Countervailing Measures - measure imposed on a product which is granted directly or indirectly by the government of the country of export any kind of specific subsidy.
“Subsidy" refers to any specific assistance (e.g., financial contribution, income or price support schemes) directly or indirectly provided by the government of the country of export or origin in respect of the product imported into the Philippines.
A Guide to Countervailing Measures
This is a guide for Philippine producers who believe that subsidization of imported products could be injuring their industry. It provides general information about subsidization and the recourse that affected industries can take against it.
This guide has also been designed to assist Philippine domestic industry in preparing a properly documented protest for subsidy investigation.
It clarifies issues regarding the effects of subsidization on local producers, Philippine importers, foreign producers and exporters, consumers and the public in general.
It also explains the legal background to subsidization, procedures in applying for an investigation, the conduct of an investigation and the action that will be taken afterwards.
Republic Act No. 8751, otherwise known as the “Countervailing Duty Act of 1999” (the “Act”), provides protection to a Philippine domestic industry which is being materially injured, or is likely to be materially injured by the subsidization of articles imported into or sold in the Philippines.
Action under this legislation becomes an international trade issue because it represents an accusation that a trading partner is trading unfairly. For this reason, any action contemplated must be carefully examined and solid grounds must be established to demonstrate that the action meets the requirements of this Act and our obligations under international trade agreements.
As a member of the World Trade Organization (WTO), the Philippine administration of subsidies and countervailing measure practices adheres to the rights and obligations set out in the WTO Agreement on Subsidies and Countervailing Measures (the “Agreement”). This Agreement seeks to ensure that such practices should not constitute an unjustifiable impediment to international trade. Moreover, this Agreement includes detailed procedural and evidentiary requirements and, as a result, all interested parties need to substantiate claims made in an inquiry.
Applicants are strongly advised to familiarize themselves with the provisions of Republic Act No. 8751 and its Implementing Rules and Regulations and the WTO Agreement on Subsidies and Countervailing Measures.
What is Subsidy?
Subsidy involves the provision of the specific assistance, directly or indirectly, by a government or any public body within the territory of the exporting country in respect of products exported to the Philippines. A subsidy can be an export subsidy, aimed at assisting exports, or it can be a domestic subsidy, which provides assistance irrespective of whether the products are exported or not. Countervailable subsidies are those which are specific to an enterprise or industry or a group of enterprises or industries and are not generally available to all enterprises or industries within the exporting country. Certain kinds of government assistance such as equity capital, loans, guarantees and goods or services are only countervailable if they are more favorable than those available in the private market.
Is Subsidization Illegal?
Subsidization is not illegal nor prohibited. However, when it injures Philippine producers, countervailing duties can be imposed after a formal investigation.
The following conditions must be met for imported products to be considered subsidized:
- subsidy must be specific and amount of subsidy must be at least 1% ad valorem
- the imported product is injuring or threatening to injure or retard the establishment of a domestic industry; and
- there is a causal link to show that injury to the local industry is due to subsidization.
The imposition of the countervailing duty seeks to remedy, not punish, unfair pricing of imported products. The imposition of the duty generally benefits the domestic producers by causing the cessation or reduction of unfairly traded imports or by causing their prices to increase.
How do you apply for an Investigation?
Any person, whether natural or juridical, representing a domestic industry may file a written application using the Protestant’s Application Form/Questionnaire duly supported by relevant documents which shall include evidence of (a) subsidization (b) injury and (c) causal link between the subsidized imports and the alleged injury.
The application shall be filed with the Secretary of Trade and Industry in the case of non-agricultural product or with the Secretary of Agriculture in the case of agricultural product.
Properly Documented Application
The application must be complete at the time it is lodged and must contain all relevant information that is reasonably available to the protestant. Allegations made in the protest should be supported by documentation, data, or other satisfactory evidence. Additionally, where any estimates have been provided in the complaint, it is important that an explanation be provided to support the basis of the estimates.
