1997R2026 — EN — 08.11.2002 — 001.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COUNCILREGULATION(EC)No2026/97
of6October1997
on protection against subsidized imports from countries not members of the European Commu-
nity
(OJ L 288, 21.10.1997, p. 1)
Amended by:
Official Journal
No page date
►M1Council Regulation (EC) No 1973/2002 of 5 November 2002 L 305 4 7.11.2002
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COUNCILREGULATION(EC)No2026/97
of6October1997
on protection against subsidized imports from countries not
membersoftheEuropeanCommunity
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, andin particular Article 113 thereof,
Having regard to the Regulations establishing the common organization
of agricultural marketsand the Regulationsadopted purs uant to Article
235 of the Treaty applicable to goodsmanufactured from agricultural
products, and in particular the provisions of those Regulations whichallow for derogation from the general principle that protectivemeasures at frontiers may be replaced solely by the measures providedfor in those Regulations,
Having regard to the proposal from the Commission (
1),
(1)Whereas, by Regulation (EEC) No 2423/88 (2), the Council
adopted common rules for protection against dumped or subsi-dized importsfrom countrieswhich are not membersof theEuropean Community;
(2)Whereasthos e ruleswere adopted in accordance with exis ting
international obligations, in particular those arising from Article
VI of the General Agreement on Tariffsand Trade (‘theGATT’), from the Agreement on Implementation of Article VIof the GATT (‘the 1979 Anti-Dumping Code’) and from theAgreement on Interpretation and Application of ArticlesVI,XVI and XXIII of the GATT (Code on Subsidies and Counter-
vailing Duties);
(3)Whereasthe conclus ion of the Uruguay Round of multilateral
trade negotiations has led to the establishment of the WorldTrade Organization (‘the WTO’);
(4)Whereas Annex 1A to the Agreement establishing the WTO(‘the WTO Agreement’), approved by Decision 94/800/EC (
3),
contains, inter alia, the General Agreement on Tariffsand Trade
1994 (‘the GATT 1994’), an Agreement on Agriculture (‘the
Agreement on Agriculture’), an Agreement on implementationof Article VI of the GATT 1994 (hereinafter referred to as‘the1994 Anti-Dumping Agreement’) and a new Agreement onSubsidies and Countervailing Measures (‘the Subsidies Agree-ment’);
(5)Whereas, in order to reach greater transparency and effectiveness
in the application by the Community of the ruleslaid down in
the 1994 Anti-Dumping Agreement and the Subsidies Agreementrespectively, it is considered necessary to adopt two separateRegulationswhich will lay down in s ufficient detail the require-mentsfor the application of each of thes e commercial defence
instruments;
(6)Whereasit istherefore appropriate to amend Community rules
governing the application of countervailing measures in the lightof the new multilateral rules, with regard inter alia to the proce-
dures for initiation of proceedings and the conduct of subsequentinvestigations, including the establishment and treatment of thefacts, the imposition of provisional measures, the imposition
and collection of countervailing duties, the duration and review
of countervailing measures, and the public disclosure of informa-tion relating to countervailing investigations;1997R2026 — EN — 08.11.2002 — 001.001 — 2
(1) OJ C 99, 26. 3. 1997, p. 1.
(2) OJ L 209, 2. 8. 1988, p. 1. Regulation aslas t amended by Regulation (EC)
No 522/94 (OJ L 66, 10. 3. 1994, p. 10).
(3) OJ L 336, 23. 12. 1994, p. 1.
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(7)Whereas, in view of the extent of the changes brought about by
the new Agreements and to ensure an adequate and transparent
implementation of the new rules, it is appropriate to transposethe language of the new Agreementsinto Community legis lationto the extent possible;
(8)Whereas, furthermore, it seems advisable to explain, in adequatedetail, when a subsidy shall be deemed to exist, according towhich principlesit s hall be countervailable (in particular whetherthe subsidy has been granted specifically), and according to
which criteria the amount of the countervailable subsidy is to
be calculated;
(9)Whereas, in determining the existence of a subsidy, it is neces-sary to demonstrate that there has been a financial contributionby a government or any public body within the territory of acountry, or that there hasbeen s ome form of income or pricesupport within the meaning of Article XVI of the GATT 1994,
and that a benefit hasthereby been conferred on the recipient
enterprise;
(10)Whereas it is necessary to explain in sufficient detail which kindof subsidies are not countervailable and which procedure shall befollowed if, during an investigation, it is determined that anenterprise undergoing investigation has received non-countervail-able subsidies;
(11)Whereas the Subsidies Agreement states that the provisionsconcerning non-countervailable subsidies shall cease to applyfive yearsafter the date of entry into force of the WTO Agree-
ment, unless they are extended by mutual agreement of the
members of the WTO; whereas it may therefore be necessary toamend thisRegulation accordingly if the validity of thos e provi-sions is not so extended;
(12)Whereas the measures listed in Annex 2 to the Agreement onAgriculture are non-countervailable, to the extent provided forin that Agreement;
(13)Whereasit isdes irable to lay down clear and detailed guidanceasto the factorswhich may be relevant for the determination ofwhether the subsidized imports have caused material injury or
are threatening to cause injury; whereas, in demonstrating that
the volume and price levelsof the importsconcerned are res pon-sible for injury sustained by a Community industry, attentionshould be given to the effect of other factors and in particularprevailing market conditionsin the Community;
(14)Whereas it is advisable to define the term ‘Community industry’and to provide that partiesrelated to exportersmay be excluded
from such industry, and to define the term ‘related’; whereas it is
also necessary to provide for countervailing duty action to betaken on behalf of producersin a region of the Community andto lay down guidelineson the definition of s uch region;
(15)Whereas it is necessary to lay down who may lodge a counter-vailing duty complaint, including the extent to which it shouldbe supported by the Community industry, and the informationon countervailable subsidies, injury and causation which such
complaint should contain; whereas it is also expedient to specify
the proceduresfor the rejection of complaintsor the initiation ofproceedings;
(16)Whereas it is necessary to lay down the manner in which inter-ested parties should be given notice of the information which theauthorities require, and should have ample opportunity to presentall relevant evidence and to defend their interests; whereas it is
also desirable to set out clearly the rules and procedures to be
followed during the investigation, in particular the rules wherebyinterested parties are to make themselves known, present theirviews and submit information within specified time limits, ifsuch views and information are to be taken into account;whereas it is also appropriate to set out the conditions under1997R2026 — EN — 08.11.2002 — 001.001 — 3
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which an interested party may have access to, and comment on,
information presented by other interested parties; whereas thereshould also be cooperation between the Member States and the
Commission in the collection of information;
(17)Whereas it is necessary to lay down the conditions under which
provisional duties may be imposed, including conditionswhereby they may be imposed no earlier than 60 days frominitiation and not later than nine monthsthereafter; whereassuch duties may in all cases be imposed by the Commission
only for a four-month period;
(18)Whereas it is necessary to specify procedures for the acceptance
of undertakingseliminating or offs etting the countervailablesubsidies and injury in lieu of the imposition of provisional ordefinitive duties; whereas it is also appropriate to lay down theconsequences of breach or withdrawal of undertakings and that
provisional duties may be imposed in cases of suspected viola-
tion or where further investigation is necessary to supplementthe findings; whereas, in accepting undertakings, care should betaken that the proposed undertakings, and their enforcement, donot lead to anti-competitive behaviour;
(19)Whereas it is necessary to provide that the termination of cases
should, irrespective of whether definitive measures are adopted
or not, normally take place within 12 months, and in no caselater than 13 months, from the initiation of the investigation;
(20)Whereas an investigation or proceeding should be terminatedwhenever the amount of the subsidy is found to be de minimis
or if, particularly in the case of imports originating in developing
countries, the volume of subsidized imports or the injury is
negligible, and it is appropriate to define those criteria; whereas,where measures are to be imposed, it is necessary to provide forthe termination of investigations and to lay down that measuresshould be less than the amount of countervailable subsidies ifsuch lesser amount would remove the injury, and also to specify
the method of calculating the level of measures in cases of
sampling;
(21)Whereas it is necessary to provide for the retroactive collectionof provisional duties if that is deemed appropriate and to definethe circumstances which may trigger the retroactive applicationof dutiesin order to avoid the undermining of the definitive
measures to be applied; whereas it is also necessary to provide
that dutiesmay be applied retroactively in cas esof breach orwithdrawal of undertakings;
(22)Whereas it is necessary to provide that measures are to lapseafter five years unless a review indicates that they should bemaintained; whereas it is also necessary to provide, in cases
where sufficient evidence is submitted of changed circumstances,
for interim reviewsor for inves tigationsto determine whetherrefundsof countervailing dutiesare warranted;
(23)Whereas, even though the Subsidies Agreement does not containprovisions concerning circumvention of countervailing measures,the possibility of such circumvention exists, in terms similar,
albeit not identical, to the circumvention of anti-dumping
measures; whereas it appears therefore appropriate to enact ananti-circumvention provision in this Regulation;
(24)Whereas it is expedient to permit the suspension of counter-vailing measures where there is a temporary change in marketconditions which makes the continued imposition of such
measures temporarily inappropriate;
(25)Whereas it is necessary to provide that imports under investiga-
tion may be made subject to registration upon importation inorder to enable measures to be subsequently applied againstsuch imports;
(26)Whereas, in order to ensure proper enforcement of measures, itis necessary that Member States monitor, and report to the1997R2026 — EN — 08.11.2002 — 001.001 — 4
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Commission, the import trade in products subject to investiga-
tion or subject to measures, and also the amount of dutiescollected under thisRegulation;
(27)Whereas it is necessary to provide for consultation of an Advi-sory Committee at regular and specified stages of theinvestigation; whereas the Committee should consist of represen-tativesof Member Stateswith a repres entative of theCommission as chairman;
(28)Whereasit isexpedient to provide for verification vis itsto check
information submitted on countervailable subsidies and injury,
such visits being, however, conditional on proper replies to ques-tionnairesbeing received;
(29)Whereas it is essential to provide for sampling in cases wherethe number of partiesor trans actionsislarge in order to permitcompletion of investigations within the appointed time limits;
(30)Whereas, it is necessary to provide that, where parties do not
cooperate satisfactorily, other information may be used to estab-
lish findings and that such information may be less favourable tothe partiesthan if they had cooperated;
(31)Whereas provision should be made for the treatment of confiden-tial information so that business or governmental secrets are notdivulged;
(32)Whereas it is essential that provision be made for proper disclo-
sure of essential facts and considerations to parties which qualify
for such treatment and that such disclosure be made, with dueregard to the decision-making process in the Community, withina time period which permits parties to defend their interests;
(33)Whereas it is prudent to provide for an administrative systemunder which arguments can be presented as to whether measuresare in the Community interest, including the interests of consu-
mers, and to lay down the time periods within which such
information has to be presented, together with the disclosurerightsof the partiesconcerned;
(34)Whereasin applying the rulesof the Subs idiesAgreement it isessential, in order to maintain the balance of rights and obliga-tions which this Agreement sought to establish, that the
Community take account of their interpretation by the Commu-
nity's major trading partners, as reflected in legislation orestablished practice;
(35)Whereas, by Regulation (EC) No 3284/94 of 22 December 1994on protection against subsidized imports from countries notmembersof the European Community (
1), the Council replaced
Regulation (EEC) No 2423/88 and instituted a new common
system of defence against subsidized imports from countries notmembersof the European Community;
(36)Whereasdrafting problemsin the text of Regulation (EC)No 3284/94 became apparent on publication; whereas, moreover,the Regulation hasalready been amended;
(37)Whereas, in the interests of clarity, transparency and legal
certainty, that Regulation should therefore be repealed and
replaced, without prejudice to the countervailing proceedingsalready initiated under it or under Regulation (EEC) No 2423/88,1997R2026 — EN — 08.11.2002 — 001.001 — 5
(1) OJ L 349, 31. 12. 1994, p. 22. Regulation asamended by Regulation (EC)
No 1252/95 (OJ L 122, 2. 6. 1995, p. 2).
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HAS ADOPTED THIS REGULATION:
Article 1
Principles
1. A countervailing duty may be imposed for the purpose of offset-
ting any subsidy granted, directly or indirectly, for the manufacture,
production, export or transport of any product whose release for free
circulation in the Community causes injury.
