallbeterminated where theamount ofthecountervailable
subsidies isbelow therelevant deminimis levelforindividual exporters, whoshallremain subject to
theproceedings andmaybere-investigated inanysubsequent review carried outforthecountry
concerned pursuant toArticles 18and19.
Article 15
Imposition ofdefinitive duties
1. Where thefactsasfinally established show theexistence ofcountervailable subsidies andinjury
caused thereby, andtheCommunity interest callsforintervention inaccordance withArticle 31,a
definitive countervailing dutyshallbeimposed bytheCouncil, acting bysimple majority onaproposal
submitted bytheCommission afterconsultation oftheAdvisory Committee, unless thesubsidy or
subsidies arewithdrawn orithasbeendemonstrated thatthesubsidies nolonger confer anybenefit
ontheexporters involved. Where provisional duties areinforce, aproposal fordefinitive action shall
besubmitted totheCouncil notlaterthanonemonth before theexpiry ofsuchduties. Theamount
ofthecountervailing dutyshallnotexceed theamount ofcountervailable subsidies from which the
exporters havebeenfound tobenefit, established pursuant tothisRegulation, butshould belessthan
thetotalamount ofcountervailable subsidies, ifsuchlesser dutywere tobeadequate toremove the
injury totheCommunity industry.
2. Acountervailing duty shall beimposed intheappropriate amounts ineach case, ona
non-discriminatory basis, onimports ofaproduct fromallsources found tobenefit fromcountervailable
subsidies andcausing injury, except astoimports fromthose sources fromwhich undertakings under
theterms ofthisRegulation havebeenaccepted. Theregulation imposing thedutyshallspecify the
dutyforeachsupplier, or,ifthatisimpracticable, thesupplying country concerned.G/SCM/N/1/EEC/2
Page23
3. When theCommission haslimited itsexamination inaccordance with Article 27,any
countervailing dutyapplied toimports fromexporters orproducers which havemade themselves known
inaccordance withArticle 27butwerenotincluded intheexamination shallnotexceed theweighted
average amount ofcountervailable subsidies established fortheparties inthesample. Forthepurpose
ofthisparagraph, theCommission shalldisregard anyzeroanddeminimis amounts ofcountervailable
subsidies andamounts ofcountervailable subsidies established inthecircumstances referred toin
Article 28.Individual duties shallbeapplied toimports from anyexporter orproducer forwhich an
individual amount ofsubsidization hasbeencalculated asprovided forinArticle 27.
Article 16
Retroactivity
1. Provisional measures anddefinitive countervailing duties shallonlybeapplied toproducts which
enterfreecirculation afterthetimewhen themeasure taken pursuant toArticle 12(1)orArticle 15(1),
asthecasemaybe,enters intoforce, subject totheexceptions setoutinthisRegulation.
2. Where aprovisional dutyhasbeenapplied andthefactsasfinally established show theexistence
ofcountervailable subsidies andinjury, theCouncil shalldecide, irrespective ofwhether adefinitive
countervailing dutyistobeimposed, what proportion oftheprovisional dutyistobedefinitively
collected. Forthispurpose, 'injury 'shallnotinclude material retardation oftheestablishment ofa
Community industry, notthreat ofmaterial injury, except where itisfound thatthiswould, inthe
absence ofprovisional measures, havedeveloped intomaterial injury. Inallother cases involving such
threat orretardation, anyprovisional amounts shallbereleased anddefinitive duties canonlybeimposed
from thedateonwhich afinaldetermination ofthreat ormaterial retardation ismade.
3. Ifthedefinitive countervailing dutyishigher thantheprovisional duty, thedifference shall
notbecollected. Ifthedefinitive dutyislower thantheprovisional duty, thedutyshallberecalculated.
Where afinaldetermination isnegative, theprovisional dutyshallnotbeconfirmed.
4. Adefinitive countervailing dutymaybelevied onproducts which wereentered forconsumption
notmore than90daysprior tothedateofapplication ofprovisional measures butnotprior tothe
initiation oftheinvestigation, provided thattheimports have been registered inaccordance with
Article 24(5),theimporters concerned havebeengiven anopportunity tocomment bytheCommission,
and:
(a) there arecritical circumstances where forthesubsidized product inquestion injury
which isdifficult torepair iscaused bymassive imports inarelatively short period
ofaproductbenefitingfromcountervailablesubsidiesunderthetermsofthisRegulation;
and,
(b) itisdeemed necessary, inorder topreclude therecurrence ofsuchinjury, toassess
countervailing duties retroactively onthose imports.
5. Incases ofbreach orwithdrawal ofundertakings, definitive duties maybelevied ongoods
entered forfreecirculation notmore than90daysbefore theapplication ofprovisional measures,
provided thattheimports havebeenregistered inaccordance withArticle 24(5)andthatanysuch
retroactive assessment shall notapply toimports entered before thebreach orwithdrawal ofthe
undertaking.G/SCM/N/1/EEC/2
Page24
Article 17
Duration
Acountervailing measure shallremain inforce onlyaslongas,andtotheextent that,itis
necessary tocounteract thecountervailable subsidies which arecausing injury.
Article 18
Expiry reviews
1. Adefinitive countervailing measure shallexpire fiveyears from itsimposition orfiveyears
from thedateofthemost recent review which hascovered bothsubsidization andinjury, unless it
isdetermined inareview thattheexpiry would belikely toleadtoacontinuation orrecurrence of
subsidization andinjury. Suchanexpiry review shallbeinitiated ontheinitiative oftheCommission,
orupon arequest made byoronbehalf ofCommunity producers, andthemeasure shallremain in
force pending theoutcome ofsuchreview.
2. Anexpiry review shallbeinitiated where therequest contains sufficient evidence thattheexpiry
ofthemeasures would belikely toresult inacontinuation orrecurrence ofsubsidization andinjury.
Such alikelihood may, forexample, beindicated byevidence ofcontinued subsidization andinjury
orevidence thattheremoval ofinjury ispartly orsolely duetotheexistence ofmeasures orevidence
thatthecircumstances oftheexporters, ormarket conditions, aresuchthattheywould indicate the
likelihood offurther injurious subsidization.
3. Incarrying outinvestigations under thisArticle, theexporters, importers, thecountry oforigin
and/or export andtheCommunity producers shallbeprovided withtheopportunity toamplify, rebut
orcomment onthematters setoutinthereview request, andconclusions shallbereached withdue
account taken ofallrelevant anddulydocumented evidence presented inrelation tothequestion as
towhether theexpiry ofmeasures would belikely, orunlikely, toleadtothecontinuation orrecurrence
ofsubsidization andinjury.
4. Anotice ofimpending expiry shall bepublished intheOfficial Journal oftheEuropean
Communities atanappropriate timeinthefinalyearoftheperiod ofapplication ofthemeasures as
defined inthisArticle. Thereafter, theCommunity producers shall, nolaterthanthree months before
theendofthefive-year period, beentitled tolodge areview request inaccordance withparagraph 2.
Anotice announcing theactual expiry ofmeasures under thisArticle shallalsobepublished.
Article 19
Interim reviews
1. Theneedforthecontinued imposition ofmeasures mayalsobereviewed, where warranted,
ontheinitiative oftheCommission orattherequest ofaMember Stateor,provided thatareasonable
period oftimeofatleastoneyearhaselapsed since theimposition ofthedefinitive measure, upon
arequest byanyexporter, importer orbytheCommunity producers orthecountry oforigin and/or
export which contains sufficient evidence substantiating theneedforsuchaninterim review.
