Page229
AGREEMENT ONSUBSIDIES AND COUNTERVAILING MEASURES
Members hereby agree asfollows:
PART I:GENERAL PROVISIONS
Article 1
Definition ofaSubsidy
1.1 Forthepurpose ofthisAgreement, asubsidy shallbedeemed toexistif:
(a)(1) thereisafinancial contribution byagovernment oranypublic bodywithin theterritory
ofaMember (referred tointhisAgreement as"government"), i.e.where:
(i) agovernment practice involves adirect transfer offunds (e.g.grants, loans,
andequity infusion), potential direct transfers offunds orliabilities (e.g.loan
guarantees);
(ii) government revenue thatisotherwise dueisforegone ornotcollected (e.g.
fiscal incentives suchastaxcredits)1;
(iii) agovernment provides goods orservices other thangeneral infrastructure,
orpurchases goods;
(iv) agovernment makes payments toafunding mechanism, orentrusts ordirects
aprivate body tocarry outoneormore ofthetypeoffunctions illustrated
in(i)to(iii)above which would normally bevested inthegovernment and
thepractice, innorealsense, differs from practices normally followed by
governments;
or
(a)(2) thereisanyformofincome orpricesupport inthesense ofArticle XVIofGATT 1994;
and
(b) abenefit isthereby conferred.
1.2 Asubsidy asdefined inparagraph 1shallbesubject totheprovisions ofPartIIorshallbe
subject totheprovisions ofPartIIIorVonlyifsuchasubsidy isspecific inaccordance withthe
provisions ofArticle 2.
1Inaccordance withtheprovisions ofArticle XVIofGATT 1994 (Note toArticle XVI) andtheprovisions ofAnnexes
Ithrough IIIofthisAgreement, theexemption ofanexported product from duties ortaxes borne bythelikeproduct when
destined fordomestic consumption, ortheremission ofsuchduties ortaxes inamounts notinexcess ofthose which have
accrued, shall notbedeemed tobeasubsidy.Page230
Article 2
Specificity
2.1 Inorder todetermine whether asubsidy, asdefined inparagraph 1ofArticle 1,isspecific
toanenterprise orindustry orgroup ofenterprises orindustries (referred tointhisAgreement as"certain
enterprises") within thejurisdiction ofthegranting authority, thefollowing principles shallapply:
(a) Where thegranting authority, orthelegislation pursuant towhich thegranting authority
operates, explicitly limits access toasubsidy tocertain enterprises, suchsubsidy shall
bespecific.
(b) Where thegranting authority, orthelegislation pursuant towhich thegranting authority
operates, establishes objective criteria orconditions2governing theeligibility for,and
theamount of,asubsidy, specificity shallnotexist, provided thattheeligibility is
automatic andthatsuchcriteria andconditions arestrictly adhered to.Thecriteria
orconditions mustbeclearly spelled outinlaw,regulation, orother official document,
soastobecapable ofverification.
(c) If,notwithstanding anyappearance ofnon-specificity resulting from theapplication
oftheprinciples laiddown insubparagraphs (a)and(b),there arereasons tobelieve
thatthesubsidy mayinfactbespecific, other factors maybeconsidered. Suchfactors
are: useofasubsidy programme byalimited number ofcertain enterprises,
predominant usebycertain enterprises, thegranting ofdisproportionately largeamounts
ofsubsidy tocertain enterprises, andthemanner inwhich discretion hasbeenexercised
bythegranting authority inthedecision togrant asubsidy.3Inapplying this
subparagraph, account shall betaken oftheextent ofdiversification ofeconomic
activities within thejurisdiction ofthegranting authority, aswellasofthelength of
timeduring which thesubsidy programme hasbeeninoperation.
2.2 Asubsidy which islimited tocertain enterprises located within adesignated geographical region
within thejurisdiction ofthegranting authority shallbespecific. Itisunderstood thatthesetting or
change ofgenerally applicable taxratesbyalllevels ofgovernment entitled todososhallnotbedeemed
tobeaspecific subsidy forthepurposes ofthisAgreement.
2.3 Anysubsidy falling under theprovisions ofArticle 3shallbedeemed tobespecific.
2.4 AnydeterminationofspecificityundertheprovisionsofthisArticleshallbeclearlysubstantiated
onthebasis ofpositive evidence.
2Objective criteria orconditions, asusedherein, mean criteria orconditions which areneutral, which donotfavour certain
enterprises overothers, andwhich areeconomic innature andhorizontal inapplication, suchasnumber ofemployees or
sizeofenterprise.
3Inthisregard, inparticular, information onthefrequency withwhich applications forasubsidy arerefused orapproved
andthereasons forsuch decisions shall beconsidered.Page231
PART II:PROHIBITED SUBSIDIES
Article 3
Prohibition
3.1 ExceptasprovidedintheAgreementonAgriculture,thefollowingsubsidies,withinthemeaning
ofArticle 1,shallbeprohibited:
(a) subsidies contingent, inlaworinfact4,whether solely orasoneofseveral other
conditions, upon export performance, including those illustrated inAnnex I5;
(b) subsidies contingent, whether solely orasoneofseveral other conditions, upon the
useofdomestic overimported goods.
3.2 AMember shallneither grant normaintain subsidies referred toinparagraph 1.
Article 4
Remedies
4.1 Whenever aMember hasreason tobelieve thataprohibited subsidy isbeing granted or
maintained byanother Member, suchMember mayrequest consultations withsuchother Member.
4.2 Arequest forconsultations under paragraph 1shallinclude astatement ofavailable evidence
withregard totheexistence andnature ofthesubsidy inquestion.
4.3 Upon request forconsultations under paragraph 1,theMember believed tobegranting or
maintaining thesubsidy inquestion shallenter intosuchconsultations asquickly aspossible. The
purpose oftheconsultations shallbetoclarify thefactsofthesituation andtoarrive atamutually
agreed solution.
4.4 Ifnomutually agreed solution hasbeenreached within 30days6oftherequest forconsultations,
anyMember party tosuchconsultations mayreferthematter totheDispute Settlement Body ("DSB")
fortheimmediate establishment ofapanel, unless theDSBdecides byconsensus nottoestablish a
panel.
4.5 Upon itsestablishment, thepanel mayrequest theassistance ofthePermanent Group ofExperts7
(referred tointhisAgreement asthe"PGE") withregard towhether themeasure inquestion isa
prohibited subsidy. Ifsorequested, thePGEshallimmediately review theevidence withregard to
4Thisstandardismetwhenthefactsdemonstratethatthegrantingofasubsidy,withouthavingbeenmadelegallycontingent
upon export performance, isinfacttiedtoactual oranticipated exportation orexport earnings. Themere factthatasubsidy
isgranted toenterprises which export shallnotforthatreason alone beconsidered tobeanexport subsidy within themeaning
ofthisprovision.
5MeasuresreferredtoinAnnexIasnotconstitutingexportsubsidiesshallnotbeprohibitedunderthisoranyotherprovision
ofthisAgreement.
6Anytime-periods mentioned inthisArticle maybeextended bymutual agreement.
7Asestablished inArticle 24.Page232
theexistence andnature ofthemeasure inquestion andshallprovide anopportunity fortheMember
applying ormaintaining themeasure todemonstrate thatthemeasure inquestion isnotaprohibited
subsidy. ThePGEshallreport itsconclusions tothepanel within atime-limit determined bythepanel.
ThePGE'sconclusions ontheissueofwhether ornotthemeasure inquestion isaprohibited subsidy
shallbeaccepted bythepanel without modification.
4.6 Thepanel shallsubmit itsfinalreport totheparties tothedispute. Thereport shallbecirculated
toallMembers within 90daysofthedateofthecomposition andtheestablishment ofthepanel'sterms
ofreference.
4.7 Ifthemeasure inquestion isfound tobeaprohibited subsidy, thepanel shallrecommend that
thesubsidizing Member withdraw thesubsidy without delay. Inthisregard, thepanel shallspecify
initsrecommendation thetime-period within which themeasure must bewithdrawn.
4.8 Within 30daysoftheissuance ofthepanel'sreport toallMembers, thereport shallbeadopted
bytheDSBunless oneoftheparties tothedispute formally notifies theDSBofitsdecision toappeal
ortheDSBdecides byconsensus nottoadopt thereport.
4.9 Where apanel report isappealed, theAppellate Body shallissue itsdecision within 30days
fromthedatewhen theparty tothedispute formally notifies itsintention toappeal. When theAppellate
Body considers thatitcannot provide itsreport within 30days, itshallinform theDSBinwriting of
thereasons forthedelay together withanestimate oftheperiod within which itwillsubmit itsreport.
Innocaseshalltheproceedings exceed 60days. Theappellate report shallbeadopted bytheDSB
andunconditionally accepted bytheparties tothedispute unless theDSBdecides byconsensus not
toadopt theappellate report within 20daysfollowing itsissuance totheMembers.8
4.10 Intheevent therecommendation oftheDSBisnotfollowed within thetime-period specified
bythepanel, which shallcommence from thedateofadoption ofthepanel’sreport ortheAppellate
Body’sreport, theDSB shall grant authorization tothecomplaining Member totakeappropriate9
countermeasures, unless theDSBdecides byconsensus toreject therequest.
4.11 Intheevent aparty tothedispute requests arbitration under paragraph 6ofArticle 22ofthe
Dispute Settlement Understanding ("DSU"), thearbitrator shalldetermine whether thecountermeasures
areappropriate.10
4.12 Forpurposes ofdisputes conducted pursuant tothisArticle, except fortime-periods specifically
prescribed inthisArticle, time-periods applicable under theDSUfortheconduct ofsuchdisputes shall
behalfthetimeprescribed therein.
8Ifameeting oftheDSB isnotscheduled during thisperiod, such ameeting shall beheldforthispurpose.
9Thisexpression isnotmeant toallow countermeasures thataredisproportionate inlightofthefactthatthesubsidies
dealt withunder these provisions areprohibited.
10Thisexpression isnotmeant toallow countermeasures thataredisproportionate inlightofthefactthatthesubsidies
dealt withunder these provisions areprohibited.Page233
PART III:ACTIONABLE SUBSIDIES
Article 5
Adverse Effects
NoMember should cause, through theuseofanysubsidy referred toinparagraphs 1and2
ofArticle 1,adverse effects totheinterests ofother Members, i.e.:
(a) injury tothedomestic industry ofanother Member11;
(b) nullification orimpairment ofbenefits accruing directly orindirectly tootherMembers
under GATT 1994inparticular thebenefits ofconcessions bound under Article IIof
GATT 199412;
(c) serious prejudice totheinterests ofanother Member.13
ThisArticle doesnotapply tosubsidies maintained onagricultural products asprovided inArticle 13
oftheAgreement onAgriculture.
Article 6
Serious Prejudice
6.1 Serious prejudice inthesense ofparagraph (c)ofArticle 5shallbedeemed toexistinthecase
of:
(a) thetotaladvalorem subsidization14ofaproduct exceeding 5percent15;
(b) subsidies tocover operating losses sustained byanindustry;
(c) subsidies tocover operating losses sustained byanenterprise, other thanone-time
measures which arenon-recurrent andcannot berepeated forthatenterprise andwhich
aregiven merely toprovide timeforthedevelopment oflong-term solutions andto
avoid acute social problems;
11Theterm "injury tothedomestic industry" isused hereinthesame sense asitisused inPartV.
12Theterm"nullification orimpairment" isusedinthisAgreement inthesame sense asitisusedintherelevant provisions
ofGATT 1994, andtheexistence ofsuchnullification orimpairment shall beestablished inaccordance withthepractice
ofapplication ofthese provisions.
13Theterm"serious prejudice totheinterests ofanother Member" isusedinthisAgreement inthesame sense asitis
used inparagraph 1ofArticle XVIofGATT 1994, andincludes threat ofserious prejudice.
14Thetotaladvalorem subsidization shall becalculated inaccordance withtheprovisions ofAnnex IV.
15Since itisanticipated thatcivilaircraft willbesubject tospecific multilateral rules, thethreshold inthissubparagraph
does notapply tocivilaircraft.Page234
(d) direct forgiveness ofdebt,i.e.forgiveness ofgovernment-held debt,andgrants tocover
debtrepayment.16
6.2 Notwithstanding theprovisions ofparagraph 1,serious prejudice shall notbefound ifthe
subsidizing Member demonstrates thatthesubsidy inquestion hasnotresulted inanyoftheeffects
enumerated inparagraph 3.
6.3 Serious prejudice inthesense ofparagraph (c)ofArticle 5mayariseinanycasewhere one
orseveral ofthefollowing apply:
(a) theeffect ofthesubsidy istodisplace orimpede theimports ofalikeproduct ofanother
Member intothemarket ofthesubsidizing Member;
(b) theeffect ofthesubsidy istodisplace orimpede theexports ofalikeproduct ofanother
Member from athirdcountry market;
(c) theeffect ofthesubsidy isasignificant price undercutting bythesubsidized product
ascompared withtheprice ofalikeproduct ofanother Member inthesame market
orsignificant price suppression, price depression orlostsalesinthesame market;
(d) theeffect ofthesubsidy isanincrease intheworld market share ofthesubsidizing
Member inaparticular subsidized primary product orcommodity17ascompared to
theaverage share ithadduring theprevious period ofthree years andthisincrease
follows aconsistent trend overaperiod when subsidies havebeengranted.
6.4 Forthepurpose ofparagraph 3(b),thedisplacement orimpeding ofexports shallinclude any
caseinwhich, subject totheprovisions ofparagraph 7,ithasbeendemonstrated thatthere hasbeen
achange inrelative shares ofthemarket tothedisadvantage ofthenon-subsidized likeproduct (over
anappropriately representative period sufficient todemonstrate cleartrends inthedevelopment ofthe
market fortheproduct concerned, which, innormal circumstances, shallbeatleastoneyear). "Change
inrelative shares ofthemarket" shallinclude anyofthefollowing situations: (a)there isanincrease
inthemarket share ofthesubsidized product; (b)themarket share ofthesubsidized product remains
constant incircumstances inwhich, intheabsence ofthesubsidy, itwould havedeclined; (c)the
market share ofthesubsidized product declines, butataslower ratethanwould havebeenthecase
intheabsence ofthesubsidy.
6.5 Forthepurpose ofparagraph 3(c),price undercutting shallinclude anycaseinwhich such
price undercutting hasbeendemonstrated through acomparison ofprices ofthesubsidized product
withprices ofanon-subsidized likeproduct supplied tothesame market. Thecomparison shallbe
made atthesame leveloftrade andatcomparable times, dueaccount being taken ofanyother factor
affecting price comparability. However, ifsuchadirect comparison isnotpossible, theexistence of
price undercutting maybedemonstrated onthebasis ofexport unitvalues.
