Commission Decision No 1889/98/ECSC of 3 September 1998 on protection against subsidised imports from countries not members of the European Coal and Steel Community
Date: 1998-09-03
Institutions: European Commission
Subjects: ECSC, economic support, financial equalisation, import, iron and steel product, third country

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COMMISSION DECISION No 1889/98/ECSC

of 3 September 1998

on protection against subsidised imports from countries not members of the
European Coal and Steel Community

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Coal and Steel Community, and in particular Article 74
thereof,

(1) Whereas, the Commission, by Decision No 2424/
88/ECSC (1), adopted common rules for protection
against dumped or subsidised imports from coun-
tries which are not members of the European Coal
and Steel Community;

(2) Whereas those rules were adopted in accordance
with existing international obligations, in particular
those arising from Article VI of the General Agree-
from the
ment on Tariffs and Trade (‘GATT'),
Agreement on Implementation of Article VI of the
GATT (‘the 1979 Anti-Dumping Code') and from
the Agreement on Interpretation and Application
of Articles VI, XVI and XXIII of the GATT (‘Code
on Subsidies and Countervailing Duties');

(3) Whereas the conclusion of the Uruguay Round of
multilateral trade negotiations has led to the estab-
lishment of the World Trade Organization (‘the
WTO');

(4) Whereas Annex 1A to the Agreement establishing
the WTO approved by Council Decision 94/
800/EC (2) (‘the WTO Agreement') contains, inter
alia, the General Agreement on Tariffs and Trade
1994 (‘the GATT 1994'), a new Agreement on
implementation of Article VI of the GATT 1994
(‘the 1994 Anti-Dumping Agreement'), and a new
Agreement on Subsidies and Countervailing Meas-
ures (‘the Subsidies Agreement');

(5) Whereas it is therefore appropriate to amend the
Community rules in the light of those new Agree-
ments; whereas it is also desirable, in the light of
the different nature of the new rules for dumping
and subsidies respectively, to have a separate body
of Community rules in each of those two areas;
whereas, consequently, new rules on protection
against dumped imports were
laid down in
Commission Decision No 2277/96/ECSC (3) which
removed those imports from the scope of Decision
No 2424/88/ECSC;

(6) Whereas

it

is

therefore appropriate to amend
Community rules governing the application of
countervailing measures in the light of the new
multilateral rules, with regard, inter alia, to the

(1) OJ L 209, 2. 8. 1988, p. 18.
(2) OJ L 336, 23. 12. 1994, p. 1.
(3) OJ L 308, 29. 11. 1996, p. 11.

procedures for initiation of proceedings and the
conduct of subsequent investigations, including the
establishment and treatment of the facts, the impo-
sition of provisional measures, the imposition and
collection of countervailing duties,
the duration
and review of countervailing measures, and the
public disclosure of information relating to coun-
tervailing investigations;

(7) Whereas,

in view of the extent of the changes
brought about by the new Agreements and to
ensure a proper and transparent application of the
new rules, the language of the new Agreements
should be brought into Community legislation as
far as possible;

(8) Whereas the Subsidies Agreement has been imple-
mented by the European Community through
Council Regulation (EC) No 2026/97 (4); whereas it
is therefore appropriate to make similar provision
for the application by the European Coal and Steel
Community of
the principles and definitions
contained in Regulation (EC) No 2026/97 to ensure
the homogeneity of the external trade legislation of
the European Communities, whilst taking account
of the decision-making processes of the European
Coal and Steel Community;

(9) Whereas,

seems

advisable

furthermore,

to
it
explain, in adequate detail, when a subsidy is to be
deemed to exist, according to which principles it is
to be countervailable (in particular whether the
and
been granted
subsidy has
according to which criteria the amount of
the
countervailable subsidy is to be calculated;

specifically),

(10) Whereas, in determining the existence of a subsidy,
it is necessary to demonstrate that there has been a
financial contribution by a government or any
public body within the territory of a country, or
that there has been any form of income or price
support within the meaning of Article XVI of the
GATT 1994, and that a benefit has thereby been
conferred on the recipient enterprise;

(11) Whereas it is necessary to explain in sufficient
detail which kinds of subsidies are not countervail-
able and which procedure is to be followed if,
during an investigation, it is determined that an
enterprise undergoing investigation has received
non-countervailable subsidies;

(4) OJ L 288, 21. 10. 1997, p. 1.

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(12) Whereas the Subsidies Agreement states that the
provisions concerning non-countervailable subsi-
dies are to cease to apply five years after the date of
entry into force of the WTO Agreement, unless
the
they are extended by mutual agreement of
Members of the WTO; whereas it may therefore be
necessary to amend this Decision accordingly, if
the validity of those provisions is not so extended;

(13) Whereas it

for

the determination of whether

is desirable to lay down clear and
detailed guidance as to the factors which may be
relevant
the
subsidised imports have caused material injury or
are threatening to cause injury; whereas, in demon-
strating that the volume and price levels of the
imports
injury
sustained by a Community industry, attention
should be given to the effect of other factors and in
particular prevailing market conditions
in the
Community;

concerned are

responsible

for

(14) Whereas

it

is

the

advisable

to define

term
‘Community industry' and to provide that parties
related to exporters may be excluded from such
industry and to define the term ‘related'; whereas it
is also necessary to provide for countervailing duty
action to be taken on behalf of producers in a
region of the Community and to lay down guide-
lines on the definition of such region;

(15) Whereas it is necessary to lay down who may lodge
including the
a countervailing duty complaint,
extent to which it should be supported by the
Community industry, and the information on
countervailable subsidies,
injury and causation
which such complaint should contain; whereas it is
also expedient to specify the procedures for the
rejection of complaints or the initiation of proceed-
ings;

(16) Whereas it is necessary to lay down the manner in
which interested parties should be given notice of
the information which the authorities require, and
should have ample opportunity to present all rele-
vant evidence and to defend their interests; whereas
it is also desirable to set out clearly the rules and
procedures to be followed during the investigation,
in particular the rules whereby interested parties
are to make themselves known, present their views
information within specified time
and submit
limits,
if such views and information are to be
taken into account; whereas it is also appropriate to
set out the conditions under which an interested
party may have access to, and comment on, infor-
mation presented by other
interested parties;
whereas there should also be cooperation between

the Member States and the Commission in the
collection of information;

(17) Whereas it is necessary to lay down the conditions
under which provisional duties may be imposed,
including that they may be imposed no earlier than
60 days from initiation and not later than nine
months thereafter; whereas, such duties may in all
cases be imposed by the Commission only for a
four-month period;

(18) Whereas it is necessary to specify procedures for
the acceptance of undertakings eliminating or
offsetting the countervailable subsidies and injury
in lieu of the imposition of provisional or definitive
duties; whereas it is also appropriate to lay down
the consequences of breach or withdrawal of
undertakings and that provisional duties may be
imposed in cases of suspected violation or where
further investigation is necessary to supplement the
findings; whereas, in accepting undertakings, care
should be taken that the proposed undertakings,
and their enforcement, do not lead to anti-competi-
tive behaviour;

(19) Whereas it is necessary to provide that the termina-
tion of cases should, irrespective of whether defin-
itive measures are adopted or not, normally take
place within 12 months, and in no case later than
13 months, from the initiation of the investigation;

(20) Whereas an investigation or proceeding should be
terminated whenever the amount of the subsidy is
found to be de minimis or if, particularly in the
case of imports originating in developing countries,
the volume of subsidised imports or the injury is
negligible, and it is appropriate to define those
criteria; whereas, where measures
to be
imposed, it is necessary to provide for the termina-
tion of investigations and to lay down that meas-
ures should be less than the amount of countervail-
able subsidies if such lesser amount would remove
the injury, and also to specify the method of calcu-
lating the level of measures in cases of sampling;

are

if

(21) Whereas it is necessary to provide for the retroac-
tive collection of provisional duties
is
deemed appropriate and to define the circum-
stances which may trigger the retroactive applica-
tion of duties in order to avoid the undermining of
the definitive measures to be applied; whereas it is
also necessary to provide that duties may be
applied retroactively in cases of breach or with-
drawal of undertakings;

that

(22) Whereas it is necessary to provide that measures
are to lapse after five years unless a review indicates
that they should be maintained; whereas it is also
in cases where sufficient
necessary to provide,

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evidence is submitted of changed circumstances,
for interim reviews or for investigations to deter-
mine whether refunds of countervailing duties are
warranted;

(23) Whereas, even though the Subsidies Agreement
does not contain provisions concerning circumven-
tion of countervailing measures, the possibility of
such circumvention exists, in terms similar, albeit
not
anti-
dumping measures; whereas, it therefore appears
appropriate to enact an anti-circumvention provi-
sion in this Decision;

circumvention of

identical,

to the

(24) Whereas it is expedient to permit the suspension of
countervailing measures where there is a temporary
change in market conditions which makes the
continued imposition of such measures temporarily
inappropriate;

(25) Whereas it is necessary to provide that imports
under investigation may be made subject to regis-
tration upon importation to enable measures to be
subsequently applied against such imports;

it

(26) Whereas, in order to ensure proper enforcement of
measures,
is necessary that Member States
monitor, and report to the Commission, the import
trade of products subject to investigation or subject
to measures and also the amount of duties collected
pursuant to this Decision;

(27) Whereas it is necessary to provide for consultation
of an Advisory Committee at regular and specified
stages of the investigation; whereas the Committee
should consist of representatives of Member States
with a
the Commission as
chairman;

representative of

(28) Whereas it is expedient to provide for verification
visits to check information submitted on counter-
vailable subsidies and injury, such visits being,
however, conditional on proper replies to question-
naires being received;

(29) Whereas it is essential to provide for sampling in
cases where the number of parties or transactions is
large in order to permit completion of investiga-
tions within the appointed time limits;

(30) Whereas it

is necessary to provide that, where
parties do not cooperate satisfactorily, other infor-
mation may be used to establish findings and that
such information may be less favourable to the
parties than if they had cooperated;

(31) Whereas provision should be made for the treat-
ment of confidential information so that business
or governmental secrets are not divulged;

(32) Whereas it is essential that provision be made for
proper disclosure of essential facts and considera-
tions to parties which qualify for such treatment
and that such disclosure be made, with due regard
to the decision-making process in the Community,
within a time period which permits parties to
defend their interests;

(33) Whereas it is prudent to provide for an adminis-
trative system under which arguments can be
to whether measures are in the
presented as
Community interest,
including the interests of
consumers, and to lay down the time periods
within which such information has to be presented
the parties
as well as the disclosure rights of
concerned;

(34) Whereas,

in applying the rules of the Subsidies
Agreement it is essential, in order to maintain the
balance of rights and obligations which that Agree-
ment sought to establish, that the Community take
account of their interpretation by the Community’s
major trading partners, as reflected in legislation or
established practice;

(35) Whereas Decision No 2424/88/ECSC should

accordingly be repealed,

HAS ADOPTED THIS DECISION:

Article 1

Principles

the
1. A countervailing duty may be imposed for
purpose of offsetting any subsidy granted, directly or
indirectly,
for the manufacture, production, export or
transport of any product whose release for free circulation
in the Community causes injury.

