7.304 The United States recalls that, as noted by the recent panel in Japan - Agricultural Products, a panel must accept a fact submitted to establish a prima facie case that is based on "evidence (1) which is sufficient to raise a presumption that the alleged fact or claim is correct and (2) that has not been sufficiently rebutted by the opposing party."[171] Once a prima facie case has been made, the burden of proof shifts to the responding party.[172] As the Appellate Body stated:

…it is a generally-accepted canon of evidence in civil law, common law and, in fact, most jurisdictions, that the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defense. If that party adduces evidence sufficient to raise a presumption that what is claimed is true, the burden then shifts to the other party, who will fail unless it adduces sufficient evidence to rebut the presumption.[173]

8.1 On 15 March 1999, Australia and the United States requested the Panel to review, in accordance with Article 15.2 of the DSU, precise aspects of the interim report issued to the parties on 8 March 1999. Neither party requested a meeting with the Panel.

8.2 Australia requested a clarifying change to footnote 1, paragraph 1 of the Report. The Panel made this change. Australia also questioned the accuracy of a sentence in paragraph 2.3 of the Panel Report concerning the calculation of the maximum amount of the payments under the grant contract. In light of Australia's comments, we revised the sentence in question to reflect Australia's initial explanation in this regard. In addition, Australia asserted that a phrase in paragraph 9.69 of the Panel Report could be misleading. In light of Australia's comments, we revised the phrase in question.

8.3 The United States requested that the Panel reconsider its finding that the loan was not a subsidy that was "contingent … in fact…upon export performance" within the meaning of Article 3.1(a) of the SCM Agreement. The United States re-emphasized certain factors, including factors based upon confidential business information submitted to the Panel, which, in its view, lead to the conclusion that the loan is "in fact" contingent upon export performance. The Panel did not make any change to its Report in light of the United States comments.

8.4 In its letter of 8 March 1999 transmitting the interim report to the parties, the Panel had indicated that it was "willing to consider brief arguments with respect to the issue of the time period within which the measures found to be prohibited subsidies must be withdrawn under Article 4.7 of the Agreement on Subsidies and Countervailing Measures". Australia made no comments in this regard. The United States endorsed the Panel's recommendation that prohibited subsidies provided to Howe be withdrawn within 90 days.

9.1 This dispute concerns certain financial assistance provided by the government of Australia to Howe and Company Proprietary Ltd. ("Howe"), the only dedicated producer and exporter of automotive leather in Australia. Automotive leather is primarily used for seat coverings and other interior components of automobiles, such as head and armrests, centre consoles and door trim.

9.2 On 7 October 1996, the United States requested consultations with Australia concerning subsidies available to leather under the Australian Textiles, Clothing and Footwear Import Credit Scheme[175] (the "ICS") and any other subsidies to leather granted or maintained in Australia prohibited under Article3 of the SCM Agreement.[176] Following consultations, the United States and Australia reached a settlement on 24 November 1996. This settlement was announced on 25November 1996.[177] Under the terms of settlement, the government of Australia would remove automotive leather from eligibility for benefits under the ICS, as well as under the Export Facilitation Scheme for Automotive Products[178] (the "EFS"), by 1 April 1997. On 26 March 1997, Australian Customs Notice No. 97/29 excised automotive leather from the ICS and EFS, effective 1 April 1997.

9.3 At the time of the settlement, the government of Australia announced a commitment to provide financial assistance to Howe, to help maintain its commercial viability in light of the settlement between Australia and the United States, which resulted in the removal of automotive leather from eligibility under the ICS and EFS programmes.[179] The government of Australia entered into two separate agreements, a grant contract and a loan contract, with Howe and its parent company, Australian Leather Holdings, Limited ("ALH") in March 1997.

9.4 The grant contract provides for three payments totalling up to a maximum of A$30 million, an amount estimated to equal approximately 5 per cent of Howe's expected sales for the period 1April 1997-31 December 2000. The first payment of A$5 million was to be paid upon conclusion of the contract. The second and third payments, of up to A$12.5 million each, were to be paid in July 1997 and 1998 respectively, on the basis of Howe's performance against the targets set out in the contract. The performance targets consist of sales targets and capital expenditure targets. With regard to sales, an overall target for Howe's aggregate sales over the entire term of the contract is established, broken down into interim targets. With respect to capital expenditure, the contract established an aggregate target of A$22.8 million over the four-year period in question, to be spent on approved investments directly tied to the production of automotive leather, also broken down into interim targets. Howe was required, under the contract, to use "best endeavours" to meet these targets, and to provide the Australian government with reports indicating its sales and capital expenditures.

9.5 The loan contract provides for a fifteen-year loan of $A25 million by the government of Australia to Howe and its parent company, ALH. For the first five-year period of this loan, Howe/ALH is not required to pay principal or interest. After the expiration of this five-year period, interest on the loan is to be based on the rate for Australian Commonwealth Bonds with a ten-year maturity, plus two percentage points. The loan is secured by a second lien over the assets and undertakings of ALH.

