COR2 2019 IN: Certain corrosion-resistant steel sheet
Statement of Reasons—Final decisions

Complainant

[20] The complainant is AMD, which was founded as the Dominion Steel Casting Company in 1912 in Hamilton, Ontario. In 2006 Dofasco was acquired by Arcelor S.A. Later that year, Arcelor S.A merged with Mittal Steel.

[21] AMD is a manufacturer of COR which it produces at its facility in Hamilton, Ontario. The company is the largest of the three known producers of COR in Canada and accounts for a major proportion of the total domestic production of like goods.

[22] The contact information of the complainant is as follows:

ArcelorMittal Dofasco G.P.
1330 Burlington St E,
Hamilton, Ontario  L8N 3J5

[23] The other manufacturers of like goods in Canada are:

Stelco Inc. (Stelco)
386 Wilcox Street
Hamilton, Ontario  L8L 8K5

Continuous Colour Coated Limited (CCCL)^{Footnote 2}
1430 Martin Grove Road
Rexdale, Ontario  M9W 4Y1

Trade unions

[24] The complaint identified the following trade union as representing persons employed in the production of COR in Canada^{Footnote 3}:

United Steel Workers
234 Eglinton Avenue East, 8th floor
Toronto, Ontario  M4P 1K7

[25] The trade union did not make any submissions during the investigation.

Importers

[26] At the initiation of the investigations, the CBSA identified 64 potential importers of the subject goods based on both information provided by the complainant and CBSA import documentation. The CBSA sent an Importer request for information (RFI) to all potential importers of the goods. The CBSA received 12 responses to the Importer RFI.

Exporters

[27] At the initiation of the investigation, the CBSA identified 55 potential exporters/producers of the subject goods based on CBSA import documentation and information submitted in the complaint. All of the potential exporters were sent the CBSA’s Dumping and Subsidy RFI. The CBSA conducted, as part of its dumping investigation, a section 20 inquiry to determine whether the conditions set forth in paragraph 20(1)(a) of SIMA exist in the flat-rolled steel industry sector in Vietnam. As such, exporters and producers located in Vietnam were also sent a separate Section 20 RFI.

[28] Twenty-one companies provided a response to the Dumping RFI. Respondents included producers and exporters. In addition, five companies in Vietnam provided responses to the Section 20 RFI, and 20 companies responded to the Subsidy RFI.

[29] Of the aforementioned companies that responded to the Dumping and Subsidy RFI, three exporters/producers from Turkey provided incomplete information. Deficiencies were communicated to these companies, however, complete information was not subsequently provided to the CBSA. As such, their responses were not used for purposes of the final determination.

[30] Information on the results of the investigation pertaining to the companies who provided a response to the Dumping RFI and Subsidy RFI, and were considered to be exporters of the subject goods for SIMA purposes, are summarized under the dumping investigation and subsidy investigation portion of this document.

[31] CBSA officers performed desk-audit verifications in Ottawa of all substantially complete exporter responses.

Government

[32] For the purposes of these investigations, “Government of Turkey (GOT)”, “Government of United Arab Emirates (GOU)”, and “Government of Vietnam (GOV)” refer to all levels of government, i.e., federal, central, provincial/state, regional, municipal, city, township, village, local, legislative, administrative or judicial, singular, collective, elected or appointed. It also includes any person, agency, enterprise, or institution acting for, on behalf of, or under the authority of, or under the authority of any law passed by, the government of that country or that provincial, state or municipal or other local or regional government.

[33] At the initiation of the investigation, the CBSA sent a Government Subsidy RFI to the GOT, the GOU and the GOV. In addition, the GOT was sent a particular market situation (PMS) RFI and the GOV was sent the CBSA’s Government Section 20 RFI.

[34] All of the governments of the named countries provided a response to the Government Subsidy RFI. In addition, the GOT responded to the PMS RFI^{Footnote 4} and the GOV responded to the Government Section 20 RFI^{Footnote 5}.

Definition

[35] For the purpose of this investigation, subject goods are defined as:^{Footnote 6}

Additional product information^{Footnote 7}

[36] The product definition includes corrosion-resistant steel sheet where the substrate is coated with a corrosion-resistant material such as zinc, aluminum, and other alloys. The coating may be applied by a variety of processes including hot-dip galvanizing or electro-galvanizing.

[37] The product definition includes galvannealed steel. Galvannealed steel is produced by passing the steel through an annealing furnace after it completes the hot-dip galvanizing process and while the zinc is still liquid. This causes the iron and zinc layers to diffuse into each other, creating a zinc-alloy layer at the surface.

[38] Passivation refers to a material becoming “passive”, that is, less affected or corroded by the environment of future use. Passivation involves creation of an outer layer of shield material that is applied as a micro-coating, created by chemical reaction with the base material, or allowed to build from spontaneous oxidation in the air. As a technique, passivation is the use of a light coat of a protective material, to create a shell against corrosion.

[39] Corrosion-resistant steel with anti-fingerprint coatings (whether as part of a passivation treatment or separate) are also included within the product definition.

[40] Corrosion-resistant steel sheet is usually produced from cold-rolled carbon steel sheet (CRS) and sometimes from hot-rolled carbon steel sheet (HRS). However, additions of certain elements such as titanium, vanadium, niobium or boron, during the steel-making process enable the steel to be classified as alloy steel. Therefore, corrosion-resistant steel produced from either carbon steel or alloy steel is included in the definition of the subject goods.

[41] The subject goods (and like goods produced by the domestic industry) are manufactured to meet certain American Society for Testing and Materials (ASTM), Society of Automotive Engineering (SAE) or equivalent specifications, including, but not limited to:

• ASTM A653/653M
• ASTM A792/A792M
• SAE J403
• SAE J1392
• SAE J2329
• SAE J1562

[42] The product definition includes “seconds”. Seconds are goods that do not meet some aspect of the original specification. This could include dimensions, grade, or coating. It could also include a coil that has been damaged. Seconds are sold at a discount. Seconds may meet ASTM, SAE or other specifications or may be re-certified to meet a standard. For example, a coil that is damaged along the edge may be a “second”. However, if the damaged edge is slit and the damage is removed the coil could be classified as a primary coil produced to the new width. Seconds are graded and sold on a scale of five.^{Footnote 8}

[43] For greater clarity, the product definition does not cover^{Footnote 9}:

Production process^{Footnote 10}

[44] The subject goods are usually produced from CRS and sometimes from HRS sheet. The steel sheet to be coated is commonly referred to as steel substrate. Hot-dip galvanizing and electro-galvanizing are the two processes that can be used to coat the substrate steel sheet with zinc, aluminum, or other alloys. AMD uses hot-dip galvanizing.

[45] In the hot-dip galvanizing process, the first step is to clean the surfaces to improve the adhesion of the coating. After cleaning, the substrate enters a continuous annealing furnace. The furnace heats the substrate to the temperature necessary to develop the desired metallurgical properties of the final product. The substrate is then placed in a molten coating bath and, as it emerges from the bath, an air, nitrogen or steam wipe is used to control the thickness of the coating. The galvanized steel sheet is then cooled in a cooling tower.

[46] In the electro-galvanizing process charged steel passes through a plating bath and opposite electrical charges cause the zinc solution to coat the steel. Cold-rolled steel coils are batch annealed in multi-stack furnaces or in off-line continuous annealing process, often skin passing on a temper mill, before being electro-galvanized with a thin coating of zinc on a continuous processing line.

Product use^{Footnote 11}

[47] Common applications for COR falling within the product definition include, but are not limited to, production of farm buildings, grain bins, culverts, garden sheds, roofing material, siding, floor decks, roof decks, wall studs, drywall corner beads, doors, door frames, ducting (and other heating and cooling applications), flashing, hardware products and appliance components.

Classification of imports

[48] The dumped and subsidized goods are normally classified under the following tariff classification numbers^{Footnote 12}:

• 7210.30.00.00
• 7210.49.00.10
• 7210.49.00.20
• 7210.49.00.30
• 7210.61.00.00
• 7210.69.00.10
• 7210.69.00.20
• 7212.20.00.00
• 7212.30.00.00
• 7212.50.00.00
• 7225.91.00.00
• 7225.92.00.00
• 7226.99.00.10

[49] The listing of tariff classification numbers is for convenience of reference only. The tariff numbers include non-subject goods. Also, subject goods may fall under tariff numbers that are not listed. Refer to the product definition for authoritative details regarding the subject goods.

Normal value

[70] Normal values are generally determined based on the domestic selling prices of like goods in the country of export, in accordance with section 15 of SIMA, or based on either the methodology of 19(a) or on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profits, in accordance with paragraph 19(b) of SIMA.

[71] If, in the opinion of the President, domestic sales of like goods in the country of export do not permit a proper comparison with the sales of the goods to the importer in Canada because a PMS prevails, the sale of such goods, in accordance with paragraph 16(2)(c) of SIMA, will not be taken into account in determining the normal value under section 15. The CBSA will then look to one of the methodologies of section 19. A PMS can be found to exist in respect of any goods of a particular exporter or of a particular country.

[72] In the case of a prescribed country such as Vietnam, if, in the opinion of the President of the CBSA, the government of that country substantially determines domestic prices and there is sufficient reason to believe that the domestic prices are not substantially the same as they would be in a competitive market, the normal values are generally determined on the basis of section 20 of SIMA using either the selling prices or the full costs of like goods in a “surrogate” country, or using re-sales in Canada of goods imported from a “surrogate” country.

[73] Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, normal values are determined pursuant to a ministerial specification in accordance with subsection 29(1) of SIMA.

Export price

[74] The export price of goods sold to importers in Canada is generally determined in accordance with section 24 of SIMA based on the lesser of the adjusted exporter’s sale price for the goods or the adjusted importer’s purchase price. These prices are adjusted where necessary by deducting the costs, charges, expenses, duties and taxes resulting from the exportation of the goods as provided for in subparagraphs 24(a)(i) to 24(a)(iii) of SIMA.

[75] Where there are sales between associated persons or a compensatory arrangement exists, the export price may be determined based on the importer’s resale price of the imported goods in Canada to non-associated purchasers, less deductions for all costs incurred in preparing, shipping and exporting the goods to Canada that are additional to those incurred on the sales of like goods for use in the country of export, all costs that are incurred in reselling the goods (including duties and taxes) or associated with the assembly of the goods in Canada, and an amount representative of the average industry profit in Canada, pursuant to paragraphs 25(1)(c) and 25(1)(d) of SIMA. In any cases not provided for under paragraphs 25(1)(c) and 25(1)(d) of SIMA, the export price is determined in such a manner as the Minister specifies, pursuant to paragraph 25(1)(e).

[76] Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, export prices are determined pursuant to a ministerial specification under subsection 29(1) of SIMA.

Margin of dumping

[77] The margin of dumping by exporter is equal to the amount by which the total normal value exceeds the total export price of the goods, expressed as a percentage of the total export price. All the subject goods shipped to Canada during the POI are included in the margins of dumping of the goods. Where the total normal value of the goods does not exceed the total export price of the goods, the margin of dumping is zero.

Particular market situation

[78] The CBSA may form the opinion that a PMS exists, which does not permit a proper comparison with the sale of the goods to the importer in Canada, if one or more of the following factors have had a significant impact on the domestic sales of like goods in the country of export:

• government regulations such as price floors, price ceilings, production quotas, import and export controls
• taxation policies
• government support programs (financial or otherwise)
• the presence and activities of state-owned or state-controlled enterprises in the domestic market as suppliers or purchasers of the like goods (also including other state-owned or state-controlled enterprises such as financial institutions)
• the acquisition of production inputs or processing services that do not reflect market-based costs because they are acquired from suppliers which are state-owned or state-controlled or that are affected by government influence or control
• significant volatility in economic conditions in the home market of the exporter
• evidence of distorted input costs and
• any other circumstances which may or may not be the result of government intervention, in which normal market conditions or patterns of supply and demand do not prevail

Results of the dumping investigation

[79] The following summarizes the results of the dumping investigation for the exporters in Turkey, UAE and Vietnam which provided a response to the RFIs:

Summary of results: Dumping

[200] A summary of the results of the dumping investigation respecting all subject goods released into Canada during the POI is as follows:

[201] In order to make a final determination of dumping, the CBSA must be satisfied that:

• the subject goods have been dumped and
• that the margin of dumping is not insignificant

[202] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of any goods of an exporter if it is satisfied that the goods have not been dumped or the margin of dumping of the goods of that exporter is insignificant, meaning a margin of dumping that is less than 2% of the export price of the goods. Therefore, the CBSA is required to terminate the dumping investigation in respect of certain COR exported to Canada from Turkey by Borçelik Çelik Sanayi Ticaret A.Ş and from the UAE by Al Ghurair Iron & Steel LLC.

[203] The remaining goods under investigation have been dumped and the margins of dumping determined for those goods, are greater than the threshold of 2% and are therefore not considered insignificant. As a result, the legislative requirement is satisfied for making a final determination of dumping respecting certain COR from Turkey, the UAE and Vietnam.

[204] A summary of the results of the dumping investigation respecting the subject goods released into Canada during the POI are presented in Appendix 1.

Results of the subsidy investigation

[212] The following presents the results of the investigation into the subsidizing of COR originating in or exported from Turkey, the UAE and Vietnam.

[213] At the initiation of the investigation, the CBSA sent Subsidy RFIs to the governments of the named countries, as well as to all known exporters and vendors of COR. The exporters/vendors were requested to forward a portion of the RFI to their input suppliers, who were asked to respond to questions pertaining to their legal characterization as state owned enterprises SOEs. Information was requested in order to establish whether there had been financial contributions made by any level of government, including SOEs possessing, exercising or vested with government authority and, if so, to establish if a benefit has been conferred on persons engaged in the production, manufacture, growth, processing, purchase, distribution, transportation, sale, export or import of COR; and whether any resulting subsidy was specific in nature. Information was also requested from the governments of the named countries, concerning financial contributions made to exporters of COR released into Canada during the POI. The respective governments were also notified that the full and complete responses to questions on programs administered by all levels of government are obtained from the appropriate governmental authorities.

[214] The governments and the exporters were also notified that failure to submit all required information and documentation, including non-confidential versions, failure to comply with all instructions contained in the RFI, failure to permit verification of any information or failure to provide documentation requested during the verification visits may result in the amount of subsidy and the assessment of countervailing duties on subject goods being based on facts available to the CBSA. Further, they were notified that a determination on the basis of facts available could be less favorable to their firm than if complete, verifiable information was made available.

