3.181 Canada argued that the economic factors applicable to foreign and domestic periodicals are not the same which is why their respective rates are different. Those rates are a reflection of competitive situations, not the result of discriminatory practices as was argued by the United States. Canada Post has no policy of giving a competitive advantage to one segment of its customers over another, and would have no interest in pursuing any such practice. Given appropriate competitive factors, it might very well be that certain foreign periodicals would enjoy better rates than non-subsidized Canadian magazines. This is exactly the type of scenario that Article III of GATT 1994 is intended to preserve. If foreign magazines are in better competitive situations, they should be able to take advantage of it. If on the contrary, they are not in such a position, Article III should not be there to grant them advantages that market forces do not provide. In the commercial and competitive environment in which Canada Post operates, it is under no obligation by virtue of Article III:4 to subsidize US publications by setting a better postal rate then what their specific market conditions require.

(ii) Article III:8(b)

3.182 The United States argued that Canada Post's discriminatory postal rates do not constitute the payment of subsidies exclusively to domestic producers within the meaning of Article III:8(b), because domestic producers receive no subsidy payments. Under their 1 May 1996 Agreement, Canadian Heritage provides Canada Post with fixed annual payments to support Canada Post's below-cost "funded" postal rates for certain magazines produced in Canada. Those payments are not distributed to domestic magazine producers; instead Canada Post uses the funds to underwrite the lower postage rates it charges domestically-produced magazines. Thus, Canada's discriminatory postal rates are not direct payments to Canadian producers; rather, they modify the conditions of competition between domestic and imported products in contravention of Article III:4.

3.183 A series of GATT 1947 panel reports had interpreted Article III:8(b) very narrowly to hold that the only subsidies subject to exclusion from the national treatment provisions of Article III are those subsidies that are paid directly to domestic producers. So, for example, credit facilities provided to purchasers, and not producers,¹⁰⁷ and payments whose benefits could be partially retained by processors,¹⁰⁸ have been found not to qualify under Article III:8(b). Nor does the annual payment that Canadian Heritage makes to Canada Post constitute a subsidy to domestic producers under Article III:8(b). Canadian Heritage does not provide its funds to domestic producers. The low-priced "funded" postal rate that Canada applies to certain favoured periodicals produced in Canada do not fall within the terms of Article III:8(b). Rather, these rates, together with the "commercial"  rate and various discounts applicable only to Canadian-produced magazines, are part of an overtly discriminatory postal rate scheme designed to create further protection for Canada's domestic magazine industry.

3.184 Canada argued that the funds paid by Canadian Heritage to Canada Post to enable it to grant Canadian publishers of publications reduced postal rates are allowable subsidies under GATT Article III:8(b), which explicitly recognizes that subsidies to domestic producers are not subject to the national treatment rules of Article III. Paragraph 8(b) applies with respect to all provisions of Article III, including Article III:4. Public policy has been developed to ensure that Canadians, regardless of where they live, have access on a reasonable basis to periodicals. Subsidized postal rates are provided to maximize the opportunity for distribution, particularly in light of Canada's relatively small and widely dispersed population. This measure is critical, since Canadian magazines have only limited access to newsstands and rely mainly on paid subscriptions for circulation. Subsidized postal rates have enabled Canadian magazines to reach a widely dispersed readership. The provision of reduced postal rates is a way of paying subsidies that is compatible with GATT 1994. These payments are made to Canada Post four times a year in return for its undertaking to deliver eligible publications at the agreed reduced rates. The benefit of the subsidies flows directly to eligible Canadian magazine publishers. The Canadian publication industry is the exclusive beneficiary of these subsidies and has to qualify for these subsidized rates in accordance with criteria set by Canadian Heritage before being found to be eligible.

3.185 The decision of the panel in US - Malt Beverages lends no support to the US position. This panel held that the expression "payment of subsidies" applies only to direct subsidies and not to other kinds of subsidies such as tax credits or tax abatements.¹⁰⁹ The panel was concerned solely with the distinction between subsidies, tax remissions and differential taxation rates, because a failure to make that distinction would destroy the effect of Article III:2. The formal distinction between taxation measures - benefits not involving direct expenditures by government - and subsidies is vital to the operation of the Article as a whole. Canada's postal subsidy meets the requirement of directness, in the sense in which that concept is used in the US - Malt Beverages decision, because a payment by government for the exclusive benefit of the producers is being made. It is only the mechanics of payment that were indirect.

