Article 1: Definition of a Subsidy
1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if:
(a)(1) there is a financial contribution by a government or any public body within the territory of a
Member (referred to in this Agreement as “government”), i.e. where:
(i) a government practice involves a direct transfer of funds (e.g. grants, loans, and equity infusion),
potential direct transfers of funds or liabilities (e.g. loan guarantees);
(ii) government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives
such as tax credits)(1);
(iii) a government provides goods or services other than general infrastructure, or purchases goods;
(iv) a 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 illustrated in (i) to (iii) above which would
normally be vested in the government and the practice, in no real sense, differs from practices
normally followed by governments;
Article 2: Specificity
2.1 In order to determine whether a subsidy, as defined in paragraph 1 of Article 1, is specific to an
enterprise or industry or group of enterprises or industries (referred to in this Agreement as
“certain enterprises”) within the jurisdiction of the granting authority, the following principles
shall apply:
(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 objective criteria or conditions(2) 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. The criteria or conditions must be clearly spelled out
in law, regulation, or other official document, so as to be capable of verification.
(c) If, notwithstanding any appearance of non-specificity resulting from the application of the
principles laid down in subparagraphs (a) and (b), there are reasons to believe that the subsidy may
in fact be specific, other factors may be considered. Such factors are: use of a subsidy programme
by a limited number of certain enterprises, predominant use by certain enterprises, the granting of
disproportionately large amounts of subsidy to certain enterprises, and the manner in which
discretion has been exercised by the granting authority in the decision to grant a subsidy(3). In
applying this subparagraph, account shall be taken of the extent of diversification of economic
activities within the jurisdiction of the granting authority, as well as of the length of time during
which the subsidy programme has been in operation.
2.2 A subsidy which is limited to certain enterprises located within a designated geographical region
within the jurisdiction of the granting authority shall be specific. It is understood that the setting or
change of generally applicable tax rates by all levels of government entitled to do so shall not be
deemed to be a specific subsidy for the purposes of this Agreement.
2.3 Any subsidy falling under the provisions of Article 3 shall be deemed to be specific.
2.4 Any determination of specificity under the provisions of this Article shall be clearly
substantiated on the basis of positive evidence.
Part II: Prohibited Subsidies
Article 3: Prohibition
3.1 Except as provided in the Agreement on Agriculture, the following subsidies, within the meaning
of Article 1, shall be prohibited:
(a) subsidies contingent, in law or in fact(4), whether solely or as one of several other conditions,
upon export performance, including those illustrated in Annex I(5);
(b) subsidies contingent, whether solely or as one of several other conditions, upon the use of
domestic over imported goods.
3.2 A Member shall neither grant nor maintain subsidies referred to in paragraph 1.
Article 4: Remedies
4.1 Whenever a Member has reason to believe that a prohibited subsidy is being granted or
maintained by another Member, such Member may request consultations with such other Member.
4.2 A request for consultations under paragraph 1 shall include a statement of available evidence
with regard to the existence and nature of the subsidy in question.
4.3 Upon request for consultations under paragraph 1, the Member believed to be granting or
maintaining the subsidy in question shall enter into such consultations as quickly as possible. The
purpose of the consultations shall be to clarify the facts of the situation and to arrive at a mutually
agreed solution.
4.4 If no mutually agreed solution has been reached within 30 days(6) of the request for
consultations, any Member party to such consultations may refer the matter to the Dispute
Settlement Body (“DSB”) for the immediate establishment of a panel, unless the DSB decides by
consensus not to establish a panel.
4.5 Upon its establishment, the panel may request the assistance of the Permanent Group of
Experts(7) (referred to in this Agreement as the “PGE”) with regard to whether the measure in
question is a prohibited subsidy. If so requested, the PGE shall immediately review the evidence
with regard to the existence and nature of the measure in question and shall provide an opportunity
for the Member applying or maintaining the measure to demonstrate that the measure in question is
not a prohibited subsidy. The PGE shall report its conclusions to the panel within a time-limit
determined by the panel. The PGE's conclusions on the issue of whether or not the measure in
question is a prohibited subsidy shall be accepted by the panel without modification.
4.6 The panel shall submit its final report to the parties to the dispute. The report shall be
circulated to all Members within 90 days of the date of the composition and the establishment of
the panel's terms of reference.
