What is countervailing duty? What are the characteristics of countervailing duty?

What are countervailing duties?

Countervailing duties are also called "anti-subsidy duties" or "offset duties". They are an additional import tax imposed on foreign goods that receive export subsidies or allowances at the import stage. They are a form of differential tariffs. The amount of tax levied is generally equal to the amount of subsidies received by the goods. Countervailing duties were first introduced in the UK in the late 19th century.

At that time, the UK imposed this tax on European sugar that received export subsidies, and some countries followed suit. The purpose was to offset the amount of subsidies enjoyed by imported goods, weaken their competitiveness, prevent cheap dumping, and protect domestic production and the domestic market. Direct and indirect subsidies and preferences received by imported goods during the production, manufacturing, processing and export process can constitute a reason for the importing country to impose anti-subsidy duties on them.

What are the characteristics of countervailing duties?

(1) Subsidy is a kind of government behavior. The government here includes not only the central government and related agencies in the general sense, but also various systems under the central government, such as state, provincial and local governments. In addition, government behavior also includes the behavior of government agents and private behavior under government intervention;

(2) Subsidies are a fiscal measure. Subsidies should be fiscal interventions by the government, that is, expenditures from public accounts;

(3) Subsidies must confer certain benefits on the subsidized party. The Agreement does not clearly define "benefits". Generally speaking, benefits refer to the value or preferential conditions that the subsidized party obtains from a government-funded program that it cannot obtain from the market. The granting of no such benefits does not constitute a subsidy;

(4) Subsidies should be received by producers or sellers. Only subsidies granted to enterprises are likely to distort trade and are covered by the Agreement.

However, not all subsidies that meet the above characteristics are subject to the agreement. Subsidies that are subject to the agreement have specificity. That is, only when the subsidy is specifically targeted at one (or one type of) enterprise or industry can the prescribed remedial measures be implemented for "prohibited" or "appealable" subsidies. Specificity is the core concept of the agreement. The following four types of subsidies have specificity:

① Enterprise-specificity: a government selects one or several specific companies for subsidies;

② Industry-specificity: A government subsidizes one or several specific industry sectors;

③ Regional-specificity: A government subsidizes production in a specific region within its territory;

④ Prohibited-subsidies: subsidies that are linked to export performance or the use of domestic products.

This is the end of the introduction to countervailing duties in this issue. If you want to learn more about countervailing duties, please pay attention. We will continue to answer your questions and give you a wave of benefits! Sellers on cross-border e-commerce platforms can register a zero-rate account with us. For fund collection, it is very necessary to reduce costs. For cross-border transaction collection, it is recommended to use Airwallex. Registration entrance: https://hub6.cn/DJN7rn