AN
ORDINANCE
to amend and consolidate the law relating to imposition of countervailing duties to offset
subsidies
WHEREAS it is expedient and 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 amend and consolidate 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 matters ancillary thereto or connected therewith;
AND WHEREAS the imposition of countervailing duties to offset injurious
subsidization is in the public interest;
AND WHEREAS the National Assembly and the Senate stand suspended in
pursuance of the Proclamation of the fourteenth day of October, 1999, and the
Provisional Constitution Order No. 1 of 1999;
AND WHEREAS the President is satisfied that circumstances exist which render
it necessary to take immediate action;
NOW THEREFORE, in pursuance of the Proclamation of Emergency of the
fourteenth day of October, 1999, and the Provisional Constitution Order No. 1 of 1999,
read with the Provisional Constitutional (Amendment) Order No. 9 of 1999, and in
exercise of all powers enabling him in that behalf, the President of the Islamic Republic
of Pakistan 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, 2000.
(2) It extends to the whole of Pakistan.
(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 and
Countervailing Measures included in Annex (1A) to the Final Act 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 Ordinance, 2000 ( of 2000);
(c) “application” means an application submitted to the Commission pursuant
to sub-section (1) of section 11;
(d) “association” means a trade organisation as defined in the Trade
Organisations Ordinance, 1961( XLV of 1961), which has been granted or
deemed to have been granted a licence thereunder;
(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 of them 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 concerned 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 –
(i) the producers within such a market sell all or almost all of their
production of the product in question in such a market; and
(ii) he demand in such a market is not to any substantial degree
supplied by producers of the product in question located elsewhere
in Pakistan;
(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 Pakistan
but is transported through an intermediate country, such
intermediate country;
(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;
(o) “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 Agrrement concluded in Marrakesh, Morocco, on the 15th
April, 1994.
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 therefrom 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 Pakistan.
(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, by regarded as
having taken place between the country of origin of the investigated product and
Pakistan.
PART III
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.– (1) 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 economic in nature
and horizontal in application, such as, number of employees or size of
enterprise. Such criteria or conditions 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 sub-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;
Explanation.– For 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 sub-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-section (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 sub-
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.– (1) The following subsidies shall not be
subjected to countervailing measures under this Ordinance, namely:–
(a) subsidies which are not specific as determined in accordance with the
provisions of section 5;
(b) subsidies which are specific in accordance with the provisions of section
5 but which meet the conditions set out in sub-section (2), (4) or (6) as
read with sub-section (3), (5) and (7); and
(c) the element of subsidy which may exist in any of the measures listed in
the Fourth Schedule:
Provided that the provisions of this sub-clause shall cease to apply
on the first day of January, 2004.
(2) Subsidies for research activities conducted by firms or by higher education or
research establishments on a contract basis with firms shall not be subject to
countervailing measures under this Ordinance, if the subsidies cover not more than
seventy-five per cent of the costs of industrial research or fifty per cent of the costs of
pre-competitive development activity, provided that such subsidies are limited
exclusively to –
(a) personnel costs such as researchers, technicians and other supporting
staff employed exclusively in the research activity;
(b) costs of instruments, equipment, land and buildings used exclusively and
permanently except, when disposed of on a commercial basis, for the
research activity;
(c) costs of consultancy and equivalent services used exclusively for the
research activity including bought-in research, technical knowledge,
patents or otherwise;
(d) additional overhead costs incurred directly as a result of the research
activity; and
(e) other running costs such as those of materials, supplies and the like
incurred directly as a result of the research activity.
