World Trade	G/SCM/N/1/BRA/2
	8 September 1997
Organization	
	(97-3575)

	Original:  English
Committee on Subsidies
and Countervailing Measures

	NOTIFICATION OF LAWS AND REGULATIONS
	UNDER ARTICLE 32.6 OF THE AGREEMENT

	BRAZIL

	The following communication, dated 19 August 1997, has been received from the Permanent Mission of Brazil.

	_______________

	TABLE OF CONTENTS

	Page

Title I		Subsidies and Procedures for the Application of Countervailing Measures	3

	Chapter I	Principles	3

	Chapter II	Subsidies	4

		Section I	Definition of a Subsidy	4

		Section II	Actionable Subsidies	4

		Section III	Non-Actionable Subsidies	6

	Chapter III	The Calculation of the Amount of Actionable Subsidy	7

	Chapter IV	Determination of Injury	10

	Chapter V	Definition of Domestic Industry	12

	Chapter VI	The Investigation	13

		Section I	Petitions	13

		Section II	Opening an Investigation	15

		Section III	Conduction the Investigation	17

			Sub-section I	Evidence	17

	Page

			Sub-section II	The Defence	18

			Sub-section III	Final Procedures Concerning the Conduction of
					the Investigation	19

		Section IV	Provisional Countervailing Measures	19

		Section V	Undertakings	20

		Section VI	Concluding the Investigation	21

	Chapter VII	The Imposition and Collection of Countervailing Duties	22

		Section I	Imposition	22

		Section II	Collection	23

		Section III	Productions Subject to Provisional Measures	23

	Chapter VIII	The Duration and Review of Countervailing Measures and 
			Undertakings	25

	Chapter IX	Public Notice	26

	Chapter X	Formalities Related to Acts and Procedural Terms	26

	Chapter XI	The Decision Making Process	27

Title II		Special Procedures	28

	Chapter I	Agricultural Products	28

	Chapter II	On-the-Spot Investigations	29

	Chapter III	Use of Information from Secondary Sources	29

	Chapter IV	General Provisions	30

Annex I	Illustrative List of Export Subsidies	32

Annex II	Guidelines on Consumption of Inputs in the Production Process	34

Annex III	Guidelines in the Determination of Substitution Drawback Systems as
		Export Subsidies	36

Annex IV	Developing Countries Members	38

Annex V	List of Agricultural Products	39

Annex VI	Domestic Support:  The Basis for Exemption from the Reduction
		Commitments	40

	DECREE Nº 1.751, 19 DECEMBER 1995.

								Regulates the norms which control
								administrative procedures for the
								application of countervailing measures.

	The VICE‑PRESIDENT OF THE REPUBLIC, acting as PRESIDENT OF THE REPUBLIC, by virtue of the powers that are vested in him by Article 84, Sections IV and VI, of the Constitution, and taking into consideration the provisions of the Agreement on Subsidies and Countervailing Measures, the Agreement on Agriculture and the General Agreement on Tariffs and Trade 1994 ‑ GATT 1994, approved by Legislative Decree Nº 30, dated 15 December 1994, and, and promulgated by Decree Nº 1.355 dated 30 December 1994, and by Law Nº 9.019, dated 30 March 1995,

	DECREES:

TITLE I

SUBSIDIES AND PROCEDURES FOR THE APPLICATION OF
COUNTERVAILING MEASURES
	
	Chapter I

	PRINCIPLES

Article 1º.	Countervailing measures may be applied with the objective of compensation for subsidies that are granted, directly or indirectly, in the exporting country, to the manufacture, production, export or transport of any product, whose export to Brazil causes injury to domestic industry.

§ 1º.	Countervailing measures shall be applied in accordance with investigations initiated and conducted according to the provisions of this Decree.  Agricultural products are also simultaneously subject to the provisions of Chapter I of Title II.

§ 2º.	In keeping with the provisions set forth in paragraph 5 of Article VI of GATT/1994, the import of a product may not be subject simultaneously to the application of countervailing measures and anti‑dumping measures, which are referred to in the Agreement on the Implementation of Article VI of GATT 1994, to compensate for the same situation.

§ 3º.	The term “exporting country” means the country of origin or exportation to where the subsidy is granted.  In case the products are not exported directly to Brazil from the exporting Country, but from an intermediate country, the procedures referred to in this Decree will be applied, and the transactions in question will be considered to have occurred between the exporting country and Brazil.

Article 2º.	The Ministers of State of Industry, Trade, and Tourism and of Finance, have the competence to apply, through a joint act, provisional countervailing measures or definitive measures and ratify undertakings, based on findings of the Secretariat of External Trade ‑ SECEX. of the Ministry of Industry, Trade and Tourism, which confirm the existence of subsidies and of injury arising therefrom.

Article 3º.	SECEX is responsible for conducting the administrative proceedings regulated by this Decree.

	Chapter II

	SUBSIDIES

	Section I
	Definition of a Subsidy
	
Article 4º.	For purposes of this Decree, subsidy shall be considered to exist when a benefit is conferred in function of the following hypotheses:

	I.	If there is in the exporting country any form of income or price support that contributes, directly or indirectly, to the increase or decrease of exports of any product;  or

	II.	If there is financial contribution by the government or by a public organ within the territory of the exporting country, henceforth referred to as “government”, where:

	(a)	the practice of the government involves a direct transfer of funds (e.g. grants, loans and equity infusion), potential direct transfers of funds or liabilities (e.g. loan guarantees); 

	(b)	government revenue that is otherwise due is foregone or not collected (e.g. fiscal incentives).  In accordance with Article XVI of GATT 1994 and  Annexes I through III of the Agreement on Subsidies and Countervailing Measures, the exemption of an exported product from duties or taxes borne by the like product when destined for internal consumption, or the remission of such duties or taxes in amounts not in excess of those that have accrued, shall not be deemed to be a subsidy;

	(c)	the government provides goods or services other than general infrastructure, or purchases goods; 

	(d)	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 illustrated in the previous paragraphs, which would normally be vested in the government and the practice, in no real sense, differs from practices normally followed by governments. 

	Sole paragraph.  The term “like product” is to be understood as a product identical in all aspects to the product that is being examined or in the absence of such a product, another product that, although not exactly the same, has characteristics closely resembling those of the product under consideration.

Section II
Actionable Subsidies

Article 5º.	For purposes of this Decree, a subsidy, as defined in the previous Article, will be denominated actionable, subject to countervailing measures, if the same is specific, with the exception of those foreseen in Articles 11, 12, and 13.

Article 6º.	A subsidy is specific where the granting authority, or the legislation pursuant to which this authority operates, explicitly limits access to this subsidy to an enterprise, or to a group of enterprises, within the jurisdiction of that authority, here denominated “certain enterprises”.

  1º.	Specificity will not occur when the granting authority, or the legislation pursuant to which this authority operates, establishes objective conditions or criteria that determine eligibility for subsidies and the amounts to be granted,  provided that the eligibility is automatic and that such criteria are strictly adhered to.  The criteria and conditions stipulated by law, regulation or other normative act, must be strictly respected and their verification shall be made.

§ 2º.	The expression “conditions or objective criteria” means neutral conditions or criteria that do not favour certain enterprises over others, that  are economic in nature and horizontal in application, such as number of employees or the size of the enterprise.

§ 3º.	In cases where there is not, apparently, specificity in the terms of §§ 1º and 2, but there are reasons to believe that the subsidy in question is in fact specific, other factors may be taken into consideration, such as:  the use of a subsidy programme by a limited number of certain enterprises, predominant use of a subsidy programme by certain enterprises, the granting of disproportionately large amounts of subsidy to certain enterprises, and the manner in which discretion has been exercised by the granting authority in the decision to grant a subsidy.

§ 4º.	For purposes of  § 3º, the following shall be taken into account:

	(a)	information about the frequency with which applications for subsidies are refused or approved and the reasons which led to these decisions;

	(b)	the diversification of economic activities within the jurisdiction of the granting authority, as well as the period of time during which the programme of subsidies was in force.

Article 7º.	Subsidy will be specific if it is limited to certain enterprises located inside a geographic region situated inside the jurisdiction of the granting authority.

	Sole paragraph.  The setting or change of generally applicable tax rates  by all levels of the government with competence to do so, shall not be deemed to be a  specific subsidy.

Article 8º.	Notwithstanding the provisions of Articles 6º and 7º, subsidies will be specific, for purposes of investigation, if they fall within the definition of prohibited subsidies, in the terms of Article 3 of the Agreement on Subsidies and Countervailing Measures, as follows:

	I.	Subsidies contingent, in law or in fact, whether solely or as one of several other conditions, upon export performance, including those illustrated in Annex I.  This standard will be met when it is demonstrated that the 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.  The mere fact that subsidies are granted to export enterprises, shall not for that reason alone be considered as an export subsidy.

	II.	Subsidies contingent, whether solely or as one of several other conditions, upon the use of domestic over imported goods.

Article 9º.	Any determination of specificity in accordance with the provisions of this section, shall be clearly based on positive proof.

Section III
Non‑Actionable Subsidies
	
Article 10.	For purposes of this Decree, a subsidy, as defined in Article 4º, will be considered non‑actionable, not subject to countervailing measures, when:

	I.	It is not specific as defined in articles 6º and 7º,

	II.	It is specific as defined in Articles 6º and 7º, but meets the conditions enumerated in Articles 11, 12, and 13.

Article 11.	Assistance granted for purposes of research, with the  exception of that related to civil aircraft, is not subject to countervailing measures, as defined in § 1º of this article, when carried out by firms, or by higher education or research establishments on a contract basis  with firms if the Assistance covers up to a maximum of 75% of the costs of industrial research, as defined in paragraph § 3º, or 50% of the costs of pre‑competitive development activities, defined in § 4º.  These permitted levels of non‑actionable Assistance will be established by reference to the total eligible costs incurred over the duration of a project and provided that such assistance is limited exclusively to:

	I.	Personnel costs of those employed exclusively in the research activity, such as researchers, technicians, and other supporting  staff.

	II.	Costs of instruments, equipment, land and buildings, used exclusively and permanently for the research activity, except when disposed of on a commercial basis.

	III	Costs of consultancy and equivalent services used exclusively for the research activity, including bought‑in research, technical knowledge, patents, etc.;

	IV.	Additional overhead costs incurred directly as a result of the research activity.

	V.	Other running costs, such as those of materials, supplies and the like, incurred directly as a result of the research activity.

§ 1º.	The term “research” does not include fundamental research activities carried out independently by higher education or  research establishments.

§ 2º.	The term “fundamental research” means an enlargement of technical‑scientific knowledge not linked to industrial and commercial objectives.