2. For the purpose of this Regulation, a product is considered to be
subsidized if it benefits from a countervailable subsidy as defined in
Articles2 and 3.
3. Such subsidy may be granted by the government of the country of
origin of the imported product, or by the government of an inter-mediate country from which the product isexported to the
Community, known for the purpose of this Regulation as ‘the country
of export’.
The term ‘government’ isdefined, for the purpos esof thisRegulation
asa government or any public body within the territory of the country
of origin or export.
4. Notwithstanding paragraphs 1, 2 and 3, where products are not
directly imported from the country of origin but are exported to theCommunity from an intermediate country, the provisions of this Regu-
lation shall be fully applicable and the transaction or transactions shall,
where appropriate, be regarded ashaving taken place between thecountry of origin and the Community.
5. For the purpose of this Regulation the term ‘like product’ shall be
interpreted to mean a product which isidentical, that isto s ay, alike in
all respects, to the product under consideration, or in the absence of
such a product, another product which although not alike in allrespects, has characteristics closely resembling those of the productunder consideration.
Article 2
Definitionofasubsidy
A subsidy shall be deemed to exist if:
1. (a) there isa financial contribution by a government in the country
of origin or export, that isto s ay, where:
(i) a government practice involvesa direct trans fer of funds
(for example, grants, loans, equity infusion), potential directtransfers of funds or liabilities (for example, loan guaran-tees);
(ii) government revenue that isotherwis e due isforgone or not
collected (for example, fiscal incentives such as tax
credits); in this regard, the exemption of an exportedproduct from dutiesor taxesborne by the like productwhen destined for domestic consumption, or the remissionof such duties or taxes in amounts not in excess of those
which have been accrued, shall not be deemed to be a
subsidy, provided that such an exemption is granted inaccordance with the provisions of Annexes I to III;
(iii) a government providesgoodsor s ervicesother than general
infrastructure, or purchases goods;
(iv) a government:
— makespaymentsto a funding mechanis m,
or
— entrusts or directs a private body to carry out one or
more of the type of functionsillus trated in points(i),(ii) and (iii) which would normally be vested in thegovernment, and the practice, in no real sense, differsfrom practicesnormally followed by governments ;1997R2026 — EN — 08.11.2002 — 001.001 — 6
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or
(b) there isany form of income or price s upport within the meaning
of Article XVI of the GATT 1994; and
2. a benefit isthereby conferred.
Article 3
Countervailablesubsidies
1. Subsidies shall be subject to countervailing measures only if they
are specific, as defined in paragraphs 2, 3 and 4.
2. In order to determine whether a subsidy is specific to an enter-
prise or industry or group of enterprises or industries (hereinafterreferred to as ‘certain enterprises’) within the jurisdiction of thegranting authority, the following principless hall apply:
(a) where the granting authority, or the legislation pursuant to which
the granting authority operates, explicitly limits access to a subsidy
to certain enterprises, such subsidy shall be specific;
(b) where the granting authority, or the legislation pursuant to which
the granting authority operates, establishes objective criteria orconditionsgoverning the eligibility for, and the amount of, asubsidy, specificity shall not exist, provided that the eligibility is
automatic and that such criteria and conditions are strictly adhered
to.
For the purpose of this Article, objective criteria or conditions
mean criteria or conditionswhich are neutral, which do not favourcertain enterprises over others, and which are economic in natureand horizontal in application, such as number of employees or
size of enterprise.
The criteria or conditions must be clearly set out by law, regula-
tion, or other official document, so as to be capable of verification;
(c) if, notwithstanding any appearance of non-specificity resulting from
the application of the principleslaid down in s ubparagraphs(a) and
(b), there are reasons to believe that the subsidy may in fact be
specific, other factors may be considered. Such factors are: use ofa subsidy programme by a limited number of certain enterprises;predominant use by certain enterprises; the granting of dispropor-tionately large amounts of subsidy to certain enterprises; and themanner in which discretion has been exercised by the granting
authority in the decision to grant a subsidy. In this regard, informa-
tion on the frequency with which applications for a subsidy arerefused or approved and the reasons for such decisions shall, inparticular, be considered.
In applying the first subparagraph, account shall be taken of the
extent of diversification of economic activities within the jurisdic-
tion of the granting authority, aswell asof the length of timeduring which the subsidy programme has been in operation.
3. A subsidy which is limited to certain enterprises located within a
designated geographical region within the jurisdiction of the grantingauthority shall be specific. The setting or changing of generally applic-able tax rates by all levels of government entitled to do so shall not bedeemed to be a specific subsidy for the purposes of this Regulation.
4. Notwithstanding paragraphs 2 and 3, the following subsidies shall
be deemed to be specific:
(a) subsidies contingent, in law or in fact, whether solely or as one of
several other conditions, upon export performance, including those
illustrated in Annex I.
Subsidies shall be considered to be contingent in fact upon export
performance when the factsdemons trate that the granting of asubsidy, without having been made legally contingent upon exportperformance, isin fact tied to actual or anticipated exportation orexport earnings. The mere fact that a subsidy is accorded to enter-1997R2026 — EN — 08.11.2002 — 001.001 — 7
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prises which export shall not for that reason alone be considered to
be an export subsidy within the meaning of this provision;
(b) subsidies contingent, whether solely or as one of several other
conditions, upon the use of domestic over imported goods.
5. Any determination of specificity under the provisions of this
Article shall be clearly substantiated on the basis of positive evidence.
Article 5
Calculationoftheamountofthecountervailable subsidy
The amount of countervailable subsidies, for the purposes of this Regu-
lation, shall be calculated in terms of the benefit conferred on therecipient which is found to exist during the investigation period forsubsidization. Normally this period shall be the most recent accounting
year of the beneficiary, but may be any other period of at least six
monthsprior to the initiation of the inves tigation for which reliablefinancial and other relevant data are available.
Article 6
Calculationofbenefittotherecipient
Asregardsthe calculation of benefit to the recipient, the following
ruless hall apply:
(a) government provision of equity capital shall not be considered to
confer a benefit, unless the investment can be regarded as inconsis-tent with the usual investment practice (including for the provisionof risk capital) of private investors in the territory of the country oforigin and/or export;
(b) a loan by a government shall not be considered to confer a benefit,
unless there is a difference between the amount that the firmreceiving the loan payson the government loan and the amountthat the firm would pay for a comparable commercial loan whichthe firm could actually obtain on the market. In that event the
benefit shall be the difference between these two amounts;
(c) a loan guarantee by a government shall not be considered to confer
a benefit, unless there is a difference between the amount that thefirm receiving the guarantee payson a loan guaranteed by thegovernment and the amount that the firm would pay for a compar-
able commercial loan in the absence of the government guarantee.
In this case the benefit shall be the difference between these twoamounts, adjusted for any differences in fees;
(d) the provision of goods or services or purchase of goods by a
government shall not be considered to confer a benefit, unless the
provision is made for less than adequate remuneration or the
purchase is made for more than adequate remuneration. Theadequacy of remuneration shall be determined in relation toprevailing market conditions for the product or service in questionin the country of provision or purchase (including price, quality,availability, marketability, transportation and other conditions of
purchase or sale).
If there are no such prevailing market terms and conditions for the
product or service in question in the country of provision orpurchase which can be used as appropriate benchmarks, the
following ruless hall apply:
(i) the termsand conditionsprevailing in the country concerned
shall be adjusted, on the basis of actual costs, prices and otherfactorsavailable in that country, by an appropriate amountwhich reflectsnormal market termsand conditions ; or1997R2026 — EN — 08.11.2002 — 001.001 — 8
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(ii) when appropriate, the termsand conditionsprevailing in the
market of another country or on the world market which areavailable to the recipient shall be used.
Article 7
General provisionsoncalculation
1. The amount of the countervailable subsidies shall be determined
per unit of the subsidized product exported to the Community.
In establishing this amount the following elements may be deducted
from the total subsidy:
(a) any application fee, or other costs necessarily incurred in order to
qualify for, or to obtain, the subsidy;
(b) export taxes, duties or other charges levied on the export of the
product to the Community specifically intended to offset thesubsidy.
Where an interested party claims a deduction, it must prove that the
claim isjus tified.
2. Where the subsidy is not granted by reference to the quantities
manufactured, produced, exported or transported, the amount of coun-
tervailable subsidy shall be determined by allocating the value of the
total subsidy, as appropriate, over the level of production, sales orexportsof the productsconcerned during the inves tigation period forsubsidization.
3. Where the subsidy can be linked to the acquisition or future
acquisition of fixed assets, the amount of the countervailable subsidy
shall be calculated by spreading the subsidy across a period whichreflects the normal depreciation of such assets in the industryconcerned. The amount so calculated which is attributable to the inves-tigation period, including that which derives from fixed assets acquired
before this period, shall be allocated as described in paragraph 2.
Where the assets are non-depreciating, the subsidy shall be valued as
an interest-free loan, and be treated in accordance with Article 6 (b).
4. Where a subsidy cannot be linked to the acquisition of fixed
assets, the amount of the benefit received during the investigation
period shall in principle be attributed to this period, and allocated as
described in paragraph 2, unless special circumstances arise justifyingattribution over a different period.
Article 8
Determination ofinjury
1. For the purposes of this Regulation, the term ‘injury’ shall, unless
otherwise specified, be taken to mean material injury to the Commu-nity industry, threat of material injury to the Community industry ormaterial retardation of the establishment of such an industry and shallbe interpreted in accordance with the provisions of this Article.
2. A determination of injury shall be based on positive evidence and
shall involve an objective examination of both:
(a) the volume of the subsidized imports and the effect of the subsi-
dized importson pricesin the Community market for like
products; and
(b) the consequent impact of those imports on the Community
industry.
3. With regard to the volume of the subsidized imports, considera-
tion shall be given to whether there has been a significant increase insubsidized imports, either in absolute terms or relative to production orconsumption in the Community. With regard to the effect of the subsi-dized imports on prices, consideration shall be given to whether there1997R2026 — EN — 08.11.2002 — 001.001 — 9
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has been significant price undercutting by the subsidized imports as
compared with the price of a like product of the Community industry,or whether the effect of such imports is otherwise to depress prices to a
significant degree or prevent price increases which would otherwise
have occurred, to a significant degree. No one or more of these factorscan necessarily give decisive guidance.
4. Where importsof a product from more than one country are
simultaneously subject to countervailing duty investigations, the effectsof such imports shall be cumulatively assessed only if it is determinedthat:
(a) the amount of countervailable subsidies established in relation to
the importsfrom each country ismore than de minimis asdefined
in Article 14 (5) and that the volume of importsfrom each country
isnot negligible; and
(b) a cumulative assessment of the effects of the imports is appropriate
in light of the conditionsof competition between imported productsand the conditionsof competition between the imported productsand the like Community product.
5. The examination of the impact of the subsidized imports on the
Community industry concerned shall include an evaluation of all rele-
vant economic factorsand indiceshaving a bearing on the s tate of the
industry, including: the fact that an industry is still in the process ofrecovering from the effects of past subsidization or dumping, themagnitude of the amount of countervailable subsidies, actual andpotential decline in sales, profits, output, market share, productivity,
return on investments, utilization of capacity; factors affecting Commu-
nity prices; actual and potential negative effects on cash flow,inventories, employment, wages, growth, ability to raise capital orinvestments and, in the case of agriculture, whether there has been anincreased burden on government support programmes. This list is notexhaustive, nor can any one or more of these factors necessarily give
decisive guidance.
6. It must be demonstrated, from all the relevant evidence presented
in relation to paragraph 2, that the subsidized imports are causing
injury within the meaning of thisRegulation. Specifically, thiss hallentail a demonstration that the volume and/or price levels identifiedpursuant to paragraph 3 are responsible for an impact on the Commu-nity industry as provided for in paragraph 5, and that this impact existsto a degree which enables it to be classified as material.
7. Known factors other than the subsidized imports which are
injuring the Community industry at the same time shall also be exam-
ined to ensure that injury caused by these other factors is not attributed
to the subsidized imports pursuant to paragraph 6. Factors which maybe considered in this respect include the volume and prices of non-subsidized imports, contraction in demand or changes in the patternsof consumption, restrictive trade practices of, and competition between,
third country and Community producers, developments in technology
and the export performance and productivity of the Communityindustry.
