World Trade
Organization		
		
	G/SCM/N/1/CHN/1/Suppl.3
20 October 2004	
	(04-4454)	
		
Committee on Subsidies 
and Countervailing Measures	Original:  	English	

NOTIFICATION OF LAWS AND REGULATIONS UNDER
ARTICLE 32.6 OF THE AGREEMENT

PEOPLE'S REPUBLIC OF CHINA

Supplement

	The following communication, dated 18 October 2004, is being circulated at the request of the Delegation of the People's Republic of China.

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	With reference to Article 32.6 of the Agreement on Subsidies and Countervailing Measures, I have the honour to notify the Committee on Subsidies and Countervailing Measures the following regulations:  Regulations of the People's Republic of China on Countervailing Measures - English translation, which is authentic only in Chinese, is attached for reference by WTO Members.

Regulations of the People’s Republic of China on Countervailing Measures

(Promulgated by Decree No. 329 of the State Council of the People’s Republic of China on 26 November 2001, and revised in accordance with the Decision of the State Council on Amending the Regulations of the People’s Republic of China on Countervailing Measures promulgated on 31 March 2004)

Chapter I	General Provisions

	Article 1  These Regulations are formulated in accordance with the relevant provisions of the Foreign Trade Law of the People’s Republic of China for the purpose of maintaining the foreign trade order and fair competition.

	Article 2  Where an import to which a subsidy is granted causes material injury or threat of material injury to an established domestic industry, or causes material retardation of the establishment of such an industry, a countervailing investigation shall be initiated and countervailing measures applied in accordance with the provisions of these Regulations.

Chapter II	Subsidy and Injury

	Article 3  The term “subsidy” means a financial contribution or any form of income or price support which is provided by the government or any public body of an exporting country (region) and which will benefit the recipients.

	The government or any public body of an exporting country (region) is hereinafter collectively referred to as the government of an exporting country (region).

	The term “financial contribution” in Paragraph 1 of this Article shall include:

(1)	the government of an exporting country (region) directly provides funds in the form of grants, loans, or equity infusion, etc., or potentially directly transfers funds or liabilities in the form of loan guarantees or otherwise;
(2)	the government of an exporting country (region) forgoes or does not collect revenue that is otherwise due;
(3)	the government of an exporting country (region) provides goods or services other than general infrastructure, or purchases goods; and
(4)	the government of an exporting country (region) carries out the above-mentioned functions by making payments to a funding mechanism, or entrusts or directs a private body to carry out the above-mentioned functions.

	Article 4  A subsidy subject to countervailing investigation and countervailing measures under these Regulations must be specific.

	A subsidy falling under one of the following circumstances shall be specific:

(1)	the subsidy received by certain enterprises or industries explicitly specified by the government of an exporting country (region);   
(2)	the subsidy received by certain enterprises or industries explicitly provided for in laws and regulations of an exporting country (region);
(3)	the subsidy received by enterprises or industries located within a designated specific area;
(4)	the subsidy contingent upon export performance, including any of those illustrated in the List of Export Subsidies annexed to these Regulations; or 
(5)	the subsidy contingent upon the use of domestic over imports.
	In determining the specificity of a subsidy, such factors as the number of subsidized enterprises, the amount, proportion, length of time, and form of the subsidy received by enterprises shall also be considered.

	Article 5  The Ministry of Commerce shall be responsible for the investigation and determination of a subsidy.

	Article 6  The amount of a subsidy to an import shall be calculated according to the following methods by distinguishing among differing cases:

(1)	where the subsidy is granted in the form of a grant, the amount of the subsidy shall be calculated on the basis of the actual amount received by an enterprise;    
(2)	where the subsidy is granted in the form of a loan, the amount of the subsidy shall be calculated on the basis of the difference between the amount of interest an enterprise should pay on a loan in the ordinary commercial loan conditions and the amount of interest the enterprise pays on this loan;       
(3)	where the subsidy is granted in the form of a loan guarantee, the amount of the subsidy shall be calculated on the basis of the difference between the amount of interest an enterprise should pay on a commercial loan without such guarantee and the amount of interest the enterprise actually pays on a loan guaranteed;      
(4)	where the subsidy is granted in the form of an equity infusion, the amount of the subsidy shall be calculated on the basis of the actual amount of the capital an enterprise receives;      
(5)	where the subsidy is granted in the form of the provision of goods or services, the amount of the subsidy shall be calculated on the basis of the difference between the price of the goods or services at normal market price and the price that an enterprise actually pays;
(6)	where the subsidy is granted in the form of purchase of goods, the amount of the subsidy shall be calculated on the basis of the difference between the actual price the government pays and the normal market price of the goods; and
(7)	where the subsidy is granted in the form of forgoing or not collecting due revenue, the amount of the subsidy shall be calculated on the basis of the difference between the amount payable under law and the actual amount an enterprise pays.

	The amount of subsidies granted in forms other than those enumerated in the preceding paragraph shall be calculated in a fair and reasonable way.

	Article 7  The term “injury” means material injury or threat of material injury caused by a subsidy to an established domestic industry or material retardation of the establishment of such a domestic industry.

	The Ministry of Commerce shall be responsible for the investigation and determination of injury. The countervailing investigation of injury to a domestic industry involving agricultural products shall be conducted by the Ministry of Commerce jointly with the Ministry of Agriculture. 

	Article 8  The following factors shall be examined in the determination of injury caused by a subsidy to a domestic industry:

(1)	the effects on trade likely to arise from the subsidy;
(2)	whether the volume of subsidized imports, including the volume of subsidized imports either in absolute terms or relative to the production or consumption of a like domestic product, has been increasing significantly, or the possibility of a significant increase in subsidized imports;
(3)	the effects of subsidized imports on prices, including the price undercutting by the subsidized imports, or the significant suppressing or depressing effects on the price of a like domestic product, etc.;
(4)	the consequent impact of the subsidized imports on the relevant economic factors and indices of the domestic industry;
(5)	the production capacity or export capacity of the exporting country (region) or the country (region) of origin, and inventories of the product under investigation; and
(6)	other factors that may cause or have caused injury to a domestic industry.

	The determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility.

	When determining the injury caused by a subsidy to a domestic industry, the determination shall be based on positive evidence, and the injuries caused by factors other than subsidy must not be attributed to the subsidy.

	Article 9  Where the subsidized imports from more than one country (region) simultaneously satisfy the following requirements, the effects of such subsidized imports on a domestic industry may be cumulatively assessed:

(1)	the amount of subsidization established in relation to the subsidized imports from each country (region) is not de minimis, and the volume of such imports from each country is not negligible; and
(2)	a cumulative assessment of the effects of the subsidized imports is appropriate in light of the conditions of competition between the subsidized imports and the conditions of competition between the subsidized imports and the like domestic product.

	A subsidy is de minimis if the amount of the subsidy is less than one per cent of the value of a product; however, with respect to the subsidized imports from a developing country (region), the subsidy is de minimis if the amount of the subsidy is less than two per cent of the value of a product.

	Article 10  The effect of the subsidized imports shall be assessed in relation to the separate identification of the domestic production of the like product. If such separate identification of that production is not possible, the effect of the subsidized imports shall be assessed by the examination of the production of the narrowest group or range of products, including the like domestic product.

	Article 11  The term “domestic industry” means the domestic producers as a whole of the like products within the People’s Republic of China or those of them whose collective output of the products constitutes a major proportion of the total production of those products, except that when domestic producers are related to the exporters or importers or are themselves importers of the subsidized products or like products.

	In exceptional circumstances, the producers within a regional domestic market may be regarded as a separate industry if the producers within such market sell all or almost all of the like products in that market, and the demand in that market is not to any substantial degree supplied by domestic producers of the like products located in other domestic regions.

	Article 12  The term “like product” means the product that is identical to the subsidized import, or in the absence of such a product, another product that has characteristics closely resembling the subsidized import.

Chapter III	Countervailing Investigation

	Article 13  Any domestic industry, natural person, legal person or relevant organization on behalf of the domestic industry (hereinafter collectively referred to as “the applicant”) may make a written application to the Ministry of Commerce for a countervailing investigation in accordance with the provisions of these Regulations.