§ 3º.	The term “industrial research” means planned research or investigation aimed at the discovery of new knowledge that may be useful to the development of new products, processes or services, or in bringing  about a significant improvement to existing products, processes or services.

§ 4º.	The term “pre‑competitive development activity” means the translation of industrial research findings into a plans, blueprint or design for  new, modified or improved products, processes or services, whether intended for sale or use, including the creation of a first prototype which would not be capable of commercialization.  It may further include the 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.  The term does not include routine or periodic alterations to existing products, production lines, manufacturing processes, services and other on‑going operations even though those alterations may represent improvements.

§ 5º.	In the case of programmes that span industrial research and pre‑competitive development activity, the allowable levels of non‑actionable assistance shall not exceed the simple average of the allowable levels of non‑actionable assistance applicable to each one of the two categories referred to in the caput of this article, calculated on the basis of all eligible costs as set forth in items I to V of this Article.

Article 12.	Assistance to a disadvantaged region within the territory of an exporting country pursuant to a general framework of regional development and non‑specific, in accordance with the provisions of Articles 6º and 7º, is  not subject to countervailing measures provided that:

	I.	Each disadvantaged region must be a clearly designated contiguous geographical area with a definable economic‑administrative identity;

	II.	The region is considered as disadvantaged on the basis of neutral and objective criteria, clearly expressed in law, regulations or other normative acts, in such a way as to permit verification, and that such verification demonstrates that the difficulties arise out of more than temporary circumstances.;  and

	III.	The criteria shall include a measurement of economic development verified during a period of three years, and based on at least one of the following indicators:

	(a)	one of either income per capita or household income per capita, or GDP per capita, which must not be above 85% of the average for the territory concerned;

	(b)	unemployment rate, which must be at least 110% of the average for the territory under consideration.

§ 1º.	The economic development measure referred to in item III, may also be the result of a composite measure of the indicators referred to in paragraphs “a”, “b” and may also include others not mentioned. 

§ 2º.	”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 to geographically isolated areas, without any or almost no influence on the development of a region.

§ 3º.	”Neutral and objective criteria” means criteria that do not favour certain regions beyond what is necessary to eliminate or reduce regional disparities, within  the framework of the regional development policy. 

§ 4º.	For the purposes set forth in the previous paragraph, regional subsidy programmes shall include ceilings on the amount of assistance which can be granted to each subsidized programme which shall be differentiated according to the different levels of development in each assisted region, and must be expressed in terms of investment costs or cost of job creation.

§ 5º.	Within such ceilings, the assistance distribution shall be sufficiently broad  and even to avoid the predominant use of one subsidy by , or the granting of disproportionately large amounts of subsidy to, certain enterprises, in accordance with the provisions of Section II of this Chapter.

Article 13.	Assistance granted to promote the adaptation of facilities in operation for at least two years before the imposition of new environmental requirements imposed by law or regulations which result in greater constraints and financial burden on firms are not subject to the application of countervailing measures, provided that such assistance:

	I.	Is a one‑time non‑recurrent measure;

	II.	Is limited to 20% of the cost of adaptation;

	III.	Does not cover the cost of replacing and operating the assisted investment, which must be fully borne by firms;

	IV.	Is directly linked and proportionate to the reduction of nuisance and pollution planned by the firm and does not cover any manufacturing costs savings which may be achieved;

	V.	Is available to all firms which can adopt the new equipment and/or production processes.

	Chapter III

	THE CALCULATION OF THE AMOUNT OF ACTIONABLE SUBSIDY

Article 14.	In order to apply countervailing measures, the amount of the actionable subsidy shall be calculated by unit of subsidized goods exported to Brazil, based on the benefits utilized during the period of investigation of actionable subsidies, as per § 1º of Article 35.

	Sole paragraph. The term “subsidized product” will be understood as a product that benefits from an actionable subsidy.

Article 15.	The following shall not be considered as conferring a benefit:

	I.	Government provision of equity capital,  unless the investment decision can be regarded as inconsistent with the usual investment practice (including for the provision of risk capital) of private investors in the territory of the exporting country;

	II.	Government loans, unless there is a difference between the amount that the firm receiving the loan pays on the government loan and the amount the firm would pay on a comparable commercial loan that could have been obtained on the market.  In this case the benefit shall be the difference between these two amounts.

	III.	A loan guarantee by a government, unless there is a difference between the amount that the firm receiving the guarantee pays on a loan guaranteed by the government and the amount that the firm would pay on a comparable commercial loan, without the government guarantee. In this case, the benefit shall be the difference between the two amounts, adjusted for any differences in fees.

	IV.	The provision of goods or services or purchase of goods by the government, unless the provision is made for less than adequate remuneration, or the purchase for more than adequate remuneration.  The adequacy of remuneration shall be determined in relation to market conditions prevailing for the good or service under consideration in the country of provision or purchase, including price, quality, availability, marketability, transportation, and other conditions of purchase or sale.

Article 16.	In the determination of the amount, the following items may be deducted from the total:

	I.	Expenses incurred necessarily to qualify  for the subsidy or to benefit from it.

	II.	Taxes to which the product has been submitted upon exportation to Brazil, when specifically designed to neutralize subsidies.

	Sole paragraph.   When an interested party or government requests a deduction, they have to  present proof that the deduction is justified.

Article 17.	When the subsidy is not granted on the basis of the quantities manufactured, produced, exported, or transported, the amount of actionable subsidy shall be calculated if appropriate, dividing in an adequate way the total value of the subsidy by the volume manufactured, produced, for sale or for export of the product which is referred to, during the period of investigation during which subsidy existed.

Article 18.	When the subsidy is granted for the present or future acquisition of fixed assets, the amount of the actionable subsidy shall be calculated and pro‑rated for a period that corresponds to the normal depreciation of such assets in the industry which is being considered.  The amount thus calculated, relative to the period of investigation of the existence of actionable subsidy, including the amount derived from the acquisition of fixed assets in previous periods, it shall be divided as per the previous article.

	Sole paragraph.   In case of assets not subject to depreciation, the subsidy shall be considered a loan at zero interest rate and evaluated as per the item II of Article 15.

Article 19.	When the subsidy cannot be related to the acquisition of fixed assets, the amount of assistance received during the investigation of the existence of subsidy shall be attributed to this period and divided as per Article 17, unless there exist exceptional circumstances that justify attributing them to a different period.

Article 20.	The general rule will be the determination of an individual amount of actionable subsidy for each one of the known exporters, or producers of the product under investigation.

§ 1º.	In case the number of exporters, producers, importers known or types of products or transactions under investigation be so expressive that the determinations of the “caput” become impractical, the examination may be limited to:

	(a)	a reasonable number of interested parties, transactions or products, determined by a statistically valid sample based on the information available at the time of selection; or

	(b)	to the largest volume of production, sale, or exportation, that is representative and may be investigated taking into account the determined deadlines.

§ 2º.	Any selection of exporters, producers, importers, types of products or transactions, which is made as per the previous paragraph, shall be effected after the governments of the exporting countries, the exporters, the producers or importers, have been consulted and their approval has been obtained,
provided that they have provided information necessary for the selection of a representative sample. 

§ 3º.	In case one or more of the selected enterprises do not provide the information requested, another selection shall be made.  If there is not enough time to make a new selection or if the new firms selected also fail to provide the requested information, the determination or decision shall be based on the information available, pursuant to the provision of Article 79.

§ 4º.	The individual amount of actionable subsidy shall be determined for each exporter or producer who was not included in the selection, but who presents the necessary information in time for consideration during the  investigation, with the exception of situations in which the number of exporters or producers is so expressive that the analysis of individual cases would result in a disproportionate burden which would impede the conclusion of the investigation within the designated time limit. Voluntary replies shall be encouraged.

	Chapter IV

	DETERMINATION OF INJURY

Article 21.	For the effects of this Decree, the term “injury” shall mean material injury or threat of material injury to a domestic industry already established or material retardation of the establishment of such an industry.

§ 1º.	Determination of injury shall be based on positive evidence and shall include an objective examination of:

	a)	the volume of imports of the subsidized product;

	(b)	its effect on the prices of the like Brazilian product;

	(c)	the consequent impact of these imports on the domestic industry.

§ 2º.	With regard to the volume of imports of the subsidized product, it shall be considered whether there has been a significant increase in subsidized imports, either in absolute terms or relative to the production or consumption in Brazil.

§ 3º.	For purposes of this investigation, the term “negligible” shall normally be understood to mean the volume of imports coming from a specific country, less than 3% of the total imports of the like product, unless the countries that account for, individually, less than 3%, account for collectively, more than 7% of the total imports of the like product.

§ 4º.	For developing countries, negligible shall be understood to mean the volume of imports when this accounts for less than 4% of the total imports of the like product, unless these countries that account for, individually, less than 4%, account for, collectively, more than 9% of the total imports of the like product. 

§ 5º.	In regard to the effect of imports of subsidized products on the prices of this product, it shall be considered whether there has been a significant price undercutting by the subsidized imports as compared with the price of a like product of Brazil, or whether the effect of such imports is otherwise to depress prices to a significant degree or to prevent price increases, which otherwise would have occurred.

§ 6º.	None or several of these factors can necessarily give decisive guidance.

§ 7º.	When imports of a product originating from more than one country are simultaneously investigated, the effects of such importations shall be determined cumulatively, if it is determined that:

	(a)	the amount of subsidization established in relation to the imports of each one of the countries, is not de minimis, and that the volume of imports of each country is not negligible. 

	(b)	the cumulative assessment of the effects of these imports is appropriate in view of the conditions of competition between the products imported and the conditions of competition between these products and the like domestic product.

§ 8º.	The amount of the actionable subsidy shall be considered as de minimis when it is less than 1% ad valorem.

§ 9º.	The amount of the actionable subsidy shall be considered as de minimis for developing countries when the global level of actionable subsidies granted for the product in question does not exceed 2% ad valorem.

§ 10.	For developing countries Members who have eliminated subsidies for exports, before the period of eight years counting from the date the  Marrakesh Agreement Establishing of the World Trade Organization (WTO Agreement) , the value mentioned in the previous paragraph shall be 3% ad valorem. This provision shall be applied starting from the date of notification of the elimination of the export subsidy to the Committee on Subsidies of the WTO, and for the whole period in which export subsidies have not been granted by the developing country Member which has notified.

§ 11.	The provisions of the previous paragraph shall expire eight years after the WTO Agreement  has entered in force.

§ 12.	For developing countries Members, which are referred to in Annex IV, the amount mentioned in § 9º shall be 3% ad valorem.