4.7 If the measure in question is found to be a prohibited subsidy, the panel shall recommend that
the subsidizing Member withdraw the subsidy without delay. In this regard, the panel shall specify
in its recommendation the time period within which the measure must be withdrawn.
4.8 Within 30 days of the issuance of the panel's report to all Members, the report shall be adopted
by the DSB unless one of the parties to the dispute formally notifies the DSB of its decision to
appeal or the DSB decides by consensus not to adopt the report.
4.9 Where a panel report is appealed, the Appellate Body shall issue its decision within 30 days
from the date when the party to the dispute formally notifies its intention to appeal. When the
Appellate Body considers that it cannot provide its report within 30 days, it shall inform the DSB in
writing of the reasons for the delay together with an estimate of the period within which it will
submit its report. In no case shall the proceedings exceed 60 days. The appellate report shall be
adopted by the DSB and unconditionally accepted by the parties to the dispute unless the DSB
decides by consensus not to adopt the appellate report within 20 days following its issuance to the
Members.(8)
4.10 In the event the recommendation of the DSB is not followed within the time period specified
by the panel, which shall commence from the date of adoption of the panel’s report or the
Appellate Body’s report, the DSB shall grant authorization to the complaining Member to take
appropriate(9) countermeasures, unless the DSB decides by consensus to reject the request.
4.11 In the event a party to the dispute requests arbitration under paragraph 6 of Article 22 of the
Dispute Settlement Understanding (“DSU”), the arbitrator shall determine whether the
countermeasures are appropriate.(10)
4.12 For purposes of disputes conducted pursuant to this Article, except for time periods specifically
prescribed in this Article, time periods applicable under the DSU for the conduct of such disputes
shall be half the time prescribed therein.
Part III: Actionable Subsidies
Article 5: Adverse Effects
No Member should cause, through the use of any subsidy referred to in paragraphs 1 and 2 of
Article 1, adverse effects to the interests of other Members, i.e.:
(a) injury to the domestic industry of another Member(11);
(b) nullification or impairment of benefits accruing directly or indirectly to other Members under
GATT 1994 in particular the benefits of concessions bound under Article II of GATT 1994(12);
(c) serious prejudice to the interests of another Member.(13)
This Article does not apply to subsidies maintained on agricultural products as provided in Article
13 of the Agreement on Agriculture.
Article 6: Serious Prejudice
6.1 Serious prejudice in the sense of paragraph (c) of Article 5 shall be deemed to exist in the case
of:
(a) the total ad valorem subsidization(14) of a product exceeding 5 per cent(15):
(b) subsidies to cover operating losses sustained by an industry;
(c) subsidies to cover operating losses sustained by an enterprise, other than one-time measures
which are non-recurrent and cannot be repeated for that enterprise and which are given merely to
provide time for the development of long-term solutions and to avoid acute social problems;
(d) direct forgiveness of debt, i.e. forgiveness of government-held debt, and grants to cover debt
repayment.(16)
Article 7: Remedies
7.4 If consultations do not result in a mutually agreed solution within 60 days(20), any Member
party to such consultations may refer the matter to the DSB for the establishment of a panel,
unless the DSB decides by consensus not to establish a panel. The composition of the panel and its
terms of reference shall be established within 15 days from the date when it is established.
7.5 The panel shall review the matter and shall submit its final report to the parties to the dispute.
The report shall be circulated to all Members within 120 days of the date of the composition and
establishment of the panel’s terms of reference.
7.6 Within 30 days of the issuance of the panel’s report to all Members, the report shall be
adopted by the DSB(21) unless one of the parties to the dispute formally notifies the DSB of its
decision to appeal or the DSB decides by consensus not to adopt the report.
7.7 Where a panel report is appealed, the Appellate Body shall issue its decision within 60 days
from the date when the party to the dispute formally notifies its intention to appeal. When the
Appellate Body considers that it cannot provide its report within 60 days, it shall inform the DSB in
writing of the reasons for the delay together with an estimate of the period within which it will
submit its report. In no case shall the proceedings exceed 90 days. The appellate report shall be
adopted by the DSB and unconditionally accepted by the parties to the dispute unless the DSB
decides by consensus not to adopt the appellate report within 20 days following its issuance to the
Members.(22)
7.8 Where a panel report or an Appellate Body report is adopted in which it is determined that any
subsidy has resulted in adverse effects to the interests of another Member within the meaning of
Article 5, the Member granting or maintaining such subsidy shall take appropriate steps to remove
the adverse effects or shall withdraw the subsidy.