[215] The CBSA received responses to the Subsidy RFI from five exporters in Turkey, two exporters in the UAE and five exporters in Vietnam. Additionally, all of the governments involved in the subsidy investigation Turkey, the UAE and Vietnam provided a response to the Government Subsidy RFI.

[216] The results for each exporter and government that provided a response to the Subsidy RFIs, are summarized as follows.

[217] A description of identified programs and incentives is included as Appendix 3.

Summary of results: Subsidizing

[260] A summary of the results of the subsidy investigation respecting all subject goods released into Canada during the POI is as follows:

[261] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of any goods of an exporter if the CBSA is satisfied that the goods have not been subsidized or the amount of subsidy on the goods of that exporter is insignificant.

[262] Pursuant to subsection 2(1) of SIMA, an amount of subsidy of less than 1% of the export price of the goods, is defined as insignificant.

[263] However, according to section 41.2 of SIMA, the President is required to take into account Article 27.10 of the WTO Agreement on Subsidies and Countervailing Measures (ASCM) when conducting a subsidy investigation. This provision stipulates that a countervailing duty investigation involving a product from a developing country should be terminated where the authorities determine that the overall level of subsidies granted upon the product in question does not exceed 2% of its value calculated on a per unit basis.

[264] Neither the ASCM nor SIMA defines or provides any guidance regarding the determination of a “developing country” for purposes of Article 27.10 of the ASCM. As an administrative alternative, the CBSA refers to the Development Assistance Committee List of Official Development Assistance Recipients^{Footnote 92} and regards a country as developing if it is listed as a least developed country, other low income country, lower middle income country or territory. As Vietnam is included in these lists, the CBSA extends developing country status to Vietnam for purposes of this investigation.

[265] As can be seen from the table above, the amount of subsidy determined in respect of COR exported to Canada from Turkey by Atakaş, Borçelik and Tatmetal and from the UAE by AGIS and UIS did not exceed 1% of their value on a per unit basis and was, therefore, determined to be insignificant. The amounts of subsidy exported to Canada from Vietnam by CSVC, HSG, Nam Kim, SSSC, and TDA did not exceed 2% of their value calculated on a per unit basis and were, therefore, determined to be insignificant. As a result, the CBSA terminated the subsidy investigation in respect of these goods pursuant to paragraph 41(1)(a) of SIMA.

[266] As all exporters of goods from the UAE and Vietnam have an insignificant amount of subsidy or no amount of subsidy, the termination in respect of subject goods from these exporters will effectively end the CBSA’s subsidy proceedings in respect of subject goods from the UAE and Vietnam.

[267] The remaining goods under investigation have been subsidized and the amounts of subsidy determined for those goods, for a developed country, are greater than the threshold of 1% and are therefore not considered insignificant. As a result, the legislative requirement is satisfied for making a final determination of subsidy respecting certain COR from Turkey.

Turkey

Subsidy programs used by responding exporters

Based on the information available, for purposes of the final determination, the CBSA has found that these programs were used by the responding exporters in Turkey. Based on the information available, these programs constitute a financial contribution provided by the GOT and confer benefits to companies and are specific.

Program 1: Turk Eximbank—Rediscount Credit Program

The legal basis for this program is the Turk Eximbank Law, Principles and Articles of Association, and the “Implementation Principles for Rediscount Program”.^{Footnote 210} The Central Bank of Republic of Turkey (CBRT)’s Export Credit Rediscount Operation Instructions also includes terms and conditions regarding the credit process in addition to the Implementation Principles.

The program, which requires an export commitment, provides rediscount loans to exporters, with a maturity of 360 days or less.

Under SIMA, as a general rule, an entity will constitute “government” when it possesses, exercises, or is vested with governmental authority. The following are factors that could indicate that this is the case in a particular entity:

• Express delegation or vesting of authority to an entity by statute or other legal instrument
• Evidence that an entity is, in fact, exercising governmental functions
• Evidence that a government exercises meaningful control over an entity

The CBSA determined that the Turk Eximbank satisfies the above criteria of a public body. As such, financial contributions provided by the Turk Eximbank (or on its behalf) with respect to the Eximbank programs are considered as financial contributions provided by the GOT. The CBSA’s position is based on the following factors:

• The bank is wholly-owned by the GOT and is under the responsibility of the Prime Ministry. The bank was created by the government decree (No.87/11914) in 1987 following the order of Law No. 3332^{Footnote 211}
• the bank acts as the government’s major export incentive instrument in Turkey’s export strategy and maintains close co-operation with the related entities of the government. Its objectives are legislated^{Footnote 212}
• the Bank’s policies and operations have been formulated to work within the framework of the export-led growth strategies pursued by the Turkish government^{Footnote 213}
• the Responsibilities and Powers of the Supreme Advisory and Credit Guidance Committee, which is comprised of GOT officials^{Footnote 214}
• the Turkish Treasury makes capital contributions to Turk Eximbank as the sole shareholder of the Bank. Its main sources of funds are direct funding from the Treasury through capital injections as well as through borrowing from commercial banks and international financial markets^{Footnote 215} and
• losses incurred by Turk Eximbank as a result of political risks are covered by the Turkish Treasury^{Footnote 216}

A loan is considered a direct transfer of funds and therefore considered a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA.

Pursuant to section 28 of the Special Import Measures Regulations (SIMR), the benefit to the recipient should be based on a commercial benchmark that reflects the recipient’s ability to obtain comparable financial services in the commercial market. Benefit exists if the bank requires the recipient to repay a lesser amount than would otherwise be payable under a comparable commercial loan. Specifically, the benefit is equal to the difference between:

1. the amount of interest that would be payable, by the recipient of the preferential loan, on a non-guaranteed commercial loan in the same currency, in which the payments for the preferential loan are expressed and on the same credit terms, (other than the interest rate) as are applicable to the preferential loan, plus any additional costs (other than the interests) that would have been incurred by the recipient with respect to a non-guaranteed commercial loan the recipient could have obtained
2. and the amount of interest payable on the preferential loan.

In order to determine appropriate benchmarks for the loans by the respondents, the CBSA used interest rates from privately owned banks and government banks operating on commercial basis for short term loans (within 360 days), weighted by the value of each loan obtained by the responding exporters during the POI (or where interest accrued during the POI).

The information available also indicates that this program is considered a specific subsidy under paragraph 2(7.2)(b) of SIMA as it is contingent upon export performance and, therefore, constitutes a prohibited subsidy as defined in subsection 2(1) of SIMA.

Program 3: Turk Eximbank—Post-shipment Rediscount Credits (PSRC)

The legal basis for this program is the Turk Eximbank Law, Principles and Articles of Association, and the “Implementation Principles for Post-Shipment Rediscount Credit Program”.^{Footnote 217} The CBRT’s Export Credit Rediscount Operation Instructions also includes terms and conditions regarding the credit process in addition to the Implementation Principles.

PSRC is a post-shipment finance facility, aiming at increasing the competitiveness of Turkish exporters in international markets.

A loan is considered a direct transfer of funds and therefore considered a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA. Pursuant to section 28 of the SIMR, the benefit to the recipient is determined in the same manner as described for Program 1 above.

The information available also indicates that this program is considered a specific subsidy under paragraph 2(7.2)(b) of SIMA as it is contingent upon export performance and, therefore, constitutes a prohibited subsidy as defined in subsection 2(1) of SIMA.

While one of the respondents used this program during the POI, the information available indicates that the amount of benefit was not applicable to subject goods because the program was only used for goods shipped to other destinations.

Program 4: Turk Eximbank—Pre-export Credits (PEC)

The legal basis for this program is the Turk Eximbank Law, Principles and Articles of Association, and the “Implementation Principles for Pre-Export Credit Program”.^{Footnote 218}

Pre-export Credits are export credit facilities to exporters which are provided in foreign currency or in Turkish lira (TL). The purpose of PEC Program is to provide financial support to exporters, manufacturer-exporters and export-oriented manufacturers in return of the export commitment of Turkish origin goods. The credited company is obliged to fulfill its export commitment within the credit period.^{Footnote 219}

A loan is considered a direct transfer of funds and therefore considered a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA. Pursuant to section 28 of the SIMR, the benefit to the recipient is determined in the same manner as described for Program 1 above.

The information available also indicates that this program is considered a specific subsidy under paragraph 2(7.2)(b) of SIMA as is contingent upon export performance and, therefore, constitutes a prohibited subsidy as defined in subsection 2(1) of SIMA.

While one of the respondents used this program during the POI, the information available indicates that the amount of benefit was not applicable to subject goods because the program was only used for goods shipped to other destinations.

Program 6: Turk Eximbank—Investment Credit for Export

The legal basis for this program is the Turk Eximbank Law, Principles and Articles of Association, and the “Implementation Principles for Investment Credit for Export Program”.^{Footnote 220}

Investment Credit for Export (ICE) Program aims at financing machine, equipment and accessory expenditures which need a middle or long term financing because of their sustainability or long-term usage properties on the basis of the amount excluding VAT. The maturity for this program is up to 10 years.^{Footnote 221} Manufacturers and manufacturer-exporter firms which are established in Turkey and which produce export-oriented Turkish products are eligible to apply for this credit program.^{Footnote 222}

A loan is considered a direct transfer of funds and therefore considered a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA. Pursuant to section 28 of the SIMR, the benefit to the recipient is based on a commercial benchmark that reflects the recipient’s ability to obtain comparable financial services in the commercial market. Benefit exists if the bank requires the recipient to repay a lesser amount than would otherwise be payable under a comparable commercial loan.

For benchmark, the CBSA attempted to use interest rates from privately owned banks and government banks operating on commercial basis for long term loans of similar maturity, in the same currency, weighted by the value of each loans, obtained by the cooperating exporters during the POI (or where interest accrued during the POI). The best information available for a benchmark rate in the same currency was the weighted average interest rates for state owned banks’ USD commercial loans, as provided by the GOT.^{Footnote 223}

The information available also indicates that this program is considered a specific subsidy under paragraph 2(7.2)(b) of SIMA as it is contingent upon export performance and, therefore, constitutes a prohibited subsidy as defined in subsection 2(1) of SIMA.

Program 24: Deduction from Taxable Income for Export Revenue

According to Article 40, Clause 1 of Income Tax Law No. 193 dated January 6, 1961, which was amended by the Law No. 4108 dated June 2, 1995, all taxpayers may have an additional deduction of a lump sum amount from their gross income resulting from exports, construction, maintenance, assembly and transportation activities abroad. This amount may not exceed 0.5% of the proceeds they earned in foreign exchange from such activities. The program is administered by Ministry of Treasury and Finance.^{Footnote 224}

The only criterion is receipt of foreign currency revenue. The deduction is claimed as part of the exporter’s tax filings and is shown in their annual tax return. No application or approval process required.

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected.

Section 32 of the SIMR deals with income tax credits, refunds and exemptions contingent on the export of goods. The subsidy in such cases is to be determined as the amount of the income tax which is credited, refunded or exempted, according to the taxation laws in the territory of the government (i.e. local, state or national) providing the tax relief. The amount of the subsidy on a per unit basis is determined by dividing the tax saving by the total number of units exported during the taxation period under review. The tax rate in Turkey is 22%.

The information available also indicates that this program is considered a specific subsidy under paragraph 2(7.2)(b) of SIMA as it is contingent upon export performance and, therefore, constitutes a prohibited subsidy as defined in subsection 2(1) of SIMA.

Program 27: Investment Incentive Program

In its response to the Subsidy RFI, the GOT addressed this program 16: OIZ – Additional Support Granted Under the Investment Incentives Program under Program 27. The CBSA determined that program 16 and program 27 should be merged as a single program.

The GOT refers to the Program as the “Investment Encouragement Program” (IEP). IEP is designed and implemented by the Ministry of Industry and Technology (MIT) and is currently based on the provisions of the Council of Ministers’ Decree No. 2012/3305, which has been in force since June 15, 2012.^{Footnote 225}

Pursuant to the current Decree No. 2012/3005, IEP consists of four separate incentive schemes: Regional Investment Incentive Scheme (RIIS), Large Scale Investment Incentive Scheme (LSIIS), Strategic Investment Incentive Scheme (SIIS) and General Investment Incentive Scheme (GIIS). A company should have an investment incentive certificate issued by MIT to have a support under IEP.^{Footnote 226}

There are nine aspects of support measures under either one of the schemes:^{Footnote 227}

1. Customs duty exemption: Investment machinery and equipment imported within the scope of the incentive certificate are exempted from customs duty set in the Import Regime Decree. The customs duties are exempted for the companies, which have an incentive certificate, during import operations under the control of the Ministry of Trade
2. VAT exemption: Investment machinery and equipment imported and/or locally provided within the scope of the incentive certificate are exempted from VAT. The companies, which have an incentive certificate, do not pay VAT for the machinery and equipment under the control of Ministry of Treasury and Finance
3. Interest rate support: This support is available for investment loans, borrowed to finance the investment, with a maturity of at least one year for Regional Investments (Region 3, 4, 5 and 6), Strategic Investments, R&D and Environment Investments. The GOT covers a portion of the interest/profit share of the loans that do not exceed 70% of the fixed investment amount registered on the certificate for a specific period which would not exceed five years. The amount of interest rate support and the support rate is limited for each region differently
4. Social security premium support (employer’s share): For any additional employment created by an investment with an incentive certificate under Regional, Large Scale and Strategic Investment Incentive Schemes, the amount corresponding to the employer’s share of the social security premium on legal minimum wage, paid by the investor, is covered by the Social Security Institution. In order for an investor to benefit from this support, the project should be concluded and a completion visa should be granted
5. Tax reduction: Reduced income or corporate tax rates are applied for the companies until the total deduction reaches the “contribution amount”. There are two different rates for the implementation of this support; “contribution rate” and “discount rate”. The discount rate is used to find the reduced income/corporate tax rate of the company. The contribution rate is used to find the total deduction. Multiplication of contribution rate with total investment amount gives the contribution amount. The Ministry of Treasury and Finance applies reduced income/corporate tax rate for the company until total deduction reaches the contribution amount
6. Land allocation: State-owned lands are allocated for investments with incentive certificate under large scale, strategic and regional incentive schemes in accordance with the rules and principles defined by the Ministry of Treasury and Finance, depending on the availability of such land in the provinces where investments are made
7. VAT refund: VAT collected on the building & construction expenses made for Strategic Investments is rebated provided that the fixed investment amount is over 500 million TL
8. Social security premium support for employee's share (only for region 6): This scheme allows for the Ministry to cover the employee’s share of the social security premium paid by the investor to the Social Security Institution in the amount corresponding to the legal minimum wage, for additional personnel recruited for new investments in Region 6. This support is available for Regional, Large Scale and Strategic investments in Region 6 only and for 10 years
9. Income tax withholding support (only for region 6): For additional employment created by the investments to be realized within the scope of the incentive certificates issued for Region 6, the income tax that is calculated on the basis of the portion of the employees’ wages that corresponds to the minimum wage is not levied. This support is available for the investments in Region 6 only for 10 years

According to the Article 18 of the Decree No. 2012/3305, investments with incentive certificates within the scope of large scale investments or regional incentive implementations may benefit from tax discount and social security premium employer share support over the rates and periods valid in one region below the region they exist, if the investment is realized in an OIZ (Program 16).^{Footnote 228}

According to the GOT, unless they are operating in region 6, the producers of subject merchandise could only benefit from General Investment Incentive Scheme.^{Footnote 229} The CBSA notes that producers operating in region 5 are also eligible if they are in an OIZ.^{Footnote 230} Steel is a sector supported under the Regional scheme.