§ 13.	The examination of the impact of imports of the subsidized product on the domestic industry shall include evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including actual and potential decline in output, sales, market share, profits, productivity, return on investments, or utilization of capacity, as well as factors that affect 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 assistance programmes.

§ 14.	The list contained in the previous paragraph is not exhaustive, nor can one or several of these factors necessarily give decisive guidance.

Article 22.	It’s necessary to demonstrate de causal relationship between imports of subsidized products and the injury to the domestic industry based on an examination of: 

	I.	Relevant evidence;  and

	II.	any known factors, other than the subsidized imports, which at the same time are injuring the domestic industry , and the injuries caused by these other factors will not be attributed to the subsidized imports.

1º.	The relevant factors in this respect, include, among others, the volumes and prices of non‑subsidized imports of the product in question, the impact of the alterations in import tariffs on the domestic prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between foreign and domestic producers, developments in technology and the export performance and productivity of domestic industry.

§ 2º.	When the available data permit the separate identification of domestic industrial production of the like product, the effect of the imports of the subsidized product shall be assessed on the basis of such criteria  as the production process, producer’s sales and profits.

§ 3º.	If such separate identification of that production is not possible, the effects of imports on the subsidized product shall be determined by an examination of the production of the narrowest group or range of products, which includes the like product, for which the necessary information can be provided.

Article 23.	The determination of the existence of the threat of material injury shall be based on facts and a convincing motive.  The change in circumstances which would create a situation in which the subsidy would cause injury must be clearly foreseen and imminent.

§ 1º.	In making the determination of the existence of threat of material injury, the following factors, among others, shall be considered:

	(a)	the nature of the subsidy or subsidies in question and the trade effects likely to arise therefrom.

	(b)	a significant rate of increase of subsidized imports, indicative of the likelihood of a substantially increased importation;

	(c)	sufficient freely disposable, or an imminent, substantial increase in, capacity of the exporter, that indicates the likelihood of substantially increased subsidized exports to Brazil, taking into consideration the availability of other possible markets that could absorb the possible increase of exports.

	(d)	imports entering at prices that will have a significant depressing or suppressing effect on  domestic prices, and that will probably increase the demand for imports.

	(e)	inventories of the product under investigation.

§ 2º.	None of the factors of § 1º by itself shall give decisive guidance, but the totality of the factors will lead to the conclusion that additional imports of the subsidized products are imminent and that unless protective action is taken, material injury will occur.

	Chapter V

	DEFINITION OF DOMESTIC INDUSTRY

Article 24.	For the purposes of this Decree, the term “domestic industry” shall be understood as referring to the domestic producers  of the like product, or to those whose collective output of the mentioned product constitutes a major proportion of the total domestic production, except when:

	I.	The producers are related to the importers or exporters or are themselves importers of the allegedly subsidized product or a like product originating in other countries. In this case, the expression “domestic industry” shall be interpreted as referring to the rest of the producers;  or:

	II.	In exceptional circumstances, Brazilian territory may be divided into two or more competing markets, and the term “domestic industry” shall be interpreted as the producers of one of those markets.

§1º.	To apply the determination of item I, producers shall be considered to be related to exporters or to importers only if:

	(a)	one of them, directly or indirectly,  controls the other;

	(b)	both of them are, directly or indirectly, controlled by a third party;

	(c)	together they control, directly or indirectly, a third party.

§ 2º.	The situations of the previous paragraph shall only be considered if there are grounds to believe or suspect that these relations may cause the producer to behave differently from non‑related producers.

§ 3º.	Control, for purposes of this paragraph, will be considered to exist when the former is in legal or operational conditions to exercise restraint or direction over the latter.

§ 4º.	For purposes of that determined in item II, the producers in each one of the markets, may be considered domestic industry when:

	(a)	the producers active in this market, sell all or almost all of their production of the like product in question in this same market;  and

	(b)	the demand in this market is not to any substantial degree supplied by producers of the like product located elsewhere in the territory.

§ 5º.	In the situation of § 4º of this article, the injury may be found to exist even where a major portion of the total domestic industry is not being injured, provided there is a concentration in that market of the subsidized imports, and that these are causing injury to the producers of all or almost all of the production within such market.

	Chapter VI

	THE INVESTIGATION

Section I
Petitions
	
Article 25.	With the exception of that provided for in Article_33, the investigation to determine the existence, the degree, and the effect of any alleged subsidy, shall be requested by the domestic industry, or in its behalf, by means of petition, in written form, in accordance with the procedures established by SECEX.

§ 1º.	The petition shall include evidence of the existence of a subsidy, and if possible, the amount, the injury and the causal link between the imports of the subsidized product and the injury alleged, and the following data:

	(a)	the identity of the petitioner, a description of the volume and value of the domestic production by the petitioner, or in case the petition has been presented on behalf of the domestic industry, the name of the industry on whose behalf the petition was presented with the name of the domestic producers represented as well as the volume and value of the production accounted for by such producers.

	(b)	an estimate of the volume and value of the total national production of the like product.

	(c)	a list of known domestic producers of the like product, which are not represented in the petition, and as far as possible, an indication of the volume and value of domestic production of the like product which corresponds to those producers, as well as their position concerning the presentation of the petition.

	(d)	a complete description of the product allegedly subsidized, the name of the respective country or countries of origin or of export, the identity of each known exporter or foreign producer, and a list of the known importers of the product in question;

	(e)	a complete description of the product manufactured by the domestic industry;

	(f)	evidence with regard to the existence, amount, and nature of the subsidy in question;

	(g)	evidence of the evolution of the volume and value of imports of the allegedly subsidized product, of the effects of such imports on prices of the like product in the domestic market and the consequent impact of the imports on domestic industry, as  demonstrated by factors and indices having a bearing on the state of the domestic industry.

§ 2º.	In case the petition contains confidential information, the provisions of Article 38 shall apply.

Article 26.	A petition shall undergo a preliminary examination to determine whether it is contains the necessary elements, or if complementary information is necessary.  The petitioner shall be informed of the results of this examination within twenty days of filing the petition.

§ 1º.	When complementary information is requested, a new examination shall take place to determine if new information is necessary or if the petition is properly presented.  The petitioner shall be informed of the results of this examination within twenty days from the submission of the complementary information.

§ 2º.	Twenty days from the date of the presentation of the new information, the petitioner shall be informed whether the petition is properly presented or if it was considered definitively not acceptable.

§ 3º.	The time limit for supplying complementary information or new information shall be determined by SECEX, in accordance with the nature of the information, and shall be communicated to the petitioner.

§ 4º	The petitioner shall have ten days from the time of being informed that the petition is proper, to present as many copies of the non‑confidential summary of the petition and of the resume as per § 1º of Article 38, as there are producers, known exporters, and governments of exporting countries listed.

§ 5º.	If the number of producers and exporters, referred to in § 4º, is especially high, copies of the petition may be provided in a number sufficient only for sending to governments of countries listed and the corresponding representative associations.

Section II
Opening an Investigation
	
Article 27.	As soon as possible after the acceptance of the petition, as per Article 26 and, in any case, always before opening the investigation, the governments, whose products may come to be subject of the investigation, shall be invited for consultation with the aim of clarifying the situation as to the matters referred to in Article_25 and for arriving at a mutually satisfactory solution.

§ 1º.	The government of the exporting country shall be notified of the petition for the opening of the subsidies investigation and shall have a time limit of ten days to manifest interest in holding consultations, which shall take place within thirty days.

§ 2º.	The deadlines referred to in this Article will be counted from the date of the notification to the exporting countries concerning the invitation for  consultations.

Article 28.	The evidence of both  subsidy and  injury shall be considered simultaneously, in the decision whether or not to initiate an investigation.

§ 1º.	The accuracy and adequacy of the evidence contained in the petition shall be examined based on information from other sources readily available in order to determine the existence of sufficient motives to justify the initiation of an investigation.

§ 2º.	SECEX shall proceed with the examination of the degree of support or opposition to the petition expressed by the other domestic producers of the like product, with the objective of determining if the petition was presented by  or on behalf of the domestic industry. In the case of fragmented industries involving an exceptionally high number of producers, support or opposition may be determined through the use of statistically valid sampling techniques.

§ 3º.	A petition shall be considered to have been presented “by or on behalf of the domestic industry” if presented by producers responsible for more than 50% of the total domestic production of the like product made by the portion of domestic industry that had expressed support or opposition to the petition.

Article 29.	An investigation may be opened with a view to verifying if the alleged subsidies are specific in terms of Articles 6º and 7º, or in case they are related to research activities, regional development, or environmental requirements, if they meet the requirements established in Articles 12, 13, or 14, respectively.

§ 1º.	An investigation will not be opened when the subsidy has been granted in the context of a programme considered non‑actionable by the exporting country, which has notified it in advance to the Committee on Subsidies and Countervailing Measures of the WTO.

§ 2º.	The exception covered by the previous paragraph will not be applied, however, to cases in which the competent body of the WTO, or procedures of the Committee on Subsidies and Countervailing Measures, conclude that a violation of the provisions contained in Section III of Chapter II of this Decree exists.

Article 30.	The petitioner will be notified of a positive or negative  determination regarding initiation of an investigation within fifty days following the date of dispatch of the determination that the petition is properly presented.

§ 1º.	The petition shall be rejected and the case closed, when

	(a)	there is no sufficient evidence of existence of a subsidy, or of injury caused by it, that justifies the initiation of an investigation;

	(b)	the petition has not been presented by or on behalf of the domestic industry;  or

	(c)	the domestic producers, who support the petition, account for less than 25% of the total production of the like product produced by the domestic industry.

§ 2º.	In the case of a positive determination, the investigation shall be opened and an act containing such determination shall be published in the “Diario Oficial” (Official Gazette).  The interested parties and governments shall be notified and given a time limit of twenty days, counting from the date of publication of this determination, in order to request qualification of other parties who manifest interest, along with their legal representatives, as per the pertinent legislation.

§ 3º.	For effects of this Decree, interested parties shall be considered:

	(a)	the domestic producers of the like product or the association which represents them;

	(b)	the importers or consignees of the goods which are the object of  investigation or the associations which represent them.

	(c)	the exporters or foreign producers of the goods referred to or the associations which represent them;

	(d)	other parties, national or foreign, considered by SECEX as interested parties.

§ 4º.	As soon as the investigation is initiated, the complete text of the petition shall be provided to the known producers and exporters, and to the authorities of the exporting country, and, shall, if so requested, be placed at the disposal of other interested parties involved in the investigation.  In case the number of producers and exporters is especially large, the non‑confidential version of the petition shall be provided only to the authorities of the exporting country and to the corresponding representative association. Due regard shall be paid to the protection of confidential information.