7.9 In the event the Member has not taken appropriate steps to remove the adverse effects of the
subsidy or withdraw the subsidy within six months from the date when the DSB adopts the panel
report or the Appellate Body report, and in the absence of agreement on compensation, the DSB
shall grant authorization to the complaining Member to take countermeasures, commensurate with
the degree and nature of the adverse effects determined to exist, unless the DSB decides by
consensus to reject the request.
7.10 In the event that a party to the dispute requests arbitration under paragraph 6 of Article 22 of
the DSU, the arbitrator shall determine whether the countermeasures are commensurate with the
degree and nature of the adverse effects determined to exist.
Part IV: Non-Actionable Subsidies
Article 8: Identification of Non-Actionable Subsidies
8.1 The following subsidies shall be considered as non-actionable(23);
(a) subsidies which are not specific within the meaning of Article 2;
(b) subsidies which are specific within the meaning of Article 2 but which meet all of theconditions
provided for in paragraphs 2(a), 2(b) or 2(c) below.
8.2 Notwithstanding the provisions of Parts III and V, the following subsidies shall be
non-actionable:
(a) assistance for research activities conducted by firms or by higher education or research
establishments on a contract basis with firms if:(24), (25), (26)the assistance covers(27) not more
than 75 per cent of the costs of industrial research(28) or 50 per cent of the costs of
pre-competitive development activity(29), (30); and provided that such assistance is limited
exclusively to:
(i) costs of personnel (researchers, technicians and other supporting staff employed exclusively in
the research activity);
(ii) costs of instruments, equipment, land and buildings used exclusively and permanently (except
when disposed of on a commercial basis) for the research activity;
(iii) costs of consultancy and equivalent services used exclusively for the research activity, including
bought?in research, technical knowledge, patents, etc.;
(iv) additional overhead costs incurred directly as a result of the research activity;
(v) other running costs (such as those of materials, supplies and the like), incurred directly as a
result of the research activity.
(b) assistance to disadvantaged regions within the territory of a Member given pursuant to a
general framework of regional development (31) and non-specific (within the meaning of Article 2)
within eligible regions provided that:
(i) each disadvantaged region must be a clearly designated contiguous geographical area with a
definable economic and administrative identity;
(ii) the region is considered as disadvantaged on the basis of neutral and objective criteria(32),
indicating that the region's difficulties arise out of more than temporary circumstances; such criteria
must be clearly spelled out in law, regulation, or other official document, so as to be capable of
verification;
(iii) the criteria shall include a measurement of economic development which shall be based on at
least one of the following factors:
- one of either income per capita or household income per capita, or GDP per capita, which must
not be above 85 per cent of the average for the territory concerned;
- unemployment rate, which must be at least 110 per cent of the average for the territory
concerned;
as measured over a three-year period; such measurement, however, may be a composite one and
may include other factors.
(c) assistance to promote adaptation of existing facilities(33) to new environmental requirements
imposed by law and/or regulations which result in greater constraints and financial burden on firms,
provided that the assistance:
(i) is a one-time non-recurring measure; and
(ii) is limited to 20 per cent of the cost of adaptation; and
(iii) does not cover the cost of replacing and operating the assisted investment, which must be fully
borne by firms; and
(iv) is directly linked to and proportionate to a firm's planned reduction of nuisances and pollution,
and does not cover any manufacturing cost savings which may be achieved; and
(v) is available to all firms which can adopt the new equipment and/or production processes.
