8.98 It is clear to us that the URAA grants to the SAA unique legal status as an authoritative interpretation of the URAA, which the US courts must take into account. The text of the SAA confirms this by characterising itself as "an authoritative interpretation . . . both for purposes of US international obligations and domestic law". The SAA went through an approval process in Congress, and was in fact approved by Congress at the same time as the URAA. The United States itself acknowledges that "there is no disagreement between the parties about the status of the SAA as an authoritative interpretive tool".¹⁸⁴ Finally, it is clear that no other form of legislative history has higher authority than the SAA with regard to the meaning of the statute. The United States indicates that "If, hypothetically, on a particular interpretive issue, the SAA said 'X' and some other document of legislative history (e. g., a committee report) said 'Y', the interpretation should be 'X'".¹⁸⁵

8.99 The unique legal status granted to the SAA is, however, in respect of its interpretive authority in respect of the statute. The URAA indicates that "[t]he statement of administrative action approved by the Congress . . . shall be regarded as an authoritative expression by the United States concerning the interpretation and application of the Uruguay Round Agreements and this Act"¹⁸⁶, which implements the Agreements. We find no evidence, in the URAA, in the SAA, or anywhere else, that the SAA has an operational life or status independent of the statute such that it could, on its own, give rise to a violation of WTO rules. Independent of the statute, the SAA does not do anything; rather, it interprets (i. e., informs the meaning of) the statute. In other words, a petitioner or an exporter could not argue before a US court that the DOC had acted inconsistently with the provisions of the SAA, but rather that it had acted inconsistently with the provisions of the statute read in light of the SAA.

8.100 Accordingly, we consider that the SAA constitutes authoritative interpretive guidance in respect of the statute. As such, given its unique authority as interpretive guidance, the SAA is of fundamental importance in this dispute, in the sense that the statute cannot be properly interpreted without reference to the SAA. In particular, to understand the treatment of export restraints under the US CVD statute, anything that the SAA says about export restraints must be taken into account. Nor, as indicated, do the parties suggest otherwise. Indeed, the United States itself emphasises that it does not argue that the statute could or should be examined without some regard to the interpretation reflected in the SAA¹⁸⁷ . For the foregoing reasons, we shall look to the SAA as primary interpretive guidance in respect of the statute.

(b) Content in respect of export restraints

8.101 The next question to which we turn is what, if anything, the SAA says concerning subsidies in general, and export restraints in particular, in the context of CVD investigations. The issue we must address is whether the SAA requires the DOC to interpret the statute such that export restraints are treated as financial contributions in CVD investigations. If so, given that the SAA is authoritative interpretation of the statute, and given our finding that the treatment of export restraints as financial contributions is inconsistent with the SCM Agreement (See Section VIII.B.3, supra), it would follow, pursuant to the classical test, that the legislation as such is inconsistent with the United States' obligations under the SCM Agreement.

8.102 Dealing with the definition of subsidy in the SCM Agreement, including as it pertains to export restraints, the SAA states:

"In general, the Administration intends that the definition of 'subsidy' will have the same meaning that administrative practice and courts have ascribed to the term 'bounty or grant' and 'subsidy' under prior versions of the statute, unless that practice or interpretation is inconsistent with the definition contained in the bill. Absent such inconsistency, and subject to other relevant changes enacted in the implementing bill (e. g., rules regarding non-countervailable subsidies and de minimis countervailable subsidies), practices countervailable under the current law will be countervailable under the revised statute.

Basic Definition

. . .

One of the definitional elements of a subsidy under the Subsidies Agreement is the provision by a government or any public body of a 'financial contribution' as defined by the Agreement, including the provision of goods or services. Moreover, the Subsidies Agreement specifically states that the term 'financial contribution' includes situations where the government entrusts or directs a private body to provide the subsidy. (It is the Administration's view that the term 'private body' is not necessarily limited to a single entity, but can include a group of entities or persons.) Additionally, Article VI of the GATT 1994 continues to refer to subsidies provided 'directly or indirectly' by a government. Accordingly, the Administration intends that the 'entrusts or directs' standard shall be interpreted broadly. The Administration plans to continue its policy of not permitting the indirect provision of a subsidy to become a loophole when unfairly traded imports enter the United States and injure a US industry.