9.6 On 10 November 1997, the United States requested consultations regarding allegedly prohibited subsidies provided to Australian producers and exporters of automotive leather, including subsidies provided to Howe.[180] Consultations held between the United States and Australia on 16 December 1997 failed to resolve the dispute. At its meeting of 22 January 1998, the DSB established a panel in accordance with Article 4.4 of the SCM Agreement and Article 6 of the DSU pursuant to the request made by the United States on 9 January 1998. That panel was never composed.

9.7 On 4 May 1998, the United States again requested consultations with Australia regarding allegedly prohibited subsidies provided to Howe, alleging that "the [Government of Australia] has provided subsidies to Howe that include a A$25million loan, which was made on preferential and non-commercial terms, and grants of up to another A$30 million. The United States believes that these measures appear to violate the obligations of the [Government of Australia] under Article 3 of the SCM Agreement”. [181] On 11 June 1998, the United States requested the immediate establishment of a panel, and this Panel was established on 22 June 1998, with standard terms of reference.

9.8 The United States and Australia each made requests for preliminary rulings in their first submissions. Specifically, the United States asked the Panel to order Australia to produce certain documents. Australia asked the Panel to terminate its work, based on the argument that its establishment was inconsistent with the DSU, or in the alternative, because the United States had failed to meet its disclosure obligations under Article 4 of the SCM Agreement. Assuming the Panel denied the request to terminate, Australia asked the Panel to limit the United States to certain information and arguments in the presentation of its case, based on the argument that the United States failed to meet its disclosure obligations under Article 4 of the SCM Agreement.

9.9 Because these requests involved issues which had important implications for the conduct, indeed, the continuation, of this panel proceeding, we ruled on them at the end of the first meeting with the parties, without detailing our analysis and conclusions.[182] The following sets forth the reasoning underlying our oral rulings of 10 December 1998.

1. Australia's request for termination based on the existence of multiple panels regarding the same matter

9.10 Australia requests that this Panel terminate its work and, in effect, disestablish itself, on the grounds that the DSU does not permit the establishment of a panel when another panel between the same parties with respect to the same matter is in existence.

9.11 Australia's request addresses two different and not necessarily related questions. The first is whether the United States had a right or was entitled under the DSU to unilaterally terminate the first panel, and the second is whether this Panel was properly established. The answer to the first question does not, in our view, control the answer to the second. Even assuming that Australia is correct in asserting that a panel may not be unilaterally terminated by the complainant after it is established -- an issue we need not and do not decide -- we conclude that this Panel must complete its consideration of the matter referred to it.

9.12 The establishment of a panel is the task of the DSB. It is by no means clear that, once the DSB has established a panel, as it did in this case at its meeting of 22 June 1998, the panel so established has the authority to rule on the propriety of its own establishment. Nothing in our terms of reference expressly authorizes us to consider whether the DSB acted correctly in establishing this Panel. Further, the issues raised by Australia's request are of a systemic nature, concerning questions of policy regarding the operation of the WTO dispute settlement system and an evaluation of the actions taken by the DSB, and thus might be more appropriately taken up in other fora.

9.13 Assuming this Panel does have the authority to rule on the propriety of its own establishment, the DSU does not explicitly address the issue of multiple panels between the same parties regarding the same matter, and thus does not expressly prohibit the establishment of such multiple panels. The DSU does, on the other hand, set forth the conditions and procedures which, if complied with, give the complainant a right to have a panel established. Article4 governs requests for consultations and Article 6 addresses requests for panel establishment. In a dispute such as this one, concerning allegedly prohibited subsidies, the special or additional procedures in Articles 4.2 through 4.12 of the Agreement on Subsidies and Countervailing Measures ("SCM Agreement") are also applicable. Article 4.2 of the SCM Agreement deals with requests for consultations and Article 4.4 deals with requests for panel establishment. In order for a panel to be established in respect of a complaint concerning an allegedly prohibited subsidy, a Member must respect the applicable procedures for consultations and panel establishment set out in these provisions of the DSU and the SCM Agreement. If these procedures are followed, the DSU does not impose any further constraints upon the establishment of a panel.

9.14 In our view, Australia is asking this Panel to read into the DSU an implicit prohibition on multiple panels between the same parties regarding the same matter that does not exist in the text of the DSU. Australia's arguments in support of its position arise out of policy considerations and address the object and purpose of the DSU. In light of the fundamental importance in the WTO dispute settlement system of the right to have a panel established to examine a matter, in the absence of a consensus not to do so, we do not consider it appropriate in this dispute to read such an implicit prohibition into the DSU. This is particularly true given that the policy concerns expressed by Australia are purely theoretical and do not arise in this case. Specifically, this is not a case where a complainant is actively pursuing two proceedings with respect to the same matter -- the United States has made it very clear that it is not pursuing the first dispute. To the contrary, the United States has sought to terminate the first dispute, and it is Australia which has sought to prevent that result. Nor is this a case where a complainant has sought a second panel before a first panel has completed its work with respect to the same matter because it was dissatisfied with developments in the first panel. Although the first panel in this case was established, it was never composed and thus never began its work.