2.
For the purpose of this Decision, a product is consid-
ered as being subsidised if it benefits from a countervail-
able subsidy as defined in Articles 2 and 3.

3.
Such subsidy may be granted by the government of
the country of origin of the imported product, or by the
government of an intermediate country from which the
product is exported to the Community, known for the
purpose of this Decision as ‘the country of export'.

The term ‘government' is defined, for the purposes of this
Decision as a government or any public body within the
territory of the country of origin or export.

4. Notwithstanding paragraphs 1, 2 and 3, where prod-
ucts are not directly imported from the country of origin
but are exported to the Community from an intermediate
country, the provisions of this Decision shall be fully
applicable and the transaction or transactions shall, where
appropriate, be regarded as having taken place between
the country of origin and the Community.

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this Decision,

For the purpose of

the term ‘like
5.
product' shall be interpreted to mean a product which is
identical, that is to say, alike in all respects, to the product
under consideration, or in the absence of such a product,
another product which although not alike in all respects,
has characteristics closely resembling those of the product
under consideration.

Article 2

Definition of a subsidy

A subsidy shall be deemed to exist if:

1.

(a)

there is a financial contribution by a government
in the country of origin or export, that is to say,
where:

funds (for example, grants,

(i) a government practice involves a direct transfer
of
loans, equity
infusion), potential direct transfers of funds or
liabilities (for example, loan guarantees);

(ii) government revenue that is otherwise due is
forgone or not collected (for example, fiscal
incentives such as tax credits); in this regard,
the exemption of an exported product from
duties or taxes borne by the like product when
destined for domestic consumption, or the
remission of such duties or taxes in amounts
not
those which have been
accrued, shall not be deemed to be a subsidy,
provided that such an exemption is granted in
accordance with the provisions of Annexes I to
III;

in excess of

(iii) a government provides goods or services other
than general infrastructure, or purchases goods;

(iv) a government:

(cid:190) makes payments to a funding mechanism,

or

(cid:190) entrusts or directs a private body to carry
out one or more of the type of functions
illustrated in points (i) (ii) and (iii) which
would normally be vested in the govern-
ment, and the practice, in no real sense,
differs from practices normally followed by
governments;

or

(b) there is any form of

income or price support
within the meaning of Article XVI of the GATT
1994; and

2. a benefit is thereby conferred.

In order to determine whether a subsidy is specific to
2.
an enterprise or industry or group of enterprises or indus-
tries (hereinafter referred to as ‘certain enterprises') within
the jurisdiction of the granting authority, the following
principles shall apply:

(a) where the granting authority, or

the legislation
pursuant to which the granting authority operates,
explicitly limits access to a subsidy to certain enter-
prises, such subsidy shall be specific;

(b) where the granting authority, or

the legislation
pursuant to which the granting authority operates,
establishes objective criteria or conditions governing
the eligibility for, and the amount of, a subsidy, specif-
icity shall not exist, provided that the eligibility is
automatic and that such criteria and conditions are
strictly adhered to.

For the purpose of this Article, objective criteria or
conditions mean criteria or conditions which are
neutral, which do not favour certain enterprises over
others, and which are economic in nature and hori-
zontal in application, such as number of employees or
size of enterprise.

The criteria or conditions must be clearly spelled out
by law, regulation, or other official document, so as to
be capable of verification;

(c)

if, notwithstanding any appearance of non-specificity
resulting from the application of the principles laid
down in subparagraphs (a) and (b), there are reasons to
believe that the subsidy may in fact be specific, other
factors may be considered. Such factors are: use of a
subsidy programme by a limited number of certain
enterprises, predominant use by certain enterprises,
the granting of disproportionately large amounts of
subsidy to certain enterprises, and the manner in
which discretion has been exercised by the granting
authority in the decision to grant a subsidy. In this
regard,
information on the frequency with which
applications for a subsidy are refused or approved and
the reasons for such decisions shall, in particular, be
considered.

In applying the first subparagraph, account shall be
taken of the extent of diversification of economic
activities within the jurisdiction of
the granting
authority, as well as of the length of time during
which the subsidy programme has been in operation.

Article 3

Countervailable subsidies

1.
Subsidies shall be subject to countervailing measures
only if they are specific, as defined in paragraphs 2, 3 and
4.

3. A subsidy which is limited to certain enterprises
located within a designated geographical region within
the jurisdiction of the granting authority shall be specific.
The setting or change of generally applicable tax rates by
all levels of government entitled to do so shall not be
deemed to be a specific subsidy for the purposes of this
Decision.

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4. Notwithstanding paragraphs 2 and 3, the following
subsidies shall be deemed to be specific:

(d) additional overhead costs incurred directly as a result

of the research activity;

(a) subsidies contingent, in law or in fact, whether solely
or as one of several other conditions, upon export
performance, including those illustrated in Annex I.

Subsidies shall be considered to be contingent in fact
upon export performance when the facts demonstrate
that the granting of a subsidy, without having been
made legally contingent upon export performance, is
in fact tied to actual or anticipated exportation or
export earnings. The mere fact
that a subsidy is
accorded to enterprises 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 provi-
sions of this Article shall be clearly substantiated on the
basis of positive evidence.

Article 4

Non-countervailable subsidies

The following subsidies shall not be subjected to

1.
countervailing measures:

(a) subsidies which are not specific within the meaning

of Article 3(2) and (3);

(b) subsidies which are specific within the meaning of
Article 3(2) and (3), but which meet the conditions
provided for in paragraphs 2, 3 or 4 of this Article.

2.
Subsidies for research activities conducted by firms
or by higher education or research establishments on a
contract basis with firms shall not be subject to counter-
vailing measures, if the subsidies cover not more than
75 % of the costs of industrial research or 50 % of the
costs of pre-competitive development
and
provided that such subsidies are limited exclusively to:

activity,

(a) personnel costs (researchers,

technicians and other
supporting staff employed exclusively in the research
activity);

(b) costs of instruments, equipment, land and buildings
used exclusively and permanently (except when
disposed of on a commercial basis) for the research
activity;

(e) other

running costs

those of materials,
(such as
supplies and the like), incurred directly as a result of
the research activity.

For the purpose of the first subparagraph:

(a)

the allowable levels of non-countervailable subsidy
referred to in this paragraph shall be established by
reference to the total eligible costs incurred over the
duration of an individual project.

the

allowable

In the case of programmes which span both ‘indus-
trial research' and ‘pre-competitive development acti-
vity',
level of non-countervailable
subsidy shall not exceed the simple average of the
allowable levels of non-countervailable subsidy applic-
able to the above two categories, calculated on the
basis of all eligible costs as set forth in points (a) to (e)
of the first subparagraph;

(b) the term ‘industrial research' means planned search or
critical investigation aimed at discovery of new know-
ledge, with the objective that such knowledge may be
useful
in developing new products, processes or
services, or in bringing about a significant improve-
ment to existing products, processes or services;

(c) the

term ‘pre-competitive development

activity'
means the translation of industrial research findings
into a plan, blueprint or design for new, modified or
services whether
improved products, processes or
intended for sale or use, including the creation of a
first prototype which would not be capable of
commercial use. It may further include the conceptual
formulation and design of products, processes or
services alternatives and initial demonstration or pilot
projects, provided that these same projects cannot be
converted or used for
application or
commercial exploitation. It does not include routine
or periodic alterations to existing products, production
lines, manufacturing process,
services, and other
ongoing operations even though those alterations may
represent improvements.

industrial

Subsidies to disadvantaged regions within the terri-
3.
tory of
the country of origin and/or export, given
pursuant to a general framework of regional development,
and which would be non-specific if the criteria laid down
in Article 3(2) and (3) were applied to each eligible region
concerned, shall not be subject to countervailing meas-
ures, provided that:

(c) costs of consultancy and equivalent services used
exclusively for the research activity, including bought-
in research, technical knowledge, patents, etc.;

(a) each disadvantaged region is a clearly designated
area with a definable

contiguous
geographical
economic and administrative identity;

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(b) the region is considered as disadvantaged on the basis
of neutral and objective criteria, indicating that the
region’s difficulties arise out of more than temporary
circumstances; such criteria must be clearly spelled
out by law, regulation, or other official document, so
as to be capable of verification;

(c) the criteria mentioned under (b) include a measure-
ment of economic development which shall be based
on at least one of the following factors:

(cid:190) either income per capita or household income per
capita, or GDP per capita, which must not be
above 85 % of the average for the territory of the
country of origin or export concerned,

(cid:190) unemployment rate, which must be at least 110 %
of the average for the territory of the country of
origin or export concerned;

as measured over a three-year period; such measure-
ment, however, may be a composite one and may
include other factors.

For the purpose of the first subparagraph:

(a) a ‘general framework of regional development' means
that regional subsidy programmes are part of an inter-
nally consistent and generally applicable regional
development policy and that regional development
subsidies are not granted in isolated geographical
points having no, or virtually no, influence on the
development of a region;

(b)

‘neutral and objective criteria' means criteria which do
not favour certain regions beyond what is appropriate
for the elimination or reduction of regional disparities
within the framework of the regional development
policy. In this regard, regional subsidy programmes
shall include ceilings on the amount of subsidy which
can be granted to each subsidised project. Such ceil-
ings must be differentiated according to the different
levels of development of eligible regions and must be
expressed in terms of investment costs or the cost of
job creation. Within such ceilings, the distribution of
subsidy shall be sufficiently broad and even to avoid
the predominant use of a subsidy by, or the granting
of disproportionately large amounts of subsidy to,
certain enterprises.

This provision shall be applied in the light of the criteria
set out in Article 3(2) and (3).

