Updated: Monday October 17, 2016/AlEthnien
Muharram 16, 1438/Somavara
Asvina 25, 1938, at 08:52:38 PM
The Countervailing Duties Ordinance, 2014
ORDINANCEN o. III OF 2015
AN
ORDINANCE
to reform and repeal the Countervailing Duties
Ordinance, 2001 (1 0f 2001)
WHEREAS it is expedient to give effect
in Pakistan to the Provisions of Articles VI and XVI of the General Agreement
on Tariffs and Trade, 1994, and to the Agreement on Subsidies and
Countervailing Measures and to further strengthen the law relating to
imposition of countervailing duties to offset such subsidies, to provide a
framework for investigation and determination of such subsidies and injury in
respect of goods imported into Pakistan;
AND WHEREAS the imposition of
countervailing duties to offset injurious subsidization is in the public
interest;
AND WHEREAS it is expedient to provide
for certain reforms in the Countervailing Duties Ordinance, 2001, (I of2001) by
repealing it and re-enacting the law for matters connected therewith or
ancillary thereto;
AND WHEREAS the Senate and the National
Assembly are not in session and the President is satisfied that circumstances
exist which render it necessary to take immediate action;
Now, THEREFORE, in exercise of the
powers conferred by clause (1) of Article 89 of the Constitution of the Islamic
Republic of Pakistan, the President is pleased to make and promulgate the
following Ordinance:---
PART I
PRELIMINARY
1.
Short title, extent and commencement.—(1)
This Ordinance may be called the Countervailing Duties Ordinance, 2014.
(2)
It extends to the whole of
(3)
It shall come into force at once.
2. Definitions.-In this Ordinance, unless there is anything
repugnant in the subject or context,---
(a) “Agreement
on Subsidies” means the Agreement on Subsidies an Countervailing Measures
included in Annex (1 A) to the Final Ordinance of the Results of the Uruguay
Round concerning the Implementation of Article XVI of the General Agreement on
Tariffs and Trade, 1994;
(b) “Appellate
Tribunal” means the Appellate Tribunal established under the Anti-Dumping
Duties Ordinance 2000 (LXV of2000);
(c) “Application”
means an application submitted to the Commission pursuant to sub-section (1) of
section 11;
(d) “Association”
means a trade Organization as defined in the Trade Organizations Act, 2013, (Il
of20 13), that has been granted or deemed to have been granted a licence under
the said Act, or that is otherwise lawfully functioning as a trade organisation
pursuant to sub-section (3) of section 4 the said Act;
(e) “Commission”
means the National Tariff Commission established under the National Tariff
Commission Act, 1990 (VI of 1990);
(f) “Country”
means any country or territory whether a member- of the World Trade
Organisation or not and includes a customs union or customs territory;
(g) “Countervailing
measures” means any measures that may be taken by the Commission under this
Ordinance including imposition of countervailing duties, whether provisional or
definitive, or the acceptance of an undertaking;
(h) “Definitive
countervailing duty” means a duty imposed by the Commission under section 16,
sub-section (15) of section 14 or sub-section (2) of section 17;
(i) “Domestic
industry” means the domestic producers as a whole of a like product or those
whose collective output of that product constitutes a major proportion of the
total domestic production of that product; except that when any such domestic
producers are related to the exporters or importers, or are themselves
importers of the allegedly subsidised product. In such a case “domestic
industry” shall mean the rest of the domestic producers:
Explanation.-For the purposes of this clause, producers shall be
deemed to be related to exporters or importers only if,---
(i) one of
them directly or indirectly controls the other;
(ii) both of
them are directly or indirectly controlled by the same third person; or
(iii) together
they directly or indirectly control a third person:---
Provided that there are grounds for
believing or suspecting that the effect of the relationship is such as to cause
the producer concemed to behave differently from non-related producers and for
that purpose one shall be deemed to control another when the former is legally
or operationally in a position to exercise restraint or direction over the
latter:---
Provided further that, in exceptional
circumstances, as may be determined by the Commission, the domestic industry in
relation to a product in question may be divided into two or more competitive
markets and producers within each such market may be regarded as a separate
industry if the,---
(i) producers
within such a market sell all or. almost all of their production ofthe product
in question in such a market; and
(ii) demand
in such a market is not, to any substantial degree, supplied by producers of
the product in question located elsewhere in
(j) “Exporting
country” means a country granting subsidy in respect of an investigated
product, which country may be either-
(i) the
country of origin of the investigated product; or
(ii) where the investigated product is not exported directly to
(k) “government”
means the government or any public body within the territory of an exporting
country;
(L) “injury”
means, unless otherwise specified, material injury to a domestic industry, threat
of material injury to a domestic industry or material retardation of the
establishment of a domestic industry, when subsidised imports are causing such
injury;
(m) “interested
party” includes -
(i) an
exporter, foreign producer, an importer of an investigated product or an
association a majority of the members of which are producers, exporters or
importers of such product;
(ii) a producer of a like product in Pakistan or an association a
majority of the members of which produce a like product in Pakistan; and
(iii) such other person or group of persons as the Commission may, by
notification in the official Gazette, specify
(n) “investigated
product” means a product which is subject to an investigation under this
Ordinance;
(0) “investigation”
means an investigation conducted under this Ordinance;
(p) “like
product” means a product which is alike in all respects to an investigated
product or, in the absence of such a product, another product which, although
not alike in all respects, has characteristics closely resembling those of the
investigated product;
(q) “prescribed”
means prescribed by rules made under this Ordinance;
(r) “provisional
countervailing duty” means a duty imposed by the Commission under section 13;
(s) “public notice” means a notice published by the
Commission in at least one issue each of a daily newspaper in the English
language and a daily newspaper in the Urdu language having wide circulation in
Pakistan;
(t) “Schedule” mean the
Schedule to this Ordinance;
(u) “subsidy” means a
subsidy as defined in section 4 and “subsidization” shall be construed
accordingly; and
(v) “WTO” means the World
Trade Organisation established pursuant to the Marrakesh Agreement concluded in
PART II
COUNTERVAILING
MEASURES
3. Levy of
countervailing duty.-(1) Where the Commission determines in accordance
with the provisions of this Ordinance that any exporting country pays or
bestows, directly or indirectly, any subsidy upon the manufacture or production
therein or the exportation there from of any investigated product including any
subsidy on transportation of such product and such subsidy causes injury then,
upon the importation of any such product into Pakistan, the Commission shall,
by notification in the official Gazette, impose a countervailing duty thereon
as provided for in this Ordinance.
(2) For the purposes of
this Ordinance, a product shall be considered to be subsidised if it benefits
from a countervailable subsidy as provided for in section 4 and 5.
(3) A subsidy may be
granted by a government of the country of origin of an investigated product or
by the government of an intermediate country from which the investigated
product is exported to
(4) Notwithstanding
anything contained in this Ordinance, where an investigated product is not
directly imported from the country of origin but exported to Pakistan from an
intermediate country, the provisions of this Ordinance shall be fully
applicable and such transaction shall, where considered appropriate by the
Commission, be regarded as having taken place between the country of origin of
the investigated product and Pakistan.
DEFINITION OF
SUBSIDY, COUNTERVAILABLE AND
NON-COUNTERVAILABLE
SUBSIDIES
4. Circumstances in
which subsidy shall be deemed to exist.-A subsidy shall be deemed to exist if,---
(a) there shall be
financial contribution by a government, where,---
(i) the government practice
involves direct transfer of funds including grants, loans and equity infusion,
or potential direct transfer of funds or liabilities, or both;
(ii) government revenue that
is otherwise due is foregone or not collected including fiscal incentives such
as tax credits:---
Provided
that exemption of an exported product from duties or taxes borne by a like
product when destined for domestic consumption, or remission of such duties or
taxes in amounts not in excess of those which have accrued, shall not be deemed
to be a subsidy provided that such exemption is granted in accordance with the
provisions of the First, Second and Third Schedules;
(iii) the government provides
goods or services other than general infrastructure or purchases goods; or
(iv) the 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 specified in sub-clauses (i),
(ii) and (iii) which would normally be vested in the government and the
practice in, no real sense, differs from practices normally followed by
governments;
(b) there is any form of
income or price support within the meaning of Article XVI of the General
Agreement on Tariffs and Trade, 1994; and
(c) a benefit is thereby
conferred.
5.
Countervailable subsidies.-(l) A subsidy shall be subject to countervailing
measures under this Ordinance only if the Commission determines that such
subsidy is specific in accordance with the principles set out in sub-sections
(2), (3), (4) and (5).
(2) In
order to determine whether a subsidy is specific to an enterprise, industry or
a group of enterprises or industries, hereinafter referred to as “certain
enterprises”, within the jurisdiction of a granting authority, the Commission
shall apply the following principles, namely:---
(a) where the granting
authority, or the legislation pursuant to which the granting authority
operates, explicitly limits access to a subsidy to certain enterprises, such
subsidy shall be specific;
(b) where the granting
authority, or the legislation pursuant to which the granting authority
operates, establishes objectives criteria or conditions governing the
eligibility for, and the amount of, a subsidy, specificity shall not exist,
provided that the eligibility is automatic and that such criteria and
conditions are strictly adhered to;
Explanation.-For the purposes of
clause (b), objective criteria or conditions mean criteria or conditions which
are neutral, which do not favour certain enterprises over other, and which are
econom ic in nature and horizontal in application, such as, number of employees
or size of enterprise. Such criteria orconditions must be clearly set out by
law, regulation, or other official document, so as to be capable of
verification; and
(c) if, notwithstanding any
appearance of non-specificity resulting from the application of the principles
laid down in clauses (a) and (b), there are reasons to believe that the subsidy
may in fact be specific, the following other factors may be considered by the
Commission, namely:---
(i) use of a subsidy
programme by a limited number of certain enterprises;
(ii) predominant use by
certain enterprises;
(iii) granting of
disproportionately large amounts of subsidy to certain enterprises; and
(iv) manner in which
discretion has been exercised by the granting authority in the decision to
grant a subsidy;
ExplanationFor the purposes of
clause (c), information on the frequency with which applications for a subsidy
are refused or approved and the reasons for such decisions shall, in particular,
be considered.