6.6 EachMember inthemarket ofwhich serious prejudice isalleged tohavearisen shall, subject
totheprovisions ofparagraph 3ofAnnex V,make available totheparties toadispute arising under
Article 7,andtothepanel established pursuant toparagraph 4ofArticle 7,allrelevant information
16Members recognize thatwhere royalty-based financing foracivilaircraft programme isnotbeing fully repaid due
tothelevel ofactual sales falling below thelevel offorecast sales, thisdoesnotinitself constitute serious prejudice forthe
purposes ofthissubparagraph.
17Unless other multilaterally agreed specific rules apply tothetrade intheproduct orcommodity inquestion.Page235
thatcanbeobtained astothechanges inmarket shares oftheparties tothedispute aswellasconcerning
prices oftheproducts involved.
6.7 Displacement orimpediment resulting inserious prejudice shallnotariseunder paragraph 3
where anyofthefollowing circumstances exist18during therelevant period:
(a) prohibition orrestriction onexports ofthelikeproduct fromthecomplaining Member
oronimports fromthecomplaining Member intothethirdcountry market concerned;
(b) decision byanimporting government operating amonopoly oftrade orstatetrading
intheproduct concerned toshift, fornon-commercial reasons, imports from the
complaining Member toanother country orcountries;
(c) natural disasters, strikes, transport disruptions orother force majeure substantially
affecting production, qualities, quantities orprices oftheproduct available forexport
from thecomplaining Member;
(d) existence ofarrangements limiting exports from thecomplaining Member;
(e) voluntary decrease intheavailability forexport oftheproduct concerned from the
complaining Member (including, interalia,asituation where firms inthecomplaining
Member havebeenautonomously reallocating exports ofthisproduct tonewmarkets);
(f) failure toconform tostandards andother regulatory requirements intheimporting
country.
6.8 Intheabsence ofcircumstances referred toinparagraph 7,theexistence ofserious prejudice
should bedetermined onthebasis oftheinformation submitted toorobtained bythepanel, including
information submitted inaccordance withtheprovisions ofAnnex V.
6.9 ThisArticle doesnotapply tosubsidies maintained onagricultural products asprovided in
Article 13oftheAgreement onAgriculture.
Article 7
Remedies
7.1 Except asprovided inArticle 13oftheAgreement onAgriculture, whenever aMember has
reason tobelieve thatanysubsidy referred toinArticle 1,granted ormaintained byanother Member,
results ininjury toitsdomestic industry, nullification orimpairment orserious prejudice, suchMember
mayrequest consultations withsuchother Member.
7.2 Arequest forconsultations under paragraph 1shallinclude astatement ofavailable evidence
withregard to(a)theexistence andnature ofthesubsidy inquestion, and(b)theinjury caused tothe
18Thefactthatcertain circumstances arereferred tointhisparagraph doesnot,initself, confer upon them anylegal
status interms ofeither GATT 1994 orthisAgreement. These circumstances must notbeisolated, sporadic orotherwise
insignificant.Page236
domestic industry, orthenullification orimpairment, orserious prejudice19caused totheinterests of
theMember requesting consultations.
7.3 Upon request forconsultations under paragraph 1,theMember believed tobegranting or
maintaining thesubsidy practice inquestion shallenter intosuchconsultations asquickly aspossible.
Thepurpose oftheconsultations shallbetoclarify thefactsofthesituation andtoarrive atamutually
agreed solution.
7.4 Ifconsultations donotresult inamutually agreed solution within 60days20,anyMember party
tosuchconsultations mayreferthematter totheDSBfortheestablishment ofapanel, unless theDSB
decides byconsensus nottoestablish apanel. Thecomposition ofthepanel anditsterms ofreference
shallbeestablished within 15daysfrom thedatewhen itisestablished.
7.5 Thepanel shallreview thematter andshallsubmit itsfinalreport totheparties tothedispute.
Thereport shall becirculated toallMembers within 120daysofthedateofthecomposition and
establishment ofthepanel’sterms ofreference.
7.6 Within 30daysoftheissuance ofthepanel’sreport toallMembers, thereport shallbeadopted
bytheDSB21unless oneoftheparties tothedispute formally notifies theDSBofitsdecision toappeal
ortheDSBdecides byconsensus nottoadopt thereport.
7.7 Where apanel report isappealed, theAppellate Body shallissue itsdecision within 60days
fromthedatewhen theparty tothedispute formally notifies itsintention toappeal. When theAppellate
Body considers thatitcannot provide itsreport within 60days, itshallinform theDSBinwriting of
thereasons forthedelay together withanestimate oftheperiod within which itwillsubmit itsreport.
Innocaseshalltheproceedings exceed 90days. Theappellate report shallbeadopted bytheDSB
andunconditionally accepted bytheparties tothedispute unless theDSBdecides byconsensus not
toadopt theappellate report within 20daysfollowing itsissuance totheMembers.22
7.8 Where apanel report oranAppellate Body report isadopted inwhich itisdetermined that
anysubsidy hasresulted inadverse effects totheinterests ofanother Member within themeaning of
Article 5,theMember granting ormaintaining suchsubsidy shalltakeappropriate steps toremove
theadverse effects orshallwithdraw thesubsidy.
7.9 Intheevent theMember hasnottaken appropriate steps toremove theadverse effects ofthe
subsidy orwithdraw thesubsidy within sixmonths fromthedatewhen theDSBadopts thepanel report
ortheAppellate Body report, andintheabsence ofagreement oncompensation, theDSBshallgrant
authorization tothecomplaining Member totakecountermeasures, commensurate withthedegree and
nature oftheadverse effects determined toexist, unless theDSBdecides byconsensus toreject the
request.
19Intheevent thattherequest relates toasubsidy deemed toresult inserious prejudice interms ofparagraph 1ofArticle 6,
theavailable evidence ofserious prejudice maybelimited totheavailable evidence astowhether theconditions ofparagraph 1
ofArticle 6have been metornot.
20Anytime-periods mentioned inthisArticle maybeextended bymutual agreement.
21Ifameeting oftheDSB isnotscheduled during thisperiod, such ameeting shall beheldforthispurpose.
22Ifameeting oftheDSB isnotscheduled during thisperiod, such ameeting shall beheldforthispurpose.Page237
7.10 Intheevent thataparty tothedispute requests arbitration under paragraph 6ofArticle 22
oftheDSU, thearbitrator shalldetermine whether thecountermeasures arecommensurate withthe
degree andnature oftheadverse effects determined toexist.
PART IV:NON-ACTIONABLE SUBSIDIES
Article 8
Identification ofNon-Actionable Subsidies
8.1 Thefollowing subsidies shallbeconsidered asnon-actionable23:
(a) subsidies which arenotspecific within themeaning ofArticle 2;
(b) subsidies which arespecific within themeaning ofArticle 2butwhich meetallofthe
conditions provided forinparagraphs 2(a),2(b)or2(c)below.
8.2 NotwithstandingtheprovisionsofPartsIIIandV,thefollowingsubsidiesshallbenon-actionable:
(a) assistance forresearch activities conducted byfirms orbyhigher education orresearch
establishments onacontract basis withfirms if:24,25,26
theassistance covers27notmore than75percentofthecosts ofindustrial research28
or50percentofthecosts ofpre-competitive development activity29,30;
23Itisrecognized thatgovernment assistance forvarious purposes iswidely provided byMembers andthatthemere
factthatsuchassistance maynotqualify fornon-actionable treatment under theprovisions ofthisArticle doesnotinitself
restrict theability ofMembers toprovide such assistance.
24Since itisanticipated thatcivilaircraft willbesubject tospecific multilateral rules, theprovisions ofthissubparagraph
donotapply tothatproduct.
25Notlaterthan18months afterthedateofentry intoforce oftheWTO Agreement, theCommittee onSubsidies and
Countervailing Measures provided forinArticle 24(referred tointhisAgreement as"theCommittee") shall review the
operation oftheprovisions ofsubparagraph 2(a)withaviewtomaking allnecessary modifications toimprove theoperation
ofthese provisions. Initsconsideration ofpossible modifications, theCommittee shallcarefully review thedefinitions of
thecategories setforthinthissubparagraph inthelightoftheexperience ofMembers intheoperation ofresearch programmes
andthework inother relevant international institutions.
26Theprovisions ofthisAgreement donotapply tofundamental research activities independently conducted byhigher
educationorresearchestablishments.Theterm"fundamentalresearch"meansanenlargementofgeneralscientificandtechnical
knowledge notlinked toindustrial orcommercial objectives.
27Theallowable levels ofnon-actionable assistance referred tointhissubparagraph shallbeestablished byreference to
thetotaleligible costs incurred overtheduration ofanindividual project.
28Theterm"industrial research" means planned search orcritical investigation aimed atdiscovery ofnewknowledge,
withtheobjective thatsuchknowledge maybeuseful indeveloping newproducts, processes orservices, orinbringing about
asignificant improvement toexisting products, processes orservices.
29Theterm"pre-competitivedevelopmentactivity"meansthetranslationofindustrialresearchfindingsintoaplan,blueprint
ordesign fornew, modified orimproved products, processes orservices whether intended forsaleoruse,including the
creation ofafirstprototype which would notbecapable ofcommercial use.Itmayfurther include theconceptual formulation
anddesign ofproducts, processes orservices alternatives andinitial demonstration orpilotprojects, provided thatthese samePage238
andprovided thatsuchassistance islimited exclusively to:
(i) costsofpersonnel (researchers, technicians andothersupporting staffemployed
exclusively intheresearch activity);
(ii) costs ofinstruments, equipment, landandbuildings used exclusively and
permanently (except when disposed ofonacommercial basis) fortheresearch
activity;
(iii) costsofconsultancy andequivalent services usedexclusively fortheresearch
activity, including bought-in research, technical knowledge, patents, etc.;
(iv) additional overhead costsincurred directly asaresult oftheresearch activity;
(v) other running costs(such asthose ofmaterials, supplies andthelike), incurred
directly asaresult oftheresearch activity.
(b) assistance todisadvantaged regions within theterritory ofaMember given pursuant
toageneral framework ofregional development31andnon-specific (within themeaning
ofArticle 2)within eligible regions provided that:
(i) eachdisadvantagedregionmustbeaclearlydesignatedcontiguousgeographical
areawithadefinable economic andadministrative identity;
(ii) theregion isconsidered asdisadvantaged onthebasisofneutral andobjective
criteria32,indicating thattheregion 'sdifficulties arise outofmore than
temporary circumstances; suchcriteria must beclearly spelled outinlaw,
regulation, orother official document, soastobecapable ofverification;
(iii) thecriteria shallinclude ameasurement ofeconomic development which shall
bebased onatleastoneofthefollowing factors:
- oneofeither income percapita orhousehold income percapita, or
GDP percapita, which mustnotbeabove 85percentoftheaverage
fortheterritory concerned;
projects cannot beconverted orusedforindustrial application orcommercial exploitation. Itdoesnotinclude routine or
periodic alterations toexisting products, production lines, manufacturing processes, services, andother on-going operations
even though those alterations mayrepresent improvements.
30Inthecaseofprogrammes which spanindustrial research andpre-competitive development activity, theallowable level
ofnon-actionable assistance shallnotexceed thesimple average oftheallowable levels ofnon-actionable assistance applicable
totheabove twocategories, calculated onthebasis ofalleligible costs assetforth initems (i)to(v)ofthissubparagraph.
31A"general framework ofregional development" means thatregional subsidy programmes arepartofaninternally
consistent andgenerally applicable regional development policy andthatregional development subsidies arenotgranted in
isolated geographical points having no,orvirtually no,influence onthedevelopment ofaregion.
32"Neutral andobjective criteria" means criteria which donotfavour certain regions beyond what isappropriate forthe
elimination orreduction ofregional disparities within theframework oftheregional development policy. Inthisregard,
regional subsidy programmes shall include ceilings ontheamount ofassistance which canbegranted toeach subsidized
project. Such ceilings must bedifferentiated according tothedifferent levels ofdevelopment ofassisted regions andmust
beexpressed interms ofinvestment costs orcostofjobcreation. Within suchceilings, thedistribution ofassistance shall
besufficiently broad andeventoavoid thepredominant useofasubsidy by,orthegranting ofdisproportionately large amounts
ofsubsidy to,certain enterprises asprovided forinArticle 2.Page239
- unemployment rate,which mustbeatleast110percentoftheaverage
fortheterritory concerned;
asmeasured overathree-year period; suchmeasurement, however, maybe
acomposite oneandmayinclude other factors.
(c) assistance topromote adaptation ofexisting facilities33tonew environmental
requirements imposed bylawand/or regulations which result ingreater constraints
andfinancial burden onfirms, provided thattheassistance:
(i) isaone-time non-recurring measure; and
(ii) islimited to20percentofthecostofadaptation; and
(iii) doesnotcoverthecostofreplacingandoperatingtheassistedinvestment,which
must befullyborne byfirms; and
(iv) isdirectly linked toandproportionate toafirm'splanned reduction ofnuisances
andpollution, anddoesnotcover anymanufacturing costsavings which may
beachieved; and
(v) isavailable toallfirms which canadopt thenewequipment and/or production
processes.
8.3 Asubsidy programme forwhich theprovisions ofparagraph 2areinvoked shallbenotified
inadvance ofitsimplementation totheCommittee inaccordance withtheprovisions ofPartVII.Any
suchnotification shallbesufficiently precise toenable other Members toevaluate theconsistency of
theprogramme withtheconditions andcriteria provided forintherelevant provisions ofparagraph 2.
Members shallalsoprovide theCommittee withyearly updates ofsuchnotifications, inparticular by
supplying information onglobal expenditure foreachprogramme, andonanymodification ofthe
programme. Other Members shallhavetheright torequest information about individual cases of
subsidization under anotified programme.34
8.4 Upon request ofaMember, theSecretariat shall review anotification made pursuant to
paragraph 3and,where necessary, mayrequire additional information fromthesubsidizing Member
concerning thenotified programme under review. TheSecretariat shall report itsfindings tothe
Committee. TheCommittee shall, uponrequest, promptly review thefindings oftheSecretariat (or,
ifareview bytheSecretariat hasnotbeenrequested, thenotification itself), withaviewtodetermining
whether theconditions andcriteria laiddown inparagraph 2havenotbeenmet.Theprocedure provided
forinthisparagraph shallbecompleted atthelatest atthefirstregular meeting oftheCommittee
following thenotification ofasubsidy programme, provided thatatleasttwomonths haveelapsed
between suchnotification andtheregular meeting oftheCommittee. Thereview procedure described
inthisparagraph shallalsoapply, uponrequest, tosubstantial modifications ofaprogramme notified
intheyearly updates referred toinparagraph 3.