3.186 The position held by the United States is therefore based on a difference of form, not substance. The specific form in which the subsidy is paid is irrelevant to the operation of Article III:8(b), provided that a payment is made by the government for the exclusive benefit of domestic producers.¹¹⁰ Before being granted the privilege of posting using funded postal rates, a publisher has to sign a service agreement with Canada Post. This simple fact is evidence that publishers are direct beneficiaries. Canada Post is an intermediary, not the beneficiary. Whether the subsidy is paid to Canada Post or paid directly to the publishers, the economic effect is the same, namely that the eligible publishers are the beneficiaries of the subsidy.

3.187 In practical terms, payments to individual publishers would be a cumbersome and ineffective method of delivering this subsidy. The administrative and financial burden of such a process would erode the benefits of the program. If an eligible Canadian publisher of a monthly magazine were to receive the payment, the advantages this publisher enjoys relative to foreign competition would be essentially unchanged. Canadian publishers would find themselves in the same position as they are in now, namely with an advantage over their foreign competitors. Therefore, Canadian Heritage provides Canada Post with an agreed-upon payment on a quarterly basis. The current process is far more efficient in minimizing the administrative overhead related to the program.

3.188 Based on the panel report on the EEC - Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-feed Proteins¹¹¹ ("EEC - Oilseeds"), the United States argued that subsidies not paid directly to producers are not paid to them "exclusively" within the meaning of Article III:8(b). The word "exclusively" as used in this provision is concerned with the distinction between "domestic" as opposed to "non-domestic" producers, not whether third parties benefit from the subsidies. Whether an incidental benefit might be conferred upon Canada Post from the subsidy payment is irrelevant. Under the interpretation of this clause suggested by the United States, virtually any subsidy payment that would confer a third party benefit, however minimal, would be non-compliant. This is surely not the intended application of the exemption. Subsidies have an economic impact on third parties in almost all circumstances. The definition of the term "exclusive" proposed by the United States would lead, in practical terms, to the nullification of the Article III:8(b) exemption.

3.189 The United States argued that were Canada to provide payments directly (and exclusively) to domestic producers of magazines, the United States agreed that such payments would be protected by Article III:8(b). Under Canada's postal rate scheme for periodicals, however, domestic magazine producers receive no government payments. The only "payments" are made from one government entity (Canadian Heritage) to another (Canada Post).¹¹² Thus Canada's postal scheme simply does not comply with the requirement of Article III:8(b) that there be "payment . . . to domestic producers".

3.190 With regard to Canada's argument that its funded-rates system satisfied Article III:8(b) because it includes "payments" (to Canada Post), and because the resulting lower postal rates on domestic magazines have the same "economic effect" on domestic producers as payments made directly to them, the United States stated that the mere existence of "payments" (from one government entity to another, in this case) is not enough. The payments have to go to domestic producers. Under Canada's postal rate scheme, domestic periodicals are provided lower postal rates than imported magazines; domestic periodical producers receive no payments. Instead, so-called "funded publications" are charged lower postal rates. Because imported magazines do not qualify for these rates, they are placed at a commercial disadvantage in terms of the transportation and delivery of their magazines in Canada. This is precisely the type of discrimination that Article III:4 is meant to prohibit. Canada Post's discriminatory postal rates clearly confer an economic benefit on domestic products, but a benefit of that sort is not within the scope of Article III:8(b). That Article applies only to "the payment of subsidies exclusively to domestic producers" (emphasis added).

3.191 GATT panels have consistently applied Article III:8(b) strictly according to its terms. They have rejected appeals to ignore its actual language in favour of what Canada claims to be "an economic perspective". They have uniformly denied the protection of Article III:8(b) to measures that provided no direct payments to domestic producers, including measures that may have conferred economic benefits indirectly on domestic producers by favouring the purchase or use of domestic products. Indeed, the "economic benefits" argument was explicitly rejected by the panel on United States - Measures Affecting the Importation, Internal Sale and Use of Tobacco ("US - Tobacco").¹¹³