8. The effect of the subsidized imports shall be assessed in relation
to the production of the Community industry of the like product whenavailable data permit the separate identification of that production onthe basis of such criteria as the production process, producers' salesand profits. If such separate identification of that production is not
possible, the effects of the subsidized imports shall be assessed by
examination of the production of the narrowest group or range ofproducts including the like product, for which the necessary informa-tion can be provided.
9. A determination of a threat of material injury shall be based on
facts and not merely on allegation, conjecture or remote possibility.The change in circumstances which would create a situation in whichthe subsidy would cause injury must be clearly foreseen and imminent.1997R2026 — EN — 08.11.2002 — 001.001 — 10
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In making a determination regarding the existence of a threat of mate-
rial injury, consideration should be given to, inter alia, such factors as:
(a) the nature of the subsidy or subsidies in question and the trade
effectslikely to aris e therefrom;
(b) a significant rate of increase of subsidized imports into the
Community market indicating the likelihood of substantiallyincreased imports;
(c) sufficient freely disposable capacity of the exporter or an imminent
substantial increase in such capacity indicating the likelihood of
substantially increased subsidized exports to the Community,account being taken of the availability of other export marketstoabsorb any additional exports;
(d) whether importsare entering at pricesthat would, to a s ignificant
degree, depress prices or prevent price increases which otherwise
would have occurred, and would probably increase demand forfurther imports; and
(e) inventoriesof the product being inves tigated.
No one of the factors listed above by itself can necessarily give deci-
sive guidance but the totality of the factors considered must lead to theconclusion that further subsidized exports are imminent and that, unless
protective action istaken, material injury will occur.
Article 9
DefinitionofCommunityindustry
1. For the purposes of this Regulation, the term ‘Community
industry’ shall be interpreted as referring to the Community producers
as a whole of the like products or to those of them whose collective
output of the productscons titutesa major proportion, asdefined inArticle 10 (8), of the total Community production of those products,except that:
(a) when producersare related to the exportersor importersor are
themselves importers of the allegedly subsidized product, the term‘Community industry’ may be interpreted as referring to the rest of
the producers;
(b) in exceptional circumstances the territory of the Community may,
for the production in question, be divided into two or more compe-titive marketsand the producerswithin each market may beregarded as a separate industry if:
(i) the producers within such a market sell all or almost all of their
production of the product in question in that market, and
(ii) the demand in that market is not to any substantial degree met
by producers of the product in question located elsewhere inthe Community.
In such circumstances, injury may be found to exist even where a
major portion of the total Community industry is not injured,
provided that there is a concentration of subsidized imports into
such an isolated market and provided further that the subsidizedimports are causing injury to the producers of all or almost all ofthe production within such a market.
2. For the purpose of paragraph 1, producers shall be considered to
be related to exportersor importersonly if:
(a) one of them directly or indirectly controlsthe other; or
(b) both of them are directly or indirectly controlled by a third person;
or
(c) together they directly or indirectly control a third person, provided
that there are grounds for believing or suspecting that the effect ofthe relationship is such as to cause the producer concerned tobehave differently from non-related producers.1997R2026 — EN — 08.11.2002 — 001.001 — 11
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For the purpose of this paragraph, one shall be deemed to control
another when the former islegally or operationally in a pos ition toexercise restraint or direction over the latter.
3. Where the Community industry has been interpreted as referring
to the producersin a certain region, the exportersor the governmentgranting countervailable subsidies shall be given an opportunity to
offer undertakings pursuant to Article 13 in respect of the region
concerned. In such cases, when evaluating the Community interest ofthe measures, special account shall be taken of the interest of theregion. If an adequate undertaking isnot offered promptly or if thesituations set out in Article 13 (9) and (10) apply, a provisional or defi-nitive countervailing duty may be imposed in respect of the
Community as a whole. In such cases the duties may, if practicable,
be limited to specific producers or exporters.
4. The provisions of Article 8 (8) shall apply to this Article.
Article 10
Initiationofproceedings
1. Except asprovided for in paragraph 10, an inves tigation to deter-
mine the existence, degree and effect of any alleged subsidy shall beinitiated upon a written complaint by any natural or legal person, orany association not having legal personality, acting on behalf of theCommunity industry.
The complaint may be submitted to the Commission, or to a Member
State, which shall forward it to the Commission. The Commission shallsend Member States a copy of any complaint it receives. The complaint
shall be deemed to have been lodged on the first working day
following its delivery to the Commission by registered mail or theissuing of an acknowledgement of receipt by the Commission.
Where, in the absence of any complaint, a Member State is in posses-
sion of sufficient evidence of subsidization and of resultant injury to
the Community industry, it shall immediately communicate suchevidence to the Commission.
2. A complaint as referred to in paragraph 1 shall include sufficient
evidence of the existence of countervailable subsidies (including, if
possible, of their amount), injury and a causal link between the alleg-edly subsidized imports and the alleged injury. The complaint shallcontain such information as is reasonably available to the complainanton the following:
(a) identity of the complainant and a description of the volume and
value of the Community production of the like product by thecomplainant. Where a written complaint ismade on behalf of theCommunity industry, the complaint shall identify the industry on
behalf of which the complaint ismade by a lis t of all known
Community producers of the like product (or associations ofCommunity producersof the like product) and, to the extentpossible, a description of the volume and value of Communityproduction of the like product accounted for by such producers;
(b) a complete description of the allegedly subsidized product, the
namesof the country or countriesof origin and/or export in ques -
tion, the identity of each known exporter or foreign producer and a
list of known persons importing the product in question;
(c) evidence with regard to the existence, amount, nature and counter-
vailability of the subsidies in question;
(d) information on changes in the volume of the allegedly subsidized
imports, the effect of those imports on prices of the like productin the Community market and the consequent impact of the importson the Community industry, as demonstrated by relevant factors
and indiceshaving a bearing on the s tate of the Community
industry, such as those listed in Article 8 (3) and (5).
3. The Commission shall, as far as possible, examine the accuracy
and adequacy of the evidence provided in the complaint, in order to1997R2026 — EN — 08.11.2002 — 001.001 — 12
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determine whether there is sufficient evidence to justify the initiation
of an investigation.
4. An investigation may be initiated in order to determine whether
or not the alleged subsidies are ‘specific’ within the meaning of Article3 (2) and (3).
7. An investigation may also be initiated in respect of measures ofthe type listed in Annex IV, to the extent that they contain an elementof subsidy as defined by Article 2, in order to determine whether the
measures in question fully conform to the provisions of that Annex.
8. An investigation shall not be initiated pursuant to paragraph 1
unless it has been determined, on the basis of an examination as tothe degree of support for, or opposition to, the complaint expressed by
Community producersof the like product, that the complaint hasben
made by or on behalf of the Community industry. The complaint shallbe considered to have been made by or on behalf of the Communityindustry if it is supported by those Community producers whose collec-tive output constitutes more than 50 % of the total production of thelike product produced by that portion of the Community industry
expressing either support for or opposition to the complaint. However,
no investigation shall be initiated when Community producersexpressly supporting the complaint account for less than 25 % of totalproduction of the like product produced by the Community industry.
9. The authorities shall, unless a decision has been made to initiate
an investigation, avoid any publicizing of the complaint seeking theinitiation of an investigation. However, as soon as possible after receiptof a properly documented complaint pursuant to this Article, and in anyevent before the initiation of an investigation, the Commission shall
notify the country of origin and/or export concerned, which shall be
invited for consultations with the aim of clarifying the situation as tomattersreferred to in paragraph 2 and arriving at a mutually agreedsolution.
10. If, in special circumstances, the Commission decides to initiate
an investigation without having received a written complaint by or on
behalf of the Community industry for the initiation of such investiga-tion, this shall be done on the basis of sufficient evidence of theexistence of countervailable subsidies, injury and causal link, asdescribed in paragraph 2, to justify such initiation.
11. The evidence both of subsidies and of injury shall be considered
simultaneously in the decision on whether or not to initiate an investi-gation. A complaint shall be rejected where there is insufficientevidence of either countervailable subsidies or of injury to justify
proceeding with the case. Proceedings shall not be initiated against
countries whose imports represent a market share of below 1 %, unlesssuch countries collectively account for 3 % or more of Communityconsumption.
12. The complaint may be withdrawn prior to initiation, in which
case it shall be considered not to have been lodged.
13. Where, after cons ultation, it isapparent that there iss ufficient
evidence to justify initiating a proceeding, the Commission shall do sowithin 45 days of the lodging of the complaint and shall publish a
notice in the Official Journal of the European Communities . Where
insufficient evidence has been presented, the complainant shall, afterconsultation, be so informed within 45 days of the date on which thecomplaint is lodged with the Commission.
14. The notice of initiation of the proceedingss hall announce the
initiation of an investigation, indicate the product and countriesconcerned, give a summary of the information received, and providethat all relevant information is to be communicated to the Commission;it shall state the periods within which interested parties may makethemselves known, present their views in writing and submit informa-1997R2026 — EN — 08.11.2002 — 001.001 — 13
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tion, if such views and information are to be taken into account during
the investigation; it shall also state the period within which interestedparties may apply to be heard by the Commission in accordance with
Article 11 (5).
15. The Commission shall advise the exporters, importers and repre-
sentative associations of importers or exporters known to it to beconcerned, aswell asthe country of origin and/or export and thecomplainants, of the initiation of the proceedings and, with due regard
to the protection of confidential information, provide the full text of the
written complaint referred to in paragraph 1 to the known exportersandto the authoritiesof the country of origin and/or export, and make itavailable upon request to other interested parties involved. Where thenumber of exportersinvolved isparticularly high, the full text of the
written complaint may instead be provided only to the authorities of
the country of origin and/or export or to the relevant trade association.
16. A countervailing duty investigation shall not hinder the proce-
duresof cus tomsclearance.
Article 11
Theinvestigation
1. Following the initiation of the proceeding, the Commission,
acting in cooperation with the Member States, shall commence aninvestigation at Community level. Such investigation shall cover bothsubsidization and injury, and these shall be investigated simultaneously.For the purpose of a representative finding, an investigation period
shall be selected which, in the case of subsidization shall, normally,
cover the investigation period provided for in Article 5. Informationrelating to a period subsequent to the investigation period shall not,normally, be taken into account.
2. Parties receiving questionnaires used in a countervailing duty
investigation shall be given at least 30 days to reply. The time limit
for exporters shall be counted from the date of receipt of the question-naire, which for this purpose shall be deemed to have been receivedone week from the day on which it was sent to the respondent or trans-mitted to the appropriate diplomatic representative of the country oforigin and/or export. An extension to the 30-day period may be
granted, due account being taken of the time limitsof the inves tigation,
provided that the party shows due cause for such extension, in terms ofits particular circumstances.
3. The Commission may request Member States to supply informa-
tion, and Member States shall take whatever steps are necessary in
order to give effect to such requests. They shall send to the Commis-
sion the information requested together with the results of allinspections, checks or investigations carried out. Where this informa-tion is of general interest or where its transmission has been requestedby a Member State, the Commission shall forward it to the MemberStates, provided it is not confidential, in which case a non-confidential
summary shall be forwarded.
4. The Commission may request Member States to carry out all
necessary checks and inspections, particulary amongst importers,traders and Community producers, and to carry out investigations inthird countries, provided that the firms concerned give their consent
and that the government of the country in question has been officially
notified and raises no objection. Member States shall take whateversteps are necessary in order to give effect to such requests from theCommission. Officials of the Commission shall be authorized, if theCommission or a Member State so requests, to assist the officials ofMember Statesin carrying out their duties .
5. The interested parties which have made themselves known in
accordance with Article 10 (14), shall be heard if they have, withinthe period prescribed in the notice published in the Official Journal of
the European Communities, made a written request for a hearing
showing that they are an interested party likely to be affected by the1997R2026 — EN — 08.11.2002 — 001.001 — 14
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result of the proceeding and that there are particular reasons why they
should be heard.
6. Opportunities shall, on request, be provided for the importers,
exporters and the complainants, which have made themselves knownin accordance with Article 10 (14), and the government of the country
of origin and/or export, to meet those parties having adverse interests,
so that opposing views may be presented and rebuttal argumentsoffered. Provision of such opportunities must take account of the needto preserve confidentiality and of the convenience to the parties. Thereshall be no obligation on any party to attend a meeting, and failure to
do so shall not be prejudicial to that party's case. Oral information
provided under thisparagraph s hall be taken into account by theCommission in so far as it is subsequently confirmed in writing.