	Article 14  The application shall contain the following information:

(1)	the name, address and relevant information of the applicant; 
(2)	a complete description of the import in question, including the name of the product, the exporting country (region) or the country (region) of origin concerned, and the identity of known exporters or producers, etc.;
(3)	a description of the volume and value of domestic production of the like product;
(4)	the effect of the volume and price of the import in question on the domestic industry; and
(5)	other information that the applicant considers necessary to provide.

	Article 15  The application shall be supported by the following evidence:

(1)	existence of a subsidy to the import in question;
(2)	injury caused to a domestic industry; and
(3)	existence of a causal link between the subsidy and the injury.

	Article 16  The Ministry of Commerce shall, within 60 days from the date of receipt of the application and relevant evidence submitted by the applicant, examine whether the application is made by or on behalf of the domestic industry, the contents of the application and the evidence attached thereto, and shall decide whether or not to initiate an investigation. In special circumstances, the examination period may be extended.

	Prior to the decision to initiate an investigation, the government of the country (region) the product of which may be subject to such investigation shall be invited for consultation regarding the subsidy in question.

	Article 17  An application shall be considered to have been made by or on behalf of the domestic industry and a countervailing investigation may be initiated, if the application is supported by those domestic producers whose collective output constitutes more than 50 per cent of the total production of the like product produced by that portion of the domestic industry expressing either support for or opposition to the application. However, no investigation shall be initiated when the output of those domestic producers expressly supporting the application accounts for less than 25 per cent of total production of the like domestic product.

	Article 18  If, in special circumstances, the Ministry of Commerce decides to initiate an investigation without having received any written application for a countervailing investigation, it shall proceed only if it has sufficient evidence of the existence of a subsidy, injury and causal link to justify the initiation of an investigation.

	Article 19  The Ministry of Commerce shall publish the decision to initiate an investigation and notify the applicant, the known exporters, importers and other interested organizations and individuals (hereinafter collectively referred to as “the interested parties”), and the government of the exporting country (region).

	As soon as the decision to initiate an investigation is published, the Ministry of Commerce shall provide the full text of the written application to the known exporters and the government of the exporting country (region).

	Article 20  The Ministry of Commerce may conduct investigation and collect information from the interested parties by, among others, sending questionnaires, using samples, holding public hearings and making on-the-spot verification.

	The Ministry of Commerce shall provide opportunities for the interested parties and the government of an interested country (region) to present their views and supporting arguments.

	The Ministry of Commerce may send its staff members to the country (region) concerned to carry out investigation if it deems necessary to do so, unless the country (region) concerned object to such an investigation.

	Article 21  The interested parties and the government of an interested country (region) shall provide authentic information and relevant documentation to the Ministry of Commerce in the process of the investigation. In the event that any interested party or the government of any interested country (region) does not provide authentic information and relevant documentation, or does not provide necessary information within a reasonable time limit, or significantly impedes the investigation in other ways, the Ministry of Commerce may make determinations on the basis of the facts available.  

	Article 22  The interested parties and the government of an interested country (region) may request the Ministry of Commerce to treat the information they provide as confidential if they consider that any disclosure of such information would create significantly adverse effect.

	The Ministry of Commerce shall treat the information provided by the interested parties and the government of the interested country (region) as confidential if it considers that the request for confidentiality is justifiable, and shall require the interested parties and the government of the interested country (region) to provide non-confidential summaries thereof. 

	No confidential information shall be disclosed without permission of the interested parties and the government of the interested country (region) providing it.

	Article 23  The Ministry of Commerce shall allow the applicant, the interested parties and the government of an interested country (region) to have access to the information relevant to the investigation, provided that the information is not treated as confidential.

	Article 24  Throughout the period of an investigation, the government of the country (region) the products of which are the subject of the investigation shall be afforded a reasonable opportunity to continue consultations. The consultations shall not prevent the Ministry of Commerce from conducting investigations and adopting countervailing measures in accordance with the provisions of these Regulations.