2. Aninterim review shallbeinitiated where therequest contains sufficient evidence thatthe
continued imposition ofthemeasure isnolonger necessary tooffset thecountervailable subsidy and/or
thattheinjury would beunlikely tocontinue orrecur ifthemeasure wereremoved orvaried, orthatG/SCM/N/1/EEC/2
Page25
theexisting measure isnot,orisnolonger, sufficient tocounteract thecountervailable subsidy which
iscausing injury.
3. Where thecountervailing duties imposed arelessthantheamount ofcountervailable subsidies
found, aninterim review shallbeinitiated iftheCommunity producers provide sufficient evidence
thattheduties haveledtonomovement, orinsufficient movement, ofresale prices oftheimported
product intheCommunity. Iftheinvestigation proves theallegations tobecorrect, countervailing duties
maybeincreased toachieve thepriceincrease required toremove injury; however, theincreased duty
levelshallnotexceed theamount ofthecountervailable subsidies.
4. Incarrying outinvestigations pursuant tothisArticle, theCommission mayinteraliaconsider
whether thecircumstances withregard tosubsidization andinjury havechanged significantly, orwhether
existing measures areachieving theintended results inremoving theinjury previously established under
Article 8.Inthese respects, account shallbetaken inthefinaldetermination ofallrelevant andduly
documented evidence.
Article 20
Accelerated reviews
Anyexporter whose exports aresubject toadefinitive countervailing dutybutwhowasnot
individually investigated during theoriginal investigation forreasons other thanarefusal tocooperate
withtheCommission, shall beentitled, upon request, toanaccelerated review inorder thatthe
Commission maypromptly establish anindividual countervailing dutyrateforthatexporter. Sucha
review shallbeinitiated afterconsultation oftheAdvisory Committee andafterCommunity producers
havebeengiven anopportunity tocomment.
Article 21
Refunds
1. Notwithstanding Article 18,animporter mayrequest reimbursement ofduties collected where
itisshown thattheamount ofcountervailable subsidies, onthebasis ofwhich duties werepaid, has
beeneither eliminated orreduced toalevelwhich isbelow thelevelofthedutyinforce.
2. Inrequesting arefund ofcountervailing duties, theimporter shallsubmit anapplication tothe
Commission. Theapplication shallbesubmitted viatheMember State intheterritory ofwhich the
products werereleased forfreecirculation, within sixmonths ofthedateonwhich theamount ofthe
definitive duties tobelevied wasdulydetermined bythecompetent authorities orofthedateonwhich
adecision wasmade definitively tocollect theamounts secured bywayofprovisional duty. Member
States shallforward therequest totheCommission forthwith.
3. Anapplication forrefund shallbeconsidered tobedulysupported byevidence onlywhere
itcontains precise information ontheamount ofrefund ofcountervailing duties claimed andallcustoms
documentation relating tothecalculation andpayment ofsuchamount. Itshallalsoinclude evidence,
forarepresentative period, oftheamount ofcountervailable subsidies fortheexporter orproducer
towhich thedutyapplies. Incases where theimporter isnotassociated withtheexporter orproducer
concerned andsuchinformation isnotimmediately available, orwhere theexporter orproducer is
unwilling torelease ittotheimporter, theapplication shallcontain astatement from theexporter or
producer thattheamount ofcountervailable subsidies hasbeenreduced oreliminated, asspecified in
thisArticle, andthattherelevant supporting evidence willbeprovided totheCommission. WhereG/SCM/N/1/EEC/2
Page26
suchevidence isnotforthcoming from theexporter orproducer within areasonable period oftime
theapplication shallberejected.
4. TheCommission shall, afterconsultation oftheAdvisory Committee, decide whether andto
whatextent theapplication should begranted, oritmaydecide atanytimetoinitiate aninterim review,
whereupon theinformation andfindings fromsuchreview, carried outinaccordance withtheprovisions
applicable forsuchreviews, shallbeusedtodetermine whether andtowhatextent arefund isjustified.
Refunds ofduties shallnormally takeplace within 12months, andinnocircumstances more than18
months afterthedateonwhich arequest forarefund, dulysupported byevidence, hasbeenmade
byanimporter oftheproduct subject tothecountervailing duty. Thepayment ofanyrefund authorized
should normally bemade byMember States within 90daysoftheabovementioned decision.
Article 22
General provisions onreviews andrefunds
1. Therelevant provisions ofArticles 10and11,excluding those relating totimelimits, shall
apply toanyreview carried outpursuant toArticles 18,19and20.Anysuchreview shallbecarried
outexpeditiously andshallnormally beconcluded within 12months ofthedateofinitiation ofthe
review.
2. ReviewspursuanttoArticles18,19and20shallbeinitiatedbytheCommissionafterconsultation
oftheAdvisory Committee. Where warranted byreviews, measures shallberepealed ormaintained
pursuant toArticle 18,orrepealed, maintained oramended pursuant toArticles 19and20,bythe
Community institution responsible fortheirintroduction. Where measures arerepealed forindividual
exporters, butnotforthecountry asawhole, suchexporters shallremain subject totheproceeding
andmaybere-investigated inanysubsequent review carried outforthatcountry pursuant tothisArticle.
3. Where areview ofmeasures pursuant toArticle 19isinprogress attheendoftheperiod of
application ofmeasures asdefined inArticle 18,themeasures shallalsobeinvestigated under the
provisions ofArticle 18.
4. Inallreview orrefund investigations carried outpursuant toArticles 18to21,theCommission
shall, provided thatcircumstances havenotchanged, apply thesamemethodology asintheinvestigation
which ledtotheduty, withdueaccount being taken ofArticles 5,6,7and27.
Article 23
Circumvention
1. Countervailing duties imposed pursuant tothisRegulation maybeextended toimports from
thirdcountries oflikeproducts, orpartsthereof, when circumvention ofthemeasures inforceistaking
place. Circumvention shallbedefined asachange inthepattern oftrade between thirdcountries and
theCommunity which stems from apractice, process orwork forwhich there isinsufficient cause
oreconomic justification other thantheimposition oftheduty, andwhere there isevidence thatthe
remedial effects ofthedutyarebeing undermined interms oftheprices and/or quantities ofthelike
products andthattheimported likeproduct and/or parts thereof stillbenefit from thesubsidy.
2. Investigations shallbeinitiated pursuant tothisArticle where therequest contains sufficient
evidence regarding thefactors setoutinparagraph 1.Initiations shallbemade, afterconsultation of
theAdvisory Committee, byCommission Regulation which shallalsoinstruct thecustoms authorities
tomake imports subject toregistration inaccordance withArticle 24(5)ortorequest guarantees.G/SCM/N/1/EEC/2
Page27
Investigations shallbecarried outbytheCommission, which maybeassisted bycustoms authorities,
andshallbeconcluded within ninemonths. When thefactsasfinally ascertained justify theextension
ofmeasures, thisshallbedonebytheCouncil, acting bysimple majority andonaproposal fromthe
Commission, fromthedateonwhich registration wasimposed pursuant toArticle 24(5)oronwhich
guaranteeswererequested.TherelevantproceduralprovisionsofthisRegulationwithregardtoinitiations
andtheconduct ofinvestigations shallapply pursuant tothisArticle.
3. Products shallnotbesubject toregistration pursuant toArticle 24(5)ormeasures where they
areaccompanied byacustoms certificate declaring thattheimportation ofthegoods doesnotconstitute
circumvention. Such certificates maybeissued toimporters, upon written application following
authorization bydecision oftheCommission afterconsultation oftheAdvisory Committee, ordecision
oftheCouncil imposing measures, andtheyshallremain validfortheperiod, andunder theconditions,
setdown therein.