With respect to allegations of injury, the applicant is in the best position to assess the nature of the injury. It is the applicant’s responsibility to document the injury in sufficient detail and to show that it is caused by the alleged subsidization.
The applicant must submit evidence of the necessary level of support for the application as follows:
- First, the protest must be supported by producers whose collective output/production of the like products represents 25% or more of the total domestic production of the said product;
- Second, the total production of those domestic manufacturers/producers who express support for the protest, must be more than 50% of the total production of those producers who express either support for or opposition to the application.
In addition to industry support described above, there must be reasonable evidence that there is subsidization and that it is causing injury or is threatening to cause injury to a major proportion of the domestic production of the said product.
A properly documented application shall contain relevant evidences and information reasonably available to the applicant as follows:
- identity of the applicant or the industry
- volume and value of domestic production of like product
- description of the alleged subsidized product
- country of export or origin
- identity of each known foreign producer or exporter
- list of known importers
- information on the nature and amount of subsidy
- information on the evolution of the volume of alleged subsidized imports
- effects of alleged subsidized imports on domestic prices
- consequent impact of imports on domestic industry
Assistance with Protestant’s Application Form/Questionnaire
The Protestant’s Application Form/Questionnaire contains the requirements for a properly documented subsidy protest. Accordingly, all the requirements, questions and notes to questions set therein must be satisfied.
The Bureau of Import Services can offer advice in preparing the application for an investigation. The Bureau will answer any questions relating to subsidization. Official correspondence should be addressed to the Director – Bureau of Import Services. Contact details can be found at the end of this Guide.
The applicant is requested to sign the application form, prepare and submit four (4) copies of the completed questionnaire two (2) CONFIDENTIAL and two (2) NON-CONFIDENTIAL versions. The applicant is strongly recommended to respond to all the questions asked. The absence of responses to individual questions or the lack of a response to the questionnaire will cause the agency to return the application and request the applicant to complete it.
The application form/questionnaire is not designed to be filled in. Thus, all answers and any supplementary materials provided in support of the answers, should clearly identify the questions to which they relate (in sequence). Additional information may be requested from the applicant as necessary.
All information provided to the agency in confidence will be treated accordingly. The applicant should ensure that the information provided which is confidential, is clearly marked as such, and that there is a non-confidential version (or summary) of that data. Failure to provide a non-confidential summary may result in the information being disregarded by the DTI-BIS.
Non-Confidential Version of the Complaint
RA 8751 impliedly provides for the disclosure of information to certain parties that may have an interest in the proceedings. The intent is to make as much information available as possible so that all parties can understand the reasons and basis of facts upon which decisions are made, while still guaranteeing the protection of confidential information. Thus, it is required that information submitted is to be clearly marked either “confidential” or “non-confidential”, and the applicant must provide two (2) copies of a non-confidential summary of any confidential information supplied and/or submitted.
The non-confidential summary must be in sufficient detail to permit a reasonable understanding of the confidential information. Failure to provide a non-confidential summary may result on the information being disregarded. The non-confidential version of the submission is placed on a public file and made available to interested parties. This allows claims to be considered by the other parties who have a right to see the information relevant to the presentations of their case. Similar arrangements apply to submissions made by other interested parties.
The recommended method of satisfying the requirement for confidential and non-confidential copies is to keep the body of the application non-confidential and to place confidential data in appendices.
How is the Investigation Carried Out?
- Initiation/Preliminary Determination
The Bureau of Import Services (BIS) of the Department of Trade and Industry (DTI) initiates the preliminary determination of the subsidization protest involving non-agricultural products within ten (10) days from acceptance of the properly documented application. The BIS evaluates the accuracy and adequacy of the evidences presented to justify initiation of investigation. During this period, the applicant maybe asked to clarify the information they have provided or to submit additional evidence/documents. The Bureau may also take into account other information available to it in order to check the accuracy and adequacy of the information provided. The investigation will not be initiated if (a) there was insufficient support from domestic producers; (b) insufficient evidence of injury; (c) volume of subsidized import is less than 3% of total Philippine imports and; (d) amount of subsidy is less than 1% ad valorem.
