AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES
Article 1
Definition of a Subsidy
1.1 For
the purpose of this Agreement, a subsidy shall be deemed to exist if:
(a)(1) there is a financial
contribution by a government or any public body within the territory of
a Member (referred to in this Agreement as "government"), i.e. where:
(i) a government practice involves a
direct transfer of funds (e.g. grants, loans,
and equity infusion), potential direct transfers of funds or liabilities
(e.g. loan guarantees);
(ii) government revenue that is
otherwise due is foregone or not collected (e.g. fiscal incentives such
as tax credits) [1];
(iii) a government
provides goods or services
other than general infrastructure, or purchases goods;
(iv) a government makes
payments to a funding mechanism, or entrusts or directs a private body to carry
out one or more of the type of functions illustrated in (i) to (iii) above
which would normally be vested in the government and the practice, in no real
sense, differs from practices normally followed by governments;
and
(b) a benefit is thereby
conferred.
PART II: PROHIBITED SUBSIDIES
Article 3
Prohibition
3.1 Except
as provided in the Agreement on Agriculture, the following subsidies, within
the meaning of Article 1, shall be prohibited:
(a) subsidies
contingent, in law or in fact, whether solely or as one of several other
conditions, upon export performance, including those illustrated
in Annex I
(b) subsidies
contingent, whether solely or as one of several other conditions, upon the use
of domestic over imported goods.
3.2 A
Member shall neither grant nor maintain subsidies referred to in
paragraph 1.
PART III: ACTIONABLE SUBSIDIES
Article 5
Adverse Effects
No
Member should cause, through the use of any subsidy referred to in paragraphs 1
and 2 of Article 1, adverse effects to the interests of other Members,
i.e.:
(a) injury to the
domestic industry of another Member;
(b) nullification or
impairment of benefits accruing directly or indirectly to other Members under
GATT 1994 in particular the benefits of concessions bound under
Article II of GATT 1994;
(c) serious prejudice
to the interests of another Member.
This Article does not apply to subsidies
maintained on agricultural products as provided in Article 13 of the Agreement
on Agriculture.
PART V: COUNTERVAILING MEASURES
Article 10
Application of Article VI of
GATT 1994
Members
shall take all necessary steps to ensure that the imposition of a
countervailing duty on any product of the territory of any Member imported into
the territory of another Member is in accordance with the provisions of
Article VI of GATT 1994 and the terms of this Agreement. Countervailing duties may only be imposed
pursuant to investigations initiated and
conducted in accordance with the provisions of this Agreement and the Agreement
on Agriculture.
Article 19
Imposition and Collection of
Countervailing Duties
19.1 If, after reasonable efforts
have been made to complete consultations, a Member makes a final determination
of the existence and amount of the subsidy and that, through the effects of the
subsidy, the subsidized imports are causing injury, it may impose a
countervailing duty in accordance with the provisions of this Article unless
the subsidy or subsidies are withdrawn.
Article 21
Duration and Review of Countervailing
Duties and Undertakings
21.1 A
countervailing duty shall
remain in force only as long as and to the extent necessary to counteract
subsidization which is causing injury.
Article 23
Judicial Review
Each
Member whose national legislation contains provisions on countervailing duty measures shall maintain judicial,
arbitral or administrative tribunals or procedures for the purpose, inter alia, of the prompt review of
administrative actions relating to final determinations and reviews of determinations within the meaning of Article
21. Such tribunals or procedures shall
be independent of the authorities responsible for the determination or review
in question, and shall provide all interested parties who participated in the
administrative proceeding and are directly and individually affected by the
administrative actions with access to review.
ANNEX I
ILLUSTRATIVE LIST
OF EXPORT SUBSIDIES
(a) The provision by
governments of direct subsidies to a firm or an industry contingent upon export
performance.
(b) Currency retention
schemes or any similar practices which involve a bonus on exports.
(c) Internal transport
and freight charges on export shipments, provided or mandated by governments,
on terms more favourable than for domestic shipments.
(d) The provision by governments
or their agencies either directly or indirectly through government‑mandated
schemes, of imported or domestic products or services for use in the production
of exported goods, on terms or conditions more favourable than for provision of
like or directly competitive products or
services for use in the production of goods for domestic consumption, if (in
the case of products) such terms or conditions are more favourable than those
commercially available on world markets to their exporters.
(e) The full or
partial exemption remission, or deferral specifically related to exports, of
direct taxes[2] or social welfare charges paid or payable by industrial or
commercial enterprises.
(f) The allowance of
special deductions directly related to exports or export performance, over and
above those granted in respect to production for domestic consumption, in the
calculation of the base on which direct taxes are charged.
(g) The exemption or
remission, in respect of the production and distribution of exported products,
of indirect taxes58 in excess of those levied in respect of the production and
distribution of like products when sold for domestic consumption.
(h) The
exemption, remission or deferral of prior‑stage cumulative indirect
taxes58 on goods or services used in the production of exported products in
excess of the exemption, remission or deferral of like prior‑stage
cumulative indirect taxes on goods or services used in the production of like products when sold for
domestic consumption; provided, however,
that prior‑stage cumulative indirect taxes may be exempted, remitted or
deferred on exported products even when not exempted, remitted or deferred on
like products when sold for domestic consumption, if the prior‑stage
cumulative indirect taxes are levied on inputs that are consumed in the
production of the exported product
(making normal allowance for waste).
This item shall be interpreted in accordance with the guidelines on
consumption of inputs in the production process contained in Annex II.
[1] In
accordance with the provisions of Article XVI of GATT 1994 (Note to Article
XVI) and the provisions of Annexes I through III of this Agreement, the
exemption of an exported product from duties or taxes borne by the like product
when destined for domestic consumption, or the remission of such duties or
taxes in amounts not in excess of those which have accrued, shall not be deemed
to be a subsidy.
[2]
For the purpose of this Agreement:
The
term "direct taxes" shall mean taxes on wages, profits, interests,
rents, royalties, and all other forms of income, and taxes on the ownership of
real property;
The
term "import charges" shall mean tariffs, duties, and other fiscal
charges not elsewhere enumerated in this note that are levied on imports;
The
term "indirect taxes" shall mean sales, excise, turnover, value
added, franchise, stamp, transfer, inventory and equipment taxes, border taxes
and all taxes other than direct taxes and import charges;
"Prior‑stage"
indirect taxes are those levied on goods or services used directly or
indirectly in making the product;
"Cumulative"
indirect taxes are multi‑staged taxes levied where there is no mechanism
for subsequent crediting of the tax if the goods or services subject to tax at
one stage of production are used in a succeeding stage of production;
"Remission"
of taxes includes the refund or rebate of taxes;
"Remission
or drawback" includes the full or partial exemption or deferral of import
charges.