(3) In
applying the provisions of clause (c) of sub-section (2), the Commission shall
take into account the extent of diversification of economic activities within
the jurisdiction of a granting authority and the length of time during which
subsidy programme has been in operation.
(4) A
subsidy which is limited to certain enterprises located within a designated
geographical region within the jurisdiction of a granting authority shall be
specific.
(5) The
setting or changing of generally applicable tax rates by all levels of the
government entitled to do so shall not be deemed to be a specific subsidy.
(6)
Notwithstanding anything contained in sub-sections (2), (3), (4) and (5), the
following subsidies shall be deemed to be specific, namely:---
(a) subsidies contingent,
in law or in fact, whether solely or as one of several other conditions, upon
export performance, including those illustrated in the First Schedule:
Provided that subsidies
shall be considered by the Commission to be contingent in fact upon export
performance when the facts demonstrate that granting of a subsidy, without
having been made legally contingent upon export performance, is in fact tied to
actual or . anticipated exportation or export earnings:
Provided further that
the mere fact that a subsidy is accorded to enterprises which export shall not
for that reason alone be considered by the Commission to be an export subsidy
for the purposes of this clause; and
(b) subsidies contingent,
whether solely or as one of several other conditions, upon the use of domestic
over imported goods.
(7) Any
determination of specificity by the Commission under this section shall be
substantiated on the basis of positive evidence.
6.
Non-countervailable subsidies.-Subsidies which are not specific as determined in
accordance with the provisions of section 5, shall not be subjected to
countervailing measures under this Ordinance.
CALCULATION OF THE
AMOUNT OF COUNTERVAILABLE SUBSIDY
7.
Calculation of amount of countervailable subsidy.-(l) The amount of
countervailable subsidy, for the purposes of this Ordinance, shall be
calculated by the Commission in terms of any benefit conferred on a recipient
which is found to exist during an investigation period for subsidization, which
period shall normally be the most recent accounting year of the beneficiary but
may be any other period of at least six months prior to initiation of an
investigation for which reliable financial and other relevant data are
available.
(2) In
determining the amount of countervailable subsidy the Commission shall apply
the following principles to calculate any benefit conferred on the recipient as
referred to in sub-section (1), namely:---
(a) government provisions
of equity capital shall not be considered to confer any benefit, unless an
investment can be regarded as inconsistent with the usual investment practice
including, for the provision of risk capital of private investors in the
territory of an exporting country;
(b) a loan by a government
shall not be considered to confer any benefit, unless there is a difference
between the amount that a firm receiving the government loan pays on it and the
amount that the firm would pay for a comparable commercial loan which the firm
could actually obtain on the market, in which event the benefit shall be the
difference between these two amounts;
(c) a loan guarantee by a
government shall not be considered to confer any benefit, unless there is a
difference between the amount that a 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 in the absence of the guarantee, in which case the
benefit shall be the difference between these two amounts, adjusted for any
difference in fees; and
(d) a provision of goods or
services or purchase of goods by a government shall not be considered to confer
any benefit, unless the provision is made for less than adequate remuneration
or the purchase is made for more than adequate remuneration, and the adequacy
of remuneration shall be determined in relation to prevailing market conditions
for the product or service in question in the country of provision or purchase
including price, quality, availability, marketability, transportation and other
conditions of purchase or sale.
8.
General provisions on calculation of countcrvailable subsidies.-(1) Subject to
sub-section (2), the amount of countervailable subsidies shall be determined by
the Commission in terms of subsidization per unit of an investigated product
exported to Pakistan and in establishing such amount the following elements may
be deducted from the total subsidy, namely:---
(a) any fee or other costs
necessarily incurred in order to qualify for or, to obtain a subsidy; and
(b) export taxes, duties or
other charges levied on export of an investigated product to
(2)
Where an interested party claims a deduction under sub-section (1) such patty
shall prove to the Commission that the claim is justified.
(3)
Where a subsidy is not granted by reference to the quantities manufactured,
produced, exported or transported, the amount of countervailable subsidy shall
be determined by allocating the value of the total subsidy, as appropriate,
over the level of production, sales or exports of the products concerned during
an investigation period for subsidization.
(4)
Where a subsidy can be linked to acquisition or future acquisition of fixed
assets, the amount of countervailable subsidy shall be calculated by spreading
the subsidy across a period which reflects normal depreciation of such assets
in the industry concerned, and the amount so calculated which is attributable
to an investigation period, including that which derives from fixed asset
acquired before such period, shall be allocated as provided for in sub-section
(2):---
Provided
that where assets are non-depreciating, a subsidy shall be valued as an
interest-free loan, and be treated in accordance with the provisions of clause
(b) of su b-section (2) of section 7.
(5)
Where a subsidy cannot be linked to acquisition of fixed assets, the amount any
benefit received during an investigation period shall, in principle, be
attributed to this period, and allocated as provided for in sub-section (2),
unless special circumstances arise justifying attribution over a different
period.
PART V
DETERMINATION OF
INJURY
9.
Determination of injury.-(1) A determination of injury by the Commission
shall be based on positive evidence and shall involve an objective examination of,---
(a)
volume
of any subsidised imports and their effect on prices in domestic market for
like products; and
(b) consequent impact of
subsidised imports on domestic industry:
Explanation.- With regard to volume
of any subsidised imports, consideration shall be given by the Commission to
whether there has been a significant increase in subsidised imports, either in
absolute terms or relative to production or consumption in
imports as compared
with the price of a like product of domestic industry, or whether the effect of
such imports is otherwise to depress prices to a significant degree or prevent
price increases which would otherwise have occurred, to a significant degree,
provided that no one or more of these factors shall be deemed to necessarily
give decisive guidance.
(2)
Where imports of a product from more than one country are simultaneously
subject to an investigation, the effects of such imports may be cumulatively
assessed by the Commission only if it determines that,---
(a) the amount of
countervailable subsidies established in relation to the imports from each
country is negligible as defined in sub-section (3) of section 15 and that the
volume of imports from each country is not negligible; and
(b) a cumulative assessment
of the effects of the imports is appropriate in the light of conditions of
competition between imported products and the conditions of competition between
the imported products and a like domestic product.
(3) An
examination by the Commission of an impact of subsidized imports on a domestic
industry concerned may include an evaluation of all relevant economic factors
and indices having a bearing on the state of the domestic industry including
the fact that the domestic industry is still in the process of recovering from
the effects of past subsidisation or dumping, the magnitude of the amount of
countervailable subsidies, actual and potential decline in sales, profits,
output, market share, productivity, return on investments, utilization of
capacity, factors affecting domestic prices, actual and potential negative
effects on cash flow, inventories, employment, wages, growth, ability to raise
capital or investments and, in the case of agriculture, whether there has been
an increased burden on Government support programmes.
(4) The
Commission shall satisfy itself that subsidised imports are, through the
effects of subsidies, as set forth in sub-sections (1) and (3), causing injury
within the meaning of this Ordinance. The consideration of a causal
relationship between subsidised imports and injury to domestic industry shall
be based on an examination by the Commission of all relevant evidence before
it.
(5) The Commission shall examine known factors other
than subsidised imports which are injuring domestic industry to ensure that
injury caused by such other factors is not attributed to subsidised imports.
Such other factors may include factors such as the volume and prices of
non-subsidised imports, contraction in demand or changes in patterns of
consumption, restrictive trade practices of and competition between a third
country and domestic producers, developments in technology and export
performance and productivity of domestic industry.
(6) The
effect of subsidised imports shall be assessed by the Commission in relation to
the production by domestic industry of a like product when available data
permits separate identification ofthat production on the basis of such criteria
as the production process, producers' sales and profits:
Provided
that where such separate identification of that production is not possible, the
effects of subsidised imports shall be assessed by the Commission by
examination of the
production of the
narrowest group or range of products including a like product, for which the
necessary information can be provided.
(7) A
determination of a threat of material injury by the Commission shall be based
on facts and not merely on allegation, conjecture or remote possibility and any
change in circumstances which would create a situation in which subsidy would
cause injury must be foreseen and imminent.
(8) In
making a determination regarding the existence of a threat of material injury,
the Commission shall take into consideration factors such as,---
(a) the nature of subsidy
or subsidies in question and any trade effects likely to arise therefrom;
(b) any significant rate of
increase of subsidised imports into a domestic market indicating the likelihood
of substantially increased imports;
(c) sufficient freely
disposable capacity of an exporter or an imminent substantial increase in such
capacity Indicating the likelihood of substantially increased subsidised
exports into Pakistan, account being taken of the availability of other export
markets to absorb any additional exports;
(d) whether imports are
entering at prices that would, to a significant degree, depress prices or
prevent price increases which otherwise would have occurred and would probably
increase demand for further imports; and
(e) inventories of an
investigated product.
Explanation.-None of the factors
specified in sub-section (8) by itself shall be deemed to necessarily give
decisive guidance but the totality of the factors considered by the Commission
must lead to the conclusion that further subsidised exports are imminent and
that, unless protective action is taken, material injury will occur.
10.
Further circumstances in which injury may be found to exist.- (1) Where domestic
industry in relation to a product in question has been divided into two or more
competitive markets and the producers within each such market regarded as a
separate industry in accordance with the second proviso to clause (i) of
section 2, injury may be found to exist even where a major portion of the total
domestic industry does not suffer injury provided that, there is a
concentration of subsidised imports into such a separated market, and provided
further that the subsidised imports are causing injury to the producers of all
or almost all of the production within such market.
(2)
Where injury is found to exist in the circumstances referred to in sub- section
(1), the exporters or the government granting countervailable subsidies shall
be given an opportunity to offer an undertaking in accordance with section 14
in respect of the region concerned or to cease exporting at subsidised prices
to the region concerned prior to any countervailing measures being applied by
the Commission under this Ordinance.