For Regional Investment Scheme, the sectors that may benefit from regional support and the minimum investments are identified in Annex 2/A of the Decree No. 2012/3305. Steel is identified as such a sector. Furthermore, investments should meet the minimum investment amount criteria for respective regions. Under Strategic Investment Incentive (SII) Scheme of IEP, the investments fulfilling the criteria stipulated in Article 8 of the Decree No. 2012/3305 could benefit from the program. The scopes of investments which could benefit from Large – Scale Investment Incentive Scheme are defined in Annex 3 of the Decree No. 2012/3305. (Annex 3 of the Decree No. 2012/3305).^{Footnote 231} Annex – 4 to the Decree No. 2012/3305 describes the investments which are not supported as well as the investments which are supported under certain conditions.^{Footnote 232}

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected.

Subsection 27.1(2) of the SIMR stipulates that such amount shall be treated as a grant under Section 27. The benefit is equal to the amount that would otherwise be owing and due that was exempted under this program. Pursuant to paragraph 27(a) of the SIMR, given that the grant (grant equivalent) is to be used for operating expenses in the production, purchase, distribution, transportation, sale, export or import of subsidized goods, the benefit should be allocated over the total quantity of subsidized goods to which the grant is attributable. Pursuant to paragraph 27(b), where the grant was, or is, to be used for the purchase or construction of a fixed asset, the grant is allocated over the estimated total quantity of subsidized goods for the production, purchase, distribution, transportation, sale, export or import of which the fixed asset was, or will be, used for the anticipated useful life of the fixed asset.

This program is restricted to specified sectors, and in some instances, it favors enterprises to enterprises operating in an OIZ or other special zone Therefore, this program has been determined to be specific, pursuant to paragraph 2(7.2)(a) of SIMA.

Program 34: TUBITAK Industrial R&D Projects Grant

The legal basis for the program is The Scientific and Technological Research Council of Turkey (TUBITAK)’s Implementation Principles.^{Footnote 233} The program is provided as grants. The granting authority is TUBITAK.

According to the GOT, the projects are evaluated based on three criteria: i) the project’s R&D content and technological-innovative aspects; ii) the project plan and the company infrastructure; iii) economic and social benefits expected from the outcomes.^{Footnote 234}

Under SIMA, as a general rule, an entity will constitute “government” when it possesses, exercises, or is vested with governmental authority. The following are factors that could indicate that this is the case in a particular entity:

• Express delegation or vesting of authority to an entity by statute or other legal instrument
• Evidence that an entity is, in fact, exercising governmental functions
• Evidence that a government exercises meaningful control over an entity

According to TUBITAK’s website, the “President of TUBITAK is nominated by the Science Board from distinguished scientists, recognized in the fields of natural sciences and engineering, and is appointed by the President of Turkey upon the recommendation of the Prime Minister. The President of TUBITAK chairs the Science Board and manages the Council pursuant to the decisions reached by the Science Board.”^{Footnote 235} It also states that TUBITAK is responsible for promoting, developing, organizing, conducting and coordinating research and development in line with national targets and priorities. TUBITAK acts as an advisory agency to the Turkish Government on science and research issues, and is the secretariat of the Supreme Council for Science and Technology (SCST), the highest Science and Technology policy making body in Turkey. On the basis of the above, the CBSA is of the opinion that TUBITAK is a government body.

Pursuant to paragraph 2(1.6)(a) of SIMA, there is a financial contribution where practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities. The benefit is determined under paragraph 27(a) of the SIMR, where the amount of the grant shall be distributed over the total quantity of subsidized goods to which the grant is attributable.

Pursuant to section 2(7.1) of SIMA, the subsidy is specific because the criteria and conditions governing eligibility for, and the amount of subsidy do not appear to be objective, and may be applied in a manner that favors a limited number of enterprises. As mentioned above, TUBITAK is responsible for promoting, developing, organizing, conducting and coordinating research and development in line with national targets and priorities. In fact, there are several references to TUBITAK in key government policy documents which were reviewed by the CBSA, such as the GOT’s Development Plans, GITES, the 2023 Turkey Export Strategy and Action Plan, the Strategy Document And Action Plan on Turkey Iron-Steel And Nonferrous Metals Sector and the Mid-Term Programme 2018-2020.^{Footnote 236} On this basis, the CBSA finds that the evidence on the record suggests that the GOT exercises the discretionary nature of the program to favor certain sectors. It is noted that about 40% of requests for funding under the programs are rejected, which emphasizes the discretionary nature of the approval process.^{Footnote 237} Further the majority of the grants were distributed to manufacturing companies. As such, the CBSA has determined that the program is specific, pursuant to section 2(7.1) of SIMA.

Program 35: Social Security Premium Incentive (Employer’s Share)

The GOT refers to this program as the “Social Security Premium Incentive Under Law 6486”. This program aims to increase production and employment levels in some provinces of Turkey by reducing costs of insurance premiums to the employers and intends to reduce the unregistered employment. The program is established by the Law No. 6486, which added a provision to the Law 5510 on May 21, 2013.^{Footnote 238} The Social Security Institution (Institution) is responsible for administering the program.^{Footnote 239}

According to paragraph (ı) of Article 81 of the Law 5510; 5% of the employer’s social security premium share (11% in total) is financed by the Treasury if employers submit service documents and pay the residual part of the premiums within the statutory periods. The residual part of the premiums are the employee’s share (9%), and the rest of the employer’s share (6%). This incentive is an across the board application regardless of sector or region. With the additional paragraph (appended provision) of Article 81, the remaining 6% of employers’ social security premiums are also covered by the Treasury if these employers are operating in the provinces that are determined by the Council of Ministers. Therefore, employers operating in these provinces do not pay employers’ share of the long term social security insurance premiums (11% in total) for specified periods depending on regions.^{Footnote 240}

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected. According to subsection 27.1(2) of the SIMR, any amount otherwise owing and due to a government that is exempted or deducted and any amount owing to a government that is forgiven or not collected by the government shall be treated as a grant under section 27.

With respect to specificity, the CSBA determined that the benefit relating to “the remaining 6% of employers’ social security premiums that are also covered by the Treasury if these employers are operating in the provinces that are determined by the Council of Ministers” is specific pursuant to section 2(7.2)(a) of SIMA because it is limited to enterprises located in certain areas.

Program 36: TUBITAK International Industrial R&D Projects Grant Program

According to the GOT, the legal basis for this program is the Scientific and Technological Research Council of Turkey (TUBITAK)’s Implementation Principles.^{Footnote 241} The granting authority is TUBITAK.

The objective of the program is to create market focused R&D Projects between European countries and to increase cooperation between Europe wide firms, universities and research institutions, by using cooperation networks such as EUREKA.^{Footnote 242} The program is provided as grants.

According to the GOT, the projects are evaluated based on three criteria: i) the project’s R&D content and technological-innovative aspects; ii) the project plan and the company infrastructure; and iii) economic and social benefits expected from the outcomes.^{Footnote 243}

Pursuant to paragraph 2(1.6)(a) of SIMA, there is a financial contribution where practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities. The benefit is determined under paragraph 27(a) of the SIMR, where the amount of the grant shall be distributed over the total quantity of subsidized goods to which the grant is attributable.

Pursuant to section 2(7.1) of SIMA, the subsidy is specific because the criteria and conditions governing eligibility for, and the amount of subsidy do not appear to be objective, and may be applied in a manner that favors a limited number of enterprises. As mentioned above, TUBITAK is responsible for promoting, developing, organizing, conducting and coordinating research and development in line with national targets and priorities. In fact, there are several references to TUBITAK in key government policy documents which were reviewed by the CBSA, such as the GOT’s Development Plans, GITES, the 2023 Turkey Export Strategy and Action Plan, the Strategy Document And Action Plan on Turkey Iron-Steel And Nonferrous Metals Sector and the Mid-Term Programme 2018-2020. On this basis, the evidence on the record suggests that the GOT exercises the discretionary nature of the program to favor certain sectors. Further, key documents regarding this program, provided in response to the Government RFI, such as the implementation principle in additional to the approval and contractual documents, were not translated. As such, the CBSA has determined that the program is specific, pursuant to section 2(7.1) of SIMA.

Other potentially actionable subsidy programs identified by the CBSA that were not used by the responding exporters

Based on the information available, for purposes of the final determination, the CBSA has found that these programs were not used by the responding exporters in Turkey. Based on the information available, these programs may constitute financial contributions provided by the GOT and confer benefits to companies and appear to be specific.

Program 2: Turk Eximbank—Pre-shipment Export Credits (PSEC) including:

• Pre-shipment Turkish Lira Export Credits (PSEC-TL)
• Pre-shipment Foreign-Currency Export Credits (PSEC-FX)

The legal basis for this program is the Turk Eximbank Law, Principles and Articles of Association, and the “Implementation Principles for Pre-Shipment Export Credits Program” (with 2013.05.20 revision).^{Footnote 244}

Pre-shipment Export Credits (PSEC) are short-term export credit facilities to exporters which are provided in foreign currency or Turkish lira (TL). The facilities aim at increasing the competitiveness of Turkish exporters in foreign markets.^{Footnote 245}

According to the GOT, none of the subject product exporters received benefit from PSEC Program during POI. None of the responding exporters reported use of this program during the POI. Thus, information on the record suggests that this program has not been used by producers/exporters of subject goods.

A loan is considered a direct transfer of funds and therefore considered a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA. Pursuant to section 28 of the SIMR, the benefit to the recipient is determined in the same manner as described for Program 1 above.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 5: Turk Eximbank—Export-Oriented Working Capital Credit

The legal basis for this program is the Turk Eximbank Law, Principles and Articles of Association, and the “Implementation Principles for Export-Oriented Working Capital Credit Program”.^{Footnote 246}

Export-Oriented Working Capital Credit was established with the aim of financing raw materials, intermediate goods, machinery and equipment purchases and other financial needs of companies. Purchasing of raw materials and intermediate goods are financed based on completed procurement within the framework of invoices. The maturity for this program is currently three years.^{Footnote 247} It is believed that at least one of the exporters of subject goods used this program during the POI.^{Footnote 248}

A loan is considered a direct transfer of funds and therefore considered a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA.

Pursuant to section 28 of the SIMR, the benefit to the recipient should be based on a commercial benchmark that reflects the recipient’s ability to obtain comparable financial services in the commercial market. Benefit exists if the bank requires the recipient to repay a lesser amount than would otherwise be payable under a comparable commercial loan.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 7: Turk Eximbank—Specific Export Credit

The legal basis for this program is the Turk Eximbank Law, Principles and Articles of Association. Disbursements under this program are made in accordance with the implementation principles of Export Oriented Working Capital Program and Investment for Credit Program.”^{Footnote 249}

Specific Export Credit is a medium-term pre-shipment financing facility provided to contractors that have overseas activities, exporters, exporter-manufacturers’ foreign currency generating projects which cannot be financed via existing Turk Eximbank credits. It is believed that at least one of the exporters of subject goods used this program during the POI.^{Footnote 250}

A loan is considered a direct transfer of funds and therefore considered a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA.

Pursuant to section 28 of the SIMR, the benefit to the recipient should be based on a commercial benchmark that reflects the recipient’s ability to obtain comparable financial services in the commercial market. Benefit exists if the bank requires the recipient to repay a lesser amount than would otherwise be payable under a comparable commercial loan.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 9: Turk Eximbank—Ad-hoc Foreign Exchange Scheme for Rediscount Export Credit by the Central Bank of Turkey

The legal basis for this program is the Circular regarding the Turkish lira repayment option, dated 2018-05-25.^{Footnote 251} The program is administered by CBRT.

According to the GOT, this program is referred to as the “Turkish Lira Repayment Option”. The “Turkish Lira Repayment Option”, which was valid from May 25, 2018 to July 31, 2018, was introduced by CBRT as a temporary measure. Under the program, Turkish lira repayment option has been provided to ease borrowers’ repayment obligations with respect to the extraordinary volatility in the foreign exchange market during that period.^{Footnote 252}

In order to make use of Turkish lira repayment option, the borrower (companies which used Rediscount Program – Program 1) must have obtained the rediscount credit before May 25, 2018 and the credit must have a maturity date no later than July 31, 2018. This program potentially adds to the benefit received under Program 1 - Rediscount Program.

Turkish lira repayment option provides borrowers with a choice to make their repayments at specified exchange rates. In case the exchange rate on the date of credit extension is higher than these rates, the exchange rate on the date of credit extension will be applicable in credit repayment.^{Footnote 253} Information on the record suggest that at least one of the exporters of subject goods used this program during the POI.^{Footnote 254}

The financial contribution with respect to this program is tied to the loan received under Program 1 - Rediscount Program. A loan is considered a direct transfer of funds and therefore considered a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA. Further, the purchase or the sale of foreign currencies by the GOT is a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA.

While the benefit related to the preferential terms of the loan itself, as determined under Section 28 of the SIMR, is discussed under Program 1 - Rediscount Program above, the potential benefit under the Turkish Lira Repayment Option is equal to the difference in the cost of the credit that is attributable to the difference in the exchange rate that would have applied absent this program (i.e. the fair market value of the foreign currency), and the preferential terms applied by the GOT. The benefit is determined under Section 36 of the SIMR, which relates to the provisions of goods or services by a Government, as the difference between the fair market value of the currency sold to the exporter (what the exporter would have paid for the currency if not for the Turkish Lira Repayment Option), and the actual amount paid.