4.Nothing inthisArticle shallpreclude thenormal application oftheprovisions inforce concerning
customs duties.
Article 24
General provisions
1. Provisional ordefinitive countervailing duties shallbeimposed byRegulation, andcollected
byMember States intheform, attheratespecified andaccording totheother criteria laiddown in
theRegulation imposing suchduties. Suchduties shallalsobecollected independently ofthecustoms
duties, taxes andother charges normally imposed onimports. Noproduct shallbesubject toboth
anti-dumping andcountervailing duties forthepurpose ofdealing withoneandthesamesituation arising
from dumping orfrom export subsidization.
2. Regulationsimposingprovisionalordefinitivecountervailingduties,andRegulationsorDecisions
accepting undertakings orterminating investigations orproceedings, shallbepublished intheOfficial
Journal oftheEuropean Communities. SuchRegulations orDecisions shallcontain inparticular, and
withdueregard totheprotection ofconfidential information, thenames oftheexporters, ifpossible,
orofthecountries involved, adescription oftheproduct andasummary ofthefactsandconsiderations
relevant tothesubsidy andinjury determinations. Ineachcase, acopyoftheRegulation orDecision
shallbesenttoknown interested parties. Theprovisions ofthisparagraph shallapply mutatis mutandis
toreviews.
3. Special provisions, inparticular withregard tothecommon definition oftheconcept oforigin,
ascontained inCouncil Regulation (EEC) No2913/92 of12October 1992establishing theCommunity
Customs Code5,maybeadopted pursuant tothisRegulation.
4. IntheCommunityinterest,measuresimposedpursuanttothisRegulationmay,afterconsultation
oftheAdvisory Committee, besuspended byadecision oftheCommission foraperiod ofninemonths.
Thesuspension maybeextended forafurther period, notexceeding oneyear,iftheCouncil sodecides,
acting bysimple majority onaproposal fromtheCommission. Measures mayonlybesuspended where
market conditions havetemporarily changed tosuchanextent thatinjury would beunlikely toresume
asaresult ofthesuspension, andprovided thattheCommunity industry hasbeengiven anopportunity
tocomment andthatthose comments havebeentaken intoaccount. Measures may, atanytimeand
afterconsultation, bereinstated ifthereason forsuspension isnolonger applicable.
5OJL302,19.10.1992, p.1. Regulation aslastamended byRegulation (EC) No.82/97 oftheEuropean Parliament
andoftheCouncil (OJL17,21.1.1997, p.1).G/SCM/N/1/EEC/2
Page28
5. TheCommission may, after consultation oftheAdvisory Committee, direct thecustoms
authorities totaketheappropriate stepstoregister imports, sothatmeasures maysubsequently beapplied
against those imports fromthedateofsuchregistration. Imports maybemade subject toregistration
following arequest from theCommunity industry which contains sufficient evidence tojustify such
action. Registration shallbeintroduced byRegulation which shallspecify thepurpose oftheaction
and,ifappropriate, theestimated amount ofpossible future liability. Imports shallnotbemade subject
toregistration foraperiod longer thanninemonths.
6. Member States shallreport totheCommission every month ontheimport trade ofproducts
subject toinvestigation andtomeasures, andontheamount ofduties collected pursuant tothis
Regulation.
Article 25
Consultations
1. Anyconsultations provided forinthisRegulation, except those referred toinArticles 10(9)
and11(10), shalltakeplace within anAdvisory Committee, which shallconsist ofrepresentatives
ofeachMember State, witharepresentative oftheCommission aschairman. Consultations shallbe
heldimmediately onrequest byaMember State orontheinitiative oftheCommission, andinany
event within aperiod oftimewhich allows thetimelimits setbythisRegulation tobeadhered to.
2. TheCommittee shallmeetwhen convened byitschairman. Heshallprovide theMember States,
aspromptly aspossible, withallrelevant information.
3. Where necessary, consultation maybeinwriting only; inthatevent, theCommission shall
notify theMember States andshallspecify aperiod within which theyshallbeentitled toexpress their
opinions ortorequest anoralconsultation which thechairman shallarrange, provided thatsuchoral
consultation canbeheldwithin aperiod oftimewhich allows thetimelimits setbythisRegulation
tobeadhered to.
4.Consultation shallcover, inparticular:
(a) theexistence ofcountervailable subsidies andthemethods ofestablishing theiramount;
(b) theexistence andextent ofinjury;
(c) thecausal linkbetween thesubsidized imports andinjury;
(d) themeasures which, inthecircumstances, areappropriate toprevent orremedy the
injury caused bythecountervailable subsidies andtheways andmeans ofputting such
measures intoeffect.
Article 26
Verification visits
1. TheCommission shall, where itconsiders itappropriate, carry outvisits toexamine therecords
ofimporters, exporters, traders, agents, producers, trade associations andorganizations, toverify
information provided onsubsidization andinjury. Intheabsence ofaproper andtimely reply a
verification visitmaynotbecarried out.G/SCM/N/1/EEC/2
Page29
2. TheCommission maycarry outinvestigations inthirdcountries asrequired, provided thatit
obtains theagreement ofthefirms concerned, thatitnotifies thecountry inquestion andthatthelatter
doesnotobject totheinvestigation. Assoonastheagreement ofthefirms concerned hasbeenobtained
theCommission should notify thecountry oforigin and/or export ofthenames andaddresses ofthe
firms tobevisited andthedates agreed.
3. Thefirms concerned shallbeadvised ofthenature oftheinformation tobeverified during
verification visits andofanyfurther information which needs tobeprovided during suchvisits, though
thisshould notpreclude requests made during theverification forfurther details tobeprovided inthe
lightofinformation obtained.
4. Ininvestigations carried outpursuant toparagraphs 1,2and3,theCommission shallbeassisted
byofficials ofthose Member States whosorequest.
Article 27
Sampling
1. Incases there thenumber ofcomplainants, exporters orimporters, types ofproduct or
transactions islarge, theinvestigation maybelimited to:
(a) areasonable number ofparties, products ortransactions byusing samples which are
statistically valid onthebasis ofinformation available atthetimeoftheselection; or
(b) tothelargest representative volume oftheproduction, sales orexports which can
reasonably beinvestigated within thetimeavailable.
2. Theselection ofparties, types ofproducts ortransactions made under thisArticle shallrest
withtheCommission, though preference shallbegiven tochoosing asample inconsultation with, and
withtheconsent of,theparties concerned, provided thatsuchparties make themselves known andmake
sufficient information available, within three weeks ofinitiation oftheinvestigation, toenable a
representative sample tobechosen.
3. Incases where theexamination hasbeenlimited inaccordance withthisArticle, anindividual
amount ofcountervailable subsidization shall, nevertheless, becalculated foranyexporter orproducer
notinitially selected whosubmits thenecessary information within thetimelimits provided forinthis
Regulation, except where thenumber ofexporters orproducers issolargethatindividual examinations
would beunduly burdensome andwould prevent completion oftheinvestigation ingood time.
4. Where itisdecided tosample andthere isadegree ofnon-cooperation bysome orallofthe
parties selected which islikely tomaterially affect theoutcome oftheinvestigation, anewsample may
beselected. However, ifamaterial degree ofnon-cooperation persists orthere isinsufficient timeto
select anewsample, therelevant provisions ofArticle 28shallapply.
