The Specificity Of Subsidies

Since the copper paper case, the United States gradually increases countervailing duties to export products from China, but there are inappropriate in many ways, especially in de facto specificity.So China requests for the establishment of a panel, requiring the Panel to make a reasonable interpretation in terms of the correct application of article 2.1(c) of the SCM agreement, which includes the following arguments: the U.S. is failure to apply the first of the “other factors” under article 2.1(c) in the light a prior “appearance of non-specificity” resulting from the application of the principles laid down in sub-paragraphs(a) and(b); failure to identify a “subsidy program”; failure to identify a “granting authority”; and failure to take into account the factors in the final sentence of article 2.1(c).After a comprehensive study on the panel and the appellate body reports about the relevant issues, and decisions from United States Department of Commerce in certain cases, such as Aluminum Extrusions, Drill Pipe, Certain Kitchen Appliance Shelving and Racks and Oil Country Tubular Goods. A conclusion is made: The Department of Commerce in the U.S. has violated the article 2.1(c) of SCM, and the application of article 2.1(c) can be summarized as following: one principle with one special case, two positive evidences and two elements. One principle with one special case means the specificity analysis will ordinarily proceed in a sequential order which de facto is examined following an assessment of de jure specificity, and there maybe instances in which the evidence under consideration unequivocally indicates specificity or non-specificity by reason of law,or by reason of fact, in such circumstances further consideration maybe unnecessary. Two evidences refer to the investigation agencies must find out the subsidy program and the jurisdiction of the granting authority on the basis of positive evidence. And the two elements refer to the extent of diversification of economic activities within the jurisdiction of the granting authority as well as the length of time during which the subsidy program has been in operation.In order to find out the reason why the subsidies in goods from China have frequently regarded by the United States as the specificity of a subsidy, a conclusion is made,which is based on the theory on the efficient design of domestic subsidy rules emphasizing the dynamic balance of subsidy rules, which are neither too strict, nor too loose, its main reason is that domestic subsidy rules in the specificity both in China and the U.S. have not been effectively set. A direct consequence is the Chinese government and domestic enterprises lack of enough awareness of foreign subsidies rules because domestic subsidy rules of specificity become formality and a much more strict burden of proof in terms of de facto specificity has been given to the Chinese enterprises by the domestic law of the United States,thus Chinese domestic enterprises feel helpless and even cannot be timely to prove their exemption when leaving them in the face of surveys in the United States. As a result, they had passively accepted the countervailing duties imposed by the U.S.. Finally, it is suggested that the Chinese government, on the one hand, actively participates in WTO multilateral negotiations in order to improve the SCM Agreement, on the other hand,China has to improve domestic subsidy legislation. At the same time, it is suggested that Chinese enterprises form a correct attitudes towards the policies made by the Chinese government, and actively participate in the countervailing investigation in the U. S..