(3) For the purpose of sub-section (2) –
(a) allowable levels of non-countervailable subsidy shall be established by
reference to the total eligible costs incurred over the duration of an
individual project and in the case of programmes which span both
industrial research and pre-competitive development activity, allowable
level of non-countervailable subsidy shall not exceed a simple average
of the allowable levels of non-countervailable subsidy applicable to the
above two categories, calculated on the basis of all eligible costs as set
forth in sub-clauses (a) to (e) of sub-section (2);
(b) the term “industrial research” means planned research or critical
investigation aimed at discovery of new knowledge, with the objective
that such knowledge may be useful in developing new products,
processes, services, or in bringing about a significant improvement to
existing products, processes or services; and
(c) the term “pre-competitive development activity” means translation of
industrial research findings into a plan, blueprint or design for new,
modified or improved products, processes or services, whether intended
for sale or for use, including creation of a first prototype which would
not be capable of commercial use and, may further include conceptual
formulation and design of products, processes or services, alternatives
and initial demonstration or pilot projects, provided that the same
projects cannot be converted or used for industrial application or
commercial exploitation but, shall exclude routine or periodic alterations
to existing products, production lines, manufacturing processes, services,
and other ongoing operations even though those alterations may
represent improvements.
(4) Subsidies to disadvantaged regions within the territory of an exporting country
given pursuant to a general framework of regional development, which would be nonspecific
if the criteria set out in section 5 were applied to each eligible region concerned,
shall not be subject to countervailing measures under this Ordinance, provided that–
(a) each disadvantaged region is a clearly designated contiguous
geographical area with a definable economic and administrative identity;
and
(b) the region is regarded as disadvantaged on the basis of neutral and
objective criteria, indicating that the region’s difficulties arise out of
more than temporary circumstances; such criteria being clearly set out
by law, regulation, or other official document, so as to be capable of
verification.
Explanation.– The criteria mentioned in sub-clause (b) shall
include a measurement of economic development which shall be based
on at least one of the following factors, namely:–
(i) either income per capita, or household income per capita, or
Gross Domestic Product per capita, which must not be above
eighty-five per cent of the average for the territory of an
exporting country; or
(ii) unemployment rate, which must be at least one hundred and ten
per cent of the average for the territory of an exporting country
as measured over a three-years period. Such measurement,
however, may be a composite one and may include other factors.
(5) For the purposes of the sub-section (4) –
(a) a “general framework of regional development” means that regional
subsidy programmes are part of an internally consistent and generally
applicable regional development policy and that regional development
subsidies are not granted in isolated geographical points having no, or
virtually no, influence on the development or a region; and
(b) “neutral and objective criteria” means criteria which do not favour
certain regions beyond what is appropriate for elimination or reduction
of regional disparities within the framework of a regional development
policy.
Explanation.– Regional subsidy programmes shall include
ceilings on the amount of subsidy which can be granted to each
subsidized project. Such ceilings must be differentiated according to the
different levels of development of eligible regions and must be
expressed in terms of investment costs or the cost of job creation. Within
such ceilings, the distribution of subsidy shall be sufficiently broad and
even to avoid predominant use of a subsidy by, or granting of
disproportionately large amounts of subsidy to, certain enterprises.
(6) Subsidies to promote adaptation of existing facilities to new environmental
requirements imposed by either law or regulation, or both which, result in greater
constraints and financial burden on firms shall not be subject to countervailing measures
under this Ordinance, provided that subsidy–
(a) is a one-off non-recurring measure;
(b) is limited to twenty percent of the cost of adaptation;
(c) does not cover the cost of replacing and operating a subsidized investment
which, must be fully borne by the entity;
(d) is directly linked to and proportionate to an entity’s planned reduction of
nuisances and pollution, and does not cover any manufacturing cost
savings which may be achieved; and
(e) is available to all entities which can either adopt new equipment or
production processes, or both.
(7) For the purpose of sub-section (6) the term “existing facilities” means
facilities having been in operation for at least two years at the time when new
environmental requirements are imposed.
PART IV
CALCULATION OF THE AMOUNT OF COUNTERVAILABLE SUBSIDY
7. Calculation of amount of countervailable subsidy.– (1) 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 countervailable 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 Pakistan specifically intended to offset a subsidy.
(2) Where an interested party claims a deduction under sub-section (1) such party
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 sub-clause (b) of
sub-section (2) of section 7.
