While the multilateral trading system recognizes the need for support to industries by the governments, it sets out certain rules in case such support distorts competition and adversely affects industries of other countries. Such support if provided in the form of financial contribution by the government that confers benefit to a recipient industry is called a subsidy.

In Pakistan, subsidized imports causing injury to the domestic industry producing like or similar product is countered through imposition of countervailing duties under the Countervailing Duties Ordinance, 2001 (the “Countervailing Ordinance”).

The countervailing duty is imposed after comprehensive investigation by the Commission under the Countervailing Ordinance of the existence of (i) subsidized imports, (ii) injury to the domestic industry; and (iii) a causal link between subsidized imports and injury to the domestic industry. These conditions for imposition mirror those required for imposing anti-dumping measures. The obvious difference is the fact that in case of imposition of anti-dumping, dumping is to be established, whereas, for countervailing duty, it is essential to demonstrate the existence of subsidization of the imported product.

Similar to the procedure for anti-dumping investigations and imposition of anti-dumping duties, a procedure is provided for under the Countervailing Ordinance where a detailed investigation is conducted and all interested parties are afforded ample opportunities to defend their interests.