(3) In
the circumstances referred to in sub-section (2), special account shall be
taken by the Commission of any interest of the region and if an adequate
undertaking is not offered promptly or if the situations set out in
sub-sections (13) and (14) of section 14 apply, a provisional or definitive
countervailing duty may be imposed by the Commission in respect of domestic
industry as a whole.
(4) The
provisions of sub-section (6) of section 9 shall apply to this section.
PART VI
INVESTIGATION
11.
Initiation of investigation.-(1) Save as provided for in sub-section (11), the
Commission shall initiate an investigation to determine the existence, degree
and effect of any alleged subsidy only upon receipt of a written application by
or on behalf of domestic industry.
(2) An
application shall be submitted to the Commission in such manner, number-and
form and with such fee as may be prescribed. It shall include sufficient
evidence of the existence of a subsidy and, if possible, its amount, injury
within the meaning of this Ordinance and a causal link between the subsidized
imports and the alleged injury. The application shall also contain such
information as is reasonably available to an applicant on the following,
namely:---
(a) identity of the
applicant and a description of the volume and value of domestic production of a
like product by the applicant:
Provided that where an
application is made on behalf of domestic industry, the application shall
identify the industry on behalf of which the application is made by a list of
all known domestic producers of the like product or, association of domestic
producers of the like product and, to the extent possible, a description of the
volume and value of domestic production of the like product accounted for by
such producers;
(b) a complete description
of an allegedly subsidised product including its current customs tariff
classification number as contained in the First Schedule to the Customs Act,
1969 (IV of 1969), the name of exporting country, identity of each known
exporter or foreign producer, and a list of known persons importing the product
in question;
(c) evidence with regard to
the existence, amount, nature and countervailability of subsidy in question;
and
(d) information on changes
in volume of allegedly subsidised imports, the effect of those imports on
prices of a like product in domestic. market and the consequent impact of the
imports on domestic industry as demonstrated by relevant factors and indices
having a bearing on the state of domestic industry, such as those listed in the
explanation to sub-section (1) of section 9, and in sub-section (3) of section
9.
(3) The
Commission shall examine the accuracy and adequacy of the evidence provided in
an application to determine whether it is compliant with the requirements of
sub-section (2) and in order to determine whether there is sufficient evidence
to justify initiation of an investigation.
(4) An
investigation may be initiated by the Commission in order to determine whether
or not the alleged subsidies are specific in accordance with the principles set
out in section 5.
(5) An
investigation may also be initiated by the Commission in respect of subsidies
which are non- countervailable in accordance with the provisions of section 6
in order to determine whether or not the conditions set out therein have been
met.
(6) If a
subsidy is granted pursuant to a subsidy programme which has been notified in
advance of its implementation to the WTO Committee on Subsidies and
Countervailing Measures in accordance with Article 8 of the Agreement on
Subsidies and in respect of which the said Committee has failed to determine
that the relevant conditions laid down in Article 8 of the Agreement on
Subsidies have not been met, an investigation shall not be initiated by the
Commission in respect of a subsidy granted pursuant to such a programme, unless
an infringement of Article 8 of the Agreement on Subsidies has been ascertained
by the competent WTO Dispute Settlement Body or through arbitration as provided
in Article 8(5) of the Agreement on Subsidies. .
(7) An
investigation may be initiated by the Commission in respect of measures of any
type to the extent that they contain an element of subsidy as defined in
section 4.
(8) An investigation shall not be initiated by the
Commission pursuant to sub-section (1) unless the Commission is satisfied, on
the basis of an examination as to the degree of support for, or opposition to,
an application expressed by domestic producers of a like product, that the
application has been made by or on behalf of domestic industry.
(9) An
application shall be considered to have been made by or on behalf of domestic
industry if it is supported by those domestic producers whose collective output
constitutes more than fifty percent of the total production of a like product
produced by that portion of domestic industry expressing either support for or
opposition to the application:
Provided
that no investigation shall be initiated by the Commission when domestic
producers expressly supporting an application account for less than twenty-
five percent of the total production of a like product produced by domestic
industry.
(10) The
Commission shall, as soon as possible after receipt of a properly documented
application in accordance with the requirements of section 11, and in any event
before initiation of an investigation, give notice to an exporting country,
which shall be invited for consultations with the aim of clarifying the
situation as to matters referred to in sub-section (2) and arriving at a
mutually agreed solution.
(11) The
Commission may, suo moto, initiate an investigation without having received a
written application by or on behalf of domestic industry if it has sufficient
evidence of the existence of countervailable subsidies and injury within the
meaning of this Ordinance.
(12) The
evidence both of subsidy and of injury shall be considered simultaneously by
the Commission in the decision on whether or not to initiate an investigation
and an application shall be rejected where there is insufficient evidence of
either countervailable subsidies or of injury to justify initiation of an
investigation:---
Provided
that an investigation shall not be initiated againstcountries whose imports
represent a market share of below one per cent unless such countries
collectively account for three per cent or more of domestic consumption.
(13) An
application may be withdrawn by an applicant prior to initiation of an
investigation by the Commission, in which case it shall, subject to the
provisions of sub-section (1) of section 15, be deemed not to have been made:---
Provided
that upon withdrawal of an application any fee paid by an applicant pursuant to
sub-section (2) shall stand forfeited in favour of the Commission.
(14)
Where, after consultation with an exporting country as provided for in
sub-section (10), the Commission is satisfied that there is sufficient evidence
to justify initiating an investigation, the Commission shall give notice of
such decision by means of a public notice of initiation of an investigation,
and the initiation of an investigation shall be effective on the date on which
such notice is published.
(15)
Where the Commission does not consider it appropriate to initiate an
investigation it shall inform an applicant of its decision.
(16) The
public notice of initiation of an investigation referred to in sub- section
(14) shall announce initiation of an investigation, indicate the product and
countries concerned, give a summary of the information received, provide that
all relevant information is to be communicated to the Commission, state the
periods within which any interested party may make itself known, present its
views in writing and submit information if such views and information are to be
taken into account during the investigation and shall also state the period
within which interested parties may apply to be heard by the Commission in
accordance with sub-section (4) of section 12.
(17) The
Commission shall advise any exporters, importers and any association of
importers or exporters known to it to be concerned, as well as an exporting
country and an applicant, of initiation of an investigation and, subject to the
requirements of section 29, provide the full text of an application to the
known exporters and to the authorities of an exporting country, and make it
available upon request to other interested parties involved:
Provided
that, where the Commission determines that the number of exporters involved is
particularly high, the full text of a written complaint may instead be provided
by the Commission only to the authorities of an exporting country or to a
relevant association.
(18) An
investigation shall not hinder the procedures of customs clearance.
12.
Principles governing investigation.-(l) Following initiation of an
investigation, the Commission shall commence an investigation and such
investigation shall cover both subsidisation and injury which, shall be
investigated simultaneously.
(a) a representative
finding, an investigation period shall be selected by the Commission which, in
the case of subsidisation shall, normally, cover an investigation period
provided for in section 7 and information relating to a period subsequent to
the investigation period shall not, normally, be taken into account by the
Commission; and
(b) an investigation of
injury, the investigation period shall normally cover thirty-six months:
Provided that the
Commission may at its sole discretion, select a shorter or longer period if it
deems it appropriate in view of available information regarding domestic
industry and an investigated product.
(3) Parties
receiving questionnaires from the Commission used in a countervailing duty
investigation shall be given at least thirty days to reply and such time limit
for exporters shall be counted from the date of receipt of the questionnaire
which, for this purpose shall be deemed to have been received one week from the
day on which it was sent to a respondent or transmitted to an appropriate
diplomatic representative of an exporting country:---
Provided
that where a party shows due cause for an extension to the satisfaction of the
Commission, an extension of not more than thirty days may be granted by the
Commission at its discretion.
(4) Any
interested part): which has made itself known in accordance with sub-section
(16) of section II shall be heard by the Commission if it has, within the
period prescribed in a public notice of initiation of an investigation made a
written, request for hearing showing that it is an interested party likely to
be affected by the result of an investigation and that there are particular
reasons why it should be heard.
(5)
Opportunities shall, on request, be provided for any importers, exporters and
an applicant, which have made themselves known in accordance with sub- section
(16) of section 11 and the government of an exporting country to meet those
parties having adverse interests, so that opposing views may be presented and
rebuttal arguments offered. Provision of such opportunities shall take account
of the need to preserve confidentiality and of convenience of the parties.
There shall be no obligation on any party to attend such meeting and failure to
do so shall not be prejudicial to that party's case. Oral information provided
under this sub-section shall only be taken into account by the Commission to
the extent that the same is subsequently confirmed in writing and provided to
the Commission.
(6)
Without prejudice to the provisions of section 42, an applicant, the government
of an exporting country, importers and exporters and their representative
associations, which, have made themselves known in accordance with sub-section
(16) of section 11, may, upon written request, inspect all information made available
to the Commission by any party to an investigation, as distinct from internal
documents prepared by the Commission, which is relevant to presentation of
their cases and is not confidential within the meaning of section 29, and that
it is used in an investigation. Such parties may respond to such information
and their comments shall be taken into consideration wherever they are
sufficiently substantiated in a response.
(7) Save
as provided for in section 28, any information which is supplied by interested
parties and upon which findings are based shall, to the extent possible, be
examined for accuracy by the commission.
(8) An
investigation shall, whenever possible, be concluded within one year and in no
event later than eighteen months from its initiation, in accordance with the
findings made pursuant to section 14 for undertakings or the findings made
pursuant to section 16 for definitive action.
(9)
Throughout an investigation, the Commission shall afford an exporting country a
reasonable opportunity to continue consultations with a view to clarifying the
factual situation and arriving at a mutually agreed solution:---
Provided
that the Commission may continue an investigation during such consultations.
(10) The
Commission shall allow industrial users of an investigated product in Pakistan,
and representative consumer organisations in cases where the investigated
product is commonly sold at retail level in Pakistan to provide to the
Commission, in writing, no later than two months after initiation of an
investigation, information concerning matters relevant to the investigation
regarding subsidisation dumping and injury,
PART VII
ROVISIONAL
COUNTERVAILING MEASURES
3.