Subsidies to promote adaptation of existing facilities
4.
requirements imposed by law
to new environmental
and/or regulations which result in greater constraints and
financial burden on firms, shall not be subject to counter-
vailing measures, provided that the subsidy:

(a)

is a one-time non-recurring measure; and

(b) is limited to 20 % of the cost of adaptation; and

(c) does not cover the cost of replacing and operating the
subsidised investment, which must be fully borne by
firms; and

(d) is directly linked to and proportionate to a firm’s
planned reduction of nuisances and pollution, and
does not cover any manufacturing cost savings which
may be achieved; and

(e)

is available to all firms which can adopt the new
equipment and/or production processes.

the purpose of

For
the first subparagraph the term
‘existing facilities' means facilities having been in opera-
tion for at least two years at the time when new environ-
mental requirements are imposed.

Article 5

Calculation of the amount of the countervailable
subsidy

The amount of countervailable subsidies, for the purposes
of this Decision shall be calculated in terms of the benefit
conferred on the recipient which is found to exist during
the investigation period for subsidisation. Normally this
period shall be the most recent accounting year of the
beneficiary, but may be any other period of at least six
months prior to the initiation of the investigation for
which reliable financial and other relevant data are avail-
able.

Article 6

Calculation of benefit to the recipient

As regards the calculation of benefit to the recipient, the
following rules shall apply:

(a) government provision of equity capital shall not be
considered to confer a benefit, unless the investment
can be regarded as inconsistent with the usual invest-
ment practice (including for the provision of risk
capital) of private investors in the territory of the
country of origin and/or export;

(b) a loan by a government shall not be considered to
confer a benefit, unless there is a difference between
the amount that the firm receiving the loan pays on
the government loan and the amount that the firm
would pay for a comparable commercial loan which
the firm could actually obtain on the market. In this
case the benefit shall be the difference between these
two amounts;

(c) a loan guarantee by a government shall not be consid-
ered to confer a benefit, unless there is a difference
between the amount that the firm receiving the guar-
antee pays on a loan guaranteed by the government

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and the amount that the firm would pay for a compar-
able commercial loan in the absence of the govern-
ment guarantee. In this case the benefit shall be the
difference between these two amounts adjusted for
any differences in fees;

4. Where a subsidy cannot be linked to the acquisition
of fixed assets, the amount of the benefit received during
the investigation period shall in principle be attributed to
this period, and allocated as described in paragraph 2,
unless special circumstances arise justifying attribution
over a different period.

(d) the provision of goods or services or purchase of
goods by a government shall not be considered to
confer a benefit, unless the provision is made for less
than adequate remuneration or the purchase is made
for more than adequate remuneration. The adequacy
of remuneration shall be determined in relation to
prevailing market conditions
the product or
service in question in the country of provision or
purchase (including price, quality, availability, market-
ability,
of
purchase or sale).

transportation and other

conditions

for

Article 7

General provisions on calculation

1.
The amount of the countervailable subsidies shall be
determined per unit of the subsidised 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 the subsidy.

Where an interested party claims a deduction, it must
prove that the claim is justified.

2. Where the subsidy is not granted by reference to the
quantities manufactured, produced, exported or trans-
ported, the amount of countervailable subsidy shall be
determined by allocating the value of the total subsidy, as
appropriate, over the level of production, sales or exports
of the products concerned during the investigation period
for subsidisation.

3. Where the subsidy can be linked to the acquisition
or future acquisition of fixed assets, the amount of the
countervailable subsidy shall be calculated by spreading
the subsidy across a period which reflects the normal
depreciation of such assets in the industry concerned. The
amount so calculated which is attributable to the invest-
igation 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).

Article 8

Determination of injury

For the purposes of this Decision, the term ‘injury'
1.
shall, unless otherwise specified, be taken to mean
material
threat of
injury to the Community industry,
material injury to the Community industry or material
retardation of the establishment of such an industry and
shall be 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 subsidised imports and the effect of
the subsidised imports on prices in the Community
market for like products; and

(b) the consequent

impact of

those imports on the

Community industry.

3. With regard to the volume of the subsidised imports,
consideration shall be given to whether there has been a
significant increase in subsidised imports, either in abso-
lute terms or relative to production or consumption in the
Community. With regard to the effect of the subsidised
imports on prices, consideration shall be given to whether
there has been significant price undercutting by the
subsidised 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 signifi-
cant degree or prevent price increases which would other-
wise have occurred, to a significant degree. No one or
more of
these factors can necessarily give decisive
guidance.

4. Where imports of a product from more than one
country are simultaneously subject to countervailing duty
investigations, the effects of such imports shall be cumu-
latively assessed only if it is determined that:

(a)

the amount of countervailable subsidies established in
relation to the imports from each country is more
than de minimis as defined in Article 14(5) and that
the volume of imports from each country is not negli-
gible; and

appropriate

(b) a cumulative assessment of the effects of the imports
of
is
competition between imported products and the
conditions of competition between the imported
products and the like Community product.

conditions

in light

the

of

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The examination of the impact of the subsidised
5.
imports on the Community industry concerned shall
include an evaluation of all relevant economic factors and
indices having a bearing on the state of the industry,
including: the fact that an industry is still in the process
of recovering from the effects of past subsidisation or
dumping, the magnitude of the amount of countervailable
subsidies, actual and potential decline in sales, profits,
output, market share, productivity, return on investments,
utilisation of capacity; factors affecting Community prices;
actual and potential negative effects on cash flow, inven-
tories, employment, wages, growth and ability to raise
capital or investments. This list is not exhaustive, nor can
any one or more of these factors necessarily give decisive
guidance.

from all

It must be demonstrated,

the relevant
6.
evidence presented in relation to paragraph 2, that the
subsidised imports are causing injury within the meaning
of this Decision. Specifically, this shall entail a demon-
stration that the volume and/or price levels identified
pursuant to paragraph 3 are responsible for an impact on
the Community industry as provided for in paragraph 5,
and that this impact exists to a degree which enables it to
be classified as material.

7. Known factors other than the subsidised imports
which at the same time are injuring the Community
industry shall also be examined to ensure that injury
caused by these other factors is not attributed to the
subsidised imports pursuant to paragraph 6. Factors which
may be considered in this respect include the volume and
prices of non-subsidised imports, contraction in demand
or changes in the patterns of consumption, restrictive
trade practices of, and competition between, third country
and Community producers, developments in technology
and the export performance and productivity of
the
Community industry.

8.
The effect of the subsidised imports shall be assessed
in relation to the production of the Community industry
of the like product when available data permit the sep-
arate identification of that production on the basis of such
criteria as the production process, producers’ sales and
profits. If such separate identification of that production
is not possible, the effects of the subsidised imports shall
be assessed by examination of
the
narrowest group or range of products, which includes the
like product, for which the necessary information can be
provided.

the production of

9. A determination of a threat of material injury shall
be based on facts and not merely on allegation, conjecture
or remote possibility. The change in circumstances which
would create a situation in which the subsidy would cause
injury must be clearly foreseen and imminent.

In making a determination regarding the existence of a
threat of material injury, consideration should be given to,
inter alia, such factors as:

(a)

the nature of the subsidy or subsidies in question and
the trade effects likely to arise therefrom;

(b) a significant rate of increase of subsidised imports into
the Community market indicating the likelihood of
substantially increased imports;

(c) sufficient freely disposable capacity of the exporter or
an imminent substantial
increase in such capacity
indicating the likelihood of substantially increased
subsidised exports to the Community, account being
taken of the availability of other export markets to
absorb any additional exports;

(d) whether imports are entering at prices that would, to a
significant degree, depress prices or prevent price
increases which otherwise would have occurred, and
would probably increase demand for further imports;
and

(e)

inventories of the product being investigated.

No one of the factors listed above by itself can necessarily
give decisive guidance but
the factors
considered must lead to the conclusion that further sub-
sidised exports are imminent and that, unless protective
action is taken, material injury will occur.

the totality of

Article 9

Definition of Community industry

the

For

this Decision,

the purposes of

term
1.
‘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 prod-
ucts constitutes a major proportion, as defined in Article
10(7), of the total Community production of those prod-
ucts, except that:

(a) when producers are related to the exporters or impor-
ters or are themselves importers of the allegedly sub-
sidised product, the term ‘Community industry' may
be interpreted as referring to the rest of the producers;

(b) in exceptional circumstances

the
Community may, for the production in question, be
divided into two or more competitive markets and the
producers within each market may be regarded as a
separate industry if:

the territory of

(i) the producers within such a market sell all or
almost all of their production of the product in
question in that market; and

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(ii) the demand in that market is not to any substan-
tial degree supplied by producers of the product in
question located elsewhere in the Community.

In such circumstances, injury may be found to exist even
where a major portion of the total Community industry is
not injured, provided there is a concentration of sub-
sidised imports into such an isolated market and provided
further that the subsidised imports are causing injury to
the producers of all or almost all of the production within
such a market.

2.
For the purpose of paragraph 1, producers shall be
considered to be related to exporters or importers only if:

(a) one of them directly or indirectly controls the other;

or

(b) both of them are directly or indirectly controlled by a

third person; or

(c) together they directly or indirectly control a third
person provided that there are grounds for believing
or suspecting that the effect of the relationship is such
as to cause the producer concerned to behave differ-
ently from non-related producers.

For the purpose of this paragraph, one shall be deemed to
control another when the former is legally or operation-
ally in a position to exercise restraint or direction over the
latter.

to Article 13 in respect of

In such cases, when evaluating

3. Where the Community industry has been inter-
preted as referring to the producers in a certain region,
the exporters or the government granting countervailable
subsidies shall be given an opportunity to offer undertak-
the region
ings pursuant
concerned.
the
Community interest of the measures, special account shall
be taken of the interest of the region. If an adequate
undertaking is not offered promptly or if the situations set
out in Article 13(9) and (10) apply, a provisional or defin-
itive 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 expor-
ters.

The provisions of Article 8(8) shall apply to this

4.
Article.

Article 10

Initiation of proceedings

1.
Except as provided for in paragraph 9, an invest-
igation to determine the existence, degree and effect of
any alleged subsidy shall be initiated upon a written
complaint by any natural or legal person, or any associa-
tion not having legal personality, acting on behalf of the
Community industry.

The complaint may be submitted to the Commission, or
to a Member State, which shall forward it to the Commis-
sion. The Commission shall send Member States a copy
of any complaint
it receives. The complaint shall be
deemed to have been lodged on the first working day
following its delivery to the Commission by registered
mail or the issuing of an acknowledgement of receipt by
the Commission.