8.3 A subsidy programme for which the provisions of paragraph 2 are invoked shall be notified in
advance of its implementation to the Committee in accordance with the provisions of Part VII. Any
such notification shall be sufficiently precise to enable other Members to evaluate the consistency of
the programme with the conditions and criteria provided for in the relevant provisions of paragraph
2. Members shall also provide the Committee with yearly updates of such notifications, in particular
by supplying information on global expenditure for each programme, and on any modification of the
programme. Other Members shall have the right to request information about individual cases of
subsidization under a notified programme.(34)
8.4 Upon request of a Member, the Secretariat shall review a notification made pursuant to
paragraph 3 and, where necessary, may require additional information from the subsidizing Member
concerning the notified programme under review. The Secretariat shall report its findings to the
Committee. The Committee shall, upon request, promptly review the findings of the Secretariat (or,
if a review by the Secretariat has not been requested, the notification itself), with a view to
determining whether the conditions and criteria laid down in paragraph 2 have not been met. The
procedure provided for in this paragraph shall be completed at the latest at the first regular meeting
of the Committee following the notification of a subsidy programme, provided that at least two
months have elapsed between such notification and the regular meeting of the Committee. The
review procedure described in this paragraph shall also apply, upon request, to substantial
modifications of a programme notified in the yearly updates referred to in paragraph 3.
8.5 Upon the request of a Member, the determination by the Committee referred to in paragraph 4,
or a failure by the Committee to make such a determination, as well as the violation, in individual
cases, of the conditions set out in a notified programme, shall be submitted to binding arbitration.
The arbitration body shall present its conclusions to the Members within 120 days from the date
when the matter was referred to the arbitration body. Except as otherwise provided in this
paragraph, the DSU shall apply to arbitrations conducted under this paragraph.
Article 9: Consultations and Authorized Remedies
9.1 If, in the course of implementation of a programme referred to in paragraph 2 of Article 8,
notwithstanding the fact that the programme is consistent with the criteria laid down in that
paragraph, a Member has reasons to believe that this programme has resulted in serious adverse
effects to the domestic industry of that Member, such as to cause damage which would be difficult
to repair, such Member may request consultations with the Member granting or maintaining the
subsidy.
9.2 Upon request for consultations under paragraph 1, the Member granting or maintaining the
subsidy programme in question shall enter into such consultations as quickly as possible. The
purpose of the consultations shall be to clarify the facts of the situation and to arrive at a mutually
acceptable solution.
9.3 If no mutually acceptable solution has been reached in consultations under paragraph 2 within 60
days of the request for such consultations, the requesting Member may refer the matter to the
Committee.
9.4 Where a matter is referred to the Committee, the Committee shall immediately review the facts
involved and the evidence of the effects referred to in paragraph 1. If the Committee determines
that such effects exist, it may recommend to the subsidizing Member to modify this programme in
such a way as to remove these effects. The Committee shall present its conclusions within 120
days from the date when the matter is referred to it under paragraph 3. In the event the
recommendation is not followed within six months, the Committee shall authorize the requesting
Member to take appropriate countermeasures commensurate with the nature and degree of the
effects determined to exist.
Part V: Countervailing Measures
Article 10: Application of Article VI of GATT 1994(35)
Members shall take all necessary steps to ensure that the imposition of a countervailing duty(36) on
any product of the territory of any Member imported into the territory of another Member is in
accordance with the provisions of Article VI of GATT 1994 and the terms of this Agreement.
Countervailing duties may only be imposed pursuant to investigations initiated(37) and conducted in
accordance with the provisions of this Agreement and the Agreement on Agriculture.
Article 11: Initiation and Subsequent Investigation
11.1 Except as provided in paragraph 6, an investigation to determine the existence, degree and
effect of any alleged subsidy shall be initiated upon a written application by or on behalf of the
domestic industry.
11.2 An application under paragraph 1 shall include sufficient evidence of the existence of (a) a
subsidy and, if possible, its amount, (b) injury within the meaning of Article VI of GATT 1994 as
interpreted by this Agreement, and (c) a causal link between the subsidized imports and the alleged
injury. Simple assertion, unsubstantiated by relevant evidence, cannot be considered sufficient to
meet the requirements of this paragraph. The application shall contain such information as is
reasonably available to the applicant on the following:
(i) the identity of the applicant and a description of the volume and value of the domestic
production of the like product by the applicant. Where a written application is made on behalf of the
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 associations 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;
(ii) a complete description of the allegedly subsidized product, the names of the country or countries
of origin or export in question, the identity of each known exporter or foreign producer and a list of
known persons importing the product in question;
(iii) evidence with regard to the existence, amount and nature of the subsidy in question;
(iv) evidence that alleged injury to a domestic industry is caused by subsidized imports through the
effects of the subsidies; this evidence includes information on the evolution of the volume of the
allegedly subsidized imports, the effect of these imports on prices of the like product in the
domestic market and the consequent impact of the imports on the domestic industry, as
demonstrated by relevant factors and indices having a bearing on the state of the domestic industry,
such as those listed in paragraphs 2 and 4 of Article 15.