Article 28
Non-cooperation
1. Incasesinwhich anyinterested partyrefuses access to,orotherwise doesnotprovide, necessary
information within thetimelimits provided inthisRegulation, orsignificantly impedes theinvestigation,
provisional orfinalfindings, affirmative ornegative, maybemade onthebasisofthefactsavailable.G/SCM/N/1/EEC/2
Page30
Where itisfound thatanyinterested party hassupplied falseormisleading information, the
information shallbedisregarded andusemaybemade ofthefactsavailable.
Interested parties should bemade aware oftheconsequences ofnon-cooperation.
2. Failure togiveacomputerized response shallnotbedeemed toconstitute non-cooperation,
provided thattheinterested party shows thatpresenting theresponse asrequested would result inan
unreasonable extra burden orunreasonable additional cost.
3. Where theinformation submitted byaninterested party isnotidealinallrespects itshould
nevertheless notbedisregarded, provided thatanydeficiencies arenotsuchastocause undue difficulty
inarriving atareasonably accurate finding andthattheinformation isappropriately submitted ingood
timeandisverifiable, andthattheparty hasacted tothebestofitsability.
4. Ifevidence orinformation isnotaccepted, thesupplying party shallbeinformed forthwith
ofthereasons therefor andshallbegranted anopportunity toprovide further explanations within the
timelimitspecified. Iftheexplanations areconsidered unsatisfactory, thereasons forrejection ofsuch
evidence orinformation shallbedisclosed andgiven inpublished findings.
5. Ifdeterminations, including those regarding theamount ofcountervailable subsidies, arebased
ontheprovisions ofparagraph 1,including theinformation supplied inthecomplaint, itshall, where
practicable andwithdueregard tothetimelimits oftheinvestigation, bechecked byreference to
informationfromotherindependentsourceswhichmaybeavailable,suchaspublishedpricelists,official
import statistics andcustoms returns, orinformation obtained fromother interested parties during the
investigation.
6. Ifaninterestedpartydoesnotcooperate,orcooperatesonlypartially,sothatrelevantinformation
isthereby withheld, theresult maybelessfavourable totheparty thanifithadcooperated.
Article 29
Confidentiality
1. Anyinformation which isbynature confidential (forexample, because itsdisclosure would
beofsignificant competitive advantage toacompetitor orwould haveasignificantly adverse effect
uponaperson supplying theinformation oruponaperson fromwhom hehasacquired theinformation),
orwhich isprovided onaconfidential basisbyparties toaninvestigation shall, ifgoodcause isshown,
betreated assuchbytheauthorities.
2. Interestedpartiesprovidingconfidentialinformationshallberequiredtofurnishnon-confidential
summaries thereof. Those summaries shallbeinsufficient detail topermit areasonable understanding
ofthesubstance oftheinformation submitted inconfidence. Inexceptional circumstances, suchparties
mayindicate thatsuchinformation isnotsusceptible ofsummary. Insuchexceptional circumstances,
astatement ofthereasons whysummarization isnotpossible must beprovided.
3. Ifitisconsidered thatarequest forconfidentiality isnotwarranted andifthesupplier ofthe
information iseither unwilling tomake theinformation available ortoauthorize itsdisclosure in
generalized orsummary form, suchinformation maybedisregarded unless itcanbesatisfactorily
demonstrated from appropriate sources thattheinformation iscorrect. Requests forconfidentiality
shallnotbearbitrarily rejected.G/SCM/N/1/EEC/2
Page31
4. ThisArticle shall notpreclude thedisclosure ofgeneral information bytheCommunity
authorities, andinparticular ofthereasons onwhich decisions taken pursuant tothisRegulation are
based, nordisclosure oftheevidence relied onbytheCommunity authorities insofarasisnecessary
toexplain those reasons incourt proceedings. Such disclosure musttakeintoaccount thelegitimate
interests oftheparties concerned thattheirbusiness orgovernmental secrets should notbedivulged.
5. TheCouncil, theCommission andtheMember States, ortheofficials ofanyofthese, shall
notreveal anyinformation received pursuant tothisRegulation forwhich confidential treatment has
beenrequested byitssupplier, without specific permission fromthesupplier. Exchanges ofinformation
between theCommission andMember States, oranyinformation relating toconsultations made pursuant
toArticle 25,orconsultations described inArticles 10(9)an11(10),oranyinternal documents prepared
bytheauthorities oftheCommunity oritsMember States, shallnotbedivulged except asspecifically
provided forinthisRegulation.
6. Information received pursuant tothisRegulation shallbeusedonlyforthepurpose forwhich
itwasrequested.
Article 30
Disclosure
1. Thecomplainants, importers andexporters andtheirrepresentative associations, andthecountry
oforigin and/or export, mayrequest disclosure ofthedetails underlying theessential facts and
considerations onthebasis ofwhich provisional measures have beenimposed. Requests forsuch
disclosure shallbemade inwriting immediately following theimposition ofprovisional measures, and
thedisclosure shallbemade inwriting assoonaspossible thereafter.
2. Theparties mentioned inparagraph 1mayrequest finaldisclosure oftheessential factsand
considerations onthebasisofwhich itisintended torecommend theimposition ofdefinitive measures,
orthetermination ofaninvestigation orproceedings without theimposition ofmeasures, particular
attention being paidtothedisclosure ofanyfactsorconsiderations which aredifferent fromthose used
foranyprovisional measures.
3. Requests forfinaldisclosure shallbeaddressed totheCommission inwriting andbereceived,
incases where aprovisional dutyhasbeenapplied, notlaterthanonemonth afterpublication ofthe
imposition ofthatduty. Where aprovisional dutyhasnotbeenimposed, parties shallbeprovided with
anopportunity torequest finaldisclosure within timelimits setbytheCommission.
4. Finaldisclosure shallbegiven inwriting. Itshallbemade, dueregard being hadtotheprotection
ofconfidential information, assoonaspossible and,normally, notlaterthanonemonth prior toa
definitive decision orthesubmission bytheCommission ofanyproposal forfinalaction pursuant to
Articles 14and15.Where theCommission isnotinaposition todisclose certain factsorconsiderations
atthattime, these shallbedisclosed assoonaspossible thereafter. Disclosure shallnotprejudice any
subsequent decision which maybetaken bytheCommission ortheCouncil butwhere suchdecision
isbased onanydifferent factsandconsiderations these shallbedisclosed assoonaspossible.
5. Representations made afterfinaldisclosure isgiven shallbetaken intoconsideration onlyif
received within aperiod tobesetbytheCommission ineachcase, which shallbeatleast10days,
dueconsideration being given totheurgency ofthematter.G/SCM/N/1/EEC/2
Page32
Article 31
Community interest
1. Adetermination astowhether theCommunity interest callsforintervention should bebased
onanappraisal ofallthevarious interests taken asawhole, including theinterests ofthedomestic
industry andusers andconsumers; adetermination pursuant tothisArticle shallbemade onlywhere
allparties havebeengiven theopportunity tomake theirviews known pursuant toparagraph 2.In
suchanexamination, theneedtoeliminate thetrade-distorting effects ofinjurious subsidization and
torestore effective competition shallbegiven special consideration. Measures, asdetermined onthe
basis ofsubsidization andinjury found, maynotbeapplied where theauthorities, onthebasis ofall
theinformation submitted, canclearly conclude thatitisnotintheCommunity interest toapply such
measures.