7. The complainants, the government of the country of origin and/or
export, importers and exporters and their representative associations,users and consumer organizations, which have made themselves knownin accordance with Article 10 (14), may, upon written request, inspectall information made available to the Commission by any party to an
investigation, as distinct from internal documents prepared by the
authoritiesof the Community or itsMember States , which isrelevantto the presentation of their cases and is not confidential within themeaning of Article 29, and that it is used in the investigation. Suchparties may respond to such information and their comments shall betaken into consideration wherever they are sufficiently substantiated in
the reponse.
8. Except in circumstances provided for in Article 28, the informa-
tion which is supplied by interested parties and upon which findings
are based shall be examined for accuracy as far as possible.
9. For proceedings initiated pursuant to Article 10 (13), an investiga-
tion shall, whenever possible, be concluded within one year. In any
event, such investigations shall in all cases be concluded within 13monthsof initiation, in accordance with the findingsmade purs uant toArticle 13 for undertakingsor the findingsmade purs uant to Article 15for definitive action.
10. Throughout the investigation, the Commission shall afford the
country of origin and/or export a reasonable opportunity to continue
consultations with a view to clarifying the factual situation and arriving
at a mutually agreed solution.
Article 12
Provisional measures
1. Provisional duties may be imposed if:
(a) proceedingshave been initiated in accordance with Article 10;
(b) a notice hasbeen given to that effect and interes ted partieshave
been given adequate opportunitiesto s ubmit information and makecommentsin accordance with Article 10 (14);
(c) a provisional affirmative determination has been made that the
imported product benefits from countervailable subsidies and of
consequent injury to the Community industry; and
(d) the Community interest calls for intervention to prevent such
injury.
The provisional duties shall be imposed no earlier than 60 days from
the initiation of the proceedingsbut no later than nine monthsfromthe initiation of the proceedings.
The amount of the provisional countervailing duty shall not exceed the
total amount of countervailable subsidies as provisionally establishedbut it should be less than this amount, if such lesser duty would beadequate to remove the injury to the Community industry.
2. Provisional duties shall be secured by a guarantee and the release
of the productsconcerned for free circulation in the Community s hallbe conditional upon the provision of such guarantee.1997R2026 — EN — 08.11.2002 — 001.001 — 15
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3. The Commission shall take provisional action after consultation
or, in cases of extreme urgency, after informing the Member States.In this latter case, consultations shall take place 10 days, at the latest,
after notification to the Member Statesof the action taken by the
Commission.
4. Where a Member State requests immediate intervention by the
Commission and where the conditions of the first and second subpara-
graphs of paragraph 1 are met, the Commission shall, within a
maximum of five working daysfrom receipt of the reques t, decidewhether a provisional countervailing duty shall be imposed.
5. The Commission shall forthwith inform the Council and the
Member Statesof any decis ion taken under paragraphs1 to 4. The
Council, acting by a qualified majority, may decide differently.
6. Provisional countervailing duties shall be imposed for a
maximum period of four months.
Article 13
Undertakings
1. Investigations may be terminated without the imposition of provi-
sional or definitive duties upon receipt of satisfactory voluntary
undertakingsunder which:
(a) the country of origin and/or export agreesto eliminate or limit the
subsidy or take other measures concerning its effects; or
(b) any exporter undertakes to revise its prices or to cease exports to
the area in question as long as such exports benefit from counter-vailable subsidies, so that the Commission, after consultation, issatisfied that the injurious effect of the subsidies is eliminated.
Price increases under such undertakings shall not be higher than is
necessary to offset the amount of countervailable subsidies, andshould be less than the amount of countervailable subsidies ifsuch increases would be adequate to remove the injury to theCommunity industry.
2. Undertakings may be suggested by the Commission, but no
country or exporter shall be obliged to enter into such an undertaking.The fact that countries or exporters do not offer such undertakings, ordo not accept an invitation to do so, shall in no way prejudice consid-eration of the case. However, it may be determined that a threat of
injury is more likely to be realized if the subsidized imports continue.
Undertakings shall not be sought or accepted from countries or expor-ters unless a provisional affirmative determination of subsidization andinjury caused by such subsidization has been made. Save in exceptionalcircumstances, undertakings may not be offered later than the end ofthe period during which representations may be made pursuant to
Article 30 (5).
3. Undertakingsoffered need not be accepted if their acceptance is
considered impractical, such as where the number of actual or potentialexporters is too great, or for other reasons, including reasons of general
policy. The exporter and/or the country of origin and/or export
concerned may be provided with the reasons for which it is proposedto reject the offer of an undertaking and may be given an opportunityto make comments thereon. The reasons for rejection shall be set out inthe definitive decision.
4. Partieswhich offer an undertaking s hall be required to provide a
non-confidential version of such undertaking, so that it may be madeavailable to interested parties to the investigation.
5. Where undertakingsare, after cons ultation, accepted, and where
there is no objection raised within the Advisory Committee, the inves-
tigation shall be terminated. In all other cases, the Commission shallsubmit to the Council forthwith a report on the results of the consulta-tion, together with a proposal that the investigation be terminated. Theinvestigation shall be deemed terminated if, within one month, theCouncil, acting by qualified majority, hasnot decided otherwis e.1997R2026 — EN — 08.11.2002 — 001.001 — 16
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6. If the undertakings are accepted, the investigation of subsidization
and injury shall normally be completed. In such a case, if a negativedetermination of subsidization or injury is made, the undertaking shall
automatically lapse, except in cases where such a determination is due
in large part to the existence of an undertaking. In such cases, it maybe required that an undertaking be maintained for a reasonable period.In the event that an affirmative determination of subsidization andinjury is made, the undertaking shall continue consistent with its terms
and the provisions of this Regulation.
7. The Commission shall require any country or exporter from
whom undertakingshave been accepted to provide, periodically, infor-mation relevant to the fulfilment of such undertaking, and to permitverification of pertinent data. Non-compliance with such requirementsshall be construed as a breach of the undertaking.
8. Where undertakingsare accepted from certain exportersduring
the course of an investigation, they shall, for the purpose of Articles18, 19, 20 and 22, be deemed to take effect from the date on whichthe investigation is concluded for the country of origin and/or export.
9. In case of breach or withdrawal of undertakings by any party, a
definitive duty shall be imposed in accordance with Article 15, on the
basis of the facts established within the context of the investigation
which led to the undertaking, provided that such investigation wasconcluded with a final determination as to subsidization and injury,and that the exporter concerned, or the country of origin and/or export,has, except in the case of withdrawal of the undertaking by the exporteror such country, been given an opportunity to comment.
10. A provisional duty may, after consultation, be imposed in accor-
dance with Article 12 on the basis of the best information available,where there isreas on to believe that an undertaking isbeing breached,or in case of breach or withdrawal of an undertaking where the inves-tigation which led to the undertaking hasnot been concluded.
Article 14
Terminationwithoutmeasures
1. Where the complaint iswithdrawn, the proceeding may be termi-
nated unless such termination would not be in the Community interest.
2. Where, after consultation, protective measures are unnecessary
and there is no objection raised within the Advisory Committee, theinvestigation or proceeding shall be terminated. In all other cases, theCommission shall submit to the Council forthwith a report on the
results of the consultation, together with a proposal that the proceeding
be terminated. The proceeding shall be deemed terminated if, withinone month, the Council, acting by a qualified majority, hasnot decidedotherwise.
3. There shall be immediate termination of the proceeding where it
is determined that the amount of countervailable subsidies is de
minimis, in accordance with paragraph 5, or where the volume of subsi-
dized imports, actual or potential, or the injury, is negligible.
4. For a proceeding initiated pursuant to Article 10 (13), injury shall
normally be regarded asnegligible where the market s hare of theimports is less than the amounts set out in Article 10 (11). With regardto investigations concerning imports from developing countries, the
volume of subsidized imports shall also be considered negligible if it
represents less than 4% of the total imports of the like product in theCommunity, unless imports from developing countries whose indivi-dual shares of total imports represent less than 4% collectivelyaccount for more than 9% of the total importsof the like product inthe Community.1997R2026 — EN — 08.11.2002 — 001.001 — 17
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5. The amount of the countervailable subsidies shall be considered
to bede minimis if such amount is less than 1% ad valorem, except
that:
(a) asregardsinves tigationsconcerning importsfrom developing coun-
triesthe de minimis threshold shall be 2% ad valorem, and
(b) for those developing countries Members of the WTO referred to in
Annex VII to the Subs idiesAgreement aswell asfor developingcountriesMembersof the WTO which have completely eliminated
export subsidies as defined in Article 3 (4) (a) of this Regulation,
thede minimis subsidy threshold shall be 3% ad valorem; where
the application of thisprovis ion dependson the elimination ofexport subsidies, it shall apply from the date on which the elimina-tion of export subsidies is notified to the WTO Committee on
Subsidies and Countervailing Measures, and for so long as export
subsidies are not granted by the developing country concerned;this provision shall expire eight years from the date of entry intoforce of the WTO Agreement,
provided that it is only the investigation that shall be terminated where
the amount of the countervailable subsidies is below the relevant de
minimis level for individual exporters, who shall remain subject to the
proceedings and may be re-investigated in any subsequent reviewcarried out for the country concerned pursuant to Articles 18 and 19.
Article 15
Impositionofdefinitiveduties
1. Where the facts as finally established show the existence of coun-
tervailable subsidies and injury caused thereby, and the Communityinterest calls for intervention in accordance with Article 31, a definitivecountervailing duty shall be imposed by the Council, acting by simplemajority on a proposal submitted by the Commission after consultation
of the Advisroy Committee, unless the subsidy or subsidies are with-
drawn or it has been demonstrated that the subsidies no longer conferany benefit on the exportersinvolved. Where provis ional dutiesare inforce, a proposal for definitive action shall be submitted to the Councilnot later than one month before the expiry of such duties. The amountof the countervailing duty shall not exceed the amount of countervail-
able subsidies from which the exporters have been found to benefit,
established pursuant to this Regulation, but should be less than the totalamount of countervailable subsidies, if such lesser duty were to beadequate to remove the injury to the Community industry.
2. A countervailing duty shall be imposed in the appropriate
amounts in each case, on a non-discriminatory basis, on imports of aproduct from all sources found to benefit from countervailable subsi-dies and causing injury, except as to imports from those sources fromwhich undertakingsunder the termsof thisRegulation have been
accepted. The regulation imposing the duty shall specify the duty for
each supplier, or, if that is impracticable, the supplying countryconcerned.
3. When the Commission has limited its examination in accordance
with Article 27, any countervailing duty applied to importsfrom expor-
tersor producerswhich have made thems elvesknown in accordancewith Article 27 but were not included in the examination shall notexceed the weighted average amount of countervailable subsidies estab-lished for the parties in the sample. For the purpose of this paragraph,
the Commission shall disregard any zero and de minimis amountsof
countervailable subsidies and amounts of countervailable subsidiesestablished in the circumstances referred to in Article 28. Individualdutiess hall be applied to importsfrom any exporter or producer forwhich an individual amount of subsidization has been calculated asprovided for in Article 27.1997R2026 — EN — 08.11.2002 — 001.001 — 18
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Article 16
Retroactivity
1. Provisional measures and definitive countervailing duties shall
only be applied to productswhich enter free circulation after the time
when the measure taken pursuant to Article 12 (1) or Article 15 (1), asthe case may be, enters into force, subject to the exceptions set out inthisRegulation.
2. Where a provisional duty has been applied and the facts as finally
established show the existence of countervailable subsidies and injury,
the Council shall decide, irrespective of whether a definitive counter-
vailing duty is to be imposed, what proportion of the provisional dutyis to be definitively collected. For this purpose, ‘injury’ shall notinclude material retardation of the establishment of a Communityindustry, not threat of material injury, except where it is found that
this would, in the absence of provisional measures, have developed
into material injury. In all other cases involving such threat or retarda-tion, any provisional amounts shall be released and definitive dutiescan only be imposed from the date on which a final determination ofthreat or material retardation ismade.