According to subsection 2(7.2) of SIMA, a subsidy is considered to be specific when it is limited, in a legislative, regulatory or administrative instrument, or other public document, to a particular enterprise within the jurisdiction of the authority that is granting the subsidy; or is a prohibited subsidy. A "prohibited subsidy" is either an export subsidy or a subsidy or portion of subsidy that is contingent, in whole or in part, on the use of goods that are produced or that originate in the country of export. An "export subsidy" is a subsidy or portion of a subsidy contingent, in whole or in part, on export performance.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 11: OIZ: Provision of energy (e.g. natural gas, electricity) or utilities (e.g. water) at less than fair market value/ preferential rates

Pursuant to paragraph 2(1.6)(c) of SIMA, there is a financial contribution by a government where the government provides goods or services, other than general governmental infrastructure.

Under section 36 of the SIMR, such provision of goods or services may result in a benefit if the goods or services were provided at a price that is less than the fair market value of the goods or services, which relates to the adequacy of the remuneration.

Natural gas

The complainant alleged that companies located in OIZs save 0.5% on the cost of natural gas for uses other than electricity.^{Footnote 255} The allegations are based on the published prices of Boru Hatları ile Petrol Taşıma Anonim Şirketini [in English: Petroleum Pipeline Corporation] (BOTAS), the government entity^{Footnote 256} that is the primary supplier of natural gas in Turkey, which indicates that prices to OIZs are 0.5% lower than for companies located outside an OIZ.^{Footnote 257} The complainant also provided evidence that BOTAS was a public body. The complaint alleged that BOTAS is a “state economic enterprise”, established in accordance with the provisions of Decree Law No. 233 on State Economic Enterprises, and is 100% owned by the Turkish government. Its investment and financial decisions are subject to approval by the government, which also appoints the CEO and Board of Directors.^{Footnote 258}

The natural gas market in Turkey has been regulated according to the provisions of Natural Gas Market Law No. 4646.^{Footnote 259} The Law covers the import, transmission, distribution, storage, marketing, trade and export of natural gas and the rights and obligations of all real and legal persons relating to these activities. The GOT explained that per the law, prices in the natural gas market in Turkey are to be based on free market principles and all wholesale companies and importers undertake natural gas transactions as market players.^{Footnote 260}

The GOT also indicated that the retail price also includes a distribution charge over the wholesale price, and that this charge is regulated by the Energy Market Regulatory Authority (EMRA). Distribution charges are set for a 5-year period for each distribution region separately according to regional operating expenditures and capital expenditures components.^{Footnote 261} At this time, there is no evidence on the record suggesting any preferential distribution charges.

The GOT provided BOTAS’ wholesale prices for each month of the POI, which confirmed that prices for process consumption (i.e. not for energy generation) are consistently 0.5% lower for OIZs.^{Footnote 262} Information on the record suggest that at least one of the exporters of subject goods purchased natural gas from BOTAS during the POI.^{Footnote 263}

Pursuant to paragraph 2(1.6)(c) of SIMA, there is a financial contribution where the government provides goods or services, other than general governmental infrastructures. The potential benefit, pursuant to section 36 of the SIMR, is equal to the difference between the fair market value of the goods or services in the territory of the government providing the subsidy (i.e. the benchmark price), and the price at which the goods or services were provided by the government.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Electricity

The complainant alleged that producers in IOZ may receive a 10%-20% discount on electricity. The legal basis for the alleged preferential rates is the Article 13 of Electricity Market Law No. 6446.^{Footnote 264}

Pursuant to paragraph 2(1.6)(c) of SIMA, there is a financial contribution where the government provides goods or services, other than general governmental infrastructures. The potential benefit, pursuant to section 36 of the SIMR, is equal to the difference between the fair market value of the goods or services in the territory of the government providing the subsidy (i.e. the benchmark price), and the price at which the goods or services were provided by the government.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Water

The complainant alleged that the GOT listed low water cost as an advantage of operating in a OIZ.

Pursuant to Article 97 of Law No. 2464 on Municipality Revenues and Article 18-f of Municipality Law No. 5393, the water tariffs are determined by the related Municipal Council of the related municipality of the related province or country.^{Footnote 265}

Pursuant to paragraph 2(1.6)(c) of SIMA, there is a financial contribution where the government provides goods or services, other than general governmental infrastructures. The potential benefit, pursuant to section 36 of the SIMR, is equal to the difference between the fair market value of the goods or services in the territory of the government providing the subsidy (i.e. the benchmark price), and the price at which the goods or services were provided by the government.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 12: OIZ: VAT exemption or reduction on land acquisition

According to the complainant, a GOT’s investment guide published on the internet lists the exemption of VAT on land acquisition as an advantage of operating in an OIZ.^{Footnote 266}

According to article 17/4(k) of Value Added Tax Law No:3065, land and workplace deliveries of enterprises which are established for the purpose of founding OIZ or Small Industrial Area, are exempt from VAT.^{Footnote 267} The exemption is for enterprises which are established for the purpose of founding OIZ. The Ministry of Treasury and Finance is responsible for administering the program.^{Footnote 268}

According to the GOT, for the purpose of establishing an OIZ, commercial enterprises, such as enterprising committees, cooperatives or other names, are established. These organizations are established to carry out all or some of the services such as the land procurement that the OIZ is to be established on, completion of infrastructure, and construction of the workplaces. In the establishment of an OIZ, land and workplace deliveries are within the scope of the VAT exemption.^{Footnote 269}

Pursuant to paragraph 2(1.6)(c) of SIMA, there is a financial contribution where the government provides goods or services, other than general governmental infrastructures. The potential benefit, pursuant to section 36 of the SIMR, is equal to the difference between the fair market value of the goods or services in the territory of the government providing the subsidy (i.e. the benchmark price), and the price at which the goods or services were provided by the government.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 13: OIZ: Real Estate Duty Exemption or Reduction

According to the complainant, a GOT’s investment guide published on the internet lists the exemption of real estate duty for five years starting from the date of completion of the plant construction, as an advantage of operating in an OIZ.^{Footnote 270}

In its response to the Subsidy RFI, the GOT indicated that its answer was provided under Program 26 – Exemption from Property Tax. However, it is unclear whether these two programs are the same.

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected. According to subsection 27.1(2) of the SIMR, any amount otherwise owing and due to a government that is exempted or deducted and any amount owing to a government that is forgiven or not collected by the government shall be treated as a grant under section 27.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 14: OIZ: Municipal Tax Exemption or Reduction (e.g. for construction and usage of the plant, on solid waste, etc)

The GOT refers to program as “OIZ – Exemption from Building and Construction Charges”.^{Footnote 271}

According to the GOT, “Building constructions in municipal borders and urban areas (including extensions and amendments) are subject to building and construction charges at the time construction or amendment license is granted by related municipality. The purpose of the program is encouraging companies to operate in OIZs. The buildings and facilities constructed in OIZs are exempted from building permit fee and occupancy permit fee charged by the municipalities.”^{Footnote 272}

The program is regulated under Article 80 of the Law No. 2464 on Municipal Revenues, which states that “Organized Industrial Zones and the constructions and facilities built in small-scaled business sites are exempt from building construction duties and occupancy permit charges”.^{Footnote 273} The Ministry of Industry and Technology, Directorate General for Industrial Zones, as well as the Ministry of Treasury and Finance are reportedly responsible for the administration of the program.^{Footnote 274}

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected.

Subsection 27.1(2) of the SIMR stipulates that such amount shall be treated as a grant under Section 27. The benefit is equal to the amount that would otherwise be owing and due that was exempted under this program. Pursuant to section 27, where a grant was related to the purchase or construction of a fixed asset, the amount of benefit should be distributed over the estimated total quantity of goods produced / to be produced over the estimated useful life of the asset.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 15: OIZ – Exemption from amalgamation and allotment transaction charges

According to the GOT, this program, which aims at encouraging companies to operate in OIZs, is regulated under Article 59 (n) of the Law No. 492 on the Law on Fees, which stated that “amalgamation and allotment operations of the real estates located in organized industrial zones, free zones, industrial zones, technological development zones and industrial sites, transactions that requires annotation due to the allocation of the land and transfer and allotment transactions of the buildings built on this land and type change transactions in the mentioned zones”.^{Footnote 275}

According to the GOT, land registry and cadastre transactions are subject to land registry and cadastre charges. The charges regarding amalgamation and allotment transactions are collected at the time of amalgamation or allotment transaction by the local office of land registry where the transaction takes place. Allotment, partition or amalgamation transactions pertaining to the immovable properties located in OIZs are exempted from amalgamation and allotment transactions charges. The Ministry of Industry and Technology, Directorate General for Industrial Zones is responsible for the administration of the program.^{Footnote 276}

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected.

Subsection 27.1(2) of the SIMR stipulates that such amount shall be treated as a grant under Section 27. The benefit is equal to the amount that would otherwise be owing and due that was exempted under this program. Pursuant to section 27, where a grant was related to the purchase or construction of a fixed asset, the amount of benefit should be distributed over the estimated total quantity of goods produced / to be produced over the estimated useful life of the asset.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 26: Exemption from Property Tax

The GOT refers to this program as “Property tax exemption under the Law No. 1319”. The program provides property tax exemption for the buildings which are in the organized industrial zones, free zones, industrial zones, technology development zones and industrial sites.^{Footnote 277}

The relevant legal basis for the tax exemption is paragraph (m) of Article 4 of Property Tax Law No. 1319.^{Footnote 278} The subparagraph (m) of Article 4 (permanent exemptions) of Law No. 1319 has been amended by the Article 10 of Law No. 7033 from the date of 1 July 2017 and it is still in force. Municipalities and the Ministry of Finance are responsible for administering the program.^{Footnote 279}

Local municipalities administer this program. Companies wishing to benefit from this program must notify the related municipality when they first build or acquire a building in an OIZ. The municipality then refrains from assessing the relevant building for property tax.

The property tax rate is 0.2% for these buildings. Owners of buildings located in the types of areas covered by this law (e.g. OIZs) are eligible for the exemption under this program. Owners, not renters, who are responsible for paying property taxes can benefit from the building tax exemption under this program.^{Footnote 280}

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected.

Subsection 27.1(2) of the SIMR stipulates that such amount shall be treated as a grant under Section 27. The benefit is equal to the amount that would otherwise be owing and due that was exempted under this program. Pursuant to paragraph 27(a) of the SIMR, given that the grant (grant equivalent) is to be used for operating expenses in the production, purchase, distribution, transportation, sale, export or import of subsidized goods, the benefit should be allocated over the total quantity of subsidized goods to which the grant is attributable.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 28: Project-based Government Support for Investment Program (Super Investment Incentive Scheme)

The GOT refer to this program as “Project Based Investment Incentive System”. The legal basis of the program is Article 80 of the Law No. 6745 and Decree No. 2016/9495^{Footnote 281}.

The Ministry of Industry and Technology (MIT) is responsible for administering the program.^{Footnote 282}

Incentives under this program may include:^{Footnote 283}

Tax incentives:

• Customs duty exemption
• VAT exemption
• VAT refunds
• Corporate tax deductions or exemptions

Employment incentives:

• Social security premium support (employer’s share)
• Income tax withholding support
• Qualified personnel employment support

Financial incentives:

• Interest support
• Grant support
• Capital contribution support
• Energy support

Incentives related to land allocation:

• Substructure support
• Land allocation

Other incentives:

• Facilitation of legal and administrative procedures
• Purchasing guarantee

Companies which would like to obtain a project-based investment encouragement certificate, apply to the MIT with the details of the investment. MIT evaluates the applications and determines the projects that will be supported. MIT evaluates the applications with regard to current and future needs of the country and potential technological transformation will be provided with the investment.^{Footnote 284}

The CBSA reviewed the application documentation that must be provided by applicants.^{Footnote 285}

The application requests that the applicant submits an impact analysis. The document lists 14 criteria to address in the impact analysis, which will form the key decision criteria for the MIT in its evaluation of the applications. Key criteria taken into consideration by the granting authority include the contribution of the product produced via the project to reduce import dependency and the contribution of the project to the competitiveness and export potential of the country. The CBSA noted that these criteria are consistent with the common policies and actions cited in the GOT’s 10th and 11th Development Plans, GITES, the 2023 Turkey Export Strategy and Action Plan, the Strategy Document And Action Plan on Turkey Iron-Steel And Nonferrous Metals Sector and the Mid Term Programme 2018-2020. The policies have a common thread in regards to meeting the input supply needs of the manufacturing industry more effectively in export-oriented production, especially for product groups where import dependency is intense. Encouraging exports of higher-added-value steel products is specifically targeted, while encouraging the increase use of domestic intermediate materials in their production.^{Footnote 286}

Evidence on the record suggest that none of the exporters of subject goods used this program during the POI.

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected. Further the “other incentives” and “incentives related to land allocation” is a financial contribution pursuant to paragraph 2(1.6)(c).

Subsection 27.1(2) of the SIMR stipulates that such amount shall be treated as a grant under Section 27. The benefit is equal to the amount that would otherwise be owing and due that was exempted under this program. Pursuant to paragraph 27(a) of the SIMR, given that the grant (grant equivalent) is to be used for operating expenses in the production, purchase, distribution, transportation, sale, export or import of subsidized goods, the benefit should be allocated over the total quantity of subsidized goods to which the grant is attributable. Pursuant to paragraph 27(b), where the grant was, or is, to be used for the purchase or construction of a fixed asset, the grant is allocated over the estimated total quantity of subsidized goods for the production, purchase, distribution, transportation, sale, export or import of which the fixed asset was, or will be, used for the anticipated useful life of the fixed asset.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 29: TURQUALITY Brand Promotion Incentive Program

The GOT refers to this program as the “Overseas Branding of Turkish Products, Promotion of Turkish Product Image and Supporting ®Turquality”.^{Footnote 287} The “Turquality” program is regulated by Communiqué No. 2006/4 of the Money-Credit and Coordination Council.^{Footnote 288} The Ministry of Trade is the national authority responsible for the administration of the program.^{Footnote 289}

The expenses that may be supported under this program are international trademark registration, certification and quality marks, salaries of fashion/industrial designers and product development engineers, consultancy, promotional activities and rent, decoration and construction of branches and franchises of the supported firms. Companies who are found eligible to be supported by this program, can apply for the support of certain expenses, as listed above. Companies who are accepted under the “Turquality” program are supported for five years.^{Footnote 290}

Evidence on the record suggest that none of the responding exporters benefited from this program, during the POI.

Pursuant to paragraph 2(1.6)(a), a financial contribution is provided where practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities.

