SUBSIDIES AND COUNTER MEASURES

Highlights Topic:
A. Definition of Terms
B. Scope and Coverage
C. The Legislation
D. Procedures
E. Elements
F. Measures
A.

1. What is a subsidies
and countervailing
measure?
Subsidies and countervailing measure is
2. What is a
a trade counter-measure adopted by subsidy? Subsidy refers
government to offset any bounty or to any specific assistance
subsidy given to exporters which is not (e.g., financial contribution,
generally available to other producers of income or price support
the exporting country. schemes) directly or
indirectly provided by the
government of the country
of export or origin in respect
of the product imported into
the Philippines
What is subsidized
import/product?
A subsidized import/product refers to any
product which is granted, directly
or indirectly by the government I the country
of export of origin, any kind or form
of specific subsidy upon the exportation or
manufacture of such product, and which
Causing or is threathening to cause material
injury to a domestic industry, or is
materially retarding the growth or preventing
the establishment of a domestic industry
Producing the like product.
3. What are actionable subsidies,
non-actionable subsidies and
prohibited subsidies??
 B.TheLegistion
I. What is the Philippine legislation on subsidies
Republic Act (RA) 8751, otherwise known as “An Act
Strengthening the Mechanisms for the Imposition of
Countervailing Duties on Imported Subsidized
Products, Commodities or Articles of Commerce in
Order to Protect Domestic Industries from Unfair
Trade Competition, Amending for the Purpose
Section 302, Part 2, Title II, Book I of Presidential
Decree No. 1464, otherwise known as the „Tariff and
Customs of the Philippines, as Amended‟”, was
signed on August 7, 1999 and took effect on August
31, 1999. It provides protection to a domestic
industry which is being injured, or is likely to be
injured, by subsidized products imported into or
sold in the Philippines. The provisions of RA 8751
were adopted in Section 713 of the Customs
Modernization and Tariff Act (CMTA). The
Implementing Rules and Regulations (IRRs) of RA
8751 as embodied in Joint Administrative Order No.
02, series of 2000, took effect on September 25, 2000
II.What was the rationale for the passage of RA 8751? 

To transform the domestic countervailing duty law into a

more workable and simple piece of legislation providing
safety nets against the inflow of cheap subsidized imports; 
To strengthen the rules governing the investigation of
countervailing cases; and  To align the domestic law with
the WTO Agreement on Subsidies and Countervailing
Measures
III. Which government agencies administer the countervailing
legislation? 

1.Department of Trade and Industry (DTI) - Bureau of Import

Services (BIS) or Department of Agriculture (DA)
– receives the properly documented application (DTI for industrial
goods and DA for agricultural products); determines whether or not
a prima facie case exists to warrant initiation of investigation; and
conducts preliminary investigation for purposes of determining
whether or not provisional measures may be imposed 
2.Tariff Commission - conducts formal
investigation and makes the final
determination for purposes of the
imposition of the definitive countervailing
duty 

3.Bureau of Customs - takes charge of the

imposition of countervailing duty.
C. Scope And coverage
What articles may be covered by a
countervailing action?
A countervailing protest may cover any 1. Are there any importations
product which is granted, directly or exempted from
indirectly, by the government in the country countervailing action?
of export or origin, any kind or form of
specific subsidy upon the exportation or
manufacture of such product, and the
importation of such subsidized product is
causing or threatening to cause material
injury to a domestic industry, or is materially
retarding the growth, or preventing the
establishment of, a domestic industry.
What is a country of export?
Country of export is the country from where
the allegedly subsidized product was
shipped to the Philippines, regardless of the
location of the seller. The country of export
and the country of origin may be the same,
but not in all instances.

What is a country of origin?

Country of origin is where the allegedly
subsidized product was either wholly
obtained or where its last substantial
transformation took place. The country of
origin and the country of export may be the
same, but not in all instances. In case of
transshipment, where a product is shipped
from a third country that is not the country
where the product was manufactured or
processed, the country of origin would be
different from the country of export.
D. Procedures

Who may file a petition for countervailing

action?
A petition may be filed by, or on behalf of,
the domestic industry, in writing and in a
notarized form.
What constitutes a domestic industry?

Domestic industry refers to the domestic

producers, as a whole, of the like product or to
those producers of such like product whose
collective output of the product constitutes a
major proportion of the total domestic
production of those products in the industry
concerned. When producers are related to the
foreign exporters or importers or are themselves
importers of the allegedly subsidized product,
the term domestic industry may be interpreted
as referring to the rest of the producers.
What is the threshold of support by
producers for the petition to be
accepted?