9.15 For the foregoing reasons, we deny Australia's request to terminate this Panel, and will continue our work in accordance with our terms of reference.

2. Compliance with Article 4.2 of the SCM Agreement

9.16 Australia also asks us to terminate this Panel, or in the alternative, to disregard during the course of this proceeding all facts and arguments not explicitly set out in the request for consultations (WT/DS126/1), based on its assertion that the United States request for consultations does not comply with the requirements of Article 4.2 of the SCM Agreement.

9.17 Article 4.2 of the SCM Agreement provides:

"A request for consultations under paragraph 1 [of Article 4] shall include a statement of available evidence with regard to the existence and nature of the subsidy in question".

Focusing on the term "available evidence" in Article 4.2, Australia argues that the quid pro quo for the accelerated dispute settlement procedure available under Article 4 of the SCM Agreement is that the complainant must "show its hand" at the outset of the proceedings in order to guarantee that information necessary for the respondent to defend itself is provided. In Australia's view, Article 4.2 imposes an obligation on the complainant to disclose, in its request for consultations, not only facts, but also the argumentation why such facts lead the complainant to believe there is a violation of Article 3.1.

9.18 The ordinary meaning of the phrase "include a statement of available evidence" does not, on its face, require disclosure of arguments in the request for consultations. Nothing in the context or object and purpose of Article 4.2, discussed below, suggests a different conclusion.

9.19 Turning to the question of what is required as a "statement of available evidence", we note that Australia reads this to require disclosure of all facts and evidence on which the complaining Member will rely in the course of the dispute. Indeed, Australia asserts that any exhibits should have been provided at the time consultations were requested.[183] The ordinary meaning of the phrase "statement of available evidence" does not support Australia's position. The word "evidence" is defined as "available facts, circumstances, etc., supporting or otherwise a belief, proposition, etc.".[184] "Available" is defined as "at one's disposal", and "statement" is defined as "expression in words".[185] Thus, based on the ordinary meaning of the terms, Article 4.2 requires a complaining Member to include in the request for consultations an expression in words of the facts at its disposal at the time it requests consultations in support of the conclusion that it has, in the words of Article 4.1, "reason to believe that a prohibited subsidy is being granted or maintained". This is, in our view, considerably less than Australia would have Article 4.2 require.

9.20 Moreover, nothing in the context or object and purpose of Article 4.2 suggests to us that the statement of available evidence must be as comprehensive as Australia would require. The mere fact that proceedings under Article 4 of the SCM Agreement are accelerated by comparison to dispute settlement proceedings under the DSU does not, in our view, require us to read into Article 4.2 a requirement that the complainant disclose all facts and arguments in its request for consultations. In dispute settlement proceedings conducted pursuant to a normal schedule, a complaining Member is not even required to include a statement of the facts and arguments in a request for establishment of a panel – which comes considerably later in the dispute settlement process, after a consultation request has been made and after the parties have consulted. The complaining party is required only to identify the claims concerning the matter at issue; the facts and arguments on which it relies to establish its case must be submitted only in the first and subsequent submissions of the party to a panel.[186] To the extent that the additional requirement of Article 4.2 can be linked to the expedited nature of the proceedings, the additional requirement of a statement of available evidence satisfies the need adequately to apprise the responding Member of the information upon which the complaining Member bases its request for consultations, and serves in addition to inform the resulting consultations.

9.25 A panel is obligated by Article 11 of the DSU to conduct "an objective assessment of the matter before it". Any evidentiary rulings we make must, therefore, be consistent with this obligation. In our view, a decision to limit the facts and arguments that the United States may present during the course of this proceeding to those set forth in the request for consultations would make it difficult, if not impossible, for us to fulfill our obligation to conduct an "objective assessment" of the matter before us.

9.26 As discussed above, Article 4.2 does not require a complaining Member to disclose arguments in the request for consultations. Thus, there is no basis for limiting the scope of arguments in this proceeding.

9.27 Article 4.2 does contain a requirement, not present in the DSU, that a complainant include a "statement of available evidence" in its request for consultations. However, we do not consider that the scope of the evidence that a panel may consider is limited in any way by such a statement of available evidence. In this respect, we note Article 4.3 of the SCM Agreement, which explicitly states that one of the purposes of consultations "shall be to clarify the facts of the situation…". (emphasis added) This provision implies that additional facts or evidence will be developed during consultations. Moreover, the Appellate Body has recognized that consultations play a significant role in developing the facts in a dispute settlement proceeding. For example, in India - Patents[190], the Appellate Body observed that "the claims that are made and the facts that are established during consultations do much to shape the substance and the scope of subsequent panel proceedings". (emphasis added) This is consistent with the view that a central purpose of consultations in general, and of consultations under Article 4 of the SCM Agreement in particular, is to clarify and develop the facts of the situation.