8.5 Upon therequest ofaMember, thedetermination bytheCommittee referred toinparagraph 4,
orafailure bytheCommittee tomake suchadetermination, aswellastheviolation, inindividual
33Theterm"existing facilities" means facilities which havebeeninoperation foratleasttwoyears atthetimewhen new
environmental requirements areimposed.
34Itisrecognized thatnothing inthisnotification provision requires theprovision ofconfidential information, including
confidential business information.Page240
cases, oftheconditions setoutinanotified programme, shallbesubmitted tobinding arbitration.
Thearbitration bodyshallpresent itsconclusions totheMembers within 120daysfromthedatewhen
thematter wasreferred tothearbitration body. Except asotherwise provided inthisparagraph, the
DSU shallapply toarbitrations conducted under thisparagraph.
Article 9
Consultations andAuthorized Remedies
9.1 If,inthecourse ofimplementation ofaprogramme referred toinparagraph 2ofArticle 8,
notwithstanding thefactthattheprogramme isconsistent withthecriteria laiddown inthatparagraph,
aMember hasreasons tobelieve thatthisprogramme hasresulted inserious adverse effects tothe
domestic industry ofthatMember, suchastocause damage which would bedifficult torepair, such
Member mayrequest consultations withtheMember granting ormaintaining thesubsidy.
9.2 Upon request forconsultations under paragraph 1,theMember granting ormaintaining the
subsidy programme inquestion shallenterintosuchconsultations asquickly aspossible. Thepurpose
oftheconsultations shallbetoclarify thefactsofthesituation andtoarrive atamutually acceptable
solution.
9.3 Ifnomutually acceptable solution hasbeenreached inconsultations under paragraph 2within
60daysoftherequest forsuchconsultations, therequesting Member mayrefer thematter tothe
Committee.
9.4 Where amatter isreferred totheCommittee, theCommittee shallimmediately review thefacts
involved andtheevidence oftheeffects referred toinparagraph 1.IftheCommittee determines that
sucheffects exist, itmayrecommend tothesubsidizing Member tomodify thisprogramme insuch
awayastoremove these effects. TheCommittee shallpresent itsconclusions within 120daysfrom
thedatewhen thematter isreferred toitunder paragraph 3.Intheevent therecommendation isnot
followed within sixmonths, theCommittee shallauthorize therequesting Member totakeappropriate
countermeasures commensurate withthenature anddegree oftheeffects determined toexist.Page241
PART V:COUNTERVAILING MEASURES
Article 10
Application ofArticle VIofGATT 199435
Members shalltakeallnecessary stepstoensure thattheimposition ofacountervailing duty36
onanyproduct oftheterritory ofanyMember imported intotheterritory ofanother Member isin
accordance with theprovisions ofArticle VIofGATT 1994 andtheterms ofthisAgreement.
Countervailing duties mayonlybeimposed pursuant toinvestigations initiated37andconducted in
accordance withtheprovisions ofthisAgreement andtheAgreement onAgriculture.
Article 11
Initiation andSubsequent Investigation
11.1 Except asprovided inparagraph 6,aninvestigation todetermine theexistence, degree and
effect ofanyalleged subsidy shallbeinitiated uponawritten application byoronbehalf ofthedomestic
industry.
11.2 Anapplication under paragraph 1shallinclude sufficient evidence oftheexistence of(a)a
subsidy and,ifpossible, itsamount, (b)injury within themeaning ofArticle VIofGATT 1994 as
interpreted bythisAgreement, and(c)acausal linkbetween thesubsidized imports andthealleged
injury. Simple assertion, unsubstantiated byrelevant evidence, cannot beconsidered sufficient tomeet
therequirements ofthisparagraph. Theapplication shallcontain suchinformation asisreasonably
available totheapplicant onthefollowing:
(i) theidentity oftheapplicant andadescription ofthevolume andvalue ofthedomestic
production ofthelikeproduct bytheapplicant. Where awritten application ismade
onbehalf ofthedomestic industry, theapplication shallidentify theindustry onbehalf
ofwhich theapplication ismade byalistofallknown domestic producers ofthelike
product (orassociations ofdomestic producers ofthelikeproduct) and,totheextent
possible, adescription ofthevolume andvalue ofdomestic production ofthelike
product accounted forbysuchproducers;
35Theprovisions ofPartIIorIIImaybeinvoked inparallel withtheprovisions ofPartV;however, withregard to
theeffects ofaparticular subsidy inthedomestic market oftheimporting Member, onlyoneform ofrelief (either a
countervailing duty, iftherequirements ofPartVaremet,oracountermeasure under Articles 4or7)shall beavailable.
Theprovisions ofParts IIIandVshall notbeinvoked regarding measures considered non-actionable inaccordance with
theprovisions ofPartIV.However, measures referred toinparagraph 1(a)ofArticle 8maybeinvestigated inorder to
determine whether ornottheyarespecific within themeaning ofArticle 2.Inaddition, inthecaseofasubsidy referred
toinparagraph 2ofArticle 8conferred pursuant toaprogramme which hasnotbeennotified inaccordance withparagraph
3ofArticle 8,theprovisions ofPartIIIorVmaybeinvoked, butsuchsubsidy shall betreated asnon-actionable ifitis
found toconform tothestandards setforth inparagraph 2ofArticle 8.
36Theterm"countervailing duty" shallbeunderstood tomean aspecial dutylevied forthepurpose ofoffsetting anysubsidy
bestowed directly orindirectly uponthemanufacture, production orexport ofanymerchandise, asprovided forinparagraph 3
ofArticle VIofGATT 1994.
37Theterm"initiated"asusedhereinaftermeansproceduralactionbywhichaMemberformallycommencesaninvestigation
asprovided inArticle 11.Page242
(ii) acomplete description oftheallegedly subsidized product, thenames ofthecountry
orcountries oforigin orexport inquestion, theidentity ofeachknown exporter or
foreign producer andalistofknown persons importing theproduct inquestion;
(iii) evidence withregard totheexistence, amount andnature ofthesubsidy inquestion;
(iv) evidence thatalleged injury toadomestic industry iscaused bysubsidized imports
through theeffects ofthesubsidies; thisevidence includes information ontheevolution
ofthevolume oftheallegedly subsidized imports, theeffect oftheseimports onprices
ofthelikeproduct inthedomestic market andtheconsequent impact oftheimports
onthedomestic industry, asdemonstrated byrelevant factors andindices having a
bearing onthestateofthedomestic industry, suchasthose listed inparagraphs 2and
4ofArticle 15.
11.3 Theauthorities shall review theaccuracy andadequacy oftheevidence provided inthe
application todetermine whether theevidence issufficient tojustify theinitiation ofaninvestigation.
11.4 Aninvestigation shall notbeinitiated pursuant toparagraph 1unless theauthorities have
determined, onthebasisofanexamination ofthedegree ofsupport for,oropposition to,theapplication
expressed38bydomestic producers ofthelikeproduct, thattheapplication hasbeenmade byoron
behalf ofthedomestic industry.39Theapplication shallbeconsidered tohavebeenmade "byoron
behalf ofthedomestic industry" ifitissupported bythose domestic producers whose collective output
constitutes more than50percentofthetotalproduction ofthelikeproduct produced bythatportion
ofthedomestic industry expressing either support fororopposition totheapplication. However, no
investigation shallbeinitiated when domestic producers expressly supporting theapplication account
forlessthan25percentoftotalproduction ofthelikeproduct produced bythedomestic industry.
11.5 Theauthorities shallavoid, unless adecision hasbeenmade toinitiate aninvestigation, any
publicizing oftheapplication fortheinitiation ofaninvestigation.
11.6 If,inspecial circumstances, theauthorities concerned decide toinitiate aninvestigation without
having received awritten application byoronbehalf ofadomestic industry fortheinitiation ofsuch
investigation, theyshallproceed onlyiftheyhavesufficient evidence oftheexistence ofasubsidy,
injury andcausal link,asdescribed inparagraph 2,tojustify theinitiation ofaninvestigation.
11.7 Theevidence ofbothsubsidy andinjury shallbeconsidered simultaneously (a)inthedecision
whether ornottoinitiate aninvestigation and(b)thereafter, during thecourse oftheinvestigation,
starting onadatenotlaterthantheearliest dateonwhich inaccordance withtheprovisions ofthis
Agreement provisional measures maybeapplied.
11.8 Incases where products arenotimported directly fromthecountry oforigin butareexported
totheimporting Member fromanintermediate country, theprovisions ofthisAgreement shallbefully
applicable andthetransaction ortransactions shall, forthepurposes ofthisAgreement, beregarded
ashaving taken place between thecountry oforigin andtheimporting Member.
11.9 Anapplication under paragraph 1shallberejected andaninvestigation shallbeterminated
promptly assoonastheauthorities concerned aresatisfied thatthereisnotsufficient evidence ofeither
38Inthecaseoffragmented industries involving anexceptionally large number ofproducers, authorities maydetermine
support andopposition byusing statistically valid sampling techniques.
39Members areaware thatintheterritory ofcertain Members employees ofdomestic producers ofthelikeproduct or
representatives ofthose employees maymake orsupport anapplication foraninvestigation under paragraph 1.Page243
subsidization orofinjury tojustify proceeding withthecase. There shallbeimmediate termination
incases where theamount ofasubsidy isdeminimis ,orwhere thevolume ofsubsidized imports,
actual orpotential, ortheinjury, isnegligible. Forthepurpose ofthisparagraph, theamount ofthe
subsidy shallbeconsidered tobedeminimis ifthesubsidy islessthan1percentadvalorem.
11.10 Aninvestigation shallnothinder theprocedures ofcustoms clearance.
11.11 Investigations shall, except inspecial circumstances, beconcluded within oneyear, andinno
casemore than18months, aftertheirinitiation.
Article 12
Evidence
12.1 Interested Members andallinterested parties inacountervailing dutyinvestigation shallbe
given notice oftheinformation which theauthorities require andample opportunity topresent inwriting
allevidence which theyconsider relevant inrespect oftheinvestigation inquestion.
12.1.1 Exporters, foreign producers orinterested Members receiving questionnaires usedin
acountervailing dutyinvestigation shallbegiven atleast30daysforreply.40Due
consideration should begiven toanyrequest foranextension ofthe30-day period
and,upon cause shown, suchanextension should begranted whenever practicable.
12.1.2 Subject totherequirement toprotect confidential information, evidence presented in
writing byoneinterested Member orinterested party shallbemade available promptly
toother interested Members orinterested parties participating intheinvestigation.
12.1.3 Assoonasaninvestigation hasbeeninitiated, theauthorities shallprovide thefull
textofthewritten application received under paragraph 1ofArticle 11totheknown
exporters41andtotheauthorities oftheexporting Member andshallmake itavailable,
upon request, toother interested parties involved. Dueregard shallbepaidtothe
protection ofconfidential information, asprovided forinparagraph 4.
12.2. Interested Members andinterested parties alsoshallhavetheright, uponjustification, topresent
information orally. Where suchinformation isprovided orally, theinterested Members andinterested
parties subsequently shallberequired toreduce suchsubmissions towriting. Anydecision ofthe
investigating authorities canonlybebased onsuchinformation andarguments aswereonthewritten
record ofthisauthority andwhich were available tointerested Members andinterested parties
participating intheinvestigation, dueaccount having beengiven totheneedtoprotect confidential
information.
12.3 TheauthoritiesshallwheneverpracticableprovidetimelyopportunitiesforallinterestedMembers
andinterested parties toseeallinformation thatisrelevant tothepresentation oftheircases, thatis
40Asageneral rule, thetime-limit forexporters shall becounted from thedateofreceipt ofthequestionnaire, which
forthispurpose shall bedeemed tohave been received oneweek from thedateonwhich itwassenttotherespondent or
transmitted totheappropriate diplomatic representatives oftheexporting Member or,inthecaseofaseparate customs territory
Member oftheWTO, anofficial representative oftheexporting territory.
41Itbeing understood thatwhere thenumber ofexporters involved isparticularly high, thefulltextoftheapplication
should instead beprovided onlytotheauthorities oftheexporting Member ortotherelevant trade association whothen
should forward copies totheexporters concerned.Page244
notconfidential asdefined inparagraph 4,andthatisusedbytheauthorities inacountervailing duty
investigation, andtoprepare presentations onthebasis ofthisinformation.
12.4 Anyinformation which isbynature confidential (forexample, because itsdisclosure would
beofsignificant competitive advantage toacompetitor orbecause itsdisclosure would have a
significantly adverse effect uponaperson supplying theinformation oruponaperson fromwhom the
supplier acquired theinformation), orwhich isprovided onaconfidential basis byparties toan
investigation shall, upon good cause shown, betreated assuchbytheauthorities. Suchinformation
shallnotbedisclosed without specific permission oftheparty submitting it.42
12.4.1 Theauthorities shall require interested Members orinterested parties providing
confidentialinformationtofurnishnon-confidentialsummariesthereof.Thesesummaries
shallbeinsufficient detail topermit areasonable understanding ofthesubstance of
theinformation submitted inconfidence. Inexceptional circumstances, suchMembers
orparties mayindicate thatsuchinformation isnotsusceptible ofsummary. Insuch
exceptional circumstances, astatement ofthereasons whysummarization isnotpossible
must beprovided.
12.4.2 Iftheauthorities findthatarequest forconfidentiality isnotwarranted andifthe
supplier oftheinformation iseither unwilling tomake theinformation public orto
authorize itsdisclosure ingeneralized orsummary form, theauthorities maydisregard
suchinformation unless itcanbedemonstrated totheirsatisfaction fromappropriate
sources thattheinformation iscorrect.43
12.5 Except incircumstances provided forinparagraph 7,theauthorities shallduring thecourse
ofaninvestigation satisfy themselves astotheaccuracy oftheinformation supplied byinterested
Members orinterested parties upon which theirfindings arebased.