Subsection 27.1(2) of the SIMR stipulates that such amount shall be treated as a grant under Section 27. The benefit is equal to the amount that would otherwise be owing and due that was exempted under this program. Pursuant to paragraph 27(a) of the SIMR, given that the grant is to be used for operating expenses in the production, purchase, distribution, transportation, sale, export or import of subsidized goods, the benefit should be allocated over the total quantity of subsidized goods to which the grant is attributable.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Program 30: Support to Offset Costs Related to Trade-Remedy Investigations

According to the GOT, it is the Turkish Steel Exporters’ Association (TSEA), which is a non-profit business and trade association, that provides assistance to its members through its own budget.^{Footnote 291} According to TSEA, exporters’ associations are non-profit business and trade associations and uses its budget, which basically consists of membership fees to solve the problems that its members face at home and abroad, provides contact between members and foreign importers in order to ease the export processes, to serve up to date domestic and global market news, reports and analysis. Thus, once a trade policy investigation is initiated against Turkish exports, TSEA may contribute to such expenditures. However, the TSEA claims that this is not a support program since TSEA transfers the money to the exporters that it has already collected as membership fees.^{Footnote 292}

According to TSEA, it evaluates each request based on the provisions of “Procedures and Principles Regarding the Supports Provided to Companies for Advocacy and Legal Counselling Services Purchased in Trade Remedy Investigations and Generalized System of Preferences Practices”, which have been in force snice 2015 (Procedures and Principles).^{Footnote 293}

Under the program, 50% of consultancy fees, not exceeding 100,000 USD may be contributed by the Exporters’ Association. According to TSEA, the applicant company is required to be a member of the exporters’ association and to realize at least 500,000 USD export within two calendar years prior to the initiation of the investigation.

According to TSEA, none of the exporters having subject merchandise exports to Canada during the POI applied for, accrued, or received benefits under this program during the POI.^{Footnote 294}

The CBSA notes that pursuant to paragraph 2(1)(b) of SIMA, the definition of “government” includes “any person, agency or institution acting for, on behalf of, or under the authority of, or under the authority of any law passed by, the government of that country or that provincial, state, municipal or other local or regional government”. As a general rule, an entity will constitute “government” when it possesses, exercises, or is vested with governmental authority.^{Footnote 295}

The CBSA reviewed Law 5910^{Footnote 296}, and made the following observations:

• The TSEA is a sub-organization of the Turkish Exporters Assembly
• Article 1 - The objective of this Law is to regulate the procedures and principles related with the foundation, operation, duties, bodies, expenses and auditing of the exporters associations and the Turkish Exporters Assembly and the rights and obligations of its members in order to contribute to the economy by increasing export through organizing the exporters and improving cooperation
• Article 3(3) sets the duties of the exporters’ associations
• According to Article 1 of the Procedures and Principles,^{Footnote 297} the Support to Offset Costs Related to Trade-Remedy Investigations is provided within the context of clause (a) of third paragraph of Article 3 of Law No. 5910 on Foundation and Duties of the Turkish Exporters Assembly and the Exporters’ Associations
• Article 4 (1) - Exporters are obliged to be a member of the related association and affect the payments specified in the law
• Article 4 (2) - Members are obliged to comply with the decisions of the association, act in conformity with the objectives of the association, to submit any information and document required by the authorized bodies on time and in full and entitled to resign from membership at will
• Article 11(3) regards the duties of the Turkish Exporters Assembly. Generally speaking, the Turkish Exporters Assembly is under the authority of the Undersecretariat of Foreign Trade. For example, sub-clause (i) the Turkish Exporters Assembly is to perform the other foreign trade related duties to be assigned by the Undersecretariat
• Article 18 sets the mandatory contribution to the exporters’ association and to the Turkish Exporters Assembly

In regards to the above, the CBSA’s position is that the TSEA is vested with government authority and carrying out a government function. As such, the TSEA is considered as a government body.

Pursuant to paragraph 2(1.6)(a), a financial contribution is provided where practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities.

The benefit under this program is equal to the amount of legal fees reimbursed or covered by the TSEA. Pursuant to paragraph 27(a) of the SIMR, the subsidy is to be distributed over the estimated total quantity of subsidized goods to which the grant is attributable. In the case of this program, the grant would be distributed over the quantity of goods subject to the trade remedy investigation in question.

Due to the lack of a complete response by any other exporter, there is not sufficient information on the record to determine whether this subsidy is specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy is not specific pursuant to the criteria set out in subsection 2(7.1). On the basis of the available information, this program does not appear to be generally available to all enterprises in Turkey and therefore appears to be specific.

Identified programs found not to be subsidies

Program 8: Turk Eximbank—Export Credit Insurance including: Short-term Export Credit Insurance

The legal basis for this program is the Turk Eximbank Law, Principles and Articles of Association and “Implementation Principles for Short-Term Export Credit Insurance”.^{Footnote 298}

The Short Term Export Credit Insurance Program (STECI) provides Turkish exporters with one-year blanket insurance cover for exports purchased on short-term credits. The percentage of cover is up to 90% for losses due to the political and commercial risks for the shipments to be paid up to 360 days.^{Footnote 299}

Within the framework of this program, the rates of premium differ for all shipments according to the risk classification of buyer’s country, payment terms and credit periods and the type of the buyer (private/public).^{Footnote 300}

The provision of export credit insurance is considered as the provision of goods or services, other than general governmental infrastructure and therefore considered a financial contribution pursuant to paragraph 2(1.6)(c) of SIMA. Section 36 of the SIMR deals with the calculation of the amount of subsidy which arises from the provision of goods or services by government. In the absence of a comparable insurance service being provided on a commercial basis and in agreement with paragraph (j) of Annex I of the SCM Agreement, the CBSA will generally consider that an export insurance program provides benefit if the premiums charged for access to the program are inadequate to cover the long term operating costs and losses of the program.^{Footnote 301}

The CBSA reviewed Turk Eximbank’s 2014 to 2018 Annual Reports and other information available on the administrative record.^{Footnote 302} The CBSA’s analysis found that the revenue from premiums covers the long term operating costs of the program and that this program is not a subsidy in respect of the subject goods.

It was determined that no countervailable benefit was provided under this program as in agreement with paragraph (j) of Annex I of the SCM Agreement. Therefore, this program does not constitute a subsidy for the purposes for the final determination. For the purposes of the final determination, the CBSA excluded this program from the “all other rate”.

Program 10: Credit Guarantee Fund (KGF) Scheme for Turk Eximbank Programs

Name changed to: Credit Guarantee Fund (KGF) Equity Backed Guarantees and Treasury Backed Guarantees

This program is referred to as the “Credit Guarantee Fund (KGF) Equity Backed Guarantees and Treasury Backed Guarantees” per the GOT.

Turk Eximbank credit programs require the beneficiary to submit a letter of guarantee. The program provides collateral for different credit programs extended by Turk Eximbank. With respect to Treasury-backed guarantees, KGF can provide guarantees up to 100% for the loan requests from Eximbank or TL/foreign currency denominated loans from banks for businesses engaged in exports or foreign currency-earning activities.^{Footnote 303} It is the CBSA’s understanding that KGF generally guarantees up to 80% of the credit, with the exception of Eximbank credit which are guaranteed by 100%.^{Footnote 304}

Under SIMA, as a general rule, an entity will constitute “government” when it possesses, exercises, or is vested with governmental authority.^{Footnote 305} The following are factors that could indicate that this is the case in a particular entity:

• Express delegation or vesting of authority to an entity by statute or other legal instrument
• Evidence that an entity is, in fact, exercising governmental functions and
• Evidence that a government exercises meaningful control over an entity

The KGF is a joint-stock company incorporated under the Turkish Commercial Code. Its website lists KGF’s government entity shareholders and shareholders that have public institution status. It also states that KGF is the only institution in Turkey that provides guarantees to “ease SME and non-SME access to finance.”^{Footnote 306}

The KGF website also states that guarantee institutions are supported by states since the services they provide are for the public good. Hence, KGF is exempt from stamp duty, corporate tax, and certain other fees and charges. Furthermore, information on the record also suggests that significant funds are being provided by the GOT for the KGF.^{Footnote 307}

The CBSA noted that the GOT’s economic policy documents specifically refer to the KGF as a policy tool. For example, the Medium Term Programme (2018-2020) states that “[t]he Credit Guarantee Fund (CGF) will be restructured to prioritize the financing investments, exports, new ventures and R&D projects”.^{Footnote 308} Similarly the 11th Development Plan says that “[t]he efficiency of the existing credit guarantee system will be increased and the use of the Credit Guarantee Fund in projects that will increase competitiveness and efficiency in prioritized sectors will be concentrated. Fifty percent of the Credit Guarantee Fund will be allocated to investment and to the export loans in the manufacturing industry sectors. […]. The support of the Development and Investment Bank to industrial investments, particularly the prioritized sectors, will be strengthened.”^{Footnote 309}

Having regards to the above, the CBSA determined that the KGC satisfies the above criteria of a public body. The KGC is an entity that was established by the GOT (i.e. under Cabinet Decree No. 93/4496 dated 14 July 1993) and has a controlling number of government entity shareholders (as high as 70% according to a research paper^{Footnote 310}). Some of the KGF’s capital is provided by the GOT. The KGF appears to be exercising government functions and is used as policy tools in government economic policy and plans.

As such, financial contributions provided by the KGF are considered as financial contributions provided by the GOT.

A loan guarantee is considered a financial contribution pursuant to paragraph 2(1.6)(a) as a practice of the government that involves a contingent transfer of funds.

Pursuant to section 31.1 of the SIMR, the amount of subsidy on loan guarantees is calculated by taking the present value of the difference between (a) the amount of interest and any administrative fees the person on whose behalf the guarantee is provided would have paid in respect of the loan if not for the guarantee, and (b) the amount of interest and any administrative fee the person on whose behalf the guarantee is provided will actually pay in respect of the loan secured by the guarantee.

The CBSA estimated that this program does not result in any benefit that is not already fully determined in the calculation of the amount of benefit under any of the Eximbank loan programs already under investigation. The CBSA would be unable to segregate the proportion of the preferential terms of a given loan that is due specifically to the KGF guarantee. As such, the CBSA did not determine any amount of subsidy for this program, although potential benefit due to this program would already be reflected in the amounts of benefits estimated for the other Eximbank loan programs. The CBSA assessed whether the KGC provided guarantees on any other loans provided to the producers/exporters of subject goods. According to information on the record, none of the exporters having subject merchandise exports to Canada during the POI received loans with treasury-backed guarantees, other than Turk Eximbank loans.^{Footnote 311}

It was determined that no countervailable benefit was provided under this program. Therefore, this program does not constitute a subsidy for the purposes for the final determination. For the purposes of the final determination, the CBSA excluded this program from the “all other rate”.

1. Program 17: Free Zones Law—Corporate income tax exemption or reductions
2. Program 18: Free Zones Law—Stamp duties and fees exemptions or reductions
3. Program 19: Free Zones Law—Customs duties exemptions or reductions
4. Program 20: Free Zones Law—VAT and special consumption tax exemptions or reductions
5. Program 21: Free Zones Law—Real Estate Tax Exemptions or reductions
6. Program 22: Free Zones Law—Income Tax on Employee’s Salary Exemptions or reductions

According to the GOT, all producers/ exporters of subject goods operate in an OIZ.^{Footnote 312} The GOT also reported that none of the producers/ exporters of subject goods operate in a Free Zone.^{Footnote 313}

For the purposes of the final determination, the CBSA considered that the six programs related to Free Zones have not been used and were not available to any of the producers or exporters of subject goods. For the purposes of the final determination, the CBSA excluded these six programs from the “all others rate”.

Program 23: Inward Processing Regime – Excessive tax exemptions and drawback (Import Duty Rebates/Drawback Under Inward Processing Regime; Tariff and VAT Exemptions Under Inward Processing Certificate Program)

The legal basis for the program is the Resolution Concerning Inward Processing Regime (“The Resolution No. 2005/8391”).^{Footnote 314}

The Inward Processing Regime (IPR) is a system allowing Turkish manufacturers and exporters to obtain raw materials, intermediate unfinished goods that are used in the production of the exported goods without paying customs duty including Value Added Tax (VAT). The GOT claims that Turkey has a system in place to confirm which inputs, and in what amounts are consumed in production of the exported products under the program.^{Footnote 315}

Under the IPR, two types of certificates are granted, the D1 and D3 certificates. The D1 certificates allow manufacturer-exporters /exporters to obtain inputs that are used in the production of exported goods without paying any import duty and VAT. The D3 certificates can be used in some business activities realized in Turkey. In the implementation of D3 certificates, there is no need for export commitments. All of these business activities are defined as “domestic sales and deliveries deemed as exports”. Holder of the D3 certificates can import goods without paying import duty but in this case, as it is mentioned above, holder makes domestic sales instead of export.^{Footnote 316}

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected.

Under paragraph 2(1)(a) of SIMA, a subsidy does not include the amount of any duty or internal tax imposed on any goods which is exempted or relieved because the goods are exported (including duties on inputs consumed in the production of the exported goods). It is only the excessive relief that consist of a subsidy. An excess amount may occur where, on the condition of export, relief is provided on goods that are not exported, or in instances where the goods are exported but the amount of the relief is greater than the amount that would normally be payable if the goods had been consumed domestically rather than being exported. A normal allowance for waste should be made when considering the excess. The amount of benefit from excessive relief of duties and taxes is determined pursuant to section 35 or 35.01 (for inputs) of the SIMR.

The CBSA may also determine that the entire exemption amount constitutes a benefit if the foreign government has not examined the inputs in order to confirm that such inputs are consumed in the production of the exported goods, in what amounts, and the taxes that are imposed on the inputs. If it is found that there is a system in place that confirms this information, the CBSA will examine the system to see if it is reasonable.

This program is contingent upon an export commitment. Therefore, any potential benefit under this program would be considered to be specific, pursuant to paragraph 2(7.2)(b) of SIMA.

In past subsidy investigations, the CBSA^{Footnote 317} and Australia^{Footnote 318} have concluded that the the GOT had adequate controls in place to ensure all export commitments are met and for monitoring compliance with the IPR. It is believed that these conclusions regarded the D1 certificates.

Any relief under D3 certificates would appear to be countervailable. According to responses from the GOT and from the respondents, only D1 certificates were issued to producers or exporters of subject goods during the POI.

Considering that only D1 certificates were used by the producers / exporters of subject goods during the POI, the CBSA considered that no countervailable benefits were granted under this program, in light of evidence that the GOT had adequate controls in place to ensure all export commitments are met and for monitoring compliance with the IPR. For the purposes of the final determination, the CBSA excluded this program from the “all other rate”.