2. Inorder toprovide asound basis onwhich theauthorities cantakeaccount ofallviews and
information inthedecision astowhether ornottheimposition ofmeasures isintheCommunity interest,
thecomplainants, importers andtheirrepresentative associations, representative usersandrepresentative
consumer organizations may, within thetime limits specified inthenotice ofinitiation ofthe
countervailing dutyinvestigation, make themselves known andprovide information totheCommission.
Suchinformation,orappropriatesummariesthereof,shallbemadeavailabletotheotherpartiesspecified
inthisparagraph, andtheyshallbeentitled torespond tosuchinformation.
3. Theparties which haveacted inconformity withparagraph 2mayrequest ahearing. Such
requests shallbegranted when theyaresubmitted within thetimelimits setinparagraph 2,andwhen
theysetoutthereasons, interms oftheCommunity interest, whytheparties should beheard.
4. Theparties which haveacted inconformity withparagraph 2mayprovide comments onthe
application ofanyprovisional duties imposed. Suchcomments shallbereceived within onemonth of
theapplication ofsuchmeasures iftheyaretobetaken intoaccount andthey,orappropriate summaries
thereof, shallbemade available toother parties whoshallbeentitled torespond tosuchcomments.
5. TheCommission shallexamine theinformation which isproperly submitted andtheextent
towhich itisrepresentative, andtheresults ofsuchanalysis, together withanopinion onitsmerits,
shallbetransmitted totheAdvisory Committee. Thebalance ofviews expressed intheCommittee
shallbetaken intoaccount bytheCommission inanyproposal made pursuant toArticles 14and15.
6. Theparties which haveacted inconformity withparagraph 2mayrequest thatthefactsand
considerationsonwhichfinaldecisionsarelikelytobetakenbemadeavailabletothem.Suchinformation
shallbemade available totheextent possible andwithout prejudice toanysubsequent decision taken
bytheCommission ortheCouncil.
7. Information shallbetaken intoaccount onlywhere itissupported byactual evidence which
substantiates itsvalidity.
Article 32
Relationships between countervailing dutymeasures andmultilateral remedies
Ifanimported product ismade subject toanycountermeasures imposed following recourse
tothedispute settlement procedures oftheSubsidies Agreement, andsuchmeasures areappropriate
toremove theinjury caused bythecountervailable subsidies, anycountervailing dutyimposed with
regard tothatproduct shallimmediately besuspended, orrepealed, asappropriate.G/SCM/N/1/EEC/2
Page33
Article 33
Final provisions
ThisRegulation shallnotpreclude theapplication of:
(a) anyspecial ruleslaiddown inagreements concluded between theCommunity andthird
countries;
(b) theCommunity regulations intheagricultural sector andCouncil Regulations (EC)
No3448/93 of6December 1993 laying down thetrade arrangements applicable to
certaingoodsresultingfromtheprocessingofagriculturalproducts6,(EEC)No2730/75
of29October 1975onglucose andlactose7and(EEC) No2783/75 of29October 1975
onthecommon system oftrade forovalbumin andlactalbumin8;thisRegulation shall
operate bywayofcomplement tothose regulations andinderogation from any
provisions thereof which preclude theapplication ofcountervailing duties;
(c) special measures, provided thatsuchaction doesnotruncounter toobligations under
theGATT.
Article 34
Repeal ofexisting legislation andtransitional measures
Regulation (EC) No3284/94 ishereby repealed.
However, therepeal ofRegulation (EC) No3284/94 shall notprejudice thevalidity of
proceedings initiated thereunder.
References toRegulations (EEC) No2423/88 and(EC) No3284/94 shallbeconstrued as
references tothisRegulation, where appropriate.
Article 35
Entry intoforce
ThisRegulation shallenter intoforce onthedayofitspublication intheOfficial Journal of
theEuropean Communities.
ThisRegulation shallbebinding initsentirety anddirectly applicable inallMember States.
Done atLuxembourg, 6October 1997.
FortheCouncil
ThePresident
J.POOS
6OJL318, 20.12.1993, p.18.
7OJL281, 1.11.1975, p.20. Regulation aslastamended byCommission Regulation (EC) No.2931/95 (OJL307,
20.12.1995, p.10).
8OJL282,1.11.1975, p.104. Regulation aslastamended byCommission Regulation (EC) No.2916/95 (OJL305,
19.12.1995, p.49).G/SCM/N/1/EEC/2
Page34
ANNEX I
ILLUSTRATIVE LIST OFEXPORT SUBSIDIES
(a) Theprovision bygovernments ofdirect subsidies toafirmoranindustry contingent upon
export performance.
(b) Currency retention schemes oranysimilar practices which involve abonus onexports.
(c) Internal transport andfreight charges onexport shipments, provided ormandated by
governments, onterms more favourable thanfordomestic shipments.
(d) Theprovision bygovernments ortheir agencies either directly orindirectly through
government-mandated schemes, ofimported ordomestic products orservices foruseinthe
production ofexported goods, onterms orconditions more favourable thanforprovision of
likeordirectly competitive products orservices foruseintheproduction ofgoods fordomestic
consumption, if(inthecaseofproducts) suchterms orconditions aremore favourable than
those commercially available9onworld markets totheirexporters.
(e) Thefullorpartial exemption, remission, ordeferral specifically related toexports, ofdirect
taxes10orsocial welfare charges paidorpayable byindustrial orcommercial enterprises.11
(f) Theallowance ofspecial deductions directly related toexports orexport performance, over
andabove those granted inrespect ofproduction fordomestic consumption, inthecalculation
ofthebaseonwhich direct taxes arecharged.
9Theterm"commercially available" means thatthechoice between domestic andimported products isunrestricted and
depends onlyoncommercial considerations.
10Forthepurpose ofthisRegulation:
- theterm"direct taxes" shallmean taxes onwages, profits, interests, rents, royalties, andallother forms
ofincome andtaxes ontheownership ofrealproperty;
- theterm"import charges" shallmean tariffs, duties, andother fiscal charges notelsewhere enumerated
inthisnotethatarelevied onimports;
- theterm "indirect taxes" shall mean sales, excise, turnover, value added, franchise, stamp, transfer,
inventory andequipment taxes, border taxes andalltaxes other thandirect taxes andimport charges;
- "prior-stage" indirect taxes arethose levied ongoods orservices useddirectly orindirectly inmaking
theproduct;
- "cumulative" indirect taxes aremulti-staged taxes levied where there isnomechanism forsubsequent
crediting ofthetaxifthegoods orservices subject totaxatonestage ofproduction areusedinasucceeding
stateofproduction;
- "remission" oftaxes includes therefund orrebate oftaxes;
- "remission ordrawback" includes thefullorpartial exemption ordeferral ofimport charges.
11Deferral maynotamount toanexport subsidy where, forexample, appropriate interest charges arecollected.G/SCM/N/1/EEC/2
Page35
(g) Theexemption orremission, inrespect oftheproduction anddistribution ofexported products,
ofindirect taxes10inexcess ofthose levied inrespect oftheproduction anddistribution oflike
products when soldfordomestic consumption.
(h) Theexemption, remission ordeferral ofprior-stage cumulative indirect taxes10ongoods or
services usedintheproduction ofexported products inexcess oftheexemption, remission
ordeferral oflikeprior-stage cumulative indirect taxes ongoods orservices usedinthe
production oflikeproducts when soldfordomestic consumption; provided, however, that
prior-stagecumulativeindirecttaxesmaybeexempted,remittedordeferredonexportedproducts
even when notexempted, remitted ordeferred onlikeproducts when soldfordomestic
consumption, iftheprior-stage cumulative indirect taxesarelevied oninputs thatareconsumed
intheproduction oftheexported product (making normal allowance forwaste.12Thisitem
shallbeinterpreted inaccordance withtheguidelines onconsumption ofinputs intheproduction
process contained inAnnex II.