11.3 The authorities shall review the accuracy and adequacy of the evidence provided in the
application to determine whether the evidence is sufficient to justify the initiation of an
investigation.
11.4 An investigation shall not be initiated pursuant to paragraph 1 unless the authorities have
determined, on the basis of an examination of the degree of support for, or opposition to, the
application expressed(38) by domestic producers of the like product, that the application has been
made by or on behalf of the domestic industry.(39) The application shall be considered to have been
made “by or on behalf of the domestic industry” if it is supported by those domestic producers
whose collective output constitutes more than 50 per cent of the total production of the like product
produced by that portion of the domestic industry expressing either support for or opposition to the
application. However, no investigation shall be initiated when domestic producers expressly
supporting the application account for less than 25 per cent of total production of the like product
produced by the domestic industry.
11.9 An application under paragraph 1 shall be rejected and an investigation shall be terminated
promptly as soon as the authorities concerned are satisfied that there is not sufficient evidence of
either subsidization or of injury to justify proceeding with the case. There shall be immediate
termination in cases where the amount of a subsidy is de minimis , or where the volume of
subsidized imports, actual or potential, or the injury, is negligible. For the purpose of this paragraph,
the amount of the subsidy shall be considered to be de minimis if the subsidy is less than 1 per
cent ad valorem.
11.10 An investigation shall not hinder the procedures of customs clearance.
11.11 Investigations shall, except in special circumstances, be concluded within one year, and in no
case more than 18 months, after their initiation.
Article 15: Determination of Injury(45)
15.1 A determination of injury for purposes of Article VI of GATT 1994 shall be based on positive
evidence and involve an objective examination of both (a) the volume of the subsidized imports and
the effect of the subsidized imports on prices in the domestic market for like products(46) and (b)
the consequent impact of these imports on the domestic producers of such products.
15.2 With regard to the volume of the subsidized imports, the investigating authorities shall consider
whether there has been a significant increase in subsidized imports, either in absolute terms or
relative to production or consumption in the importing Member. With regard to the effect of the
subsidized imports on prices, the investigating authorities shall consider whether there has been a
significant price undercutting by the subsidized imports as compared with the price of a like product
of the importing Member, or whether the effect of such imports is otherwise to depress prices to a
significant degree or to prevent price increases, which otherwise would have occurred, to a
significant degree. No one or several of these factors can necessarily give decisive guidance.
15.3 Where imports of a product from more than one country are simultaneously subject to
countervailing duty investigations, the investigating authorities may cumulatively assess the effects
of such imports only if they determine that (a) the amount of subsidization established in relation to
the imports from each country is more than de minimis as defined in paragraph 9 of Article 11 and
the volume of imports from each country is not negligible and (b) a cumulative assessment of the
effects of the imports is appropriate in light of the conditions of competition between the imported
products and the conditions of competition between the imported products and the like domestic
product.
15.4 The examination of the impact of the subsidized imports on the domestic industry shall include
an evaluation of all relevant economic factors and indices having a bearing on the state of the
industry, including actual and potential decline in output, sales, market share, profits, productivity,
return on investments, or 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. This list is not exhaustive, nor can one or several of these
factors necessarily give decisive guidance.
15.5 It must be demonstrated that the subsidized imports are, through the effects(47) of subsidies,
causing injury within the meaning of this Agreement. The demonstration of a causal relationship
between the subsidized imports and the injury to the domestic industry shall be based on an
examination of all relevant evidence before the authorities. The authorities shall also examine any
known factors other than the subsidized imports which at the same time are injuring the domestic
industry, and the injuries caused by these other factors must not be attributed to the subsidized
imports. Factors which may be relevant in this respect include, inter alia, the volumes and prices of
non-subsidized imports of the product in question, contraction in demand or changes in the patterns
of consumption, trade restrictive practices of and competition between the foreign and domestic
producers, developments in technology and the export performance and productivity of the domestic
industry.