Article 31.	The initiation of the investigation shall be communicated by SECEX to the Secretariat of the Federal Revenue of the Ministry of Finance, so that it may take the appropriate steps which, shall it be the case, will provide for the imposition of the definitive countervailing measures to the imports of the product which is the object of the investigation, as per Article_64.

	Sole paragraph.   The arrangements adopted by the Secretariat of the Federal Revenue, as per this article, shall not hinder the procedures of customs clearance.

Article 32.	Before the initiation of the investigation, the existence of the petition will not be publicized, except as per the directives of Article 27.

Article 33.	In exceptional circumstances, the Federal Government, ex officio, may initiate an investigation, as long as there is sufficient evidence of the existence of a subsidy, of injury, and of  a causal relationship between them, that justify the initiation.

Section III
Conduction of the Investigation
	
Article 34.	In the course of the investigation, opportunity shall be given to the countries whose products are the object of the investigation, to hold consultations with a view to elucidate the facts and reach a mutually satisfactory solution.

Article 35.	The evidence of the existence of the actionable subsidy and of the injury shall be considered simultaneously during the investigation.

§ 1º.	The period of investigation of the existence of the actionable subsidy shall include the twelve month period immediately preceding the date of the initiation of the investigation.  It may retroact up to the beginning of most recently concluded fiscal year of the recipient for which trustworthy financial information and other relevant data are available. Under exceptional circumstances, the period of investigation can be of less than twelve  months, but never less than six.

§ 2º.	The period of investigation of the existence of injury shall be sufficiently representative to permit the analysis to which Chapter IV refers to and shall not be of less than three years and will necessarily include the period of investigation of the existence of the actionable subsidy.

Sub‑section I
Evidence
	
Article 36.	The interested parties and governments and the parties in the investigation to be interested shall be given notice with regard to the required information and shall have ample opportunity to present in writing the evidence they consider relevant with respect to the investigation being considered.

	Sole paragraph.   Whatever difficulties the interested parties, especially small enterprises, have in supplying the requested information, will be taken into consideration, and they will be given any  assistance practicable.

Article 37.	The interested parties and governments of the exporting countries shall receive questionnaires destined for the investigation and shall have a time limit of forty days to answer them, counting from the day of their dispatch.

§ 1º.	Requests for extension of the time limit of forty days shall be considered, and in case necessity is demonstrated, the extension may be granted, when practicable, for a period not to exceed thirty days, taking into account the time limits established for the investigation.

§ 2º.	Additional or complementary information may be requested or accepted, in writing, during the course of the investigation. The time limit for furnishing the requested information shall be stipulated in function of their nature and may be extended by suitably justified requests.  The time limits for the investigation shall be taken into account, for the supply of additional information, as well as for consideration of the additional information presented.

§ 3º.	In case either of the parties or governments refuse access to the necessary information, do not provide it within the time limit determined, or yet, impede the investigation, preliminary or final determinations may be made based on the facts available, as per Article 79, keeping in mind the time limits of the investigation.

Article 38.	Information which is confidential by nature or is provided on a confidential basis by parties and governments interested in the investigation, shall be treated as such, if justified, and will not be disclosed without express permission of the party supplying it.  Information classified as confidential will be the object of a separate process.

§ 1º.	Interested parties and  governments which provide confidential information, shall present a non‑confidential summary of the same, that will permit a reasonable understanding of the information provided.  In cases in which it is not possible to present the summary, the parties or governments shall justify such this situation in writing.

§ 2º.	In case it is considered that the request for confidentiality is not warranted, and if the supplier of the information refuses to make it public in whole or in summary format, such information may be disregarded, unless it is demonstrated in a convincing manner and from appropriate sources that the information is correct.

Article 39.	Opportunity shall be given to the  industrial users of the product under investigation, and representatives of consumer organizations, in cases where the product is commonly sold at the retail level, to provide information which is relevant to the investigation.  This information will be considered in the determinations or decisions.

Article 40.	In the course of the investigation, the accuracy of the information provided by the interested parties and governments will be verified.

§ 1º.	Investigations may be carried out in the territory of other countries, if the governments have been duly notified and have not objected.  The enterprises located in other countries may also be equally investigated and have their records examined, if their approval is obtained, and the representatives of the government of the country in question have been notified and do not object to the investigation. The procedures described in Article 78 shall be applied in the investigations of the enterprises.

§ 2º.	Investigations may be carried out in the enterprises involved which are located in Brazilian territory, if previous authorization has been obtained.

§ 3º.	The results of the investigations, carried out in accordance with the provisions of paragraphs 1º and 2º of this article, shall be attached to the process, with due regard being given to the right to confidentiality.

Sub‑section II
The Defence

Article 41.	During the investigation, the parties and the interested governments shall have ample opportunity to defend their interests. In case it is requested, within the time limit indicated in the act that initiates the investigation, hearings will be held where opportunity will be given to those who hold opposing views in such a way that opposing interpretations and arguments may be expressed.

§ 1º.	The parties or interested governments who have requested the hearing shall provide, along with the request, a list of specific issues that are to be discussed.

§ 2º.	The interested parties and governments shall be informed of the hearing, and of the aspects to be discussed,  within a minimum of thirty days previous to the meeting.

§ 3º.	Attendance shall not be obligatory and absence of any party shall not be used to against their interests.

§ 4º.	The interested parties and governments shall indicate their legal representatives who will be present in the hearing, at least five days before it is held, and send in writing, at least ten days before it is held, the arguments to be presented in the occasion. The interested parties and governments, may, if adequately justified, present additional information orally.

§ 5º.	When appropriate, due account shall be given to the need to protect confidentiality.

§ 6º.	The fact that hearings are being held shall not impede SECEX from reaching a preliminary or final determination.

Article 42.	Whatever decision or determination is made shall be based only on the information and documents that are part of the case and that are available to all interested parties and  governments, due account having been given to the need to protect confidential information.

§ 1º.	Information provided orally shall only be taken into consideration if, within ten days, the same is reproduced in writing and placed at the disposal of other interested parties and governments.

§ 2º.	The interested parties and governments may request, in writing, to see the information that is relevant to the legal proceedings, which shall be placed at their disposition with the exception of confidential information and the internal Government documents.  Opportunity shall be given for the parties to defend their interests, in writing, based on such information.

Sub‑section III
Final Procedures Concerning the Conduction of the Investigation

Article 43.	Before preparation of the opinion which will lead to the final determination, SECEX will hold a hearing in which the interested parties and governments will be informed of the essential facts under examination that form the basis of the opinion.  The interested parties and governments will have fifteen days, counting from the date of the hearing, to present their views in this regard.

§ 1º.	The National Agricultural Confederation (“CNA”), the National Industrial Confederation (“CNI”),the National Commercial Confederation (“CNC”), and the Brazilian Foreign Trade Association (“ABE”) will be equally informed of the essential facts under examination that forms the basis of the SECEX opinion.

§ 2º.	When the time limit determined in the “caput” has expired, the conduction of the process will have been finalized and received later shall not be considered in reaching the final determination.

§ 3º.	The provisions contained in paragraphs_3º, 4º, and 5º of Article_41 also apply to this Article.

Section IV
Provisional Countervailing Measures

Article 44.	Provisional Countervailing Measures may only be applied if:

	I.	The investigation has been initiated as per the provisions of Section II of Chapter VI, the act that contains the determination of the initiation was published and the interested parties and  governments have been offered adequate opportunity to present their views;

	II.	An affirmative preliminary determination has been made that an actionable subsidy exists and that there is injury to the domestic industry as a result of imports of the subsidized product;

	III.	The authorities referred to in Article 2º have decided that such measures are necessary to prevent  injury during the investigation;  and 

	IV.	At least sixty days have passed since the date of the initiation of the investigation.

§ 1º.	The amount of the provisional countervailing measure shall not exceed the amount of the actionable subsidy previously calculated.

§ 2º.	Provisional countervailing measures shall be applied in the form of provisional measures guaranteed by cash deposit  or bank guarantees.

§ 3º.	Interested parties and governments shall be notified of the decision to apply provisional countervailing measures and the act containing such decision shall be published in the “Diario Oficial” (Official Gazette).

§ 4º.	The Secretariat of the Federal Revenue shall decide the form which the guarantee shall take.

§ 5º.	The release from customs of the goods which are the object of provisional countervailing measures shall depend on the presentation of the guarantee.

§ 6º.	The validity of the provisional countervailing measures shall be limited to a period which shall not exceed four months.

Section V
Undertakings

Article 45.	The proceedings may be suspended without the application of provisional countervailing measures or countervailing measures, if the government of the exporting country agrees to eliminate or reduce the subsidy, or adopts other measures concerning its effects, or if the exporter accepts voluntarily satisfactory undertakings to revise the prices of the exports destined for Brazil, if the authorities referred to in Article 2º become convinced that the referred undertaking eliminates the injurious effect  of the subsidy.

§ 1º.	The increase in prices in keeping with the undertaking with the exporter shall not exceed that amount necessary to compensate the amount of the actionable subsidy, and may be limited to that necessary to remove the injury caused to the domestic industry.

§ 2º.	The government of the exporting countries and the exporters shall only propose or accept undertakings, after SECEX having arrived at an affirmative preliminary determination of the existence of actionable subsidy and of injury, and in the case of an undertaking from the exporters, that they obtain consent of the government of the exporting country.

§ 3º.	The government of the exporting country and the exporters are not obliged to propose undertakings, nor will they be forced to accept those offered. These facts shall not harm the consideration of the case nor shall they alter the preliminary determination which has been reached.

§ 4º.	The right is granted to SECEX to refuse undertakings, if such acceptation is considered inappropriate.

§ 5º.	Where practicable, in case of refusal,  the reasons for considering inappropriate the acceptance of the undertaking shall be provided to the governments and they shall be given an opportunity to make comments thereon.

Article 46.	Once the undertaking is accepted , the act which contains its legal ratification shall be published in the “Diario Oficial” (Official Gazette), and shall contain, depending on the case, the decision as to continue or to suspend the investigation. Interested parties and governments shall be notified.

	Sole paragraph.   The investigation of subsidy and injury shall proceed, in case the government of the exporting country so desires or the authorities referred to in Article 2º so decide.
Article 47.	The government of the exporting country or the exporter with whom the compromise agreement was established, shall provide, periodically, if requested, information relative to compliance with the agreement and permit the verification of the pertinent data. 

	Sole paragraph.   The failure to comply with the terms of this Article shall be considered a violation of the undertaking.

Article 48.	In the case of a violation of the undertaking, actions may be taken viewing immediate application, by the authorities referred to in Article 2º, of provisional countervailing measures using the best information available and the investigation that had been suspended shall recommence immediately.