Program 25: Exemption from Banking and Insurance Transactions Tax (BITT) on Foreign Exchange Transactions

Between May 2008 and May 15, 2019, the BITT rate set for all foreign exchange sales was 0%. To restrict speculative and high frequency foreign exchange movements, with Presidential Decree no 1106, BITT rate for foreign exchange sales was increased to 0.1% with certain exceptions.^{Footnote 319}

The BITT rate is specified by Article 1 of the Annexed Decision of the Cabinet Decree No. 98/11591 dated August 28, 1998. The change in BITT rate is put into force with the Presidential Decree no 1106 published in the Official Gazette numbered 30377 dated May 15, 2019 and amended with the Presidential Decree no 1149 published in the Official Gazette numbered 30804 dated June 17, 2019.^{Footnote 320} This regulation is administered by Ministry of Treasury and Finance.^{Footnote 321}

With the May 15, 2019 amendment, the below stated transactions remained to be subject to 0% BITT:^{Footnote 322}

• Foreign exchange sales between banks and authorized institutions or among each other
• Foreign currency sales that are made to the Ministry of Treasury and Finance
• Foreign currency sales made to corporate borrowers having foreign currency loan payables, by the lender banks or the banks that act as intermediary to the utilization of the foreign currency loan

Afterwards, with the Presidential Decree no 1149, the below stated transactions have been added to the foreign exchange transactions which are subject to 0% BITT rate, from the date of June 18, 2019:^{Footnote 323}

• Foreign exchange sales to enterprises having industrial registry certificate
• Foreign Exchange sales to exporters

As such, the GOT claimed that foreign exchange sales that are made to any enterprise having an industrial registry certificate are subject to 0% BITT rate without any exceptions. Industrial registry certificates can be obtained by any industrial establishment.^{Footnote 324}

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected.

Subsection 27.1(2) of the SIMR stipulates that such amount shall be treated as a grant under Section 27. The benefit is equal to the amount that would otherwise be owing and due that was exempted under this program. Pursuant to paragraph 27(a) of the SIMR, given that the grant (grant equivalent) is to be used for operating expenses in the production, purchase, distribution, transportation, sale, export or import of subsidized goods, the benefit should be allocated over the total quantity of subsidized goods to which the grant is attributable.

Regarding specificity, the GOT claims that the foreign exchange transactions of all enterprises having industrial registry certificate are excluded from BITT and that the applicable exemption is not contingent on export. Thus, under the GOT’s argument, the BITT exception on foreign exchange transactions is generally available and not export contingent.

On the one hand, exemption from a foreign exchange transaction tax could be treated as a de facto specific subsidy in accordance with paragraph 2(7.3)(c) due to the fact that a certain subset of those who are eligible for the program would receive a larger amount of the benefit (i.e. exporters). This could be the case if the tax relief program provides a distortive benefit in comparison to sales made in the domestic market, as those sales would not require an exchange of currency.

On the other hand, the exemption appears to be restorative in nature, such that it removes a tax on export sales that would not be present for domestic sales as they would not require currency conversion. As such, the subsidy does not appear to be causing distortions to normal patterns of investment, production and pricing that result in harmful trade effects and it is not believed to be targeted to a specific group of enterprises through administrative discretion.

The CBSA has considered that any benefit resulting from the Exemption from Banking and Insurance Transactions Tax (BITT) on Foreign Exchange Transactions is not specific and therefore not countervailable. For the purposes of the final determination, the CBSA excluded this program from the “all other rate”.

Program 31: Export Freight Supports

The GOT referred to this program as the “VAT and Special Consumption Tax (SCT) exemption on the delivery of diesel fuel to the vehicles carrying exporting goods”.^{Footnote 325} Under this program, trucks, haulers and semi-trailers with cooling unit, carrying goods that will be exported within the export regime are exempt from VAT and SCT for their fuel purchases when exiting from the customs border gates determined by the President of the Republic. Purchased diesel fuel amounts shall not exceed the standard fuel tank volumes of trucks and cooler units.^{Footnote 326}

The legal basis for the tax exemption is Article 14.3 of the Value Added Tax Law No. 3065 for the VAT exemption; and Article 7/A of the Special Consumption Tax Law No. 4760 for the SCT exemption.^{Footnote 327} The Ministry of Treasury and Finance is administering this exemption.^{Footnote 328}

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected. Subsection 27.1(2) of the SIMR stipulates that such amount shall be treated as a grant under Section 27. The benefit is equal to the amount that would otherwise be owing and due that was exempted under this program. This program is contingent upon an export commitment. Therefore, this program has been determined to be specific, pursuant to paragraph 2(7.2)(b) of SIMA.

No evidence suggests that the service providers have passed through any benefits from this program.

For the purposes of the final determination, the CBSA determined that none of the producers/exporters of subject goods benefited from this program during the POI. For the purposes of the final determination, the CBSA excluded this program from the “all other rate”.

Program 32: Provision of Input (e.g. Hot-rolled Steel, Cold-rolled Steel, coking coal) at Less than Adequate Remuneration

Hot-rolled steel (HRS), cold-rolled steel (CRS)

The complainant alleges that the GOT may be providing substrate (HRS or CRS) to Turkish COR producers through Ereğli Demir ve Çelik Fabrikaları T.A.Ş. (Erdemir) or its subsidiary for less than adequate remuneration.^{Footnote 329}

Information on the record confirmed that HRS was supplied by Erdemir for the production of subject and like goods.^{Footnote 330}

Under SIMA, as a general rule, an entity will constitute “government” when it possesses, exercises, or is vested with governmental authority. The following are factors that could indicate that this is the case in a particular entity:

• Express delegation or vesting of authority to an entity by statute or other legal instrument
• Evidence that an entity is, in fact, exercising governmental functions
• Evidence that a government exercises meaningful control over an entity

Conversely, an entity that is carrying out an entirely commercial function (e.g. a steel producer) can potentially be considered as constituting government, if there is some evidence to show that the entity is in some way possessing, exercising or vested with governmental authority, such as through a statute or through the exercise of governmental function under government control.

Evidence of meaningful control by the GOT over OYAK and/or Erdemir

Erdemir is a joint-stock company whose shares are traded on the Istanbul Stock Exchange. Erdemir is the largest iron and steel works corporation in Turkey. According to data provided by the GOT, Erdemir, together with its subsidiary Isdemir, accounted for close to 53% of HRS production in Turkey, and about 30% of the apparent domestic market for HRS (not counting HRS produced for internal consumption).^{Footnote 331} Erdemir denoted the group structure of Erdemir and its subsidiaries as OYAK Mining and Metallurgy Group.

Evidence on the record confirms that OYAK (Military Personnel Assistance and Pension Fund) owns the majority of Erdemir’s share on the stock market through its wholly-owned subsidiary ATAER Holding A.Ş.. In this regard, ATAER Holding A.Ş. owns 49.29% of Erdemir’s share, while Erdemir owns 3.08% of its own shares, which effectively provides OYAK the majority controlling interest of Erdemir (i.e. at 52.37%).^{Footnote 332} Erdemir was privatized in 2006.^{Footnote 333}

According to information on the record, at least five of the current nine members of Erdemir’s Board of Directors (BoD) are associated with OYAK. Further, the Turkish Privatization Administration (TPA), a government body, is also a member of the BoD.^{Footnote 334} The TPA has a representative on the BoD as required by Erdemir’s Article of Association, and a usufruct right over the “A Group Share”.^{Footnote 335} This right of the TPA was a precondition of privatization.^{Footnote 336}

The rights assigned to the “A Group Share” include “Resolutions regarding closedown, sales of or an encumbrance upon the integrated steel production facilities and mining facilities owned by the Company and/or its subsidiaries or a resolution on reduction in capacities of such facilities”, as well as “Resolutions regarding closedown, sales, demerger or merger or liquidation of the Company and/or its subsidiaries owning the integrated steel production facilities and mining facilities. Such resolutions can only pass through affirmative votes of the usufructuary in representation of Group A shares.^{Footnote 337} In other words, the TPA has veto power over these decisions.

On the basis of the above, it appears that the GOT does have a degree of control or authority over Erdemir, with respect to some potential corporate decisions. The GOT does have veto power over important strategic decisions such as reduction in capacity, closedown, mergers, etc. While the GOT noted that the TPA has never exercised its veto power^{Footnote 338}, the mere existence of such power could be sufficient to influence of strategic decisions of the company. With respect to the TPA’s involvement in other decisions, it may not be very influential considering the weight of OYAK representatives on the Board. On the other hand, the GOT may also exercise meaningful control over Erdemir indirectly though OYAK.

OYAK is a Military Personnel Assistance and Pension Fund (Fund) which was founded as an institution of the Ministry of National Defense, pursuant to Law No. 205 of January 3, 1961.^{Footnote 339} OYAK utilizes the contribution collected from its members in its investments. While realizing its investments, OYAK aims to contribute to the development of the Turkish economy and prioritizes the areas where this contribution shall be at the highest level”.^{Footnote 340}

Pursuant to Article 20 of the Law No. 205, OYAK is to provide benefits to its members (i.e. military personnel), specifically, retirement benefits, disability benefits, death benefits and housing acquisition benefits.^{Footnote 341} OYAK is to be funded mainly by deductions from the wage of its members and the revenues generated from the management of the assets of the Fund.^{Footnote 342}

Under the Law, OYAK shall be a corporate body with financial and administrative autonomy.^{Footnote 343} The Law describes the Organs of OYAK (i.e. Representative Assembly, General Assembly, Board of Directors, Board of Audit and General Directorate), the selection of its members, their constitutions and duties.^{Footnote 344}

A review by the CBSA of the articles describing the governing bodies of OYAK suggests that the GOT has some direct representations in these governing bodies or has influence in the selection of the representatives. For example, the Minister of National Defense and the Minister of Finance are members of the General Assembly. The General Assembly is indeed presided by the Minister of National Defense, or in his absence, by the Minister of Finance.^{Footnote 345} Some of the members of the Board of Audit are elected among candidates nominated by the Minister of National Defense and by the Prime Ministry of the Republic of Turkey. Members of the Board of Directors are nominated by the Minister of National Defense, or by an election committee composed of the Minister of National Defense, the Minister of Finance and other government officials.^{Footnote 346}

In US – Carbon Steel (India), the WTO Appellate Body observed that "a government’s power to appoint directors to the board of an entity and the issue of whether those directors are independent, would seem to be distinct factors" in assessing the governmental character of an entity.^{Footnote 347} In this context, in United States – Countervailing Measures On Certain Pipe And Tube Products From Turkey^{Footnote 348}, the WTO Panel determined that the US DOC failed to provide evidence that suggests that military and government personnel within OYAK have made decisions under the direction of the GOT in pursuit of governmental economic policies.^{Footnote 349}

The CBSA reviewed the duties of the members of the governing bodies of OYAK, as stipulated by the Law, which did not provide evidence that military and government personnel within OYAK are making decisions under the direction of the GOT in pursuit of governmental policies.

The CBSA’s review of OYAK’s corporate website, several of its Press Releases and its Annual Report, suggested evidence of an aim to contribute to the economic policies of the GOT as well as to the national economy, namely to reduce the country’s trade deficit and import dependency.^{Footnote 350} These aims are in line with the government policies and actions cited in the numerous policy documents reviewed by CBSA.^{Footnote 351}

For example, in a Press Release regarding OYAK’s 58th Ordinary General Assembly Meeting, its Chairman of the Board of Directors was quoted as saying “We are endeavoring for supporting our country’s combat against current deficit, as well as the employment mobilization, and give our best to ensure OYAK’s presence in the production fields that will reduce the foreign dependency.”^{Footnote 352} The 2018 annual report of OYAK Mining Metallurgy Group, the group structure that includes Erdemir and its subsidiaries, also discusses how the Group “[…] has added impetus to the development of the national economy by supplying raw materials to all industries, meeting the growing domestic demand by constantly improving its technology and capacity, enabling the establishment of new industries and supporting exports.”^{Footnote 353} On that basis, it could be argued that OYAK has, to some degree, a corporate strategy that is aligned with the GOT’s official economic policy. Its specific aim at reducing the country’s trade deficit and import dependency do appear to be aligned with the policies and actions cited in the GOT’s 10th and 11th Development Plans, GITES, the 2023 Turkey Export Strategy and Action Plan, the Strategy Document And Action Plan on Turkey Iron-Steel And Nonferrous Metals Sector and the Mid Term Programme 2018-2020.^{Footnote 354}

In the preliminary phase of the investigation, the CBSA took the position that Erdemir was a public body in light of evidence that the GOT had a degree of control, or potential control, over Erdemir. However, for the purposes of the final determination, the CBSA believes that the record contains insufficient evidence that such control has been exercised by the GOT in a meaningful way, and that Erdemir is, in fact, exercising governmental functions. As such, Erdemir is not considered as a public body, and as such the CBSA has not determined that the GOT has provided steel input at less than adequate remuneration. The CBSA further notes that this position is consistent with its position in all past relevant SIMA proceedings. For the purposes of the final determination, the CBSA excluded this program from the “all other rate”.

Program 33: Incentives for R&D Operations and Investments

The legal basis for Incentives for Research & Development (“R&D”) Activities is based on the “Law on supporting Research and Development Activities” (Law No. 5746).^{Footnote 355}

Technology centres, R&D centres, and some pre-competition cooperation projects are able to benefit from the support measures under the Law No. 5746 by applying the Ministry of Industry and Technology (MoIT).^{Footnote 356} The support measures provided under the Law No. 5746 are

• R&D Allowance
• Income Tax Withholding Support
• Insurance Premium Support and
• Stamp Tax Exemption^{Footnote 357}

Pursuant to paragraph 2(1.6)(a), a financial contribution is provided when practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities; likewise pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected. The benefit to the service provider would be equivalent to the amount of tax exempted, or the direct amount transferred.

With respect to specificity, the complainant believes that the program is specific due to its discretionary nature. The CBSA acknowledges that despite some objective eligibility criteria, an application for benefits under this program is subject to assessment by a panel set up by the GOT. Therefore, the CBSA examined whether there was evidence that the discretion was applied in a manner that favors or was limited to a particular enterprise (i.e. an enterprise or industry or group of enterprises or industries). The CBSA examined the statistical data provided by the GOT which suggested that the number of R&D centers were spread across all sectors.^{Footnote 358} The Iron and Non-ferrous Metal accounted for 2.3% of the total number of R&D centers.

The CBSA considered that the evidence suggested that the subsidy was generally available and therefore not specific. For the purposes of the final determination, the CBSA excluded this program from the “all other rate”.

Other program not previously addressed

Program 37: Social Security Premium Support Programs

These additional programs were reported by an exporter in its response to the subsidy RFI.

