TWN Info Service on WTO and Trade Issues (Nov10/05)
Rules Chair holds sessions on horizontal subsidies,
Geneva, 8 Nov (Kanaga Raja) -- The Chair of the WTO Negotiating Group on Rules held three days of informal plurilateral sessions last week on the issues of horizontal subsidies and anti-dumping, with the aim of generating useful ideas for the negotiations.
At an informal plenary meeting of the Rules Group
on 5 November, the Chair, Ambassador Dennis Francis of
According to trade officials, the Chair told Members that the experience proves that there is value in working in a small format, and that he saw real engagement and openness from delegations.
According to the Chair, the plurilateral sessions on horizontal subsidies covered several issues.
Among these is a proposal by
According to the Chinese proposal, one of the goals of the Doha Development Agenda rules' negotiations is to clarify the current rules and to strengthen the multilateral disciplines on countervailing duty investigations. To ensure that investigations are conducted in a transparent manner and that the rules are fully respected, as provided in the SCM Agreement, the investigating authority is required to issue a public notice regarding the alleged subsidies to be investigated prior to initiation of an investigation.
However, said China, it has happened in recent years that authorities investigate newly alleged subsidies in the course of an investigation, which were not included in the written application which formed the basis for the initiation of the investigation.
China is concerned about the increasing tendency to investigate such subsidies on the following grounds: (1) The authorities are not in a position to examine whether the requirements of accuracy and adequacy of the evidence as well as the time limit for an application and initiation of an investigation are met; (2) The consultations requirement prior to the initiation of any investigation in accordance with Article 13.1 of the SCM Agreement is bypassed; and (3) Interested parties and interested Members do not have sufficient time and full opportunity to obtain relevant and adequate information regarding the new allegation(s) in question or to respond to the questionnaires.
According to the Chinese paper, which contains a proposed textual amendment to Article 11 of the SCM Agreement, these practices have created a burden for the interested parties and/or interested Members and significantly prejudiced procedural rights of the Member(s) concerned as well as the other interested parties.
To ensure that the investigation procedure is
conducted in an equitable, fair, and transparent manner and that the
rights and obligations of the interested parties are well balanced,
(1) as a general rule, the investigating authorities shall not investigate an alleged subsidy which is not included in the original application and/or the notice of initiation.
(2) in exceptional circumstances, such newly alleged subsidies may be investigated, but only if: (i) the interested Members are invited for consultations regarding the alleged subsidy; (ii) the interested parties and interested Members are provided with adequate information on the alleged subsidies; and (iii) a reasonable period of time is given for responding to the questionnaires, prior to an investigation of the newly alleged subsidies.
According to the Chair, some Members expressed concern that the proposal will encourage governments not to comply with subsidy notification obligations of the WTO.
Also covered in the plurilateral sessions on horizontal subsidies is the EU's non-paper against long-term loans at low rates by government institutions.
According to the Chair, some delegations were of the view that government effort regarding market failures was both legitimate and desirable.
Also taken up was a proposal by India and several other delegations that export competitiveness in Article 27 of the Subsidies Agreement (developing countries found to be export competitive - 3.25 per cent of world trade - in a particular product should phase out export subsidies over an eight-year period) be modified to use a five-year moving average instead of the current two years to calculate export competitiveness.
(The proposal - TN/RL/GEN/136 - was tabled by
According to the Chair, some delegations said that the 3.25% figure is already substantial, and the country concerned can already stand on its own two feet on that product share.
Other subjects that were discussed under the rubric of horizontal subsidies were footnote 2 of the Chair's draft text concerning "benefit"; "de facto specificity"; new language in footnote 6; Article 6.4 on evidence; and proposed change in the title of Article 14 ("Calculation of the Amount of a Subsidy").
According to trade officials, the plurilateral sessions on anti-dumping discussed the issues of "zeroing", de minimis dumping and several other topics.
On the issue of "zeroing", the Chair said that some delegations supported a blanket prohibition on the use of this method of calculating dumping margins, adding that WTO jurisprudence agrees with this view. Some delegations did not support prohibiting zeroing in all contexts, and instead supported its use in cases of targeted dumping.
On the issue of de minimis dumping, the Chair said that some delegations wanted the existing 2 per cent de minimis dumping rate (at or below which no anti-dumping measure is imposed) to be raised to 5 per cent.
Other delegations objected, saying that the 2% dumping rate can already cause injury to domestic industry, he added.
Other topics that were discussed during the plurilateral sessions on anti-dumping included causation of injury, cost allocation, currency conversion, and threat of material injury.
The Chair summed up by saying that the discussions during the week have been very useful, and that it was important that delegations continue and intensify them.
The Rules Group had held an informal meeting on 1 November where the group discussed several separate proposals.
Proposals were tabled by
According to the Indian proposal, as per Article 12.7 of the ASCM, in case any interested party or interested Member refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final determination may be made on the basis of the facts available. Article 6.8 of the Anti-Dumping Agreement contains similar provision regarding use of facts available by the investigating authorities.
However, said India, this is subject to observing the provisions of Annex II of the Anti-Dumping Agreement which lay down the guidelines for use of best information available.
"It is the experience of the Members that
lack of the guidelines in the ASCM (SCM Agreement) regarding use of
facts available similar to those in the Anti-Dumping Agreement, may
at times, give much wider scope to the investigating authorities to
use facts available. This may not be a desirable situation and this
may at times lead to use of adverse facts resulting in unreasonable
determinations by the authorities," added
According to the Chinese proposal, Article 12.7 of the ASCM provides that "in cases in which any interested Member or interested party refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be made on the basis of the facts available".
"It is our experience as well as the observation
of many Members that, given the nature and the scope of the information
requested by the investigating authorities for conducting the CVD (countervailing
duty) investigations, the lack of specific rules and guidance in the
ASCM concerning the use of the 'facts available' would leave much space
and broad scope for the investigating authorities to interpret it in
a discretionary manner and thus make it more easily to use the facts
available to their determinations, affirmative or negative. This may
potentially lead to the abuse of countervailing measures," said
The Chinese paper, which also contains proposed textual amendments, stresses that, by introducing certain provisions on the use of the "facts available" and amending relevant provisions of the ASCM, a relatively clear guideline may help the investigating authorities examine and consider the information provided by relevant interested party and interested Member in an unbiased and objective manner, thus to prevent the abuse of the countervailing measure.
"In our view, this is one of the best ways
to maintain the effectiveness of the trade remedy mechanism," said
According to trade officials, some delegations voiced their support, while some others stressed on the differences between anti-dumping and countervailing duty investigations, in particular, the involvement of governments in subsidy cases.
The Group also discussed a proposal by
(As per the current provisions of Article 14(b): "a loan by a government shall not be considered as conferring a benefit, unless there is a difference between the amount that the firm receiving the loan pays on the government loan and the amount the firm would pay on a comparable commercial loan which the firm could actually obtain on the market. In this case the benefit shall be the difference between these two amounts.")
The next meeting of the Rules Group is scheduled for 6-10 December. +