Provisional countervailing duties.-(1) Provisional countervailing duty shall
be imposed by the Commission if,---
(a) an investigation has
been initiated by the Commission in accordance with section 11;
(b) a public notice of
initiation of an investigation has been given and interested parties have been
given adequate opportunities to submit information and make comments in
accordance with sub-section (16) of section 11; and
(c) a provisional
affirmative determination has been made by the Commission that a subsidy exists
and that there is consequent injury to domestic industry.
(2) A
provisional countervailing duty shall not be imposed earlier than sixty days
from initiation of an investigation but no later than nine months from
initiation of the investigation and shall be in an amount equal to the total
amount of countervailable subsidies as provisionally established by the
Commission:---
Provided
that the amount of the provisional countervailing duty shall not exceed the
total amount of subsidisation as provisionally established, but it may be less
than the margin if such lesser duty would be adequate to remove the injury to
the Domestic Industry.
(3) A
provisional countervailing duty shall be in the form of cash deposit equal to
the amount of the provisionally calculated amount of subsidisation:---
Provided
that the release of a product concerned for free circulation 111
(4) A
provisional countervailing duty shall be imposed for a period not exceeding
four months.
PART VIII
UNDERTAKINGS AND
TERMINATION WITHOUT MEASURES
14.
Undertakings.-(l) An investigation may be terminated by the
Commission without imposition of provisional or definitive countervailing
duties upon receipt of a satisfactory voluntary undertaking under which,---
(a) an exporting country
agrees to eliminate or limit subsidy or take other measures concerning its
effects; or
(b) any exporter undertakes
to revise its prices or to cease exports in question as long as such exports
benefit from countervailable subsidies, so that the Commission is satisfied
that the injurious effect of the subsidies is eliminated.
(2)
Price increases under such undertakings shall not be higher than those which
are necessary to offset the amount of countervailable subsidies and shall be
less than the amount of countervailable subsidies if such increases would be
adequate to remove injury to domestic industry.
(3)
Undertakings may be suggested by the Commission but no country or exporter
shall be obliged to enter into such an undertaking and the fact that countries
or exporters do not offer such undertakings, or do not accept an invitation to
do so, shall in no way prejudice the outcome of an investigation by the
Commission:---
Provided
that the Commission may in such circumstances determine that a threat of injury
is more likely to be-realised if the subsidised imports continue.
(4)
Undertakings shall not be sought or accepted by the Commission from countries
or exporters unless a provisional affirmative determination of subsidisation
and injury caused by such subsidisation has been made by the Commission.
(5) Save
in exceptional circumstances, undertakings may not be offered later than the
end of the period during which representations may be made pursuant to
sub-section (7) of section 30.
(6)
The-decision to accept an undertaking shall rest with the Commission.
Explanation-: The Commission may
not accept a price undertaking if it considers the acceptance thereof to be
impractical because the number of actual or potential exporters is too great or
for reasons of general policy or for any other reason.
(7) An
exporting country or exporter concerned may be provided with the reasons for
which it is proposed to reject an offer of an undertaking and may be given an
opportunity to make comments thereon and the reasons for rejection shall be set
out in a definitive decision by the Commission.
(8)
Parties which offer an undertaking shall be required to provide a non-
confidential version of such undertaking so that it may be made available to
interested parties to an investigation.
(9) If
an undertaking is accepted by the Commission, it shall nevertheless complete an
investigation if it receives a request from an exporting country or exporter in
writing to continue such investigation or where the Commission so decides on
its own accord.
(10) In
the event the Commission makes a negative determination of subsidisation and
injury pursuant to an investigation continued under sub-section (9), an
undertaking in question shall automatically lapse except in cases where the
Commission determines that such a determination is due in
large part to the existence of such undertaking in which case the Commission
may require that such undertaking be maintained for a reasonable period of time
to be determined by the Commission.
(11) In
the event the Commission makes an affirmative determination of subsidisation
and injury pursuant to an investigation continued pursuantto sub-section (9),
an undertaking in question shall continue consistent with the provisions of
this Ordinance.
(12) The
Commission may require any country or exporter from whom an undertaking has
been accepted to provide, periodically, information relevant to the fulfilment
of such undertaking and to perm it verification of such information.
(13)
Failure to provide any-information requested by the Commission pursuant to sub-section
(12) shall be deemed to be a violation of an undertaking in question. .
(14)
Where undertakings are accepted from certain exporters during the course of an
investigation, they shall, for the purpose of sections 19,20,21 and 23 be
deemed to take effect from the date on which the investigation is concluded for
an exporting country.
(15) If
an undertaking is violated or deemed to be violated, the Commission may,
subject to the provisions of this Ordinance, take expeditious actions, which
may include immediate application of pro visional measures using the best
information available. In such cases, a definitive countervailing duty may be
levied in accordance with the provisions of this Ordinance on products entered
for domestic consumption not more than ninety days before the application of
such provisional measures, except that any such retroactive assessment shall
not apply to imports entered before such violation of the undertaking.
15.
Termination of investigation without measures.-(1) An application
submitted pursuant to section 11 may be withdrawn at any time after an
investigation has been initiated, in which case the Commission shall terminate
the investigation without imposition of any measures provided for in this
Ordinance:---
Provided
that the Commission may, if it considers it fit to do so, continue an
investigation notwithstanding the withdrawal of an application in which event,
the Commission may, subject to the provisions of this Ordinance impose such
measures as are provided for in this Ordinance.
(2)
Where, the Commission determines in accordance with the provisions of
sub-sections (3), (4), (5), and (6) that the amount of countervailable
subsidies is negligible or, where the volume of subsidised imports, whether
actual or potential, or injury is\ negligible then it shall immediately
terminate an investigation.
(3) The
amount of countervailable subsidies shall be considered to be negligible if
such amount is less than one per cent ad valorem, except that in the case of
investigations concerning imports from developing countries the negligible
subsidy threshold shall be two per cent ad valorem.
(4)
Injury shall normally be regarded .as negligible where the market share of any
imports is less than the amounts set out in the proviso to sub-section (12) of
section 11.
(5) In
the case of an investigation concerning imports from developing countries, the
volume of subsidised imports shall be considered negligible if it represents
less than four per cent of the total imports of a like product in Pakistan,
unless imports from developing countries whose individual shares of total
imports represent less than four per cent collectively account for more than
nine per cent of the total imports of a like product in Pakistan.
(6) In
the case of an investigation concerning imports from countries other than
developing countries, the volume of subsidised imports shall be considered negligible
if it represents less than three per cent of the total imports of a like
product in Pakistan, unless imports from such countries under investigation
which individually account for less than three per cent of the total imports of
a like product in Pakistan collectively account for more than seven per cent of
imports of the like product in Pakistan.
(7)
Termination of an investigation under this Ordinance or conclusion of an
investigation without imposition of measures shall not be a bar to filing of a
de novo application. for a new investigation immediately after termination or
conclusion of the investigation. The Commission shall treat the application in
accordance with provisions of this Ordinance.
PART IX
DEFINITIVE
COUNTERVAILING DUTIES
16.
Imposition of definitive countervailing duties.-(1) Where the
Commission has established the existence of countervailable subsidies and
injury caused thereby, a definitive countervailing duty shall be imposed by the
Commission, unless the subsidy in question is withdrawn or it has been
demonstrated to the satisfaction of the Commission that the subsidies no longer
confer any benefit on any exporters involved.
(2) A
definitive countervailing duty shall be an amount equal to the amount of
countervailable subsidies from which any exporters have been found to benefit,
as established by the Commission in accordance with the provisions of this
Ordinance:---
Provided
that the amount of the countervailing duty shall not exceed the total amount of
subsidisation established but it may be less than the total amount if such
lesser duty would be adequate to remove injury to the domestic industry.
(3) A
definitive countervailing duty shall be imposed in an appropriate amount in
each case,' on a non-discriminatory basis, on imports of a product from all
sources found to benefit from countervailable subsidies and causing injury
except as. to imports from those sources from which undertakings under section
14 have been· accepted by the Commission.
(4) When
the Commission has limited its examination in accordance with section 27, any
definitive countervailing duty applied to imports from exporters or producers
which have made themselves known in accordance with section 27 but were not
included in an examination shall not exceed the weighted average amount of
countervailable subsidies established for parties in a sample.
(5) For
the purposes of sub-section (4), the Commission shall disregard any negligible
amounts of couutervailable subsidies and amounts of countervailable subsidies
established in the circumstances referred to in section 28.
(6)
Individual duties shall be applied to imports from any exporter or producer for
which an individual amount of subsidisation has been calculated as provided for
in section 27.
PART X
RETROACTIVITY
17.
Retroactivity.-(1) Save as otherwise provided in this section,
provisional and definitive countervailing duties shall only be applied to
products which enter Pakistan for consumption after the time when the
requirements set out in sub- section (1) of section 13 and sub-section (1) of
section 16, as the case may be, have been” fulfilled.
(2) Where the Commission makes a final determination
of injury, but not of a threat thereof or of material retardation of the
establishment of an industry or, in the case of a final determination of a
threat of injury, where the Commission determines that the effect of subsidised
imports would, in the absence of provisional measures, have led to a
determination of injury, definitive countervailing duties shall be levied by
the Commission retroactively for the period for which provisional duty, if any,
have been applied.
(3) If a
definitive countervailing duty imposed by the Commission pursuant to
sub-section (2) is higher than a provisional countervailing duty, the
difference shall not be collected:---
Provided
that where a definitive countervailing duty is lower than a provisional
countervailing duty, the duty difference shall be refunded by the Commission in
an expeditious manner.
(4) Save
as provided for in sub-section (3), where the Commission makes a determination
of threat of injury or material retardation but, no injury has yet occurred, a
definitive countervailing duty shall be imposed by the Commission only from the
date of the determination of threat of injury or material retardation and any
cash deposit provided during the period of application of provisional
countervailing duty shall be refunded by the Commission in an expeditious
manner.
