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Countervailing Reviews: Countering Subsidised Exports or Countering Subsidy Programmes?

Trade Briefs

Countervailing Reviews: Countering Subsidised Exports or Countering Subsidy Programmes?

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Three remedies are available to a domestic industry injured by international trade, two of which deal with unfair trade. The first, and most commonly used, instrument is anti-dumping, which is used against injurious dumping. The second instrument, and the focus of this Trade Brief, is countervailing. Countervailing measures are used to counter the injurious effect of subsidised exports.

Following an investigation the International Trade Administration Commission (ITAC) in 2002 imposed countervailing duties on wire, rope and cable imported from India. On 19 January 2007 ITAC initiated an interim review of the countervailing duty against India, following acceptance of a properly documented application by an Indian exporter. The exporter alleged that one of the two subsidy programmes which had been countervailed in 2002 no longer existed and that the benefit of the other programme, the Duty Entitlement Passbook Scheme DEPB), had been reduced from 10% to 3%. It alleged further that as the total benefit received by it amounted to less than 3%, the countervailing duties against it had to be terminated as it was located in a country listed in Annexure VII(b) of the World Trade Organisation (WTO) Agreement on Subsidies and Countervailing measures (SCM Agreement).

In response the domestic industry submitted evidence that the decreased benefit under the DEPB was being increased and that there were now several other subsidy programmes available to the exporter. ITAC found that the scope of an interim review was limited to the specific programmes that had previously been countervailed and that it could not take into consideration any other programmes. In addition, it found that as the higher rates on the DEPB had not been promulgated or in effect during the period of review, such higher rate could also not be taken into consideration.

ITAC’s approach raises two key issues to be considered in this Trade Brief: first, what do ‘changed circumstances’ mean and should future events play a role in the determination of changed circumstances, and, second, should an interim review be in relation to a specific subsidy programme or in relation to subsidised exports in general?

Readers are encouraged to quote and reproduce this material for educational, non-profit purposes, provided the source is acknowledged. All views and opinions expressed remain solely those of the authors and do not purport to reflect the views of tralac.


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