Before initiating an investigation, the BIS notifies the government of the exporting country concerned to provide a reasonable opportunity for consultation with the objective of clarifying the situation and arriving at a mutually agreed solution. The period required for consultation will vary according to the nature of the particular case. Reasonable opportunity for continued consultation shall be provided throughout the investigation period. After a decision to initiate an investigation has been made, the BIS advises the applicant of its decision. The notice of initiation is also published in two (2) newspapers of general circulation. The agency also, notifies all the interested parties i.e. the Philippine importer/s, foreign producer/s and exporter/s and require them to answer and submit, within thirty (30) days from receipt of such notice, the response to the questionnaire and other submissions. If the respondents fail to cooperate or did not provide the necessary information within the prescribed period, a decision may be based on the available pertinent data. Within twenty (20) days from receipt of the responses from interested parties, the BIS conducts a thorough evaluation of all the data submitted or provided by the applicant, Philippine importer/s, foreign producer/s and exporter/s and, together with the information obtained independently, conducts an investigation to determine whether or not a case exists as to warrant a formal investigation.
The investigation can be terminated at any time if it is concluded that the evidence does not disclose a reasonable indication that subsidization has caused injury to domestic producers of like articles, such that:
- If the amount of subsidy is less than one percent (1%) ad valorem; or
- The volume of dumped imports accounts for less than three percent (3%) of the total imports of the like articles in the Philippines (unless countries which collectively account for less than three percent (3%) of the dumped imports of the like articles in the Philippines collectively account for more than seven percent (7%) of total imports of that article); or
- If injury is negligible.
Application of Provisional Measures
Provisional measures will take the form of a cash bond equal to the provisionally estimated amount of subsidy. This will only be imposed sixty (60) days after the initiation of the investigation and after a preliminary affirmative determination of the existence of subsidization and injury is reached, i.e. it is established that the subsidized products have caused, or threatened material injury to the domestic industry producing like products. The provisional measure is a temporary relief to the affected domestic industry to prevent or deter further injury during the formal investigation. Shipments will only be released after the importer puts up or deposits a cash bond. The provisional measure will only be imposed for a four (4) month period.
Within three (3) days from the receipt of advice that a PRELIMINARY DETERMINATION of subsidization was found to exist and together with the pertinent records from the Secretary that the protest merits formal inquiry to determine subsidization, the Tariff Commission fully investigates the alleged subsidization, material injury and causal link, and makes a FINAL DETERMINATION within one hundred (120) days from receipt of the case records.
During the investigation, the Commission visits the protestant in order to verify information provided in the application and in any subsequent submission. Protestant should, therefore, retain worksheets supporting all data submitted for Commission’s consideration. In addition, the Commission will send supplementary questionnaires to the interested parties, domestic and foreign, to gather additional information that may be useful in the overall evaluation of the protest. The Commission may also conduct an on-site investigation of the foreign producer/exporter. Detailed information will be requested from the domestic manufacturers supporting the protest as well as from other interested parties.
The Commission also receives representations and holds consultations. It is important to note that during the consultations conducted by the Commission, it is the responsibility of the protestant(s) to prove its injury allegations. For this purpose, protestants usually retain the services of counsel with expertise in subsidy and countervailing measures.
Before making its final determination, the Commission informs all the interested parties in writing of the essential facts under consideration which form the basis for the decision. The parties are given sufficient time to comment and defend their interest.
The Commission shall submit its findings to the DTI/DA Secretary. It shall also give notice to interested parties of such findings submitted to the Secretary.