12.6 Theinvestigating authorities maycarry outinvestigations intheterritory ofother Members
asrequired, provided thattheyhavenotified ingood timetheMember inquestion andunless that
Member objects totheinvestigation. Further, theinvestigating authorities maycarry outinvestigations
onthepremises ofafirmandmayexamine therecords ofafirmif(a)thefirmsoagrees and(b)the
Member inquestion isnotified anddoesnotobject. Theprocedures setforthinAnnex VIshallapply
toinvestigationsonthepremisesofafirm.Subjecttotherequirementtoprotectconfidentialinformation,
theauthorities shallmake theresults ofanysuchinvestigations available, orshallprovide disclosure
thereof pursuant toparagraph 8,tothefirms towhich theypertain andmaymake suchresults available
totheapplicants.
12.7 Incases inwhich anyinterested Member orinterested party refuses access to,orotherwise
does notprovide, necessary information within areasonable period orsignificantly impedes the
investigation, preliminary andfinaldeterminations, affirmative ornegative, maybemade onthebasis
ofthefactsavailable.
12.8 Theauthorities shall, before afinaldetermination ismade, inform allinterested Members and
interested parties oftheessential factsunder consideration which formthebasisforthedecision whether
toapply definitive measures. Such disclosure should takeplace insufficient timefortheparties to
defend theirinterests.
42Members areaware thatintheterritory ofcertain Members disclosure pursuant toanarrowly-drawn protective order
mayberequired.
43Members agree thatrequests forconfidentiality should notbearbitrarily rejected. Members further agree thatthe
investigating authority mayrequest thewaiving ofconfidentiality onlyregarding information relevant totheproceedings.Page245
12.9 Forthepurposes ofthisAgreement, "interested parties" shallinclude:
(i) anexporter orforeign producer ortheimporter ofaproduct subject toinvestigation,
oratrade orbusiness association amajority ofthemembers ofwhich areproducers,
exporters orimporters ofsuchproduct; and
(ii) aproducer ofthelikeproduct intheimporting Member oratrade andbusiness
association amajority ofthemembers ofwhich produce thelikeproduct intheterritory
oftheimporting Member.
Thislistshall notpreclude Members from allowing domestic orforeign parties other thanthose
mentioned above tobeincluded asinterested parties.
12.10 Theauthoritiesshallprovideopportunitiesforindustrialusersoftheproductunderinvestigation,
andforrepresentative consumer organizations incases where theproduct iscommonly soldattheretail
level, toprovide information which isrelevant totheinvestigation regarding subsidization, injury and
causality.
12.11 Theauthorities shalltakedueaccount ofanydifficulties experienced byinterested parties, in
particular small companies, insupplying information requested, andshall provide anyassistance
practicable.
12.12 Theprocedures setoutabove arenotintended toprevent theauthorities ofaMember from
proceeding expeditiously withregard toinitiating aninvestigation, reaching preliminary orfinal
determinations, whether affirmative ornegative, orfrom applying provisional orfinalmeasures, in
accordance withrelevant provisions ofthisAgreement.
Article 13
Consultations
13.1 Assoonaspossible afteranapplication under Article 11isaccepted, andinanyevent before
theinitiation ofanyinvestigation, Members theproducts ofwhich maybesubject tosuchinvestigation
shallbeinvited forconsultations withtheaimofclarifying thesituation astothematters referred to
inparagraph 2ofArticle 11andarriving atamutually agreed solution.
13.2 Furthermore, throughout theperiod ofinvestigation, Members theproducts ofwhich arethe
subject oftheinvestigation shallbeafforded areasonable opportunity tocontinue consultations, with
aviewtoclarifying thefactual situation andtoarriving atamutually agreed solution.44
13.3 Without prejudice totheobligation toafford reasonable opportunity forconsultation, these
provisions regarding consultations arenotintended toprevent theauthorities ofaMember from
proceeding expeditiously withregard toinitiating theinvestigation, reaching preliminary orfinal
determinations, whether affirmative ornegative, orfrom applying provisional orfinalmeasures, in
accordance withtheprovisions ofthisAgreement.
13.4 TheMember which intends toinitiate anyinvestigation orisconducting suchaninvestigation
shall permit, upon request, theMember orMembers theproducts ofwhich aresubject tosuch
44Itisparticularly important, inaccordance withtheprovisions ofthisparagraph, thatnoaffirmative determination whether
preliminary orfinalbemade without reasonable opportunity forconsultations having been given. Such consultations may
establish thebasis forproceeding under theprovisions ofPartII,IIIorX.Page246
investigationaccesstonon-confidentialevidence,includingthenon-confidentialsummaryofconfidential
databeing usedforinitiating orconducting theinvestigation.
Article 14
Calculation oftheAmount ofaSubsidy inTerms
oftheBenefit totheRecipient
Forthepurpose ofPartV,anymethod usedbytheinvestigating authority tocalculate thebenefit
totherecipient conferred pursuant toparagraph 1ofArticle 1shallbeprovided forinthenational
legislation orimplementing regulations oftheMember concerned anditsapplication toeachparticular
caseshallbetransparent andadequately explained. Furthermore, anysuchmethod shallbeconsistent
withthefollowing guidelines:
(a) government provision ofequity capital shallnotbeconsidered asconferring abenefit,
unless theinvestment decision canberegarded asinconsistent withtheusual investment
practice (including fortheprovision ofriskcapital) ofprivate investors intheterritory
ofthatMember;
(b) aloanbyagovernment shallnotbeconsidered asconferring abenefit, unless there
isadifference between theamount thatthefirmreceiving theloanpays onthe
government loanandtheamount thefirmwould payonacomparable commercial loan
which thefirmcould actually obtain onthemarket. Inthiscasethebenefit shallbe
thedifference between these twoamounts;
(c) aloanguarantee byagovernment shallnotbeconsidered asconferring abenefit, unless
there isadifference between theamount thatthefirmreceiving theguarantee pays
onaloanguaranteed bythegovernment andtheamount thatthefirmwould payon
acomparablecommercialloanabsentthegovernmentguarantee.Inthiscasethebenefit
shallbethedifference between thesetwoamounts adjusted foranydifferences infees;
(d) theprovision ofgoods orservices orpurchase ofgoods byagovernment shallnot
beconsidered asconferring abenefit unless theprovision ismade forlessthanadequate
remuneration, orthepurchase ismade formore thanadequate remuneration. The
adequacyofremunerationshallbedeterminedinrelationtoprevailingmarketconditions
forthegoodorservice inquestion inthecountry ofprovision orpurchase (including
price,quality,availability,marketability,transportationandotherconditionsofpurchase
orsale).
Article 15
Determination ofInjury45
15.1 Adetermination ofinjury forpurposes ofArticle VIofGATT 1994shallbebased onpositive
evidence andinvolve anobjective examination ofboth(a)thevolume ofthesubsidized imports and
45Under thisAgreement theterm"injury" shall, unless otherwise specified, betaken tomean material injury toadomestic
industry, threat ofmaterial injury toadomestic industry ormaterial retardation oftheestablishment ofsuchanindustry
andshall beinterpreted inaccordance withtheprovisions ofthisArticle.Page247
theeffect ofthesubsidized imports onprices inthedomestic market forlikeproducts46and(b)the
consequent impact ofthese imports onthedomestic producers ofsuchproducts.
15.2 Withregard tothevolume ofthesubsidized imports, theinvestigating authorities shallconsider
whether therehasbeenasignificant increase insubsidized imports, either inabsolute terms orrelative
toproduction orconsumption intheimporting Member. With regard totheeffect ofthesubsidized
imports onprices, theinvestigating authorities shallconsider whether therehasbeenasignificant price
undercutting bythesubsidized imports ascompared withtheprice ofalikeproduct oftheimporting
Member, orwhether theeffect ofsuchimports isotherwise todepress prices toasignificant degree
ortoprevent price increases, which otherwise would haveoccurred, toasignificant degree. Noone
orseveral ofthese factors cannecessarily givedecisive guidance.
15.3 Where imports ofaproduct from more thanonecountry aresimultaneously subject to
countervailing dutyinvestigations, theinvestigating authorities maycumulatively assess theeffects
ofsuchimports onlyiftheydetermine that(a)theamount ofsubsidization established inrelation to
theimports from eachcountry ismore thandeminimis asdefined inparagraph 9ofArticle 11and
thevolume ofimports fromeachcountry isnotnegligible and(b)acumulative assessment oftheeffects
oftheimports isappropriate inlightoftheconditions ofcompetition between theimported products
andtheconditions ofcompetition between theimported products andthelikedomestic product.
15.4 Theexamination oftheimpact ofthesubsidized imports onthedomestic industry shallinclude
anevaluation ofallrelevant economic factors andindices having abearing onthestateoftheindustry,
including actual andpotential decline inoutput, sales, market share, profits, productivity, return on
investments, orutilization ofcapacity; factors affecting domestic prices; actual andpotential negative
effects oncashflow, inventories, employment, wages, growth, ability toraisecapital orinvestments
and,inthecaseofagriculture, whether there hasbeenanincreased burden ongovernment support
programmes. Thislistisnotexhaustive, norcanoneorseveral ofthesefactors necessarily givedecisive
guidance.
15.5 Itmust bedemonstrated thatthesubsidized imports are,through theeffects47ofsubsidies,
causinginjurywithinthemeaningofthisAgreement.Thedemonstrationofacausalrelationshipbetween
thesubsidized imports andtheinjury tothedomestic industry shallbebased onanexamination of
allrelevant evidence before theauthorities. Theauthorities shallalsoexamine anyknown factors other
thanthesubsidized imports which atthesame timeareinjuring thedomestic industry, andtheinjuries
caused bythese other factors must notbeattributed tothesubsidized imports. Factors which may
berelevant inthisrespect include, interalia,thevolumes andprices ofnon-subsidized imports ofthe
product inquestion, contraction indemand orchanges inthepatterns ofconsumption, traderestrictive
practices ofandcompetition between theforeign anddomestic producers, developments intechnology
andtheexport performance andproductivity ofthedomestic industry.
15.6 Theeffect ofthesubsidized imports shallbeassessed inrelation tothedomestic production
ofthelikeproduct when available datapermit theseparate identification ofthatproduction onthebasis
ofsuchcriteria astheproduction process, producers 'salesandprofits. Ifsuchseparate identification
ofthatproduction isnotpossible, theeffects ofthesubsidized imports shall beassessed bythe
examination oftheproduction ofthenarrowest group orrange ofproducts, which includes thelike
product, forwhich thenecessary information canbeprovided.
46Throughout thisAgreement theterm"like product" ("produit similaire") shallbeinterpreted tomean aproduct which
isidentical, i.e.alikeinallrespects totheproduct under consideration, orintheabsence ofsuchaproduct, another product
which, although notalike inallrespects, hascharacteristics closely resembling those oftheproduct under consideration.
47Assetforth inparagraphs 2and4.Page248
15.7 Adeterminationofathreatofmaterialinjuryshallbebasedonfactsandnotmerelyonallegation,
conjecture orremote possibility. Thechange incircumstances which would create asituation inwhich
thesubsidy would cause injury mustbeclearly foreseen andimminent. Inmaking adetermination
regarding theexistence ofathreat ofmaterial injury, theinvestigating authorities should consider,
interalia,suchfactors as:
(i) nature ofthesubsidy orsubsidies inquestion andthetrade effects likely toarise
therefrom;
(ii) asignificant rateofincrease ofsubsidized imports intothedomestic market indicating
thelikelihood ofsubstantially increased importation;
(iii) sufficient freely disposable, oranimminent, substantial increase in,capacity ofthe
exporter indicating thelikelihood ofsubstantially increased subsidized exports tothe
importing Member 'smarket, taking intoaccount theavailability ofotherexport markets
toabsorb anyadditional exports;
(iv) whether imports areentering atprices thatwillhave asignificant depressing or
suppressing effect ondomestic prices, andwould likely increase demand forfurther
imports; and
(v) inventories oftheproduct being investigated.
Nooneofthese factors byitself cannecessarily givedecisive guidance butthetotality ofthefactors
considered mustleadtotheconclusion thatfurther subsidized exports areimminent andthat,unless
protective action istaken, material injury would occur.
15.8 With respect tocases where injury isthreatened bysubsidized imports, theapplication of
countervailing measures shallbeconsidered anddecided withspecial care.
Article 16
Definition ofDomestic Industry
16.1 Forthepurposes ofthisAgreement, theterm"domestic industry" shall, except asprovided
inparagraph 2,beinterpreted asreferring tothedomestic producers asawhole ofthelikeproducts
ortothose ofthemwhose collective output oftheproducts constitutes amajor proportion ofthetotal
domestic production ofthose products, except thatwhen producers arerelated48totheexporters or
importers orarethemselves importers oftheallegedly subsidized product oralikeproduct fromother
countries, theterm"domestic industry" maybeinterpreted asreferring totherestoftheproducers.
16.2. Inexceptional circumstances, theterritory ofaMember may, fortheproduction inquestion,
bedivided intotwoormore competitive markets andtheproducers within eachmarket mayberegarded
asaseparate industry if(a)theproducers within suchmarket sellalloralmost alloftheirproduction
oftheproduct inquestion inthatmarket, and(b)thedemand inthatmarket isnottoanysubstantial
48Forthepurpose ofthisparagraph, producers shall bedeemed toberelated toexporters orimporters onlyif(a)one
ofthem directly orindirectly controls theother; or(b)bothofthem aredirectly orindirectly controlled byathirdperson;
or(c)together theydirectly orindirectly control athirdperson, provided thatthere aregrounds forbelieving orsuspecting
thattheeffect oftherelationship issuchastocause theproducer concerned tobehave differently from non-related producers.
Forthepurpose ofthisparagraph, oneshall bedeemed tocontrol another when theformer islegally oroperationally in
aposition toexercise restraint ordirection overthelatter.Page249
degree supplied byproducers oftheproduct inquestion located elsewhere intheterritory. Insuch
circumstances, injury maybefound toexistevenwhere amajor portion ofthetotaldomestic industry
isnotinjured, provided there isaconcentration ofsubsidized imports intosuchanisolated market
andprovided further thatthesubsidized imports arecausing injury totheproducers ofalloralmost
alloftheproduction within suchmarket.
16.3 When thedomestic industry hasbeeninterpreted asreferring totheproducers inacertain area,
i.e.amarket asdefined inparagraph 2,countervailing duties shallbelevied onlyontheproducts in
question consigned forfinalconsumption tothatarea. When theconstitutional lawoftheimporting
Member doesnotpermit thelevying ofcountervailing duties onsuchabasis, theimporting Member
maylevythecountervailing duties without limitation onlyif(a)theexporters shallhavebeengiven
anopportunity tocease exporting atsubsidized prices totheareaconcerned orotherwise giveassurances
pursuanttoArticle18,andadequateassurancesinthisregardhavenotbeenpromptlygiven,and(b)such
duties cannot belevied onlyonproducts ofspecific producers which supply theareainquestion.
