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CQ7
CQ7
INTBUS 3502NA Legal Aspects of International Business III Trimester 3 Instructor: Dr Robert Langton
Settlement Panel will hence rule State Ss import embargo JUSTIFIED under Article XX and dissolve State Rs complaint.
Countervailing Duties
Question 7 The issue of the case is whether State U can impose countervailing duty on imports of plywood from State C. From Mukand Ltd. v. Council of the European Union, it is noted that countervailing duties may be imposed only if it has been concluded, through proper investigation, that the subsidized imports cause material injury to a European Community (EC) industry. In this case, as the harm was caused by other factors such as the anti-competitive conduct on the part of EC itself, and that the EC institution has neglected to take into account other factors in their assessment of the injury to the local industry, the EC was held to withdrawn the countervailing duties. Applying the case, we must rst determine if State C has been subsidizing its lumber companies. Subsidizing is dened as a nancial contribution made by a government that confers a benet on an enterprise, a group of enterprise, or an industry. Based on the case, State C does not seem to subsidise its plywood lumber industry as State C charges nominal fee for cutting lumber in its national forest. Can argue the existence of subsidy? State U on the other hand might argue that since State Cs exports of lumber products to State U has injured their domestic industry, hence there is an existence of an actionable subsidy, which means that the subsidy may be challenged as trade distorting if it injures the domestic industry of another WTO member state. It is mentioned in the case One of State Us plywood lumber companies, has lost much of its market share in State U due to imports from State C. According to WTO, a WTO state that believes that its domestic industry has been injured by actionable subsidies can independently impose countervailing duties so long as it follows the procedures specied in the Agreement on Subsidies and Countervailing Measures. Countervailing duties may be imposed only if it has been concluded, through proper investigation, that the subsidized imports cause material injury to the state. In this case, assuming that State U has conducted proper investigations and that there are no further factors that contribute to the additional 15 to 20 percent cost to the plywood lumber companies in State U, State U is then able to impose countervailing duties. On the other hand, if investigations conducted reveal that there are other factors contributing to the additional 15 to 20 percent cost to the plywood lumber companies in State U, State U will then not be able to impose countervailing duties on State C.