INTERNATIONAL TRADE LAW

PSDA Submission

Question:
Illustrate the relevance of imposition of countervailing measures under the provisions of the
Agreement on Anti-dumping and Agreement on Subsides.

Shagun Bhadana
BBA LLB, VIII Semester, 02816503515
 Submitted by Shagun Bhadana,
BBA LLB, VIII Semester, 02816503515

Introduction:
The GATT 1984 sets forth a number of basic principles in the trade between members of the WTO,
including the MFN Binding tariffs, and applying them equally to all trading partners are key to the
smooth flow of trade in goods. The WTO agreements uphold the principles, but they also allow
exceptions in some circumstances. Two of these issues are:
 Actions taken against dumping (selling at an unfairly low price).
 Subsidies and special “countervailing” duties to offset the subsidies.

Background:

 GATT Treatment of Subsidies (Art.VI and XVI); controversial and the disciplines weak.
 Tokyo Round: Subsidies Code agreed upon; important issues rose.
 Uruguay Round: Agreement on Subsidies and Countervailing Measures (ASCM/SCM
Agreement)
 Definition of ‘subsidy’. Containing three basic elements: (i) a financial contribution
(ii) by a government or any public body within the territory of a Member (iii) which
confers a benefit. All three of these elements must be satisfied in order for a subsidy
to exist.
 Detailed standard for the Conduct of Countervailing Duty.
 Workable multilateral and unilateral track/disciplines.
 Rules of subsidization. Actionable subsidies, material injury and serious prejudice.
 Part I provides for the concept of “specificity”.
 GATT (Art.6) allows countries to take action against dumping. The Anti-Dumping Agreement
clarifies and expands Art.6, and the two operate together. They allow countries to act in a way that
would normally break the GATT principles of binding a tariff and not discriminating between
trading partners.

Countervailing Measures and Relevance:

Part V of ASCM establishes requirements that must be fulfilled before a Member may apply a
countervailing measure against subsidized imports. Art10-23 of the ASCM largely mirror
procedural and material injury provisions of the ADA.

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 Submitted by Shagun Bhadana,
BBA LLB, VIII Semester, 02816503515

Substantive rules A Member may not impose a CM unless it determines that there are subsidized
imports, injury to a domestic industry, and a causal link between the subsidized imports and the
injury.
Procedural rules: Regarding the initiation and conduct of countervailing investigations, the
imposition of preliminary and final measures, the use of undertakings, and the duration of
measures. A key objective of these rules is to ensure transparency, that all interested parties have
a full opportunity to defend their interests, and that investigating authorities adequately explain the
bases for their determinations.

Applicability:

A few innovations in CM are:

 Standing.
 Preliminary investigation.
 Undertakings.
 Sunset
 Judicial review.

Position of under-developed and least-developed countries:

Part X, Article 27 ASCM grants significant special and differential treatment to developing
country members in various ways. Although the WTO Agreements are an improvement over pre-
Uruguay regulations in terms of predictability and transparency, many problems remain such as:

 The Injury Concept

 Cumulation
 Duration and Discretion
 Non-enterprise specific approach
 Cost and constructed value determination
 Standard of review
 Ambiguities

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 Submitted by Shagun Bhadana,
BBA LLB, VIII Semester, 02816503515

 Special and differential treatments

 Access

In addition, some of the above-mentioned problems resulting from the ADA are of relevance for
the SCM as well. They concern the duration of the procedures, the longevity of imposed orders,
tightened review procedures and the clarification of certain procedures. Despite concrete forms of
special and differential treatment for developing countries, some of these provisions need to be
expanded. Among the most frequently requested changes are the raising of the de minimis
thresholds of Articles 11 (9) and 27 (11) and a limitation of countervailing duty level. Antidumping
and countervailing procedures continue to be abused as a protectionist tool.

Case Law:
European Communities-ADD on Import of Cotton-type Bedlinen from India (1998)

Complaint by India-Requests consultations with EC in respect of Council regulation (EC) no.

239897/97 (November’97).
India asserted that EC initiated anti-dumping proceedings against imports of cotton-type bedlinen
from India by publishing a notice of initiation (September’96)
Provisional ADD imposed by EC (June’97)
India contended the EC findings to be inconsistent of WTO Law.
Panel was established in October’99.
January’00; Concluded: The EC did not act inconsistently with its obligations u.art
2.2,2.2.2,3.1,3.4,3.5,5.3,5.4, and 12.2.2 of the ADA.
Australia- Subsidies provided to producers and exporters of automotive leather
(WT/DS126/RW)

June’99, the DSB adopted the report and recommendations of the panel in the dispute.
Panel found that payments under a grant contract between the government of Australia and Howe
& AHL were subsidies within the meaning of Art1 of the ASCM contingent upon export
performance within the meaning of Art3.1(a).
Panel accordingly recommended, as per art7.7 of ASCM, that Australia withdraw those subsidies
without delay (90 days).