15.6 The effect of the subsidized imports shall be assessed in relation to the domestic production of
the like product when available data permit the separate identification of that production on the
basis of such criteria as the production process, producers' sales and profits. If such separate
identification of that production is not possible, the effects of the subsidized imports shall be
assessed by the examination of the production of the narrowest group or range of products, which
includes the like product, for which the necessary information can be provided.
15.7 A determination of a threat of material injury shall be based on facts and not merely on
allegation, conjecture or remote possibility. The change in circumstances which would create a
situation in which the subsidy would cause injury must be clearly foreseen and imminent. In
making a determination regarding the existence of a threat of material injury, the investigating
authorities should consider, inter alia, such factors as:
(i) nature of the subsidy or subsidies in question and the trade effects likely to arise therefrom;
(ii) a significant rate of increase of subsidized imports into the domestic market indicating the
likelihood of substantially increased importation;
(iii) sufficient freely disposable, or an imminent, substantial increase in, capacity of the exporter
indicating the likelihood of substantially increased subsidized exports to the importing Member's
market, taking into account the availability of other export markets to absorb any additional exports;
(iv) whether imports are entering at prices that will have a significant depressing or suppressing
effect on domestic prices, and would likely increase demand for further imports; and
(v) inventories of the product being investigated.
No one of these factors by itself can necessarily give decisive guidance but the totality of the
factors considered must lead to the conclusion that further subsidized exports are imminent and that,
unless protective action is taken, material injury would occur.
15.8 With respect to cases where injury is threatened by subsidized imports, the application of
countervailing measures shall be considered and decided with special care.
Article 17: Provisional Measures
17.1 Provisional measures may be applied only if:
(a) an investigation has been initiated in accordance with the provisions of Article 11, a public
notice has been given to that effect and interested Members and interested parties have been given
adequate opportunities to submit information and make comments;
(b) a preliminary affirmative determination has been made that a subsidy exists and that there is
injury to a domestic industry caused by subsidized imports; and
(c) the authorities concerned judge such measures necessary to prevent injury being caused during
the investigation.
17.2 Provisional measures may take the form of provisional countervailing duties guaranteed by cash
deposits or bonds equal to the amount of the provisionally calculated amount of subsidization.
17.3 Provisional measures shall not be applied sooner than 60 days from the date of initiation of the
investigation.
17.4 The application of provisional measures shall be limited to as short a period as possible, not
exceeding four months.
17.5 The relevant provisions of Article 19 shall be followed in the application of provisional
measures.
Article 18: Undertakings
18.1 Proceedings may(49) be suspended or terminated without the imposition of provisional measures
or countervailing duties upon receipt of satisfactory voluntary undertakings under which:
(a) the government of the exporting Member agrees to eliminate or limit the subsidy or take other
measures concerning its effects; or
(b) the exporter agrees to revise its prices so that the investigating authorities are satisfied that the
injurious effect of the subsidy is eliminated. Price increases under such undertakings shall not be
higher than necessary to eliminate the amount of the subsidy. It is desirable that the price increases
be less than the amount of the subsidy if such increases would be adequate to remove the injury to
the domestic industry.
18.2 Undertakings shall not be sought or accepted unless the authorities of the importing Member
have made a preliminary affirmative determination of subsidization and injury caused by such
subsidization and, in case of undertakings from exporters, have obtained the consent of the
exporting Member.
18.3 Undertakings offered need not be accepted if the authorities of the importing Member consider
their acceptance impractical, for example if the number of actual or potential exporters is too great,
or for other reasons, including reasons of general policy. Should the case arise and where
practicable, the authorities shall provide to the exporter the reasons which have led them to consider
acceptance of an undertaking as inappropriate, and shall, to the extent possible, give the exporter an
opportunity to make comments thereon.
18.4 If an undertaking is accepted, the investigation of subsidization and injury shall nevertheless be
completed if the exporting Member so desires or the importing Member so decides. In such a case,
if a negative determination of subsidization or injury is made, the undertaking shall automatically
lapse, except in cases where such a determination is due in large part to the existence of an
undertaking. In such cases, the authorities concerned may require that an undertaking be maintained
for a reasonable period consistent with the provisions of this Agreement. In the event that an
affirmative determination of subsidization and injury is made, the undertaking shall continue
consistent with its terms and the provisions of this Agreement.
