To further clarify what constitutes a subsidy under the law, it is helpful to understand what is not considered a subsidy. Certain provisions or benefits can be provided, yet still not qualify as a subsidy because all the elements of a subsidy have not been met. A few examples will illustrate this principle. Assume a country provides a line of credit at the market rate to the steel industry. Although in this situation there is a programme established by the government to provide a financial contribution to a specific industry, nevertheless there is no countervailable subsidy here within the meaning of United States law because there has been no benefit provided to the company. The line of credit is at market rates.

 

Similarly, assume a private association voluntarily provides information free of charge to its members. Although in this situation a financial contribution and benefit has been provided to the members, there has been no government action. The association took this action on its own.

 

Or assume a country provides a tax holiday to new industries in the country. Is such activity a countervailable subsidy? This depends upon the number of industries that receive the financial contribution and benefit (i.e. lower taxes), and how the government uses its discretion to provide such benefits (i.e. specificity test). If the tax benefit has been applied very widely throughout the economy it is probably not a subsidy.

 

The underlying theme is that all three elements must be met for there to be a subsidy. Any two elements without the third is not sufficient. Of course, sometimes there will be intense debates during a case about whether, as a factual matter, an element has been met.

 

Source: Business Guide to Trade Remedies in the United States: Anti-dumping, countervailing and safeguards legislation practices and procedures