Lecture 6

Question 1

CVD Scenario 1

Answer 1

1. Country A subsidizes exports to Country B, causing material injury to domestic producers of product in country B

Question 2

CVD Scenario 2

Answer 2

Country A subsidizes exports to Country C, squeezes out exports from Country B to Country C’s market

Question 3

CVD Scenario 3

Answer 3

Country A subsidizes domestic production of products for its own market, having the effect of squeezing out imports from country B into country A’s market

Question 4

What are the conditions stated in Article VI of Gatt?

Answer 4

1. members can impose cvds in domestic markets but not in excess of estimated bounty
2. cvd cannot be imposed unless there has been a determination that the effect of the subsidization will cause injury to a domestic product.

Question 5

What does article XVI of gatt deal with?

Answer 5

export subsidies, subsidies result in the sale of such a product at a price lower than the comparable price for the like product in the domestic market.

Question 6

What is the process identified in Article XVI GATT

Answer 6

if any contracting parties must notify other contracting parties of the nature/extent of the subsidization and of its likely effects on imports/exports

Question 7

Subsidies on primary products

Answer 7

should not be applied in a manner which results in the subsidizing party having more than an equitable share of world export trade in that product.

Question 8

Consultation provisions of Article XVI

Answer 8

ineffectual, additional provisions on export subsidies were not adopted by many member countries, mainly developing countries.

Question 9

Tokyo Round

Answer 9

• plurilateral negotiations that ended late 1970s, established a more detailed subsidies code that attempted to set out basic disciplines for two tracks of complaints

Question 10

What were the two tracks of complaints addressed in the Tokyo Round?

Answer 10

1. unilateral imposition of cvds by members pursuant to domestic countervailing laws
2. subsidies falling into three of the scenarios described could constitute a formal complaint under the dispute settlement provisions of GATT

Question 11

Uruguay Round

Answer 11

• part of the single undertaking that all members of WTO were required to commit themselves to (multilateral agreement, in contrast to the plurality of the Tokyo Round code)

Question 12

How are the Tokyo and Uruguay Rounds similar?

Answer 12

they both preserve two tracks for objection to other countries’ subsidies policies:

1. The unilateral imposition of countervailing duties on subsidized imports
2. filing of a formal complaint with the WTO dispute settlement body, with the possibility of retaliatory sanctions

• SCM essentially adopted a red light, yellow light, green light approach.

Question 13

Article 3 SCM prohibits two classes of subsidies

Answer 13

• subsidies contingent, in law or fact, on export performance
• subsidies contingent on the use of domestic over imported goods (red light category)

Question 14

Article 8 SCM declared certain subsidies non actionable

Answer 14

• subsidies for research development, certain types of assistance for disadvantaged regions, subsidies for compliance with environmental regulations (green light category)

Question 15

What are the yellow light class of subsidies?

Answer 15

Deemed to be actionable under Part III of the SCM Agreement

Question 16

What is a subsidy (Article 1 SCM)

Answer 16

must entail a financial contribution by government; government revenue otherwise due that is foregone or not collected, and must additionally confer a benefit by the subsidy in question

Question 17

What is an actionable subsidy?

Answer 17

Must also be specific as defined in Article 2, whereby the granting authority either explicitly or implicitly limits access to a subsidy to certain enterprises

Question 18

Article 5 GATT

Answer 18

no member shall cause the following adverse effects to the interests of any other members:

1. injury to domestic industry of another member
2. nullification or impairment of benefits accruing directly or indirectly to other members
3. serious prejudice to the interests of another member

Question 19

What is serious prejudice?

Answer 19

defined in Article 6 as arising in any case where one or several of the following apply:

1. impedes the imports of a like product of another member into the market of the subsidizing member
2. impedes the exports of a like product from a third country market
3. significant price suppression, price depression, or lost sales in the same market
4. the subsidy increases world market share of the subsidizing member

Question 20

What does Part 7 of the SCM establish?

Answer 20

a detailed annual reporting requirements for members with respect to actionable subsidies granted or maintained within their territories.

Question 21

What does Part V SCM set out?

Answer 21

procedural provisions governing the unilateral imposition of countervailing measures

Question 22

What is a subsidy according to WTO?

Answer 22

a financial contribution by a government or any public body within the territory of a member whereby a benefit is thereby conferred.

Question 23

EC-Large Civil Aircraft(2010)

Answer 23

• The Panel noted that loan guarantees benefit their recipients because they enable them to obtain lower prices for the loans guaranteed.
• the assessment of potential direct transfers of funds should focus on the existence of a government practice that involves an obligation to make a direct transfer of funds, and is claimed to be capable of conferring a benefit on the recipient.

Question 24

What is the meaning of general infrastructure according to EC Large Civil aircraft (2010)?

Answer 24

case by case basis, and any other factors that tend to demonstrate that infrastructure was/was not provided for use of a single entity or limited entities

Question 25

US-FSC (2000)

Answer 25

• tax exceptions given to offshore foreign sales corps by the US
• ‘otherwise due’ requires a comparison bw revenues raised and that this varies between members according to their own tax scheme

Question 26

What is the meaning of ‘otherwise due’?

Answer 26

requires a comparison between revenue raised and otherwise raised funds, the number varies between members

Question 27

US- Softwood lumber (2004

Answer 27

Canadian provincial governments made financial contributions to timber producers by providing them with rights to harvest standing timber through government stumpage programmes in return for royalties

Question 28

Canada- Aircraft (1999)

Answer 28

dispute bw Brazil and Canada over aircraft subsidies, AB held that a financial contribution must be provided on terms that are more advantageous than those that would have been available to the recipient on the market.

Question 29

US- Definitive anti Dumping and Countervailing Duties on Certain Products from China

Answer 29

• AB upheld Panel’s finding that US was able to reject in-country prices as a benchmark in analyzing the conferral of a benefit, given that the Chinese government was the predominant supplier of the relevant goods and as such prices were likely to be distorted.

Question 30

What is overtly discriminatory practice?

Answer 30

application of a rule that a foreign bid may be accepted only if it is a certain amt lower than the lowest domestic bid

Question 31

What is covert discrimination?

Answer 31

selective tendering processes, manipulation of timing and method in a bidding process

Question 32

What are the three types of procedures that are contemplated in the Agreement?

Answer 32

1. open
2. selective
3. limited

Question 33

What would happen if a complaint was upheld, as established in the Tokyo Round?

Answer 33

if upheld, this could eventually lead to the authorization of retaliatory trade sanctions against the country whose subsidies were held in violation of the disciplines set out in this Code

Question 34

What are remedies for multilateral agreements?

Answer 34

4. 7 SCM: the Panel is to recommend that the subsidy be withdrawn immediately
5. 9 SCM: complaining parties only take countermeasures commensurate with the degree and nature of the adverse effects determined to be caused by actionable subsidies