	Sole paragraph.   The interested parties and governments shall be notified about the termination of the compromise agreement and the application of provisional countervailing measures and the act containing such decision shall be published in the “Diario Oficial” (Official Gazette).

Section VI
Concluding the Investigation

Article 49.	Investigations shall be concluded within one year of initiation, except in exceptional circumstances, when the time limit may be up to eighteen months.

Article 50.	The petitioner may, at any time, request the closing of the case.  If the request is accepted, the investigation shall be terminated. If SECEX decides to continue the investigation, the petitioner shall be informed in writing.

Article 51.	The investigation shall be terminated, without the application of countervailing measures, if:

	I.	There has not been sufficient evidence of the existence of an actionable subsidy or of injury resulting therefrom;

	II.	The amount of the actionable subsidy was de minimis as provided in paragraphs 7º to 12 of Article 21;

	III.	The volume of imports, actual or potential, of the subsidized product or the injury caused was negligible, as per §§ 3º and 4º of Article 21.

Article 52.	The investigation shall be concluded with application of measures, when SECEX completes the pertinent procedures of consultations, arrives at a final determination of the existence of an actionable subsidy, of injury and of a causal link between them.

	Sole paragraph.   The value of countervailing measures may not exceed the amount of the actionable subsidy, as per the terms of Article 14.

Article 53.	In a situation where the investigation is continued after the acceptance of an undertaking:

	I.	The undertaking shall automatically lapse and the investigation terminate, if SECEX arrives at a negative determination of  actionable subsidization or of injury resulting therefrom, except in cases where such a determination is due in large part to the existence of an undertaking. In such cases the undertaking may be maintained for a reasonable period of time in conformity with the provisions of this  Decree;

	II.	If the authorities referred to in Article 2º confirm the existence of an actionable subsidy and injury resulting therefrom, based on the SECEX opinion, the investigation shall be closed and the application of definitive measures shall be suspended while the undertaking is in effect, it being understood that the terms under which the undertaking was established, and the provisions of this Decree, are respected.

§ 1º.	For the purposes of this Article, the provisions of  Article 47 apply.

§ 2º.	In case of violation of the undertaking, action may be adopted with a view to the immediate application, by the authorities referred to in Article 2º, of countervailing measures having as a basis the determination of the investigation that was carried out.

§ 3º.	The interested parties and governments shall be notified about the lapse of the undertaking and about the countervailing duty applied. The act containing such decision shall be published in the “Diario Oficial” (Official Gazette).

Article 54.	The act that contains the determination or the decision to close the investigation, in the cases foreseen in this Section, shall be published in the “Diario Oficial” (Official Gazette).  The interested parties and governments shall be notified of the close of the investigation.

	Sole paragraph.   In the case of a decision to conclude the investigation, with the application of countervailing measures, the act containing such a decision shall indicate the producer or producers of the product in question, with the measures applicable to each one. In case the number of producers is especially high, the act shall contain the names of the producing countries involved, with the respective applicable measures.

	Chapter VII

	THE IMPOSITION AND COLLECTION OF COUNTERVAILING DUTIES

	Section I
	Imposition

Article 55.	For the effects of this Decree, the expression “countervailing measures” means the amount of money equal to or less than the amount of actionable subsidy determined, calculated as per Article 14 and applied in conformity with this article, with the objective of removing the injury caused by the actionable subsidy.

§ 1.	The countervailing measures, provisional or definitive, shall be calculated by means of the application of  ad valorem or specific duties , fixed or variable, or by a combination of both.

§ 2.	The ad valorem duties shall be applied to the customs value of the merchandise, on the basis of the c.i.f. value, verified in terms of the pertinent legislation.

§ 3.	The specific duty shall be fixed in dollars of the United States of America and converted into national currency, in terms of the pertinent legislation.

Article 56.	Countervailing measures, applied to imports originating from known exporters or producers that have not been included in the selection treated in Article 20, but who have provided the information requested, may not exceed the weighted average of the subsidy amount established for the selected group of exporters or producers.

§ 1.	For purposes provided for in this article, zero amounts or de minimus amounts will not be taken into account nor the amounts established in the circumstances to which § 3º of Article 37 refers.

§ 2.	The authorities referred to in Article 2 shall apply measures calculated individually to the original imports of any exporter or producer not included in the selection, who has provided the information requested during the investigation, as provided in § 4º of Article 20.

Article 57.	For purposes of application of the provisions of item II of Article 24, countervailing measures shall be applicable only to products destined for  final consumption in the market that has been considered domestic industry, for purposes of the investigation, in accordance with  § 4º of Article 24.

Section II
Collection
	
Article 58.	Countervailing measures applied to a product shall be collected, independent of any other tax obligations relative to is importation, in the appropriate amounts in each case, on a non‑discriminatory basis, on the import of the product from all sources which have been considered to be subsidized and causing injury  to the domestic industry, whatever may be its provenance.

§ 1.	Measures will not be charged on imports proceeding from or originating in countries that have renounced any subsidies in question, or whose undertakings have been accepted.

§ 2.	Customs clearance of goods which are the object of definitive compensatory measures shall depend on their payment.

Section III
Products subject to Provisional Measures

Article 59.	Except for the cases foreseen in this Section, provisional countervailing measures may only be applied to products which have been dispatched for consumption after the date of publication of the act that contains the decisions foreseen in Articles 44 and 52.

Article 60.	In the case of a final negative determination concerning the existence of an actionable subsidy or of injury resulting therefrom, the amount of the provisional countervailing measures, if guaranteed by deposit, shall be refunded, or, in the case of bank guarantee,  it shall be annulled.

Article 61.	In case the final determination is that there is threat of  injury or material retardation, without injury having occurred, the amount of the provisional countervailing measures, if guaranteed by deposit, shall be refunded, or in the case of bank guarantee, it shall be annulled, unless it be verified that the subsidized imports, in the absence of provisional countervailing measures, would have led to a determination of injury, in which case the provisions of Articles 62 and 63 will apply.

Article 62.	In case the final determination is that the actionable subsidy exists and that it is resulting in injury, in the situation of guarantee by deposit:

	I.	The excess amount shall be reimbursed when the value of the measures applied by the final decision are less than the value of the provisional measures guaranteed by deposit.

	II.	The difference shall not be collected when the value of the measures applied are more than the value of the measures provisionally applied by deposit.

	III.	The amount shall be automatically converted into definitive measures when the value applied by the final decision is equal to the value of the measures provisionally determined.

Article 63.	In case the final determination confirms the existence of the actionable subsidy and injury resulting therefrom, in the situation of a  bank guarantee:

	I.	The amount corresponding to the guaranteed value shall be immediately collected when the value of the definitive measures is greater than or equal to the value of the measures provisionally determined.

	II.	Only the amount equivalent to the value determined by final decision will be collected when this value is less than the value of the measures provisionally determined.

	Sole paragraph.   The collection of the amounts referred to in the opening paragraph will lead to the consequent extinction of the guarantee. In a situation of breach of contract, the guarantee shall be automatically executed, independently of judicial or extrajudicial notice, in accordance with the pertinent legislation.

Article 64.	Definitive countervailing measures may be collected for subsidized imported products that have been dispatched for consumption up to ninety days previous to the date of the application of provisional countervailing measures, whenever it is determined that, with relation to the product in question, that the injury is caused by massive imports, within a relatively short period of time, and will lead to the recurrence of such injury.

	Sole paragraph.   Measures will not be collected for products which have been dispatched for consumption before the opening date of the investigation.

Article 65.	In cases of violation of undertakings, definitive countervailing measures may be charged on imported products dispatched for consumption up to ninety days before the application of provisional countervailing measures, foreseen in Article 48, except for the products which had been dispatched before the violation of the agreement.

	Chapter VIII

	THE DURATION AND REVIEW OF COUNTERVAILING
	 MEASURES AND UNDERTAKINGS

Article 66.	Countervailing measures and undertakings may only remain in force as long as and to the extent necessary to counteract  the actionable subsidy which is causing the injury and shall be terminated within a maximum period of five years, after application or after the conclusion of the most recent revision which has considered the actionable subsidy and the resulting injury.

Article 67.	The time limit for the action to which the previous Article refers may be extended after revision, by means of petition formulated by the domestic industry or on its behalf, by organs or entities of the Federal Public Administration, or by initiative of SECEX, if it is demonstrated that the withdrawal of the measures would lead to continuation or recurrence of subsidization and  injury.

§ 1º.	The petition referred to in the opening paragraph shall be presented within a time limit of five months before the end of the application period of measures referred to in Article 66.  The same time limit will apply when the initiative is taken by SECEX.

§ 2º.	If it is confirmed that there is evidence that would justify a revision, it shall be initiated and will follow the  provisions of  Section III of Chapter VI and shall be concluded within a period of 12 months counting from the date of initiation. The acts which contain the determination to initiate and the conclude the revision shall be published in the “Diario Oficial” (Official Gazette) and the interested parties and governments shall be notified.

§ 3º.	The measures and undertakings shall remain in force pending the outcome of  the revision.

Article 68.	A revision of part or of all of the elements of decision relative to the application of countervailing measures will be conducted at the request of the interested parties or governments, or of an organ or entity of the Federal Public Administration, or SECEX, as long as a minimum period of one year has elapsed from the date of imposition of definitive countervailing measures and sufficient evidence has been presented that:

	I.	The application of measures ceased to be necessary to offset the actionable subsidy;

	II.	It is unlikely that the injury will continue or recur if the measures were removed or varied;  or

	III.	The existing measures are not or have ceased to be sufficient to offset the actionable subsidy causing the injury.

§ 1º.	In exceptional cases of substantial change of circumstances, or when in the national interest, revisions may be made at shorter intervals, at the request of the interested parties or governments, or of an organ or entity of the Federal Public Administration, or by SECEX.

§ 2º.	If it is confirmed that there is evidence that justifies the revision, it shall be initiated and the act which contains such determination shall be published in the “Diario Oficial” (Official Gazette) and the interested parties and governments shall be notified.

§ 3º.	The revision shall be concluded within twelve months counting from its initiation and shall follow the provisions of  Section III of Chapter VI.

§ 4º.	The measures shall be maintained in force pending the outcome of the revision.

§ 5º.	The authorities referred to in Article_2º, based on the results of the revision and in conformity with the evidence collected in the course of the revision, may terminate, maintain, or alter the countervailing measures.  If it is found that the measures in force are greater than what is necessary to offset the injury to the domestic industry or are no longer justified, adequate reimbursement shall be determined.