	Article 25  The Ministry of Commerce shall, on the basis of its findings, make a preliminary determination on subsidization and injury, as well as on whether there exists a causal link between subsidization and injury. The preliminary determination shall be published by the Ministry of Commerce.  

	Article 26  In cases where a preliminary determination on subsidization, injury and the causal link between the two is affirmative, the Ministry of Commerce shall conduct further investigations on the subsidization and its amount, the injury and its degree, and, on the basis of its findings, make a final determination. The final determination shall be published by the Ministry of Commerce.

	Before the final determination is made, the Ministry of Commerce shall inform all known interested parties and the government of the interested country (region) of the essential facts on which the final determination is based.
	Article 27  A countervailing investigation shall be concluded within 12 months from the date of publication of the decision to initiate the investigation, and such period may be extended in special circumstances, but in no case shall the extension be more than six months.

	Article 28  In any one of the following circumstances, a countervailing investigation shall be terminated and such termination shall be published by the Ministry of Commerce:

(1)	the application has been withdrawn by the applicant;
(2)	there is no sufficient evidence of the existence of a subsidy, injury or causal link between them;
(3)	the amount of the subsidy is de minimis;
(4)	the actual or potential volume of the subsidized imports or the injury is negligible;
(5)	an agreement has been reached with the government of the country (region) concerned after consultations, and therefore the countervailing investigation is no longer necessary; or
(6)	other circumstances that the Ministry of Commerce considers not appropriate to continue the countervailing investigation.

	If the product under investigation imported from one or some of the countries (regions) falls into one of the circumstances set forth in Item (2), (3), (4) or (5) of the preceding paragraph, the countervailing investigation on such product shall be terminated.

Chapter IV	Countervailing Measures

Section 1	Provisional Measures

	Article 29  Provisional countervailing measures may be applied if the preliminary determination establishes the existence of a subsidy and the injury caused by the subsidy to a domestic industry.

	Provisional countervailing measures shall take the form of provisional countervailing duties guaranteed by deposits or bonds.

	Article 30  The proposal applying provisional countervailing measures shall be put forward by the Ministry of Commerce, and, on the basis of such a proposal, the State Council Tariff Commission shall make a decision which shall be published by the Ministry of Commerce.  The Customs shall implement the decision from the effective date set forth in the public notice.

	Article 31  The period for applying provisional countervailing measures shall not exceed four months from the effective date set forth in the public notice regarding the decision on provisional countervailing measures.

	No provisional countervailing measures shall be applied within 60 days from the date of publication of the decision to initiate the countervailing investigation.

Section 2	Undertakings

	Article 32  During the period of a countervailing investigation, if the government of an exporting country (region) proposes an undertaking to eliminate or limit a subsidy or take other relevant measures, or if an exporter proposes an undertaking to revise its prices, the Ministry of Commerce shall give it full consideration.

	The Ministry of Commerce may suggest price undertakings to an exporter or the government of the exporting country (region).
	The Ministry of Commerce shall not force an exporter to enter into any undertaking.

	Article 33  The fact that an exporter or the government of an exporting country (region) does not offer undertakings, or does not accept any suggestion regarding price undertakings, shall in no way prejudice the investigation and determination of a countervailing case. The Ministry of Commerce has the right to determine that a threat of injury is more likely to be realized if the exporter continues subsidizing the imports.

	Article 34  If considering that an undertaking is acceptable and in the public interest, the Ministry of Commerce may decide to suspend or terminate the countervailing investigation without applying provisional countervailing measures or imposing countervailing duties. The decision to suspend or terminate the countervailing investigation shall be published by the Ministry of Commerce.

	If the Ministry of Commerce does not accept an undertaking, it shall provide the reasons therefore to the exporter concerned.

	Undertakings shall not be sought or accepted unless the Ministry of Commerce has made a preliminary affirmative determination of subsidization and injury caused by such subsidization.  In cases where an exporter enters into an undertaking without consent of the government of its own country (region), the Ministry of Commerce shall not seek or accept such an undertaking.

	Article 35  After the suspension or termination of an investigation according to the provisions of Paragraph 1, Article 34 of these Regulations, the Ministry of Commerce shall continue the investigation of subsidization and injury upon the request of the government of an exporting country (region), or may do so if it deems necessary.

