ARCHIVED - Anti-dumping and Countervailing Directorate

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OTTAWA, May 8, 2012

Dumping case number: AD/1391
Dumping file number: 4214-30

Subsidy case number: CV/128
Subsidy file number: 4218-29

STATEMENT OF REASONS

Concerning the termination of investigations with respect to the dumping and subsidizing of

CERTAIN POTASSIUM SILICATE SOLIDS ORIGINATING IN OR EXPORTED FROM THE ISLAMIC REPUBLIC OF PAKISTAN

DECISION

On April 23, 2012, pursuant to paragraph 35(2)(a) of the Special Import Measures Act, the President of the Canada Border Services Agency terminated dumping and subsidizing investigations respecting potassium silicate (also known as silicic acid, potassium salt; potassium water glass; potash water glass; potassium silicate glass), of all grades and ratios in a soluble solid including chunks, flakes or powder forms, originating in or exported from the Islamic Republic of Pakistan.

For a PDF version of the Statement of Reasons, please click on the following link.

• Statement of Reasons (PDF, 3.0 KB) [help with PDF files]

This Statement of Reasons is also available in French. Please refer to the "Information" section.

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Appendix 1 – Summary of Margins of Dumping and Amounts of Subsidy

Exporter	Margin of Dumping (as Percentage of Export Price)	Amount of Subsidy (Rupee/MT)	Amount of Subsidy (as Percentage of Export Price)
Captain	0%	0	0%
Pakistan Total	0%	0	0%

Appendix 2 – Dumping and Subsidy Representations

The details of representations made to the CBSA with respect to the dumping and subsidy investigations are listed below. Following the representations on the issues is a response explaining the position of the CBSA.

The CBSA’s Import Statistics

Counsel for the Complainant made representations regarding CBSA import statistics of potassium silicate solid during the POI. Counsel submitted that the percentage of imports of potassium silicate solid from the United States is overinflated as imports from the United States are most likely potassium silicate liquid; a good which shares the same HS code, but not subject to the investigation. Counsel supported this claim by providing importation documentation from the Complainant of potassium silicate liquid from the United States during the POI.[13]

CBSA Response:

The CBSA verified the evidence presented by counsel for the Complainant and determined that many importations made by the Complainant from the United States during the POI were indeed potassium silicate liquid and therefore not part of the investigations. The CBSA also examined imports from the United States made by other companies and removed any transactions that were identified as potassium silicate liquid. The CBSA therefore did not include the imports of potassium silicate liquid from the Complainant or from other companies when calculating import volume statistics. This change resulted in a greater share of imports from Pakistan and a lower share of imports from the United States than originally identified at the initiation of the investigation.

Observation of Import Documentation

Counsel for the complainant submitted a written observation regarding items on the protected exhibits list. In this observation they requested that the CBSA review all “costs, charges and expenses in respect of all shipments in the period of investigation for purposes of the determination of export price. Further, the CBSA should be mindful of the exchange rate manipulation.” [14]

CBSA Response:

The CBSA examined the costs, charges and expenses in respect of all shipments for the purposes of determining an export price. The CBSA did not find any inconsistencies with these expenses and was able to accurately determine an export price. The CBSA further examined the possibility of exchange rate manipulation but did not find any evidence to suggest such actions.

Request for Import Data

On February 7, 2012, the CBSA received a written request from counsel for the Complainant requesting access to the CBSA’s actual or raw import data that was used to prepare import volume data tables in the Statement of Reasons at initiation.[15]

CBSA Response:

On February 28, 2012, the CBSA sent a reply to the counsel for the Complainant, in which the CBSA informed counsel that their request for the actual or raw import data would not be granted.[16] It was explained, in the reply, that the volume data tables, as well as all other relevant information upon which the President based his decision, were prepared using a refined version of the actual or raw import data, and that such data could be found in the Statement of Reasons at initiation and in the Complaint Analysis, both of which counsel has access. There were no further requests made in regards to this matter.

Request for Consultations from the Government of Pakistan

On March 5, 2012, the Government of Pakistan submitted a written request for consultations, pursuant to article 13.2 of the Agreement on Subsidies and Countervailing Measures, in order to clarify the 26 alleged subsidy programs from which the exporter might have benefited.[17]

CBSA Response:

On March 7, 2012, in response to the above mentioned request, the CBSA responded providing the contact information of the area responsible for such consultation at the Department of Foreign Affairs and International Trade. There were no further requests made in regards to this matter.[18]

Appendix 3 - Summary of Findings for Named Subsidy Programs

The information submitted by the GOP in conjunction with the information submitted by the sole exporter in Pakistan was used for the purposes of the termination of the subsidy investigation. Sufficient information was provided to the CBSA to enable a proper analysis of the programs or to demonstrate whether or not programs used by the cooperative exporter were specific and would therefore constitute actionable subsidies. The absence of such information would normally prevent the CBSA from determining amounts of subsidy for the cooperative exporter and would result in the CBSA resorting to the use of facts available. However, due to the amount of cooperation and the volume of information that has been provided by the cooperative exporter and the GOP, the CBSA has determined an amount of subsidy for the cooperative exporter.

This appendix consists of descriptions of the potential actionable subsidy programs investigated by the CBSA that were found to not confer a benefit to the cooperative exporter.

I. grants provided for export performance

Program 1: Export Investment Support Fund

General Information:

The GOP, as part of its Strategic Trade Policy Framework, has set up the Export Investment Support Fund to assist the eligible export oriented sectors. The program was announced in the Pakistan Federal Budget 2009-2010, in order to channelize investments to selected sectors, but was never established due to lack of funding.

Legal Basis:

No document pertaining to this program was ever published. It was only announced in the Federal Budget 2009-2010. Although announced, it was never established.

Eligibility:

The program was intended to be limited to Pakistan’s main export oriented sectors, such as textile and clothing.

Determination of Subsidy and Specificity:

On the basis of available information, the subsidy provided by this program constitutes a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA, a practice of government that involves a direct transfer of funds, and confers a benefit to the recipient equal to the amount of the grant provided.

The funding provided is limited to export oriented enterprises in a specific sector, is a prohibited subsidy, as such subsidies are contingent, in whole or in part, on export performance. Prohibited subsidies are specific pursuant to paragraph 2(7.2)(b) of SIMA.

