Introduction

Under the WTO Agreement on Subsidies and Countervailing Measures (ASCM), Member countries are allowed to protect their domestic industry from injurious effect of subsided imports. As Pakistan being the member of WTO, the Government of Pakistan promulgated the Countervailing Duties Ordinance, 2001 (CVD Ordinance) in accordance with ASCM. The CVD Ordinance authorises the National Tariff Commission (the “Commission”) to investigate and impose countervailing duties on products if it is determined that these products are being subsidized and these subsidized imports have caused or are causing material injury or threaten to cause material injury to the domestic industry producing like product.

Imposition of Countervailing Duty

ASCM as a well as the CVD Ordinance stipulates three essential conditions for imposition of countervailing measures:

i)           Subsidy and subsidized imports;

ii)          Material injury or threat of material injury to the domestic industry; and

iii)         Causal relationship between subsidized imports and material injury. 

Subsidy

Subsidy is a financial Contribution by the Government that confers a benefit on a recipient. 

Financial Contribution

Financial Contribution may include:

·         Direct transfer of funds,

·         Taxes otherwise due are exempted or not collected,

·         Goods and services provided at less than market price

·         Purchases of goods at a price more than market price

Determination of Material Injury

Subsidy is actionable if it causes or threatens to cause injury to the domestic industry. It is also actionable if it causes material retardation of the establishment of the industry.

Material injury is determined on the basis of an objective examination of all relevant factors, which may include but not limited to:

·         the volume of subsidized imports;

·         effect of subsidized imports on prices in domestic market for like product; and

·        consequent impact of subsidized imports on domestic producers of such product. 

Application and Imposition of Countervailing Duty

A written application for imposition of countervailing duty may be filed with the Commission by or behalf of the domestic industry. An application shall include evidence of subsidized imports and injury to the domestic industry. To facilitate the applicants, the Commission has devised questionnaires for submission of information/data. The Commission, upon investigation to determine whether the three essential conditions for imposition of countervailing duty are present, may impose countervailing duty.

Transparency

For each investigation that the Commission conducts, it establishes and maintains a public file which is open for inspection throughout the investigation to all interested parties for review and copying at the offices of the Commission. The documents placed in the public file includes, non-confidential version of the application, responses to the questionnaires, replies, notices, the

Commission’s determinations and other documents deemed appropriate for disclosure to interested parties.

Sources of Information

The information/data for the purposes of filling up the applicant’s questionnaire may inter alia be obtained from:

·         Domestic industry (the applicant) 

·         Government of importing country (Customs, Statistics departments)

·         Government of exporting country

·         Importers

·         Industrial users

·         Exporters

·         Foreign producers

·         Press and publications

·         Consulting firms

·         Internet etc. 

Time Period for Processing of a Countervailing Application

A countervailing duty application is processed within a period of 12 months. However, provisional countervailing duty can be imposed after 60 days of initiation of the investigation.   

Duration of Countervailing Duty

Definitive countervailing duty is imposed for a period, which may extend up to five years.

Appeal Against Commission’s Decision

If any of the interested party is not satisfied with the Commission’s final determination and the decision of imposition of definitive countervailing measure, it may appeal before the Appellate Tribunal, set up under the Antidumping Duties Ordinance, 2000. Alternatively, any affected exporting government may approach the WTO Dispute Settlement Body (DSB) in Geneva and lodge a complaint against the Commission’s decision. The DSB may then set up a panel to adjudicate.

Further Information

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The text of the Countervailing Duties Ordinance, 2001, Countervailing Duties Rule, 2002, questionnaire to file an application and other related material is available on the Commission’s website.  The text of the Subsidies and Countervailing Measures Agreement may be accessed at WTO’s   website: www.wto.org