Imposition of the Duty
Within ten (10) days after receipt of the final determination by the Commission, the Secretary of DTI/DA shall issue a Department Order imposing a countervailing duty, if the finding is affirmative. He shall furnish the Secretary of Finance with the copy of the Order and request the latter to direct the Commissioner of Customs to cause the countervailing duty to be levied in addition to any other duties on such products and on like products subsequently imported from the specific exporter from the country of export. The rate of the duty cannot be more than the ascertained amount of subsidy. The duties apply for five (5) years unless a review establishes a need to continue them so that injury does not recur.
The Order of the Secretary shall be published in two (2) newspapers of general circulation. The parties’ litigants, the Tariff Commission, the Bureau of Customs and other proper government agencies shall be furnished with a copy of the decision.
In the event, however, of a negative final determination by the Commission, the Secretary shall issue, after the lapse of the appeal period, through the Secretary of Finance; an Order for the Commissioner of Customs for the immediate release of the cash bond to the importer. In addition, all the parties concerned shall also be properly notified of the dismissal of the case.
Where to File
WHERE IS THE APPLICATION FOR AN INVESTIGATION INVOLVING
NON-AGRICULTURAL PRODUCTS SENT
Bureau of Import Services
Department of Trade and Industry
3rd Floor, Tara Building
389 Sen. Gil Puyat Ave., Makati City
Telephone Nos: 896-4430/403-1418
Fax No: 896-4431
WELCOME TO THE SUBSIDY INVESTIGATION QUESTIONNAIRE
This questionnaire will help you effectively apply for a subsidy investigation.
A recommendation by the Department of Trade and Industry’s Bureau of Import Services to initiate investigation on an allegation of subsidization requires adequate and accurate information about the allegedly subsidized products and the effects on Philippine industry producing like products.
Please retain the worksheet after your application is lodged as it provides a valuable record of your sources if further evidence is required during a subsequent subsidy investigation.
|Before you begin|
Checklist of Requirements
RA 8800 - Safeguard Measures Act
Provisional Measure – Cash Bond
Validity/ Period of Implementation – 200 days from the date of the imposition
Validity/ Period of Implementation – four (4) years including the period the provisional measure took effect but shall not exceed ten (10) years including extension
RA 8752 - Anti-Dumping Act of 1999
Provisional Measure – Cash Bond
Validity/ Period of Implementation – 4 months to 6 months
Validity/ Period of Implementation – shall not exceed five (5) years from the date of the imposition but subject to sunset review
RA 8751 - Countervailing Duty Act
Provisional Measure – Cash Bond
Validity/ Period of Implementation – 4 months
Validity/ Period of Implementation – imposed for five (5) years but subject to sunset review
WELCOME TO THE GENERAL SAFEGUARD MEASURES INVESTIGATION QUESTIONNAIRE
This questionnaire will help you effectively apply for a general safeguard measures investigation.
A recommendation by the Department of Trade and Industry - Bureau of Import Services to initiate investigation to justify the imposition of general safeguard measures requires adequate and accurate information about the imported product under protest and the effects on Philippine industry producing like and directly competitive products.
Please retain the worksheet after your application is lodged as it provides a valuable record of your sources if further evidence is required during a subsequent general safeguard measures investigation.
Protestant Questionnaire -
|Clear & Bronze Float Glass||Initiation||Preliminary||Final|
|Note: The Philippines has not conducted any subsidies and countervailing measures investigation since the implementation of RA 8751.|
|WTO Agreements on Trade Remedies (1.e. Safeguard Measures, Anti-Dumping and Subsidies and Countervailing Measures)||www.wto.org|
|Formal Investigation on Trade Remedies & tariff-related matters||www.tariffcommission.gov.ph|
|Filing of Trade Remedies on Agricultural Products||www.da.gov.ph|
|Customs Memorandum Orders on the issuance of DTi Orders on Trade Remedies||www.customs.gov.ph|
|Trading in the Philippines||www.pntr.gov.ph|