3. If the definitive countervailing duty ishigher than the provis ional
duty, the difference shall not be collected. If the definitive duty is
lower than the provisional duty, the duty shall be recalculated. Wherea final determination is negative, the provisional duty shall not beconfirmed.
4. A definitive countervailing duty may be levied on productswhich
were entered for consumption not more than 90 days prior to the date
of application of provisional measures but not prior to the initiation of
the investigation, provided that the imports have been registered inaccordance with Article 24 (5), the importersconcerned have beengiven an opportunity to comment by the Commission, and:
(a) there are critical circumstances where for the subsidized product in
question injury which is difficult to repair is caused by massive
importsin a relatively s hort period of a product benefiting from
countervailable subsidies under the terms of this Regulation;
and,
(b) it is deemed necessary, in order to preclude the recurrence of such
injury, to assess countervailing duties retroactively on thoseimports.
5. In cases of breach or withdrawal of undertakings, definitive duties
may be levied on goodsentered for free circulation not more than 90
days before the application of provisional measures, provided that theimportshave been regis tered in accordance with Article 24 (5) andthat any such retroactive assessment shall not apply to imports enteredbefore the breach or withdrawal of the undertaking.
Article 17
Duration
A countervailing measure shall remain in force only as long as, and to
the extent that, it is necessary to counteract the countervailable subsi-dieswhich are caus ing injury.
Article 18
Expiryreviews
1. A definitive countervailing measure shall expire five years from
its imposition or five years from the date of the most recent review
which has covered both subsidization and injury, unless it is deter-
mined in a review that the expiry would be likely to lead to acontinuation or recurrence of subsidization and injury. Such an expiryreview shall be initiated on the initiative of the Commission, or upon arequest made by or on behalf of Community producers, and themeasure shall remain in force pending the outcome of such review.1997R2026 — EN — 08.11.2002 — 001.001 — 19
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2. An expiry review shall be initiated where the request contains
sufficient evidence that the expiry of the measures would be likely toresult in a continuation or recurrence of subsidization and injury. Such
a likelihood may, for example, be indicated by evidence of continued
subsidization and injury or evidence that the removal of injury is partlyor solely due to the existence of measures or evidence that the circum-stances of the exporters, or market conditions, are such that they wouldindicate the likelihood of further injurious subsidization.
3. In carrying out investigations under this Article, the exporters,
importers, the country of origin and/or export and the Community
producerss hall be provided with the opportunity to amplify, rebut orcomment on the matters set out in the review request, and conclusionsshall be reached with due account taken of all relevant and duly docu-mented evidence presented in relation to the question as to whether the
expiry of measures would be likely, or unlikely, to lead to the conti-
nuation or recurrence of subsidization and injury.
4. A notice of impending expiry shall be published in the Official
Journal of the European Communities at an appropriate time in the
final year of the period of application of the measures as defined inthisArticle. Thereafter, the Community producerss hall, no later than
three monthsbefore the end of the five-year period, be entitled to lodge
a review request in accordance with paragraph 2. A notice announcingthe actual expiry of measures under this Article shall also be published.
Article 19
Interimreviews
1. The need for the continued imposition of measures may also be
reviewed, where warranted, on the initiative of the Commission or atthe request of a Member State or, provided that a reasonable period oftime of at least one year has elapsed since the imposition of the defini-
tive measure, upon a request by any exporter, importer or by the
Community producersor the country of origin and/or export whichcontains sufficient evidence substantiating the need for such an interimreview.
2. An interim review shall be initiated where the request contains
sufficient evidence that the continued imposition of the measure is no
longer necessary to offset the countervailable subsidy and/or that the
injury would be unlikely to continue or recur if the measure wereremoved or varied, or that the existing measure is not, or is no longer,sufficient to counteract the countervailable subsidy which is causinginjury.
3. Where the countervailing duties imposed are less than the amount
of countervailable subsidies found, an interim review shall be initiated
if the Community producersprovide s ufficient evidence that the dutieshave led to no movement, or insufficient movement, of resale prices ofthe imported product in the Community. If the investigation proves theallegationsto be correct, countervailing dutiesmay be increas ed to
achieve the price increase required to remove injury; however, the
increased duty level shall not exceed the amount of the countervailablesubsidies.
4. In carrying out investigations pursuant to this Article, the
Commission may inter alia consider whether the circumstances with
regard to subsidization and injury have changed significantly, orwhether existing measures are achieving the intended results in
removing the injury previously established under Article 8. In these
respects, account shall be taken in the final determination of all rele-vant and duly documented evidence.
Article 20
Accelerated reviews
Any exporter whose exports are subject to a definitive countervailing
duty but who wasnot individually inves tigated during the originalinvestigation for reasons other than a refusal to cooperate with the1997R2026 — EN — 08.11.2002 — 001.001 — 20
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Commission, shall be entitled, upon request, to an accelerated review
in order that the Commission may promptly establish an individualcountervailing duty rate for that exporter. Such a review shall be
initiated after consultation of the Advisory Committee and after
Community producershave been given an opportunity to comment.
Article 21
Refunds
1. Notwithstanding Article 18, an importer may request reimburse-
ment of dutiescollected where it iss hown that the amount ofcountervailable subsidies, on the basis of which duties were paid, hasbeen either eliminated or reduced to a level which isbelow the level
of the duty in force.
2. In requesting a refund of countervailing duties, the importer shall
submit an application to the Commission. The application shall be
submitted via the Member State in the territory of which the productswere released for free circulation, within six months of the date onwhich the amount of the definitive dutiesto be levied wasduly deter-mined by the competent authoritiesor of the date on which a decis ionwasmade definitively to collect the amountss ecured by way of provi-
sional duty. Member States shall forward the request to the
Commission forthwith.
3. An application for refund shall be considered to be duly
supported by evidence only where it contains precise information onthe amount of refund of countervailing dutiesclaimed and all cus tomsdocumentation relating to the calculation and payment of such amount.It shall also include evidence, for a representative period, of theamount of countervailable subsidies for the exporter or producer to
which the duty applies. In cases where the importer is not associated
with the exporter or producer concerned and such information is notimmediately available, or where the exporter or producer isunwillingto release it to the importer, the application shall contain a statementfrom the exporter or producer that the amount of countervailable subsi-
dieshasbeen reduced or eliminated, ass pecified in thisArticle, and
that the relevant supporting evidence will be provided to the Commis-sion. Where such evidence is not forthcoming from the exporter orproducer within a reasonable period of time the application shall berejected.
4. The Commission shall, after consultation of the Advisory
Committee, decide whether and to what extent the application shouldbe granted, or it may decide at any time to initiate an interim review,
whereupon the information and findingsfrom s uch review, carried out
in accordance with the provisions applicable for such reviews, shall beused to determine whether and to what extent a refund is justified.Refunds of duties shall normally take place within 12 months, and inno circumstances more than 18 months after the date on which arequest for a refund, duly supported by evidence, has been made by
an importer of the product subject to the countervailing duty. The
payment of any refund authorized should normally be made byMember Stateswithin 90 daysof the abovementioned decis ion.
Article 22
General provisionsonreviewsandrefunds
1. The relevant provisions of Articles 10 and 11, excluding those
relating to time limits, shall apply to any review carried out pursuantto Articles 18, 19 and 20. Any such review shall be carried out expedi-
tiously and shall normally be concluded within 12 months of the date
of initiation of the review.
2. Reviews pursuant to Articles 18, 19 and 20 shall be initiated by
the Commission after consultation of the Advisory Committee. Wherewarranted by reviews, measures shall be repealed or maintainedpursuant to Article 18, or repealed, maintained or amended pursuantto Articles 19 and 20, by the Community institution responsible fortheir introduction. Where measures are repealed for individual expor-1997R2026 — EN — 08.11.2002 — 001.001 — 21
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ters, but not for the country as a whole, such exporters shall remain
subject to the proceeding and may be re-investigated in any subsequentreview carried out for that country pursuant to this Article.
3. Where a review of measures pursuant to Article 19 is in progress
at the end of the period of application of measures as defined in Article
18, the measures shall also be investigated under the provisions ofArticle 18.
4. In all review or refund investigations carried out pursuant to Arti-
cles 18 to 21, the Commission shall, provided that circumstances havenot changed, apply the same methodology as in the investigation whichled to the duty, with due account being taken of Articles5, 6, 7 and 27.
Article 23
Circumvention
1. Countervailing duties imposed pursuant to this Regulation may be
extended to importsfrom third countriesof like products , or partsthereof, when circumvention of the measures in force is taking place.
Circumvention shall be defined as a change in the pattern of trade
between third countriesand the Community which s temsfrom a prac-tice, process or work for which there is insufficient cause or economicjustification other than the imposition of the duty, and where there isevidence that the remedial effectsof the duty are being undermined intermsof the pricesand/or quantitiesof the like productsand that the
imported like product and/or partsthereof s till benefit from the
subsidy.
2. Investigations shall be initiated pursuant to this Article where the
request contains sufficient evidence regarding the factors set out inparagraph 1. Initiations shall be made, after consultation of the Advi-sory Committee, by Commission Regulation which shall also instructthe customs authorities to make imports subject to registration in accor-
dance with Article 24 (5) or to request guarantees. Investigations shall
be carried out by the Commission, which may be assisted by customsauthorities, and shall be concluded within nine months. When the factsas finally ascertained justify the extension of measures, this shall bedone by the Council, acting by simple majority and on a proposal
from the Commission, from the date on which registration was imposed
pursuant to Article 24 (5) or on which guarantees were requested. Therelevant procedural provisions of this Regulation with regard to initia-tions and the conduct of investigations shall apply pursuant to thisArticle.
3. Products shall not be subject to registration pursuant to Article 24
(5) or measures where they are accompanied by a customs certificate
declaring that the importation of the goodsdoesnot cons titute circum-
vention. Such certificates may be issued to importers, upon writtenapplication following authorization by decision of the Commissionafter consultation of the Advisory Committee, or decision of theCouncil imposing measures, and they shall remain valid for the period,and under the conditions, set down therein.
4. Nothing in thisArticle s hall preclude the normal application of
the provisions in force concerning customs duties.
Article 24
General provisions
1. Provisional or definitive countervailing duties shall be imposed
by Regulation, and collected by Member Statesin the form, at the
rate specified and according to the other criteria laid down in the Regu-
lation imposing such duties. Such duties shall also be collectedindependently of the customs duties, taxes and other charges normallyimposed on imports. No product shall be subject to both anti-dumpingand countervailing dutiesfor the purpos e of dealing with one and thesame situation arising from dumping or from export subsidization.1997R2026 — EN — 08.11.2002 — 001.001 — 22
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2. Regulations imposing provisional or definitive countervailing
duties, and Regulations or Decisions accepting undertakings or termi-nating investigations or proceedings, shall be published in the Official
Journal of the European Communities . Such Regulationsor Decis ions
shall contain in particular, and with due regard to the protection ofconfidential information, the names of the exporters, if possible, or ofthe countries involved, a description of the product and a summary ofthe facts and considerations relevant to the subsidy and injury determi-
nations. In each case, a copy of the Regulation or Decision shall be
sent to known interested parties. The provisions of this paragraph shallapplymutatis mutandis to reviews.
3. Special provisions, in particular with regard to the common defi-
nition of the concept of origin, ascontained in Council Regulation(EEC) No 2913/92 of 12 October 1992 establishing the CommunityCustoms Code (
1), may be adopted pursuant to this Regulation.
4. In the Community interest, measures imposed pursuant to this
Regulation may, after consultation of the Advisory Committee, be
suspended by a decision of the Commission for a period of ninemonths. The suspension may be extended for a further period, notexceeding one year, if the Council so decides, acting by simplemajority on a proposal from the Commission. Measures may only be
suspended where market conditions have temporarily changed to such
an extent that injury would be unlikely to resume as a result of thesuspension, and provided that the Community industry has been givenan opportunity to comment and that those comments have been takeninto account. Measures may, at any time and after consultation, be rein-stated if the reason for suspension is no longer applicable.
5. The Commission may, after consultation of the Advisory
Committee, direct the customs authorities to take the appropriate steps
to register imports, so that measures may subsequently be appliedagainst those imports from the date of such registration. Imports maybe made subject to registration following a request from the Commu-nity industry which contains sufficient evidence to justify such action.Registration shall be introduced by Regulation which shall specify the
purpose of the action and, if appropriate, the estimated amount of
possible future liability. Imports shall not be made subject to registra-tion for a period longer than nine months.
