European Commission Directorate-General for Trade

Conditions

Before any measures can be adopted to counteract a subsidy, certain conditions must be met:

Condition 1 – Specific subsidy to exporters

Subsidy – certain types of subsidies can be countervailed (i.e. anti-subsidy measures applied) when the financial contribution received is deemed to confer a benefit to exporters. The definition of a subsidy is a broad one. However, subsidies are only countervailable if they are specific.

Condition 2 – Injury

There must be material injury to the Community industry producing the like product.

The determination of injury requires an examination of the volume and prices of subsidised imports and their consequent impact on the Community industry.

In this regard, the Commission verifies whether there has been a significant increase in subsidised imports, either in absolute quantities or in terms of market share.

In determining the effect on prices, an important consideration is the extent to which the import price undercuts the Community producers price (see Figure 1).

Determining the impact on the Community producers requires analysis of various typical economic factors: market share, output, profits, productivity, return on investment, ability to raise capital, growth, size of countervailable subsidies etc.

Condition 3 – Causal link

The subsidised imports must be a cause of the injury. They need not be the only cause - other factors might also contribute. Provided the subsidised imports are a cause of injury, causality is established.

Condition 4 – Community interest

Such measures must not be against the Community interest. Although this test is not required by WTO rules, it ensures that account is take of the overall economic interests in the EU – including the domestic industry producing the product concerned, importers, Community industries that use the imported product and will ultimately pay a higher price and, where relevant, the end consumer of the product.