Findings of the Investigation:

As no funds were available with the Ministry of Finance for the Export Investment Support Fund due to higher than expected expenditures on law & order in Pakistan, the Export Investment Support Fund was never established.

Program 2: Assistance for Opening Exporters Offices Abroad

General Information:

This program was announced under the Trade Policy 2007-2008 through a notification by the Ministry of Commerce, Trade Development Authority of Pakistan (TDAP), under which companies are to benefit in form of 50% subsidy in rental fees for three years; and subsidy in salaries for three employees for three years.

Legal Basis:

This program was acknowledged by the GOP by providing the public notice of the TDAP, as part of the Trade Policy 2007-2008, titled Assistance for Opening Exporters Offices Abroad published in the press in October 2009.

Eligibility:

The eligibility criteria for this program are found in the Assistance for Opening Exporters Offices Abroad public notice. The program was intended to be limited to socially and environmentally compliant and ISO Certified exporters of the textile sector, leather sector, carpet and rugs, agro-food sector, mineral sector, services sector (IT), engineering and manufacturing sector, cutlery products, furniture and handicrafts, for setting up business offices abroad in the following countries; Malaysia; Japan; China; United Arab Emirates; Russian; United States of America; European Union; and Africa.

Determination of Subsidy and Specificity:

On the basis of available information, the subsidy provided by this program constitutes a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA, a practice of government that involves a direct transfer of funds, and confers a benefit to the recipient equal to the amount of the grant provided.

The funding provided is limited to export oriented enterprises, is a prohibited subsidy, as such subsidies are contingent, in whole or in part, on export performance. Prohibited subsidies are specific pursuant to paragraph 2(7.2)(b) of SIMA.

Findings of the Investigation:

As Canada is not part of the qualified countries, Captain is not eligible and cannot apply for the benefit under this program.

Program 3: Quality Assurance and Lab Accreditation Scheme

General Information:

This program was announced under the Trade Policy 2005-2006 through a notification by the Ministry of Commerce, TDAP, under which companies are to benefit from this program for a period of three years. The Quality Assurance and Lab Accreditation Scheme has since expired in June 2008 and has been reconfigured under the name, Compliance Certification Scheme for another three years as part of the Strategic Trade Policy Framework announced in 2009-2010. [19] The program was established to encourage all exporters/manufacturers to obtain various quality, environmental and social certifications.

This program provides eligible manufacturers 50% subsidy on 1st certification; 66% subsidy on 2nd certification; 82% subsidy on 3rd certification; and 100% subsidy on 4th certification.

Legal Basis:

This program was acknowledged by the GOP by providing the public notice of the TDAP, as part of the Trade Policy 2009-2010, titled Compliance Certification Scheme published in the press in October 2009.

Eligibility:

The eligibility criteria for this program are found in the Compliance Certification Scheme public notice. Under this program all manufacturing exporters are eligible. The applicant firm is to select an accredited certification agency for the relevant certification program, finalize terms and conditions with it and submit the application to the TDAP. After evaluation and acceptance of the request by the TDAP, 50% payment of the benefit will be released upon attainment of the certificate and the balance 50% will be paid upon production of satisfactory surveillance audit report.

Determination of Subsidy and Specificity:

The subsidy provided by this program constitutes a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA, a practice of government that involves a direct transfer of funds, and confers a benefit to the recipient equal to the amount of the funds received.

The funding provided is limited to export oriented enterprises, is a prohibited subsidy, as such subsidies are contingent, in whole or in part, on export performance. Prohibited subsidies are specific pursuant to paragraph 2(7.2)(b) of SIMA.

Findings of the Investigation:

Captain has never applied or received any benefit related to this program. Captain maintains an internal lab for quality/specs check of its own products. The lab is within the premises of the factory and subject goods exported to Canada are checked before export. The internal lab was established through Captain’s own resources and is upgraded from time to time by Captain, without any financial assistance from the GOP. [20]

Program 4: Warehousing Scheme

General Information:

This program was announced under the Trade Policy 2009-2010 through a notification by the Ministry of Commerce, TDAP, to encourage foreign trade, this program provides financial assistance to exporters to establish a warehouse in any country, which is a potential market for Pakistani products by way of funding for one year as per the following: 100% subsidy on 1st quarter; 75% subsidy on 2nd quarter; 50% subsidy on 3rd quarter; and 25% subsidy on 4th quarter. After one year, the exporter(s) bear all the cost.[21]

Legal Basis:

This program was acknowledged by the GOP by providing the public notice of the TDAP, as part of the Trade Policy 2009-2010, titled Warehousing Scheme published in the press.

Eligibility:

The eligibility criteria for this program are found in the Warehousing Scheme public notice. The scheme is open to all exporters establishing a warehouse in any part of the world provided that it is a potential market for Pakistani products.

Determination of Subsidy and Specificity:

The subsidy provided by this program constitutes a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA, a practice of government that involves a direct transfer of funds, and confers a benefit to the recipient equal to the amount of the funds received.

The funding provided is limited to export oriented enterprises, is a prohibited subsidy, as such subsidies are contingent, in whole or in part, on export performance. Prohibited subsidies are specific pursuant to paragraph 2(7.2)(b) of SIMA.

Findings of the Investigation:

Captain does not have a warehouse in export markets. Therefore, Captain has never applied or received any benefit related to this program.[22]

Program 5: Inland Freight Subsidy

General Information:

This program was announced under the Trade Policy 2009-2010 through a notification by the Ministry of Commerce, TDAP, under which companies are to benefit from this program for a period of three years. To encourage foreign trade, the Inland Freight Subsidy provides financial assistance by compensating the inland freight cost to exporters.[23]

Products originating from a minimum of 100 kilometers from a seaport would qualify for a subsidy of 50% of inland freight costs.

Legal Basis:

This program was acknowledged by the GOP by providing the public notice of the TDAP, as part of the Trade Policy 2009-2010, titled Inland Freight Subsidy published in the press.

Eligibility:

The eligibility criteria for this program are found in the Inland Freight Subsidy public notice. Exporters of cement, light engineering, leather garments, furniture, soda ash, hydrogen peroxide, caustic soda, sanitary wares including tiles, finished marble, marble blocks, granite, and onyx products are eligible to benefit under this program.

Determination of Subsidy and Specificity:

The subsidy provided by this program constitutes a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA, a practice of government that involves a direct transfer of funds, and confers a benefit to the recipient equal to the amount of the funds received.