16.4 Where twoormore countries have reached under theprovisions ofparagraph 8(a)of
Article XXIV ofGATT 1994suchalevelofintegration thattheyhavethecharacteristics ofasingle,
unified market, theindustry intheentire areaofintegration shallbetaken tobethedomestic industry
referred toinparagraphs 1and2.
16.5 Theprovisions ofparagraph 6ofArticle 15shallbeapplicable tothisArticle.
Article 17
Provisional Measures
17.1 Provisional measures maybeapplied onlyif:
(a) aninvestigation hasbeeninitiated inaccordance withtheprovisions ofArticle 11,
apublic notice hasbeengiven tothateffect andinterested Members andinterested
parties have been given adequate opportunities tosubmit information andmake
comments;
(b) apreliminary affirmative determination hasbeenmade thatasubsidy exists andthat
there isinjury toadomestic industry caused bysubsidized imports; and
(c) theauthorities concerned judge suchmeasures necessary toprevent injury being caused
during theinvestigation.
17.2 Provisional measures maytaketheform ofprovisional countervailing duties guaranteed by
cashdeposits orbonds equal totheamount oftheprovisionally calculated amount ofsubsidization.
17.3 Provisional measures shallnotbeapplied sooner than60daysfrom thedateofinitiation of
theinvestigation.
17.4 Theapplication ofprovisional measures shallbelimited toasshort aperiod aspossible, not
exceeding fourmonths.
17.5 TherelevantprovisionsofArticle19shallbefollowedintheapplicationofprovisionalmeasures.Page250
Article 18
Undertakings
18.1 Proceedings may49besuspended orterminated without theimposition ofprovisional measures
orcountervailing duties upon receipt ofsatisfactory voluntary undertakings under which:
(a) thegovernmentoftheexportingMemberagreestoeliminateorlimitthesubsidy
ortakeother measures concerning itseffects; or
(b) theexporter agrees torevise itsprices sothattheinvestigating authorities are
satisfied thattheinjurious effect ofthesubsidy iseliminated. Price increases
under suchundertakings shallnotbehigher thannecessary toeliminate the
amount ofthesubsidy. Itisdesirable thattheprice increases belessthan
theamount ofthesubsidy ifsuch increases would beadequate toremove the
injury tothedomestic industry.
18.2 Undertakings shallnotbesought oraccepted unless theauthorities oftheimporting Member
have made apreliminary affirmative determination ofsubsidization andinjury caused bysuch
subsidization and,incaseofundertakings fromexporters, haveobtained theconsent oftheexporting
Member.
18.3 Undertakings offered neednotbeaccepted iftheauthorities oftheimporting Member consider
theiracceptance impractical, forexample ifthenumber ofactual orpotential exporters istoogreat,
orforother reasons, including reasons ofgeneral policy. Should thecaseariseandwhere practicable,
theauthorities shallprovide totheexporter thereasons which haveledthem toconsider acceptance
ofanundertaking asinappropriate, andshall, totheextent possible, givetheexporter anopportunity
tomake comments thereon.
18.4 Ifanundertaking isaccepted, theinvestigation ofsubsidization andinjury shallnevertheless
becompleted iftheexporting Member sodesires ortheimporting Member sodecides. Insuchacase,
ifanegative determination ofsubsidization orinjury ismade, theundertaking shallautomatically lapse,
except incases where suchadetermination isdueinlarge parttotheexistence ofanundertaking.
Insuchcases, theauthorities concerned mayrequire thatanundertaking bemaintained forareasonable
period consistent withtheprovisions ofthisAgreement. Intheevent thatanaffirmative determination
ofsubsidization andinjury ismade, theundertaking shallcontinue consistent withitsterms andthe
provisions ofthisAgreement.
18.5 PriceundertakingsmaybesuggestedbytheauthoritiesoftheimportingMember,butnoexporter
shallbeforced toenter intosuchundertakings. Thefactthatgovernments orexporters donotoffer
suchundertakings, ordonotaccept aninvitation todoso,shallinnowayprejudice theconsideration
ofthecase. However, theauthorities arefreetodetermine thatathreat ofinjury ismore likely to
berealized ifthesubsidized imports continue.
18.6 Authorities ofanimporting Member mayrequire anygovernment orexporter fromwhom an
undertaking hasbeenaccepted toprovide periodically information relevant tothefulfilment ofsuch
anundertaking, andtopermit verification ofpertinent data. Incaseofviolation ofanundertaking,
theauthorities oftheimporting Member maytake, under thisAgreement inconformity withits
provisions, expeditious actions which mayconstitute immediate application ofprovisional measures
using thebestinformation available. Insuchcases, definitive duties maybelevied inaccordance with
49Theword "may" shallnotbeinterpreted toallow thesimultaneous continuation ofproceedings withtheimplementation
ofundertakings, except asprovided inparagraph 4.Page251
thisAgreement onproducts entered forconsumption notmore than90daysbefore theapplication of
suchprovisionalmeasures,exceptthatanysuchretroactiveassessmentshallnotapplytoimportsentered
before theviolation oftheundertaking.
Article 19
Imposition andCollection ofCountervailing Duties
19.1 If,afterreasonable efforts havebeenmade tocomplete consultations, aMember makes afinal
determination oftheexistence andamount ofthesubsidy andthat,through theeffects ofthesubsidy,
thesubsidized imports arecausing injury, itmayimpose acountervailing dutyinaccordance withthe
provisions ofthisArticle unless thesubsidy orsubsidies arewithdrawn.
19.2 Thedecision whether ornottoimpose acountervailing dutyincases where allrequirements
fortheimposition havebeenfulfilled, andthedecision whether theamount ofthecountervailing duty
tobeimposed shallbethefullamount ofthesubsidy orless,aredecisions tobemade bytheauthorities
oftheimporting Member. Itisdesirable thattheimposition should bepermissive intheterritory
ofallMembers, thatthedutyshould belessthanthetotalamount ofthesubsidy ifsuchlesser duty
would beadequate toremove theinjury tothedomestic industry, andthatprocedures should be
established which would allow theauthorities concerned totakedueaccount ofrepresentations made
bydomestic interested parties50whose interests might beadversely affected bytheimposition ofa
countervailing duty.
19.3 When acountervailing dutyisimposed inrespect ofanyproduct, suchcountervailing duty
shallbelevied, intheappropriate amounts ineachcase, onanon-discriminatory basis onimports of
suchproduct from allsources found tobesubsidized andcausing injury, except astoimports from
those sources which haverenounced anysubsidies inquestion orfromwhich undertakings under the
terms ofthisAgreement havebeenaccepted. Anyexporter whose exports aresubject toadefinitive
countervailing dutybutwhowasnotactually investigated forreasons other thanarefusal tocooperate,
shallbeentitled toanexpedited review inorder thattheinvestigating authorities promptly establish
anindividual countervailing dutyrateforthatexporter.
19.4 Nocountervailing dutyshallbelevied51onanyimported product inexcess oftheamount of
thesubsidy found toexist, calculated interms ofsubsidization perunitofthesubsidized andexported
product.
Article 20
Retroactivity
20.1 Provisional measures andcountervailing duties shallonlybeapplied toproducts which enter
forconsumption afterthetimewhen thedecision under paragraph 1ofArticle 17andparagraph 1
ofArticle 19,respectively, enters intoforce, subject totheexceptions setoutinthisArticle.
20.2 Where afinaldetermination ofinjury (butnotofathreat thereof orofamaterial retardation
oftheestablishment ofanindustry) ismade or,inthecaseofafinaldetermination ofathreat ofinjury,
50Forthepurpose ofthisparagraph, theterm"domestic interested parties" shallinclude consumers andindustrial users
oftheimported product subject toinvestigation.
51AsusedinthisAgreement "levy" shall mean thedefinitive orfinallegal assessment orcollection ofadutyortax.Page252
where theeffect ofthesubsidized imports would, intheabsence oftheprovisional measures, have
ledtoadetermination ofinjury, countervailing duties maybelevied retroactively fortheperiod for
which provisional measures, ifany,havebeenapplied.
20.3 Ifthedefinitive countervailing dutyishigher thantheamount guaranteed bythecashdeposit
orbond, thedifference shallnotbecollected. Ifthedefinitive dutyislessthantheamount guaranteed
bythecashdeposit orbond, theexcess amount shallbereimbursed orthebondreleased inanexpeditious
manner.
20.4 Except asprovided inparagraph 2,where adetermination ofthreat ofinjury ormaterial
retardation ismade (butnoinjury hasyetoccurred) adefinitive countervailing dutymaybeimposed
onlyfromthedateofthedetermination ofthreat ofinjury ormaterial retardation, andanycashdeposit
made during theperiod oftheapplication ofprovisional measures shallberefunded andanybonds
released inanexpeditious manner.
20.5 Where afinaldetermination isnegative, anycashdeposit made during theperiod ofthe
application ofprovisional measures shallberefunded andanybonds released inanexpeditious manner.
20.6 Incritical circumstances where forthesubsidized product inquestion theauthorities findthat
injury which isdifficult torepair iscaused bymassive imports inarelatively short period ofaproduct
benefiting fromsubsidies paidorbestowed inconsistently withtheprovisions ofGATT 1994 andof
thisAgreement andwhere itisdeemed necessary, inorder topreclude therecurrence ofsuchinjury,
toassess countervailing duties retroactively onthose imports, thedefinitive countervailing duties may
beassessed onimports which wereentered forconsumption notmore than90daysprior tothedate
ofapplication ofprovisional measures.
Article 21
Duration andReview ofCountervailing Duties andUndertakings
21.1 Acountervailing dutyshallremain inforce onlyaslongasandtotheextent necessary to
counteract subsidization which iscausing injury.
21.2 Theauthorities shallreview theneedforthecontinued imposition oftheduty, where warranted,
ontheirowninitiative or,provided thatareasonable period oftimehaselapsed since theimposition
ofthedefinitive countervailing duty, upon request byanyinterested party which submits positive
information substantiating theneedforareview. Interested parties shallhavetherighttorequest the
authorities toexamine whether thecontinued imposition ofthedutyisnecessary tooffset subsidization,
whether theinjury would belikely tocontinue orrecur ifthedutywereremoved orvaried, orboth.
If,asaresult ofthereview under thisparagraph, theauthorities determine thatthecountervailing duty
isnolonger warranted, itshallbeterminated immediately.
21.3 Notwithstanding theprovisions ofparagraphs 1and2,anydefinitive countervailing dutyshall
beterminated onadatenotlaterthanfiveyears fromitsimposition (orfromthedateofthemostrecent
review under paragraph 2ifthatreview hascovered bothsubsidization andinjury, orunder this
paragraph), unless theauthorities determine, inareview initiated before thatdateontheirowninitiative
oruponadulysubstantiated request made byoronbehalf ofthedomestic industry within areasonable
period oftimeprior tothatdate, thattheexpiry ofthedutywould belikely toleadtocontinuationPage253
orrecurrence ofsubsidization andinjury.52Thedutymayremain inforce pending theoutcome of
suchareview.
21.4 Theprovisions ofArticle 12regarding evidence andprocedure shallapply toanyreview carried
outunder thisArticle. Anysuchreview shall becarried outexpeditiously andshallnormally be
concluded within 12months ofthedateofinitiation ofthereview.
21.5 Theprovisions ofthisArticle shallapply mutatis mutandis toundertakings accepted under
Article 18.
Article 22
Public Notice andExplanation of
Determinations
22.1 When theauthorities aresatisfied thatthere issufficient evidence tojustify theinitiation of
aninvestigation pursuant toArticle 11,theMember orMembers theproducts ofwhich aresubject
tosuchinvestigation andotherinterested parties known totheinvestigating authorities tohaveaninterest
therein shallbenotified andapublic notice shallbegiven.
22.2 Apublic notice oftheinitiation ofaninvestigation shallcontain, orotherwise make available
through aseparate report53,adequate information onthefollowing:
(i) thename oftheexporting country orcountries andtheproduct involved;
(ii) thedateofinitiation oftheinvestigation;
(iii) adescription ofthesubsidy practice orpractices tobeinvestigated;
(iv) asummary ofthefactors onwhich theallegation ofinjury isbased;
(v) theaddress towhich representations byinterested Members andinterested
parties should bedirected; and
(vi) thetime-limits allowed tointerested Members andinterested parties formaking
theirviews known.
22.3 Public notice shallbegiven ofanypreliminary orfinaldetermination, whether affirmative
ornegative, ofanydecision toaccept anundertaking pursuant toArticle 18,ofthetermination ofsuch
anundertaking, andofthetermination ofadefinitive countervailing duty. Each suchnotice shallset
forth, orotherwise make available through aseparate report, insufficient detail thefindings and
conclusions reached onallissues offactandlawconsidered material bytheinvestigating authorities.
Allsuchnotices andreports shallbeforwarded totheMember orMembers theproducts ofwhich
aresubject tosuchdetermination orundertaking andtootherinterested parties known tohaveaninterest
therein.
52When theamount ofthecountervailing dutyisassessed onaretrospective basis, afinding inthemostrecent assessment
proceeding thatnodutyistobelevied shall notbyitself require theauthorities toterminate thedefinitive duty.
53Where authorities provide information andexplanations under theprovisions ofthisArticle inaseparate report, they
shall ensure thatsuch report isreadily available tothepublic.Page254
22.4 Apublic notice oftheimposition ofprovisional measures shallsetforth, orotherwise make
available through aseparate report, sufficiently detailed explanations forthepreliminary determinations
ontheexistence ofasubsidy andinjury andshallrefertothematters offactandlawwhich haveled
toarguments being accepted orrejected. Such anotice orreport shall, dueregard being paidtothe
requirement fortheprotection ofconfidential information, contain inparticular:
(i) thenamesofthesuppliersor,whenthisisimpracticable,thesupplyingcountries
involved;
(ii) adescription oftheproduct which issufficient forcustoms purposes;
(iii) theamount ofsubsidy established andthebasis onwhich theexistence ofa
subsidy hasbeendetermined;
(iv) considerations relevant totheinjury determination assetoutinArticle 15;
(v) themain reasons leading tothedetermination.
22.5 Apublic notice ofconclusion orsuspension ofaninvestigation inthecaseofanaffirmative
determination providing fortheimposition ofadefinitive dutyortheacceptance ofanundertaking
shallcontain, orotherwise make available through aseparate report, allrelevant information onthe
matters offactandlawandreasons which haveledtotheimposition offinalmeasures ortheacceptance
ofanundertaking,dueregardbeingpaidtotherequirementfortheprotectionofconfidentialinformation.