	On the basis of the findings of the investigation, the undertaking shall automatically lapse if a negative determination is made on subsidization or injury, or shall remain in force if the determination on both subsidization and injury is affirmative.

	Article 36  The Ministry of Commerce may require the exporter or the government of an exporting country (region) from whom an undertaking has been accepted to provide periodically information and documentation relevant to the fulfilment of such an undertaking, and make verification on such information and documentation.

	Article 37  In case of violation of an undertaking, the Ministry of Commerce may decide to resume the countervailing investigation immediately in accordance with the provisions of these Regulations, or, on the basis of the best information available, decide to apply provisional countervailing measures and levy countervailing duties retroactively on products imported not more than 90 days prior to the application of such provisional countervailing measures, except the products imported before the violation of the undertaking. 

Section 3	Countervailing Duties

	Article 38  If the efforts made to complete consultations produce no positive results, and a final determination establishes the existence of subsidy and injury caused by the subsidy to a domestic industry, a countervailing duty may be imposed. Imposition and collection of countervailing duties shall be in the public interest.

	Article 39  The proposal imposing a countervailing duty shall be put forward by the Ministry of Commerce, and, on the basis of such a proposal, the State Council Tariff Commission shall make a decision which shall be published by the Ministry of Commerce. The Customs shall implement the decision from the effective date set forth in the public notice.

	Article 40  Countervailing duties shall be imposed on products imported after the date of the publication of the final determination, with the exception of circumstances set forth in Articles 37, 44 and 45 of these Regulations.

	Article 41  Countervailing duties shall be paid by importers of subsidized imports.

	Article 42  Countervailing duties shall be determined separately on the basis of the amount of subsidy each exporter has received. Where it is necessary to impose a countervailing duty on the subsidized imports of an exporter who has not been actually investigated, an expedited review shall be conducted and a countervailing duty applicable to the exporter shall be determined in a reasonable way.

	Article 43  No countervailing duties shall be levied in excess of the amount of a subsidy established in a final determination.

	Article 44  In cases where a final determination establishes the existence of a material injury, and provisional countervailing measures have been applied prior to the final determination, countervailing duties may be levied retroactively for the period during which provisional countervailing measures have been applied.

	In cases where a final determination establishes the existence of a threat of material injury, and provisional countervailing measures have been applied in the situation that the absence of such provisional countervailing measures would have led to a determination of material injury, countervailing duties may be levied retroactively for the period during which provisional countervailing measures have been applied.

	If the countervailing duty determined in a final determination is higher than the amount guaranteed by the deposits or bonds, the difference shall not be collected; if the duty is less than the amount guaranteed by the deposits or bonds, the excess amount shall be refunded.

	Article 45  When the following three circumstances exist simultaneously, a countervailing duty may, if necessary, be retroactively levied on products imported not more than 90 days prior to the date of application of provisional countervailing measures:

(1)	the subsidized imports increase massively during a short period of time;
(2)	such increase has caused injury that is difficult to repair to a domestic industry; and
(3)	such products have benefited from the subsidy.

	Article 46  Where a final determination decides not to levy a countervailing duty, or does not decide a retroactive levy of a countervailing duty, any deposits made during the period of the application of provisional countervailing measures shall be refunded and any bonds released.

Chapter V	Duration and Review of Countervailing Duties and Undertakings

	Article 47  The period for the levy of a countervailing duty and fulfilment of an undertaking shall not exceed five years. However, the period for the levy of the countervailing duty may be extended as appropriate if, as a result of review, it is determined that the termination of the countervailing duty would be likely to lead to continuation or recurrence of subsidization and injury.

	Article 48  After a countervailing duty has taken effect, the Ministry of Commerce may decide on justifiable grounds to review the need for the continued imposition of the countervailing duty; such a review may also be conducted, provided that a reasonable period of time has elapsed, upon request by the interested parties and on the basis of examination of the relevant evidence submitted by the interested parties.