The funding provided is limited to export oriented enterprises, is a prohibited subsidy, as such subsidies are contingent, in whole or in part, on export performance. Prohibited subsidies are specific pursuant to paragraph 2(7.2)(b) of SIMA.

Findings of the Investigation:

Captain has not exported any of the items that fall under the list mentioned above, therefore Captain has not benefited under this subsidy program. As part of the investigation, the CBSA verified by a supplemental subsidy RFI sent on March 13, 2012, if Captain applied or benefited from this program as a result of their sodium silicate production, for which the main input material is soda ash. Captain stated they had “never applied nor benefited from this subsidy program for any of its products or the required raw materials”.[24] Furthermore, the CBSA found no evidence of Captain having benefited from this program through a review of their financial statements.

II. Preferential Loans

Program 6: Preferential Loans from the State Bank of Pakistan

General Information:

For the purposes of this investigation the “State Bank of Pakistan” is considered to be part of the GOP. This program was identified at the initiation of the investigation as possibly having provided actionable benefits to the exporter of subject goods. As a result, the GOP informed the CBSA of the existence of the Export Finance Scheme. Under the Export Finance Scheme, short term export financing facilities are provided to the exporters through commercial banks.

Legal Basis:

This program was acknowledged by the GOP by providing the relevant circulars: i) BSD Circular No.35/2001 and ii) BSD Circular No.44/1998.

Eligibility:

The eligibility criteria for this program are found in the BSD Circular No.35/2001. Under this program, any enterprise exporting eligible commodities can avail financing under this scheme at prevailing mark-up rates, which varied between 7.5% to 11% per annum during the POI.

Determination of Subsidy and Specificity:

The subsidy provided by this program constitutes a financial contribution pursuant to paragraph 2(1.6)(a) in the form of amounts that involves a direct transfer of funds, and confers a benefit equal to the difference between the interest payable on a commercial loan and the interest payable on the preferential loan provided by the government.

The provision of preferential loans is limited to export oriented enterprises, benefits under this program are a prohibited subsidy, as such subsidies are contingent, in whole or in part, on export performance. Prohibited subsidies are specific pursuant to paragraph 2(7.2)(b) of SIMA.

Findings of the Investigation:

Captain has not availed itself of any preferential loan facilities from the State Bank of Pakistan, or from any commercial bank under the Export finance Scheme. Captain did obtain short term loan facilities for its working capital from multiple banks. However, after verification by the CBSA, all facilities from these banks were obtained within a reasonable range of the benchmark lending rates.[25]

The CBSA compared Captain’s obtained lending rates[26] to the benchmark lending rates given by the State Bank of Pakistan[27] for the period of January 1, 2010 to September 30, 2011. The latter was also supported by the Karachi Interbank Offered Rate (KIBOR) recognized as the benchmark rate for all corporate lending in Pakistani rupee after January 31, 2004.[28] As a result, Captain’s short loans did not confer any countervailable benefit.

Program 7: Preferential Loans from the Soneri Bank

General Information:

This program was identified at the initiation of the investigation as possibly having provided actionable benefits to the exporter of subject goods during the POI. Based on the information provided by the complainant, Soneri Bank is an Islamic bank in Pakistan with connections to the State Bank of Pakistan. As such, CBSA investigated the relationship between Soneri Bank and the State Bank of Pakistan and whether the exporter of subject goods has received, directly or indirectly, preferential loans.

Legal Basis:

The GOP denied the existence of this program. Furthermore, the GOP described the Soneri Bank as a private Limited bank established under prudential regulations of the State Bank of Pakistan.

Eligibility:

Not applicable as no information was found for this program.

Determination of Subsidy and Specificity:

On the basis of available information, the subsidy provided by this program constitutes a financial contribution pursuant to paragraph 2(1.6)(a) in the form of amounts that involves a direct transfer of funds, and confers a benefit equal to the difference between the interest payable on a commercial loan and the interest payable on the preferential loan provided by the government.

Pursuant to subsection 27.1(2) of the Special Import Measures Act (SIMR), any amount owing and due to a government that is exempted shall be treated as a grant under section 27 of the SIMR.

Findings of the Investigation:

Captain did obtain short term loan facilities for its working capital from multiple banks, including Soneri Bank. However, all facilities from these banks were obtained within a reasonable range of the benchmark lending rates.[29]

The CBSA compared Captain’s obtained lending rates[30] to the benchmark lending rates given by the State Bank of Pakistan[31] for the period of January 1, 2010 to September 30, 2011. The latter was also supported by the KIBOR recognized as the benchmark rate for all corporate lending in Pakistani rupee after January 31, 2004.[32] As a result, Captain’s short loans did not confer any countervailable benefit.

III. Incentives for small and medium enterprises

Program 8: Special Loans – State Bank of Pakistan’s Refinance Facility for Modernization of SMEs

General Information:

To encourage long term investment in small and medium enterprises (SMEs), the State Bank of Pakistan provides refinance for a maximum period of ten years. Refinance under this scheme is provided through all commercial banks and Development Finance Institutions.[33]

The State Bank of Pakistan provides refinance to the banks against financing provided by them to SMEs at the following rates:

Tenor	Rate of Refinance	Banks’ Spread	End Users’ Rate
Up-to 3 years	5.50%	2.50%	8.00%
Over 3 years and up-to 5 years	6.25%	2.75%	9.00%
Over 5 years and up-to 10 years	7.00%	3.00%	10.00%

The rate of interest once fixed shall remain locked-in for the entire duration of the loan, provided the borrower(s) continue to repay all scheduled installments by the respective due dates.

Legal Basis:

This program was acknowledged by the GOP and circular titled, Refinance Facility for Modernization of SMEs, published in September 8, 2010, was provided.

Eligibility:

The eligibility criteria for this program are found in the Refinance Facility for Modernization of SMEs circular. The State Bank of Pakistan provides such refinancing to certain clusters/sectors. These include rice husking, cotton ginning, power looms, dairy & livestock, cutlery & stainless utensils, surgical instruments, marble & granite, engineering goods, fisheries, packaging/processing of fruits/vegetables, furniture, gems & jewellery, sports goods and agro-based industry.

