On Monday, Feb. 10, the Office of the United States Trade Representative (USTR) announced a change to the rules for designation of countries to be considered as “developing or least-developed” for the purposes of application of its domestic Subsidies and Countervailing Duty Law, leading to the loss of such special treatment by over a dozen of countries, including Brazil, China and India.
Under multilateral rules, countervailing duties cannot be applied against subsidies deemed “de minimis”, which the U.S. defines as usually constituting up to 1% of the total value of the imported products. For countries considered as “developing”, this minimal threshold doubles to 2%. Multilateral rules also do not allow imposing countervailing duties against imports deemed “negligible”, generally understood in the U.S. as constituting up to 3% of total import value1 – for developing countries, this negligible volume threshold increases to 4%.
This amendment to the rules therefore reduces the thresholds for imposition of countervailing duties against imports from those countries that were excluded from the list – those changes only affect the list applicable to the countervailing duty law and does not does not affect other preferential programs such as the Generalized System of Preferences (GSP).
This change was published less than a week after the U.S. announced it would start, in April, to countervail practices of currency undervaluation by foreign countries, in a series of moves that analysts say target China. 2
The change has become effective immediately.