Subsidies and Countervailing Duty (R.A. 8751, 1999)
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Questions and Answers

Which of the following best describes a subsidy?

  • Financial assistance provided by the government to a specific sector. (correct)
  • A regulation aimed at limiting imports.
  • A tax imposed on exported goods only.
  • A non-specific charge applied to all businesses equally.

What makes a subsidy countervailable?

  • It is funded by private investments.
  • It is explicitly limited to a specific enterprise or industry. (correct)
  • It is universally available to all producers.
  • It does not provide any financial benefits.

Which of the following is true about non-actionable subsidies?

  • They are limited to specific industries.
  • They provide direct financial contributions only.
  • They apply to all industries uniformly. (correct)
  • They can be challenged under WTO agreements.

What characterizes actionable subsidies?

<p>They are neither prohibited nor non-actionable. (B)</p> Signup and view all the answers

An example of a non-actionable subsidy would be:

<p>Government funds for all research activities. (C)</p> Signup and view all the answers

Which of the following is NOT considered a subsidy?

<p>A universal tax credit for all citizens. (D)</p> Signup and view all the answers

Which of the following statements is true about prohibited subsidies?

<p>They are completely forbidden by agreements. (C)</p> Signup and view all the answers

What type of subsidy is typically granted for research to adapt production facilities for environmental compliance?

<p>Non-actionable subsidy. (D)</p> Signup and view all the answers

What can trigger a countervailing protest?

<p>Importation of subsidized products causing material injury to domestic industries (D)</p> Signup and view all the answers

Which types of importations are exempt from countervailing action?

<p>Importations for government agencies designated by law to stabilize shortages (B)</p> Signup and view all the answers

What is the purpose of Republic Act (RA) 8751?

<p>To strengthen mechanisms for imposing countervailing duties on imported subsidized products (B)</p> Signup and view all the answers

When did Republic Act 8751 take effect?

<p>August 31, 1999 (B)</p> Signup and view all the answers

What is the main aim of countervailing duties?

<p>To protect domestic industries from unfair trade competition (D)</p> Signup and view all the answers

Which section of the Tariff and Customs Code was amended by RA 8751?

<p>Section 302 (D)</p> Signup and view all the answers

What are conditionally duty-free importations?

<p>Products imported into the country under specific regulations that waive duties (D)</p> Signup and view all the answers

What is the significance of Section 713 of the Customs Modernization and Tariff Act (CMTA)?

<p>It adopts the provisions of RA 8751 regarding countervailing duties (A)</p> Signup and view all the answers

What is the primary purpose of reforming the domestic countervailing duty law?

<p>To simplify legislation for better protection against cheap imports (C)</p> Signup and view all the answers

Which agency is responsible for conducting formal investigations in countervailing cases?

<p>Tariff Commission (A)</p> Signup and view all the answers

Who can file a petition for countervailing action?

<p>Domestic industry, or on behalf of, in a notarized form (D)</p> Signup and view all the answers

What does the term 'domestic industry' refer to?

<p>Domestic producers of the like product whose collective output is significant (A)</p> Signup and view all the answers

What is the required threshold of support from producers for a petition to be accepted?

<p>Support from more than 50% of total production and 25% of subsidized product producers (B)</p> Signup and view all the answers

Which agency is tasked with the imposition of countervailing duty?

<p>Bureau of Customs (B)</p> Signup and view all the answers

Under what condition can a countervailing investigation begin without a written application?

<p>If there are proven instances of subsidy with evidence (A)</p> Signup and view all the answers

What is the role of the Bureau of Import Services (BIS) in the countervailing process?

<p>Receives applications and conducts preliminary investigations (C)</p> Signup and view all the answers

What is the de minimis amount of subsidy for a product originating from a developed country?

<p>1% (A)</p> Signup and view all the answers

When is the volume of subsidized imports considered negligible for developing countries?

<p>Less than 4% (A)</p> Signup and view all the answers

What is the minimum collective share of countries with less than 4% import share that triggers reporting requirements?