Determination of Subsidy and Specificity:

On the basis of available information, the subsidy provided by this program constitutes a financial contribution pursuant to paragraph 2(1.6)(a) in the form of amounts that involves a direct transfer of funds, and confers a benefit equal to the difference between the interest payable on a commercial loan and the interest payable on the preferential loan provided by the government.

The funding provided was found to be limited to a number of enterprises of certain clusters/sectors named above, pursuant to paragraph 2(7.3)(a) of SIMA.

Findings of the Investigation:

Captain has not availed itself the refinance facility for modernization of SMEs. The State Bank of Pakistan provides such refinancing to certain cluster/sectors under which Captain does not fall. [34]

Program 9: Loan Guarantees by State Bank of Pakistan/Pakistan Export Finance Guarantee Agency

General Information:

Targeting small enterprises and farmers with economic landholding, without any specific regional or cluster restrictions, across the country, the State Bank of Pakistan provides partial credit coverage of 40% on loans extended by banks to fresh or collateral deficient small borrowers and farmers.[35]

Legal Basis:

This program was acknowledged by the GOP and circular titled Credit Guarantee Scheme for Small and Rural Enterprises, published by the State Bank of Pakistan, was provided.

Eligibility:

The eligibility criteria for this program are found in the Credit Guarantee Scheme for Small and Rural Enterprises circular. The eligible borrowers under the scheme are small enterprises and farmers with economic landholding. The selection criteria for eligible borrowers includes: regular and estimable positive cash flow; be in conformity with relevant Prudential Regulations; should have clean e-CIB record; and in line with the Credit Policy of Banks.

Determination of Subsidy and Specificity:

This program constitutes a financial contribution in the form of loan guarantee. It constitutes a practice of government involving the potential direct transfer of funds or liabilities pursuant to paragraph 2(1.6)(a). A subsidy exists where a loan guarantee by a government results in interest costs lower than they would be without the guarantee.

Pursuant to subsection 27.1(2) of the SIMR, any amount owing and due to a government that is exempted shall be treated as a grant under section 27 of the SIMR.

Findings of the Investigation:

Captain has not availed itself of this facility as no loan guarantees have been offered by the State Bank of Pakistan or the Pakistan Export Finance Guarantee Agency to Captain.[36] During the POI, Captain has availed itself of only short term financing facilities from banks reviewed as part of Program 6 and 7 above.

Program 10: Grants from Business Support Fund to SMEs

General Information:

Although this program was announced by the Ministry of Industries for the fiscal year 2009-2010, it was never established as no funds were available with the Ministry of Finance due to higher than expected expenditures on the law & order situation in Pakistan.[37]

Legal Basis:

No document pertaining to this program was ever published. It was only announced by the Ministry of Industries for the fiscal year 2009-2010. Although announced, it was never established.

Eligibility:

The program was intended to help SMEs by providing grants towards the cost of conducting international market research and the cost of preparing product directories.

Determination of Subsidy and Specificity:

On the basis of available information, the subsidy provided by this program constitutes a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA, a practice of government that involves a direct transfer of funds, and confers a benefit to the recipient equal to the amount of the grant provided.

Pursuant to subsection 27.1(2) of the SIMR, any amount owing and due to a government that is exempted shall be treated as a grant under section 27 of the SIMR.

Findings of the Investigation:

As no funds were available with the Ministry of Industries for the Grants from Business Support Fund to SMEs due to higher than expected expenditures on law & order in Pakistan, the Grants from Business Support Fund to SMEs was never established.

Program 11: Land at Concessionary Rates in Industrial Estates and Export Processing Zones

General Information:

The Export Processing Zones Authority (EPZA) provides land rates in five Export Processing Zones (EPZ)[38], at the following areas and rates:

1. Risalpur, Khyber Pakhtunkhwa US$ 0.50 per sq.ft., lease basis;
2. Sandak, Balochistan N/A, under lease with foreign companies;
3. Sandak, in Dubbar N/A, under lease with foreign companies;
4. Sialkot, Punjab US$ 1.60 per sq.ft., ownership basis; and
5. Karachi, Tuwairqui Steel US$ 1.50 per sq.ft., lease basis.

Legal Basis:

The EPZA was established on the February 28, 1980 by the GOP through ordinance, i.e. EPZA Ordinance IV of 1980. The EPZA are responsible for administrating the EPZs.

Eligibility:

Specific industrial sectors are allowed to invest in EPZs established at Risalpur, Balochistan, Dubbar, Sialkot and Karachi.

In the Karachi EPZ, the EPZA welcomes investors in the following priority sectors: hi-tech industry; gem & jewelry; software houses; information technology based industries; and precession engineering.

Determination of Subsidy and Specificity:

Based on the available information, this program constitutes a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA, the government provides goods or services, other than general governmental infrastructure, and confers a benefit to the recipient equal to the difference between the fair market value of the goods or services in Pakistan and the price at which the goods or services were provided by the government.

Goods and services provided by government to enterprises located in EPZs and other designated areas are specific pursuant to paragraph 2(7.3)(a) of SIMA because the subsidy is only provided to the limited number of enterprises located in EPZs.

Findings of the Investigation:

Although Captain is situated in Karachi, it is not located in any of the EPZs or industrial estates. The Karachi EPZ is located adjacent to the Landhi Industrial Area in Karachi, Sindh, Pakistan. Conversely, Captain’s Karachi factory is located at D-24, Site Super Highway, Phase-I, Karachi. As a result, Captain is not eligible to avail itself of any benefits under this program.[39]

IV. Export Processing Zones

Program 12: Export Processing Zones Incentives and Benefits

General Information:

In the objective to accelerate the pace of industrialization in Pakistan and to enhance the volume of exports by creating and enabling environment for investors to initiate export-oriented projects, the EPZA offers the industries located in EPZs the following incentives: lower rental rates than outside the zone; duty-free machinery and equipment; potential underpayment of duty and sales tax on raw materials and no sales tax on inputs, including electricity and gas.

Legal Basis:

The EPZA was established on the February 28, 1980 by the GOP through ordinance, i.e. EPZA Ordinance IV of 1980. The EPZA are responsible for administrating the EPZs.

Eligibility:

Specific industrial sectors are allowed to invest in EPZs established at Risalpur, Balochistan, Dubbar, Sialkot and Karachi.

In the Karachi EPZ, the EPZA welcomes investors in the following priority sectors: hi-tech industry; gem & jewelry; software houses; information technology based industries; and precession engineering.

