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Subsidy Allegation

  The basis for a countervailing duty petition involves an allegation that foreign producers or exporters are receiving countervailable subsidies. Such an allegation must include documentary evidence that such subsidies exist. Under U.S. law, a countervailable subsidy exists where an authority provides a "financial contribution" to a company ("legal person") which confers a "benefit". The subsidy must also be "specific." The Department of Commerce will look to see that the CVD petition addresses each of these elements for each subsidy that is alleged on the basis of "information that is reasonably available" to the petitioner.

  Financial Contribution
A financial contribution may involve direct funding by a government or public entity to a producer, or the indirect transfer of funds through a funding mechanism or a private party. It includes:
(i) A direct transfer of funds (e.g., grants, loans, equity infusions) or the potential direct transfer of funds or liabilities (e.g., loan guarantees);
(ii) Foregoing or not collecting revenue that is otherwise due (e.g., tax credits, deductions from taxable income, import duties);
(iii) Providing goods or services for less than adequate remuneration, other than general infrastructure;
(iv) Purchasing goods for more than adequate remuneration.

  Benefit
A benefit generally exists to the extent that the subsidy recipient pays less or receives more than he/she otherwise would in the marketplace in obtaining the financial contribution. In general, a "benefit-to-recipient" standard is used to measure whether a benefit exists. Section 771(5)(E) of statute lays out specific rules for how the benefit for certain types of financial contributions will be identified (i.e., for equity infusions, loans and loan guarantees, and provision of goods or services). The Department of Commerce’s substantive CVD regulations in 19 CFR Part 351 provide additional detailed guidance.

  Specificity:
There are three basic categories of subsidies: (1) export subsidies, (2) import substitution subsidies, and (3) domestic subsidies. Export and import substitutions subsidies are automatically deemed to be specific. Domestic subsidies may be either de jure or de facto specific.

  An export subsidy is a subsidy that is, in law or in fact, contingent upon export performance, alone or as 1 of 2 or more conditions (Section 771(5A)(B)).

  An import substitution subsidy is a subsidy that is contingent upon the use of domestic over imported goods, alone or as 1 of 2 or more conditions (Section 771(5A)(C)).

  A domestic subsidy that is de jure specific is one where the authority providing the subsidy expressly limits the subsidy to an enterprise or industry or group of enterprises or industries (Section 771(5A)(D)(I) and (ii)). De jure specificity also exists where a subsidy is limited to designated geographical regions within the jurisdiction of the granting authority (Section 771(5A)(D)(iv)).

  Even though a subsidy may appear to be generally available to all companies and industries, the actual distribution of benefits is also examined to determine if it may be de facto specific. De facto specificity exists where one or more of the following factors exist:

  Even though a subsidy may appear to be generally available to all companies and industries, the actual distribution of benefits is also examined to determine if it may be de facto specific. De facto specificity exists where one or more of the following factors exist:
(i) The actual recipients of the subsidy are limited in number.
(ii) Certain enterprises or industries are predominant users of the subsidy program or receive disproportionate benefits under the subsidy program.
(iii) The authority providing the subsidy uses discretion to favor certain enterprises or industries over other industries.



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