<p>9% (C)</p> Signup and view all the answers

How long do interested parties have to defend their interests after being disclosed the essential facts?

<p>5 days (B)</p> Signup and view all the answers

Which of the following best describes the term 'subsidy' in the context of countervailing?

<p>Any specific assistance provided by the government of the exporting country (B)</p> Signup and view all the answers

What is the first stage in a countervailing investigation?

<p>Prima Facie Determination (B)</p> Signup and view all the answers

What does the term 'negligible injury' refer to in the context of countervailing duties?

<p>Harm that is considered too small to impact decision-making (C)</p> Signup and view all the answers

Which of the following is NOT required when applying for the levy of countervailing duty?

<p>Total capital invested in competing foreign industries (D)</p> Signup and view all the answers

What can investigating authorities do if exporting enterprises impede an investigation?

<p>Use the best information available for their decisions (C)</p> Signup and view all the answers

Which of the following elements is NOT part of the definition of a 'like product' in countervailing?

<p>Significantly different features (B)</p> Signup and view all the answers

Which authority is responsible for examining the petition and determining if there is sufficient evidence for the investigation?

<p>The Department of Trade and Industry (B)</p> Signup and view all the answers

What must the applicants provide concerning the allegedly subsidized product?

<p>A description of the product (A)</p> Signup and view all the answers

What type of evidence is necessary to initiate a countervailing action?

<p>Evidence of subsidization, injury, and causal links (B)</p> Signup and view all the answers

How long does DTI-BIS or DA have to make a Prima Facie Determination after receiving a petition?

<p>Ten days (A)</p> Signup and view all the answers

Which piece of information is crucial to understand the impact of the allegedly subsidized product on domestic markets?

<p>Export prices and domestic market effects (C)</p> Signup and view all the answers

What should be included about the domestic production of the like product in the application for a countervailing duty?

<p>Volume and value of production by known producers (D)</p> Signup and view all the answers

What does a price undertaking aim to achieve in relation to exporting countries?

<p>To eliminate or limit subsidies. (D)</p> Signup and view all the answers

How long is a price undertaking effective unless proved otherwise?

<p>Five years. (B)</p> Signup and view all the answers

What is the lesser duty rule primarily designed for?

<p>To apply countervailing duties less than the calculated subsidy. (C)</p> Signup and view all the answers

What initiates an administrative sunset review regarding countervailing duties?

<p>The Tariff Commission's own motion or interest party request. (A)</p> Signup and view all the answers

What is the time frame required before initiating an interim review of countervailing duties?

<p>Twelve months after duty imposition. (D)</p> Signup and view all the answers

Who can file a petition for judicial review concerning countervailing duties?

<p>Any interested party within 30 days of final ruling notice. (C)</p> Signup and view all the answers

What is the primary focus of an interim review regarding countervailing duties?

<p>To assess the necessity of existing or additional countervailing duties. (C)</p> Signup and view all the answers

Which of the following is NOT true about the price undertaking process?

<p>It is imposed for an indefinite period. (B)</p> Signup and view all the answers

Flashcards

Subsidy

Government assistance (financial or otherwise) to a specific industry, enterprise, or region.

Countervailable Subsidy

A subsidy to an exporter, not generally available to other producers, that can trigger trade action.

Actionable Subsidy

A subsidy that is specific (targeted to a particular enterprise or industry) and falls under the WTO definition of a subsidy.

Non-actionable Subsidy

A general government support not targeted to specific enterprises or industries, permitted under trade agreements.

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Prohibited Subsidy

A subsidy that is not allowed under international trade rules.

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Subsidies and Countervailing Measures

Trade countermeasures that offset subsidies to exporters. It's a defense against unfair trade practices.

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Specific Subsidy

A subsidy that is limited to a specific enterprise, industry, or region.

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Counter-measures

Actions taken to counter actions by other parties in international trade, typically to neutralize unfair advantages given by another party's government.