Inparticular, thenotice orreport shallcontain theinformation described inparagraph 4,aswellas
thereasons fortheacceptance orrejection ofrelevant arguments orclaims made byinterested Members
andbytheexporters andimporters.
22.6 Apublic notice ofthetermination orsuspension ofaninvestigation following theacceptance
ofanundertaking pursuant toArticle 18shallinclude, orotherwise make available through aseparate
report, thenon-confidential partofthisundertaking.
22.7 Theprovisions ofthisArticle shallapply mutatis mutandis totheinitiation andcompletion
ofreviews pursuant toArticle 21andtodecisions under Article 20toapply duties retroactively.
Article 23
Judicial Review
EachMember whose national legislation contains provisions oncountervailing dutymeasures
shallmaintain judicial, arbitral oradministrative tribunals orprocedures forthepurpose, interalia,
oftheprompt review ofadministrative actions relating tofinal determinations andreviews of
determinations within themeaning ofArticle 21.Suchtribunals orprocedures shallbeindependent
oftheauthorities responsible forthedetermination orreview inquestion, andshallprovide allinterested
parties whoparticipated intheadministrative proceeding andaredirectly andindividually affected
bytheadministrative actions withaccess toreview.Page255
PART VI:INSTITUTIONS
Article 24
Committee onSubsidies andCountervailing Measures
andSubsidiary Bodies
24.1 There ishereby established aCommittee onSubsidies andCountervailing Measures composed
ofrepresentatives fromeachoftheMembers. TheCommittee shallelectitsownChairman andshall
meetnotlessthantwice ayearandotherwise asenvisaged byrelevant provisions ofthisAgreement
attherequest ofanyMember. TheCommittee shallcarry outresponsibilities asassigned toitunder
thisAgreement orbytheMembers anditshallafford Members theopportunity ofconsulting onany
matter relating totheoperation oftheAgreement orthefurtherance ofitsobjectives. TheWTO
Secretariat shallactasthesecretariat totheCommittee.
24.2 TheCommittee maysetupsubsidiary bodies asappropriate.
24.3 TheCommittee shallestablish aPermanent Group ofExperts composed offiveindependent
persons, highly qualified inthefields ofsubsidies andtrade relations. Theexperts willbeelected
bytheCommittee andoneofthem willbereplaced every year. ThePGEmayberequested toassist
apanel, asprovided forinparagraph 5ofArticle 4.TheCommittee mayalsoseekanadvisory opinion
ontheexistence andnature ofanysubsidy.
24.4 ThePGEmaybeconsulted byanyMember andmaygiveadvisory opinions onthenature
ofanysubsidy proposed tobeintroduced orcurrently maintained bythatMember. Such advisory
opinions willbeconfidential andmaynotbeinvoked inproceedings under Article 7.
24.5 Incarrying outtheirfunctions, theCommittee andanysubsidiary bodies mayconsult with
andseekinformation from anysource theydeem appropriate. However, before theCommittee or
asubsidiary body seeks suchinformation fromasource within thejurisdiction ofaMember, itshall
inform theMember involved.
PART VII: NOTIFICATION AND SURVEILLANCE
Article 25
Notifications
25.1 Members agree that,without prejudice totheprovisions ofparagraph 1ofArticle XVIof
GATT 1994, theirnotifications ofsubsidies shallbesubmitted notlaterthan30Juneofeachyearand
shallconform totheprovisions ofparagraphs 2through 6.
25.2 Members shallnotify anysubsidy asdefined inparagraph 1ofArticle 1,which isspecific
within themeaning ofArticle 2,granted ormaintained within theirterritories.
25.3 Thecontent ofnotifications should besufficiently specific toenable other Members toevaluate
thetradeeffects andtounderstand theoperation ofnotified subsidy programmes. Inthisconnection,Page256
andwithout prejudice tothecontents andformofthequestionnaire onsubsidies54,Members shallensure
thattheirnotifications contain thefollowing information:
(i) form ofasubsidy (i.e.grant, loan, taxconcession, etc.);
(ii) subsidy perunitor,incases where thisisnotpossible, thetotalamount or
theannualamountbudgetedforthatsubsidy(indicating,ifpossible,theaverage
subsidy perunitintheprevious year);
(iii) policy objective and/or purpose ofasubsidy;
(iv) duration ofasubsidy and/or anyother time-limits attached toit;
(v) statistical datapermitting anassessment ofthetrade effects ofasubsidy.
25.4 Where specific points inparagraph 3havenotbeenaddressed inanotification, anexplanation
shallbeprovided inthenotification itself.
25.5 Ifsubsidies aregranted tospecific products orsectors, thenotifications should beorganized
byproduct orsector.
25.6 Members which consider thatthere arenomeasures intheirterritories requiring notification
under paragraph 1ofArticle XVIofGATT 1994 andthisAgreement shallsoinform theSecretariat
inwriting.
25.7 Members recognize thatnotification ofameasure doesnotprejudge either itslegalstatus under
GATT 1994andthisAgreement, theeffects under thisAgreement, orthenature ofthemeasure itself.
25.8 AnyMember may,atanytime, make awritten request forinformation onthenature andextent
ofanysubsidy granted ormaintained byanother Member (including anysubsidy referred toinPartIV),
orforanexplanation ofthereasons forwhich aspecific measure hasbeenconsidered asnotsubject
totherequirement ofnotification.
25.9 Members sorequested shall provide such information asquickly aspossible andina
comprehensive manner, andshallbeready, upon request, toprovide additional information tothe
requesting Member. Inparticular, theyshallprovide sufficient details toenable theother Member
toassess theircompliance withtheterms ofthisAgreement. AnyMember which considers thatsuch
information hasnotbeenprovided maybring thematter totheattention oftheCommittee.
25.10 AnyMember which considers thatanymeasure ofanother Member having theeffects ofa
subsidy hasnotbeennotified inaccordance withtheprovisions ofparagraph 1ofArticle XVIof
GATT 1994andthisArticle maybring thematter totheattention ofsuchother Member. Ifthealleged
subsidy isnotthereafter notified promptly, suchMember mayitselfbring thealleged subsidy inquestion
tothenotice oftheCommittee.
25.11 Members shallreport without delay totheCommittee allpreliminary orfinalactions taken
withrespect tocountervailing duties. Suchreports shallbeavailable intheSecretariat forinspection
byother Members. Members shallalsosubmit, onasemi-annual basis, reports onanycountervailing
dutyactions taken within thepreceding sixmonths. Thesemi-annual reports shallbesubmitted on
anagreed standard form.
54TheCommittee shallestablish aWorking Party toreview thecontents andform ofthequestionnaire ascontained in
BISD 9S/193-194.Page257
25.12 EachMember shallnotify theCommittee (a)which ofitsauthorities arecompetent toinitiate
andconduct investigations referred toinArticle 11and(b)itsdomestic procedures governing the
initiation andconduct ofsuchinvestigations.
Article 26
Surveillance
26.1 TheCommittee shall examine newandfullnotifications submitted under paragraph 1of
Article XVIofGATT 1994andparagraph 1ofArticle 25ofthisAgreement atspecial sessions held
every third year. Notifications submitted intheintervening years (updating notifications) shallbe
examined ateachregular meeting oftheCommittee.
26.2 TheCommitteeshallexaminereportssubmittedunderparagraph11ofArticle25ateachregular
meeting oftheCommittee.
PART VIII: DEVELOPING COUNTRY MEMBERS
Article 27
Special andDifferential Treatment ofDeveloping Country Members
27.1 Members recognize thatsubsidies mayplayanimportant roleineconomic development
programmes ofdeveloping country Members.
27.2 Theprohibition ofparagraph 1(a)ofArticle 3shallnotapply to:
(a) developing country Members referred toinAnnex VII.
(b) other developing country Members foraperiod ofeight years fromthedateofentry
intoforce oftheWTO Agreement, subject tocompliance withtheprovisions in
paragraph 4.
27.3 Theprohibition ofparagraph 1(b)ofArticle 3shallnotapply todeveloping country Members
foraperiod offiveyears, andshallnotapply toleastdeveloped country Members foraperiod ofeight
years, from thedateofentry intoforce oftheWTO Agreement.
27.4 AnydevelopingcountryMemberreferredtoinparagraph2(b)shallphaseoutitsexportsubsidies
within theeight-year period, preferably inaprogressive manner. However, adeveloping country
Member shallnotincrease thelevelofitsexport subsidies55,andshalleliminate themwithin aperiod
shorter thanthatprovided forinthisparagraph when theuseofsuchexport subsidies isinconsistent
withitsdevelopment needs. Ifadeveloping country Member deems itnecessary toapply suchsubsidies
beyond the8-year period, itshallnotlaterthanoneyearbefore theexpiry ofthisperiod enter into
consultation withtheCommittee, which willdetermine whether anextension ofthisperiod isjustified,
afterexamining alltherelevant economic, financial anddevelopment needs ofthedeveloping country
Member inquestion. IftheCommittee determines thattheextension isjustified, thedeveloping country
Member concerned shallholdannual consultations withtheCommittee todetermine thenecessity of
55Foradeveloping country Member notgranting export subsidies asofthedateofentry intoforce oftheWTO Agreement,
thisparagraph shall apply onthebasis ofthelevel ofexport subsidies granted in1986.Page258
maintaining thesubsidies. Ifnosuchdetermination ismade bytheCommittee, thedeveloping country
Member shallphase outtheremaining export subsidies within twoyears from theendofthelast
authorized period.
27.5 Adeveloping country Member which hasreached export competitiveness inanygiven product
shallphase outitsexport subsidies forsuchproduct(s) overaperiod oftwoyears. However, fora
developing country Member which isreferred toinAnnex VIIandwhich hasreached export
competitiveness inoneormore products, export subsidies onsuchproducts shallbegradually phased
outoveraperiod ofeight years.
27.6 Export competitiveness inaproduct exists ifadeveloping country Member 'sexports ofthat
product havereached ashare ofatleast3.25percentinworld tradeofthatproduct fortwoconsecutive
calendaryears.Exportcompetitivenessshallexisteither(a)onthebasisofnotificationbythedeveloping
country Member having reached export competitiveness, or(b)onthebasisofacomputation undertaken
bytheSecretariat attherequest ofanyMember. Forthepurpose ofthisparagraph, aproduct isdefined
asasectionheadingoftheHarmonizedSystemNomenclature.TheCommitteeshallreviewtheoperation
ofthisprovision fiveyears from thedateoftheentry intoforce oftheWTO Agreement.
27.7 Theprovisions ofArticle 4shallnotapply toadeveloping country Member inthecaseofexport
subsidieswhichareinconformitywiththeprovisionsofparagraphs2through5.Therelevantprovisions
insuchacaseshallbethose ofArticle 7.
27.8 There shallbenopresumption interms ofparagraph 1ofArticle 6thatasubsidy granted by
adeveloping country Member results inserious prejudice, asdefined inthisAgreement. Suchserious
prejudice, where applicable under theterms ofparagraph 9,shallbedemonstrated bypositive evidence,
inaccordance withtheprovisions ofparagraphs 3through 8ofArticle 6.
27.9 Regarding actionable subsidies granted ormaintained byadeveloping country Member other
thanthose referred toinparagraph 1ofArticle 6,action maynotbeauthorized ortaken under Article 7
unless nullification orimpairment oftariffconcessions orother obligations under GATT 1994isfound
toexistasaresult ofsuchasubsidy, insuchawayastodisplace orimpede imports ofalikeproduct
ofanother Member intothemarket ofthesubsidizing developing country Member orunless injury
toadomestic industry inthemarket ofanimporting Member occurs.
27.10 Anycountervailing dutyinvestigation ofaproduct originating inadeveloping country Member
shallbeterminated assoonastheauthorities concerned determine that:
(a) theoverall level ofsubsidies granted upon theproduct inquestion doesnotexceed
2percentofitsvalue calculated onaperunitbasis; or
(b) thevolume ofthesubsidized imports represents lessthan4percentofthetotalimports
ofthelikeproduct intheimporting Member, unless imports fromdeveloping country
Members whose individual shares oftotalimports represent lessthan4percent
collectively account formore than9percentofthetotalimports ofthelikeproduct
intheimporting Member.
27.11 ForthosedevelopingcountryMemberswithinthescopeofparagraph2(b)whichhaveeliminated
export subsidies prior totheexpiry oftheperiod ofeight years from thedateofentry intoforce of
theWTO Agreement, andforthose developing country Members referred toinAnnex VII,thenumber
inparagraph 10(a) shallbe3percentrather than2percent. Thisprovision shallapply from the
datethattheelimination ofexport subsidies isnotified totheCommittee, andforsolongasexport
subsidies arenotgranted bythenotifying developing country Member. Thisprovision shallexpire
eight years from thedateofentry intoforce oftheWTO Agreement.Page259
27.12 Theprovisions ofparagraphs 10and11shallgovern anydetermination ofdeminimis under
paragraph 3ofArticle 15.
27.13 Theprovisions ofPartIIIshallnotapply todirect forgiveness ofdebts, subsidies tocover social
costs, inwhatever form, including relinquishment ofgovernment revenue andothertransfer ofliabilities
when suchsubsidies aregranted within anddirectly linked toaprivatization programme ofadeveloping
country Member, provided thatbothsuchprogramme andthesubsidies involved aregranted fora
limited period andnotified totheCommittee andthattheprogramme results ineventual privatization
oftheenterprise concerned.
27.14 TheCommittee shall, uponrequest byaninterested Member, undertake areview ofaspecific
exportsubsidypracticeofadevelopingcountryMembertoexaminewhetherthepracticeisinconformity
withitsdevelopment needs.
27.15 TheCommittee shall, upon request byaninterested developing country Member, undertake
areview ofaspecific countervailing measure toexamine whether itisconsistent withtheprovisions
ofparagraphs 10and11asapplicable tothedeveloping country Member inquestion.
PART IX:TRANSITIONAL ARRANGEMENTS
Article 28
Existing Programmes
28.1 Subsidy programmes which havebeenestablished within theterritory ofanyMember before
thedateonwhich suchaMember signed theWTO Agreement andwhich areinconsistent withthe
provisions ofthisAgreement shallbe:
(a) notified totheCommittee notlaterthan90daysafterthedateofentry intoforce of
theWTO Agreement forsuchMember; and
(b) brought intoconformity withtheprovisions ofthisAgreement within three years of
thedateofentry intoforce oftheWTO Agreement forsuchMember anduntilthen
shallnotbesubject toPartII.
