Countervailing duty (CVD) is an additional import duty imposed on imported products (by the importing country) when such products enjoy benefits like export subsidies and tax concessions in the country of their origin (ie., where it is produced and exported). CVD is thus an import tax by the importing country on imported products. It is an attempt to ensure fair and market oriented pricing of imported products and thereby protecting domestic industries and firms. The most popular example for CVD is the imposition of additional duty by an importing country when the product has given export subsidy by the exporter/producer country.
The objective of CVD is to nullify or eliminate the price advantage (low price) enjoyed by an imported product when it is given subsidies or exempted from domestic taxes in the country where they are manufactures.
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