Minimum wage support

According to the GOT, this program was introduced on January 14, 2016 with the provisional Article 68 of the Law No. 5510 which was included in by the Law No. 6661.^{Footnote 359} The Social Security Institution is responsible for administering the program.^{Footnote 360}

This program was introduced following a substantial increase in the minimum wage by the year 2016. The objective of the program was to reduce the employment costs of the companies due to the sudden increase in minimum wage.^{Footnote 361} The program is provided as a deduction from the employers’ share in insurance premium.^{Footnote 362}

The GOT stated that this program was introduced to reduce employment costs regardless of sector and region of the company.^{Footnote 363} The program’s amount of benefit is determined by the criteria in Law No. 5510.^{Footnote 364} To benefit from this program, companies which registered before January 1, 2016 must fulfill the requirements below:^{Footnote 365}

• Provide their 2016 monthly premiums and service documents within the statutory period
• Declare their employees’, who worked for their companies in 2016, earnings that are subject to premium in full

Companies which registered after January 1, 2016 must fulfill the requirements below:^{Footnote 366}

• Provide their 2016 monthly premiums and service documents within the statutory period
• pay their current month premiums within the statutory period
• not to owe any premium, administrative fine and default fine and late fees to the (Social Security Institution) SSI. If the companies already have received a deferment, installment or restructuring of debt they will submit that to the local offices of the Institution
• inform their employees they are insured and
• the company can not underreport the employees earnings which are subject to premium

Hiring new employees who previously unemployed

According to information on the record, there were three laws that governed this program. These three laws were as follows, Law 6111, Law 6645 and Law 7103. The purpose of these laws is to support all companies that hire new employees who were previously unemployed.

In regards to Law 6111 as per the GOT, Provisional Article 10 of Unemployment Insurance Law No. 4447 which was appended by Law No. 6111 was implemented to increase the employment of young people, women, and vocational proficiency certificate holders. The amount of insurance premium shares that is to be covered by the employers is covered from the Unemployment Insurance Fund.^{Footnote 367} The amount of the assistance provided is determined by the criteria found in Provisional Article 10 of Unemployment Insurance Law no 4447.^{Footnote 368} In order to benefit from this program the employer must be a private sector employer; employ the insured in addition to the average number of the insured personnel; submit monthly premium and service documents to SSI within the statutory periods; pay insurance premiums within the statutory periods; and not have been found to employ unregistered workers.^{Footnote 369}

In regards to Law 6645 as per the GOT, Provisional Article 15 of Unemployment Insurance Law No. 4447 which was appended by Law No. 6645, was implemented to promote the hiring of people who completed on-the-job training programs. This law was enacted to benefit employers that hire people who completed on-the-job training programs and are between 18-29.^{Footnote 370} The amount of the assistance provided is determined by the criteria in Provisional Article 15 of Unemployment Insurance Law no. 4447.^{Footnote 371} In order to benefit from this program the employer must be a private sector employer; employ the insured in addition to the average number of the insured personnel; submit monthly premium and service documents to SSI within the statutory periods; pay the amount corresponding to the insured’s share within the legal period; and also not be bound by a liability of a premium, administrative fine to the Social Security Institution or penalty for default or default interest in connection therewith for the insured employee.^{Footnote 372}

In regards to Law 7103 as per the GOT, Provisional Article 19 of Unemployment Insurance Law No. 4447, which was appended by Law No. 7103, was implemented to increase employment by providing premium support to employers who hire unemployed people.^{Footnote 373} The amount of the assistance provided is determined by the criteria in Provisional Article 19 of Unemployment Insurance Law no. 4447.^{Footnote 374} In order to benefit from this program the employer must not be in debt of any premium and administrative fine, delay fine and late fee of such payments to the Social Security Institution; must submit monthly premium and service documents to SSI within the statutory periods, must pay its share of insurance premiums within the statutory periods, and not have been found to employ unregistered workers or make false statements with regard to the insured workers.^{Footnote 375}

Income tax withholding support under Law 7103

As per the GOT, the benefit from this law is provided pursuant to Provisional Article 21 of Unemployment Insurance Law No. 4447, which was appended by Law No. 7103, to the employers who employ new employees within the scope of this Law’s Provisional Articles of 19 and 20.^{Footnote 376}

According to the GOT, in order to benefit from this program under provision article 19 the employer must:

• not be in debt of a premium and an administrative fine, delay fine and late fee for the payments to the Social Security Institution
• submit monthly premium and service documents to the SSI within the statutory periods
• pay its share of insurance premiums within the statutory periods and
• not have been found to employ unregistered workers or make false statements with regard to the insured workers

According to the GOT, in order to benefit from this program under provision article 20 the employer must fulfill all the same requirements as listed in article 19 as well as:

• be an employer in the manufacturing sector
• have a master certificate in the manufacturing sector and
• have the average number of 1 to 3, regarding the registered insured in the monthly premium and service documents provided to SSI^{Footnote 377}

Per the GOT, due to the sizes of the respondent companies, they cannot have met the additional criteria in the Provisional Article 20. Therefore, the respondent companies may have benefited from this program only through Provisional Article 19. They also stated that the use of this program is not contingent upon export performance or upon the use of domestic over imported goods. It is not limited to any enterprise or group of enterprises located in a geographical region, or to any industry or sector, or to small and medium sized enterprises.^{Footnote 378}

Social security premium support under Law 4857

According to the GOT, this program was introduced to increase the employment of people with disabilities. Article 30 of Law 4857 states that employers in private businesses employing 50 or more employees are obligated to employ three percent of people with disabilities, in public businesses it is four percent for people with disabilities and two percent for ex-convicts. They must employ them in jobs appropriate for their professions and physical and psychological status. 100 percent of the employer’s share of insurance premium for the employees with disabilities is financed by the Ministry of Treasury and Finance if the three percent quota is met.^{Footnote 379}

Pursuant to paragraph 2(1.6)(b), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected. Based on the above, CBSA confirmed that there was a financial contribution in the form of amounts otherwise owing to the government.

Regarding specificity, the GOT claims that the above programs are not contingent on export or any geographically region. Thus, under the GOT’s argument, the programs above are generally available and not export contingent.

In regards to the program, Income Tax Withholding Support Under Law 7103 program, the CBSA found that financial contributions made under this program are not specific, given the broad nature of the manufacturing sector, which can include a range of industries (steel, petrochemical, lumber etc.). Similarly, the CBSA found that the applicable selection criteria for the other remaining programs, as listed above, strongly indicate that they are generally available to a number of different industries. As such, based on the information available, the CBSA found that any benefit resulting from those programs is not specific and therefore not actionable. For the purposes of the final determination, the CBSA excluded Program 37 from the “all other rate”.

Program 38: Intern Salary Support

This additional program was reported by an exporter in their response to the request for information.

Per the GOT, this law was introduced in December 2, 2016 by way of the Provisional Article 12 of Law 3308 which was appended by Law 6764. This was introduced to support employers by paying a portion of the salary paid by employers to apprentice candidates, apprentices and students that undertake vocational training, internship or supplementary training in workplaces.^{Footnote 380} According to the GOT, the purpose of the program is to encourage internship and strengthen the relationship between education and employment. They stated that the main purpose of the program is not to provide support to companies but to encourage internship for vocational high school and university students. They submitted that the beneficiaries are students rather than companies.^{Footnote 381}

The government benefit provided is two-thirds of the salary of those employees for workplaces that employ less than 20 workers and one-third of the salary for those employees for workplaces that employ 20 or more workers.^{Footnote 382}

This program is not supported via an application process.^{Footnote 383} The contribution share of the wage from the state is paid from the Turkish Employment Agency from the Unemployment Insurance Fund. The remaining amount of the wage is paid by the employer.^{Footnote 384}

Pursuant to paragraph 2(1.6)(a) of SIMA, there is a financial contribution where practices of the government involve the direct transfer of funds or liabilities or the contingent transfer of funds or liabilities. The direct transfer of salary would therefore constitute as a financial contribution. With respect to specificity, information on the record does not demonstrate that they are not generally available. Based on the information available, CBSA has considered that any benefit resulting from the programs above is not specific and therefore not countervailable. For the purposes of the final determination, the CBSA excluded this program from the “all other rate”.

United Arab Emirates

Program 1. Import Duty and VAT Exemption in Free Trade Zone

The complainant identified one subsidy program for the UAE. The complainant alleges that COR producers located in free-trade zones in the UAE are exempt from paying a 5% import duty and 5% VAT on the importation of machinery, equipment and other capital used in their production of COR. The allegation is based on online publications by the UAE government and by a consulting firm. The complainant also alleged that at least two of the four known COR producers in the UAE are located in a Free-Trade Zone (FTZ).^{Footnote 385}

The complainant maintains that this relief provides a beneficial financial contribution in the form of revenue foregone by government and that the benefit is specific because it is only available to enterprises located in such free-trade zones.^{Footnote 386}

Pursuant to paragraph 2(1.6)(b) of the Special Import Measures Act (SIMA), a financial contribution is provided where amounts that would otherwise be owing and due to the government are exempted or deducted or amounts that are owing and due are forgiven or not collected. Based on the above, CBSA confirmed that there was a financial contribution in the form of revenue foregone by the GOU.

To determine whether the financial contribution was specific, the CBSA examined the legal framework of the country’s tax laws and qualification criteria for the exemption of import duty and VAT on the importation of equipment and material.

The GOU and two exporters provided the relevant legislation that provides the exemption. The legislation states that any business with an “Industrial License” is exempt from all import duties for equipment and materials. Both exporters also provided copies of their application forms as well as “Industrial License” certificates. In addition, the GOU also provided statistics on the total number of companies in the UAE that hold an “Industrial License”, which range vastly among industries, from restaurants to industrial manufacturers.

Based on the information above, the CBSA was satisfied that although both exporters had received financial contribution in the form of revenue forgone by the government, it was not on account of being located in a FTZ. Furthermore, the large number of companies throughout the UAE spanning across many industries that also qualified for the same import duty exemption supports that the exemption of import duties is generally available.

It is noteworthy that the GOU imposed 5% VAT as of January 2018. Prior to this, VAT was neither collected by the GOU nor remitted by any person or business in the UAE.

The CBSA considered that Article 48(1) of the VAT Regulations permit the usage of a reverse charge mechanism and accounts for VAT at the time of importation as if the taxable supply was made within the UAE. Article 54(1) of the VAT Regulations then permits recovery of VAT paid on imports as an input tax credit in its corporate tax return. In the CBSA’s understanding, this is similar to how the HST and GST function in Canada. The CBSA therefore confirmed that both exporters paid VAT on imported equipment and materials as of 2018, and with regards to the reverse charge mechanism, the CBSA does not consider either exporter to have benefitted from a VAT exemption.

Program 2. Preferential Export Financing or Export Credit Insurance

Prior to the initiation of the investigation, the CBSA identified an additional potential program which exporters located in the UAE may have also benefited from in the form of export financing or export credit insurance from the GOU, in particular from the Etihad Credit Insurance (ECI). The ECI is a Public Joint Stock Company owned by the United Arab Emirates Federal Government and the Government of the Emirate of Abu Dhabi, the Government of the Emirate of Dubai, the Government of the Emirate of Ajman, the Government of the Emirate of Ras Al Khaimah and the Government of the Emirate of Fujairah.^{Footnote 387} Its website says it is a “specialized state institution to support the export and re-export of United Arab Emirates goods, works, services, and the foreign investments of United Arab Emirates companies, through the provision of a range of export credit, financing and investment insurance products.” Services offered also include “Post-shipment financing of exports through bills discounting with the commercial banks at concessional interest rates [emphasis added]; and Pre-shipment financing facilities for exporters through commercial banks against guarantees issued by ECI for working capital requirements, so as to meet and enhance the opportunity for their export sales”.

Pursuant to paragraph 2(1.6)(c) of SIMA, a financial contribution is provided where the government provides goods or services, other than general governmental infrastructure, or purchases goods.

In its RFI response, the GOU provided that the Etihad Export Credit Insurance PJSC (ECI) was established by the UAE Cabinet Resolution No. 303/11W7 of 2015, and is “…mandated to protect and help UAE companies to reduce the uncertainty of exporting to other countries. It provides production to exporters and re-exporters against non-payments due to commercial and political risks associated with the export and re-export of UAE goods and services. It provides protection for foreign investments and projects (outside UAE) due to associated political risks.”^{Footnote 388}

Both exporters provided that they did not apply for, nor receive any export credit insurance through ECI during the POI. The GOU also confirmed that neither exporter applied for nor received any export credit insurance through ECI during the POI. In its review and desk audit of the exporters’ information, including financial statements and accounting records, no positive evidence of companies applying for the program or receiving any benefits under the program were found. Therefore the CBSA considered that no countervailable benefits were granted under this program.

Program 3. Export Assistance Program

Prior to the initiation of the investigation, the CBSA identified an additional potential program which exporters located in the UAE may have also benefited from. This program, the “Export Assistance Program” was identified as being offered by the Dubai Export Development Corporation (Dubai Exports), believed to be the export promotion agency of the government of Dubai.^{Footnote 389} Under the program, according to the agency’s website, “companies can apply for reimbursement on the eligible export promotion activities such as market visits and participation in exhibitions.” Its website also refers to the program as “[…] an invaluable means to access funding for their export operations.”

Pursuant to paragraph 2(1.6)(c) of SIMA, a financial contribution is provided where the government provides goods or services, other than general governmental infrastructure, or purchases goods.

In its RFI response, the GOU acknowledged the existence of the programme, however it also provided that “…the program has been put on hold since 2015, and as per the official statement of the UAE during the last WTO Trade Policy review undertaken in 2006, Dubai Exporters do not envisage to re-initiate this programs.”^{Footnote 390}

In their RFI responses, both exporters provided that they did not apply for nor receive any export assistance under this program during the POI. The GOU also provided that neither exporter applied for nor received any export assistance under this program during the POI. In its review and desk audit of the exporters’ information, including financial statements and accounting records, no positive evidence of companies applying for the program or receiving any benefits under the program were found. Therefore the CBSA considered that no countervailable benefits were granted under this program.

Program 4. Mussafah as a Special Economic Zone

In reviewing Program 1, the CBSA also identified that Mussafah may be considered as a Special Economic Zone (SEZ), and that manufacturers and or exporters of COR may have benefitted from being located in Mussafah.

The GOU provided that Mussafah is not an SEZ, and maintained that no benefit was conferred to either exporter, specifically in land usage fees, or in utility rates, or for income tax purposes. The GOU provided current average lease rates throughout the UAE. It also provided relevant commercial utility rates. Since there is no income tax payable in the UAE, neither exporter could have benefited from a preferential tax rate.