(5)
Where the Commission makes a negative final determination any cash deposit
provided during the period of application of provisional countervailing duties
shall be refunded by the Commission in an expeditious manner.
(6) A
definitive countervailing duty shall be imposed by the Commission on products,
which were imported for consumption not more than ninety days prior to the date
of application of provisional countervailing duty if, the Commission determines,
for an investigated product in question, that injury which is difficult to
repair, is caused by massive imports in a relatively short period of a product
benefiting from a countervailable subsidy and the Commission deems it necessary
to impose such duty in order to preclude the recurrence of such injury.
PART XI
DURATION, REVIEWS
AND REFUNDS, AND GENERAL PROVISIONS
18.
Duration of definitive countervailing duty.-Subject to the
provisions of this Ordinance, a definitive countervailing duty imposed pursuant
to this Ordinance shall remain in force only as long as, and to the extent
that, it is necessary to counteract countervailable subsidies which are causing
injury.
19.
Expiry reviews.- (1) A definitive countervailing duty shall expire
after five years from its imposition or five years from the date of the most
recent review which has covered bothsubsidisation and injury, unless it is
determined in a review that the expiry would be likely to lead to a
continuation or recurrence of subsidisation and injury. Such an expiry review
may be initiated, on an initiative of the Commission or, upon a request made by
or on behalf of domestic producers, and the measure in question shall remain in
force pending the outcome of such review.
(2)
Anexpiry review shall be initiated by the Commission upon request made by or on
behalf of domestic producers where such request contains sufficient evidence
that the expiry of a measure in question would be likely to result in a
continuation or recurrence of subsidisation and injury.
Explanation.- Such a likelihood
may, for example, be indicated by evidence of continued subsidisation and
injury or evidence that the removal of injury is partly or solely due to the
existence of measures or evidence that the circumstances of exporters, or
market conditions, are such that they would indicate the likelihood of further
injurious subsidisation.
(3)
Incarrying out investigations under this section, the Commission shall provide
any exporters, importers, an exporting country and domestic producers with the
opportunity to amplify, rebut or comment on the matters set out in a review
request, and conclusions shall be reached by the Commission with due account
taken of all relevant and duly documented evidence presented in relation to the
question as to whether the expiry of measures would be likely, or unlikely, to
lead to the continuation or recurrence of subsidisation and injury.
(4) The
Commission shall notify an impending expiry by a public notice which shall be
published at an appropriate time, as determined by the Commission, in the final
year
of the period of
application of a measure in question and a public notice announcing the actual
expiry of a measure under this section shall also be published by the
Commission.
20.
Interim reviews-(1) The need for continued imposition of measures
under this Ordinance may also be reviewed, where warranted on an initiative of
the Commission or, provided that a period of at least twenty-four months has
elapsed since the imposition of definitive countervailing duty, upon a request
by any exporter, importer or by domestic producers or an exporting country
which contains sufficient evidence substantiating the need for such an interim
review.
(2) An
interim review under sub-section (1) shall be initiated by the Commission where
a request contains sufficient evidence that the continued imposition of a
measure is no longer necessary to offset countervailable subsidy or that injury
would be unlikely to continue or recur if a measure were removed or varied, or
that an existing measure is not, or is no longer, sufficient to counteract
countervailable subsidy which is causing injury:---
Provided
that the Commission may require an applicant requesting a review under
sub-section (1) to fill in an additional questionnaire provided by it requiring
such information and for such period as the Commission deems necessary before
such review is initiated in which case the review shall be initiated following
the receipt by the Commission of such questionnaire duly filled in.
(3) In
carrying out investigations pursuant to this section, the Commission may, in
addition to other factors considered relevant by it, consider whether the
circumstances with regard to subsidisation and injury have changed
significantly, or whether existing measures are achieving the intended results
in removing an injury previously established under section 9.
21.
Accelerated reviews.-(1) Any exporter whose exports are subject to a
definitive countervailing duty but who was not individually investigated during
an original investigation for reasons other than a refusal to co-operate with
the Commission, shall be entitled, upon request, to an accelerated review in
order that the Commission may promptly establish an individual countervailing
duty rate for that exporter provided that such review shall be initiated after
domestic producers have been given an opportunity to comment.
(2) The
Commission may require an applicant requesting a review under sub-section (I)
to fill in an additional questionnaire provided by it before such review is
initiated in which case a review under sub-section (1) shall be initiated
following the receipt by the Commission of such questionnaire duly filled in.
22.
Refunds.-(l) Notwithstanding anything contained in section 19, an importer may
apply to the Commission for refund of duties collected where it is shown that
the amount of countervailable subsidies, on the basis of which duties were
paid, has been either eliminated or reduced to a level which is below the level
of the. duty in force.
(2)An
importer may submit an application for refund of countervailing duties
collected within any twelve months period to the Commission later than sixty
days from the end of such period.
(3) An
application for refund shall be considered to be duly supported by evidence
only where it contains precise information on the amount of refund of
countervailing duties claimed and all customs documentation relating to the
calculation and payment of such amount and includes evidence, for a
representative period, of the amount of countervailable subsidies for any
exporter or producer to which the duty applies:---
Provided
that, where the importer is not associated with any exporter or producer
concerned and such information is not immediately available, or where any
exporter or producer is unwilling to release it to an importer, the application
for refund shall contain a statement from the exporter or producer that the
amount of countervailable subsidies has been reduced or eliminated, as
specified in this section, and that the relevant supporting evidence will be
provided to the Commission:---
Provided
further that where such evidence is not forthcoming from any exporter or
producer within a reasonable period of time, as determined by the Commission,
the application shall be rejected by the Commission.
(4) The
Commission shall determine whether and to what extent an application should be
granted, or it may decide at any time to initiate an interim review, whereupon
any information and findings from such review, carried out in accordance with
the provisions applicable for such review, shall be used to determine whether
and to what extent a refund is justified.
(5) A
refund of countervailing duties under this section shall normally take place
within twelve months, and in no circumstances more than eighteen months after
the date on which a request for a refund, duly supported by evidence, has been
made by an importer of a product subject to countervailing duty.
23.
General provisions on reviews and refund.-(l) The provisions of
sections 11 and 12, excluding those relating to time limits, shall mutatis
mutandis apply to any review carried out pursuant to sections 19, 20 and 21.
(2) Any
review pursuant to sections 19, 20 or 21 shall be carried out by the Commission
expeditiously and shall normally be concluded within twelve months of the date
of initiation of the review.
(3)
Where a review pursuant to section 20 is in progress at the end of the period
of application of a measure as defined in section 19, the measure shall also be
investigated under the provisions of section 19 .
(4) In
any review or refund investigation carried out pursuant to sections 19 to 22,
the Commission shall, provided that circumstances have not changed, apply the
same methodology as in an investigation which led to the duty, with due·
account being taken of sections 7, 8 and 27.
24.Anti-circumvention
measures.-(1) Countervailing duties imposed pursuant to this
Ordinance may be extended to imports from third countries, of the like product,
whether slightly modified or not, or to imports of the slightly modified like
product from the country subject to measures, or parts thereof, when
circumvention of the measures in force is taking place. Countervailing duties
not exceeding the residual countervailing duty imposed in accordance with
section 16 may be extended to imports from companies benefiting from individual
duties in the countries subject to measures when circumvention of the measures
in force is taking place. Circumvention shall be defined as a change in the
pattern of trade between third countries and Pakistan or between individual
companies in the country subject to measures by Pakistan, which stems from a
practice, process or work for which there is insufficient due cause or economic
justification other than the imposition of the duty, and where there is
evidence of injury or that the remedial effects of the duty are being
undermined in terms of the prices or quantities of the like product, and where
there is evidence of subsidy previously established for the like product, if
necessary in accordance with the provisions of this Ordinance.
(2) The
practice, process or work referred to in sub-section (1) includes, inter alia,
the slight modification of the product concerned to make it fall under customs
tariff which are normally not subject to the measures, provided that the
modification does not alter its essential characteristics, the consignment of
the productsubject to measures via third countries, the re-organisation by
exporters or producers of their patterns and channels of sales in the country
subject to measures in order to eventually have their products exported to
Pakistan through producers benefiting from an individual duty rate lower than
that applicable to the products of the manufacturers, and, in the circumstances
indicated in sub-section (3), the assembly of parts by an assembly operation in
Pakistan or a third country.
(3) An
assembly operation in
(a) operation started or
substantially increased since, or just prior to, the initiation of the
investigation and the parts concerned are from the country subject to measures;
(b) parts constitute sixty
percent or more of the total value of the parts of the assembled product,
except that in no case shall circumvention be considered to be taking place
where the value added to the parts brought in, during the assembly or
completion operation, is greater than twenty five percent of the manufacturing
cost; and
(c) remedial effects of the
duty are being undermined in terms of the prices or quantities of the assembled
like product and there is evidence of subsidy previously established for the
like or similar products.
(4)
Investigations shall be initiated pursuant to this section on the initiative of
the Commission or at the request of any interested party on the basis of
sufficient evidence regarding the factors set out in sub-section (I) and (2).
Investigations shall be concluded by the Commission within nine months.
25.
General provisions.-(1) Countervailing duties, provisional or definitive,
as the case may be, imposed under this Ordinance shall,---
(a) take the form of ad
valorem or specific duties:---
Provided that
provisional countervailing shall take the form of cash deposits equal to the
amount of a provisionally calculated amount of subsidization;
(b) be imposed in addition
to other import duties levied on an investigated product; and
(c) be collected in the
same manner as customs-duties under-the Customs Act, 1969 (IV of 1969).
(2) No
product shall be subject to both anti-dumping duties and countervailing duties,
under their respective laws for the time being in force, under this Ordinance
for the purpose of dealing with one and the same situation arising from dumping
or from export subsidization:---
Provided
that sub-section (2) shall not prohibit or prevent, concurrent investigations
of the same product under the laws specified therein.
