The World Trade Organization (WTO) allows its member countries to impose countervailing duties (CVDs) to mitigate the negative impact that certain imports can have on domestic industries.
At GCE Logistics, our team, specializing in Exporter of Record services, understands the ins and outs of how CVDs are implemented across different countries. In this post, we’ll give you a quick overview of what CVDs are and how they work.
What is Meant by Countervailing Duties CVDs?
Countervailing Duties (CVDs) apply to specific goods listed in the Foreign Trade Policy. Authorities impose these duties to mitigate the negative impact on domestic manufacturers producing the same product. The duty amount depends on the export subsidy the exporter receives from their local government.
Provisions regarding Countervailing Duties CVDs are contained in the WTO’s Agreement on Subsidies and Countervailing Measures, which is a part of the General Agreement on Tariffs and Trade (GATT). It explains both the situations in which subsidies are permitted and the measures countries can implement to mitigate their negative effects.
The countermeasures allowed by the WTO include:
- Using the dispute settlement procedure of WTO to obtain the withdrawal of subsidies.
- Imposing CVDs on the subsidized imports to protect the domestic industry.
Countervailing Duties CVDs help balance out the price, thereby protecting the interests of the domestic manufacturers. Without CVDs, the economic growth of the importing country could suffer. Imposing CVDs helps make local products equally competitive with imported goods. It trumps the advantage gained by the exporting company due to receiving local subsidies.
How GCE can help in Countervailing Duties
Importing countries impose Countervailing Duties (CVDs) on subsidized goods. Companies exporting these products must pay the duties to the government. The WTO permits these duties only after the importing country has conducted a thorough investigation into the subsidized products. Detailed rules exist for determining whether goods are subsidized and for calculating the CVDs. Once determined, CVDs remain in effect for five years; subsequently, another investigation assesses and recalculates the subsidies.
GCE Logistics is a reliable provider of the importer of record IOR and exporter of record EOR services in the Middle East.
Our team has extensive knowledge of import and export rules and regulations in various countries. We provide an affordable solution for companies that cannot establish a direct presence in the country where they import goods. If you want to learn more about our IOR/EOR services.
Source: IORservice.com
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