3.192 If Canada's view - that Article III:8(b) encompasses the indirect provision of economic benefits to domestic producers through government advantages conferred on their goods - is accepted, it would dramatically expand the types of measures exempted from discipline under Article III. That is because virtually any form of more-favourable treatment accorded by a government to domestic products could be characterized as providing economic benefits similar to the payment of subsidies to domestic producers. Past panels have uniformly interpreted Article III:8(b) to require actual payments to domestic producers. In the panel on Italian Discrimination Against Agricultural Machinery, that panel

"agreed with the contention of the United Kingdom delegation that in any case the provisions of paragraph 8(b) would not be applicable to this particular case since the credit facilities provided under the Law were granted to the purchasers or agricultural machinery and could not be considered as subsidies accorded to the producers of agricultural machinery".¹¹⁴

3.193 In that case it could have been argued that even though a subsidy was granted to purchasers of agricultural machinery, economic benefits also flowed directly or indirectly to the domestic producer of the machinery, since the availability of inexpensive credit limited to the purchase of domestic goods would stimulate the sales of such goods. However, the panel had correctly interpreted the words "exclusively to domestic producers" according to their plain meaning and found that the Italian credit scheme did not qualify for the Article III:8(b) exemption.

3.194 The panel report on US - Malt Beverages, cited by Canada in its submissions, does not deal with the issue of payments to third parties. The panel rejected a US argument that tax credits for small domestic producers of beer and wine constituted a domestic subsidy permitted under Article III:8(b), and holding that

"Article III:8(b) . . . clarifies that the product-related rules in paragraphs 1 through 7 of Article III 'shall not prevent the payment of subsidies exclusively to domestic producers' (emphasis added [in original text]). The words 'payment of subsidies' refer only to direct subsidies involving a payment. . ."¹¹⁵

The panel thus continued the practice of past panels of invoking a narrow and literal interpretation of that provision. In this case, the only "payment" goes from Canadian Heritage to Canada Post, not to magazine producers. In fact, this "payment" is more akin to an internal transfer of government funds than a true economic "payment" to an unrelated entity.

3.195 In US - Tobacco,¹¹⁶ the panel found that price support payments made to domestic tobacco farmers out of the proceeds of the No Net Cost Assessment ("NNCA") were within the scope of Article III:8(b). The panel rejected an interpretation of Article III:8(b) based on a measure's economic impact:

"The Panel was cognizant of the fact that a remission of a tax on a product and the payment of a producer subsidy out of the proceeds of such a tax could have the same economic effects. However, the panel noted that the distinction in Article III:8(b) is a formal one, not related to the economic impact of a measure. Thus, in view of the explicit language of Article III:8(b), which recognizes that the product-related rules of Article III "shall not prevent the payment of subsidies exclusively to domestic producers," the Panel did not consider, as argued by the complainants, that the payment of a subsidy to tobacco producers out of the proceeds of the NNCA resulted in a form of tax remission inconsistent with Article III:2".¹¹⁷

3.196 Finally, the EEC - Oilseeds¹¹⁸ panel examined EEC legislation that, like the payments by the Department of Canadian Heritage to Canada Post, included government payments to a middleman rather than to the domestic producer itself, on the theory that the payments would induce the middleman to provide preferential treatment to the domestic producer. The EEC legislation provided for the payment of subsidies to processors of oilseeds whenever they established by documentary evidence that they had transformed oilseeds of Community origin. In that decision:

"The Panel noted that Article III:8(b) applies only to payments made exclusively to domestic producers and considered that it can reasonably be assumed that a payment not made directly to producers is not made "exclusively" to them. It noted moreover that if the economic benefits generated by the payments granted by the Community can at least partly be retained by the processors of Community oilseeds, the payments generate a benefit conditional upon the purchase of oilseeds of domestic origin inconsistently with Article III:4. Under these circumstances Article III:8(b) would not be applicable because in that case the payments would not be made exclusively to domestic producers but to processors as well".¹¹⁹

3.197 Canada mischaracterizes the EEC - Oilseeds decision as standing for the proposition that the phrase "exclusively to domestic producer," as used in Article III:8(b), is intended only to distinguish between "domestic" as opposed to "non-domestic" producers. The emphasized language makes it clear that the distinction is between "direct payments to producers" and "payments to ... processors" (who might in turn provide an indirect benefit to producers). So, too, in this case, the only "payments" are to an entity other than the domestic producers (and this "payment" is an internal transfer of government funds).