18.5 Price undertakings may be suggested by the authorities of the importing Member, but no
exporter shall be forced to enter into such undertakings. The fact that governments or exporters do
not offer such undertakings, or do not accept an invitation to do so, shall in no way prejudice the
consideration of the case. However, the authorities are free to determine that a threat of injury is
more likely to be realized if the subsidized imports continue.
18.6 Authorities of an importing Member may require any government or exporter from whom an
undertaking has been accepted to provide periodically information relevant to the fulfilment of such
an undertaking, and to permit verification of pertinent data. In case of violation of an undertaking,
the authorities of the importing Member may take, under this Agreement in conformity with its
provisions, expeditious actions which may constitute immediate application of provisional measures
using the best information available. In such cases, definitive duties may be levied in accordance
with this Agreement on products entered for consumption not more than 90 days before the
application of such provisional measures, except that any such retroactive assessment shall not
apply to imports entered before the violation of the undertaking.
Article 19: Imposition and Collection of Countervailing Duties
19.1 If, after reasonable efforts have been made to complete consultations, a Member makes a final
determination of the existence and amount of the subsidy and that, through the effects of the
subsidy, the subsidized imports are causing injury, it may impose a countervailing duty in
accordance with the provisions of this Article unless the subsidy or subsidies are withdrawn.
19.2 The decision whether or not to impose a countervailing duty in cases where all requirements
for the imposition have been fulfilled, and the decision whether the amount of the countervailing
duty to be imposed shall be the full amount of the subsidy or less, are decisions to be made by the
authorities of the importing Member. It is desirable that the imposition should be permissive in the
territory of all Members, that the duty should be less than the total amount of the subsidy if such
lesser duty would be adequate to remove the injury to the domestic industry, and that procedures
should be established which would allow the authorities concerned to take due account of
representations made by domestic interested parties(50) whose interests might be adversely affected
by the imposition of a countervailing duty.
19.3 When a countervailing duty is imposed in respect of any product, such countervailing duty
shall be levied, in the appropriate amounts in each case, on a non?discriminatory basis on imports
of such product from all sources found to be subsidized and causing injury, except as to imports
from those sources which have renounced any subsidies in question or from which undertakings
under the terms of this Agreement have been accepted. Any exporter whose exports are subject to
a definitive countervailing duty but who was not actually investigated for reasons other than a
refusal to cooperate, shall be entitled to an expedited review in order that the investigating
authorities promptly establish an individual countervailing duty rate for that exporter.
19.4 No countervailing duty shall be levied (51) on any imported product in excess of the amount of
the subsidy found to exist, calculated in terms of subsidization per unit of the subsidized and
exported product.
Article 20: Retroactivity
20.1 Provisional measures and countervailing duties shall only be applied to products which enter for
consumption after the time when the decision under paragraph 1 of Article 17 and paragraph 1 of
Article 19, respectively, enters into force, subject to the exceptions set out in this Article.
20.2 Where a final determination of injury (but not of a threat thereof or of a material retardation of
the establishment of an industry) is made or, in the case of a final determination of a threat of
injury, where the effect of the subsidized imports would, in the absence of the provisional measures,
have led to a determination of injury, countervailing duties may be levied retroactively for the
period for which provisional measures, if any, have been applied.
20.6 In critical circumstances where for the subsidized product in question the authorities find that
injury which is difficult to repair is caused by massive imports in a relatively short period of a
product benefiting from subsidies paid or bestowed inconsistently with the provisions of GATT 1994
and of this Agreement and where it is deemed necessary, in order to preclude the recurrence of
such injury, to assess countervailing duties retroactively on those imports, the definitive
countervailing duties may be assessed on imports which were entered for consumption not more
than 90 days prior to the date of application of provisional measures.
Article 21: Duration and Review of Countervailing Duties and Undertakings
21.1 A countervailing duty shall remain in force only as long as and to the extent necessary to
counteract subsidization which is causing injury.
21.2 The authorities shall review the need for the continued imposition of the duty, where
warranted, on their own initiative or, provided that a reasonable period of time has elapsed since the
imposition of the definitive countervailing duty, upon request by any interested party which submits
positive information substantiating the need for a review. Interested parties shall have the right to
request the authorities to examine whether the continued imposition of the duty is necessary to
offset subsidization, whether the injury would be likely to continue or recur if the duty were
removed or varied, or both. If, as a result of the review under this paragraph, the authorities
determine that the countervailing duty is no longer warranted, it shall be terminated immediately.
