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Anti-subsidy measures

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Anti-subsidy measures

This regulation transposes the provisions of the Agreement on Subsidies* and Countervailing Measures concluded within the framework of the World Trade Organization (WTO) into European Union (EU) legislation with a view to ensuring appropriate and transparent application of the anti-subsidy rules.

ACT

Council Regulation (EC) No 597/2009 of 11 June 2009 on protection against subsidised imports from countries not members of the European Community (Codified version).

SUMMARY

This regulation lays down the EU's rules on the imposition of countervailing duties*. Their purpose is to offset any subsidy granted, directly or indirectly, for the manufacture, production, export or transport of any product originating in a non-EU country whose release on the EU market causes injury to competitors.

This regulation works alongside Regulation (EC) No 1225/2009 (‘the basic Anti-Dumping* Regulation’). The provisions for the determination of injury, the definition of EU industry, the initiation of the proceeding, the investigation, the provisional and definitive measures and the termination of the proceeding are, except for some particularities, very similar in both regulations.

Definition of a subsidy

A subsidy is deemed to exist, firstly, if there is a financial contribution by a government (including public bodies), in the country of origin or export, or if there is any form of income or price support within the meaning of Article XVI of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and, secondly, if a benefit is thereby conferred.

Countervailable subsidies

Subsidies are subject to countervailing measures only if they are specific to an enterprise or industry or to a group of enterprises or industries. They are specific in cases where the granting authority explicitly limits access to a subsidy to certain enterprises. In some cases, subsidies which appear to be non-specific, may in practice be specific, and therefore, countervailable.

Calculation of the amount of countervailable subsidies

This amount is calculated in terms of the benefit conferred on the recipient during the investigation period. This regulation sets the following rules for calculating the benefit to the recipient:

government provision of equity capital is considered to confer a benefit if the investment can be regarded as inconsistent with the usual investment practice of private investors in the country of origin or export;

a loan by a government is considered to confer a benefit if there is a difference between the amount that the firm receiving the loan pays on the government loan and the amount that the firm would pay for a comparable commercial loan which the firm could actually obtain on the market;

a loan guarantee by a government is considered to confer a benefit if there is a difference between the amount that the firm receiving the guarantee pays on the loan guaranteed by the government and the amount that the firm would pay for a comparable commercial loan without the government guarantee;

the provision or purchase of goods by a government is considered to confer a benefit if the provision is made for less than adequate remuneration, or the purchase is made for more than adequate remuneration, in relation to prevailing market conditions in the country in question.

The amount of the countervailable subsidy is determined per unit of the subsidised product exported to the EU. Some elements may be deducted from the subsidy, such as any fees or costs incurred in order to qualify for the subsidy, or export taxes, duties or charges levied on the export of the product to the EU intended to offset the subsidy. Where a subsidy is not granted by reference to the quantities manufactured, produced, exported or transported, the amount of the subsidy is determined by spreading the value of the total subsidy over the level of production, sales or exports of the product during the investigation period.

Determination of injury

The determination of injury must be based on positive evidence and involve an objective examination of the following elements:

the volume of the subsidised imports;

the effect of the subsidised imports on prices of like products on the EU market;

the consequent impact of those imports on the EU industry concerned.

Initiation of proceedings

Proceedings are initiated upon a written complaint by any natural or legal person, or any association not having legal personality, acting on behalf of an EU industry. Where, in the absence of any complaint, an EU country is in possession of sufficient evidence of subsidisation and of resultant injury to the EU industry, it can immediately communicate such evidence to the Commission. The complaint must include evidence of the existence of countervailable subsidies (including, if possible, their amount), injury and a causal link between these two elements.

The complaint is considered to have been made by or on behalf of the EU industry if it is supported by those EU producers whose collective output constitutes more than 50 % of the total EU production of the like product produced by that portion of the EU industry expressing either support for or opposition to the complaint. However no investigation can be initiated where the portion of EU industry supporting the complaint accounts for less than 25 % of total production of the like product in the EU.

Provisional measures

Provisional duties may be imposed if:

proceedings have been initiated, notice has been given to that effect, and interested parties have had adequate opportunity to submit information and make comments;

a provisional affirmative determination has been made that the imported product benefits from countervailable subsidies, resulting in injury to the EU industry;

it is in the EU interest to intervene to prevent such injury.

Imposition of definitive countervailing duties

Where the facts show the existence of countervailable subsidies and resultant injury, and the EU interest calls for intervention, a definitive countervailing duty is imposed by the Commission. The amount of the duty must not exceed the amount of the countervailable subsidies established and it should be less if it would be adequate to remove the injury to the EU industry.

KEY TERMS

Anti-dumping: an action taken to prevent a company from exporting a product at prices lower than its normal value on its home market.

Anti-subsidy: an action taken (in the form of a countervailing duty) to compensate for the fact that a product's manufacture has been financially assisted by a subsidy from a public body.

Countervailing duty: subsidised producers have an unfair advantage over their competitors. A countervailing duty is an import tax placed on goods to compensate for the fact that their production has been subsidised and to raise their price to the level it would be if there had been no subsidy.

REFERENCES

Act

Entry into force

Deadline for transposition in the Member States

Official Journal

Regulation (EC) No 597/2009

7.8.2009

-

OJ L 188 of 18.7.2009, pp.93-126.

RELATED DOCUMENTS

Proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EC) No 1225/2009 on protection against dumped imports from countries not members of the European Community and Council Regulation (EC) No 597/2009 on protection against subsidised imports from countries not members of the European Community (COM(2013)192 final of 10.4.2013).

The Commission proposes the following changes to the current anti-dumping and anti-subsidy rules:

interested parties would be informed 2 weeks ahead of the intention to impose provisional measures. When it is decided not to impose provisional measures but to continue the investigation, interested parties would be informed of the intention not to impose the measures 2 weeks before the ultimate date for imposition.

to ensure effective protection of EU producers against threats of retaliation, such threats would be considered to constitute special circumstances that warrant the ex-officio opening of an investigation by the Commission.

to dispense with the‘lesser duty rule’in cases of circumvention, or where structural raw material distortions have been found to exist, and subsidisation.

duties collected during the investigation should be reimbursed to importers, where measures are not extended after the conclusion of an expiry review investigation.

Communication from the Commission to the Council and the European Parliament on Modernisation of Trade Defence Instruments - Adapting trade defence instruments to the current needs of the European economy. (COM(2013)191 final of 10.4.2013).

The Commission describes the evolving economic environment and explains why it is proposing changes be made to the rules governing EU trade defence instruments (TDIs). It considers that the EU's TDIs should be improved in a pragmatic and balanced way for the benefit of producers, importers and users.

Last updated: 10.04.2014

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