	After an undertaking has taken effect, the Ministry of Commerce may, on justifiable grounds, decide to review the need for the continued fulfilment of the undertaking; such a review may also be conducted, provided that a reasonable period of time has elapsed, upon request by the interested parties and on the basis of examination of the relevant evidence submitted by the interested parties.

	Article 49  On the basis of the findings of a review, the Ministry of Commerce shall, in accordance with the provisions of these Regulations, make a proposal on the retention, revision, or termination of a countervailing duty, and the State Council Tariff Commission shall, in light of the proposal made by the Ministry of Commerce, make a decision which shall be published by the Ministry of Commerce. Meanwhile, the Ministry of Commerce may make a decision on the retention, revision or termination of an undertaking and publish such decision in accordance with the provisions of these Regulations.

	Article 50  The review proceedings shall be conducted with reference to the relevant provisions of these Regulations on countervailing investigation.

	Any review shall be concluded within 12 months of the date of decision of initiation of such a review.

	Article 51  During the period of review, the review proceedings shall not impede the application of countervailing measures.

Chapter VI	Supplementary Provisions

	Article 52  Where any party is not satisfied with a final determination made under Article 26 of these Regulations, or not satisfied with a decision on whether or not to impose a countervailing duty or a decision on retroactive imposition of a duty, which is made under Chapter IV of these Regulations, or not satisfied with the review findings made under Chapter V of these Regulations, it may, in accordance with the law, apply for administrative reconsideration or file a lawsuit in the people’s court.

	Article 53  A public notice issued under these Regulations shall contain, inter alia, important information, facts, reasons, basis, findings and conclusions, etc.

	Article 54  The Ministry of Commerce may take appropriate measures to prevent the circumvention of countervailing measures.

	Article 55  Where any country (region) discriminatorily applies countervailing measures on the exports from the People’s Republic of China, the People’s Republic of China may, on the basis of the actual situations, take corresponding measures against that country (region).

	Article 56  The Ministry of Commerce shall be responsible for foreign-related consultation, notification and dispute settlement concerning countervailing activities.

	Article 57  The Ministry of Commerce may, in accordance with these Regulations, formulate specific implementing measures.
	Article 58  These Regulations shall be effective as of 1 January 2002.  The provisions on countervailing measures contained in the Regulations of the People’s Republic of China on 
Anti-dumping and Anti-subsidy promulgated by the State Council on 25 March 1997 shall be repealed simultaneously.

Annex

List of Export Subsidies

1.	The provision of direct subsidies by the government of an exporting country (region) to an enterprise or industry contingent upon export performance.
2.	Foreign currency retention schemes or any similar practices which involve a bonus on exports.
3.	Internal transport or freight charges on exports, provided for or approved by the government of an exporting country (region), on terms more favourable than for domestic goods.
4.	The provision of goods or services by the government of an exporting country (region) either directly or indirectly to the production of exports, on terms more favourable than for provision of like goods or services to the production of domestic goods, except for special circumstances.
5.	The full or partial remission, exemption or deferral of direct taxes or social welfare charges specifically related to exports which have been paid or are payable by enterprises.
6.	The deductions directly related to exports or export performance, over and above those granted in respect to domestic production, in the calculation of the base on which direct taxes are charged.
7.	The remission, exemption or reimbursement, in respect of the production and distribution of exports, of indirect taxes in excess of those levied in respect of the production and distribution of like domestic products.
8.	The remission, exemption, reimbursement or deferral of prior-stage cumulative indirect taxes on goods or services used in the production of exports in excess of the remission, exemption, reimbursement or deferral of like prior-stage cumulative indirect taxes on goods or services used in the production of like domestic product, except for special circumstances.
9.	The remission, exemption or reimbursement of import charges on imported inputs for the production of exports in excess of those levied on such inputs when they are imported, except for special circumstances. 
10.	The provision by the government of an exporting country (region) 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.
11.	The grant by the government of an exporting country (region) of export credits at rates below those which are actually paid for the employment of such funds, or the payment by it of all or part of the costs incurred by exporters or financial institutions in obtaining credits, in order that that could attain advantages in the field of export credits terms, except for special circumstances.
12.	Any other charges on the public account constituting an export subsidy.

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