What is the difference between 'countervailing duties' and 'anti-dumping duties'?

• A. Countervailing duties are the same as anti-dumping duties.
• B. Countervailing duties only apply to domestic subsidies; anti-dumping only to domestic markets.
• C. Countervailing duties counteract government subsidies on imported goods causing injury; anti-dumping duties address below-market pricing; both are remedies after injury and investigations.
• D. They are optional tools not based on injury findings.

Answer: (C)

These two trade remedies differ in what triggers them: subsidies versus dumping. Countervailing duties target subsidies granted by a foreign government to its producers; if those subsidies distort trade and injure domestic industry, the importing country may impose countervailing duties to offset the subsidy’s effect. Anti-dumping duties target pricing practices where imported goods are sold in the importing country at prices below their normal value (below-market or below cost), and injure domestic producers; duties are applied to bring the import price closer to fair value.

In both cases a formal investigation is conducted and there must be a finding of injury or threat of injury caused by the alleged unfair practice, with a causal link established. The remedies are not optional; they are designed to offset the identified distortions while the underlying issues are addressed.