Where, in the absence of any complaint, a Member State
is in possession of sufficient evidence of subsidisation and
of resultant injury to the Community industry, it shall
immediately communicate such evidence to the Commis-
sion.

2. A complaint as referred to in paragraph 1 shall
include sufficient evidence of the existence of counter-
vailable subsidies (including, if possible, of their amount),
injury and a causal link between the allegedly subsidised
imports and the alleged injury. The complaint shall
contain such information as is reasonably available to the
complainant on the following:

(a)

is made on behalf of

identity of the complainant and a description of the
volume and value of the Community production of
the like product by the complainant. Where a written
the Community
complaint
industry, the complaint shall identify the industry on
behalf of which the complaint is made by a list of all
known Community producers of the like product (or
associations of Community producers of
the like
product) and, to the extent possible, a description of
the volume and value of Community production of
the like product accounted for by such producers;

(b) a complete description of

the allegedly subsidised
product, the names of the country or countries of
origin and/or export in question, the identity of each
known exporter or foreign producer and a list of
known persons importing the product in question;

(c) evidence with regard to the existence, amount, nature
and countervailability of the subsidies in question;

(d) information on changes in the volume of the allegedly
subsidised imports, the effect of those imports on
prices of the like product in the Community market
and the consequent impact of the imports on the
Community industry, as demonstrated by relevant
factors and indices having a bearing on the state of the
Community industry, such as those listed in Article
8(3) and (5).

The Commission shall, as far as possible, examine
3.
the accuracy and adequacy of the evidence provided in
the complaint to determine whether there is sufficient
evidence to justify the initiation of an investigation.

4. An investigation may be initiated in order to deter-
mine whether or not the alleged subsidies are ‘specific'
within the meaning of Article 3(2) and (3).

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5. An investigation may also be initiated in respect of
subsidies which are non-countervailable according to
Article 4(2), (3) or (4) in order to determine whether or not
the conditions laid down in those paragraphs have been
met.

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 %, unless such countries collectively account for
3 % or more of Community consumption.

If a subsidy is granted pursuant

6.
to a subsidy
programme which has been notified in advance of its
implementation to the WTO Committee on Subsidies
and Countervailing Measures in accordance with the
provisions of Article 8 of the Subsidies Agreement, and in
respect of which that Committee has failed to determine
that the relevant conditions laid down in Article 8 of the
Subsidies Agreement have not been met, an investigation
shall not be initiated in respect of a subsidy granted
pursuant
to such a programme, unless a violation of
Article 8 of the Subsidies Agreement has been ascertained
by the competent WTO Dispute Settlement Body or
through arbitration as provided in Article 8(5) of the
Subsidies Agreement.

7. An investigation shall not be initiated pursuant to
paragraph 1 unless it has been determined, on the basis of
an examination as to the degree of support for, or opposi-
tion to, the complaint expressed by Community produ-
cers of the like product, that the complaint has been
made by or on behalf of the Community industry. The
complaint shall be considered to have been made by or
on behalf of the Community industry if it is supported by
those Community producers whose collective output
constitutes more than 50 % of the total production of the
like product produced by that portion of the Community
industry expressing either support for or opposition to the
complaint. However, no investigation shall be initiated
when Community producers expressly supporting the
complaint account for less than 25 % of total production
of the like product produced by the Community industry.

8.
The authorities shall avoid, unless a decision has
been made to initiate an investigation, any publicising of
the complaint seeking the initiation of an investigation.
However, as soon as possible after the receipt of a prop-
erly documented complaint pursuant to this Article, and
in any event before the initiation of an investigation, the
Commission shall notify the country of origin and/or
export concerned, which shall be invited for consultations
with the aim of clarifying the situation as to matters
referred to in paragraph 2 and arriving at a mutually
agreed solution.

9.
If, in special circumstances, the Commission decides
to initiate an investigation without having received a
written complaint by or on behalf of the Community
industry for the initiation of such investigation, this shall
be done on the basis of sufficient evidence of the exis-
tence of countervailable subsidies, injury and causal link,
as described in paragraph 2, to justify such initiation.

10. The evidence of both subsidies and injury shall be
considered simultaneously in the decision on whether or
not to initiate an investigation. A complaint shall be
rejected where there is insufficient evidence of either

11. The complaint may be withdrawn prior to initiation,
in which case it shall be considered not to have been
lodged.

12. Where, after consultation, it is apparent that there is
sufficient evidence to justify initiating a proceeding the
Commission shall do so within 45 days of the lodging of
the complaint and shall publish a notice in the Official
Journal of the European Communities. Where insuffi-
cient evidence has been presented, the complainant shall,
after consultation, be so informed within 45 days of the
date on which the complaint is lodged with the Commis-
sion.

initiation of

13. The notice of
the proceedings shall
announce the initiation of an investigation, indicate the
product and countries concerned, give a summary of the
information received and provide that all relevant infor-
mation is to be communicated to the Commission; it
shall state the periods within which interested parties may
make themselves known, present their views in writing
and submit information, if such views and information
are to be taken into account during the investigation; it
shall also state the period within which interested parties
may apply to be heard by the Commission in accordance
with Article 11(5).

14. The Commission shall advise the exporters, impor-
ters and representative associations of importers or expor-
ters known to it to be concerned, as well as the country of
origin and/or export and the complainants, of the initia-
tion of
the proceedings and, with due regard to the
protection of confidential information, provide the full
text of the written complaint referred to in paragraph 1 to
the known exporters and to the authorities of the country
of origin and/or export, and make it available upon
request to other interested parties involved. Where the
number of exporters involved is particularly high, the full
text of the written complaint may instead be provided
only to the authorities of the country of origin and/or
export or to the relevant trade association.

15. A countervailing duty investigation shall not hinder
the procedures of customs clearance.

Article 11

The investigation

Following the initiation of

the
1.
Commission, acting in cooperation with the Member
States, shall commence an investigation at Community
level. Such investigation shall cover both subsidisation

the proceeding,

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L 245/13

and injury and these shall be investigated simultaneously.
For the purpose of a representative finding, an invest-
igation period shall be selected which, in the case of
subsidisation shall, normally, cover
the investigation
period provided for in Article 5. Information relating to a
period subsequent
to the investigation period shall,
normally, not be taken into account.

Parties receiving questionnaires used in a counter-
2.
vailing duty investigation shall be given at least 30 days to
reply. The time limit for exporters shall be counted from
the date of receipt of the questionnaire, which for this
purpose shall be deemed to have been received one week
from the day on which it was sent to the respondent or
transmitted to the appropriate diplomatic representative
of the country of origin and/or export. An extension to
the 30-day period may be granted, due account being
taken of the time limits of the investigation, provided that
the party shows due cause for such extension, in terms of
its particular circumstances.

The Commission may request Member States to
3.
supply information, and Member States shall take what-
ever steps are necessary in order to give effect to such
requests. They shall send to the Commission the informa-
tion requested together with the results of all inspections,
checks or investigations carried out. Where this informa-
tion is of general interest or where its transmission has
been requested by a Member State, the Commission shall
forward it to the Member States, provided it is not confi-
dential, in which case a non-confidential summary shall
be forwarded.

4.
The Commission may request Member States to
carry out all necessary checks and inspections, particularly
amongst importers, traders and Community producers,
and to carry out investigations in third countries, provided
that the firms concerned give their consent and that the
government of the country in question has been officially
notified and raises no objection. Member States shall take
whatever steps are necessary in order to give effect to such
requests from the Commission. Officials of the Commis-
sion shall be authorised, if the Commission or a Member
State so requests, to assist the officials of Member States in
carrying out their duties.

5.
The interested parties which have made themselves
known in accordance with Article 10(13), shall be heard if
they have, within the period prescribed in the notice
the European
published in the Official Journal of
Communities, made a written request
for a hearing
showing that they are an interested party likely to be
affected by the result of the proceeding and that there are
particular reasons why they should be heard.

and/or export, to meet those parties with adverse interests,
so that opposing views may be presented and rebuttal
arguments offered. Provision of such opportunities must
take account of the need to preserve confidentiality and of
the convenience to the parties. There shall be no obliga-
tion on any party to attend a meeting, and failure to do so
shall not be prejudicial to that party’s case. Oral informa-
tion provided under this paragraph shall be taken into
account by the Commission in so far as it is subsequently
confirmed in writing.

7.
The complainants, the government of the country of
origin and/or export, importers and exporters and their
representative associations, users and consumer organ-
isations, which have made themselves known in accord-
ance with Article 10(13), may, upon written request,
inspect all information made available to the Commission
by any party to an investigation, as distinct from internal
documents prepared by the authorities of the Community
or its Member States, which is relevant to the presentation
of their cases and not confidential within the meaning of
Article 29, and that it is used in the investigation. Such
parties may respond to such information and their
comments shall be taken into consideration, wherever
they are sufficiently substantiated in the response.

Except in circumstances provided for in Article 28,
8.
the information which is supplied by interested parties
and upon which findings are based shall be examined for
accuracy as far as possible.

For proceedings initiated pursuant to Article 10(12),
9.
an investigation shall, whenever possible, be concluded
within one year. In any event, such investigations shall in
all cases be concluded within 13 months of initiation, in
accordance with the findings made pursuant to Article 13
for undertakings or the findings made pursuant to Article
15 for definitive action.

10. Throughout the investigation the Commission shall
afford the country of origin and/or export a reasonable
opportunity to continue consultations with a view to clari-
fying the factual situation and arriving at a mutually
agreed solution.

Article 12

Provisional measures

1.

Provisional duties may be imposed if:

(a) proceedings have been initiated in accordance with

Article 10;

6. Opportunities shall, on request, be provided for the
importers, exporters and the complainants, which have
made themselves known in accordance with Article
the country of origin
10(13), and the government of

(b) a notice has been given to that effect and interested
parties have been given adequate opportunities to
submit information and make comments in accord-
ance with Article 10(13);

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(c) a provisional affirmative determination has been made
that the imported product benefits from countervail-
able subsidies and of consequent
injury to the
Community industry; and

(d) the Community interest calls for

intervention to

prevent such injury.

The provisional duties shall be imposed no earlier than
60 days from the initiation of the proceedings but no later
than nine months from the initiation of the proceedings.

The amount of the provisional countervailing duty shall
not exceed the total amount of countervailable subsidies
as provisionally established but it should be less than this
amount, if such lesser duty would be adequate to remove
the injury to the Community industry.