In the past, the [DOC] [] has countervailed a variety of programs where the government has provided a benefit through private parties (See, e. g., Certain Softwood Lumber Products from Canada, Leather from Argentina, Lamb from New Zealand, Oil Country Tubular Goods from Korea, Carbon Steel Wire Rod from Spain, and Certain Steel Products from Korea) . . . [The DOC] has found a countervailable subsidy to exist where the government took or imposed (through statutory, regulatory, or administrative action) a formal, enforceable measure which directly led to a discernible benefit being provided to the industry under investigation.

In cases where the government acts through a private party, such as in Certain Softwood Lumber Products from Canada and Leather from Argentina (which involved export restraints that led directly to a discernible lowering of input costs), the Administration intends that the law continue to be administered on a case-by-case basis consistent with the preceding paragraph. It is the Administration's view that Article 1.1(a)(1)(iv) of the Subsidies Agreement and Section 771(5)(B)(iii) encompass indirect subsidy practices like those which [the DOC] has countervailed in the past, and that these types of indirect subsidies will continue to be countervailable, provided that [the DOC] is satisfied that the standard under Section 771(5)(B)(iii) has been met."¹⁸⁸

8.103 We recall that the text of the statute is silent on the question of export restraints as such. That is clearly not the case with the SAA, but the question is whether the comments regarding indirect subsidies and export restraints contained therein are mandatory in nature, i. e., whether they amount to a requirement that the DOC interpret the statute so as to treat export restraints as financial contributions. For that to be the case, the SAA would have to create a binding obligation on the DOC to interpret Section 771(5)(B)(iii) such that export restraints meet the standard thereunder (which standard essentially mirrors the requirements in Article 1.1(a)(1)(iv) of the SCM Agreement).

8.104 On this point, the SAA appears to disclose a certain tension between two propositions or themes. On the one hand, there are passages suggesting that the DOC's past practice of treating export restraints as countervailable subsidies if they confer a benefit and are specific will continue. In particular, the SAA expresses the Administration's view that Article 1.1(a)(1)(iv) of the SCM Agreement encompasses indirect subsidy practices like those which the DOC countervailed in the past, particularly in Leather from Argentina ("Leather")¹⁸⁹ and Certain Softwood Lumber Products from Canada ("Lumber")¹⁹⁰. On the other hand, there are passages to the effect that this will be the case only where the new condition is satisfied. Past practice will not be followed where this would be "inconsistent with the definition contained in the bill". It will be followed only where the DOC is satisfied that the standard under Section 771(5)(B)(iii) has been met. Since Section 771(5)(B)(iii) prescribes a new condition, including entrustment or direction to a private entity to make a financial contribution, it is clear that the practice followed in the past cannot continue without modification. Post-WTO, the DOC must address a question that did not previously arise: Is Section 771(5)(B)(iii) satisfied? Only if that question is answered in the affirmative can a subsidy be found to exist.

8.105 We conclude that, on careful reading, the SAA correctly indicates that the Administration's past practice will be pursued in future only to the extent that there is no inconsistency with the definition of subsidy under the URAA. The phrase "absent such inconsistency" makes the continuation of pre-WTO CVD practice expressly contingent on the consistency of such practice with the new statute, and specifically with the definition of subsidy set out therein. The SAA indicates, in respect of Leather and Lumber, that "these types of indirect subsidies will continue to be countervailable, provided that [the DOC] is satisfied that the standard under Section 771(5)(B)(iii) has been met". The language of this proviso further confirms that the DOC must apply the statute's definition of subsidy.

8.106 For these reasons, we conclude that the SAA does not require the DOC to interpret the statute such that export restraints are treated as financial contributions.

(iii) The Preamble to the US Countervailing Duty Regulations

(a) Status in US domestic law

8.107 We next consider the operational status in US domestic law of the Preamble to the US CVD Regulations. In particular, we consider whether the Preamble has an independent operational life of its own and could independently give rise to the violations alleged by Canada.

8.108 The United States explains that, in 1995, following the enactment of the URAA, the DOC commenced a rulemaking process with the objective of revising its anti-dumping and CVD regulations so as to bring them into conformity with the URAA and, in some cases, to flesh out the provisions of the statute. The DOC published its final CVD regulations some years later, in 1998, following the receipt and analysis of comments submitted on the proposed regulations that had been published in 1997. The Preamble to the Regulations sets out, inter alia, the DOC's response to those comments, including on the subject of indirect subsidies in general and export restraints in particular. Canada notes that the Regulations were issued in accordance with the Administrative Procedure Act ("APA"), which governs US federal agency rulemaking and requires a notice and comment rulemaking process, and which therefore requires that the final regulations include a preamble setting forth the basis and purpose of the regulations and the agency's reasoned consideration of comments received in response to its proposed regulations.