(i) Theremission ordrawback ofimport charges10inexcess ofthose levied onimported inputs
thatareconsumed intheproduction oftheexported product (making normal allowance for
waste); provided, however, thatinparticular cases afirmmayuseaquantity ofhome market
inputs equal to,andhaving thesame quality andcharacteristics as,theimported inputs asa
substitute fortheminorder tobenefit fromthisprovision iftheimport andthecorresponding
export operations bothoccur within areasonable timeperiod, nottoexceed twoyears. This
itemshallbeinterpreted inaccordance withtheguidelines onconsumption ofinputs inthe
production process contained inAnnex IIandtheguidelines inthedetermination ofsubstitution
drawback systems asexport subsidies contained inAnnex III.
(j) Theprovision bygovernments (orspecial institutions controlled bygovernments) ofexport
credit guarantee orinsurance programmes, ofinsurance orguarantee programmes against
increases inthecostofexported products orofexchange riskprogrammes, atpremium rates
which areinadequate tocover thelong-term operating costs andlosses oftheprogrammes.
(k) Thegrantbygovernments (orspecial institutions controlled byand/or acting under theauthority
ofgovernments) ofexport credits atratesbelow those which theyactually havetopayforthe
funds soemployed (orwould havetopayiftheyborrowed oninternational capital markets
inorder toobtain funds ofthesame maturity andother credit terms anddenominated inthe
samecurrency astheexport credit), orthepayment bythemofallorpartofthecostsincurred
byexporters orfinancial institutions inobtaining credits, insofar astheyareusedtosecure
amaterial advantage inthefieldofexport credit terms.
Provided, however, thatifaMember oftheWTO isaparty toaninternational undertaking
onofficial export credits towhich atleast 12original such Members areparties asof
1January1979(orasuccessorundertakingwhichhasbeenadoptedbythoseoriginalMembers),
orifinpractice aMember oftheWTO applies theinterest ratesprovisions oftherelevant
undertaking, anexport credit practice which isinconformity withthose provisions shallnot
beconsidered anexport subsidy.
(l) AnyotherchargeonthepublicaccountconstitutinganexportsubsidyinthesenseofArticleXVI
ofGATT 1994.
12Paragraph (h)doesnotapply tovalue-added taxsystems andborder-tax adjustment inlieuthereof; theproblem of
theexcessive remission ofvalue-added taxes isexclusively covered byparagraph (g).G/SCM/N/1/EEC/2
Page36
ANNEX II
GUIDELINES ONCONSUMPTION OFINPUTS INTHE PRODUCTION PROCESS13
I
1. Indirect taxrebate schemes canallow forexemption, remission ordeferral ofprior-stage
cumulative indirect taxes levied oninputs thatareconsumed intheproduction oftheexported product
(making normal allowance forwaste). Similarly, drawback schemes canallow fortheremission or
drawback ofimport charges levied oninputs thatareconsumed intheproduction oftheexported product
(making normal allowance forwaste).
2. Theillustrative listofexport subsidies inAnnex Imakes reference totheterm'inputs that
areconsumed intheproduction oftheexported product ‘inparagraphs (h)and(i).Pursuant to
paragraph (h),indirect taxrebate schemes canconstitute anexport subsidy totheextent thattheyresult
inexemption, remission ordeferral ofprior-stage cumulative indirect taxes inexcess oftheamount
ofsuchtaxes actually levied oninputs thatareconsumed intheproduction oftheexported product.
Pursuant toparagraph (i),drawback schemes canconstitute anexport subsidy totheextent thatthey
result inaremission ordrawback ofimport charges inexcess ofthose actually levied oninputs that
areconsumed intheproduction oftheexported product. Bothparagraphs stipulate thatnormal allowance
forwaste mustbemade infindings regarding consumption ofinputs intheproduction oftheexported
product. Paragraph (i)alsoprovides forsubstitution, where appropriate.
II
3. Inexamining whether inputs areconsumed intheproduction oftheexported product, aspart
ofacountervailingdutyinvestigationpursuanttothisRegulation,theCommissionmustnormallyproceed
onthefollowing basis.
4. Where itisalleged thatanindirect taxrebate scheme, oradrawback scheme, conveys asubsidy
byreason ofover-rebate orexcess drawback ofindirect taxes orimport charges oninputs consumed
intheproduction oftheexported product, theCommission mustnormally firstdetermine whether the
government oftheexporting country hasinplace andapplies asystem orprocedure toconfirm which
inputs areconsumed intheproduction oftheexported product andinwhatamounts. Where sucha
system orprocedure isdetermined tobeapplied, theCommission must normally thenexamine the
system orprocedure toseewhether itisreasonable, effective forthepurpose intended, andbased on
generallyacceptedcommercialpracticesinthecountryofexport.TheCommissionmaydeemitnecessary
tocarry out,inaccordance withArticle 26(2),certain practical testsinorder toverify information
ortosatisfy itself thatthesystem orprocedure isbeing effectively applied.
5. Where thereisnosuchsystem orprocedure, where itisnotreasonable, orwhere itisinstituted
andconsidered reasonable butisfound nottobeapplied ornottobeapplied effectively, afurther
examination bytheexporting country based ontheactual inputs involved willnormally needtobe
carried outinthecontext ofdetermining whether anexcess payment occurred. IftheCommission deems
itnecessary, afurther examination maybecarried outinaccordance withparagraph 4.
13Inputs consumed intheproduction process areinputs physically incorporated, energy, fuelsandoilusedintheproduction
process andcatalysts which areconsumed inthecourse oftheir usetoobtain theexported product.G/SCM/N/1/EEC/2
Page37
6. TheCommission mustnormally treatinputs asphysically incorporated ifsuchinputs areused
intheproduction process andarephysically present intheproduct exported. Aninput neednotbe
present inthefinalproduct inthesame form inwhich itentered theproduction process.
7. Indeterminingtheamountofaparticularinputthatisconsumedintheproductionoftheexported
product, a'normal allowance forwaste‘must normally betaken intoaccount, andsuchwaste must
normally betreated asconsumed intheproduction oftheexported product. Theterm'waste‘refers
tothatportion ofagiven inputwhich doesnotserve anindependent function intheproduction process,
isnotconsumed intheproduction oftheexported product (forreasons suchasinefficiencies) andis
notrecovered, usedorsoldbythesame manufacturer.
8. TheCommission 'sdetermination ofwhether theclaimed allowance forwaste is'normal ‘must
normally takeintoaccount theproduction process, theaverage experience oftheindustry inthecountry
ofexport, andother technical factors, asappropriate. TheCommission must bearinmind thatan
important question iswhether theauthorities intheexporting country havereasonably calculated the
amount ofwaste, when suchanamount isintended tobeincluded inthetaxordutyrebate orremission.G/SCM/N/1/EEC/2
Page38
ANNEX III
GUIDELINES INTHE DETERMINATION OFSUBSTITUTION DRAWBACK
SYSTEMS ASEXPORT SUBSIDIES
I
Drawback systems canallow fortherefund ordrawback ofimport charges oninputs which
areconsumed intheproduction process ofanother product andwhere theexport ofthislatter product
contains domestic inputs having thesamequality andcharacteristics asthose submitted fortheimported
inputs. Pursuant toparagraph (i)ofAnnex I,substitution drawback systems canconstitute anexport
subsidy totheextent thattheyresult inanexcess drawback oftheimport charges levied initially on
theimported inputs forwhich drawback isbeing claimed.