2.
Provisional duties shall be secured by a guarantee
and the release of the products concerned for free circula-
tion in the Community shall be conditional upon the
provision of such guarantee.

The Commission shall take provisional action after
3.
in cases of extreme urgency, after
consultation or,
informing the Member States. In this latter case, consulta-
tions shall take place 10 days, at the latest, after noti-
fication to the Member States of the action taken by the
Commission.

4. Where a Member State requests immediate interven-
tion by the Commission and where the conditions of the
first and second subparagraphs of paragraph 1 are met,
the Commission shall, within a maximum of five working
days of receipt of the request, decide whether a provi-
sional countervailing duty shall be imposed.

The Commission shall forthwith inform the Member
5.
States of any decision taken under paragraphs 1 to 4.

Provisional

6.
maximum period of validity of four months.

countervailing duties

shall have

a

Article 13

Undertakings

1.
Investigations may be terminated without the impo-
sition of provisional or definitive duties upon receipt of
satisfactory voluntary undertakings under which:

(a)

the country of origin and/or export agrees to eliminate
or
take other measures
the
concerning its effects; or

subsidy or

limit

from countervailable subsidies, so that

(b) any exporter undertakes to revise its prices or to cease
exports to the area in question as long as such exports
benefit
the
Commission, after consultation, is satisfied that the
injurious effect of the subsidies is eliminated. Price
increases under such undertakings shall not be higher
than necessary to offset the amount of countervailable
subsidies, and should be less than the amount of
countervailable subsidies if such increases would be
adequate to remove the injury to the Community
industry.

2. Undertakings may be suggested by the Commission,
but no country or exporter shall be obliged to enter into
such an undertaking. The fact that countries or exporters
do not offer such undertakings, or do not accept an invi-
tation to do so, shall in no way prejudice consideration of
the case. However, it may be determined that a threat of
injury is more likely to be realised if
the subsidised
imports continue. Undertakings shall not be sought or
accepted from countries or exporters unless a provisional
affirmative determination of
subsidisation and injury
caused by such subsidisation has been made. Save in
exceptional circumstances, undertakings may not be
offered later than the end of the period during which
representations may be made pursuant to Article 30(5).

3. Undertakings offered need not be accepted if their
acceptance is considered impractical, such as where the
number of actual or potential exporters is too great, or for
other reasons, including reasons of general policy. The
exporter and/or
the country of origin and/or export
concerned may be provided with the reasons for which it
is proposed to reject the offer of an undertaking and may
be given an opportunity to make comments thereon. The
reasons for rejection shall be set out in the definitive
decision.

4.
Parties which offer an undertaking shall be required
to provide a non-confidential version of such undertaking,
so that it may be made available to interested parties to
the investigation.

5. Where undertakings are, after consultation, accepted,
the investigation shall be terminated by the Commission.

6.
If the undertakings are accepted, the investigation of
subsidisation and injury shall normally be completed. In
such a case, if a negative determination of subsidisation or
injury is made, the undertaking shall automatically lapse,
except in cases where such a determination is due in large
part to the existence of an undertaking. In such cases, it
may be required that an undertaking be maintained for a
reasonable period. In the event that an affirmative deter-
mination of subsidisation and injury is made, the under-
taking shall continue consistent with its terms and the
provisions of this Decision.

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The Commission shall

require any country or
7.
exporter from whom undertakings have been accepted to
provide, periodically, information relevant to the fulfil-
ment of such undertaking, and to permit verification of
pertinent data. Non-compliance with such requirements
shall be construed as a breach of the undertaking.

imports of the like product in the Community, unless
imports
from developing countries whose individual
shares of total imports represent less than 4 % collec-
tively account for more than 9 % of the total imports of
the like product in the Community.

8. Where undertakings
are accepted from certain
exporters during the course of an investigation, they shall,
for the purpose of Articles 18, 19, 20 and 22, be deemed
to take effect from the date on which the investigation is
concluded for the country of origin and/or export.

In case of breach or withdrawal of undertakings by
9.
any party, a definitive duty shall be imposed in accord-
ance with Article 15, on the basis of the facts established
within the context of the investigation which led to the
such investigation was
undertaking, provided that
concluded with a final determination as to subsidisation
and injury, and that
the exporter concerned, or the
country of origin and/or export, has, except in the case of
withdrawal of the undertaking by the exporter or such
country, been given an opportunity to comment.

information available, where there is

10. A provisional duty may, after consultation, be
imposed in accordance with Article 12 on the basis of the
reason to
best
believe that an undertaking is being breached, or in case
of breach or withdrawal of an undertaking where the
investigation which led to the undertaking has not been
concluded.

Article 14

Termination without measures

1. Where the complaint is withdrawn, the proceeding
may be terminated unless such termination would not be
in the Community interest.

2. Where, after consultation, protective measures are
unnecessary the investigation or proceeding shall be
terminated by the Commission.

There

shall be

termination of

3.
the
immediate
proceeding where it is determined that the amount of
countervailable subsidies is de minimis,
in accordance
with the provisions of paragraph 5, or where the volume
of subsidised imports, actual or potential, or the injury, is
negligible.

4.
For a proceeding initiated pursuant to Article 10(12),
injury shall normally be regarded as negligible where the
market share of the imports is less than the amounts set
in Article 10(10). With regard to investigations
out
concerning imports
the
volume of subsidised imports shall also be considered
the total
negligible if

it represents less than 4 % of

from developing countries,

5.
The amount of the countervailable subsidies shall be
considered to be de minimis if such amount is less than
1 % ad valorem, except that:

(a) as regards investigations concerning imports from
developing countries the de minimis threshold shall
be 2 % ad valorem; and

(b) for those developing countries Members of the WTO
referred to in Annex VII to the Subsidies Agreement
as well as for developing countries Members of the
WTO which have completely eliminated export sub-
sidies as defined in Article 3(4)(a) of this Decision, the
subsidy threshold shall be 3 % ad
de minimis
this provision
valorem; where the application of
it
depends on the elimination of export subsidies,
shall apply from the date on which the elimination 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 devel-
oping country concerned; this provision shall expire
eight years from the date of entry into force of the
WTO Agreement;

provided that it is only the investigation that shall be
terminated where the amount of
the countervailable
subsidies is below the relevant de minimis level for indi-
vidual exporters, who shall remain subject to the proceed-
ings and may be re-investigated in any subsequent review
carried out for the country concerned pursuant to Articles
18 and 19.

Article 15

Imposition of definitive duties

the Advisory Committee, unless

1. Where the facts as finally established show the exis-
tence of countervailable subsidies and injury caused
thereby, and the Community interest calls for interven-
tion in accordance with Article 31 a definitive counter-
vailing duty shall be imposed by the Commission after
consultation of
the
subsidy or subsidies are withdrawn or it has been demon-
strated that the subsidies no longer confer any benefit on
the exporters involved. The amount of the countervailing
duty shall not exceed the amount of countervailable
subsidies from which the exporters have been found to
benefit, established pursuant to this Decision, but should
be less than the total amount of countervailable subsidies,
if such lesser duty would be adequate to remove the injury
to the Community industry.

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4. 9. 98

2. A countervailing duty shall be imposed in the appro-
priate amounts in each case, on a non-discriminatory
basis, on imports of a product from all sources found to
benefit from countervailable subsidies and causing injury,
except as to imports from those sources from which
undertakings under the terms of this Decision have been
accepted. The Decision imposing the duty shall specify
the duty for each supplier, or, if that is impracticable, the
supplying country concerned.

3. When the Commission has limited its examination
in accordance with Article 27, any countervailing duty
applied to imports from exporters or producers which
have made themselves known in accordance with Article
27 but were not included in the examination shall not
exceed the weighted average amount of countervailable
subsidies established for the parties in the sample. For the
purpose of this paragraph, the Commission shall disre-
gard any zero and de minimis amounts of countervailable
subsidies and amounts of countervailable subsidies estab-
lished in the circumstances referred to in Article 28.
Individual duties shall be applied to imports from any
exporter or producer for which an individual amount of
subsidisation has been calculated as provided for
in
Article 27.

Article 16

Retroactivity

mination is negative, the provisional duty shall not be
confirmed.

4. A definitive countervailing duty may be levied on
products which were entered for consumption not more
than 90 days prior to the date of application of provi-
sional measures but not prior to the initiation of the
investigation, provided that the imports have been regis-
the importers
tered in accordance with Article 24(5),
concerned have been given an opportunity to comment
by the Commission, and:

(a)

there exist critical circumstances where for the sub-
sidised product in question injury which is difficult to
repair is caused by massive imports in a relatively
short period of a product benefiting from countervail-
able subsidies under the terms of this Decision; and

(b) it is deemed necessary, in order to preclude the recur-
rence of such injury, to assess countervailing duties
retroactively on those imports.

5.
In cases of breach or withdrawal of undertakings,
definitive duties may be levied on goods entered for free
circulation not more than 90 days before the application
of provisional measures, provided that the imports have
been registered in accordance with Article 24(5) and that
any such retroactive assessment shall not apply to imports
entered before the breach or withdrawal of the under-
taking.

1.
Provisional measures and definitive countervailing
duties shall only be applied to products which enter free
circulation after
the time when the measure taken
pursuant to Article 12(1) or 15(1), as the case may be,
enters into force, subject to the exceptions set out in this
Decision.

2. Where a provisional duty has been applied and the
facts as finally established show the existence of counter-
vailable subsidies and injury,
the Commission shall
decide, irrespective of whether a definitive countervailing
duty is to be imposed, what proportion of the provisional
duty is to be definitively collected. For this purpose,
‘injury' shall not include material retardation of the estab-
lishment of a Community industry, nor threat of material
injury, except where it is found that this would, in the
absence of provisional measures, have developed into
material injury. In all other cases involving such threat or
retardation, any provisional amounts shall be released and
definitive duties can only be imposed from the date that a
final determination of threat or material retardation is
made.

If the definitive countervailing duty is higher than
3.
the provisional duty, the difference shall not be collected.
If the definitive duty is lower than the provisional duty,
the duty shall be recalculated. Where a final deter-

Article 17

Duration

A countervailing measure shall remain in force only as
long as, and to the extent that, it is necessary to coun-
teract
the countervailable subsidies which are causing
injury.