28.2 NoMember shallextend thescope ofanysuchprogramme, norshallsuchaprogramme be
renewed upon itsexpiry.
Article 29
Transformation intoaMarket Economy
29.1 Membersintheprocessoftransformationfromacentrally-plannedintoamarket,free-enterprise
economy mayapply programmes andmeasures necessary forsuchatransformation.
29.2 ForsuchMembers, subsidy programmes falling within thescope ofArticle 3,andnotified
according toparagraph 3,shallbephased outorbrought intoconformity withArticle 3within aperiod
ofseven years from thedateofentry intoforce oftheWTO Agreement. Insuchacase, Article 4
shallnotapply. Inaddition during thesame period:Page260
(a) Subsidy programmes falling within thescope ofparagraph 1(d)ofArticle 6shallnot
beactionable under Article 7;
(b) Withrespect toother actionable subsidies, theprovisions ofparagraph 9ofArticle 27
shallapply.
29.3 Subsidy programmes falling within thescope ofArticle 3shallbenotified totheCommittee
bytheearliest practicable dateafterthedateofentry intoforce oftheWTO Agreement. Further
notifications ofsuchsubsidies maybemade uptotwoyears afterthedateofentry intoforce ofthe
WTO Agreement.
29.4 Inexceptional circumstances Members referred toinparagraph 1maybegiven departures
fromtheirnotified programmes andmeasures andtheirtime-frame bytheCommittee ifsuchdepartures
aredeemed necessary fortheprocess oftransformation.
PART X:DISPUTE SETTLEMENT
Article 30
Theprovisions ofArticles XXII andXXIII ofGATT 1994 aselaborated andapplied bythe
Dispute Settlement Understanding shallapply toconsultations andthesettlement ofdisputes under
thisAgreement, except asotherwise specifically provided herein.
PART XI:FINAL PROVISIONS
Article 31
Provisional Application
Theprovisions ofparagraph 1ofArticle 6andtheprovisions ofArticle 8andArticle 9shall
apply foraperiod offiveyears, beginning withthedateofentry intoforce oftheWTO Agreement.
Notlaterthan180daysbefore theendofthisperiod, theCommittee shallreview theoperation of
those provisions, withaviewtodetermining whether toextend theirapplication, either aspresently
drafted orinamodified form, forafurther period.
Article 32
Other Final Provisions
32.1 Nospecific action against asubsidy ofanother Member canbetaken except inaccordance
withtheprovisions ofGATT 1994, asinterpreted bythisAgreement.56
32.2 Reservations maynotbeentered inrespect ofanyoftheprovisions ofthisAgreement without
theconsent oftheother Members.
56Thisparagraph isnotintended topreclude action under other relevant provisions ofGATT 1994, where appropriate.Page261
32.3 Subjecttoparagraph4,theprovisionsofthisAgreementshallapplytoinvestigations,andreviews
ofexisting measures, initiated pursuant toapplications which havebeenmade onorafterthedateof
entry intoforce foraMember oftheWTO Agreement.
32.4 Forthepurposes ofparagraph 3ofArticle 21,existing countervailing measures shallbedeemed
tobeimposed onadatenotlaterthanthedateofentry intoforceforaMember oftheWTO Agreement,
except incases inwhich thedomestic legislation ofaMember inforce atthatdatealready included
aclause ofthetypeprovided forinthatparagraph.
32.5 Each Member shalltakeallnecessary steps, ofageneral orparticular character, toensure,
notlaterthanthedateofentry intoforce oftheWTO Agreement forit,theconformity ofitslaws,
regulations andadministrative procedures withtheprovisions ofthisAgreement astheymayapply
totheMember inquestion.
32.6 EachMember shallinform theCommittee ofanychanges initslawsandregulations relevant
tothisAgreement andintheadministration ofsuchlawsandregulations.
32.7 TheCommittee shallreview annually theimplementation andoperation ofthisAgreement,
taking intoaccount theobjectives thereof. TheCommittee shallinform annually theCouncil forTrade
inGoods ofdevelopments during theperiod covered bysuchreviews.
32.8 TheAnnexes tothisAgreement constitute anintegral partthereof.Page262
ANNEX I
ILLUSTRATIVE LIST OFEXPORT SUBSIDIES
(a) Theprovision bygovernments ofdirect subsidies toafirmoranindustry contingent upon
export performance.
(b) Currency retention schemes oranysimilar practices which involve abonus onexports.
(c) Internal transport andfreight charges onexport shipments, provided ormandated by
governments, onterms more favourable thanfordomestic shipments.
(d) Theprovision bygovernments ortheir agencies either directly orindirectly through
government-mandated schemes, ofimported ordomestic products orservices foruseinthe
production ofexported goods, onterms orconditions more favourable thanforprovision of
likeordirectly competitive products orservices foruseintheproduction ofgoods fordomestic
consumption, if(inthecaseofproducts) suchterms orconditions aremore favourable than
those commercially available57onworld markets totheirexporters.
(e) Thefullorpartial exemption remission, ordeferral specifically related toexports, ofdirect
taxes58orsocial welfare charges paidorpayable byindustrial orcommercial enterprises.59
(f) Theallowance ofspecial deductions directly related toexports orexport performance, over
andabove those granted inrespect toproduction fordomestic consumption, inthecalculation
ofthebaseonwhich direct taxes arecharged.
57Theterm"commercially available" means thatthechoice between domestic andimported products isunrestricted and
depends onlyoncommercial considerations.
58Forthepurpose ofthisAgreement:
Theterm"direct taxes" shallmean taxes onwages, profits, interests, rents, royalties, andallother forms ofincome,
andtaxes ontheownership ofrealproperty;
Theterm"import charges" shall mean tariffs, duties, andother fiscal charges notelsewhere enumerated inthis
notethatarelevied onimports;
Theterm"indirect taxes" shall mean sales, excise, turnover, value added, franchise, stamp, transfer, inventory
andequipment taxes, border taxes andalltaxes other thandirect taxes andimport charges;
"Prior-stage" indirect taxes arethose levied ongoods orservices useddirectly orindirectly inmaking theproduct;
"Cumulative" indirect taxes aremulti-staged taxes levied where there isnomechanism forsubsequent crediting
ofthetaxifthegoods orservices subject totaxatonestage ofproduction areusedinasucceeding stage ofproduction;
"Remission" oftaxes includes therefund orrebate oftaxes;
"Remission ordrawback" includes thefullorpartial exemption ordeferral ofimport charges.
59TheMembers recognize thatdeferral need notamount toanexport subsidy where, forexample, appropriate interest
charges arecollected. TheMembers reaffirm theprinciple thatprices forgoods intransactions between exporting enterprises
andforeign buyers under theirorunder thesame control should fortaxpurposes betheprices which would becharged between
independent enterprises acting atarm'slength. AnyMember maydraw theattention ofanother Member toadministrative
orother practices which maycontravene thisprinciple andwhich result inasignificant saving ofdirect taxes inexport
transactions. Insuchcircumstances theMembers shall normally attempt toresolve theirdifferences using thefacilities of
existing bilateral taxtreaties orother specific international mechanisms, without prejudice totherights andobligations of
Members under GATT 1994, including theright ofconsultation created inthepreceding sentence.
Paragraph (e)isnotintended tolimitaMember fromtaking measures toavoid thedouble taxation offoreign-source
income earned byitsenterprises ortheenterprises ofanother Member.Page263
(g) Theexemption orremission, inrespect oftheproduction anddistribution ofexported products,
ofindirect taxes58inexcess ofthose levied inrespect oftheproduction anddistribution oflike
products when soldfordomestic consumption.
(h) Theexemption, remission ordeferral ofprior-stage cumulative indirect taxes58ongoods or
services usedintheproduction ofexported products inexcess oftheexemption, remission
ordeferral oflikeprior-stage cumulative indirect taxes ongoods orservices usedinthe
production oflikeproducts when soldfordomestic consumption; provided, however, that
prior-stagecumulativeindirecttaxesmaybeexempted,remittedordeferredonexportedproducts
even when notexempted, remitted ordeferred onlikeproducts when soldfordomestic
consumption, iftheprior-stage cumulative indirect taxesarelevied oninputs thatareconsumed
intheproduction oftheexported product (making normal allowance forwaste).60Thisitem
shallbeinterpreted inaccordance withtheguidelines onconsumption ofinputs intheproduction
process contained inAnnex II.
(i) Theremission ordrawback ofimport charges58inexcess ofthose levied onimported inputs
thatareconsumed intheproduction oftheexported product (making normal allowance for
waste); provided, however, thatinparticular cases afirmmayuseaquantity ofhome market
inputs equal to,andhaving thesame quality andcharacteristics as,theimported inputs asa
substitute fortheminorder tobenefit fromthisprovision iftheimport andthecorresponding
export operations bothoccur within areasonable timeperiod, nottoexceed twoyears. This
itemshallbeinterpreted inaccordance withtheguidelines onconsumption ofinputs inthe
production process contained inAnnex IIandtheguidelines inthedetermination ofsubstitution
drawback systems asexport subsidies contained inAnnex III.
(j) Theprovision bygovernments (orspecial institutions controlled bygovernments) ofexport
credit guarantee orinsurance programmes, ofinsurance orguarantee programmes against
increases inthecostofexported products orofexchange riskprogrammes, atpremium rates
which areinadequate tocover thelong-term operating costs andlosses oftheprogrammes.
(k) Thegrantbygovernments (orspecial institutions controlled byand/or acting under theauthority
ofgovernments) ofexport credits atratesbelow those which theyactually havetopayforthe
funds soemployed (orwould havetopayiftheyborrowed oninternational capital markets
inorder toobtain funds ofthesame maturity andother credit terms anddenominated inthe
samecurrency astheexport credit), orthepayment bythemofallorpartofthecostsincurred
byexporters orfinancial institutions inobtaining credits, insofarastheyareusedtosecure
amaterial advantage inthefieldofexport credit terms.
Provided, however, thatifaMember isapartytoaninternational undertaking onofficial export
credits towhich atleast twelve original Members tothisAgreement areparties asof
1January1979(orasuccessorundertakingwhichhasbeenadoptedbythoseoriginalMembers),
orifinpractice aMember applies theinterest ratesprovisions oftherelevant undertaking,
anexport credit practice which isinconformity withthose provisions shallnotbeconsidered
anexport subsidy prohibited bythisAgreement.
(l) AnyotherchargeonthepublicaccountconstitutinganexportsubsidyinthesenseofArticleXVI
ofGATT 1994.
60Paragraph (h)doesnotapply tovalue-added taxsystems andborder-tax adjustment inlieuthereof; theproblem of
theexcessive remission ofvalue-added taxes isexclusively covered byparagraph (g).Page264
ANNEX II
GUIDELINES ONCONSUMPTION OFINPUTS INTHE PRODUCTION PROCESS61
I
1. Indirect taxrebate schemes canallow forexemption, remission ordeferral ofprior-stage
cumulative indirect taxes levied oninputs thatareconsumed intheproduction oftheexported product
(making normal allowance forwaste). Similarly, drawback schemes canallow fortheremission or
drawback ofimport charges levied oninputs thatareconsumed intheproduction oftheexported product
(making normal allowance forwaste).
2. TheIllustrative ListofExport Subsidies inAnnex IofthisAgreement makes reference tothe
term"inputs thatareconsumed intheproduction oftheexported product" inparagraphs (h)and(i).
Pursuant toparagraph (h),indirect taxrebate schemes canconstitute anexport subsidy totheextent
thattheyresult inexemption, remission ordeferral ofprior-stage cumulative indirect taxes inexcess
oftheamount ofsuchtaxesactually levied oninputs thatareconsumed intheproduction oftheexported
product. Pursuant toparagraph (i),drawback schemes canconstitute anexport subsidy totheextent
thattheyresult inaremission ordrawback ofimport charges inexcess ofthose actually levied oninputs
thatareconsumed intheproduction oftheexported product. Bothparagraphs stipulate thatnormal
allowance forwaste mustbemade infindings regarding consumption ofinputs intheproduction of
theexported product. Paragraph (i)alsoprovides forsubstitution, where appropriate.
II
Inexamining whether inputs areconsumed intheproduction oftheexported product, aspart
ofacountervailingdutyinvestigationpursuanttothisAgreement,investigatingauthoritiesshouldproceed
onthefollowing basis:
1. Where itisalleged thatanindirect taxrebate scheme, oradrawback scheme, conveys asubsidy
byreason ofover-rebate orexcess drawback ofindirect taxes orimport charges oninputs consumed
intheproduction oftheexported product, theinvestigating authorities should firstdetermine whether
thegovernment oftheexporting Member hasinplace andapplies asystem orprocedure toconfirm
which inputs areconsumed intheproduction oftheexported product andinwhatamounts. Where
suchasystem orprocedure isdetermined tobeapplied, theinvestigating authorities should thenexamine
thesystem orprocedure toseewhether itisreasonable, effective forthepurpose intended, andbased
ongenerally accepted commercial practices inthecountry ofexport. Theinvestigating authorities
maydeem itnecessary tocarry out,inaccordance withparagraph 6ofArticle 12,certain practical
testsinorder toverify information ortosatisfy themselves thatthesystem orprocedure isbeing
effectively applied.
2. Where thereisnosuchsystem orprocedure, where itisnotreasonable, orwhere itisinstituted
andconsidered reasonable butisfound nottobeapplied ornottobeapplied effectively, afurther
examination bytheexporting Member based ontheactual inputs involved would needtobecarried
outinthecontext ofdetermining whether anexcess payment occurred. Iftheinvestigating authorities
deemed itnecessary, afurther examination would becarried outinaccordance withparagraph 1.
61Inputs consumed intheproduction process areinputs physically incorporated, energy, fuelsandoilusedintheproduction
process andcatalysts which areconsumed inthecourse oftheir usetoobtain theexported product.Page265
3. Investigating authorities should treatinputs asphysically incorporated ifsuchinputs areused
intheproduction process andarephysically present intheproduct exported. TheMembers notethat
aninput neednotbepresent inthefinalproduct inthesame form inwhich itentered theproduction
process.
4. Indeterminingtheamountofaparticularinputthatisconsumedintheproductionoftheexported
product, a"normal allowance forwaste" should betaken intoaccount, andsuchwaste should betreated
asconsumed intheproduction oftheexported product. Theterm"waste" refers tothatportion of
agiven input which doesnotserve anindependent function intheproduction process, isnotconsumed
intheproduction oftheexported product (forreasons suchasinefficiencies) andisnotrecovered,
usedorsoldbythesame manufacturer.
