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Anti-subsidy

A subsidy is a financial contribution made by (or on behalf of) a government or a public body that gives the recipient a benefit.

Some subsidies are used to pursue domestic or social policies, for example supporting industries that help create new jobs. However, unfair subsidies can distort the EU market, create unfair competition and therefore damage European industry.

The EU can impose duties to counteract a subsidy, but only if it is limited to a specific firm, industry or group of firms or industries. Export subsidies, and subsidies based on using domestic goods over imported ones, are specific.

EU anti-subsidy rules

When an EU industry thinks that imports of a product from a non-EU country are subsidised and injuring the EU industry producing the same product, it can lodge a complaint with the Commission.

Overview on lodging a complaint

How to draft an anti-dumping complaint

Types of subsidies

The recipient benefits when financial contributions are provided on more favourable terms than those available on the market.  

A financial contribution can be:

  • a direct or potential transfer of funds (e.g. grants, loans, equity injection or loan guarantees)
  • government revenue abandoned or not collected (e.g. tax credits)
  • a government providing goods and services, apart from infrastructure
  • a government purchasing goods
  • any of the above done by a private company on the instruction of the government  

A specific subsidy is limited to a particular sector (e.g. ceramics or chemicals). A subsidy that is broadly available, like helping small businesses regardless of the industrial sector, isn't considered specific.

The EU's anti-subsidy investigation

If the complaint shows evidence of subsidy and injury, the Commission must open an anti-subsidy investigation.

The investigation checks if:

  1. the imports benefit from countervailable subsidies, including those identified in the complaint or discovered in the course of the investigation
  2. the EU industry suffers material injury
  3. there is a causal link between the injury and the subsidised imports
  4. putting measures in place is in the European interest

Details of the anti-subsidy investigation

Flowchart of the anti-subsidy investigation process

Types of countervailing measures

Countervailing measures counteract the effects of subsidised imports on the EU market and restore fair competition. The measures can be:

  • adding a percentage of the price to the goods
  • a fixed amount per unit
  • applying a minimum import price
  • 'price undertaking' where the exporter commits to sell the product under investigation above a minimum price. In return, the Commission doesn't impose a duty.

The Commission monitors import volumes and prices of all products subject to measures, to make sure the countervailing measures are working. It does so in close cooperation with:

The exporting country may also agree to remove or limit the unfair subsidy.

Interim and expiry reviews

Countervailing measures lapse after five years. In that period, the Commission can conduct an interim review if:

  • there's evidence that the measures are no longer needed (e.g. the government of an exporting country may claim that the subsidy no longer exists)
  • the measures are no longer needed to counteract subsidised injurious imports (the EU industry may claim that the subsidy amount has increased)

How to ask for an interim review

In the final year of measures, the EU producers may ask the Commission to conduct an expiry review. This review determines whether the expiry of the measures could lead to continued or recurring subsidisation and injury. If so, the measures may continue for another five years.

How to request an expiry review

Importers can also request a refund of the duties paid when they think that the amount of subsidy has been reduced or eliminated.

How to ask for a refund

More on Anti-subsidy

The EU's anti-subsidy rules are based on a 1994 WTO agreement which allows remedial action to be taken against subsidies that are considered an unfair trade practice.

The Commission has also adopted guidelines for calculating the amount of a subsidy.