21.3 Notwithstanding the provisions of paragraphs 1 and 2, any definitive countervailing duty shall
be terminated on a date not later than five years from its imposition (or from the date of the most
recent review under paragraph 2 if that review has covered both subsidization and injury, or under
this paragraph), unless the authorities determine, in a review initiated before that date on their own
initiative or upon a duly substantiated request made by or on behalf of the domestic industry within
a reasonable period of time prior to that date, that the expiry of the duty would be likely to lead to
continuation or recurrence of subsidization and injury.(52) The duty may remain in force pending
the outcome of such a review.
21.4 The provisions of Article 12 regarding evidence and procedure shall apply to any review carried
out under this Article. Any such review shall be carried out expeditiously and shall normally be
concluded within 12 months of the date of initiation of the review.
21.5 The provisions of this Article shall apply mutatis mutandis to undertakings accepted under
Article 18.
Article 23: Judicial Review
Each Member whose national legislation contains provisions on countervailing duty measures shall
maintain judicial, arbitral or administrative tribunals or procedures for the purpose, inter alia, of the
prompt review of administrative actions relating to final determinations and reviews of
determinations within the meaning of Article 21. Such tribunals or procedures shall be independent
of the authorities responsible for the determination or review in question, and shall provide all
interested parties who participated in the administrative proceeding and are directly and individually
affected by the administrative actions with access to review.
Article 27: Special and Differential Treatment of Developing Country Members
27.1 Members recognize that subsidies may play an important role in economic development
programmes of developing country Members.
27.2 The prohibition of paragraph 1(a) of Article 3 shall not apply to:
(a) developing country Members referred to in Annex VII.
(b) other developing country Members for a period of eight years from the date of entry into force
of the WTO Agreement, subject to compliance with the provisions in paragraph 4.
27.3 The prohibition of paragraph 1(b) of Article 3 shall not apply to developing country Members
for a period of five years, and shall not apply to least developed country Members for a period of
eight years, from the date of entry into force of the WTO Agreement.
27.4 Any developing country Member referred to in paragraph 2(b) shall phase out its export
subsidies within the eight year period, preferably in a progressive manner. However, a developing
country Member shall not increase the level of its export subsidies(55), and shall eliminate them
within a period shorter than that provided for in this paragraph when the use of such export
subsidies is inconsistent with its development needs. If a developing country Member deems it
necessary to apply such subsidies beyond the 8?year period, it shall not later than one year before
the expiry of this period enter into consultation with the Committee, which will determine whether
an extension of this period is justified, after examining all the relevant economic, financial and
development needs of the developing country Member in question. If the Committee determines that
the extension is justified, the developing country Member concerned shall hold annual consultations
with the Committee to determine the necessity of maintaining the subsidies. If no such
determination is made by the Committee, the developing country Member shall phase out the
remaining export subsidies within two years from the end of the last authorized period.
27.5 A developing country Member which has reached export competitiveness in any given product
shall phase out its export subsidies for such product(s) over a period of two years. However, for a
developing country Member which is referred to in Annex VII and which has reached export
competitiveness in one or more products, export subsidies on such products shall be gradually
phased out over a period of eight years.
27.6 Export competitiveness in a product exists if a developing country Member's exports of that
product have reached a share of at least 3.25 per cent in world trade of that product for two
consecutive calendar years. Export competitiveness shall exist either (a) on the basis of notification
by the developing country Member having reached export competitiveness, or (b) on the basis of a
computation undertaken by the Secretariat at the request of any Member. For the purpose of this
paragraph, a product is defined as a section heading of the Harmonized System Nomenclature. The
Committee shall review the operation of this provision five years from the date of the entry into
force of the WTO Agreement.
27.7 The provisions of Article 4 shall not apply to a developing country Member in the case of
export subsidies which are in conformity with the provisions of paragraphs 2 through 5. The
relevant provisions in such a case shall be those of Article 7
27.8 There shall be no presumption in terms of paragraph 1 of Article 6 that a subsidy granted by
a developing country Member results in serious prejudice, as defined in this Agreement. Such
serious prejudice, where applicable under the terms of paragraph 9, shall be demonstrated by
positive evidence, in accordance with the provisions of paragraphs 3 through 8 of Article 6.