3.198 Canada considered it paradoxical if not contradictory for the United States to challenge Canada Post's international commercial rates on the grounds that Canada Post and the Government are one and the same, and to object to subsidized rates on the grounds that the same Corporation is obtaining, as a third party, a share of the benefits which the postal subsidy extends to Canadian periodical publishers. The argument that the Corporation is obtaining a benefit presupposes that it is an entirely separate entity from the Government: were it an organ of the Government, it would make little difference if it benefitted in any way from the payments, for in this case it would not be a government subsidy but simply a transfer of funds. The United States cannot maintain that the commercial rates and subsidized rates are discriminatory because Canada Post is part of the Government in the first case but not part of the Government in the second case. This is a clear contradiction.

3.199 The United States concedes that the protection provided by Article III:8(b) would extend to direct payments made exclusively to domestic periodical producers. At the same time, the United States takes a highly formalistic approach based on a very narrow interpretation of Article III:8(b). However, the formalism which the United States is asking the Panel to enshrine is supported neither by the text of Article III:8(b) nor by GATT practice. The method of subsidy payment is not in and of itself conclusive in determining whether Article III:8(b) applies. The essential factor is that the payment be made by the government for the benefit of domestic producers.

3.200 The panel reports quoted by the United States do not support the conclusion that the subsidy must always be paid directly and exclusively to domestic producers. For example, it cannot seriously be argued that the panel on Italian Discrimination against Agricultural Machinery determined that the subsidy had to be paid to domestic producers through actual payments. The panel found that Article III:8(b) did not apply in that case because the credit facilities provided by the legislation were extended to the purchasers of agricultural machinery and could not be considered to be subsidies paid to the producers of agricultural machinery. In the case of the Italian legislation, government support in the form of credit facilities for the purchase of Italian agricultural machinery was granted to the purchasers of agricultural machinery, and in the view of the panel the provisions of Article III:8(b) do not apply in these circumstances. The postal subsidy program involves no similar circumstances, since the Canadian Government's assistance in the form of reduced postal rates does not go to Canada Post Corporation.

3.201 It would appear that the formalism advocated by the United States stems from the report of the US - Malt Beverages panel, which dealt with a lower excise tax levied on domestic beer than on imported beer. The United States argued that the clear purpose of the lower tax was to subsidize small producers, and that reducing the excise tax was a way of granting such a subsidy which was compatible with the GATT. The panel concluded that "the words `payment of subsidies' refer only to direct subsidies involving a payment, not to other subsidies such as tax credits or tax reductions". In the opinion of the panel, the prohibition on discriminatory internal taxes in Article III:2 would be rendered inoperative were it possible to offer a general justification for such taxes on imported goods on the grounds that these were subsidies paid to competing domestic producers in accordance with Article III:8(b).

3.202 The US - Malt Beverages report must be read and understood within the full context of Article III:2 and with consideration to tax credits and reductions. In that specific case, the tax reductions and exemptions could not be deemed equivalent to the subsidies provided for by Article III:8(b). The panel did not make a determination on all other forms of subsidies. The Canadian postal subsidy, which has nothing in common with a tax abatement, exemption, credit or reduction, is consistent with the provisions of Article III:8(b) and is in no way incompatible with the US - Malt Beverages decision. In the present case, payments are made four times a year for the exclusive benefit of periodical producers. Only the mechanics of payment are indirect.

3.203 This interpretation is supported by the US - Tobacco report, which the United States quotes and to which it attributes an unwarranted scope in light of Article III:8(b). Without entering into the details, the issue in this case was whether the net self-financing levy on imported tobacco was higher than the self-financing levy on domestic tobacco, since the latter received a de facto tax remission by virtue of the operation of the tobacco price support program. The panel did not consider that the payment of a subsidy to tobacco producers out of the proceeds of the self-financing levy resulted in a form of tax remission inconsistent with Article III:2. The panel noted the formal distinction between a tax remission on the one hand and the payment of a subsidy on the other, even if they could have the same economic effect. The economic impact in the case of tax remission is irrelevant to the application of Article III:8(b). The formal distinction between taxation measures and subsidies is vital to the operation of Article III:2. It cannot be concluded from this panel report, as the United States did, that in the case of a producer subsidy, the examination of the measure's economic impact is irrelevant to determine whether the measure is consistent with the provisions of Article III:8(b).