II
Inexamining anysubstitution drawback system aspartofacountervailing dutyinvestigation
pursuant tothisRegulation, theCommission must normally proceed onthefollowing basis:
1. paragraph (i)ofAnnex Istipulates thathome market inputs maybesubstituted forimported
inputs intheproduction ofaproduct forexport provided suchinputs areequal inquantity to,
andhavesamequalityandcharacteristicsas,theimportedinputsbeingsubstituted.Theexistence
ofaverification system orprocedure isimportant because itenables thegovernment ofthe
exporting country toensure anddemonstrate thatthequantity ofinputs forwhich drawback
isclaimed doesnotexceed thequantity ofsimilar products exported, inwhatever form, and
thatthereisnotdrawback ofimport charges inexcess ofthose originally levied ontheimported
inputs inquestion;
2. where itisalleged thatasubstitution drawback system conveys asubsidy, theCommission
must normally firstproceed todetermine whether thegovernment oftheexporting country
hasinplace andapplies averification system orprocedure. Where suchasystem orprocedure
isdetermined tobeapplied, theCommission shall normally thenexamine theverification
procedures toseewhether theyarereasonable, effective forthepurpose intended, andbased
ongenerally accepted commercial practices inthecountry ofexport. Totheextent thatthe
procedures aredetermined tomeet thistestandareeffectively applied, nosubsidy willbe
presumed toexist. Itmaybedeemed necessary bytheCommission tocarry out,inaccordance
withArticle 26(2),certain practical testsinorder toverify information ortosatisfy itselfthat
theverification procedures arebeing effectively applied;
3. where there arenoverification procedures, where theyarenotreasonable, orwhere such
procedures areinstituted andconsidered reasonable butarefound notbeactually applied or
notbeapplied effectively, there maybeasubsidy. Insuchcases, further examination bythe
exporting country based ontheactual transactions involved would needtobecarried outto
determine whether anexcess payment occurred. IftheCommission deems itnecessary, afurther
examination matbecarried outinaccordance withpoint 2;
4. theexistence ofasubstitution drawback provision under which exporters areallowed toselect
particular import shipments onwhich drawback isclaimed should notofitself beconsidered
toconvey asubsidy;G/SCM/N/1/EEC/2
Page39
5. anexcess drawback ofimport charges within themeaning ofparagraph (i)ofannex Iwould
bedeemed toexist where governments paidinterest onanymonies refunded under their
drawback schemes, totheextent oftheinterest actually paidorpayable.G/SCM/N/1/EEC/2
Page40
ANNEX IV
(This Annex reproduces Annex 2totheAgreement onAgriculture. Anyterms orexpressions
which arenotexplained herein orwhich arenotself-explanatory aretobeinterpreted inthecontext
ofthatAgreement.)
DOMESTIC SUPPORT: THE BASIS OFEXEMPTION
FROM THE REDUCTION COMMITMENTS
1. Domestic support measures forwhich exemption fromthereduction commitments isclaimed
shallmeetthefundamental requirement thattheyhaveno,oratmostminimal, trade-distorting effects
oreffects onproduction. Accordingly, allmeasures forwhich exemption isclaimed shallconform
tothefollowing basic criteria:
(a) thesupport inquestion shall beprovided through apublicly-funded government
programme (including government revenue foregone) notinvolving transfers from
consumers; and,
(b) thesupport inquestion shallnothavetheeffect ofproviding pricesupport toproducers;
pluspolicy-specific criteria andconditions assetoutbelow.
Government service programmes
2. General services
Policies inthiscategory involve expenditures (orrevenue foregone) inrelation toprogrammes
which provide services orbenefits toagriculture ortheruralcommunity. They shallnotinvolve direct
payments toproducers orprocessors. Such programmes, which include butarenotrestricted tothe
following list,shallmeetthegeneral criteria inparagraph 1andpolicy-specific conditions where set
outbelow:
(a) research, including general research, research inconnection with environmental
programmes, andresearch programmes relating toparticular products;
(b) pestanddisease control, including general andproduct-specific pestanddisease control
measures, suchasearly-warning systems, quarantine anderadication;
(c) training services, including bothgeneral andspecific training facilities;
(d) extension andadvisory services, including theprovision ofmeans tofacilitate the
transfer ofinformation andtheresults ofresearch toproducers andconsumers;
(e) inspectionservices,includinggeneralinspectionservicesandtheinspectionofparticular
products forhealth, safety, grading orstandardization purposes;
(f) marketing andpromotion services, including market information, advice andpromotion
relating toparticular products butexcluding expenditure forunspecified purposes that
could beusedbysellers toreduce theirselling priceorconfer adirect economic benefit
topurchasers; andG/SCM/N/1/EEC/2
Page41
(g) infrastructural services, including: electricity reticulation, roads andother means of
transport,marketandportfacilities,watersupplyfacilities,damsanddrainageschemes,
andinfrastructural works associated withenvironmental programmes. Inallcases the
expenditure shallbedirected totheprovision orconstruction ofcapital works only,
andshall exclude thesubsidized provision ofon-farm facilities other thanforthe
reticulation ofgenerally available public utilities. Itshallnotinclude subsidies toinputs
oroperating costs, orpreferential usercharges.
3. Public stockholding forfoodsecurity purposes14
Expenditures (orrevenue foregone) inrelation totheaccumulation andholding ofstocks of
products which form anintegral partofafoodsecurity programme identified innational legislation.
Thismayinclude government aidtoprivate storage ofproducts aspartofsuchaprogramme.
Thevolume andaccumulation ofsuchstocks shallcorrespond topredetermined targets related
solely tofoodsecurity. Theprocess ofstock accumulation anddisposal shallbefinancially transparent.
Food purchases bythegovernment shallbemade atcurrent market prices andsalesfromfoodsecurity
stocks shallbemade atnolessthanthecurrent domestic market price fortheproduct andquality in
question.
4.Domestic foodaid15
Expenditure (orrevenue foregone) inrelation totheprovision ofdomestic foodaidtosections
ofthepopulation inneed.
Eligibility toreceive thefoodaidshallbesubject toclearly-defined criteria related tonutritional
objectives. Suchaidshallbeintheformofdirect provision offoodtothose concerned ortheprovision
ofmeans toallow eligible recipients tobuyfoodeither atmarket oratsubsidized prices. Foodpurchases
bythegovernment shallbemade atcurrent market prices andthefinancing andadministration ofthe
aidshallbetransparent.
5. Direct payments toproducers
Support provided through direct payments (orrevenue foregone, including payments inkind)
toproducers forwhich exemption fromreduction commitments asclaimed shallmeetthebasiccriteria
setoutinparagraph 1,plusspecific criteria applying toindividual types ofdirect payment assetout
inparagraphs 6to13.Where exemption from reduction isclaimed foranyexisting ornewtypeof
direct payment other thanthose specified inparagraphs 6to13,itshallconform tocriteria (b)to(e)
inparagraph 6,inaddition tothegeneral criteria setoutinparagraph 1.
14Forthepurpose ofparagraph 3ofthisAnnex, governmental stockholding programmes forfoodsecurity purposes in
developing countries whose operation istransparent andconducted inaccordance withofficially published objective criteria
orguidelines shall beconsidered tobeinconformity withtheprovisions ofthisparagraph, including programmes under
which stocks offoodstuffs forfoodsecurity purposes areacquired andreleased atadministered prices, provided thatthe
difference between theacquisition price andtheexternal reference price isaccounted forintheAMS.