Support by domestic producers whose

collective output constitutes more than 50%
of the total production of the like product
produced by the domestic industry; and 
Support by producers accounting for at least
25% of the total domestic production of the
product alleged to be subsidized.
What are the stages in a countervailing investigation?

a. Prima Facie Determination. The DTI-BIS or DA has ten

(10) days from receipt of the properly documented petition to
examine the accuracy and adequacy of the petition and
determine whether there is sufficient evidence to justify the
initiation of an investigation.

b. Preliminary Determination. Once a prima

facie case has been established, DTI or DA initiates
the investigation and makes a preliminary
determination on whether or not a provisional
measure may be imposed within 20 days from
receipt of the answers of the questionnaire from
respondents and other interested parties.
c. Final Determination. In the conduct of its formal
investigation, the Tariff Commission notifies all
interested parties; receives representations and/or other
submissions; holds preliminary conference and public
consultations; and conducts on-site investigation/data
verification both foreign and domestic. The Commission
has 120 days from receipt of the advice from either
Secretary of DTI or DA to complete its investigation and
submit its report of findings to the Secretary.

d. Issuance of Department Order. Within ten (10) days from receipt of the
affirmative final determination by the Tariff Commission, the Secretary of DTI
or DA issues a Department Order for the imposition of a definitive
countervailing duty, unless the Secretary has earlier accepted a price
undertaking from the foreign exporter, producer or government of the country
of export or origin. In case of a negative determination, the Secretary, after the
lapse of the period for the petitioner to appeal to the Court of Tax Appeals, issue,
through the Secretary of Finance, an Order for the Commissioner of Customs to
immediately release the cash bond to the importer.
 E.Elements
What are the four elements of
countervailing?
a. Like Product - a product is identical or alike in all respects to the
article under consideration or, in the absence of such product, another
product which, although not alike in all respects, has characteristics
closely resembling those of the product under consideration

b. Subsidy - refers to any specific assistance directly or indirectly

provided by the government of the country of export or origin in
respect of a product imported into the Philippines
c. Injury - means material injury to a domestic industry, threat of
material injury or material retardation of the growth or the prevention
of the establishment of a domestic industry. Injury test must be based
on positive evidence and shall involve an objective examination of both
(i) the volume of the subsidized imports; (ii) effects of subsidized
imports on the prices of like product in the domestic market; and (iii)
the consequent impact of these imports on domestic producers of such
products
d. Causal link - the material injury suffered
by the domestic industry is the direct result
of the importation of the subsidized
product.
What are the three modalities in
determining price effects?
 Price depression refers to the extent by which the domestic
producer reduces its selling price in order to compete with the
allegedly subsidized product.
 Price suppression exists when the allegedly subsidized
product prevents the domestic producer from increasing its
selling price to a level that would allow full recovery of its cost
of production.
Price undercutting refers to the extent by which the allegedly
subsidized product is consistently sold at a price below the
domestic selling price of the like product
F. Measures

What are the remedies/measures imposed

against subsidization?
a. Provisional measure – takes the form
of a security (cash deposit or bond) equal
to the amount of the provisionally
calculated amount of subsidy. It is
applied only after the DTI-BIS or DA has
made a preliminary affirmative
determination and no sooner than 60
days from the initiation of the case.

b. Definitive duty – final countervailing

duty imposed, in addition to the regular
duty and other charges, on a protested
product imported from a specific
exporter, following an affirmative final
determination.
What is the duration of the imposition of
countervailing measures?

Provisional measure - four (4) months.

Definitive countervailing duty - five (5)

years from the date of imposition.

What is meant by price undertaking?

Price undertaking is a voluntary undertaking by the government of
the exporting country to eliminate or limit the subsidy; or
voluntary commitment by the foreign exporter and/or the
producer that they will increase their prices or will cease exporting
to the Philippines at the subsidized price. An offer of price
undertaking shall be made only after a preliminary affirmative
determination of subsidization and injury to the domestic
industry.
Price undertaking is effective for a period of
five (5) years unless the foreign exporter
proves to the satisfaction of the authorities
that the undertaking is no longer necessary.

What is the “lesser duty rule”?

Lesser duty rule is the imposition of

countervailing duty in amounts lower than
the calculated subsidy, if such a lesser duty is
adequate to remove the injury to the
domestic industry
 G. Reviews

What are the reviews available to the affected

parties of countervailing measures?

a. Administrative Reviews: Interim review - conducted by the

Sunset review - may be initiated Commission, motu proprio, or upon
by any interested party or the direction of the Secretary or
upon own motion of the upon petition of any interested
Tariff Commission before the party to determine whether (i) the
sunset date, i.e., the 5th year, imposition of the countervailing
to determine whether the duty is no longer necessary to offset
expiry of the duration of the subsidization, taking into
countervailing duty consideration the need to protect
imposition would lead to a the existing
continuation or recurrence of
subsidization and injury.
 b. Judicial Review -
domestic industry Aggrieved and/or any
against dumping, or (ii) interested party may file a
the existing duty is not petition for review with the
sufficient to counteract Court of Tax Appeals within
the subsidization which thirty (30) days from receipt
is causing injury. At least of notice of the final ruling on
one (1) year should have the imposition of a
elapsed since the countervailing duty. Filing of
imposition of the such petition for review shall
countervailing duty not in any way stop or
before an interim review suspend the imposition and
can be initiated. collection of the
countervailing duty.