Article 18

Expiry reviews

1. A definitive countervailing measure shall expire five
years from its imposition or five years from the date of
the most recent review which has covered both subsidisa-
tion and injury, unless it is determined in a review that
the expiry would be likely to lead to a continuation or
recurrence of subsidisation and injury. Such an expiry
review shall be initiated on the initiative of the Commis-
sion, or upon a request made by or on behalf of Com-
munity producers, and the measure shall remain in force
pending the outcome of such review.

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2. An expiry review shall be initiated where the request
contains sufficient evidence that the expiry of the meas-
ures would be likely to result in a continuation or recur-
rence of subsidisation and injury. Such a likelihood may,
for example, be indicated by evidence of continued sub-
sidisation and injury or evidence that the removal of
injury is partly or solely due to the existence of measures
or evidence that the circumstances of the exporters, or
market conditions, are such that they would indicate the
likelihood of further injurious subsidisation.

In carrying out

investigations pursuant

3.
to this
Article, the exporters, importers, the country of origin
and/or export and the Community producers shall be
provided with the opportunity to amplify,
rebut or
comment on the matters set out in the review request,
and conclusions shall be reached with due account taken
of all relevant and duly documented evidence presented
in relation to the question as to whether the expiry of
measures would be likely, or unlikely, to lead to the
continuation or recurrence of subsidisation 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 applica-
tion of the measures as defined in this Article. Thereafter,
the Community producers shall, no later than three
months before the end of the five-year period, be entitled
to lodge a review request in accordance with paragraph 2.
A notice announcing the actual expiry of measures
pursuant to this Article shall also be published.

no movement, or insufficient movement, of resale prices
of the imported product in the Community. If the invest-
igation proves the allegations to be correct, countervailing
duties may be increased to achieve the price increase
required to remove injury; however, the increased duty
level shall not exceed the amount of the countervailable
subsidies.

In carrying out

investigations pursuant

the Commission may,

4.
to this
inter alia, consider
Article,
whether the circumstances with regard to subsidisation
and injury have changed significantly, or whether existing
measures are achieving the intended results in removing
the injury previously established pursuant to Article 8. In
these respects, account shall be taken in the final deter-
mination of all relevant and duly documented evidence.

Article 20

Accelerated reviews

Any exporter whose exports are subject to a definitive
countervailing duty but who was not individually investi-
gated during the original investigation for reasons other
than a refusal to cooperate with the Commission, shall be
entitled, upon request, to an accelerated review in order
that the Commission may promptly establish an indi-
vidual countervailing duty rate for that exporter. Such a
review shall be initiated after consultation of the Advisory
Committee and after Community producers have been
given an opportunity to comment.

Article 19

Interim reviews

Article 21

Refunds

1.
The need for the continued imposition of measures
may also be reviewed, where warranted, on the initiative
of the Commission or at the request of a Member State or,
provided that a reasonable period of time of at least one
year has elapsed since the imposition of the definitive
measure, upon a request by any exporter, importer or by
the Community producers or the country of origin and/or
export which contains sufficient evidence substantiating
the need for such an interim review.

2. An interim review shall be initiated where the
request contains sufficient evidence that the continued
imposition of the measure is no longer necessary to offset
the countervailable subsidy and/or that the injury would
be unlikely to continue or recur if the measure were
removed or varied, or that the existing measure is not, or
is no longer, sufficient to counteract the countervailable
subsidy which is causing injury.

1. Notwithstanding Article 18, an importer may request
reimbursement of duties collected where it is shown that
the amount of countervailable subsidies, on the basis of
which duties were paid, has been eliminated or reduced to
a level which is below the level of the duty in force.

2.
In requesting a refund of countervailing duties, the
importer shall submit an application to the Commission.
The application shall be submitted via the Member State
in the territory of which the products were released for
free circulation, within six months of the date on which
the amount of the definitive duties to be levied was duly
determined by the competent authorities or of the date on
which a decision was made definitively to collect the
amounts secured by way of provisional duty. Member
States shall forward the request to the Commission forth-
with.

3. Where the countervailing duties imposed are less
than the amount of countervailable subsidies found, an
interim review shall be initiated if the Community produ-
cers provide sufficient evidence that the duties have led to

3. An application for refund shall be considered to be
duly supported by evidence only where it contains precise
information on the amount of refund of countervailing
duties claimed and all customs documentation relating to

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4. 9. 98

for a representative period, of

the calculation and payment of such amount. It shall also
include evidence,
the
amount of countervailable subsidies for the exporter or
producer to which the duty applies. In cases where the
importer is not associated with the exporter or producer
concerned and such information is not immediately avail-
able, or where the exporter or producer is unwilling to
release it to the importer, the application shall contain a
statement from the exporter or producer that the amount
of countervailable subsidies has been reduced or elimi-
nated, as specified in this Article, and that the relevant
supporting evidence will be provided to the Commission.
Where such evidence is not
forthcoming from the
exporter or producer within a reasonable period of time
the application shall be rejected.

4.
the
The Commission shall, after consultation of
Advisory Committee, decide whether and to what extent
the application should be granted, or it may decide at any
time to initiate an interim review, whereupon the infor-
mation and findings from such review, carried out in
accordance with the provisions applicable for
such
reviews, shall be used to determine whether and to what
extent a refund is justified. Refunds of duties shall
normally take place within 12 months, and in no circum-
stances more than 18 months after the date on which a
request for a refund, duly supported by evidence, has been
made by an importer of the product subject to the coun-
tervailing duty. The payment of any refund authorised
should normally be made by Member States within 90
days of the abovementioned decision.

Article 22

General provisions on reviews and refunds

1.
The relevant provisions of Articles 10 and 11,
excluding those relating to time limits, shall apply to any
review carried out pursuant to Articles 18, 19 and 20. Any
such review shall be carried out expeditiously and shall
normally be concluded within 12 months of the date of
initiation of the review.

2. Reviews pursuant to Articles 18, 19 and 20 shall be
initiated by the Commission after consultation of the
Advisory Committee. Where warranted by reviews, meas-
ures shall be repealed or maintained pursuant to Article
18, or repealed, maintained or amended pursuant
to
Articles 19 and 20 by the Commission. Where measures
are repealed for individual exporters, but not
for the
country as a whole, such exporters shall remain subject to
the proceeding and may be re-investigated in any subse-
quent review carried out for that country pursuant to
Articles 18 and 19.

3. Where a review of measures pursuant to Article 19 is
in progress at the end of the period of application of
measures as defined in Article 18, the measures shall also
be investigated under the provisions of Article 18.

4.
In all review or refund investigations carried out
pursuant to Articles 18 to 21, the Commission shall,
provided that circumstances have not changed, apply the
same methodology as in the investigation which led to
the duty, with due account being taken of Articles 5, 6, 7
and 27.

Article 23

Circumvention

imposed pursuant

to this
1. Countervailing duties
Decision may be extended to imports from third coun-
tries of like products, or parts thereof, when circumven-
tion of the measures in force is taking place. Circumven-
tion shall be defined as a change in the pattern of trade
between third countries and the Community which stems
from a practice, process or work for which there is insuffi-
cient due cause or economic justification other than the
imposition of the duty, and where there is evidence that
the remedial effects of the duty are being undermined in
terms of the prices and/or quantities of the like products
and that the imported like product and/or parts thereof
still benefit from the subsidy.

after consultation of

Investigations shall be initiated pursuant

2.
to this
Article where the request contains sufficient evidence
regarding the factors set out in paragraph 1. Initiations
the Advisory
shall be made,
Committee, by Commission decision which shall also
instruct the customs authorities to make imports subject
to registration in accordance with Article 24(5) or to
request guarantees. Investigations shall be carried out by
the Commission, which may be assisted by customs
authorities, and shall be concluded within nine months.
When the facts as finally ascertained justify the extension
of measures, this shall be done by the Commission, after
consultation of the Advisory Committee, from the date on
which registration was imposed pursuant to Article 24(5)
or on which guarantees were requested. The relevant
procedural provisions of
this Decision with regard to
initiations and the conduct of investigations shall apply
pursuant to this Article.

3.
Products shall not be subject to registration pursuant
to Article 24(5) or measures where they are accompanied
by a customs certificate declaring that the importation of
the goods does not constitute circumvention. These certi-
ficates may be issued to importers, upon written applica-
tion following authorization by decision of the Commis-

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sion after consultation of the Advisory Committee, and
they shall remain valid for the period, and under the
conditions, set down therein.

4. Nothing in this Article shall preclude the normal
application of the provisions in force concerning customs
duties.

Article 24

General provisions

1.
Provisional or definitive countervailing duties shall
be imposed by a Commission decision and collected by
Member States in the form, at the rate specified and
according to the other criteria laid down in the decision
imposing such duties. Such duties shall also be collected
independently of
taxes and other
the customs duties,
charges normally imposed on imports. No product shall
be subject to both anti-dumping and countervailing duties
for the purpose of dealing with one and the same situa-
tion arising from dumping or from export subsidisation.

2. Decisions imposing provisional or definitive coun-
tervailing duties, and decisions accepting undertakings or
shall be
terminating investigations or proceedings,
published in the Official Journal of
the European
Communities. Such decisions shall contain in particular
and with due regard to the protection of confidential
information, the names of the exporters, if possible, or of
the countries involved, a description of the product and a
summary of the facts and considerations relevant to the
subsidy and injury determinations. In each case, a copy of
the Decision shall be sent to known interested parties.
The provisions of
this paragraph shall apply mutatis
mutandis to reviews.

3.
Special provisions, in particular with regard to the
common definition of the concept of origin, as contained
in Council Regulation (EEC) No 2913/92 (1) may be
adopted pursuant to this Decision.

In the Community interest, measures

4.
imposed
pursuant to this Decision may, after consultation of the
Advisory Committee, be suspended by a decision of the
Commission for a period of nine months. The suspension
may be extended for a further period, not exceeding one
year, if the Commission, after consultation, so decides.
Measures may only be suspended where market condi-
tions have temporarily changed to an extent that injury
would be unlikely to resume as a result of the suspension,
and provided that
the Community industry has been
given an opportunity to comment and these comments
have been taken into account. Measures may, at any time
and after consultation, be reinstated if the reason for
suspension is no longer applicable.

(1) OJ L 302, 19. 10. 1992, p. 1.

the
The Commission may, after consultation of
5.
Advisory Committee, direct the customs authorities to
take the appropriate steps to register imports, so that
measures may subsequently be applied against
those
imports from the date of such registration. Imports may
be made subject to registration following a request from
the Community industry which contains
sufficient
evidence to justify such action. Registration shall be intro-
duced by a Commission decision which shall specify the
purpose of the action and, if appropriate, the estimated
amount of possible future liability. Imports shall not be
made subject to registration for a period longer than nine
months.