Determination of Subsidy and Specificity:

Based on the available information, this program constitutes a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA, the government provides goods or services, other than general governmental infrastructure, and confers a benefit to the recipient equal to the difference between the fair market value of the goods or services in Pakistan and the price at which the goods or services were provided by the government.

Goods and services provided by government to enterprises located in EPZs and other designated areas are specific pursuant to paragraph 2(7.3)(a) of SIMA because the subsidy is only provided to the limited number of enterprises located in EPZs.

Findings of the Investigation:

Although Captain is situated in Karachi, it is not located in any of the EPZs or industrial estates. The Karachi EPZ is located adjacent to the Landhi Industrial Area in Karachi, Sindh, Pakistan. Conversely, Captain’s Karachi factory is located at D-24, Site Super Highway, Phase-I, Karachi. As a result, Captain is not eligible to avail itself of any benefits under this program.[40]

V. Preferential Income tax rates

Program 13: Income Tax Exemptions for Undertakings and Set-ups in Specified Areas

General Information:

To attract investment in Larkano Industrial Estate, the Income Tax Ordinance 2001, administered by the Federal Board of Revenue, stipulates that profits and gains derived by a taxpayer from an industrial undertaking set up in Larkano Industrial Estate will be allowed income tax exemptions for a period of ten years beginning with the month in which the industrial undertaking is set up or commercial production commenced.

Legal Basis:

This program was acknowledged by the GOP through the Schedule II of the Income Tax Ordinance 2001, administered by the Federal Board of Revenue.

Eligibility:

The income tax exemption is allowed to industrial undertaking set up in Larkano Industrial Estate between the 1st day of July, 2008 and the thirtieth day of June, 2013.[41]

Determination of Subsidy and Specificity:

On the basis of available information, preferential tax policies under this program constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, amounts that would otherwise be owing and due to the government are exempted or deducted and confers a benefit to the recipient equal to the amount of the exemption/deduction.

Preferential tax rates provided to exporters in a specified area were found to be limited, in law, to a particular enterprise pursuant to paragraph 2(7.2)(a) of SIMA, as it is limited, pursuant to a legislative, regulatory, or administrative instrument or other public document, in this case, as set forth in the Schedule II of the Income Tax Ordinance 2001. In addition, the subsidy is further limited to a group of enterprises located in the Larkano Industrial Estate.

Findings of the Investigation:

Captain has not availed itself of any income tax exemption under this program as it does not fall within the area eligible for such exemptions. Therefore, no benefit was conferred to Captain under this program.

Program 14: Income Tax Exemptions in Export Processing Zones

General Information:

To attract investment in EPZs under the EPZA, the Income Tax Ordinance 2001, administered by the Federal Board of Revenue, stipulates that profits and gains derived by a taxpayer from an industrial undertaking set up in the Gawadar Export Processing Zone. Will be allowed income tax exemptions for a period of ten years beginning with the month in which the industrial undertaking is set up or commercial production commenced.[42]

Legal Basis:

This program was acknowledged by the GOP through the Schedule II of the Income Tax Ordinance 2001, administered by the Federal Board of Revenue.

Eligibility:

The income tax exemption is allowed to industrial undertaking set up in the Gawadar EPZ.

Determination of Subsidy and Specificity:

On the basis of available information, preferential tax policies under this program constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, amounts that would otherwise be owing and due to the government are exempted or deducted and confers a benefit to the recipient equal to the amount of the exemption/deduction.

Preferential tax rates provided to exporters in a specified area were found to be limited, in law, to a particular enterprise pursuant to paragraph 2(7.2)(a) of SIMA, as it is limited, pursuant to a legislative, regulatory, or administrative instrument or other public document, in this case, as set forth in the Schedule II of the Income Tax Ordinance 2001. In addition, the subsidy is further limited to a group of enterprises located in the Gawadar EPZ.

Findings of the Investigation:

Captain is not located in the Gawadar EPZ in Pakistan. Captain has manufacturing facilities in Karachi and Faisalabad in Pakistan and therefore is not eligible to avail any benefit under this program.[43]

Program 15: Preferential Tax Rates for Export Business – Final Tax on Exports

General Information:

Under this scheme a company may benefit from a tax regime on its export turnover. A withholding tax of 1% is deducted on the total value of the export transaction of foreign exchange proceeds, regardless of any profit of the company. This tax deduction is to be considered a final tax on the income arising from the export transactions.[44]

In comparison, the tax regime on domestic sales are at a rate of 35% applied on the net income of a domestic sale.

Legal Basis:

This program was acknowledged by the GOP through the Schedule II of the Income Tax Ordinance 2001, administered by the Federal Board of Revenue.

Eligibility:

This scheme is accessible to every exporter at the time of realization of the proceeds on account of a sale of goods. The Income Tax Ordinance, 2001 of Pakistan does not require applications to be made by exporters to avail this facility. Such deductions are automatically made at the export stage by the relevant authorities.[45]

Determination of Subsidy and Specificity:

On the basis of available information, preferential tax policies under this program constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, amounts that would otherwise be owing and due to the government are exempted or deducted and confers a benefit to the recipient equal to the amount of the exemption/deduction.

The subsidy is a prohibited subsidy pursuant to paragraph 2(7.2)(b) of SIMA, as it is contingent, in whole or in part, on export performance.

Findings of the Investigation:

The investigation established that in practice the scheme could, in certain circumstances, provide a favourable tax treatment for the exporters. The tax rate at 1% of the total export turnover could represent an advantageous tax system in comparison with the normal tax regime where a rate at 35% is applied on the normal income. In the extent that this tax regime results in profits due to the fact that exports are taxed at a lower rate than domestic sales, this scheme would be considered to be a subsidy.

As for Captain, the CBSA has performed a series of calculations in order to determine if Captain has benefited from a potential lower tax rate on its exports, which were taxed at the rate of 1% of their total value. To this end, the CBSA compared the actual income tax paid on exports with the amount which would have been payable had the goods been sold domestically and subject to the normal tax rate of 35% of net profit.

As a result, Captain’s profits from exports were not taxed at a lower rate than those earned on domestic sales during the POI. Therefore, Captain did not receive any benefit under this program.