(5) Where a subsidy cannot be linked to acquisition of fixed assets, the amount of
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 Pakistan. With regard to
effect of any subsidised imports on prices, consideration shall be given
by the Commission to whether there has been significant price
undercutting by the subsidised 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 subsidised 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, utilisation 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 of that 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-section (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 with such fee as may be
prescribed and shall include sufficient evidence of the existence of countervailable
subsidies including, if possible, of their amount, and of injury within the meaning of this
Ordinance and shall 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 subsection
(1) of section 9, and in sub-section (3) of section 9.
(3) The Commission shall, to the extent possible, 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 listed in the Fourth Schedule, to the extent that they contain an element of
subsidy as defined in section 4, in order to determine whether the measures in question
fully conform to the provisions of the Fourth Schedule.
(8) An investigation shall not be initiated by the Commission pursuant to subsection
(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 against countries 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 subsection
(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 subsection
(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.– (1) 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.
(2) For the purpose of 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.
(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 party which has made itself known in accordance with subsection
(16) of section 11 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 to 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
PROVISIONAL COUNTERVAILING MEASURES
13. 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 be imposed no 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.
(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 in Pakistan
shall be subject to provisions of such cash deposit.
(4) A provisional countervailing duty shall be imposed for a period not exceeding
four months.
PART VIII
UNDERTAKINGS AND TERMINATION WITHOUT MEASURES
14. Undertakings.– (1) 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 nonconfidential
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 pursuant to 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 permit 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 provisional 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) Where an application
is withdrawn, an investigation shall be terminated by the Commission:
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 subsections
(3), (4), (5), (6) and (7), 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 –
(a) in the case of investigations concerning imports from developing
countries the negligible subsidy threshold shall be two per cent ad
valorem; and
(b) for those developing countries which are referred to in the Fifth
Schedule and other developing countries which are members of the
WTO and which have completely eliminated export subsidies, the
negligible subsidy threshold shall be three per cent ad valorem.
(4) Where the application of sub-section (3) depends on elimination of export
subsidies, it shall apply from the date on which elimination of export subsidies is notified
to the WTO Committee on Subsidies and Countervailing Measures pursuant to the
Agreement on Subsidies, and for so long as export subsidies are not granted by a
developing country concerned:
Provided that this provision shall expire on the first day of January, 2003:
Provided further that it is only an investigation that shall be terminated where the
amount of countervailable subsidies is below the relevant level for individual exporters
who shall remain subject to investigation by the Commission under this Ordinance and
may be re-investigated in any subsequent review carried out for a country concerned
pursuant to sections 19 and 20.
(5) 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.
(6) 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.
(7) 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.
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.
(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 countervailable 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 both subsidisation 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) An expiry 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) In carrying 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 subsection
(1) 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.– (1) 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 no 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.– (1) 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. Circumvention.– (1) Countervailing duties imposed pursuant to this
Ordinance may be extended by the Commission to imports from third countries of like
products, or parts thereof, if the Commission determines that circumvention of the
measures in force is taking place.
(2) For the purposes of sub-section (1), circumvention shall mean a change in the
pattern of trade between third countries and Pakistan which stems from a practice,
process or work for which there is insufficient cause or economic justification other than
an imposition of a duty, and where there is evidence that the remedial effects of a duty
are being undermined in terms of either the prices or quantities of like products, or both,
and that either the imported like product or parts thereof, or both, still benefit from
subsidy.

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 subsidisation.
(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 under the Anti-
Dumping Duties Ordinance, 2000 ( of 2000), and countervailing duties under this
Ordinance for the purpose of dealing with one and the same situation arising from
dumping or from export subsidisation.
(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.– (1) 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.– (1) 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.– (1) 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, the result may be less favourable to the party
than if it had co-operated.
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 submitting 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 Commission may 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 (10), 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.
(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.
30. Disclosure .– (1) 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 section 64 of the Anti-Dumping Ordinance, 2000 ( of 2000), the Appellate
Tribunal shall also exercise jurisdiction under sub-section (2).
(2) Any interested party may prefer an appeal to the Appellate Tribunal against –
(i) an affirmative or negative final determination by the Commission; and
(ii) any final determination pursuant to a review.