§ 6º.	The act which contains the determination to terminate the revision shall be published in the “Diario Oficial” (Official Gazette) and the interested parties and governments shall be notified.

§ 7º.	The provisions of this Article_apply to the undertakings accepted in conformity with Section V of Chapter VI.

Article 69.	When a product is subject to countervailing measures, if requested, an expedited review shall be instituted immediately to in order for individual countervailing measures to be promptly established for any exporters or producers that have not in fact been investigated for reasons other than the refusal to cooperate with the investigation.

Article 70.	Countervailing measures may be suspended, on the basis of a technical opinion, for a period of one year, which can be extended for an equal period, in case temporary alterations occur in market conditions, as long as the injury does  not recur or does not subsist as a result of the suspension and as long as domestic industry has expressed its views.

	Sole paragraph.   The measures may be reapplied, at any moment, if the suspension is no longer justified.

	Chapter IX

	PUBLIC NOTICE

Article 71.	The acts resulting from the decisions of the authorities referred to in Article 2º, and the determinations of SECEX, shall be published in the “Diario Oficial” (Official Gazette) and shall contain detailed information about the conclusions reached regarding each matter of fact and of law considered pertinent, in keeping with the terms of Article 22 of the Agreement on Subsidies and Countervailing Measures.

	Sole paragraph.   _For purposes of notification, a copy of the acts mentioned in the first paragraph of this Article shall be sent to the government of the country or countries that export the products that have been the object of investigation, and also to other the known interested parties.

	Chapter X

	FORMALITIES RELATED TO ACTS AND PROCEDURAL TERMS

Article 72.	The interested parties and governments shall observe the norms of this Decree and the instructions of SECEX in the elaboration of petitions and documents in general, since documents will not be attached to the process in case of disregard of norms and instructions..

§ 1º.	The only instructions that must be observed are those that have been made public before the beginning of the procedural process or have been specified in communications directed to the parties.

§ 2º.	The acts and procedural terms shall be written and the hearings and consultations reduced to written terms.  The translation to Portuguese, by an official translator, of texts in other languages is mandatory.

§ 3º.	The procedural acts are public and the right to consult the minutes and to request certificates about the proceedings is restricted to the parties, to governments and their attorneys, with due consideration being given to the provisions of the sole paragraph of Article 42, which regard the respect for  confidentiality of information and internal documents of the Government.

§ 4º.	Requests for certificates related to the proceedings will only be accepted thirty days after the opening of the investigation or from the last request for a certificate by the same party.

	Chapter XI

	THE DECISION MAKING PROCESS

Article 73.	The determinations or decisions, preliminary or final, relative to the investigation, shall be adopted based on the findings of SECEX.

§ 1º.	SECEX shall publish, within twenty days from the date of reception of the findings by the Foreign Trade Secretary, an act the contains the determination to (a) open an investigation; (b)  extend the  time limit of an investigation; (c) terminate a case by request of the petitioner; (d) initiate a revision process of definitive measures, or undertakings; or (e) terminating an investigation without the application of measures.

§ 2º.	An act shall be published, within twenty days from reception of the findings by the Ministers of State of Industry, Trade, Tourism, and of Finance, which contains the decision to (a) apply provisional countervailing measures; (b) accept or reject an undertaking; (c) terminate an investigation with the application of measures; (d) suspension of definitive measures; (e) the result of a revision of definitive measures or undertakings.

§ 3º.	In exceptional circumstances, notwithstanding evidence of the existence of an actionable subsidy and injury resulting therefrom, the authorities referred to in Article 2º may decide, for reasons of national interest, to suspend the application of measures or not to ratify undertakings, or even, in accordance with the provisions of the sole paragraph of Article 52, to apply measures at a amount from  that which was recommended, and,  in this case the act shall contain the grounds for their decision.

	TITLE II

	SPECIAL PROCEDURES

	Chapter I

	AGRICULTURAL PRODUCTS

Article 4.	The provisions of this Chapter apply to agricultural products, included in Annex V, during a period of nine years beginning on 1 January 1995.

	Sole paragraph.   In the case of developing countries, the period is of ten years.

Article 75.	Non‑actionable subsidies are those measures of domestic support that meet the criteria established in Annex VI, which may be verified by opening an investigation to determine if they are in complete conformity with that Annex.

Article 76.	In order to initiate  an investigation of actionable subsidies, it shall be verified if they are in conformity to the reduction commitments, in terms of domestic support  and export subsidies, as specified in Part IV of the list of  each country and in other documentation annex to the Agreement on Agriculture.

	Sole paragraph.   In the initiation of investigations to examine actionable subsidies for agricultural products, which fall within the provisions of the caput or the criteria for exemption of reduction commitments,  the provisions of Article 13 of the Agreement on Agriculture will be observed.

Article 77.	The following are export subsidies subject to the reduction commitments:

	I.	The provision by governments or their agencies of direct subsidies, including payments‑in‑kind, to a firm, to an industry, to producers of an agricultural product, to a cooperative or other association of such producers, or to a marketing  board, contingent on export performance.

	II.	The sale or disposal for export by governments or their agencies of non‑commercial stocks of agricultural products at a price lower than the comparable price charged  for the like product to buyers in the domestic market;

	III.	Payments on the export of an agricultural product that are financed by virtue of governmental action, whether or not a charge on the public account is involved, including payments that are financed from the proceeds of a levy imposed on the agricultural product concerned or on an agricultural product from which the export product is derived;

	IV.	The provision of subsidies to reduce the costs of marketing exports of agricultural products (other than the widely available export promotion and advisory services) including handling, upgrading and other processing costs, and the costs of international transport and freight;

	V.	Internal transport and freight charges on export shipments, provided or mandated by governments,  on terms more favourable than for domestic  shipping;

	VI.	Subsidies on agricultural products contingent on their incorporation in exported products.

		Chapter II

	ON‑THE‑SPOT INVESTIGATIONS

Article 78.	Once the investigation is initiated, the authorities of the exporting country shall be informed of the intention to carry out on‑the‑spot investigations, as per § 1º of Article 40.

§ 1º.	In exceptional circumstances, when there is the intention of including non‑governmental experts in the investigation team, the authorities of the exporting country and the interested enterprises shall be informed.  The non‑governmental experts will be subject to the sanctions provided for in Article 325 of the Brazilian Penal Code.

§ 2º.	Explicit agreement shall be obtained from the enterprises concerned in the exporting country, before the visit is made.

§ 3º.	After obtaining the agreement referred to in the previous paragraph, the authorities of the exporting country shall be immediately notified of the names and addresses of the enterprises to be visited, as well as the dates agreed on.

§ 4º.	The enterprises involved shall be notified of the visit with sufficient advance notice.

§ 5º.	Visits with the purpose of explaining the questionnaire can only take place at the request of the producer or exporter firm, and this may only occur if SECEX notifies the representative of the government in question and there are no objections to the visit.

§ 6º.	Visits shall be made after the return of the questionnaire, unless the enterprise agrees otherwise and the government of the exporting country has been previously notified and has not objected.

§ 7º.	Before the visit, the general nature of the information requested shall be brought to the attention of the enterprises involved and the answers to the requests for information or questions formulated by the authorities or enterprises of the exporting country, essential for the good result of the on‑the‑spot investigation shall, whenever possible,  be provided, before the visit takes place.

§ 8º.	Requests for supplementary clarification may be made during the visit, based on the information obtained.

	Chapter III

	USE OF INFORMATION FROM SECONDARY SOURCES

Article 79.	As soon as the investigation is initiated, and whenever necessary, the information requested of the interested parties and governments shall be specified in detail, as well as the time limits for response and the form in which the information shall be structured in the reply.

§ 1º.	The parties and governments shall also be notified that the failure to provide the requested information or the partial submission of information requested, within the time limits established, will allow for determinations to be made on the basis of available facts and that the results obtained may be less favourable to that party, than they would have been if the party had cooperated.

§ 2º.	SECEX may request that part of the reply be provided in computer language.

§ 3º.	Whenever a party does not maintain computerized accounting, or the delivery of the replies in such form would represent an additional burden, with unjustified increase in costs and difficulties, this party may be exempt from the obligation to present the replies in the form mentioned in the previous paragraph.

§ 4º.	Whenever SECEX does not have specific means to process the information, by having received it in a computer language incompatible with its operational system, the information shall be provided in written form.

§ 5º.	In formulating determinations, verifiable information that has been presented within schedule, but which is not, however, in all aspects adequate, may be used.

§ 6º.	In case SECEX does not accept certain information, it shall communicate immediately to the party the motive for the refusal, so that the party may supply clarifications, within the time limits established, keeping within the limit established for the investigation. In case the additional clarifications are not satisfactory, the reasons for refusal shall figure in the acts that contain any determination or decision.

§ 7º.	In a situation in which it is proved that the information is false or tendentious, the information shall be rejected and the determinations shall be based on the available facts.

§ 8º.	In the formulation of determinations, if secondary sources of information are used, including those provided in the petition, independent sources of information and information from other parties shall be used for comparative purposes.

	Chapter IV

	GENERAL PROVISIONS

Article 80.	The provisions of the Agreement on Subsidies and Countervailing Measures relative to prohibited and actionable subsidies, contained in Parts II and III respectively, may be invoked simultaneously with those relative to countervailing measures treated in this Decree.

	Sole paragraph.   In regard to the effects of a subsidy on the domestic market, only one form of compensation may be applied, or a countervailing measure, if the necessary requisites are met, or a remedy falling within the scope of Articles 4º and 7º of the Agreement on Subsidies and Countervailing Measures.

Article 81.	The provisions of the Agreement on Agriculture shall be applied simultaneously with those of this Decree.

Article 82.	The time limits foreseen in this present Decree, shall be calculated in calendar days and may be extended for one additional equal period, except for those which already have an extension established.

Article 83.	Acts practised contrary with the provisions of this Decree, shall be null under law.

Article 84.	The procedures established in this Decree shall not impede the competent authorities for acting expeditiously in relation to any decisions and determinations and shall not hinder customs clearance.

Article 85.	For effects of this Decree, the term “industry” also includes activities related to agriculture.

Article 86.	The provisions of this Decree shall be applied to investigations and revisions initiated after 30 December 1994.

Article 87.	The Ministers of State of Industry, Trade and Tourism and of Finance shall issue the complementary norms for the execution of this Decree.

Article 88.	This Decree shall enter into force on the date of its publication.

	Brasilia, 19 December 1995;  174th of Independence and 107th of the Republic.