6. Member States shall report to the Commission every month on
the import trade of products subject to investigation and to measures,and on the amount of dutiescollected purs uant to thisRegulation.
Article 25
Consultations
1. Any consultations provided for in this Regulation, except those
referred to in Articles10 (9) and 11 (10), s hall take place within anAdvisory Committee, which shall consist of representatives of each
Member State, with a representative of the Commission as chairman.
Consultations shall be held immediately on request by a Member Stateor on the initiative of the Commission, and in any event within aperiod of time which allowsthe time limitss et by thisRegulation tobe adhered to.
2. The Committee shall meet when convened by its chairman. He
shall provide the Member States, as promptly as possible, with all rele-
vant information.
3. Where necessary, consultation may be in writing only; in that
event, the Commission shall notify the Member States and shall specifya period within which they shall be entitled to express their opinions orto request an oral consultation which the chairman shall arrange,provided that such oral consultation can be held within a period of1997R2026 — EN — 08.11.2002 — 001.001 — 23
(1) OJ L 302, 19. 10. 1992, p. 1. Regulation aslas t amended by Regulation
(EC) No 82/97 of the European Parliament and of the Council (OJ L 17,
21. 1. 1997, p. 1).
▼B
time which allowsthe time limitss et by thisRegulation to be adhered
to.
4. Consultation shall cover, in particular:
(a) the existence of countervailable subsidies and the methods of estab-
lishing their amount;
(b) the existence and extent of injury;
(c) the causal link between the subsidized imports and injury;
(d) the measures which, in the circumstances, are appropriate to
prevent or remedy the injury caused by the countervailable subsi-dies and the ways and means of putting such measures into effect.
Article 26
Verification visits
1. The Commission shall, where it considers it appropriate, carry out
visits to examine the records of importers, exporters, traders, agents,
producers, trade associations and organizations, to verify information
provided on subsidization and injury. In the absence of a proper andtimely reply a verification visit may not be carried out.
2. The Commission may carry out investigations in third countries
asrequired, provided that it obtainsthe agreement of the firmsconcerned, that it notifiesthe country in ques tion and that the latterdoes not object to the investigation. As soon as the agreement of thefirms concerned has been obtained the Commission should notify the
country of origin and/or export of the names and addresses of the firms
to be visited and the dates agreed.
3. The firms concerned shall be advised of the nature of the infor-
mation to be verified during verification visits and of any further
information which needs to be provided during such visits, though thisshould not preclude requests made during the verification for furtherdetailsto be provided in the light of information obtained.
4. In investigations carried out pursuant to paragraphs 1, 2 and 3,
the Commission shall be assisted by officials of those Member Stateswho so request.
Article 27
Sampling
1. In cases there the number of complainants, exporters or importers,
types of product or transactions is large, the investigation may belimited to:
(a) a reasonable number of parties, products or transactions by using
samples which are statistically valid on the basis of informationavailable at the time of the selection; or
(b) to the largest representative volume of the production, sales or
exports which can reasonably be investigated within the time avail-
able.
2. The selection of parties, types of products or transactions made
under this Article shall rest with the Commission, though preference
shall be given to choosing a sample in consultation with, and with theconsent of, the parties concerned, provided that such parties makethemselves known and make sufficient information available, withinthree weeks of initiation of the investigation, to enable a representative
sample to be chosen.
3. In cases where the examination has been limited in accordance
with this Article, an individual amount of countervailable subsidization
shall, nevertheless, be calculated for any exporter or producer not initi-
ally selected who submits the necessary information within the timelimitsprovided for in thisRegulation, except where the number ofexportersor producersiss o large that individual examinationswouldbe unduly burdensome and would prevent completion of the investiga-tion in good time.1997R2026 — EN — 08.11.2002 — 001.001 — 24
▼B
4. Where it isdecided to s ample and there isa degree of non-coop-
eration by some or all of the parties selected which is likely tomaterially affect the outcome of the investigation, a new sample may
be selected. However, if a material degree of non-cooperation persists
or there is insufficient time to select a new sample, the relevant provi-sions of Article 28 shall apply.
Article 28
Non-cooperation
1. In cases in which any interested party refuses access to, or other-
wise does not provide, necessary information within the time limitsprovided in this Regulation, or significantly impedes the investigation,provisional or final findings, affirmative or negative, may be made on
the basis of the facts available.
Where it is found that any interested party has supplied false or
misleading information, the information shall be disregarded and usemay be made of the factsavailable.
Interested parties should be made aware of the consequences of non-
cooperation.
2. Failure to give a computerized response shall not be deemed to
constitute non-cooperation, provided that the interested party shows
that presenting the response as requested would result in an unreason-
able extra burden or unreasonable additional cost.
3. Where the information submitted by an interested party is not
ideal in all respects it should nevertheless not be disregarded, providedthat any deficiencies are not such as to cause undue difficulty in
arriving at a reasonably accurate finding and that the information is
appropriately submitted in good time and is verifiable, and that theparty hasacted to the bes t of itsability.
4. If evidence or information isnot accepted, the s upplying party
shall be informed forthwith of the reasons therefor and shall be granted
an opportunity to provide further explanationswithin the time limit
specified. If the explanations are considered unsatisfactory, the reasonsfor rejection of such evidence or information shall be disclosed andgiven in published findings.
5. If determinations, including those regarding the amount of coun-
tervailable subsidies, are based on the provisions of paragraph 1,
including the information supplied in the complaint, it shall, wherepracticable and with due regard to the time limitsof the inves tigation,be checked by reference to information from other independent sourceswhich may be available, such as published price lists, official import
statistics and customs returns, or information obtained from other inter-
ested parties during the investigation. ►
M1Such information may
include relevant data pertaining to the world market or other represen-tative markets, where appropriate. ◄
6. If an interested party does not cooperate, or cooperates only
partially, so that relevant information is thereby withheld, the result
may be less favourable to the party than if it had cooperated.
Article 29
Confidentiality
1. Any information which isby nature confidential (for example,
because its disclosure would be of significant competitive advantageto a competitor or would have a significantly adverse effect upon aperson supplying the information or upon a person from whom he hasacquired the information), or which isprovided on a confidential bas is
by parties to an investigation shall, if good cause is shown, be treated
as such by the authorities.
2. Interested parties providing confidential information shall be
required to furnish non-confidential summaries thereof. Those summa-ries shall be in sufficient detail to permit a reasonable understanding of1997R2026 — EN — 08.11.2002 — 001.001 — 25
▼B
the substance of the information submitted in confidence. In excep-
tional circumstances, such parties may indicate that such informationis not susceptible of summary. In such exceptional circumstances, a
statement of the reasons why summarization is not possible must be
provided.
3. If it is considered that a request for confidentiality is not
warranted and if the supplier of the information is either unwilling tomake the information available or to authorize its disclosure in general-ized or summary form, such information may be disregarded unless it
can be satisfactorily demonstrated from appropriate sources that the
information is correct. Requests for confidentiality shall not be arbitra-rily rejected.
4. This Article shall not preclude the disclosure of general informa-
tion by the Community authorities, and in particular of the reasons onwhich decisions taken pursuant to this Regulation are based, nor disclo-
sure of the evidence relied on by the Community authorities in so far
as is necessary to explain those reasons in court proceedings. Suchdisclosure must take into account the legitimate interests of the partiesconcerned that their business or governmental secrets should not bedivulged.
5. The Council, the Commission and the Member States, or the offi-
cials of any of these, shall not reveal any information received pursuant
to thisRegulation for which confidential treatment hasbeen reques ted
by its supplier, without specific permission from the supplier.Exchangesof information between the Commis s ion and MemberStates, or any information relating to consultations made pursuant toArticle 25, or consultations described in Articles 10 (9) an 11 (10), or
any internal documentsprepared by the authoritiesof the Community
or its Member States, shall not be divulged except as specificallyprovided for in thisRegulation.
6. Information received pursuant to this Regulation shall be used
only for the purpose for which it was requested.
Article 30
Disclosure
1. The complainants, importers and exporters and their representa-
tive associations, and the country of origin and/or export, may requestdisclosure of the details underlying the essential facts and considera-
tions on the basis of which provisional measures have been imposed.
Requests for such disclosure shall be made in writing immediatelyfollowing the imposition of provisional measures, and the disclosureshall be made in writing as soon as possible thereafter.
2. The parties mentioned in paragraph 1 may request final disclosure
of the essential facts and considerations on the basis of which it is
intended to recommend the imposition of definitive measures, or the
termination of an investigation or proceedings without the impositionof measures, particular attention being paid to the disclosure of anyfacts or considerations which are different from those used for anyprovisional measures.
3. Requests for final disclosure shall be addressed to the Commis-
sion in writing and be received, in cases where a provisional duty has
been applied, not later than one month after publication of the imposi-
tion of that duty. Where a provisional duty has not been imposed,parties shall be provided with an opportunity to request final disclosurewithin time limits set by the Commission.
4. Final disclosure shall be given in writing. It shall be made, due
regard being had to the protection of confidential information, ass oon
as possible and, normally, not later than one month prior to a definitive
decision or the submission by the Commission of any proposal for finalaction pursuant to Articles 14 and 15. Where the Commission is not ina position to disclose certain facts or considerations at that time, theseshall be disclosed as soon as possible thereafter. Disclosure shall notprejudice any subsequent decision which may be taken by the Commis-1997R2026 — EN — 08.11.2002 — 001.001 — 26
▼B
sion or the Council but where such decision is based on any different
facts and considerations these shall be disclosed as soon as possible.
5. Representations made after final disclosure is given shall be taken
into consideration only if received within a period to be set by theCommission in each case, which shall be at least 10 days, due consid-eration being given to the urgency of the matter.
Article 31
Communityinterest
1. A determination asto whether the Community interes t callsfor
intervention should be based on an appraisal of all the various intereststaken as a whole, including the interests of the domestic industry andusers and consumers; a determination pursuant to this Article shall bemade only where all partieshave been given the opportunity to make
their views known pursuant to paragraph 2. In such an examination, the
need to eliminate the trade-distorting effects of injurious subsidizationand to restore effective competition shall be given special considera-tion. Measures, as determined on the basis of subsidization and injuryfound, may not be applied where the authorities, on the basis of all theinformation submitted, can clearly conclude that it is not in the
Community interest to apply such measures.
2. In order to provide a sound basis on which the authorities can
take account of all viewsand information in the decis ion asto whetheror not the imposition of measures is in the Community interest, the
complainants, importers and their representative associations, represen-
tative users and representative consumer organizations may, within thetime limitss pecified in the notice of initiation of the countervailingduty investigation, make themselves known and provide informationto the Commission. Such information, or appropriate summaries
thereof, shall be made available to the other parties specified in this
paragraph, and they shall be entitled to respond to such information.
3. The partieswhich have acted in conformity with paragraph 2 may
request a hearing. Such requests shall be granted when they are
submitted within the time limits set in paragraph 2, and when they set
out the reasons, in terms of the Community interest, why the partiesshould be heard.
4. The partieswhich have acted in conformity with paragraph 2 may
provide commentson the application of any provis ional duties
imposed. Such comments shall be received within one month of theapplication of such measures if they are to be taken into account andthey, or appropriate summaries thereof, shall be made available to otherparties who shall be entitled to respond to such comments.
5. The Commission shall examine the information which is properly
submitted and the extent to which it is representative, and the results ofsuch analysis, together with an opinion on its merits, shall be trans-mitted to the Advisory Committee. The balance of views expressed in
the Committee shall be taken into account by the Commission in any
proposal made pursuant to Articles 14 and 15.
6. The partieswhich have acted in conformity with paragraph 2 may
request that the facts and considerations on which final decisions are
likely to be taken be made available to them. Such information shall
be made available to the extent possible and without prejudice to anysubsequent decision taken by the Commission or the Council.
7. Information shall be taken into account only where it is supported
by actual evidence which substantiates its validity.