Program 16: Excessive Claims of Deductions and Exemptions and Concessions

General Information:

This program was identified at the initiation of the investigation as possibly having provided actionable benefits to the exporter of subject goods during the POI. Based on the information provided by the complainant, there was reason to believe that the exporters located in Pakistan could avail themselves of a benefit by claiming excessive deductions, exemptions and/or concessions.

Legal Basis:

The GOP denied the existence of this program. Furthermore, the GOP referred the CBSA to the Schedule II of the Income Tax Ordinance 2001, administered by the Federal Board of Revenue.

Eligibility:

Not applicable as no information was found on this program. However, any exporter that would claim excessive deductions, exemptions and/or concessions beyond what is entitled would avail themselves a benefit.

Determination of Subsidy and Specificity:

On the basis of available information, under this program excessive claims of deductions, exemptions and concessions would constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, amounts that would otherwise be owing or due to the government and confers a benefit to the recipient equal to the amount in excess of the allowed deduction, exemption and/or concession.

Pursuant to subsection 27.1(2) of the SIMR, any amount owing and due to a government that is exempted shall be treated as a grant under section 27 of the SIMR.

Findings of the Investigation:

Captain did not claim any deductions or concessions beyond what was entitled on their income tax returns of 2010 or 2011. Therefore, Captain did not avail itself of any benefit under this program.[46]

VI. excessive remission of duties and taxes

Program 17: Manufacturing Bond Scheme

General Information:

Under this scheme any company, who obtained a license from the Collector of Customs, is permitted to import duty-free input material under the condition that it is used for subsequent exports.[47]

Legal Basis:

This program was acknowledged by the GOP through the Customs Rules 2001, issued June 18, 2001, and administered by the Federal Board of Revenue.

Eligibility:

Any person or firm that has obtained a license to operate a warehouse is allowed to import input goods, without payment of custom duty, central excise duty and sales tax after declaring on the bill of entry that the input goods are being imported under this scheme.

Determination of Subsidy and Specificity:

On the basis of available information, under this program excessive claims of deductions, exemptions and concessions would constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, amounts that would otherwise be owing or due to the government and confers a benefit to the recipient equal to the amount in excess of the allowed deduction, exemption and/or concession.

Pursuant to subsection 27.1(2) of the SIMR, any amount owing and due to a government that is exempted shall be treated as a grant under section 27 of the SIMR.

Findings of the Investigation:

The CBSA has found that Captain does not pay duties at the import level of their raw materials used for production of products for export. Refer to Program 19: Drawback and Remission Scheme for details regarding duties on imported raw materials used for production of subject goods exported to Canada and other countries. The exemption from payment of duties only provides a deferral of the tax liability and does not constitute revenue forgone as Captain is not allowed to deduct this percentage from the final tax liability.

In its verification, the CBSA found that the duties exempted where not excessive remissions, refunds or drawbacks and therefore Captain has not availed itself of any benefit from this program.

Program 18: Excessive Repayments of Customs Duties

General Information:

This program was identified at the initiation of the investigation as possibly having provided actionable benefits to the exporter of subject goods during the POI. Based on the information provided by the complainant, there was reason to believe that the exporters located in Pakistan could avail themselves of a benefit by claiming repayments of customs duties.

Legal Basis:

The GOP denied the existence of this program. Furthermore, the GOP referred the CBSA to the Custom Rules 2001, issued June 18, 2001, and administered by the Federal Board of Revenue.

Eligibility:

Not applicable as no information was found on this program. However, any exporter that would claim excessive deductions, exemptions and/or concessions beyond what is entitled would avail themselves of a benefit.

Determination of Subsidy and Specificity:

On the basis of available information, under this program excessive repayments of duties would constitute a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, amounts that would otherwise be owing or due to the government and confers a benefit to the recipient equal to the amount in excess of the allowed repayment.

Pursuant to subsection 27.1(2) of the SIMR, any amount owing and due to a government that is exempted shall be treated as a grant under section 27 of the SIMR.

Findings of the Investigation:

Captain did not receive re-payments of customs duties on goods exported to Canada or any other export destination. Yet, as mentioned above Captain did not pay the duty on imported raw materials used for production of subject goods exported to Canada and other countries.[48] Refer to Program 19: Drawback and Remission Scheme for details regarding duties on imported raw materials used for production of subject goods exported to Canada and other countries.

The exemption from payment of duties only provides a deferral of the tax liability and does not constitute revenue forgone as Captain is not allowed to deduct this percentage from the final tax liability.

In its verification, the CBSA found that the duties exempted where not excessive remissions, refunds or drawbacks and therefore Captain has not availed itself of any benefit from this program.

Program 19: Drawback and Remission Schemes

General Information:

This program was identified at the initiation of the investigation as possibly having provided actionable benefits to the exporter of subject goods. As a result, the GOP informed the CBSA of the existence of the Duty and Tax Remission for Exports Scheme (DTRE).

Under the DTRE scheme, essentially 4 types of duties and taxes are exempted namely (i) customs duty at 5% (refundable); (ii) Federal Excise Duty at 1% (refundable); (iii) Advance tax at 4% (adjustable); and (iv) Sales tax at 16% (adjustable).[49]

1. Customs Duty - This duty is either refunded or not collected at the time of import of raw materials that are used in the production of products for exports. If the raw materials are imported for production of product destined for domestic sales, no such refund or exemption is available.
2. Federal Excise Duty - This duty is also refunded or not collected at the time of import of raw materials that are used in the production of products for exports. If the raw materials are imported for production of product destined for domestic sales, no such refund or exemption is available.
3. Advance Tax - The advance tax is payable at the time of import of raw materials for use in production of goods in Pakistan. The exemption from payment of advance tax only provides a deferral of the tax liability to a company and does not constitute revenue forgone as a company availing this exemption is not allowed to deduct this percentage from the final tax liability. However, in case of exports, this tax is exempt, but to the extent of raw material used for production of goods for exports.
4. Sales Tax - Sales tax is related to tax on sale of the product. However, the incident of sales tax is passed on to the customers (end-users). For all local sales Captain collected sales tax from the customers, the same was paid to the tax authorities on behalf of the end-users. As export sales are concerned such collection does not take place as sales are made outside the jurisdiction of the tax authorities of Pakistan. Similarly, the sales tax on imported raw materials used for production of goods destined for export, being an adjustable tax, is not collected at the time of imports.

Legal Basis:

The GOP referred the CBSA to the Custom Rules 2001, issued June 18, 2001, and administered by the Federal Board of Revenue.