15Forthepurposes ofparagraphs 3and4ofthisAnnex, theprovision offoodstuffs atsubsidized prices withtheobjective
ofmeeting foodrequirements ofurban andrural poorindeveloping countries onaregular basis atreasonable prices shall
beconsidered tobeinconformity withtheprovisions ofthisparagraph.G/SCM/N/1/EEC/2
Page42
6. Decoupled income support
(a) Eligibility forsuchpayments shallbedetermined byclearly-defined criteria suchasincome,
status asaproducer orlandowner, factor useorproduction levelinadefined andfixed base
period.
(b) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,thetype
orvolume ofproduction (including livestock units) undertaken bytheproducer inanyyear
afterthebaseperiod.
(c) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,theprices,
domestic orinternational, applying toanyproduction undertaken inanyyearafterthebase
period.
(d) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,thefactors
ofproduction employed inanyyearafterthebaseperiod.
(e) Noproduction shallberequired inorder toreceive suchpayments.
7. Government financial participation inincome insurance andincome safety-net programmes
(a) Eligibility forsuchpayments shallbedetermined byanincome loss,taking intoaccount only
income derived from agriculture, which exceeds 30percentofaverage gross income orthe
equivalent innetincome terms (excluding anypayments from thesame orsimilar schemes)
inthepreceding three-year period orathree-year average based onthepreceding five-year
period, excluding thehighest andthelowest entry. Anyproducer meeting thiscondition shall
beeligible toreceive thepayments.
(b) Theamount ofsuchpayments shallcompensate forlessthan70percentoftheproducer 's
income lossintheyeartheproducer becomes eligible toreceive thisassistance.
(c) Theamount ofanysuchpayments shallrelate solely toincome; itshallnotrelate tothetype
orvolume ofproduction (including livestock units) undertaken bytheproducer; ortotheprices,
domestic orinternational, applying tosuchproduction; ortothefactors ofproduction employed.
(d) Where aproducer receives inthesame yearpayments pursuant tothisparagraph andpursuant
toparagraph 8(relief from natural disasters), thetotalofsuchpayments shallbelessthan
100percentoftheproducer 'stotalloss.
8. Payments (made either directly orbywayofagovernment financial participation incrop
insurance schemes) forrelief from natural disasters
(a) Eligibility forsuchpayments shallariseonlyfollowing aformal recognition bygovernment
authorities thatanatural orlikedisaster (including disease outbreaks, pestinfestations, nuclear
accidents, andwarontheterritory oftheMember concerned) hasoccurred orisoccurring;
andshallbedetermined byaproduction losswhich exceeds 30percentoftheaverage of
production inthepreceding three-year period orathree-year average based onthepreceding
five-year period, excluding thehighest andthelowest entry.
(b) Paymentsmadefollowingadisastershallbeappliedonlyinrespectoflossesofincome,livestock
(including payments inconnection withtheveterinary treatment ofanimals), landorother
production factors duetothenatural disaster inquestion.G/SCM/N/1/EEC/2
Page43
(c) Payments shallcompensate fornotmore thanthetotalcostofreplacing suchlosses andshall
notrequire orspecify thetypeorquantity offuture production.
(d) Payments made during adisaster shallnotexceed thelevel required toprevent oralleviate
further lossasdefined incriterion (b).
(e) Where aproducer receives inthesame yearpayments pursuant tothisparagraph andpursuant
toparagraph7(incomeinsuranceandincomesafety-netprogrammes),thetotalofsuchpayments
shallbelessthan100percentoftheproducer 'stotalloss.
9. Structural adjustment assistance provided through producer retirement programmes
(a) Eligibility forsuchpayments shallbedetermined byreference toclearly defined criteria in
programmes designed tofacilitate theretirement ofpersons engaged inmarketable agricultural
production, ortheirmovement tonon-agricultural activities.
(b) Payments shallbeconditional upon thetotalandpermanent retirement oftherecipients from
marketable agricultural production.
10. Structural adjustment assistance provided through resource retirement programmes
(a) Eligibility forsuchpayments shallbedetermined byreference toclearly defined criteria in
programmes designed toremove landorother resources, including livestock, frommarketable
agricultural production.
(b) Payments shall beconditional upon theretirement oflandfrom marketable agricultural
production foraminimum ofthree years, andinthecaseoflivestock onitsslaughter or
definitive permanent disposal.
(c) Payments shallnotrequire orspecify anyalternative useforsuchlandorother resources which
involves theproduction ofmarketable agricultural products.
(d) Payments shallnotberelated toeither typeorquantity ofproduction ortotheprices, domestic
orinternational, applying toproduction undertaken using thelandorotherresources remaining
inproduction.
11. Structural adjustment assistance provided through investment aids
(a) Eligibility forsuchpayments shallbedetermined byreference toclearly-defined criteria in
governmentprogrammesdesignedtoassistthefinancialorphysicalrestructuringofaproducer's
operations inresponse toobjectively demonstrated structural disadvantages. Eligibility forsuch
programmes may alsobebased onaclearly defined government programme forthe
reprivatization ofagricultural land.
(b) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,thetype
orvolume ofproduction (including livestock units) undertaken bytheproducer inanyyear
afterthebaseperiod other thanasprovided forunder criterion (e).
(c) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,theprices,
domestic orinternational, applying toanyproduction undertaken inanyyearafterthebase
period.G/SCM/N/1/EEC/2
Page44
(d) Thepayments shallbegiven onlyfortheperiod oftimenecessary fortherealization ofthe
investment inrespect ofwhich theyareprovided.
(e) Thepayments shallnotmandate orinanywaydesignate theagricultural products tobeproduced
bytherecipients except torequire them nottoproduce aparticular product.
(f) Thepayments shall belimited totheamount required tocompensate forthestructural
disadvantage.
12. Payments under environmental programmes
(a) Eligibility forsuchpayments shall bedetermined aspartofaclearly-defined government
environmental orconservation programme andbedependent onthefulfilment ofspecific
conditionsunderthegovernmentprogramme,includingconditionsrelatedtoproductionmethods
orinputs.
(b) Theamount ofpayment shall belimited totheextra costs orlossofincome involved in
complying withthegovernment programme.
13. Payments under regional assistance programmes
(a) Eligibility forsuchpayments shallbelimited toproducers indisadvantaged regions. Eachsuch
region mustbeaclearly designated contiguous geographical areawithadefinable economic
andadministrative identity, considered asdisadvantaged onthebasis ofneutral andobjective
criteria clearly speltoutinalaworregulation andindicating thattheregion 'sdifficulties arise
outofmore thantemporary circumstances.
(b) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,thetype
orvolume ofproduction (including livestock units) undertaken bytheproducer inanyyear
afterthebaseperiod other thantoreduce thatproduction.
(c) Theamount ofsuchpayments inanygiven yearshallnotberelated to,orbased on,theprices,
domestic orinternational, applying toanyproduction undertaken inanyyearafterthebase
period.
(d) Payments shallbeavailable onlytoproducers ineligible regions, butgenerally available to
allproducers within suchregions.
(e) Where related toproduction factors, payments shall bemade atadegressive rateabove a
threshold levelofthefactor concerned.
(f) Thepayments shallbelimited totheextra costs orlossofincome involved inundertaking
agricultural production intheprescribed area.
__________