(3) Every appeal under sub-section (2) shall be filed within forty-five days from
the date of publication in newspapers of a public notice of any affirmative or negative
final determination by the Commission, as the case may be, and shall be in such form
and contain such information as may be prescribed.
(4) 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.
(5) An examining an appeal, the Appellate Tribunal shall as regards assessment
of the facts relating to an impugned determination of the Commission, determine on the
basis of official record maintained by the Commission or any other documents relied
upon by the Commission in reaching a determination appealed against, whether the
establishment of the facts by the Commission was proper and whether the Commission’s
evaluation of those facts was unbiased and objective. 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 an impugned determination of
the Commission provided that the Appellate Tribunal is satisfied that in reaching the
impugned determination, the Commission complied with the relevant provisions of this
Ordinance.
(6) An appeal under sub-section (2) shall be disposed of and the decision of the
Appellate Tribunal pronounced, as expeditiously as possible but not later than ninety
days from the date of receipt of an appeal compliant with the requirements of subsection
(3), except in extraordinary circumstances and on grounds to be recorded. The
Appellate Tribunal shall hear the appeal from day to day.
(7) The decision of the Appellate Tribunal shall be in writing and shall give
details of the issues raised in appeal and the arguments adopted by an appellant and the
Commission, and shall give reasons for reaching its decision with reference to the
provisions of this Ordinance and the facts of the case.
(8) The Appellate Tribunal shall provide copies of its decision to all the
appellants and the Commission no later that five days from the date of rendering its
decision.
(9) 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.
(10) The decision of the Appellate Tribunal shall be final and no further appeal
shall lie therefrom:
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 and
the Appellate Tribunal shall only accept such application if it is satisfied that a material
issue discussed in its decision requires further clarification or elaboration:
Provided further that the party likely to be adversely affected by such
clarification shall also be given a notice by the Appellate Tribunal:
Provided also that no application under this sub-section shall be accepted by the
Appellate Tribunal later that thirty days of its decision.
(11) The Appellate Tribunal shall perform its functions under this Ordinance in
accordance with such procedures as may be prescribed.
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, 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. Public servants.– The employees and other persons authorised to perform or
exercise any function or power under this Ordinance or rendering services to the
Commission as consultant or adviser shall be deemed to be public servants within the
meaning of section 21 of the Pakistan Penal Code, 1860 (Act XLV of 1860).
36. Failure to disclose correct information offence.– Any person who
knowingly and wilfully provides false, misleading or incorrect information to the
Commission whether in an application received under this Ordinance or, otherwise in
connection with an investigation under this Ordinance, shall be guilty of an offence and
shall on conviction be liable to imprisonment for a term which may extend to three
years, or a fine not exceeding five million rupees, or both.
37. Cognizance of offences.– (1) Notwithstanding anything contained in the
Code of Criminal procedure, 1898 (Act V of 1898), no court other than a court of
session shall have jurisdiction to try any person charged with an offence under section
36.
(2) No court of session shall take cognizance of an offence under this Ordinance
except upon a complaint in written made by the Commission or an officer authorised by
it, and signed by any two members of the Commission.
38. Protection to persons prejudiced in employment because of assisting the
Commission.– (1) 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.
39. 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 (1) 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, throughout the course of an investigation or
review and any appeal under section 32.
40. Official file to be maintained by the Commission.– (1) 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.
41. Appointment of advisers and consultants.– (1) Subject to sub-section (2),
the Commission may, employ and pay consultants and agents and 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.
42. Indemnity.– No suit, prosecution or other legal proceedings shall lie against
the Commission, the Chairman or any member of the Commission or any employee,
consultant, agent or adviser of the Commission in respect of anything which is in good
faith done or intended to be done under this Ordinance or rules made thereunder.
43. 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.
44. 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, including, without limitation, the National Tariff Commission
Act, 1990 (VI of 1990), and the Customs Act, 1969 (IV of 1969).
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, in calculation 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 longterm
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
(l) 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 First Schedule, 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 examin