Eligibility:

Any exporters are eligible to the exemption from paying duties on imported raw materials as long as the imported raw materials are used for production of goods for exports.

Determination of Subsidy and Specificity:

On the basis of available information, under this program excessive repayments of duties would constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, amounts that would otherwise be owing or due to the government and confers a benefit to the recipient equal to the amount in excess of the allowed repayment.

Pursuant to subsection 27.1(2) of the SIMR, any amount owing and due to a government that is exempted shall be treated as a grant under section 27 of the SIMR.

Findings of the Investigation:

It is the responsibility of the government of Pakistan to ensure that amounts of drawback or remission are not in excess of the actual amounts of duties paid on the inputs and that they relate to export only, and not domestic sales.

At the time of application for claiming exemption under the DTRE scheme, Captain provided the GOP with the details and specifications of the goods to be produced for export sales and the raw materials required for the same. As such, exemption and remission was limited to the extent of the inputs used for exports to Canada and other export destinations and was not excessive to the applicable duties and taxes, therefore, this program did not confer any benefit to Captain. [50],[51]

Program 20: Ad hoc Additional Duty Drawback @ 1% of Export Value

General Information:

In order to encourage exports of selected fourteen sectors, the GOP in Trade Policy 2009-2010, decided to give interim relief of additional duty drawback at 1% of export value for exports made from July 1, 2009 to June 30, 2010.

Legal Basis:

This program was acknowledged by the GOP by providing the public notice of the TDAP, as part of the Trade Policy 2009-2010, titled Ad hoc Relief @ 1% of Export Value.

Eligibility:

The edibility criteria for this program are found in the Ad hoc Relief @ 1% of Export Value public notice. The eligible sectors under this program are: tents, canvas, & tarpaulin; electric machinery; carpets, rugs and mats; sports goods; footwear; surgical\medical\veterinary\beauty care instruments; cutlery; onyx products; electric fans; furniture; auto parts; handicrafts; jewellery; and pharmaceuticals.

The exporters of the 14 sectors submit their bank statement indicating quarterly exports to the TDAP. After approval from the TDAP, exporters of the 14 sectors mentioned above are entitled to the additional duty drawback at 1% of export value. [52]

Determination of Subsidy and Specificity:

The subsidy provided by this program constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, amounts that would otherwise be owing and due to the government are exempted or deducted, and confers a benefit to the recipient equal to the amount of the amounts exempted or deducted.

The exemption or deduction provided is limited to export oriented enterprises, is a prohibited subsidy, as such subsidies are contingent, in whole or in part, on export performance. Prohibited subsidies are specific pursuant to paragraph 2(7.2)(b) of SIMA.

Findings of the Investigation:

Captain is not part of the qualified sectors above, therefore, Captain is not eligible and cannot apply or benefit under this program.[53]

VII. purchases of state-owned enterprises

Program 21: Pakistan Water and Power Development Authority

General Information:

For the purposes of this investigation the “Pakistan Water and Power Development Authority” is considered to be a vertically integrated state-owned enterprise (SOE). Based on the information provided by the complainant, this program was identified as possibly having provided actionable benefits to the exporter of subject goods where the amount by which the price of electricity is lower than fair market value may be a subsidy.

Legal Basis:

The GOP denied the existence of this program. Furthermore, the GOP referred the CBSA to the Karachi Electric Supply Company, as they provide electricity to the sole exporter of subject goods.

Eligibility:

Not applicable as no information was found on this program. However, any manufacturer that would purchase electricity from a SOE at less than fair market value would avail itself a benefit under this program.

Determination of Subsidy and Specificity:

Based on the available information, this program constitutes a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA, where the government provides goods or services, other than general governmental infrastructure, and confers a benefit to the recipient equal to the difference between the fair market value of the goods or services in Pakistan and the price at which the goods or services were provided by the government.

Goods and services provided by government to producers are specific pursuant to paragraph 2(7.3)(a) of SIMA because the subsidy is only provided to the limited number of enterprises purchasing from SOEs.

Findings of the Investigation:

Captain is not purchasing utilities from Pakistan Water and Power Development Authority. Therefore, Captain did not avail itself of any benefit under this program.[54]

Program 22: Karachi Electric Supply Corporation

General Information:

For the purposes of this investigation the “Karachi Electric Supply Corporation” (KESC) is considered to be a vertically integrated SOE. Based on the information provided by the complainant, this program was identified as possibly having provided actionable benefits to the exporter of subject goods where the amount by which the price of electricity is less than fair market value may be a subsidy.

Legal Basis:

The GOP denied the existence of this program, but confirmed to the CBSA that the sole exporter of subject goods obtains its electricity from KESC.

Eligibility:

Not applicable as no information was found on this program. However, any manufacturer that would purchase electricity from a SOE at less than fair market value would avail itself a benefit under this program.

Determination of Subsidy and Specificity:

Based on the available information, this program constitutes a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA, where the government provides goods or services, other than general governmental infrastructure, and confers a benefit to the recipient equal to the difference between the fair market value of the goods or services in Pakistan and the price at which the goods or services were provided by the government.

Goods and services provided by government to producers are specific pursuant to paragraph 2(7.3)(a) of SIMA because the subsidy is only provided to the limited number of enterprises purchasing from SOEs.

Findings of the Investigation:

Captain purchases electricity from KESC, which is a publicly listed company established and operating under the laws of Pakistan. The power sector of Pakistan is regulated by the National Electric Power Regulatory Authority (NEPRA) which is the sole and exclusive regulator enjoying quasi-judicial powers.[55]

The CBSA compared the rate at which electricity was provided to Captain by KESC[56] to the industrial rate published in the “Cost of doing Business in Pakistan” publication used as a benchmark for the purposes of this investigation.[57]

As a result, the rates at which Captain was provided electricity during the POI are above the benchmark, therefore, Captain did not avail any benefit under this program.

Program 23: Purchases from Other State-Owned Enterprises at Less Than Fair Market Value

General Information:

Based on the information provided by the complainant, there is reason to believe that exporters in Pakistan might avail themselves of direct subsidies where the amount by which the goods or services purchased from SOEs are at less than fair market value.

As such, CBSA investigated the relationship between the sole cooperative exporter and the SOEs providing goods and services. It was found that other than KESC, which provides electricity, the sole exporter of subject goods also purchases natural gas from an SOE, Sui Sothern Gas Company Limited.