6. Member States shall report to the Commission every
month on the import trade of products subject to invest-
igation and to measures, and on the amount of duties
collected pursuant to this Decision.

Article 25

Consultations

1. Any consultations provided for in this Decision,
except those referred to in Articles 10(8) and 11(10), shall
take place within an Advisory Committee, which shall
consist of representatives of each Member State, with a
representative of the Commission as chairman. Consulta-
tions shall be held immediately on request by a Member
State or on the initiative of the Commission, and in any
event within a period of time which allows the time limits
set by this Decision to be adhered to.

The Committee shall meet when convened by its
2.
chairman. He shall provide the Member States, as
promptly as possible, with all relevant information.

in that event,

3. Where necessary, consultation may be in writing
the Commission shall notify the
only;
Member States and shall specify a period within which
they shall be entitled to express their opinions or to
request an oral consultation which the chairman shall
arrange, provided that such oral consultation can be held
within a period of time which allows the time limits set
by this Decision to be adhered to.

4. Consultation shall cover, in particular:

(a)

the existence of countervailable subsidies and the
methods of establishing their amount;

(b) the existence and extent of injury;

(c) the causal link between the subsidised imports and

injury;

(d) the measures which, in the circumstances, are appro-
priate to prevent or remedy the injury caused by the
countervailable subsidies and the ways and means of
putting such measures into effect.

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Article 26

Verification visits

The Commission shall, where it considers it appro-
1.
priate, carry out visits to examine the records of importers,
exporters, traders, agents, producers, trade associations and
organisations, to verify information provided on subsid-
isation and injury. In the absence of a proper and timely
reply a verification visit may not be carried out.

2.
The Commission may carry out investigations in
third countries as required, provided that it obtains the
agreement of the firms concerned, that it notifies the
country in question and that the latter does not object to
the investigation. As soon as the agreement of the firms
concerned has been obtained the Commission should
notify the country of origin and/or export of the names
and addresses of the firms to be visited and the dates
agreed.

3.
The firms concerned shall be advised of the nature of
the information to be verified during verification visits
to be
and of any further
provided during such visits,
though this should not
preclude requests made during the verification for further
details
information
obtained.

to be provided in the light of

information which needs

who submits the necessary information within the time
limits provided for in this Decision, except where the
number of exporters or producers is so large that indi-
vidual examinations would be unduly burdensome and
would prevent completion of the investigation in good
time.

4. Where it is decided to sample and there is a degree
of non-cooperation by some or all of the parties selected
which is likely to materially affect the outcome of the
investigation, a new sample may be selected. However, if a
material degree of non-cooperation persists or there is
insufficient time to select a new sample, the relevant
provisions of Article 28 shall apply.

Article 28

Non-cooperation

1.
In cases in which any interested party refuses access
to, or otherwise does not provide, necessary information
within the time limits provided in this Decision, or
significantly impedes the investigation, provisional or
final findings, affirmative or negative, may be made on
the basis of the facts available.

4.
In investigations carried out pursuant to paragraphs l,
2 and 3, the Commission shall be assisted by officials of
those Member States who so request.

Where it is found that any interested party has supplied
false or misleading information, the information shall be
disregarded and use may be made of the facts available.

Article 27

Sampling

1.
In cases where the number of complainants, expor-
ters or importers, types of product or transactions is large,
the investigation may be limited to:

(a) a reasonable number of parties, products or transac-
tions by using samples which are statistically valid on
the basis of information available at the time of the
selection; or

(b) the largest representative volume of the production,
sales or exports which can reasonably be investigated
within the time available.

though preference

2.
The selection of parties, types of products or transac-
tions made pursuant to this Article shall rest with the
Commission,
shall be given to
choosing a sample in consultation with, and with the
consent of,
the parties concerned, provided that such
parties make themselves known and make sufficient
information available, within three weeks of initiation of
the investigation, to enable a representative sample to be
chosen.

In cases where the examination has been limited in
3.
accordance with this Article, an individual amount of
countervailable subsidisation shall, nevertheless, be calcu-
lated for any exporter or producer not initially selected

Interested parties
consequences of non-cooperation.

should be made

aware of

the

2.
Failure to give a computerised 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 unreasonable extra burden or
unreasonable additional cost.

3. Where the information submitted by an interested
party is not ideal in all respects it should nevertheless not
be disregarded, provided that any deficiencies are not
such as to cause undue difficulty in arriving at a reason-
ably accurate finding and that the information is appro-
priately submitted in good time and is verifiable, and that
the party has acted to the best of its ability.

If evidence or

the
information is not accepted,
4.
supplying party shall be informed forthwith of
the
reasons thereof and shall be granted an opportunity to
provide further explanations within the time limit speci-
fied. If the explanations are considered unsatisfactory, the
reasons for rejection of such evidence or information shall
be disclosed and given in published findings.

If determinations,

5.
including those regarding the
amount of countervailable subsidies, are based on the
provisions of paragraph 1,
including the information
supplied in the complaint, it shall, where practicable and
with due regard to the time limits of the investigation, be

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checked by reference to information from other indepen-
dent sources which may be available, such as published
price lists, official import statistics and customs returns, or
information obtained from other interested parties during
the investigation.

6.
If an interested party does not cooperate, or cooper-
ates only partially, so that relevant information is thereby
withheld, the result may be less favourable to the party
than if it had cooperated.

any information relating to consultations made pursuant
to Article 25, or consultations described in Articles 10(8)
and 11(10), or any internal documents prepared by the
authorities of the Community or its Member States, shall
not be divulged except as specifically provided for in this
Decision.

6.
Information received pursuant to this Decision shall
be used only for the purpose for which it was requested.

Article 29

Confidentiality

Article 30

Disclosure

1. Any information which is by nature confidential (for
example, because its disclosure would be of significant
competitive advantage to a competitor or would have a
significantly adverse effect upon a person supplying the
information or upon a person from whom he has
acquired the information) or which is provided on a
confidential basis by parties to an investigation shall, if
good cause is shown, be treated as such by the authorities.

Interested parties providing confidential information
2.
shall be required to furnish non-confidential summaries
thereof. Those summaries shall be in sufficient detail to
permit a reasonable understanding of the substance of the
In exceptional
information submitted in confidence.
circumstances, such parties may indicate that such infor-
mation is not susceptible to summary. In such excep-
tional circumstances, a statement of
the reasons why
summarisation is not possible must be provided.

3.
If it is considered that a request for confidentiality is
not warranted and if the supplier of the information is
either unwilling to make the information available or to
authorise its disclosure in generalised 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 arbitrarily rejected.

the reasons on which decisions

4.
This Article shall not preclude the disclosure of
general information by the Community authorities and in
particular of
taken
pursuant to this Decision are based, nor disclosure of the
evidence relied on by the Community authorities in so far
as is necessary to explain those reasons in court proceed-
ings. Such disclosure must take into account the legiti-
mate interests of the parties concerned that their business
or governmental secrets should not be divulged.

5.
The Commission and the Member States, or the
officials of any of them, shall not reveal any information
received pursuant to this Decision for which confidential
treatment has been requested by its supplier, without
specific permission from the supplier. Exchanges of infor-
mation between the Commission and Member States, or

The complainants, importers and exporters and their
1.
representative associations, and the country of origin
and/or export, may request disclosure of
the details
underlying the essential facts and considerations on the
basis of which provisional measures have been imposed.
Requests for such disclosure shall be made in writing
immediately following the imposition of provisional
measures, and the disclosure shall 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 imposition of
measures, particular attention being paid to the disclosure
of any facts or considerations which are different from
those used for any provisional measures.

3. Requests for final disclosure shall be addressed to the
Commission in writing and be received, in cases where a
provisional duty has been applied, not later than one
month after publication of the imposition of that duty.
Where a provisional duty has not been applied, parties
shall be provided with an opportunity to request final
disclosure within time limits set by the Commission.

Final disclosure shall be given in writing. It shall be
4.
made, due regard being had to the protection of confiden-
tial information, as soon as possible and, normally, not
later than one month prior to a definitive decision or the
submission by the Commission of any proposal for final
action pursuant
to Articles 14 and 15. Where the
Commission is not in a position to disclose certain facts
or considerations at that time, these shall be disclosed as
soon as possible thereafter. Disclosure shall not prejudice
any subsequent decision which may be taken by the
Commission but where such decision is based on any
different facts 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 the Commission in each case, which

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4. 9. 98

shall be at least 10 days, due consideration being given to
the urgency of the matter.

with an opinion on its merits, shall be transmitted to the
Advisory Committee.

Article 31

Community interest

1. A determination as to whether
the Community
interest calls for intervention shall be based on an appre-
the various interests taken as a whole,
ciation of all
including the interests of the domestic industry and users
and consumers; a determination pursuant to this Article
shall only be made where all parties have been given the
opportunity to make their views known pursuant to para-
graph 2. In such an examination, the need to eliminate
the trade distorting effects of injurious subsidisation and
to restore effective competition shall be given special
consideration. Measures, as determined on the basis of
subsidisation and injury found, may not be applied where
the information
the authorities, on the basis of all
submitted, can clearly conclude that
in the
it
Community interest to apply such measures.

is not

2.
In order to provide a sound basis on which the
authorities can take account of all views and information
in the decision as to whether or not the imposition of
measures is in the Community interest, the complainants,
importers and their representative associations, represent-
ative users and representative consumer organisations
may, within the time limits specified in the notice of
initiation of the countervailing duty investigation, make
themselves known and provide information to the
Commission. Such information, or appropriate summaries
thereof, shall be made available to the other parties speci-
fied in this paragraph, and they shall be entitled to
respond to such information.

3.
The parties which have acted in conformity with
paragraph 2 may request a hearing. Such requests shall be
granted when they are submitted within the time limits
set in paragraph 2, and when they set out the reasons, in
terms of the Community interest, why the parties should
be heard.

The parties which have acted in conformity with
4.
paragraph 2 may provide comments on the application of
any provisional duties imposed. Such comments shall be
received within one month of the application of such
measures if they are to be taken into account and they, or
appropriate summaries thereof, shall be made available to
other parties who shall be entitled to respond to such
comments.

