1What is a subsidy?
subsidy is a financial Contribution by the Government that confers a benefit on recipient. This places the recipient in a more beneficial position than its competitors in the international market.
2What is Financial Contribution?
Financial Contribution includes:
- 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
- Any other form of income or price support.
3What is the effect of subsidy?
The subsidy in the country of exports enables the producers to sell their products at price lower than the price of its competitors. This in the country of imports puts the indigenous producer at a comparative disadvantage, thereby causing injury to the domestic industry.
4What are the remedies for country getting subsidised imports?
There are two types of remedies available for importing countries:
- Challenge the subsidy in the WTO dispute settlement mechanism.
- Impose a countervailing duty on the exporters who get benefit of subsidy.
5Is every subsidy countervailable?
In WTO system every subsidy is not countervailable rather a subsidy, which is specific in nature can be subjected to a countervailing measure.
6What are specific subsidies?
- The specific subsidy is the one whose benefit is limited to:
- Certain enterprises
- Certain industries and
- Certain regions
- Prohibited subsides are deemed specific
7What is prohibited subsidy?
Prohibited subsidies are:
- Contingent upon export or export performance.
- Contingent upon preferred use of domestic inputs as compared to imported inputs.
8What is the test of specificity?
- The law according to which subsidy is being paid limits the benefit of subsidy (degree specificity)and
- Or practice limits the benefit of subsidy. (defacto specificity).
9What are the ways to counter subsidization?
Subsidization can be returned by way of countervailing duty or price undertaking.
10How an action for imposition of countervailing duty be started?
The investigation may be initiated for a countervailing duty upon a request made by the domestic industry producing the “like product”.
11What are the contents of countervailing duty application?
- The National Tariff Commission “Investigating Agency” has designed forms for application of countervailing duty to facilitate the domestic manufacturers in preparation of countervailing duty application.
- The Countervailing Duty Application must include among other things the volume and value of domestic production, volume and value of subsidized and other imports, and effect of subsidized imports on domestic production.
12Where the application for subsidized imports can be made?
The application for initiation of investigation against subsidized imports can be made to National Tariff Commission. The application form is available on NTC website: (www.ntc.gov.pk)
13Who can apply for a countervailing duty investigation?
The application for countervailing duty investigation can be made by or on behalf of domestic industry (manufacturing “like product”), which is being injured due to subsidized imports.
14How a request is processed by NTC?
- NTC on receipt of application for a countervailing duty investigation invites the exporting country for consultation and clarification of the matters provided for in the application.
- If the application and consultation thereafter, the Commission come to the conclusion that there is sufficient evidence of:
- Injury to domestic industry.
- Casual relationship between the injury and the subsidization.
NTC issues a notice of initiation of investigation.
- Thereafter NTC sends questionnaire to the exporters and the importers and government of exporting country for comments/ defence.
- NTC after receipt of necessary response makes provisional determination.
- A public hearing is held if a request for the same is made. The final determination for imposing or otherwise of countervailing duty is based on the relevant data/ information gathered in process.
15How fast is the process of NTC?
- The NTC can make a provisional determination and impose a provisional countervailing duty no sooner than 60 days of the initiation of investigation for a period of four months.
- The final determination has to be made within one year (extendable to 18 months of duty of initiation of investigation)
16Is the decision of NTC final?
The decision of NTC for imposition of countervailing duty is final and the NTC can impose countervailing duty by an SRO.
- The decision of NTC can be appealed with the Appellate Tribunal with a Supreme Court judge as its chairman.
- The government of exporting country can make an appeal and through the dispute settlement mechanism of WTO.