Legal Basis:

The GOP denied the existence of this program.

Eligibility:

Not applicable as no information was found on this program. However, any manufacturer that would purchase goods or services from a SOE at less than fair market value would avail itself of a benefit under this program.

Determination of Subsidy and Specificity:

Based on the available information, this program constitutes a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA, where the government provides goods or services, other than general governmental infrastructure, and confers a benefit to the recipient equal to the difference between the fair market value of the goods or services in Pakistan and the price at which the goods or services were provided by the government.

Goods and services provided by government to producers are specific pursuant to paragraph 2(7.3)(a) of SIMA because the subsidy is only provided to the limited number of enterprises purchasing from SOEs.

Findings of the Investigation:

Captain purchases natural gas from a state owned company, Sui Sothern Gas Company Limited on industrial rates prescribed by an independent regulator namely Oil & Gas Regulatory Authority, which is a quasi-judicial statutory body.[58]

The CBSA compared the rate at which gas was provided to Captain by Sui Sothern Gas Company Limited[59] to the industrial rate published in the “Cost of doing Business in Pakistan” publication used as a benchmark for the purposes of this investigation.[60]

As a result, the rates at which Captain was provided gas during the POI are above the benchmark, therefore, Captain did not avail itself of any benefit under this program.

Program 24: Pakistan Mineral Development Corporation

General Information:

For the purposes of this investigation the “Pakistan Mineral Development Corporation” (PMDC) is considered to be a SOE. Based on the information provided by the complainant, this program was identified as possibly having provided actionable benefits to the exporter of subject goods where the amount by which the price of raw materials is lower than fair market value may be a subsidy.

Legal Basis:

The GOP denied the existence of this program, but confirmed to the CBSA that the sole exporter of subject goods has purchased silica sand from PMDC at market rates.

Eligibility:

Not applicable as no information was found on this program. However, any manufacturer that would purchase raw materials from a SOE at less than fair market value would avail itself of a benefit under this program.

Determination of Subsidy and Specificity:

Based on the available information, this program constitutes a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA, where the government provides goods or services, other than general governmental infrastructure, and confers a benefit to the recipient equal to the difference between the fair market value of the goods or services in Pakistan and the price at which the goods or services were provided by the government.

Goods and services provided by government to producers are specific pursuant to paragraph 2(7.3)(a) of SIMA because the subsidy is only provided to the limited number of enterprises purchasing from SOEs.

Findings of the Investigation:

Captain did purchase a small quantity of Silica Sand in Faisalabad during the POI from PMDC.[61]

The CBSA compared the purchase price at which silica sand was provided to Captain by the PMDC[62] to purchases made from other non-state owned suppliers used as a benchmark for the purposes of this investigation.[63]

As a result, the price at which Captain was provided the silica sand from the PMDC during the POI are within a reasonable range of the benchmark for purposes of this investigation, therefore, Captain did not avail itself of any benefit under this program.

Program 25: Cost of Domestic Inputs Lower Than Imported Inputs

General Information:

Based on the information provided by the complainant, this program was identified as possibly having provided actionable subsidies to the exporter of subject goods. The GOP may have a program in place to encourage the purchase of domestic raw materials over imported raw materials. The exporter would benefit from the amount by which the price of domestic raw materials is lower than imported fair market value raw materials.

Legal Basis:

The GOP denied the existence of this program.

Eligibility:

Not applicable as no information was found on this program. However, any manufacturer that would purchase raw materials from a SOE at less than fair market value would avail itself a benefit under this program.

Determination of Subsidy and Specificity:

On the basis of available information, this program constitutes a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, where an amounts that would otherwise be owing and due to the government are exempted or deducted, and confers a benefit to the recipient equal to the amount of the exemption/deduction.

The benefit an exporter would acquire from the difference between the price of domestic raw materials and the imported fair market value raw materials is a prohibited subsidy pursuant to paragraph 2(7.2)(b) of SIMA, as it is contingent, in whole or in part, on the use of goods that are produced or that originate in the country of export.

Findings of the Investigation:

Production of potassium silicate involves fusing two raw materials, potassium carbonate and silica sand as per the desired ratio.

As mentioned above, Captain sources their silica sand from various domestic suppliers at fair market prices.[64] Purchases of the other input, potassium carbonate, during the POI were from foreign suppliers.[65] As such, Captain did not avail itself of any benefit under this program.

Program 26: Purchases of Goods and Services from the State Bank of Pakistan

General Information:

For the purposes of this investigation the “State Bank of Pakistan” is considered to be part of the GOP. This program was identified at the initiation of the investigation as possibly having provided actionable benefits to the exporter of subject goods. The GOP may have provided goods or services to the exporter at less than fair market value.

The GOP denied the existence of this program and referred the CBSA to the Export Finance Scheme described above under Program 6 – Preferential Loans from the State Bank of Pakistan and the Credit Guarantee Scheme for Small and Rural Enterprises also described above under Program 9 - Loan Guarantees by State Bank of Pakistan/Pakistan Export Finance Guarantee Agency.

Legal Basis:

The GOP denied the existence of this program.

Eligibility:

Not applicable as no information was found on this program. However, any manufacturer that would purchase goods or services from the GOP at less than fair market value would avail itself a benefit under this program.

Determination of Subsidy and Specificity:

Based on the available information, this program constitutes a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA, where the government provides goods or services, other than general governmental infrastructure, and confers a benefit to the recipient equal to the difference between the fair market value of the goods or services in Pakistan and the price at which the goods or services were provided by the government.

Goods and services provided by government to producers are specific pursuant to paragraph 2(7.3)(a) of SIMA because the subsidy is only provided to the limited number of enterprises purchasing from SOEs.

Findings of the Investigation:

Captain did obtain short term loan facilities for its working capital from multiple banks, including Soneri Bank. However, all facilities from these banks were obtained within the reasonable range of the benchmark lending rates.[66]

The CBSA compared Captain’s obtained lending rates[67] to the benchmark lending rates given by the State Bank of Pakistan[68] for the period of January 1, 2010 to September 30, 2011. The latter was also supported by the Karachi Interbank Offered Rate (KIBOR) recognized as the benchmark rate for all corporate lending in Pakistani rupee after January 31, 2004.[69] As a result, Captain’s short term loans did not confer any countervailable benefit.