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Countervailing protest

A protest against imports subsidized by a foreign government, to protect domestic industries from unfair competition.

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Subsidized product

A product receiving direct or indirect government support (e.g., subsidies) in the exporting country.

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Material injury to domestic industry

Significant harm to a domestic business due to subsidized imports, potentially damaging production.

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Exempted importations

Importations not subjected to countervailing protests, specifically those supporting essential needs (e.g., by government agencies).

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Government agencies

Agencies that can import goods exempted from countervailing protests to fulfill public needs or shortage situations.

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RA 8751

A Philippine law strengthening mechanisms to impose countervailing duties on subsidized imports, protecting local industries.

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Conditionally duty-free importations

Importations allowed duty-free under specific provisions of the Tariff and Customs Code.

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Countervailing Duty Law

A law designed to protect domestic industries from subsidized imports.

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Rationale for RA 8751

The reason behind the law is to shield domestic industries from unfair competition (through subsidized imports) which might threaten their growth or survival.

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Investigation of Counter Vailing Cases

A process to determine if unfair trade practices exist involving subsidized imports, and if so, what action should be taken.

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WTO Agreement Alignment

Ensuring the domestic law complies with international trade rules.

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Government Agencies (DTI/DA/Tariff Commission/Customs)

Administering the countervailing duty law. DTI/DA start investigation and Tariff Commission concludes. Customs imposes the duties.

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Petition Filing

Domestic industry may petition for actions against subsidized imports.

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Domestic Industry Definition

Domestic producers of a similar product who produce the major percentage of that product.

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Petition Support Threshold

More than 50% of domestic output, or producers making up at least 25% of total production, must support a countervailing petition.

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Investigation Initiation Without Application

Conditions under which an investigation can begin without a request from the domestic industry.

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De Minimis Subsidy (Developed Countries)

A subsidy amount below 1% of the product's value; if the volume of subsidized imports is less than 3% of the total imported volume.

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De Minimis Subsidy (Developing Countries)

A subsidy amount less than or equal to 2% (3% for least developed countries), for negligible volumes of subsidized imports (less than 4% of the importing country's total imports).

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Negligible Injury

Injury to the domestic industry deemed insignificant, preventing trade actions.

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Disclosure of Essential Facts

The Tariff Commission's obligation to share key details for trade decisions.

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Refusal to Cooperate (Investigations)

Investigating authorities' ability to base decisions on available information when exporters refuse to cooperate.

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Subsidy (Countervailing)

Government support directed at a specific product or exporter, directly or indirectly.

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Like Product (Countervailing)

Products identical, similar, or having very close characteristics to the subject product.

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Collective Share Thresholds

When smaller countries act collectively they can exceed certain volumes, (e.g. 7% or 9% of imports) despite individual shares not exceeding a limit(e.g. 3% or 4%).

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Countervailing Action Initiation

DTI or DA can start an investigation into subsidies without a domestic industry application, if sufficient evidence exists of subsidization, harm, and a link between the two.

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Counter-duty application info

Information needed to request countervailing duty, including domestic production volume, producers list, export details, subsidy extent, and domestic industry impacts.

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Investigation Stages

Counter-investigation steps, including an initial review (prima facie) and a preliminary determination stage.

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Prima Facie Determination

DTI-BIS or DA assesses the petition's accuracy and adequacy within 10 days to determine if the investigation can start.

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Preliminary Determination

Subsequent step to Prima Facie Decision to verify claims about alleged subsidies.

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Application Requirements

Necessary details to request a counter-duty levy, encompassing domestic industry details to imported product information.

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Evidence for Investigation

Sufficient proof of subsidization, harm, and causation between subsidization and harm is essential for initiating a countervailing investigation.

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Sufficient Evidence

Evidence demonstrating the existence of subsidies, harmful effects on domestic industries, and a verifiable link between the two is mandatory for opening an investigation.

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Price Undertaking

A voluntary agreement by an exporting country's government or an exporter to eliminate/limit subsidies or raise prices, to avoid countervailing duties.