MARCO ANTONIO DE OLIVEIRA MACIEL
Sebastião do Rego Barros Netto
Pedro Malan
José Eduardo de Andrade Viera
Dorothea Werneck
Andreia Sandro Calabi

	ANNEX I

	ILLUSTRATIVE LIST OF EXPORT SUBSIDIES

(a)	The provision by governments of direct subsidies to a firm or to 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 governments, on terms more favourable than for domestic shipments.

(d)	The provision by governments or their agencies either directly or indirectly through government‑mandated schemes, of  imported or domestic products or services for the 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 for their exporters.

	The term “commercially available” means that the choice between domestic and imported products is unrestricted and depends only on commercial considerations.

(e)	The full or partial exemption or remission or deferral specifically related to  exports, of direct taxes, or social welfare charges paid or payable by industrial or commercial enterprises.

	“Remission” of taxes includes the  refund or rebate of taxes.

	Deferral need not amount to an export subsidy when, for example, appropriate interest charges are collected.

	The term “direct taxes” means taxes on wages, profits, interests, rents, royalties, and all other forms of income, and taxes on the ownership of real property.

	Prices for goods in transactions between exporting enterprises and foreign buyers under their or under the same control should, for tax purposes, be the prices which would be charged between independent enterprises acting at arm’s length.

	This item does not include measures that avoid double taxation of foreign‑source income.

(f)	The allowance of special deductions directly related to exports or to export performance, over and above those granted in respect to  production for domestic consumption, in the calculation of the base on which direct taxes are charged.

(g)	The exemption or remission, in respect of the production and distribution of exported products,  of indirect taxes in excess of those levied in respect of the production and distribution of like products when sold for domestic consumption.

	The term “indirect taxes” means taxes on sales, excise, turnover, value added, franchise, stamp, transfer, inventory and equipment taxes, border taxes, and all taxes other than direct taxes, referred to in letter “e” and import charges, referred to in  letter “i”.
(h)	The exemption, remission or deferral of prior‑stage cumulative indirect taxes on goods or services used in the production of exported products in excess of the exemption, remission or deferral of like prior‑stage cumulative indirect taxes on goods and 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 the prior‑stage cumulative indirect taxes are levied on inputs that are consumed in the production of the exported product (making normal allowance for waste).  This item shall be interpreted in accordance with the guidelines on consumption of inputs in the production process contained in Annex II.  The provisions of this item does not apply to value‑added tax systems and border‑tax adjustment in lieu thereof; the problem of excessive remission of value‑added taxes is exclusively covered by item “g”.

	“Prior‑stage” indirect taxes are those levied  on goods or services used directly or indirectly in the making of a product.  “Cumulative” indirect taxes are multi‑staged taxes levied where there is no mechanism for subsequent crediting of the tax if the goods or services subject to tax at one stage of production are used in a succeeding stage of production.

(i)	The remission or drawback of import charges in excess of those levied on imported inputs that are consumed in the production of the 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 form this provision if the import and the corresponding export operations both occur within a reasonable period of time, not to exceed two years.  This item shall be interpreted in accordance with the guidelines on consumption of inputs in the production process contained in Annex II and the guidelines in the determination of substitution drawback systems as export subsidies contained in Annex III.

	"Remission or drawback” includes the full or partial exemption or deferral of import charges.

	The term “ import charges” means tariffs, duties, and other fiscal charges not elsewhere enumerated in this  Annex that are levied on imports

(j)	The provision by governments (or special institutions controlled by governments) 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 the long‑term operating costs and losses of the programmes.

(k)	The grant by governments (or special institutions controlled by and/or acting under the authority of governments) 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 the export credit), or the payment by them of all or part of the costs incurred by exporters or financial institutions in obtaining credits, in so far as they are used to secure a material  advantages in the field of export credit terms.

	Provided, however, that if a Member of the WTO is a party to an international undertaking on official export credits to which at least twelve original Members to the Agreement on Subsidies and Countervailing Measures are parties as of 1 January 1979 (or a successor undertaking which has been adopted by those original Members), or if in practice a Member country applies the interest rates provisions of the relevant undertaking, an export credit practice which is in conformity with those provisions shall not be considered a prohibited export subsidy.
(l)	Any other charge on the public account constituting an export subsidy  in the sense of Article XVI of GATT 1994.

	ANNEX II

	GUIDELINES ON CONSUMPTION OF INPUTS IN THE PRODUCTION PROCESS

(A)	Inputs consumed in the production process are those incorporated physically, energy, fuels and oils used in the production process and catalysts which are consumed in the course of their use to  obtain the exported product.

(b)	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 the 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 the exported product (making normal allowance for waste ).

(c)	The Illustrative List of Export Subsidies in Annex I makes reference, in items “h” and “I”,  to the term “inputs consumed in the production of the exported product”.  Pursuant to item “h”,  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 the exported product.  Pursuant to item “i”, drawback schemes can constitute an export subsidy to the extent that they result in a remission or drawback of import charges in excess to those actually levied on inputs that are consumed in the production of the exported product. Normal allowance for waste will be made in findings regarding consumption of inputs in the production of the exported product. In the case foreseen in item “i”, substitution may be made when appropriate.

(d)	for purposes of subsidy investigations, SECEX will proceed in the following manner when examining the mechanism of rebate:

	(d.1)	where it is alleged that an indirect tax rebate scheme, or a drawback scheme, conveys as subsidy by reason of over‑rebate or excess drawback of indirect taxes or import charges on inputs consumed in the production of the exported product, SECEX will first determine whether the government of the exporting Member has in place and applies a system or procedure to confirm which inputs are consumed in the production of the exported product and in what amounts.  Where such system or procedure is determined to be applied, SECEX will then examine the system or procedure to see whether it is reasonable, effective for the purpose intended, and based on generally accepted commercial practices in the country of export.  SECEX may consider it necessary to realize, in accordance with paragraph 1 of Article 40 of the Decree that regulates the norms of application of countervailing measures, certain practical tests in order to verify information and certifying that the system or procedure is being effectively applied. 

	(d.2)	when such a system or procedure does not exist, or when it is not reasonable, or when though it exists, it is not being applied or not applied effectively, a further examination by the exporting Member based on the actual inputs involved would need to be carried out in the context of determining whether an excess payment occurred.  If SECEX considers it necessary, a further examination will be carried out, in accordance with the previous item.

	(d.3)	SECEX shall treat inputs as physically incorporated if such inputs are used in the production process and physically present in the exported product.  It is not necessary that the input be present in the final product in the same form in which it entered the production process.

	(d.4)	in determining the amount of a specific input that is consumed in the production of the exported product, a “normal allowance for waste” should  be taken into account, and such waste should be treated as consumed in the production of the exported product. The term “waste” refers to that portion of the particular of a given input which does not serve an independent function in the production process, is not consumed in the production of the exported  product (for reasons such as inefficiencies), and is not recovered, used or sold by the same manufacturer.

	(d.5)	on determining whether the claimed allowance for waste is “normal”, SECEX will take into account the production process, the average experience of the industry in the exporting country, and other technical factors, as appropriate. SECEX will take into account that an important question is whether the authorities of the exporting country have calculated reasonably the amount of waste, when such an amount is intended to be included in the tax or duty rebate or remission.

	ANNEX III

	GUIDELINES IN THE DETERMINATION OF SUBSTITUTION 
	DRAWBACK SYSTEMS AS EXPORT SUBSIDIES

(a)	Drawback systems can allow for the refund or drawback of import charges on inputs which are consumed in the production process of another product and where the export of this latter product contains domestic inputs having the same quality and characteristics as those substituted for the imported ones.  Pursuant to item “i” of the Illustrative List of Export Subsidies in Annex I, substitution drawback systems can constitute an export subsidy to the extent that they result in an excess drawback of the import charges levied initially on the imported inputs for which drawback is being claimed..

(b)	For purposes of subsidy investigations, SECEX will proceed in the following manner to examine any substitution drawback system:

	(b.1)	Item “i” of the Illustrative List 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 the same quality and characteristics as, the imported inputs being substituted.  The existence of a verification system or procedure is important because it enables the government of the exporting Member to ensure and demonstrate that the quantity of exports for which drawback is claimed does not exceed the quantity of similar products exported, in whatever form, and that there is not drawback of import charges in excess of those originally levied on the imported inputs in question.

	(b.2)	where  it is alleged that a substitution drawback conveys a subsidy, SECEX will first proceed to determine whether the government of the exporting Member has in place and applies a system or procedure of verification.  Where such a system or procedure is determined to be applied, SECEX will examine the system or procedures of verification to establish if these are reasonable, effective for the purpose intended and based on generally accepted commercial practices of the exporting country.  To the extent these procedures are determined to meet this test and are effectively applied, no subsidy shall be presumed to exist. It may be deemed necessary for SECEX to carry out, in accordance with paragraph 1 of Article 40 of the Decree which regulates the application of countervailing measures, certain  practical tests to verify information or to certify that the verification procedures are being effectively applied.

	(b.3)	when there are no procedures of verification, or when they are not reasonable, or yet, when the procedures exist and were considered reasonable, but have not been actually applied or with effectively, there may be a subsidy.  In such situations it shall be necessary for the exporting country to carry out a further examination based on the actual transactions involved in order to determine if there have been excessive payments. If SECEX deems it necessary, a further examination will be carried out  in accordance with the previous item.

	(b.4)	The existence of a substitution drawback provision under which exporters are allowed to select particular import shipments on which drawback is claimed should not of itself be considered to convey a subsidy.

	(b.5)	An excess drawback of import charges in the sense of item “I” of Annex I will be deemed to exist where governments paid interest on any monies refunded under their drawback schemes, to the extent of the interest actually paid or payable.

	ANNEX IV

	DEVELOPING COUNTRIES MEMBERS

	Developing countries Members which are referred to in  paragraph 12 of Article 21 of the Decree which regulates the norms for the application of countervailing measures, are the following:

(a)	Least‑developed countries designated as such by the United Nations, that are members of the World Trade Organization.

(b)	Each of the following developing countries which are Members of the WTO shall not be subject to the provisions of this Annex when GNP per capita has reached $1,000 per annum:  Bolivia, Cameroon, Congo, Côte d’Ivoire, Dominican Republic, Egypt, Ghana, Guatemala, Guyana India, Indonesia, Kenya, Morocco, Nicaragua, Nigeria, Pakistan, Philippines, Senegal, Sri Lanka and Zimbabwe.