AGIS provided that “the Higher Corporation for Specialized Economic Zones (ZonesCorp) is an Abu Dhabi owned industrial development organization of purpose built economic zones in the UAE. ZonesCorp owns and operates the Industrial City of Dubai (ICAD) where AGIS’s manufacturing facility is located. ICAD is a general industrial area that operates much as an industrial park would in Canada, situating similar businesses and industries in a geographic area to facilitate, among other things, proper land use planning and the provision of infrastructure and other services.”^{Footnote 391}

Pursuant to paragraph 2(1.6)(c) of SIMA, a financial contribution is provided where the government provides goods or services, other than general governmental infrastructure, or purchases goods.

The CBSA did not find any positive evidence of services offered to either exporter at preferential rates during the POI on account of being located in the ICAD.

Program 5. Preferential Loans from a Government Bank

The CBSA examined whether any preferential loans from a government bank benefited either exporter in the UAE. Exporters were found to hold loans from banks partially owned or fully owned by the GOU.

A loan is considered a direct transfer of funds and therefore considered a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA.

Pursuant to section 28 of the Special Import Measures Regulations (SIMR), the benefit to the recipient should be based on a commercial benchmark that reflects the recipient’s ability to obtain comparable financial services in the commercial market. Benefit exists if the bank requires the recipient to repay a lesser amount than would otherwise be payable under a comparable commercial loan. Specifically, the benefit is equal to the difference between:

1. the amount of interest that would be payable, by the recipient of the preferential loan, on a non-guaranteed commercial loan in the same currency, in which the payments for the preferential loan are expressed and on the same credit terms (other than the interest rate), as are applicable to the preferential loan, plus any additional costs (other than the interests), that would have been incurred by the recipient with respect to a non-guaranteed commercial loan the recipient could have obtained, and
2. the amount of interest payable on the preferential loan. For benchmark, the CBSA used interest rate from a similar loan from a privately owned bank in the same currency

The CBSA conducted an analysis of the interest rates, and determined that the rates were not preferential to confer a benefit. Therefore, no subsidy amount under this program was attributable to the subject goods of either exporter.

Vietnam

Subsidy programs used by the responding exporters

Based on the information available, for purposes of the final determination, the CBSA has found that these programs were used by the responding exporters in Vietnam. Based on the information available, these programs constitute a financial contribution provided by the GOV and confer benefits to companies and are specific.

Program 1. Exemptions of import duty

The programs of import duty exemptions are made available pursuant to the Law No. 107/2016/QH13 dated April 6, 2016, on export and import duties (Law No. 107) and Decree No. 134/2016/ND CP dated September 1, 2016, on guidelines for the law on export and import duties (Decree No. 134). Law No. 107 replaced the Law on Export and Import Tax No. 45/2005/QH11 dated June 14, 2005, on detailing a number of articles of the law on export and import duties (Law No. 45). Decree 134 replaced Decree No. 87/2010/ND CP dated August 13, 2010, guiding the implementation of a number of articles of the Law on Export Tax and Import Tax (Decree No. 87). Duty exemption is stipulated in Article 16 of Law No. 45 and Law No. 107 and specified in Article 12 of Decree No. 87 and Article 5 to 29 of Decree No. 134. These programs were provided by the GOV.

This program is considered to be a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the Government are reduced and/or exempted, and confers a benefit to the recipient equal to the amounts of the reductions and exemptions.

The program is specific pursuant to subsection 2(7.2) of SIMA because it is limited to either enterprises in certain geographic areas or investment projects specified in Appendix 1 and Appendix 2 of Decree No. 118/2015/ND-CP^{Footnote 392} dated November 12, 2015, guiding the implementation of a number of articles of the law on investment.

Program 3. Incentives on Non-agricultural land use tax

Based on CBSA research, non-agricultural land use tax is regulated by Law No. 48/2010/QH12 dated June 17, 2010, on non-agricultural land use tax (Law No. 48); Decree 53/2011/ND-CP dated July 1, 2011, guiding the implementation of this Law No. 48; and Circular No. 153/2011/TT-BTC dated November 11, 2011, guiding on non-agricultural land use tax (Circular No. 153). Articles 9 and 10 of Law No. 48 provide for tax exemption and reduction for non-agricultural land use. This program was provided by the GOV.

Appendix 1 of Decree No. 118/2015/ND-CP dated November 12, 2015, guiding the implementation of the Law on Investment (Decree No. 118), defines domains eligible for investment promotion and domains eligible for special investment preferences. Appendix 2 of Decree No. 118 defines areas with extreme socio-economic difficulties, areas with socio-economic difficulties eligible for investment preferences.

This program is a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the Government are reduced and/or exempted, and confers a benefit to the recipient equal to the amount of the reduction/exemption.

The program is specific pursuant to subsection 2(7.2) of SIMA because it is limited to industries located in the regions prescribed.

Program 4. Exemption/Reductions of Land Rent, Tax and Levy

Land used for production and business purposes is governed by Law No. 45/2013/QH13^{Footnote 393} dated June 21, 2013, on Land (Law No. 45); Decree No. 46/2014/ND-CP^{Footnote 394} dated May 15, 2014, on regulating the collection of land rents and water surface rents (Decree No. 46); Circular No. 77/2014/TT-BTC^{Footnote 395} dated June 16, 2014, guiding Decree No. 46/2014/ND-CP; and Circular No. 333/2016/TT-BTC dated December 26, 2016, amending and supplementing a number of articles of Circular No. 77/2014/TT-BTC. Land rent exemption and reduction in land rent are provided in Articles 19 and 20 of Decree No. 46. These programs were provided by the GOV.

The program land-use levy exemption/reduction was terminated on July 1, 2014, as the effective date of the Law No. 45/2013/QH13 dated June 21, 2013, on Land (Law No. 45), replaced Law No. 13. Although, this program was terminated on July 1, 2014, companies that were eligible for the program could have benefited from the subsidy while it was in effect. Depending on the size of the benefits, the benefits could potentially be amortized over the following subsequent years.

This program is considered to be a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the Government are reduced and/or exempted, and confers a benefit to the recipient equal to the amounts of the reductions and exemptions.

The program is specific pursuant to subsection 2(7.2) of SIMA because it is limited to the List of domains entitled to investment incentives and the List of regions entitled to investment incentives as specified in Article 110 of the Law on Land 2013; Section II, Chapter II of Decree No. 46; and Appendix II of Decree 118/2015/ND-CP.

Program 6. Enterprise income tax preferences, exemptions and reductions

Corporate income tax and tax benefits are governed by Law No. 14/2008/QH12^{Footnote 396} dated June 3, 2008, on Enterprise Income Tax 2008 (Law No. 14); Law No. 32/2013/QH13^{Footnote 397} dated June 19, 2013, on amending and supplementing a number of articles of Law on Enterprise Income Tax 2008 (Income Tax 2008 Amending); Law No. 71/2014/QH13^{Footnote 398} dated December 8, 2014, on amending and supplementing a number of articles of the laws on taxes (Law No. 71); Decree No. 218/2013/ND-CP dated December 26, 2013, on detailing and guiding the implementation of law on corporate income tax (Decree No. 218) and Decree No. 12/2015/ND-CP dated February 12, 2015, on elaboration of the law on amendments to tax laws (Decree No. 12). Income tax rate preference is provided in Article 15 of Decree No. 218 and tax exemptions and reductions is provided in Article 16 of Decree No. 218. This program was provided by the GOV.

Article 20.2 of Decree 218 allows the continuation of the application of corporate income tax preferences granted before the Decree’s effective date as of February 15, 2014, if those preferences are more advantaged than those granted under Decree 218.

According to Article 15 of Law No. 67/2014/QH13 dated November 26, 2014, on the Law on Investment (Law No. 67), corporate income tax preferences apply to: (1) Economic zone, high-tech zone established by Decision of the Prime Minister in area with difficult socio-economic conditions; (2) Industrial, processing zone established by Decision of the Prime Minister in areas with special difficult socio-economic conditions specified in Attachment II to Decree No. 118/2015/ND-CP dated November 12, 2015, on guidelines for some articles of the law on Investment (Decree No. 118).

This program is a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the Government are reduced and/or exempted, and confers a benefit to the recipient equal to the amount of the reduction/exemption.

The program is specific pursuant to subsection 2(7.2) of SIMA because it is limited to investment projects within certain eligible geographic areas as specified in Article 15 of Law No. 67.

Program 8. Investment support

The complaint listed the two programs and referred to the US DOC’s final determination in certain steel nails.^{Footnote 399}

The programs are made available pursuant to Decree 108/2006/ND-CP of the Government, dated, September 22, 2006.^{Footnote 400} Decree 108 details in which areas the government will support new investments.

This program is a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts confer a benefit to the recipient equal to the amount of the extra support received from the Government.

The program is specific pursuant to subsection 2(7.2) of SIMA because it is limited to a list of sectors entitled to investment incentives and a list of geographical areas entitled to investment incentives as specified in Appendix I and II and of the Law.

Other potentially actionable subsidy programs identified by the CBSA that were not used by the responding exporter

Based on the information available, for purposes of the final determination, the CBSA has found that these programs were not used by the responding exporters in Vietnam. Based on the information available, these programs may constitute financial contributions provided by the GOV and confer benefits to companies and appear to be specific.

Program 2. Refunds of import duty

The import duty refund programs are made available pursuant to the Law No. 107/2016/QH13 dated April 6, 2016, on export and import duties (Law No. 107) and Decree No. 134/2016/ND CP dated September 1, 2016, on guidelines for the law on export and import duties (Decree No. 134). Law No. 107 replaced the Law on Export and Import Tax No. 45/2005/QH11 dated June 14, 2005, on detailing a number of articles of the law on export and import duties (Law No. 45). Decree 134 replaced Decree No. 87/2010/ND-CP dated August 13, 2010, guiding the implementation of a number of articles of the Law on Export Tax and Import Tax (Decree No. 87). Duty refund is stipulated in Article 19 of Law No. 45 and Law No. 107 and specified in Article 15 of Decree No. 87 and Article 33 to 37 of Decree No. 134. These programs were provided by the GOV.

This program is considered to be a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the Government are reduced and/or exempted, and confers a benefit to the recipient equal to the amount of the refund.

The program is specific pursuant to subsection 2(7.2) of SIMA because it is limited to enterprises located in certain geographic areas or contingent upon export performance and, therefore, constitutes a prohibited subsidy as defined in subsection 2(1) of SIMA.

Program 7. Accelerated Depreciation of Fixed Assets

Accelerated depreciation of fixed assets is specified in Circular 45/2013/TT-BTC^{Footnote 401} dated April 25, 2013, on guiding the regime of management, use and depreciation of fixed assets (Circular 45). According to Article 1, Circular No. 45 applies to enterprises established and operating in Vietnam under regulations of law. Enterprises are permitted to choose their preferred method of depreciation, period of depreciation of fixed assets according to Circular No. 45 and must notify the tax authority before implementation. This program was provided by the GOV.

Article 35 of Law No. 59/2005/QH11 dated November 29, 2005, on the Law on Investment (Law No. 59) provides for investment projects in investment incentive sectors and geographical areas and business projects with high economic efficiency to adopt accelerated depreciation of fixed assets.

This program is a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the Government are reduced and/or exempted, and confers a benefit to the recipient equal to the amount of the reduction/exemption.

The program is specific pursuant to subsection 2(7.2) of SIMA because it is limited to particular enterprises with fixed assets and specialized technological capabilities.

Program 9. Export Promotion Program

The National Trade program was established by Decision No. 279/2005/QD-TTg of November 3, 2005. The Decision constituted the framework for state-funded trade promotion activities from 2006 to 2010. The state funding of these activities was derived from the Export Promotion Fund, established pursuant to Prime Minister's Decision No. 195/1999/QD-TTg. The Decision 279 was amended and supplemented by Prime Minister's Decision No. 80/2009/QD-TTg of May 21, 2009.^{Footnote 402}

This program is considered to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA, where a direct transfer of funds from the Government confers a benefit to the recipient equal to the amount of the grant.

The program is specific pursuant to subsection 2(7.2) of SIMA because Article 9 of Decision 279 specifies the types of trade promotion schemes that are eligible for support and Article 10 specifies the level of support that is available for each of the eligible schemes.

Identified programs found not to be subsidies

Program 5. Export and import support in forms of preferential loan, guarantee and factoring

Investment credit and export credit are made available pursuant to Decree No. 75/2011/ND-CP^{Footnote 403} dated August 30, 2011, on state investment credit and export credit (Decree No. 75) and Decree No. 151/2006/ND-CP^{Footnote 404} dated December 20, 2006, on state investment credit and export credit (Decree No. 151). These programs were provided by the GOV.

Investment credit is stipulated in Chapter II and Appendix I of Decree No. 75 and in Chapter II and List of Eligible Projects for Investment Credit of Decree No. 151. Export credit is stipulated in Chapter III and Appendix II of Decree No. 75 and in Chapter III and List of Eligible projects for export credit of Decree No. 151. The regulation of guarantee operation was detailed in the Circular 28/2012/TT-NHNN^{Footnote 405} issued by the State Bank of Vietnam.

This program is considered to be a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the Government and confers a benefit to the recipient equal to the amount of the grant.

It was determined that no financial contribution was received by the exporters with respect to the terms outlined in subsection 2(1.6) of SIMA during the POI. Therefore, this program does not constitute a subsidy for the purposes for the final decision.

Program 10: Assistance to Enterprises Facing Difficulties due to Objective Reasons

The GOV reported this subsidy program in its New and Full Notifications pursuant to Article 25 of the WTO Agreement on Subsidies and Countervailing Measures, dated, March 13, 2013. This program was provided by the GOV.

According to the GOV response, this program targets companies facing difficulties that arise as the result of unforeseen reasons, such as: policy changes in terms of taxation and other dues to the state budget; relocation of enterprises upon request of competent authorities; loss due to natural disaster, etc.

Depending on the form of benefit, this program may be considered a financial contribution pursuant to paragraph 2(1.6)(a) of SIMA as a direct transfer of funds from the Government and confers a benefit to the recipient equal to the amount of the grant. This program may also be considered a financial contribution pursuant to paragraph 2(1.6)(b) of SIMA, in that amounts that would otherwise be owing and due to the government are reduced and/or exempted, and confers a benefit to the recipient equal to the amount of the reduction/exemption.

It was determined that no financial contribution was received by the exporters with respect to the terms outlined in subsection 2(1.6) of SIMA during the POI. Therefore, this program does not constitute a subsidy for the purposes for the final decision.