5.
The Commission shall examine the information
which is properly submitted and the extent to which it is
representative, and the results of such analysis, together

6.
The parties which have acted in conformity with
paragraph 2 may request the facts and considerations on
which final decisions are likely to be taken to be made
available to them. Such information shall be made avail-
able to the extent possible and without prejudice to any
subsequent decision taken by the Commission.

7.
Information shall only be taken into account where
it is supported by actual evidence which substantiates its
validity.

Article 32

Relationships between countervailing duty meas-
ures and multilateral remedies

If an imported product is made subject to any counter-
measures
imposed following recourse to the dispute
settlement procedures of the Subsidies Agreement, and
such measures are appropriate to remove the injury
caused by the countervailable subsidies, any counter-
vailing duty imposed with regard to that product shall
immediately be suspended, or repealed, as appropriate.

Article 33

Final provisions

This Decision shall not preclude the application of:

(a) any special rules laid down in agreements concluded

between the Community and third countries;

(b) special measures, provided that such action does not

run counter to obligations under the GATT.

Article 34

Repeal of existing legislation

Decision No 2424/88/ECSC is hereby repealed.

References to the provisions of Decision No 2424/88/
ECSC as regards protection against subsidised imports
from countries not members of the European Coal and
Steel Community shall be construed as references to this
Decision.

Article 35

Entry into force

This Decision shall enter into force on the third day
following its publication in the Official Journal of the
European Communities.

It shall apply to proceedings initiated on or after that
date.

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This Decision shall be binding in its entirety and directly applicable in all Member
States.

Done at Brussels, 3 September 1998.

For the Commission

Leon BRITTAN

Vice-President

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ANNEX I

Illustrative list of export subsidies

(a) The provision by governments of direct subsidies to a firm or an industry contingent upon export

performance.

(b) Currency retention schemes or any similar practices which involve a bonus on exports.

(c) Internal transport and freight charges on export shipments, provided or mandated by governments, on

terms more favourable than for domestic shipments.

(d) The

or

by

provision

governments

through
government-mandated schemes, of imported or domestic products or services for use in the production of
exported goods, on terms or conditions more favourable than for provision of like or directly competitive
products or services for use in the production of goods for domestic consumption, if (in the case of
products) such terms or conditions are more favourable than those commercially available (1) on world
markets to their exporters.

indirectly

agencies

directly

either

their

or

(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
cumulative indirect taxes on goods or services used in the production of like products when sold for
domestic consumption; provided, however, that prior-stage cumulative indirect taxes may be exempted,
remitted or deferred on exported products even when not exempted, remitted or deferred on like products
when sold for domestic consumption, if the prior-stage cumulative indirect taxes are levied on inputs that
are consumed in the production of the exported product (making normal allowance for waste) (4). This
item shall be interpreted in accordance with the guidelines on consumption of inputs in the production
process contained in Annex II.

(i) The remission or drawback of import charges (2) in excess of those levied on imported inputs that are
consumed in the production of the exported product (making normal allowance for waste); provided,
however, that in particular cases a firm may use a quantity of home market inputs equal to, and having the
same quality and characteristics as, the imported inputs as a substitute for them in order to benefit from

(1) The term ‘commercially available' means that the choice between domestic and imported products is unrestricted and

depends only on commercial considerations.

(2) For the purpose of this Decision:

(cid:190) the term ‘direct taxes' shall mean taxes on wages, profits, interests, rents, royalties, and all other forms of income,

and taxes on the ownership of real property,

(cid:190) the term ‘import charges' shall mean tariffs, duties, and other fiscal charges not elsewhere enumerated in this note

that are levied on imports,

(cid:190) the term ‘indirect taxes' shall mean sales, excise, turnover, value added, franchise, stamp, transfer, inventory and

equipment taxes, border taxes and all taxes other than direct taxes and import charges,

(cid:190) ‘prior stage' indirect taxes are those levied on goods or services used directly or indirectly in making the product,
(cid:190) ‘cumulative' indirect taxes are multi-staged taxes levied where there is no mechanism for subsequent crediting of
the tax if the goods or services subject to tax at one stage of production are used in a succeeding state of produc-
tion,

(cid:190) ‘remission' of taxes includes the refund or rebate of taxes,
(cid:190) ‘remission or drawback' includes the full or partial exemption or deferral of import charges.

(3) Deferral may not amount to an export subsidy where, for example, appropriate interest charges are collected.
(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).

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this provision if the import and the corresponding export operations both occur within a reasonable time
period, not to exceed two years. This item shall be interpreted in accordance with 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.

(j) The provision by governments (or special

institutions controlled by governments) of export credit
guarantee or insurance programmes, of insurance or guarantee programmes against increases in the cost of
exported products or of exchange risk programmes, at premium rates which are inadequate to cover the
long-term operating costs and losses of the programmes.

(k) The grant by governments (or special institutions controlled by and/or acting under the authority of
governments) of export credits at rates below those which they actually have to pay for the funds so
employed (or would have to pay if they borrowed on international capital markets in order to obtain funds
of the same maturity and other credit terms and denominated in the same currency as the export credit),
or the payment by them of all or part of the costs incurred by exporters or financial institutions in
obtaining credits, in so far as they are used to secure a material advantage in the field of export credit
terms.

Provided, however, that if a Member of the WTO is a party to an international undertaking on official
export credits to which at least 12 original such Members are parties as of 1 January 1979 (or a successor
undertaking which has been adopted by those original Members), or if in practice a Member of the WTO
applies the interest rates provisions of the relevant undertaking, an export credit practice which is in
conformity with those provisions shall not be considered an export subsidy.

(l) Any other charge on the public account constituting an export subsidy in the sense of Article XVI of

GATT 1994.

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ANNEX II

Guidelines on consumption of inputs in the production process (1)

I

1. Indirect tax rebate schemes can allow for exemption, remission or deferral of prior-stage cumulative
indirect taxes levied on inputs that are consumed in the production of the exported product (making
normal allowance for waste). Similarly, drawback schemes can allow for the remission or drawback of
import charges levied on inputs that are consumed in the production of the exported product (making
normal allowance for waste).

2. The illustrative list of export subsidies in Annex I makes reference to the term ‘inputs that are consumed in
the production of the exported product' in paragraphs (h) and (i). Pursuant to paragraph (h), indirect tax
rebate schemes can constitute an export subsidy to the extent that they result in exemption, remission or
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 inputs that are consumed in the production of the
exported product. Both paragraphs stipulate that normal allowance for waste must be made in findings
regarding consumption of inputs in the production of the exported product. Paragraph (i) also provides for
substitution, where appropriate.

II

3. In examining whether inputs are consumed in the production of the exported product, as part of a
countervailing duty investigation pursuant to this Decision, the Commission 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 taxes or import charges on inputs consumed in the production
of the exported product, the Commission must normally first determine whether the government of the
exporting country has in place and applies a system or procedure to confirm which inputs are consumed in
the production of the exported product and in what amounts. Where such a system or procedure is
determined to be applied, the Commission must normally then examine the system or procedure to see
whether it is reasonable, effective for the purpose intended, and based on generally accepted commercial
practices in the country of export. The Commission may deem it necessary to carry out, in accordance with
Article 26(2), certain practical tests in order to verify information or to satisfy itself that the system or
procedure is being effectively applied.

5. Where there is no such system or procedure, where it is not reasonable, or where it is instituted and
considered reasonable but is found not to be applied or not to be applied effectively, a further examination
by the exporting country based on the actual inputs involved will normally need to be carried out in the
context of determining whether an excess payment occurred. If the Commission deems it necessary, a
further examination may 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 is consumed 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 does not serve an independent function in the production process, is not
consumed in the production of the exported product (for reasons such as inefficiencies) and is not
recovered, used or sold by the same manufacturer.

8. The Commission’s determination of whether the claimed allowance for waste is ‘normal' must normally
take into account the production process, the average experience of the industry in the country of export,
and other technical factors, as appropriate. The Commission must bear in mind that an important question
is whether the authorities in the exporting country have reasonably calculated the amount of waste, when
such an amount is intended to be included in the tax or duty rebate or remission.

(1) Inputs consumed in the production process are inputs physically incorporated, energy, fuels and oil used in the produc-

tion process and catalysts which are consumed in the course of their use to obtain the exported product.

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ANNEX III

Guidelines in the determination of substitution drawback systems as export subsidies

I

Drawback systems can allow for the refund or drawback of import charges on inputs which are consumed in
the production process of another product and where the export of this latter product contains domestic
inputs having the same quality and characteristics as those submitted for the imported inputs. Pursuant to
paragraph (i) of Annex I, substitution drawback systems can constitute an export subsidy to the extent that
they result in an excess drawback of the import charges levied initially on the imported inputs for which
drawback is being claimed.

II

In examining any substitution drawback system as part of a countervailing duty investigation pursuant to this
Decision, the Commission must normally proceed on the following basis:

1. Paragraph (i) of Annex I stipulates that home market inputs may be substituted for imported inputs in the
production of a product for export provided such inputs are equal in quantity to, and have the same quality
and characteristics as, the imported inputs being substituted. 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 is claimed does not exceed the quantity of
similar products exported, in whatever form, and that there is not drawback of import charges in excess of
those originally levied on the imported inputs in question.

2. Where it is alleged that a substitution drawback system conveys a subsidy, the Commission must normally
first proceed to determine whether the government of the exporting country has in place and applies a
verification system or procedure. Where such a system or procedure is determined to be applied, the
Commission shall normally then examine 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 procedures are determined to meet this test and are effectively applied, no
subsidy will be presumed to exist. It may be deemed necessary by the Commission to carry out, in
accordance with Article 26(2), certain practical tests in order to verify information or to satisfy itself that the
verification procedures are being effectively applied.

3. Where there are no verification procedures, where they are not reasonable, or where such procedures are
instituted and considered reasonable but are found not to be actually applied or not to be applied
effectively, there may be a subsidy. In such cases, further examination by the exporting country based on
the actual transactions involved would need to be carried out to determine whether an excess payment
occurred. If the Commission deems it necessary, a further examination may be carried out in accordance
with paragraph 2.

4. The existence of a substitution drawback provision under which exporters are allowed to select particular
import shipments on which drawback is claimed should not of itself be considered to convey a subsidy.

5. An excess drawback of import charges in the sense of paragraph (i) of Annex I would be deemed to exist
where governments paid interest on any monies refunded under their drawback schemes, to the extent of
the interest actually paid or payable.