RESTRICTED
WORLD TRADE G/SCM/7
10October 1995
ORGANIZATION(95-3007)
Original: English Committee onSubsidies andCountervailing Measures
CANADA -COUNTERVAILING DUTY INVESTIGATION CONCERNING
IMPORTS OFCERTAIN DRY PASTA FROM ITALY
Request forConsultations withCanada
under Article 13.2oftheAgreement
Communication from theEuropean Communities
Thefollowing communication, dated 15September 1995, hasbeenreceived fromthePermanent
Mission oftheEuropean Communities.
_______________
1. TheCommunity requests consultations under Article 13.2oftheWTO Subsidies Agreement
concerning theabove investigation, withaview toclarifying thefactual situation andarriving ata
mutually agreed solution.
2. Canada initiated thiscountervailing dutyinvestigation on30August 1995, onthebasis ofa
complaint from itsdomestic producers. Theonlysubsidy scheme alleged inthecomplaint isthe
Community 'sexport restitution programme. Aswasexplained bytheCommunity during consultations
heldprior totheinitiation, noexport restitutions havebeengranted forpasta since 30June1995;
indeed, onpage6ofitsstatement ofreasons Revenue Canada accepts thattheamount ofsubsidy is
zero.
3. Given thatthealleged subsidy isnolonger granted bytheEC,andsincethestatement ofreasons
contains noevidence todemonstrate thatitsresumption isimminent, theCommunity canseenogrounds
fortheinitiation oftheinvestigation andrequests thatCanada terminate itpromptly.
4. Indeed, theinitiation ofthisinvestigation constitutes aclear violation ofArticle 11.2ofthe
Subsidies Agreement, asRevenue Canada itselfadmits thattheapplication doesnotcontain sufficient
evidence ofsubsidization, inview oftheinformation ontheabsence ofrefunds supplied bythe
Community (inthisrespect, pastsubsidization isirrelevant). Theattention oftheCanadian authorities
isalsodrawn toArticle 19.4which states, interalia,that"[n]o countervailing dutyshallbelevied
...inexcess oftheamount ofthesubsidy found toexist[emphasis added]: afortiori noinvestigation
should beinitiated when theamount found iszero, aswellastoArticle 21.1which states that"[a]
countervailing dutyshallremain inforce onlyaslongasandtotheextent necessary tocounteract
subsidization ...".
5. Theinitiation ofthisinvestigation further constitutes aviolation ofArticle 11.3which states
that"[t]he authorities shallreview theaccuracy andadequacy oftheevidence provided intheapplication
todetermine whether theevidence issufficient tojustify theinitiation ofaninvestigation": itishard
toseehowevidence ofsubsidization issufficient tojustify initiation when theinvestigating authority
itself states thatthesubsidy amount iszero.
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Page2
6. Theinitiation ofthisinvestigation alsoconstitutes aviolation ofArticle 11.9, which states that
"[a]napplication under paragraph 1shallberejected ...assoonastheauthorities concerned aresatisfied
thatthere isnotsufficient evidence ofeither subsidization orofinjury tojustify proceeding withthe
case". Furthermore, should Canada notterminate thisinvestigation, thiswould constitute afurther
violation ofArticle 11.9, which alsostates that,insuchcircumstances asthese, "aninvestigation shall
beterminated promptly". Attention isalsodrawn totheremainder ofArticle 11.9, which states that
"[t]here shallbeimmediate termination incases where theamount ofasubsidy isdeminimis ....
Forthepurpose ofthisparagraph, theamount ofthesubsidy shallbeconsidered tobedeminimis if
thesubsidy islessthan1percentadvalorem": heretheamount iszero.
7. Itshould beemphasized thattheprovisions ofArticle 11apply atthestage ofthereceipt of
anapplication (i.e.before initiation) andthatArticle 11.9alsoapplies atthestage immediately after
initiation, andthatinvestigating authorities arenotallowed, under theAgreement, tocarry outan
investigation tofindoutwhether, despite insufficient evidence intheapplication, andevidence tothe
contrary supplied bytheCommunity, subsidization infactexists.
8. Theconsultations should beheldinGeneva assoonaspossible.