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Benefit to the recipient
08/12/2022 06:49
The mere existence of a government programme providing a financial contribution is not enough to constitute a subsidy. Whatever financial contribution is provided must also confer a 'benefit' to someone or some entity. There are standards under United States law for determining the existence and amount of benefit conferred under any particular subsidy programme. Moreover, the law makes clear that any such benefit will 'normally be treated as conferred where there is a benefit to the recipient'.
There are four standard examples of the types of activities that would 'normally' be treated as conferring a benefit under the law:
- Equity infusions (if the equity infusion is 'inconsistent with the usual investment practice of private investors');
- Loans (if the loan interest rate or other costs are lower than what could be obtained on the market);
- Loan guarantees (if the cost of the loan with the government guarantee is lower than the cost of a comparable commercial loan without the government guarantee); and
- The provision or purchase of goods or services (particularly where the amount paid is 'less than adequate' when the government provides goods or services to firms, or 'more than adequate' when the government purchases goods or services from firms).
Suffice it to say that any methodologies used to measure the value of benefits bestowed are complex and critical, and vary by the type and use of the subsidy at issue. Generally, the adequacy of any type of remuneration will be determined based on prevailing open market conditions (price, quality, availability, marketability, and other factors involving 'conditions of purchase or sale'). Moreover, in making these determinations, the Commerce Department is not required to consider the effect of the subsidy in determining whether a subsidy exists (e.g. the effects on prices or outputs from income or price supports).
The Commerce Department has developed a very detailed set of policies that explain how to calculate the value of the benefit from various types of programmes that come up frequently in United States countervailing duty investigations. These policies have been codified in the Commerce Department Regulations. Other benefit calculation policies, however, are still evolving and are not reflected in the Commerce Department Regulations. One of the most important examples involves situations where a state-owned industry found to have received a countervailable benefit is subsequently 'privatized'. The existing Commerce Department practice attempts to incorporate findings of the WTO Appellate Body from United States - Countervailing Measures concerning Certain Products from the European Communities, though in application the Commerce Department practice is already the subject of a WTO challenge for failing to adequately implement the Appellate Body decision.