5. Theinvestigating authority 'sdetermination ofwhether theclaimed allowance forwaste is
"normal" should takeintoaccount theproduction process, theaverage experience oftheindustry in
thecountry ofexport, andother technical factors, asappropriate. Theinvestigating authority should
bearinmind thatanimportant question iswhether theauthorities intheexporting Member have
reasonably calculated theamount ofwaste, when suchanamount isintended tobeincluded inthetax
ordutyrebate orremission.Page266
ANNEX III
GUIDELINES INTHE DETERMINATION OFSUBSTITUTION
DRAWBACK SYSTEMS ASEXPORT SUBSIDIES
I
Drawback systems canallow fortherefund ordrawback ofimport charges oninputs which
areconsumed intheproduction process ofanother product andwhere theexport ofthislatter product
contains domestic inputs having thesamequality andcharacteristics asthosesubstituted fortheimported
inputs. Pursuant toparagraph (i)oftheIllustrative ListofExport Subsidies inAnnex I,substitution
drawback systems canconstitute anexport subsidy totheextent thattheyresult inanexcess drawback
oftheimport charges levied initially ontheimported inputs forwhich drawback isbeing claimed.
II
Inexamining anysubstitution drawback system aspartofacountervailing dutyinvestigation
pursuant tothisAgreement, investigating authorities should proceed onthefollowing basis:
1. Paragraph (i)oftheIllustrative Liststipulates thathome market inputs maybesubstituted for
imported inputs intheproduction ofaproduct forexport provided suchinputs areequal inquantity
to,andhavethesamequality andcharacteristics as,theimported inputs being substituted. Theexistence
ofaverification system orprocedure isimportant because itenables thegovernment oftheexporting
Member toensure anddemonstrate thatthequantity ofinputs forwhich drawback isclaimed does
notexceed thequantity ofsimilar products exported, inwhatever form, andthatthereisnotdrawback
ofimport charges inexcess ofthose originally levied ontheimported inputs inquestion.
2. Where itisalleged thatasubstitution drawback system conveys asubsidy, theinvestigating
authorities should firstproceed todetermine whether thegovernment oftheexporting Member has
inplaceandapplies averification system orprocedure. Where suchasystem orprocedure isdetermined
tobeapplied, theinvestigating authorities should thenexamine theverification procedures toseewhether
theyarereasonable, effective forthepurpose intended, andbased ongenerally accepted commercial
practices inthecountry ofexport. Totheextent thattheprocedures aredetermined tomeetthistest
andareeffectively applied, nosubsidy should bepresumed toexist. Itmaybedeemed necessary
bytheinvestigating authorities tocarry out,inaccordance withparagraph 6ofArticle 12,certain
practical testsinorder toverify information ortosatisfy themselves thattheverification procedures
arebeing effectively applied.
3. Where there arenoverification procedures, where theyarenotreasonable, orwhere such
procedures areinstituted andconsidered reasonable butarefound nottobeactually applied ornot
applied effectively, there maybeasubsidy. Insuchcases afurther examination bytheexporting
Member based ontheactual transactions involved would needtobecarried outtodetermine whether
anexcess payment occurred. Iftheinvestigating authorities deemed itnecessary, afurther examination
would becarried outinaccordance withparagraph 2.
4. Theexistence ofasubstitution drawback provision under which exporters areallowed toselect
particular import shipments onwhich drawback isclaimed should notofitselfbeconsidered toconvey
asubsidy.Page267
5. Anexcess drawback ofimport charges inthesense ofparagraph (i)would bedeemed toexist
where governments paidinterest onanymonies refunded under theirdrawback schemes, totheextent
oftheinterest actually paidorpayable.Page268
ANNEX IV
CALCULATION OFTHE TOTAL ADVALOREM SUBSIDIZATION
(PARAGRAPH 1(A)OFARTICLE 6)62
1. Anycalculation oftheamount ofasubsidy forthepurpose ofparagraph 1(a)ofArticle 6shall
bedoneinterms ofthecosttothegranting government.
2. Except asprovided inparagraphs 3through 5,indetermining whether theoverall rateof
subsidization exceeds 5percentofthevalue oftheproduct, thevalue oftheproduct shallbecalculated
asthetotalvalue oftherecipient firm's63salesinthemost recent 12-month period, forwhich sales
dataisavailable, preceding theperiod inwhich thesubsidy isgranted.64
3. Where thesubsidy istiedtotheproduction orsaleofagiven product, thevalue oftheproduct
shallbecalculated asthetotalvalue oftherecipient firm'ssales ofthatproduct inthemost recent
12-month period, forwhich salesdataisavailable, preceding theperiod inwhich thesubsidy isgranted.
4. Where therecipient firmisinastart-up situation, serious prejudice shallbedeemed toexist
iftheoverall rateofsubsidization exceeds 15percentofthetotalfunds invested. Forpurposes of
thisparagraph, astart-up period willnotextend beyond thefirstyearofproduction.65
5. Where therecipient firmislocated inaninflationary economy country, thevalue oftheproduct
shallbecalculated astherecipient firm'stotalsales(orsalesoftherelevant product, ifthesubsidy
istied)inthepreceding calendar yearindexed bytherateofinflation experienced inthe12months
preceding themonth inwhich thesubsidy istobegiven.
6. Indetermining theoverall rateofsubsidization inagiven year, subsidies given under different
programmes andbydifferent authorities intheterritory ofaMember shallbeaggregated.
7. Subsidies granted prior tothedateofentry intoforce oftheWTO Agreement, thebenefits
ofwhich areallocated tofuture production, shallbeincluded intheoverall rateofsubsidization.
8. Subsidies which arenon-actionable under relevant provisions ofthisAgreement shallnotbe
included inthecalculation oftheamount ofasubsidy forthepurpose ofparagraph 1(a)ofArticle 6.
62Anunderstanding among Members should bedeveloped, asnecessary, onmatters which arenotspecified inthisAnnex
orwhich need further clarification forthepurposes ofparagraph 1(a)ofArticle 6.
63Therecipient firmisafirmintheterritory ofthesubsidizing Member.
64Inthecaseoftax-related subsidies thevalue oftheproduct shallbecalculated asthetotalvalue oftherecipient firm's
sales inthefiscal yearinwhich thetax-related measure wasearned.
65Start-up situations include instances where financial commitments forproduct development orconstruction offacilities
tomanufacture products benefiting from thesubsidy have been made, even though production hasnotbegun.Page269
ANNEX V
PROCEDURES FOR DEVELOPING INFORMATION CONCERNING SERIOUS PREJUDICE
1. Every Member shallcooperate inthedevelopment ofevidence tobeexamined byapanel in
procedures under paragraphs 4through 6ofArticle 7.Theparties tothedispute andanythird-country
Member concerned shallnotify totheDSB, assoonastheprovisions ofparagraph 4ofArticle 7have
beeninvoked, theorganization responsible foradministration ofthisprovision within itsterritory and
theprocedures tobeusedtocomply withrequests forinformation.
2. Incases where matters arereferred totheDSBunder paragraph 4ofArticle 7,theDSBshall,
uponrequest, initiate theprocedure toobtain suchinformation fromthegovernment ofthesubsidizing
Member asnecessary toestablish theexistence andamount ofsubsidization, thevalue oftotalsales
ofthesubsidized firms, aswellasinformation necessary toanalyze theadverse effects caused bythe
subsidized product.66Thisprocess mayinclude, where appropriate, presentation ofquestions tothe
government ofthesubsidizing Member andofthecomplaining Member tocollect information, aswell
astoclarify andobtain elaboration ofinformation available totheparties toadispute through the
notification procedures setforth inPartVII.67
3. Inthecaseofeffects inthird-country markets, aparty toadispute maycollect information,
including through theuseofquestions tothegovernment ofthethird-country Member, necessary to
analyse adverse effects, which isnototherwise reasonably available from thecomplaining Member
orthesubsidizing Member. Thisrequirement should beadministered insuchawayasnottoimpose
anunreasonable burden onthethird-country Member. Inparticular, suchaMember isnotexpected
tomake amarket orprice analysis specially forthatpurpose. Theinformation tobesupplied isthat
which isalready available orcanbereadily obtained bythisMember (e.g.mostrecent statistics which
havealreadybeengatheredbyrelevantstatisticalservicesbutwhichhavenotyetbeenpublished,customs
dataconcerning imports anddeclared values oftheproducts concerned, etc.). However, ifaparty
toadispute undertakes adetailed market analysis atitsownexpense, thetaskoftheperson orfirm
conducting suchananalysis shallbefacilitated bytheauthorities ofthethird-country Member and
suchaperson orfirmshall begiven access toallinformation which isnotnormally maintained
confidential bythegovernment.
4. The DSB shall designate arepresentative toserve thefunction offacilitating the
information-gathering process. Thesolepurpose oftherepresentative shallbetoensure thetimely
development oftheinformation necessary tofacilitate expeditious subsequent multilateral review of
thedispute. Inparticular, therepresentative maysuggest ways tomost efficiently solicit necessary
information aswellasencourage thecooperation oftheparties.
5. Theinformation-gathering process outlined inparagraphs 2through 4shallbecompleted within
60daysofthedateonwhich thematter hasbeenreferred totheDSBunder paragraph 4ofArticle 7.
Theinformation obtained during thisprocess shallbesubmitted tothepanel established bytheDSB
inaccordancewiththeprovisionsofPartX.Thisinformationshouldinclude,interalia,dataconcerning
theamount ofthesubsidy inquestion (and, where appropriate, thevalue oftotalsalesofthesubsidized
firms), prices ofthesubsidized product, prices ofthenon-subsidized product, prices ofother suppliers
tothemarket, changes inthesupply ofthesubsidized product tothemarket inquestion andchanges
66Incases where theexistence ofserious prejudice hastobedemonstrated.
67Theinformation-gathering process bytheDSBshalltakeintoaccount theneedtoprotect information which isbynature
confidential orwhich isprovided onaconfidential basis byanyMember involved inthisprocess.Page270
inmarket shares. Itshould alsoinclude rebuttal evidence, aswellassuchsupplemental information
asthepanel deems relevant inthecourse ofreaching itsconclusions.
6. Ifthesubsidizing and/or third-country Member failtocooperate intheinformation-gathering
process, thecomplaining Member willpresent itscaseofserious prejudice, based onevidence available
toit,together withfactsandcircumstances ofthenon-cooperation ofthesubsidizing and/or third-country
Member. Where information isunavailable duetonon-cooperation bythesubsidizing and/or
third-country Member, thepanel maycomplete therecord asnecessary relying onbestinformation
otherwise available.
7. Inmaking itsdetermination, thepanel should draw adverse inferences frominstances ofnon-
cooperation byanyparty involved intheinformation-gathering process.
8. Inmaking adetermination touseeither bestinformation available oradverse inferences, the
panel shall consider theadvice oftheDSB representative nominated under paragraph 4astothe
reasonableness ofanyrequests forinformation andtheefforts made byparties tocomply withthese
requests inacooperative andtimely manner.
9. Nothing intheinformation-gathering process shalllimittheability ofthepanel toseeksuch
additional information itdeems essential toaproper resolution tothedispute, andwhich wasnot
adequately sought ordeveloped during thatprocess. However, ordinarily thepanel should notrequest
additional information tocomplete therecord where theinformation would support aparticular party's
position andtheabsence ofthatinformation intherecord istheresult ofunreasonable non-cooperation
bythatparty intheinformation-gathering process.Page271
ANNEX VI
PROCEDURES FOR ON-THE-SPOT INVESTIGATIONS PURSUANT TO
PARAGRAPH 6OFARTICLE 12
1. Upon initiation ofaninvestigation, theauthorities oftheexporting Member andthefirms known
tobeconcerned should beinformed oftheintention tocarry outon-the-spot investigations.
2. Ifinexceptional circumstances itisintended toinclude non-governmental experts inthe
investigating team, thefirms andtheauthorities oftheexporting Member should besoinformed. Such
non-governmental experts should besubject toeffective sanctions forbreach ofconfidentiality
requirements.
3. Itshouldbestandardpracticetoobtainexplicitagreementofthefirmsconcernedintheexporting
Member before thevisitisfinally scheduled.
4. Assoonastheagreement ofthefirms concerned hasbeenobtained, theinvestigating authorities
should notify theauthorities oftheexporting Member ofthenames andaddresses ofthefirms tobe
visited andthedates agreed.
5. Sufficient advance notice should begiven tothefirms inquestion before thevisitismade.
6. Visits toexplain thequestionnaire should onlybemade attherequest ofanexporting firm.
Incaseofsucharequest theinvestigating authorities mayplace themselves atthedisposal ofthefirm;
suchavisitmayonlybemade if(a)theauthorities oftheimporting Member notify therepresentatives
ofthegovernment oftheMember inquestion and(b)thelatter donotobject tothevisit.
7. Asthemain purpose oftheon-the-spot investigation istoverify information provided orto
obtain further details, itshould becarried outaftertheresponse tothequestionnaire hasbeenreceived
unless thefirmagrees tothecontrary andthegovernment oftheexporting Member isinformed by
theinvestigating authorities oftheanticipated visitanddoesnotobject toit;further, itshould bestandard
practice prior tothevisittoadvise thefirms concerned ofthegeneral nature oftheinformation tobe
verified andofanyfurther information which needs tobeprovided, though thisshould notpreclude
requests tobemade onthespotforfurther details tobeprovided inthelightofinformation obtained.
8. Enquiries orquestions putbytheauthorities orfirms oftheexporting Members andessential
toasuccessful on-the-spot investigation should, whenever possible, beanswered before thevisitis
made.Page272
ANNEX VII
DEVELOPING COUNTRY MEMBERS REFERRED TO
INPARAGRAPH 2(A)OFARTICLE 27
Thedeveloping country Members notsubject totheprovisions ofparagraph 1(a)ofArticle 3
under theterms ofparagraph 2(a)ofArticle 27are:
(a) Least-developed countries designated assuchbytheUnited Nations which areMembers
oftheWTO.
(b) Each ofthefollowing developing countries which areMembers oftheWTO shallbe
subject totheprovisions which areapplicable toother developing country Members
according toparagraph 2(b) ofArticle 27when GNP percapita hasreached
$1,000 perannum68:Bolivia, Cameroon, Congo, Côted'Ivoire, Dominican Republic,
Egypt, Ghana, Guatemala, Guyana, India, Indonesia, Kenya, Morocco, Nicaragua,
Nigeria, Pakistan, Philippines, Senegal, SriLanka andZimbabwe.
68Theinclusion ofdeveloping country Members inthelistinparagraph (b)isbased onthemost recent datafrom the
World Bank onGNP percapita.