(3) The
decisions regarding imposition of provisional or definitive countervailing
duties, and notices regarding acceptance of undertakings or terminating an
investigation, shall be published by the Commission in a public notice which
shall contain, in particular, and with due regard to the protection of
confidential information in accordance with section 29, the names of exporters,
if possible, or of the countries involved, a description of the product and a
summary of the facts and considerations relevant to subsidy and injury
determinations and in each case, a copy of the said notice shall be sent to the
known interested parties.
(4) The
provisions of sub-section (3) shall apply, mutatis mutandis, to reviews under
this Ordinance.
(5) The
Commission shall establish and maintain a non-lapseable personal ledger account
in its name for the purpose of this Ordinance and all duties and fees payable
under and collected pursuant to this Ordinance shall be held in such account.
(6) The
account established under sub-section (5) shall be maintained and operated in
such manner as may be prescribed.
PART XII
VERIFICATION VISITS, SAMPLING, NON-COOPERATION, CONFIDENTIALITY AND
DISCLOSURE
26.
Verification visits.-(l) The Commission may, where it considers it
appropriate, carry out visits to examine the records of importers, exporters,
traders, agents, producers, trade associations and organisations, to verify
information provided on subsidisation and injury:---
Provided
that in the absence of a proper and timely reply a verification visit may not
be carried out.
(2) The
Commission may carry out investigations in third countries as required,
provided that,---
(a) it obtains consent of
an entity concerned;
(b) it gives notice to a
country in question; and
(c) the country in question
does not object to an investigation.
(3) As
soon as consent of an entity concerned has been obtained the Commission shall
give notice to an exporting country of the name and address of the entity to be
visited and the dates agreed.
(4) An
entity concerned shall be advised of the nature of information to be verified
during verification visits and of any further information which needs to be
provided during such visits:---
Provided
that this shall not preclude the Commission from requiring further information
or verification.
27.
Sampling.-(l) Where the Commission determines that the number
of complainants, exporters or importers, types of product or transactions is
large, the Commission may limit an investigation to,---
(a) a reasonable number of
parties, products or transactions by using samples which are statistically
valid on the basis of information available at the time of selection; or
(b) to the largest representative volume of any production, sales or
exports which can reasonably be investigated within the time available.
(2) The
selection of parties, types of products or transactions made under this section
shall rest with the Commission:---
Provided
that preference shall be given by the Commission to choosing a sample in
consultation with, and with the consent of, the parties concerned:---
Provided
further that such parties make themselves known and make sufficient information
available to the Commission, within three weeks of initiation of an
investigation, to enable a representative sample to be chosen.
(3) In
cases where the examination has been limited in accordance with this section,
an individual amount of countervailable subsidisation shall, nevertheless, be
calculated by the Commission for any exporter or producer not initially
selected who submits the necessary information within the time limits provided
for in this Ordinance except where the Commission determines that the number of
exporters or producers is so large that individual examinations would be unduly
burdensome and would prevent completion of an investigation within the
applicable time limits.
(4)
Where the Commission has decided to undertake a sample as provided for in this
section and there is a degree of non-cooperation by some or all of the parties
selected which is likely to materially affect the outcome of an investigation,
a new sample may be selected by the Commission:
Provided
that if a material degree of non-cooperation persists or there is insufficient
time to select a new sample, the relevant provisions of section 28 shall apply.
28.
Non-cooperation.-(l) Where any interested party refuses access to, or
otherwise does not provide, necessary information within the time limits
provided in this Ordinance, or significantly impedes an investigation,·
provisional or final determinations, whether affirmative or negative, may be
made by the Commission on the basis of the facts available.
(2)
Where the Commission establishes that any interested party has supplied false
or misleading information, such information shall be disregarded and use may be
made by the Commission of the facts available.
(3)
Where any information submitted by an interested party is not ideal in all
respects it shall nevertheless not be disregarded by the Commission:---
Provided
that the Commission is satisfied that any deficiencies are not such as to cause
undue difficulty in arriving at a reasonably accurate finding and that the
information is appropriately submitted in good time and is verifiable, and that
the party has acted to the best of its ability.
(4) If
evidence or information is not accepted by the Commission, a supplying party
shall be informed forthwith of the reasons therefor and shall be granted an
opportunity to provide further explanations within such time limit as the
Commission may specify.
(5) If
determinations, including those regarding the amount of countervailable
subsidies, are based on the provisions of sub-section (1) including any
information supplied in an application it shall, where practicable and with due
regard to the time limits of an investigation, be checked by the Commission by
reference to information from other independent sources which may be available
including. published price lists, official import statistics and customs
returns, or information obtained from other interested parties during the
investigation.
(6) If
an interested party does not co-operate, or co-operates only partially so that
relevant information is thereby withheld, this may result in adverse inferences
being drawn against the party withholding such relevant information.
29. Confidentiality.-(1) Subject to
sub-section (2), the Commission shall, during and after an investigation, keep
confidential any information submitted to it and such information shall not be
disclosed without specific permission of the party submitting it.
(2)
Information which is,---
(a) by nature
confidential, because its disclosure shall be of significant competitive
advantage to a competitor, or because its disclosure would have a significantly
adverse effect upon a person supplying the information, or upon a person from
whom the information was acquired, or where the Commission determines such
information to be of a confidential nature for any other reason; or
(b) provided on a
confidential basis by parties to an investigation, shall, upon good cause
shown, be treated as confidential by the Commission.
(3) The
following types of information shall be deemed to be by nature confidential,
unless the Commission determines that disclosure in a particular case would
neither be of significant competitive advantage to a competitor nor have a
significantly adverse effect upon a person supplying an information or upon a
person from whom such information was acquired, namely:---
(a) business or trade
secrets concerning the nature of a product, production processes, operations,
production equipment, or machinery;
(b) information concerning
financial condition of a company, which is not publicly available; and
(c) information concerning
costs, identification of customers, sales, inventories, shipments, or amount or
source of any income, profit, loss or expenditure related to the manufacture
and sale of a product.
(4) Any
party seeking any information to be kept confidential shall request for the
same at the time the information is submitted, along with the reasons
warranting confidentiality. The Commission shall consider such requests
expeditiously and inform the party submitting the information if it determines
that the request for keeping the information confidential is not warranted.
(5) Any
party sublJ1itting any information with the request to keep it confidential
shall furnish a non-confidential summary thereof Such summary may take the form
of ranges or indexation of figures provided in a confidential version, or
marked deletions in text or in such other form as the Commissionmay require:---
Provided that such non-confidential summary shall
permit a reasonable understanding of the substance of any information submitted
in confidence:---
Provided
further that the deletion in text shall, unless otherwise allowed by the
Commission, only relate to names of any buyer or supplier.
(6) In
exceptional circumstances, parties may indicate that information for which
confidentiality is sought is not susceptible of summary, in which case a
statement of the reasons why summarisation is not possible shall be provided:---
Provided
that where the Commission concludes that a non-confidential summary provided
fails to satisfy the requirements of sub-section (5), it may determine that the
request for keeping an information confidential is not warranted,
(7) If
the Commission finds that a request for keeping an information confidential is
not warranted, and if the supplier of the information is unwilling to make the
information public or to authorise the disclosure in generalised or summary
form, the Commission shall disregard such information, and return the
information concerned to the party submitting it.
(8) Save
for sub-section (l0), notwithstanding anything contained in this Ordinance or
in any other law for the time being in force, any confidential information
received or obtained, directly or indirectly, by the Commission pursuant to or
in connection with an investigation shall not be subject to disclosure by the
Commission to any Ministry, Division, department, agency or instrumentality of
the Federal Government or a Provincial Government without the prior permission
of the party submitting such confidential information:---
Provided
that no such permission shall be required in case where issues of National
Security or Defense are involved. In this regard, the Commission shall decide
as to whether the issues of National Security or Defense are involved in a case
or not.
(9) Information
received pursuant to this Ordinance shall be used only for the purpose for
which it was requested.
(10) The provisions of
sub-section (8) shall not preclude the supply of information called for by the
Appellate Tribunal pursuant to section 33:---
Provided
that the obligation to protect confidential information as provided for in this
Chapter shall, mutatis mutandis, extend to the Appellate Tribunal, subject to
the proviso to sub-section (8).
30.
Disclosure.-(l) Any applicant, importer and exporter and their
representative association and an exporting country may request disclosure by
the Commission of the details underlying the essential facts and considerations
on the basis of which provisional countervailing duties have been imposed:---
Provided
that requests for such disclosure shall be made in writing immediately
following imposition of provisional countervailing duties and in any event no
later than fifteen days thereof and a disclosure by the Commission shall be
made in writing as soon as possible thereafter.
(2) The
parties specified in sub-section (1) may request for a final disclosure by the
Commission of the essential facts and considerations on the basis of which it
is intended to recommend imposition of definitive countervailing duties, or
termination of an investigation or proceedings without imposition of duties,
particular attention being paid to disclosure of any facts or considerations
which are different from those used for any provisional countervailing duties.
(3)
Requests for final disclosure shall be addressed to the Commission in writing
and be received, in cases where provisional countervailing duty has been
applied, not later than one month after imposition of that duty.
(4)
Where a provisional countervailing duty has not been imposed, parties shall be
provided with an opportunity to request final disclosure within such time
limits as may be determined by the Commission.
(5)
Final disclosure shall be given in writing and shall be made, with due regard
to the protection of confidential information pursuant to section 29, as soon
as possible, and normally, not later than one month prior to a definitive
determination.
(6)
Where the Commission is not in a position to disclose certain facts or
considerations at that time, these shall be disclosed as soon as possible thereafter
.Disclosure shall not prejudice any subsequent decision which may be taken by
the Commission but where such decision is based on any different facts and
considerations these shall be disclosed as soon as possible.
(7)
Representations which are made after a final disclosure is given, shall be
taken into consideration only if received within such period as may be
determined by the Commission in each case, which shall be at least ten days,
due consideration being given to the urgency of the matter.
31. Relationships
between countervailing duty measures and multilateral remedies.-Where an investigated
product is made subject to any countermeasures imposed following recourse to
the dispute settlement procedures provided for in the Agreement on Subsidies and
such measures are appropriate to remove the injury caused by any
countervailable subsidies, any countervailing duty imposed with regard to such
product under this Ordinance shall immediately be terminated by the Commission.