Article 32
Relationships between countervailing duty measures and multilat-
eralremedies
If an imported product is made subject to any countermeasures
imposed following recourse to the dispute settlement procedures ofthe Subsidies Agreement, and such measures are appropriate to remove1997R2026 — EN — 08.11.2002 — 001.001 — 27
▼B
the injury caused by the countervailable subsidies, any countervailing
duty imposed with regard to that product shall immediately besuspended, or repealed, as appropriate.
Article 33
Finalprovisions
ThisRegulation s hall not preclude the application of:
(a) any special rules laid down in agreements concluded between the
Community and third countries;
(b) the Community regulationsin the agricultural s ector and Council
Regulations(EC) No 3448/93 of 6 December 1993 laying downthe trade arrangementsapplicable to certain goodsres ulting from
the processing of agricultural products (
1), (EEC) No 2730/75 of
29 October 1975 on glucose and lactose (2) and (EEC) No 2783/
75 of 29 October 1975 on the common system of trade for oval-bumin and lactalbumin (
3); thisRegulation s hall operate by way of
complement to those regulations and in derogation from any provi-sions thereof which preclude the application of countervailing
duties;
(c) special measures, provided that such action does not run counter to
obligationsunder the GATT.
Article 34
Repealofexistinglegislationandtransitionalmeasures
Regulation (EC) No 3284/94 ishereby repealed.However, the repeal of Regulation (EC) No 3284/94 shall not prejudice
the validity of proceedingsinitiated thereunder.
Referencesto Regulations(EEC) No 2423/88 and (EC) No 3284/94
shall be construed as references to this Regulation, where appropriate.
Article 35
Entryintoforce
ThisRegulation s hall enter into force on the day of itspublication in
theOfficial Journal of the European Communities .
ThisRegulation s hall be binding in itsentirety and directly applicable
in all Member States.1997R2026 — EN — 08.11.2002 — 001.001 — 28
(1) OJ L 318, 20. 12. 1993, p. 18.
(2) OJ L 281, 1. 11. 1975, p. 20. Regulation as last amended by Commission
Regulation (EC) No 2931/95 (OJ L 307, 20. 12. 1995, p. 10).
(3) OJ L 282, 1. 11. 1975, p. 104. Regulation as last amended by Commission
Regulation (EC) No 2916/95 (OJ L 305, 19. 12. 1995, p. 49).
▼B
ANNEX I
ILLUSTRATIVELISTOFEXPORTSUBSIDIES
(a) The provision by governments of direct subsidies to a firm or an industry
contingent upon export performance.
(b) Currency retention schemes or any similar practices which involve a bonus
on exports.
(c) Internal transport and freight charges on export shipments, provided or
mandated by governments, on terms more favourable than for domestic
shipments.
(d) The provision by governments or their agencies either directly or indirectly
through government-mandated schemes, of imported or domestic products
or services for use in the production of exported goods, on terms or condi-
tionsmore favourable than for provis ion of like or directly competitive
products or services for use in the production of goods for domestic
consumption, if (in the case of products) such terms or conditions are more
favourable than those commercially available (1) on world marketsto their
exporters.
(e) The full or partial exemption, remission, or deferral specifically related to
exports, of direct taxes (2) or social welfare charges paid or payable by
industrial or commercial enterprises (3).
(f) The allowance of special deductions directly related to exports or export
performance, over and above those granted in respect of production for
domestic consumption, in the calculation of the base on which direct taxes
are charged.
(g) The exemption or remission, in respect of the production and distribution of
exported products, of indirect taxes (2) in excess of those levied in respect of
the production and distribution of like products when sold for domestic
consumption.
(h) The exemption, remission or deferral of prior-stage cumulative indirect
taxes(2) on goods or services used in the production of exported products
in excess of the exemption, remission or deferral of like prior-stage cumula-
tive indirect taxes on goods or services used in the production of like
products when sold for domestic consumption; provided, however, that
prior-stage cumulative indirect taxes may be exempted, remitted or deferred
on exported productseven when not exempted, remitted or deferred on like
products when sold for domestic consumption, if the prior-stage cumulative
indirect taxesare levied on inputsthat are cons umed in the production of
the exported product (making normal allowance for waste (4). Thisitem
shall be interpreted in accordance with the guidelines on consumption of
inputsin the production proces scontained in Annex II.
(i) The remission or drawback of import charges (2) in excess of those levied
on imported inputsthat are cons umed in the production of the exported
product (making normal allowance for waste); provided, however, that in
paticular cases a firm may use a quantity of home market inputs equal to,
and having the same quality and characteristics as, the imported inputs as a
substitute for them in order to benefit from this provision if the import andthe corresponding export operations both occur within a reasonable time
period, not to exceed two years. This item shall be interpreted in accordance
with the guidelines on consumption of inputs in the production process
contained in Annex II and the guidelines in the determination of substitution
drawback systems as export subsidies contained in Annex III.1997R2026 — EN — 08.11.2002 — 001.001 — 29
▼B
(j) The provision by governments (or special institutions controlled by govern-
ments) of export credit guarantee or insurance programmes, of insurance or
guarantee programmes against increases in the cost of exported products or
of exchange risk programmes, at premium rates which are inadequate to
cover the long-term operating costs and losses of the programmes.
(k) The grant by governments (or special institutions controlled by and/or acting
under the authority of governments) of export credits at rates below those
which they actually have to pay for the fundss o employed (or would
have to pay if they borrowed on international capital marketsin order to
obtain fundsof the s ame maturity and other credit termsand denominated
in the same currency as the export credit), or the payment by them of all
or part of the costs incurred by exporters or financial institutions in
obtaining credits, insofar as they are used to secure a material advantage in
the field of export credit terms.
Provided, however, that if a Member of the WTO isa party to an interna-
tional undertaking on official export creditsto which at leas t 12 original
such Members are parties as of 1 January 1979 (or a successor undertaking
which has been adopted by those original Members), or if in practice a
Member of the WTO applies the interest rates provisions of the relevant
undertaking, an export credit practice which isin conformity with thos e
provisions shall not be considered an export subsidy.
(l) Any other charge on the public account constituting an export subsidy in the
sense of Article XVI of GATT 1994.1997R2026 — EN — 08.11.2002 — 001.001 — 30
(1) The term ‘commercially available’ meansthat the choice between domes tic and
imported products is unrestricted and depends only on commercial considerations.
(2) For the purpose of this Regulation:
— the term ‘direct taxes’ shall mean taxes on wages, profits, interests, rents, royalties,
and all other formsof income, and taxeson the owners hip of real property,
— the term ‘import charges’ shall mean tariffs, duties, and other fiscal charges not
elsewhere enumerated in this note that are levied on imports,
— the term ‘indirect taxes’ shall mean sales, excise, turnover, value added, franchise,
stamp, transfer, inventory and equipment taxes, border taxes and all taxes otherthan direct taxesand import charges ,
— ‘prior-stage’ indirect taxes are those levied on goods or services used directly or
indirectly in making the product,
— ‘cumulative’ indirect taxesare multi-s taged taxeslevied where there isno
mechanism for subsequent crediting of the tax if the goods or services subject totax at one stage of production are used in a succeeding state of production,
— ‘remission’ of taxes includes the refund or rebate of taxes,— ‘remission or drawback’ includes the full or partial exemption or deferral of import
charges.
(
3) Deferral may not amount to an export subsidy where, for example, appropriate interest
chargesare collected.
(4) Paragraph (h) does not apply to value-added tax systems and border-tax adjustment in
lieu thereof; the problem of the excessive remission of value-added taxes is exclusively
covered by paragraph (g).
▼B
ANNEX II
GUIDELINESON CONSUMPTIONOF INPUTSINTHE PRODUCTION
PROCESS (1)
I
1. Indirect tax rebate schemes can allow for exemption, remission or deferral of
prior-stage cumulative indirect taxes levied on inputs that are consumed in
the production of the exported product (making normal allowance for waste).
Similarly, drawback schemes can allow for the remission or drawback of
import chargeslevied on inputsthat are cons umed in the production of the
exported product (making normal allowance for waste).
2. The illustrative list of export subsidies in Annex I makes reference to the
term ‘inputsthat are cons umed in the production of the exported product’ in
paragraphs (h) and (i). Pursuant to paragraph (h), indirect tax rebate schemes
can constitute an export subsidy to the extent that they result in exemption,
remission or deferral of prior-stage cumulative indirect taxes in excess of the
amount of such taxes actually levied on inputs that are consumed in the
production of the exported product. Pursuant to paragraph (i), drawback
schemes can constitute an export subsidy to the extent that they result in a
remission or drawback of import charges in excess of those actually levied
on inputsthat are cons umed in the production of the exported product. Both
paragraphs stipulate that normal allowance for waste must be made in find-
ingsregarding cons umption of inputsin the production of the exported
product. Paragraph (i) also provides for substitution, where appropriate.
II
3. In examining whether inputsare cons umed in the production of the exported
product, as part of a countervailing duty investigation pursuant to this Regu-
lation, the Commission must normally proceed on the following basis.
4. Where it is alleged that an indirect tax rebate scheme, or a drawback scheme,
conveys a subsidy by reason of over-rebate or excess drawback of indirect
taxesor import chargeson inputscons umed in the production of the exported
product, the Commission must normally first determine whether the govern-
ment of the exporting country has in place and applies a system or procedure
to confirm which inputsare cons umed in the production of the exported
product and in what amounts. Where such a system or procedure is deter-
mined to be applied, the Commission must normally then examine the
system or procedure to see whether it is reasonable, effective for the purpose
intented, and based on generally accepted commercial practices in the
country of export. The Commission may deem it necessary to carry out, in
accordance with Article 26 (2), certain practical tests in order to verify infor-
mation or to satisfy itself that the system or procedure is being effectively
applied.
5. Where there is no such system or procedure, where it is not reasonable, or
where it is instituted and considered reasonable but is found not to be applied
or not to be applied effectively, a further examination by the exporting
country based on the actual inputs involved will normally need to be carried
out in the context of determining whether an excess payment occurred. If the
Commission deems it necessary, a further examination may be carried out in
accordance with paragraph 4.
6. The Commission must normally treat inputs as physically incorporated if
such inputs are used in the production process and are physically present in
the product exported. An input need not be present in the final product in the
same form in which it entered the production process.
7. In determining the amount of a particular input that iscons umed in the
production of the exported product, a ‘normal allowance for waste’ must
normally be taken into account, and such waste must normally be treated as
consumed in the production of the exported product. The term ‘waste’ refers
to that portion of a given input which doesnot s erve an independent function
in the production process, isnot consumed in the production of the exported
product (for reasons such as inefficiencies) and is not recovered, used or sold
by the same manufacturer.1997R2026 — EN — 08.11.2002 — 001.001 — 31
(1) Inputs consumed in the production process are inputs physically incorporated, energy,
fuels and oil used in the production process and catalysts which are consumed in the
course of their use to obtain the exported product.
▼B
8. The Commission's determination of whether the claimed allowance for waste
is ‘normal’ must normally take into account the production process, the
average experience of the industry in the country of export, and other tech-
nical factors, as appropriate. The Commission must bear in mind that an
important question is whether the authorities in the exporting country have
reasonably calculated the amount of waste, when such an amount is intended
to be included in the tax or duty rebate or remission.1997R2026 — EN — 08.11.2002 — 001.001 — 32
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ANNEX III
GUIDELINES IN THE DETERMINATION OF SUBSTITUTION DRAW-
BACKSYSTEMSASEXPORTSUBSIDIES
I
Drawback systems can allow for the refund or drawback of import charges on
inputs which are consumed in the production process of another product and
where the export of thislatter product containsdomes tic inputshaving the
same quality and characteristics as those submitted for the imported inputs.
Pursuant to paragraph (i) of Annex I, substitution drawback systems can consti-
tute an export subsidy to the extent that they result in an excess drawback of the
import chargeslevied initially on the imported inputsfor which drawback is
being claimed.
II
In examining any substitution drawback system as part of a countervailing duty
investigation pursuant to this Regulation, the Commission must normally
proceed on the following basis:
1. paragraph (i) of Annex I stipulates that home market inputs may be substi-
tuted for imported inputsin the production of a product for export provided
such inputs are equal in quantity to, and have same quality and characteris-
tics as, the imported inputs being substituted. The existence of a verification
system or procedure is important because it enables the government of the
exporting country to ensure and demonstrate that the quantity of inputs for
which drawback isclaimed doesnot exceed the quantity of s imilar products
exported, in whatever form, and that there isnot drawback of import charges
in excess of those originally levied on the imported inputs in question;
2. where it is alleged that a substitution drawback system conveys a subsidy, the
Commission must normally first proceed to determine whether the govern-
ment of the exporting country has in place and applies a verification system
or procedure. Where such a system or procedure is determined to be applied,
the Commission shall normally then examine the verification procedures to
see whether they are reasonable, effective for the purpose intended, and
based on generally accepted commercial practices in the country of export.