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Lesser Duty Rule

Imposing countervailing duties lower than the calculated subsidy amount, if it's enough to address the injury to the domestic industry.

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Sunset Review

A review done after a set period (e.g., 5 years) to see if the countervailing duty is still needed due to continuing subsides and injury.

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Interim Review

A review to see if the countervailing duty is necessary or not, during the initial duty period to offset subsidies, to address continued injury, or if the duty is enough .

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Judicial Review

A legal review of a countervailing duty imposition by a court.

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Preliminary Affirmative Determination

A finding that there are subsidies and that they cause harm/injury to domestic industries.

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Countervailing Duty

A trade measure imposed to neutralize the effects of a subsidy given in an exporting country.

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Review Period

A time period allocated for examination of the countervailing measure, whether it is interim or final, to determine if it satisfies its intended effect.

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Study Notes

Subsidies and Countervailing Duty (R.A. 8751, 1999)

  • A subsidy is any specific assistance (financial, income, or price support) given by a government to exporters, not generally available to other producers.
  • Actionable subsidies (yellow) are specific, targeting particular enterprises, industries, or regions.
  • Non-actionable subsidies (green) are general (applied equally to all industries) and permitted.
  • Prohibited subsidies (red) are contingent on export performance or using domestic goods over imports. These are subject to remedies through the WTO.
  • Country of export is where the product was shipped to the Philippines. Can be different than the origin.
  • Country of origin is where the product was substantially transformed or made. May be different from the export country.
  • Countervailing action can be taken against products with subsidies that cause harm to a domestic industry.
  • Domestic industry is the whole of domestic producers of a like product, making up a major proportion of the total domestic production in the industry.
  • Support threshold for petition acceptance: Over 50% collective output, or 25% of total production.
  • Initiating a countervailing investigation without formal application is possible in special circumstances.
  • To initiate a petition:
    • Identity of applicant and product description
    • List of domestic producers, volume, and value
    • Description of the subsidized product
  • Types of subsidies that are actionable:
    • Direct subsidies based on export performance
    • Currency retention schemes with export bonuses
    • Provision of subsidized inputs for exports
    • Tax exemptions specifically for exports
    • Remission of import charges exceeding domestic consumption charges
  • Governing law: Republic Act (RA) 8751, taking effect on 31 August 1999, designed to protect domestic industries.
  • Government agencies involved: Department of Trade and Industry (DTI), Bureau of Import Services (BIS) or Department of Agriculture (DA).
  • Parties who can file a petition: domestic industry. Petitions must be presented in a notarized form.
  • Conditions for investigation termination:
    • De minimis subsidy amounts, negligible import volumes
    • Negligible injury to domestic businesses.
  • Essential facts disclosure: Before duty imposition, interested parties receive essential facts for response in writing
  • Like products: Identical or similar products.
  • Subsidies: Specific assistance from government.
  • Injury: Material injury or threat to the domestic industry (e.g. reduced prices, lost market share).
  • Determining material injury factors:
    • Output, sales, market share, profitability, productivity, return on investments, or capacity utilization
    • Effects on domestic prices
    • Cashflow, inventories, employment, wages, growth and capital investments
  • Remedies: Provisional and definitive duties.
  • Price undertaking: A voluntary commitment by the exporting government or exporter to adjust prices or cease exports at reduced prices. This can last for 5 years.
  • Lesser duty rule: Apply a duty that removes injury but is smaller than the subsidy.
  • Administrative reviews: Conducted by the Tariff Commission (including sunset and interim reviews).
  • Judicial review: Available through the Court of Tax Appeals within 30 days.

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Primer RA8751 (CV) PDF

Description

This quiz covers the key concepts of subsidies as defined under R.A. 8751, 1999, including actionable, non-actionable, and prohibited subsidies. It also discusses countervailing duties and the distinction between the country of export and the country of origin. Test your understanding of these important trade regulations and their implications for domestic industries.

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