3.204 Lastly, the United States suggests that Article III:8(b) is inapplicable in light of the EEC - Oilseeds report, in which the panel provides an unusual interpretation of the word "exclusively". Contrary to the US contention, Canada has not misinterpreted this report. It simply supports a more common interpretation of the word "exclusively". The general thrust of Article III is against discrimination between imported and domestic products. In this context, granting a government subsidy "exclusively" to domestic producers can only mean granting a subsidy only to the producers of domestic products, in the sense that it is paid to them alone and not to foreign producers.

3.205 In the case under study, the payments to processors were an incentive for them to buy oilseeds of EEC origin instead of imported oilseeds. The incentive derived from the fact that the payments made to processors could be greater than the difference between the price processors actually paid to EEC producers and the price that processors would have had to pay for imported oilseeds. This excess compensation created an incentive to buy products of EEC origin instead of imports. It is for this reason that Article III:8(b) was not applicable, for in this case the payments were not made to domestic EEC producers exclusively, but to processors as well.

3.206 The panel demonstrated that the payments could constitute benefits granted to EEC processors if the latter purchased EEC products. There is no parallel between the postal subsidy and the flaws in the EEC system. The United States has failed to demonstrate such a parallel. Moreover, the United States claim that the panel developed a general principle of interpretation by which Article III:8(b) does not apply if there is an intermediary between the government and the beneficiary is groundless. The panel would not have taken the trouble to perform such a complex analysis of the various prices (in paragraphs 136 through 141) were it only a matter of putting forward a general principle. The United States has not presented any analysis comparable to the one performed by the panel.

3.207 Moreover, there is no parallel with the postal subsidy because Canada Post does not receive "bonus payments" for handling and distributing periodicals from Canadian publishers rather than from foreign publishers. The Corporation receives an amount that is stipulated in a memorandum of understanding or contract in exchange for the provision of reduced postal rates. This amount is based on estimates of expected eligible Canadian periodical volumes at the negotiated reduced rates, which estimates are developed independently by each of Canada Post and Canadian Heritage in the course of negotiating the contract. There is no incentive to handle the periodicals of Canadian publishers rather than those of foreign publishers, since delivering a larger number of Canadian magazines than that originally estimated by Canada Post would not increase the Corporation's net income. The postal subsidy does not grant the Corporation any particular benefit. The EEC system provided incentives favouring EEC processors whereas there are no such measures favouring Canada Post in the memorandum of understanding with Canadian Heritage.

3.208 The agreement between Canadian Heritage and Canada Post expressly stipulates the rates paid by eligible Canadian periodical publishers. The terms of the agreement ensure that the payments to the Corporation secure the price it must charge publishers who mail their periodicals at subsidized rates. The contract for the provision of delivery services for eligible publications is at a fixed rate. Canada Post receives a lump sum in exchange for providing delivery services at the reduced rate. It should be noted that the predetermined annual payment to Canada Post from Canadian Heritage is a negotiated value for service in the spirit of any fixed price contract; that is, Canada Post must provide delivery at the agreed reduced rates to all eligible publications in return for the fixed amount. Both parties are aware that variances up or down in a given year relative to each's view of expected volume are to be expected. However, it is each party's studied view that in spite of these risks, it has an equal chance to gain or lose relative to those expectations of volumes. In view of the fixed price nature of the agreement, there is no relevance to arguments of payments in excess of value of service provided. The value provided is by definition exactly what was contracted to be provided in return for the pre-determined fixed payment.

3.209 The United States has conceded that were the payments made directly and exclusively to Canadian periodical publishers, these payments would qualify for protection under Article III:8(b). The question the Panel must consider is whether such a change in the method of subsidy payment would place foreign periodical publishers in a more favourable competitive position in relation to Canadian publishers in respect of the postal subsidy. There is no reason to believe that this would be the case. The method of payment is merely the subsidy's technical, administrative aspect. It does not reveal who benefits from the subsidy. If payments were made directly to publishers, Canada Post would increase its rates for the delivery and distribution of the magazines that had previously enjoyed reduced rates, in accordance with its practice for commercial services and its profit maximization objectives. Eligible Canadian publishers would continue to buy periodical delivery services from the Corporation at a cost "lower" than the commercial rate, in view of the compensatory payments they would receive. As for foreign publishers, they would continue to buy periodical delivery and distribution services from Canada Post at the same rates as before.

