Terms & Glossaries of Shipping and Trading

Countervailable Subsidy

Countervailable subsidies exist when a foreign government or public entity provides a "financial contribution" to a company which confers a "benefit" to the company's production, manufacture, or exportation of merchandise and which is "specific".

What is Countervailable Subsidy?

A subsidy is an incentive given by the government to individuals or businesses in the form of cash, grants or tax breaks. While the term subsidy is broadly defined, covering a wide variety of governmental support, not all subsidies are countervailable. Rather, a subsidy must be specific in order to be countervailable.

Being specific means that a countervailable subsidy is limited to specific enterprises or industries. Or to put it in another way, the government targets a particular company, sector, or producer for subsidization.

A countervailable subsidy exists when a foreign government provides financial assistance to a company, which benefits the company’s production, manufacture or exportation of merchandise. The statute and regulations establish standards for determining when an unfair subsidy has been conferred. The amount of subsidies the foreign producer receives from the government is the basis for the subsidy rate by which the subsidy is offset, or “countervailed,” through higher import duties.