	ANNEX V

	LIST OF AGRICULTURAL PRODUCTS

01	Products in Chapters 1 to 24 of the Harmonized System (“HS”), less fish and fish products, plus

02	HS Code	2905.43	(mannitol)	
	HS Code	2905.44	(sorbitol)	
	HS Heading	33.01	(essential oils)	
	HS Headings	35.01 to 35.05	(albuminoidal substances, modified starches, glues)	
	HS Code	3809.10	(finishing agents)	
	HS Code	3823.60	(sorbitol n.e.p)	
	HS Headings	41.01 to 41.03	(hides and skins)	
	HS Heading	43.01	(raw fur skins)	
	HS Headings	50.01 to 51.03	(raw silk  and silk waste)	
	HS Headings	51.01 to 51.03	(wool and animal hair)	
	HS Headings	52.01 to 52.03	(raw cotton, waste and cotton carded or combed)	
	HS Heading	53.01	(raw flax)	
	HS Heading	53.02	(raw hemp)	

	The product description in round brackets are not necessarily exhaustive.  The valid descriptions are to be found in the Mercosur Common Nomenclature.

	ANNEX VI

	DOMESTIC SUPPORT:   THE BASIS FOR EXEMPTION
	FROM THE REDUCTION COMMITMENTS

1.	Domestic support measures for which exemption from the  reduction commitments shall meet the fundamental requirement that they have no, or at most minimal, trade distorting effects or effects on production.  Accordingly, all measures for which exemption is claimed shall conform to the following basic criteria:

(a)	the support in question shall be provided through a publicly‑funded government programme (including government revenue foregone) not involving transfers from consumers;  and

(b)	the support in question shall not have the effect of providing price support to producers.

	Besides the basic criteria, the measures shall meet the criteria and the conditions relative to specific governmental policies, as follows:

2.	General Services

	Policies in this category involve expenditures (or revenue foregone) in relation to programmes which provide services or benefits to agriculture or to the rural community.  They shall not involve direct payments to producers or processors. Such programmes, which include but are not restricted to the following list, shall meet the general criteria mentioned in item 1 and the conditions relative to specific policies in the following cases:

(a)	research, including general research, research in connection with environmental programmes, and research programmes relating to particular products.

(b)	control of pest and disease, including general and product‑specific pest and disease control measures, such as early warning systems, quarantine  and eradication;

(c)	training services, including both general and specialist training facilities.

(d)	extension and advisory services, including the provision  of means to facilitate the transfer of information and the results of research to producers and consumers.

(e)	inspection services, including general inspection services and the inspection of particular products, for health, safety, grading or standardization purposes.

(f)	marketing and promotion services,  including market information, advice and promotion relating to particular products but excluding expenditure for unspecified purposes that could be used by sellers to reduce their selling price or confer direct economic benefit to purchasers;  and

(g)	infrastructural services, including: electricity reticulation, roads or other means of transport, market and dock facilities, water supply facilities, dams and drainage schemes, and infrastructural works associated with environmental  programmes. In all cases the expenditure  shall  be directed to the provision or construction of capital works only and will exclude the subsidized provision of on‑farm facilities other than the reticulation of generally available public utilities.  It shall not include subsidies to inputs or operating costs, or preferential user charges.

3.	Public stockholding for food security purposes

	Expenditures (or revenue foregone)  in relation to the accumulation and holding of stocks of products which form an integral part of a programme of  food security identified in national legislation. This may include governmental aid to private storage of products as part of such  programme.

	The volume and accumulation of such stocks shall correspond to predetermined targets related solely to food security.  The process of stock accumulation and disposal shall be financially transparent.  The purchase of food by the government shall be made at current market prices and sales from food security stocks shall be made at no less than the current domestic market price for the product and quality in question.

	Governmental stockholding for food security purposes in developing countries whose operation is transparent and conducted in accordance with officially published objective criteria shall be considered to be in conformity withe the provisions of this item, including programmes under which stocks of foodstuffs for food security purposes are acquired and released at  administered prices, provided that the difference between the price of acquisition and the price of external reference is accounted for in the AMS, as determined by Annex 3 of the Agreement on Agriculture.

4.	Domestic  food aid

	Expenditures (or revenue foregone) in relation to the provision of domestic food aid to section of the population in need.

	Eligibility to receive food aid shall be subject to clearly defined criteria related to  nutritional objectives.  Such aid shall be in the form of direct provision of food to those concerned or the provision of means to allow eligible recipients to buy food either at market or at subsidized prices.  Food purchases by the government shall made be at current market prices and the financing and administration of the aid shall be transparent.

	For purposes of items 3 and 4 of this annex, the provision of foodstuffs at subsidized prices with the objective of meeting food requirements of the rural and urban poor in developing countries on a regular basis at reasonable prices shall be considered in conformity with the provisions of this paragraph.

5.	Direct payments to producers

	Support provided through direct payments (or revenue foregone, including payments in kind) to producers for which exemption from reduction commitments is claimed shall meet the basic criteria established in item 1, plus specific criteria applying to individual types of direct payment as set out in items 6 through 13.  Where exemption from reduction is claimed for any existing or new type of  direct payment other than those specified in items 6 through 13, it shall conform to criteria specified in items “b” to “e” of item 6, in addition to the general criteria established in item 1.

6.	Decoupled income support

(a)	Eligibility for such payments shall be determined by clearly defined criteria such as income, status as a producer or landowner, factor use or  the level of production in a defined  and fixed base period.

(b)	The amount of such payments in any given year shall not be related to , or based on, the type or volume of production (including livestock units ) undertaken by the producer in any year after the base period.

(c)	The amount of such payments in any given year shall not be related to, or based on, the prices, domestic or international, applying to any production undertaken in any year after the base period.

(d)	The amount of such payments in any given year shall be related to, or based on,  the factors of production employed in any  year after the base period.

(e)	No production shall be required in order to receive such payments.

7.	Government financial participation in income insurance and income safety‑net programmes

(a)	Eligibility for such payments shall be determined by an income loss, taking account only income derived from agriculture, which exceeds 30% of average gross income or the equivalent in net income terms (excluding any payments from the same or similar schemes) in the preceding three year period or a three year average based on the preceding five year period, excluding the highest and lowest entry.  Any producer meeting this condition shall be eligible to receive the payments.

(b)	The amount of such payments shall compensate for less than 70% of the producer’s income loss in the year the producer becomes eligible to receive the assistance.

(c)	The amount of any such payments shall related solely to income; it shall  not relate to the type or volume of production (including livestock units) undertaken by the producer; or to the prices, domestic or international, applying to such production; or to the factors of production employed.

(d)	Where a producer receives in the same year payments described in this item and in item 8 (relief from natural disasters), the total of such  payments shall be less than 100% of the total loss of the producer.

8.	Payments (made either directly or by way of government financial participation in crop insurance schemes) for relief from natural disasters.

(a)	Eligibility to receive such  payments shall arise only following a formal recognition by government authorities that a natural or like disaster ( including disease outbreaks, pest infections, nuclear accidents, and war on the territory of the Member concerned) has occurred or is occurring;  and shall be determined by a production loss which exceeds thirty per cent of the average of production in the preceding three‑year period or a three‑year average based on the preceding five‑year period, excluding the highest and the lowest entry.  

(b)	Payments made following a disaster shall be applied only in respect of  losses of income, livestock (including payments in connection with the veterinary treatment of animals), land or other production factors due to the natural disaster in question.

(c)	Payments shall  compensate for not more that the total cost of replacing such losses, and shall not require or specify the type or quantity of future production.

(d)	Payments made during a disaster shall not exceed the level required to prevent or alleviate further loss as defined in the criteria established in “b” of this item.

(e)	Where a producer receives in the same year payments described in this item and in the previous item (income insurance and income safety‑net programmes), the total of such payments shall be less than 100% of the total loss of the producer.

9.	Structural adjustment assistance provided through producer retirement programmes

(a)	Eligibility for such payments shall be determined by reference to clearly defined criteria in programmes designed to facilitate the retirement of persons engaged in marketable agricultural production, or their movement to non‑agricultural activities.

(b)	Payments shall be conditional upon the total and permanent retirement of the recipients from marketable agricultural production.

10.	Structural adjustment assistance provided  through resource retirement programmes

(a)	Eligibility for such payments shall be determined by reference to clearly defined criteria in programmes designed to remove land or other resources, including livestock, from marketable  agricultural production.

(b)	Payments shall be conditional upon the retirement of land from marketable agricultural production for a minimum of three years, and in the case of livestock, on its  slaughter or definitive permanent disposal.

(c)	Payments shall not require or specify any alternative use for such land or other resources which involves the production of marketable agricultural products.

(d)	Payments shall not be related to either the type or quantity of production or to the prices, domestic or international, applying to production undertaken using the land or other resources remaining in production.

11.	Structural adjustment assistance provided through investment aids

(a)	Eligibility for such payments shall be determined by reference to clearly defined criteria in government programmes designed to assist in the physical or financial restructuring of a producer operations in response to objectively demonstrated structural disadvantages. Eligibility for such programmes may also be based  on a clearly defined government programme for the reprivatization of agricultural land.

(b)	The amount of such payments in any given year shall  be related to, or based on,  the type or volume of production (including livestock units), undertaken by the producer in any year after the base period, except for that provided for in by “e” below.

(c)	The amount of such payments in any given year shall not be related, or based on, the prices, domestic or international, applying to any production undertaken in  any  year after the base period.

(d)	Payments shall be given only for the period of time necessary for the realization of the investment in respect of which they are provided.

(e)	The payments shall not mandate or in any way designate the agricultural products to be produced by the recipients except  to require them not to produce a particular product.

(f)	The payments shall be limited to the amount required to compensate for the structural disadvantage.

12.	Payments under environmental programmes:

(a)	Eligibility for such payments shall be determined as part of a clearly defined government environmental or conservation programme  and be dependent on the fulfilment of specific conditions under the government programme, including conditions related to production methods or inputs.

(b)	The amount of payment shall be limited to the extra costs or loss of income involved in complying with the government programme.

13.	Payments under regional assistance  programmes

(a)	Eligibility for such payments shall be limited to producers in disadvantaged regions.  Each such region must be a clearly designated contiguous geographical area with definable economic and administrative identity, considered as disadvantaged on the basis of neutral and objective criteria clearly spelt out in law or regulation and indicating that the region’s difficulties arise out of more than temporary circumstances;

(b)	The amount of such payments in any given year shall not be related to, or based on, the type or volume of production (including livestock units), undertaken by the producer in any year after the base period other than to reduce that production;

(c)	The amount of such payments in any given  year, shall not be related to, or based on, the prices, domestic or international, applying to any production undertaken in any year after the base period;

(d)	Payments shall be available only to producers in eligible regions but generally available to all producers within such regions;

(e)	Where related to production factors,  payments shall be made at a digressive rate above a threshold level for the factor concerned;

(f)	The payments shall be limited to the extra costs or loss of income involved in undertaking  agricultural production in the prescribed area.