Subsidies II: Countervailing Duties, and India's Cases

In one line

Where a subsidised import injures a domestic industry, the importing member may impose a duty offsetting the subsidy, after an investigation as detailed as an anti-dumping one.

In exam wording: Part V of the Agreement on Subsidies and Countervailing Measures, Articles 10 to 23, governs the imposition of countervailing duties, requiring a countervailable subsidy, material injury and a causal link, with the duty capped at the amount of the subsidy found.

The three findings, and how they differ from anti-dumping

A countervailable subsidy, that is a specific subsidy within Articles 1 and 2. Material injury or threat of it to the domestic industry, or material retardation of an industry's establishment. And a causal link with the same non-attribution discipline.

The difference from anti-dumping is what is being answered. Dumping is private pricing; subsidisation is a government act. That difference produces three consequences: the exporting government must be invited to consult before initiation, under Article 13; the remedy for a prohibited subsidy is withdrawal rather than a duty, under Article 4; and the same conduct may be actionable multilaterally under Article 5 as well as answerable by a duty, which is not true of dumping.

The procedure, Articles 11 to 22

Article 11 initiation, on a written application by or on behalf of the domestic industry with evidence of subsidy, injury and causation, and the same standing thresholds as anti-dumping: more than fifty per cent of those expressing a view and at least twenty five per cent of total production.

Article 11.9 termination: where the subsidy is de minimis, that is less than one per cent ad valorem, or where the volume or injury is negligible. Article 27.10 raises the de minimis for developing members to two per cent, and to three per cent for those in Annex VII and for members whose economies are in transition.

Article 12 due process, mirroring Article 6 of the Anti-Dumping Agreement: evidence, confidentiality with non-confidential summaries, verification, and disclosure of the essential facts.

Article 13 requires consultations with the exporting member before initiation and throughout, with the aim of a mutually agreed solution.

Article 15 injury, with the same structure as Article 3 of the Anti-Dumping Agreement: positive evidence, objective examination of volume, price effects and impact, the mandatory factors in Article 15.4, and the non-attribution rule in Article 15.5.

Article 19.2 counsels that the duty be less than the total amount of the subsidy if that would be adequate to remove the injury. Article 19.3 requires that the duty be levied non-discriminatorily on all subsidised sources, and it is the provision that condemns a double remedy. Article 19.4 caps the duty at the amount of the subsidy found to exist.