3.210 If the subsidy were paid directly to publishers rather than to Canada Post, the effects would be the same. Eligible publishers would be the beneficiaries of the subsidy. Only administrative costs would increase substantially. There is no valid reason in this case, such as for example a concern that provisions of the 1994 GATT would be rendered inoperative, which demand that the Panel uphold an interpretation which would have the effect of replacing the relatively simple and economical existing system with a costly and complicated system. Lastly, there are no grounds for claiming, as the United States has done, that our interpretation of Article III:8(b) would have the effect of encouraging the governments of member states to introduce a host of discriminatory measures in favour of domestic goods for the sole reason that these would economically benefit domestic producers. Canada is not proposing the abolition of the disciplines in the 1994 GATT but only a reading of Article III:8(b) that respects its terms.

3.211 The United States concluded that over the years GATT panels had been very careful to apply the precise language of Article III:8(b) and to avoid expanding the scope of that Article to encompass measures other than the direct payment of subsidies that convey economic benefits on the domestic producers. This caution was completely justified because the liberal reading Canada suggests for Article III:8(b) would permit governments to employ a wide variety of discriminatory measures in favour of domestic products that could be justified on the ground of conferring economic benefits on domestic producers. Such a result could dramatically alter the competitive environment in the markets of Members around the world. Canada's "funded" postage rate scheme for domestically-produced periodicals was a very good example of a product transportation and distribution regime that may well confer economic benefits on domestic producers but that plainly altered the competitive relationship between imported and domestic products.¹²⁰

TO CONTINUE WITH CANADA - CERTAIN MEASURES CONCERNING PERIODICALS

¹⁰⁷ Panel Report on Italian Discrimination Against Agricultural Machinery, op. cit., at 60, 64, para. 14.

¹⁰⁸ Panel Report on European Economic Community - Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins, adopted on 25 January 1990, 37S/86, 124, para 137.

¹⁰⁹ Panel Report on United States - Measures Affecting Alcoholic and Malt Beverages, op. cit.

¹¹⁰ Canada noted that the US-Malt Beverages panel read subparagraph 8(b) having regard to the context of the whole of Article III but, except in the context of taxation measures, it was never stated that for every subsidy to qualify, the payment must be made directly to domestic producers. The panel simply said that the words "payment of subsidies" refer only to direct subsidies involving a payment, not to other subsidies such as tax credits or tax reductions (ibid. at 271, para. 5.8).

¹¹¹ Panel Report on European Economic Community - Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins, op. cit., at 124-125, paras. 137-141.

¹¹² Memorandum of Agreement.

¹¹³ Panel report on United States - Measures Affecting the Importation, Internal Sale and Use of Tobacco, adopted 4 October 1994, DS44/R.

¹¹⁴ Panel Report on Italian Discrimination Against Agricultural Machinery, op. cit.para. 14.

¹¹⁵ Panel Report on United States - Measures Affecting Alcoholic and Malt Beverages, op. cit.

¹¹⁶ Panel Report on United States - Measures Affecting the Importation, Internal Sale and Use of Tobacco, op. cit.

¹¹⁷ Ibid., para. 109 (emphasis added).

¹¹⁸ Panel Report on European Economic Community - Payments and Subsidies Paid to Processors and Producers of Oilseeds and Related Animal-Feed Proteins, op. cit.,, para. 137.

¹¹⁹ Ibid., para. 137 (emphasis added).

¹²⁰ The United States argued that even if it were concluded that the payments made by Canadian Heritage to Canada Post to support the "funded" postal rates somehow gave rise to payments to domestic producers within the meaning of Article III:8(b), because domestic producers ultimately received an economic benefit, such a benefit would not be provided "exclusively" to domestic producers. Canada Post itself might well be a beneficiary. This is because Canada Post's pre-determined annual payment from Canadian Heritage might exceed Canada Post's cost of delivering all eligible periodicals in a given year. Moreover, Canada Post could further benefit economically from having a captive set of customers who must use its services in order to obtain the "funded" rates. For these reasons, according to the United States, it cannot be said that the benefits of Canada's Publications Assistance Program are provided "exclusively to domestic producers".