To the extent that the proceduresare determined to meet thistes t and are
effectively applied, no subsidy will be presumed to exist. It may be deemed
necessary by the Commission to carry out, in accordance with Article 26 (2),
certain practical tests in order to verify information or to satisfy itself that the
verification proceduresare being effectively applied;
3. where there are no verification procedures, where they are not reasonable, or
where such procedures are instituted and considered reasonable but are found
not be actually applied or not be applied effectively, there may be a subsidy.
In such cases, further examination by the exporting country based on the
actual transactions involved would need to be carried out to determine
whether an excess payment occurred. If the Commission deems it necessary,
a further examination mat be carried out in accordance with point 2;
4. the existence of a substitution drawback provision under which exporters are
allowed to select particular import shipments on which drawback is claimed
should not of itself be considered to convey a subsidy;
5. an excess drawback of import charges within the meaning of paragraph (i) of
annex I would be deemed to exist where governments paid interest on any
monies refunded under their drawback schemes, to the extent of the interest
actually paid or payable.1997R2026 — EN — 08.11.2002 — 001.001 — 33
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ANNEX IV
(ThisAnnex reproducesAnnex 2 to the Agreement on Agriculture. Any terms
or expressions which are not explained herein or which are not self-explanatory
are to be interpreted in the context of that Agreement.)
DOMESTIC SUPPORT: THE BASIS OF EXEMPTION FROM THE REDUC-
TION COMMITMENTS
1. Domestic support measures for which exemption from the reduction
commitmentsisclaimed s hall meet the fundamental requirement that they
have no, or at most minimal, trade-distorting effects or effects on produc-
tion. Accordingly, all measures for which exemption is claimed shall
conform to the following basic criteria:
(a) the support in question shall be provided through a publicly-funded
government programme (including government revenue foregone) not
involving transfers from consumers;
and,
(b) the support in question shall not have the effect of providing price
support to producers;
plus policy-specific criteria and conditions as set out below.
Governmentservice programmes
2.General services
Policiesin thiscategory involve expenditures(or revenue foregone) in rela-
tion to programmeswhich provide s ervicesor benefitsto agriculture or the
rural community. They shall not involve direct payments to producers or
processors. Such programmes, which include but are not restricted to the
following list, shall meet the general criteria in paragraph 1 and policy-
specific conditions where set out below:
(a) research, including general research, research in connection with envir-
onmental programmes, and research programmes relating to particular
products;
(b) pest and disease control, including general and product-specific pest and
disease control measures, such as early-warning systems, quarantine and
eradication;
(c) training services, including both general and specific training facilities;
(d) extension and advisory services, including the provision of means to
facilitate the transfer of information and the results of research to
producers and consumers;
(e) inspection services, including general inspection services and the
inspection of particular products for health, safety, grading or standardi-
zation purposes;
(f) marketing and promotion services, including market information, advice
and promotion relating to particular productsbut excluding expenditure
for unspecified purposes that could be used by sellers to reduce their
selling price or confer a direct economic benefit to purchasers; and
(g) infrastructural services, including: electricity reticulation, roads and
other means of transport, market and port facilities, water supply facil-
ities, dams and drainage schemes, and infrastructural works associated
with environmental programmes. In all cases the expenditure shall be
directed to the provision or construction of capital works only, and shall
exclude the subsidized provision of on-farm facilities other than for the
reticulation of generally available public utilities. It shall not include
subsidies to inputs or operating costs, or preferential user charges.
3.Public stockholding for food security purposes (1)
Expenditures(or revenue foregone) in relation to the accumulation and
holding of stocks of products which form an integral part of a food security
programme identified in national legislation. This may include government
aid to private storage of products as part of such a programme.1997R2026 — EN — 08.11.2002 — 001.001 — 34
(1) For the purpose of paragraph 3 of this Annex, governmental stockholding programmes
for food security purposes in developing countries whose operation is transparent and
conducted in accordance with officially published objective criteria or guidelines shallbe considered to be in conformity with the provisions of this paragraph, includingprogrammes under which stocks of foodstuffs for food security purposes are acquiredand released at administered prices, provided that the difference between the acquisi-
tion price and the external reference price isaccounted for in the AMS.
▼B
The volume and accumulation of such stocks shall correspond to predeter-
mined targets related solely to food security. The process of stock
accumulation and disposal shall be financially transparent. Food purchases
by the government shall be made at current market prices and sales from
food security stocks shall be made at no less than the current domestic
market price for the product and quality in question.
4.Domestic food aid (1)
Expenditure (or revenue foregone) in relation to the provision of domestic
food aid to sections of the population in need.
Eligibility to receive the food aid shall be subject to clearly-defined criteria
related to nutritional objectives. Such aid shall be in the form of direct
provision of food to those concerned or the provision of means to allow
eligible recipients to buy food either at market or at subsidized prices.
Food purchases by the government shall be made at current market prices
and the financing and administration of the aid shall be transparent.
5.Direct payments to producers
Support provided through direct payments(or revenue foregone, including
paymentsin kind) to producersfor which exemption from reduction
commitments as claimed shall meet the basic criteria set out in paragraph
1, pluss pecific criteria applying to individual typesof direct payment as
set out in paragraphs 6 to 13. Where exemption from reduction is claimed
for any existing or new type of direct payment other than those specified in
paragraphs6 to 13, it s hall conform to criteria (b) to (e) in paragraph 6, in
addition to the general criteria set out in paragraph 1.
6.Decoupled income support
(a) Eligibility for such payments shall be determined by clearly-defined
criteria such as income, status as a producer or landowner, factor use
or production level in a defined and fixed base period.
(b) The amount of such payments in any given year shall not be related to,
or based on, the type or volume of production (including livestock
units) undertaken by the producer in any year after the base period.
(c) The amount of such payments in any given year shall not be related to,
or based on, the prices, domestic or international, applying to any
production undertaken in any year after the base period.
(d) The amount of such payments in any given year shall not be related to,
or based on, the factors of production employed in any year after the
base period.
(e) No production shall be required in order to receive such payments.
7.Government financial participation in income insurance and income safety-
net programmes
(a) Eligibility for such payments shall be determined by an income loss,
taking into account only income derived from agriculture, which
exceeds30% of average gros sincome or the equivalent innet income
terms (excluding any payments from the same or similar schemes) in
the preceding three-year period or a three-year average based on the
preceding five-year period, excluding the highest and the lowest entry.
Any producer meeting thiscondition s hall be eligible to receive the
payments.
(b) The amount of such payments shall compensate for less than 70% of
the producer'sincome los sin the year the producer becomeseligible to
receive this assistance.
(c) The amount of any such payments shall relate solely to income; it shall
not relate to the type or volume of production (including livestock
units) undertaken by the producer; or to the prices, domestic or interna-
tional, applying to such production; or to the factors of production
employed.
(d) Where a producer receives in the same year payments pursuant to this
paragraph and pursuant to paragraph 8 (relief from natural disasters),
the total of such payments shall be less than 100% of the producer's
total loss.1997R2026 — EN — 08.11.2002 — 001.001 — 35
(1) For the purposes of paragraphs 3 and 4 of this Annex, the provision of foodstuffs at
subsidized prices with the objective of meeting food requirements of urban and ruralpoor in developing countries on a regular basis at reasonable prices shall be considered
to be in conformity with the provisions of this paragraph.
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8.Payments (made either directly or by way of a government financial parti-
cipation in crop insurance schemes) for relief from natural disasters
(a) Eligibility for such payments shall arise only following a formal recog-
nition by government authorities that a natural or like disaster
(including disease outbreaks, pest infestations, nuclear accidents, and
war on the territory of the Member concerned) hasoccurred or isoccur-
ring; and shall be determined by a production loss which exceeds 30%
of the average of production in the preceding three-year period or a
three-year average based on the preceding five-year period, excluding
the highest and the lowest entry.
(b) Payments made following a disaster shall be applied only in respect of
losses of income, livestock (including payments in connection with the
veterinary treatment of animals), land or other production factors due to
the natural disaster in question.
(c) Payments shall compensate for not more than the total cost of replacing
such losses and shall not require or specify the type or quantity of
future production.
(d) Payments made during a disaster shall not exceed the level required to
prevent or alleviate further loss as defined in criterion (b).
(e) Where a producer receives in the same year payments pursuant to this
paragraph and pursuant to paragraph 7 (income insurance and income
safety-net programmes), the total of such payments shall be less than
100% of the producer's total loss.
9.Structural adjustment assistance provided through producer retirement
programmes
(a) Eligibility for such payments shall be determined by reference to clearly
defined criteria in programmesdes igned to facilitate the retirement of
persons engaged in marketable agricultural production, or their move-
ment to non-agricultural activities.
(b) Paymentss hall be conditional upon the total and permanent retirement
of the recipientsfrom marketable agricultural production.
10.Structural adjustment assistance provided through resource retirement
programmes
(a) Eligibility for such payments shall be determined by reference to clearly
defined criteria in programmesdes igned to remove land or other
resources, including livestock, from marketable agricultural production.
(b) Paymentss hall be conditional upon the retirement of land from market-
able agricultural production for a minimum of three years, and in the
case of livestock on its slaughter or definitive permanent disposal.
(c) Payments shall not require or specify any alternative use for such land
or other resources which involves the production of marketable agricul-
tural products.
(d) Paymentss hall not be related to either type or quantity of production or
to the prices, domestic or international, applying to production under-
taken using the land or other resources remaining in production.
11.Structural adjustment assistance provided through investment aids
(a) Eligibility for such payments shall be determined by reference to
clearly-defined criteria in government programmes designed to assist
the financial or physical restructuring of a producer's operations in
response to objectively demonstrated structural disadvantages. Elig-
ibility for such programmes may also be based on a clearly defined
government programme for the reprivatization of agricultural land.
(b) The amount of such payments in any given year shall not be related to,
or based on, the type or volume of production (including livestock
units) undertaken by the producer in any year after the base period other
than asprovided for under criterion (e).
(c) The amount of such payments in any given year shall not be related to,
or based on, the prices, domestic or international, applying to any
production undertaken in any year after the base period.
(d) The payments shall be given only for the period of time necessary for
the realization of the investment in respect of which they are provided.
(e) The payments shall not mandate or in any way designate the agricul-
tural productsto be produced by the recipientsexcept to require them
not to produce a particular product.
(f) The payments shall be limited to the amount required to compensate for
the structural disadvantage.1997R2026 — EN — 08.11.2002 — 001.001 — 36
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12.Payments under environmental programmes
(a) Eligibility for such payments shall be determined as part of a clearly-
defined government environmental or conservation programme and be
dependent on the fulfilment of specific conditions under the government
programme, including conditionsrelated to production methodsor
inputs.
(b) The amount of payment shall be limited to the extra costs or loss of
income involved in complying with the government programme.
13.Payments under regional assistance programmes
(a) Eligibility for such payments shall be limited to producers in disadvan-
taged regions. Each such region must be a clearly designated contiguous
geographical area with a definable economic and administrative iden-
tity, considered as disadvantaged on the basis of neutral and objective
criteria clearly spelt out in a law or regulation and indicating that the
region's difficulties arise out of more than temporary circumstances.
(b) The amount of such payments in any given year shall not be related to,
or based on, the type or volume of production (including livestock
units) undertaken by the producer in any year after the base period other
than to reduce that production.
(c) The amount of such payments in any given year shall not be related to,
or based on, the prices, domestic or international, applying to any
production undertaken in any year after the base period.
(d) Payments shall be available only to producers in eligible regions, but
generally available to all producers within such regions.
(e) Where related to production factors, payments shall be made at a
degressive rate above a threshold level of the factor concerned.
(f) The payments shall be limited to the extra costs or loss of income
involved in undertaking agricultural production in the prescribed area.1997R2026 — EN — 08.11.2002 — 001.001 — 37