PART XIII
APPEAL TO THE APPELLATE
TRIIBUNAL
32.
Appeal to the Appellate Tribunal.-(1) Without prejudice to the provisions
of Anti-Dumping Ordinance, 2000 (LXV of2000), the Appellate Tribunal shall also
exercise jurisdiction under sub-section (2) under this Ordinance.
(2) Any
interested party may prefer an appeal to the Appellate Tribunal against,---
(a) the initiation of an
investigation or a preliminary determination, where it is alleged that it does
not satisfy the requirements of section 11 and section 13 respectively;
(b) an affirmative or
negative final determination by the Commission;
(c) any final determination
pursuant to a review;
(d) an order of the
Commission for termination of investigation under section 15; or
(e) a determination of the
Commission under section 22.
(3) An
appeal under clause (a) of sub-section (2) shall be filed within thirty days of
the publication of notice of initiation or notice preliminary determination, as
the case may be.
(4) The
Appellate Tribunal shall handle such an appeal as a priority and shall issue
its decision on the appeal within forty five days of the filing of an appeal
with the Appellate Tribunal.
(5) The
filing of an appeal under clause (a) of Sub-section (2) shall have no effect on
the Commission's conduct of investigation.
(6) An appeal under clauses (b) to (e) of sub-section
(2) shall be filed within forty-five days from the date of publication in
newspapers of a public notice or as the case may be, date of the decision of
the Commission of any affirmative or negative final decision or determination
or termination of investigation by the Commission, and shall be in such form
and contain such information as may be prescribed.
(7) Such
an appeal shall be disposed of and the decision of the Appellate Tribunal
pronounced, as expeditiously as possible, but no later than ninety days from
the date of receipt of an appeal compliant with the requirements contained in
this Ordinance, except in extraordinary circumstances and on grounds to be
recorded. The Appellate Tribunal shall hear' the appeal from day-to-day.
(8) In
examining an appeal under sub-section (2), the Appellate Tribunal may make such
further inquiry as it may consider necessary, and after giving the Commission
and an appellant an opportunity of being heard, pass such order as it thinks fit,
confirming, altering or annulling a determination of the Commission appealed
against:---
Provided
that in case the Appellate Tribunal decision requires action by the Commission,
it shall remand the case to the Commission for decision.
(9)
After examining the appeal, the Appellate Tribunal shall assess the facts
related to the impugned determination of the Commission. The Appellate Tribunal
shall determine whether the establishment of the facts of the Commission was
proper and whether the Commission's evaluation of those facts was unbiased and
objective. The Appellate Tribunal shall base its determination on the official
record maintained by the Commission or any other documents relied upon by the
Commission in reaching the impugned determination.
(10) Where
the Appellate Tribunal determines that the Commission's establishment of the
facts was proper and its evaluation was unbiased and objective, it shall
confirm the impugned determination of the Commission provided that the
Appellate Tribunal is satisfied that in reaching its determination, the
Commission complied with the relevant provisions of this Ordinance.
(11) The
decision of the Appellate Tribunal shall be in writing, detailing the issues
raised in the appeal and the arguments adopted by the appellant and the
Commission. The Appellate Tribunal shall also provide reasons for reaching its
decision with reference to the provisions of this Ordinance and the facts of
the ease.
(12) The
Appellate Tribunal shall provide copies of its decision to all the appellants
and respondents including the Commission no later than five days from the date
of rendering its decision.
(13) The
Appellate Tribunal may, if it deems necessary, require an appellant to provide
security in such form as may be prescribed, at the time of filing of an appeal
(14) The
decision of the Appellate Tribunal shall be appealable in the High Court. The
High Court shall decide the appeal within thirty days:---
Provided
that The Appellate Tribunal may, if it thinks fit, accept an application from
any party to an appeal in which the Appellate Tribunal has rendered its
decision, for a clarification of any of the issues raised by the-Appellate
Tribunal in its decision:---
Provided
further that such application shall specify the precise issue in respect of
which a clarification is sought and give reasons as to why a clarification is
necessary
(15) The
Appellate Tribunal shall only accept an application under the first proviso of
sub-section (14) if it is satisfied that a material issue discussed in its
decision requires further clarification or elaboration. The party likely to be
adversely affected by such clarification shall also be issued a notice by the
Appellate Tribunal:---
Provided
that no such application shall be accepted by the Appellate Tribunal later than
thirty days of its decision.
(16) The
Appellate Tribunal shall perform its functions under this Ordinance in
accordance with such procedures as may be prescribed.
(17) A
determination of the Commissions hall be given full force and effect during the
pendency of any appeal of such determination
(18) A
person duly authorized by any party is entitled to appear, plead and act on
behalf of that interested party before the Appellate Tribunal.
33.
Power of the Appellate Tribunal to call for and examine record.- The Appellate
Tribunal may call for and examine any records of an investigation conducted by
the Commission and any other information or documents relied upon by the
Commission in reaching a determination appealed against for the purpose of
satisfying itself as to the legality or propriety of an impugned determination
of the Commission.
PART XVI
MISCELLANEOUS
34.
Power to make rules.-(1) The Federal Government may, in consultation with
the Commission by notification in the official Gazette, make rules for carrying
out the purposes of this Ordinance.
(2) In
particular and without prejudice to the generality of the foregoing power, such
rules may provide for the manner in which any investigation may be conducted,
the manner in which an investigated product may be identified, the factors to
which regard shall be had in any such investigation, the manner of assessment,
levy and collection of any countervailing duty, whether preliminary or
definitive, and for all matters connected with an investigation.
35.
Protection to persons prejudiced in employment because of assisting the
Commission.-(l) An employer shall not,---
(a) dismiss an employee,
or prejudice an employee in his employment, because the employee has assisted
the Commission in connection with an inquiry or investigation under this
Ordinance; or
(b) dismiss or threaten to
dismiss an employee, or prejudice or threaten to prejudice an employee in his
employment, because the employee proposes to assist the Commission in
connection with an inquiry or investigation under this Ordinance.
(2) For
the purposes of sub-section (1), a person shall be taken to assist the
Commission in connection with an inquiry if the person,---
(a) gives information,
whether orally or in writing, or gives documents; to the Commission in
connection with an inquiry or investigation under this Ordinance; or
(b) gives evidence, or
produces documents, at an inquiry, investigation or hearing held under this
Ordinance.
36. Public file to be maintained for interested party
and access thereto.-(1) The Commission shall establish and maintain a
file relating to each investigation or review pursuant to this Ordinance and
subject to the requirement to protect confidential information under section
29. The Commission shall place in such file,---
(a) all public notices
relating to an investigation or review;
(b) all materials,
including questionnaires, responses to questionnaires, and written
communications submitted to the Commission;
(c) all other information
developed or obtained by the Commission; and
(d) any other documents the
Commission deems appropriate for disclosure to an interested party.
(2) The
file to be maintained under sub-section (I) shall be available to any
interested party for review and copying at the offices of the Commission,
during such time as the Commission may specify, through out the course of an
investigation or review and any appeal under section 32.
37.
Official file to be maintained by the Commission.-(l) The Commission
shall establish and maintain an official file relating to each investigation or
review pursuant to this Ordinance and shall place in such file,---
(a) all materials, papers
and documents, confidential or otherwise, including questionnaires, responses
to questionnaires, and written communications submitted to or by the Commission
in connection with an investigation or review;
(b) all documents relating
to or setting out any calculations made by the. Commission in connection with
an investigation or review;
(c) all internal
correspondence or memoranda of the Commission relating to or in connection with
an investigation or review that are relevant to the calculation of dumping
margin or determination of injury including, any correspondence with or between
any other Ministry, Division, department, agency or instrumentality of the
Federal Government or any Provisional Government;
(d) any other information
developed, obtained or relied on by the Commission in connection with an
investigation or review; and
(e) any other document or
information that the Commission deems appropriate for placing in the official
file.
(2) The
file to be maintained under sub-section (1) shall only be for the internal use
of the Commission and for the Appellate Tribunal in connection with an appeal
under section 32.
38.
Appointment of advisers and consultants.(1) Subject to sub-
section (2), the Commission may, employ and pay consultants, agents, 'technical,
professional and other advisers, including bankers, economists, actuaries,
accountants, lawyers and other persons to do any act required to be done in the
exercise of its powers, the performance of its functions or for the better
implementation of the purposes of this Ordinance.
(2) The
decision to employ and the terms and conditions of employment of external
advisers and consultants pursuant to sub-section (1) shall be made by the
Commission in accordance with such policy guidelines as may be established by
the Federal Government, in consultation with the Commission, from time to time.
39.
Removal of difficulties.- The Federal Government may for the purpose of
removing any difficulties in relation to any matters under this Ordinance, make
such orders as may appear to it to be necessary for the purpose of removing the
difficulty:---
Provided
that no such power shall be exercised after the expiry of two years from the
commencement of this Ordinance.
40.
Ordinance to override other laws.- The provisions of this Ordinance shall
have effect notwithstanding anything inconsistent therewith contained in any
other law for the time being in force:---
Provided
that this provision shall not apply on the National Tariff Commission Act, J
990 (VI of 1990).
THE FIRST SCHEDULE
[See section 5(6) (a)]
ILLUSTRATIVE LIST OF
EXPORT SUBSIDIES
1. In
this Schedule, unless there is anything repugnant in the subject or context,---
(a) “commercially available”
means that the choice between domestic and imported products is unrestricted
and depends only on commercial considerations;
(b) “direct taxes” means
taxes on wages, profits, interests, rents, royalties, and all other forms of
income, and taxes on the ownership of real property;
(c)
“cumulative
indirect taxes” means indirect taxes which are multi-staged taxes levied where
there is no mechanism for subsequent crediting of the tax if goods or services
subject to tax at one stage of production are used in a succeeding state of
production;
(d) “import charges” means
tariffs, duties, and other fiscal charges that are levied on imports;
(e) “indirect taxes” means
sales, excise, turnover, value added, franchise, stamp, transfer, inventory and
equipment taxes, border taxes and all taxes other than direct taxes and import
charges;
(f) “prior-stage indirect
taxes” means those indirect taxes levied on goods or services used directly or
indirectly in making a product;
(g) “remission” of taxes
includes the refund or rebate of taxes; and
(h) “remission or drawback”
includes the full or partial exemption or deferral of import charges:---
Provided
that deferral may not amount to an export subsidy where, for example,
appropriate interest charges are collected.
