A subsidy is defined as any assistance by or on behalf of government which bestows a benefit on the recipient thereof, whether in the form of the payment of a subsidy or the exemption of payments to be made by the company or industry in question. Subsidised exports are deemed to be unfair and may be countered by the imposition of countervailing duties in the importing country if it can be shown that the subsidy is specific, that is, restricted to specific enterprises or industries, and that such exports cause or threaten material injury to the industry producing the like product in the importing country.

The relevant South African legislation is contained in the International Trade Administration Act, 71 of 2002 (ITA Act), and the Countervailing Regulations (CVR) that were promulgated in April 2005. Whereas the ITA Act makes only brief reference to subsidies and countervailing measures, the CVR clearly set out the substantive and procedural issues relating to countervailing action. Although the CVR have been in force for less than five years, ITAC on 16 January 2009 published extensive proposed amendments to the CVR. Including an extension, parties have been granted the opportunity to comments on the proposed amendments until 2 March 2009.

This Working Paper considers the proposed amendments to the CVR, whether the amendments are in order and whether all amendments that should be made have been included in the proposed amendments. It also comments on the effect of the proposed amendments by investigating whether such amendments will increase the accuracy of findings, provide for a more transparent process and ensure WTO compatibility of the CVR. The Working Paper then draws the conclusion that although some of the proposed amendments are in order, a number of the proposed amendments will decrease the effectiveness of the instrument and deny the SACU industry protection against unfair international trade. It also indicates that there are a number of areas in which amendments should have been made to bring the CVR into conformity with the Subsidies Agreement. The Working Paper concludes by proposing that ITAC issue a new proposal taking into consideration all comments and that the second proposal be discussed in the National Economic Development and Labour Council (NEDLAC).

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