- It has been a settled position of the DGTR that need for continuation of measures and quantum of such measures can be determined in a sunset review. However, there was ambiguity regarding the question of re-examination of countervailability of a subsidy or examination of a new subsidy in a sunset review.
- The WTO Panel and Appellate Body have clarified that investigating authorities can re-examine the countervailability of a subsidy, subject to availability of sufficient evidence and re-determine the quantum of subsidy.
- While the European Commission routinely examines new subsidy schemes in a sunset review, the U.S. Department of Commerce does not undertake examination of countervailability of a scheme or quantum of benefit in a sunset review.
- Recently, in the findings issued in the sunset review of anti-subsidy duty on Continuous Cast Copper Wire Rods from Indonesia, Malaysia, Thailand and Vietnam, the DGTR noted that examination and quantification of a new subsidy scheme was permissible in a sunset review.
Pursuant to Article 21 of the WTO Agreement on Subsidies and Countervailing Measures ('ASCM'), anti-subsidy duties may be imposed for a maximum period of five years, unless extended pursuant to a sunset or expiry review.
India conducted its first anti-subsidy investigation in 2015 and consequently, its first sunset review of anti-subsidy duties in 2020. While it was well-established that the purpose of a sunset review was to examine the need for continued imposition of duty, the scope of the investigation in a sunset review was not finalized. Even though it is now a well-settled position that it is within the purview of the Authority to examine the need for continuation of duty measures and the appropriate quantum of measures, certain aspects of the scope of investigation in a sunset review were open to question. First, whether the Authority can examine subsidy programs in a sunset review, which were not previously examined in the original investigation. Second, whether the Authority can re-examine the countervailability of a subsidy scheme which was previously found to be countervailable.
WTO Jurisprudence
The WTO Panel examined the scope of examination of subsidies in a review initiated under Article 21 of the ASCM in the case of US – Carbon Steel (India). The Panel observed that once an anti-subsidy duty has been imposed, an investigating authority may review the correct amount of duty as well as the need for the continued imposition of such duty. Further, if a subsidy scheme which was found to be countervailable in the original investigation is modified or terminated, interested parties may request that the duty imposed on the basis of that scheme be reduced or terminated. Similarly, if a new subsidy scheme comesinto existence subsequent to the original investigation or the amount of benefit has increased, interested parties may request that the duty level be amended or increased. In such cases, it would be necessary for the investigating authority to examine such new schemes with respect to countervailability as well as the amount of such subsidies.
The Appellate Body further refined the findings of the Panel and held that a new subsidy scheme may be examined in a sunset review only if it has a 'reasonable nexus' with the originally countervailed programs. The Appellate Body did not prescribe any specific factors to be examined to establish a nexus. However, it was held that the fact that the originally countervailed subsides and the new subsidies pertained to the same product (the product under consideration), the requirement of 'reasonable nexus' between the subsidies was met.
Practice in other jurisdictions
The practice of other jurisdictions varies in this regard. In the European Union, new subsidy programs are routinely examined in a sunset review, even if such schemes existed at the time of the original investigation but were not examined at that time, for any reason. Interestingly, in the sunset review of anti-subsidy duty on Hot-rolled Steel Flat Products from China (2023), the scheme in question was a non-recurring scheme, and the benefit under the scheme was received at the time of the original investigation. Despite this, the scheme was only examined and quantified in the sunset review.
In contrast, the authorities in USAonly examine the need for continuation of duty, based on evidence of likelihood, in a sunset review. Quantum of duties or countervailability of subsidy schemes is not re-examined in a sunset review. However, the U.S. Department of Commerce modifies the quantum of duties through administrative reviews. Further, the Department of Commerce also regularly examines new subsidy programs or re-examines the countervailability of subsidies already examined in the original investigation. In the administrative review of anti-subsidy duty on Off-the-Road Tyres from India (2021), the Department held that the Advance Authorization Program was not countervailable with respect to an exporter, even though it had been countervailed against in the original investigation.
Examination of new subsidy schemes in India
Though new subsidy schemes had been considered in certain sunset reviews, including Saccharin from China (2024) and Hot Rolled and Cold Rolled Stainless Steel Flat Products from China (2023), subsidy margins were not quantified for such new subsidy schemes in any case since none of the participating exportes availed these schemes. Therefore, there remained a level of ambiguity regarding permissibility of examination of new schemes.
However, this ambiguity was resolved in the sunset review of anti-subsidy duty on Continuous Cast Copper Wire Rods from Indonesia, Malaysia, Thailand and Vietnam (2025). In the said case, the DGTR explicitly noted, for the first time, that examination and quantification of new subsidy programs was permissible in a sunset review. In fact, in this case, the DGTR examined and countervailed schemes that existed even at the time of the original investigation.
Re-examination of Countervailability in India
With regard to the re-examination of countervailability of a subsidy scheme in a sunset review, which was found countervailable in the original investigation, the DGTR noted that in a sunset review, the Authority is not normally required to re-examine the countervailability of a program already found countervailable. However, if an interested party claims and establishes that material changes have taken place in the program since the last investigation, the Authority may reexamine such subsidy programs.
While what constitutes a 'material change' has not been defined, it is likely that the threshold is significantly high, and only lasting changes affecting one of the essential components of a subsidy (financial contribution, public body, benefit and specificity) would warrant re-examination of a programme.
Conclusion
The DGTR has adopted a progressive position on the question of the scope of subsidy examination in a sunset review. As discussed above, the DGTR has affirmed that examination of new subsidy programmes is permissible in a sunset review, regardless of whether such a program was in existence at the time of the original investigation. Further, the DGTR has affirmed that once a programme is found countervailable, its countervailability would not ordinarily be re-examined in a sunset review, unless the interested parties can show a material change in facts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