2. The
following is an illustrative list of export subsidies, namely:---
(a) any provision by a government
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 a government, on
terms more favourable than for domestic shipments;
(d) any provision by a
government or its 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) any full or partial
exemption, remission, or deferral specifically related to exports, of direct
taxes or social welfare charges paid or payable by industrial or commercial
enterprises;
(f) any allowance of
special deductions directly related to exports or export performance, over and
above those granted in respect of production for domestic
consumption, incalculation of the base on which direct taxes are charged;
(g) any exemption or
remission, in respect of the production and distribution of exported products,
of indirect taxes in excess of those levied in respect of production and
distribution of like products when sold for domestic consumption;
(h) any exemption,
remission or deferral of prior-stage cumulative indirect taxes on goods or
services used in the production of exported products in excess of any
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 any prior-stage cumulative indirect taxes are levied on inputs
that are' consumed in the production of an exported product making normal
allowance for waste. This clause shall be interpreted in accordance with the guidelines
on consumption of inputs in a production process contained in the Second
Schedule. For the avoidance of doubt, the provisions of this clause shall not
apply to value-added tax systems and border-tax adjustment in lieu thereof and
the provisions of clause (g) shall exclusively cover issues relating to
excessive remission of value-added taxes;
(i) any remission or
drawback of import charges in excess of those levied on imported inputs that
are consumed in the production of an exported product, making normal allowance
for waste; provided, however, that in particular cases a firm may use a
quantity of home market inputs equal to, and having the same quality and
characteristics as, the imported inputs as a substitute for them in order to
benefit from this ,provision if the import and the corresponding export
operations both occur within a reasonable time period, not to exceed two years.
This clause shall be interpreted in accordance with the guidelines on
consumption of inputs in the production process contained in the Second
Schedule and the guidelines in the determination of substitution drawback
systems as export subsidies contained in the Third Schedule;
(j) any provision by a
government or, special institutions controlled by a government, of export credit
guarantee or insurance programmes, of insurance or guarantee programmes against
increases in the cost of exported products or of exchange risk programmes, at
premium rates which are inadequate to cover long-term operating costs and
losses of the programmes;
(k) any grant by a
government or special institutions controlled by or acting under the authority
of a government, or both, of export credits at rates below those which they
actually have to pay for the funds so employed or, would have to pay if they
borrowed on international capital markets in order to obtain funds of the same
maturity and other credit terms and denominated in the same currency as an
export credit or, the payment by them of all or part of the costs incurred by
exporters or financial institutions in obtaining credits, insofar as they are
used to secure a material advantage in the field of export credit terms.
Provided, however, that if a country which is a member of the WTO is a party to
an international undertaking on official export credits to which at least
twelve original such members are parties as of the first day of January, 1979,
or, a successor undertaking which has been adopted by those original members,
or if in practice a country which is member of the WTO applies the interest
rates provisions of the relevant undertaking, an export credit practice which
is in conformity with those provisions shall not be considered an export
subsidy; and
(I) any other charge on a
public account constituting an export subsidy in the sense of Article XVI of
the General Agreement on Tariffs and Trade, 1994. .
THE SECOND SCHEDULE
(See the First
Schedule)
GUIDELINES ON
CONSUMPTION OF INPUTS IN THE PRODUCTION PROCESS
1. For
the purposes of this Schedule “inputs consumed in the production process” means
inputs physically incorporated, energy, fuels and oil used in a production
process and catalysts which are consumed in the course of their use to obtain
an exported product.
2.
Indirect tax rebate schemes can allow for exemption, remission or deferral of
prior-stage cumulative indirect taxes levied on inputs that are consumed in the
production of an exported product making normal allowance for waste. Similarly,
drawback schemes can allow for the remission or drawback of import charges
levied on inputs that are consumed in the production of an exported product
making normal allowance for waste.
3.The
illustrative list of export subsidies in the First Schedule makes reference to
the term “inputs that are consumed in the production of the exported product”
in clauses (h) and (i) of para 2 thereof. Pursuant to clause (h) of para 2 of
the First Schedule, indirect tax rebate schemes can constitute an export
subsidy to the extent that they result in exemption, remission or deferral of
prior-stage cumulative indirect taxes in excess of the amount of such taxes
actually levied on inputs that are consumed in the production of an exported
product. Pursuant to clause (i) of para 2 of the drawback schemes can constitute an export subsidy to
the extent that they result in a remission or drawback of import charges in
excess of those actually levied on inputs that are consumed in the production
of an exported product. Both the said clauses stipulate that normal allowance
for waste must be made in findings regarding consumption of inputs in the
production of an exported product. Clause (i) of para 2 of the First Schedule
also provides for substitution, where appropriate.
4.In examining whether inputs are
consumed in the production of an exported product, as part of a countervailing
duty investigation pursuant to this Ordinance, the Commission should normally
proceed on the following basis, namely:---
(a) where it
is alleged that an indirect tax rebate scheme, or a drawback scheme, conveys a
subsidy by reason of over-rebate or excess drawback of indirect taxes or import
charges on inputs consumed in the production of an investigated product, the
Commission shall normally first determine whether the government of an
exporting country has in place and applies a system or procedure to confirm
which inputs are consumed in the production of an exported product and in what
amounts. Where such a system or procedure is determined to be applied, the
Commission shall normally then examine the system or procedure to see whether
it is reasonable and effective for the purpose intended, and based on generally
accepted commercial practices in the country of export. The Commission may deem
it necessary to carry out, in accordance with section 26, certain practical
tests in order to verify information or to satisfy itself that the system or
procedure is being effectively applied;
(b) where
there is no such system or procedure, or where it is not reasonable, or where
it is instituted and considered reasonable but is found not to be applied or
not to be applied effectively, a further examination by an exporting country
based on the actual inputs involved will normally need to be carried out in the
context of determining whether an excess payment occurred. If the Commission
deems it necessary, a further examination may be carried out in accordance with
clause (a) of this para;
(c) the
Commission must normally treat inputs as physically incorporated if such inputs
are used in the production process and are physically present in a product
exported, and an input need not be present in a final product in the same form
in which it entered the production process;
(d) in determining the amount of a particular input that
is consumed in the production of an exported product, a “normal allowance for
waste” must normally be taken into account by the Commission, and such waste
must normally be treated as consumed in the production of an exported product.
The term “waste” refers to that portion of a given input which does not serve
an independent function in the production process, is not consumed in the
production of an exported product, for reasons such as inefficiencies, and is
not recovered, used or sold by the same manufacturer; and
(e) the
Commission's determination of whether the claimed allowance for waste is “normal”
shall normally take into account the production process, the average experience
of an industry in the country of export, and other technical factors, as
appropriate. The Commission shall bear in mind that an important question is
whether the authorities in an exporting country have reasonably calculated the
amount of waste, when such an amount is intended to be included in a tax or
duty rebate or remission.
THE THIRD SCHEDULE
[See the First Schedule and Second Schedule]
GUIDELINES IN THE DETERMINATION OF SUBSTITUTION
DRAWBACK SYSTEMS AS EXPORT SUBSIDIES
1. Drawback systems can allow for
refund or drawback of import charges on inputs which are consumed in a
production process of another product and where export of this latter product
contains domestic inputs having the same quality and characteristics as those
submitted for imported inputs. Pursuant to clause (i) of para 2 of the First
Schedule, substitution drawback systems can constitute an export subsidy to the
extent that they result in an excess drawback of import charges levied
initially on imported inputs for which drawback is being claimed.
2. In examining any.
substitution drawback system as part of a an investigation the Commission shall
normally proceed on the following basis, namely:---
(a) clause
(i) of para 2 of the First Schedule stipulates that home market inputs may be
substituted for imported inputs in the production of a product for export
provided such inputs are equal in quantity to, and have same quality and
characteristics as, imported inputs being substituted. The existence of a
verification system or procedure is important because it enables the government
of an exporting country to ensure and demonstrate that the quantity of inputs
for which drawback is claimed does not exceed the quantity of similar products
exported, in whatever form, and that there is no drawback of import charges in
excess of those originally levied on imported inputs in question;
(b) where it
is alleged that a substitution drawback system conveys a subsidy, the
Commission shall normally first proceed to determine whether the government of
an exporting country has in place and applies a verification system or
procedure. Where such a system or procedure is determined to be applied, the
Commission shall normally then examine the verification procedures to see
whether they are reasonable and effective for the purpose intended, and based
on generally accepted commercial practices in the country of export. To the
extent that any procedures are determined to meet this test and are effectively
applied, no subsidy Will be presumed to exist. It may be deemed necessary by
the Commission to carry out, in accordance with section 26, certain practical
tests in order to verify information or to satisfy itself that verification
procedures are being effectively applied;
(c) where
there are no verification procedures, or where they are not reasonable, or
where such procedures are instituted and considered reasonable but are found
not be actually applied or not be applied effectively, there may be a subsidy.
In such cases, further examination by an exporting country based on actual
transactions involved would need to be carried out to determine whether an
excess payment occurred. If the Commission deems it necessary, a further
examination mat be carried out in accordance with clause (b); and (d) the
existence of a substitution drawback provision under which exporters are
allowed to select particular import shipments on which drawback is claimed
shall not of itself be considered by the Commission to convey a subsidy.
3. An excess drawback of import charges
within the meaning of clause (i) of para 2 of the First Schedule, would be
deemed to exist where a government paid interest on any monies refunded under
its drawback schemes, to the extent of an interest actually paid or payable.
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| LL. B. – III | LL. B.
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