8.109 Canada submits that the Preamble "is an integral part of the Regulations and is recognised and relied on as such by US courts"¹⁹¹, citing to various US court decisions in this regard. In Canada's view, the Preamble is binding, and it disagrees with the United States that a preamble to regulations has lesser legal status than the regulations. According to Canada, this US argument ignores the administrative framework under which US agencies promulgate regulations. Canada submits that the APA specifically provides that "the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose", which is commonly called the Preamble.¹⁹² Canada cites in particular to a US Court of Appeals statement as follows:

"These regulations were expressly authorised by Congress, and, in view of Congress' delegation, the [Department of Justice's] regulations should be accorded 'controlling weight unless [they are] 'arbitrary, capricious, or manifestly contrary to the statute''. The same is true of the preamble or commentary accompanying the regulations since both are part of the [Department of Justice's] official interpretation of the legislation."¹⁹³

8.110 Finally, Canada considers that the DOC, in its CVD determinations, uniformly treats the Preamble as an integral part of the Regulations and equivalent in legal authority to other sections of the Regulations. Canada indicates that, when an issue is addressed by the Preamble, the DOC routinely applies the Preamble provisions to resolve issues in CVD investigations or administrative reviews.

8.111 The United States argues that only the Regulations themselves, and not the Preamble thereto, have the force of law, meaning that even if the Preamble stated that the DOC was required to treat export restraints as subsidies, any such statement would not be binding on the DOC as a matter of US law. The United States characterises the Preamble as "evidence of an agency's contemporaneous understanding of its proposed rules" which "may be consulted to determine the proper interpretation of an agency's regulation", also citing to various US court decisions in this regard.¹⁹⁴ The United States submits that a US court has found that "language in the preamble of a regulation is not controlling over the language of a regulation itself" and, in the US view, "certainly is not controlling over a statute".¹⁹⁵ Further, the United States is of the view that, as the DOC did not promulgate a regulation on the topic of indirect subsidies in general, or export restraints in particular, the Preamble cannot even be used as an interpretive tool in the instant case, because there is no regulation to interpret. According to the United States, the Preamble is "at most . . . a non-binding statement by the DOC regarding its views at the time concerning the scope of Section 771(5)(B(iii)"¹⁹⁶ and "expressions of [the DOC's] tentative thoughts"¹⁹⁷. As to the DOC's references to the Preamble in its determinations, the United States argues that "[t]here is a big difference between citing the Preamble as a shorthand explanation of the reasons why the DOC is making a particular determination, and citing the Preamble as binding authority"¹⁹⁸.

8.112 We recall, as indicated by Canada itself, that the APA specifically provides that "the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose", which is commonly called a Preamble.¹⁹⁹ We can certainly conceive of such a general statement as an indication of the context in which particular regulations were prepared, as a reflection of the issuing agency's views on the interpretations and methodologies set out in the regulations, and even as an interpretive guide to the regulations. To the extent that a Preamble refers to an underlying statute in addition to the regulations to which it is attached, we also can envision that it could provide interpretive guidance in respect of the statute.

8.113 We fail to see, however, that a "general statement of the[] basis and purpose" of regulations could have the same operational status as the regulations themselves, i. e., that the Preamble could constitute rules that were separate from the regulations and that would have independent operational effect on the agency in question. Only if that were the case could the general statement (the Preamble) be able to give rise independently to WTO violations. Further, while we note the APA's use of the words "incorporate in the rules", we consider that a "general statement of the[] basis and purpose" of the rules, even when "incorporate[d]" therein, could by its very nature only inform the reader of the rationale generally for the regulations, and for the interpretations and methodologies contained therein. That is, we are not persuaded that the fact that a general statement of basis and purpose is described as being "incorporate[d] in the rules" automatically confers on that statement the same operational status and effect as the rules themselves. Nor was the Preamble subject to any approval process comparable to that to which the SAA was subject, or to the notice and comment process to which the Regulations themselves were subject. Indeed, the Preamble to a large extent appears simply to be a written record of that latter process.

8.114 As for its description of that process, the Preamble states: (i) that the DOC has decided not to issue a regulation in respect of "entrusts or directs"; and (ii) that instead the DOC believes that it should follow the guidance provided in the SAA to examine indirect subsidies (under which rubric the DOC would place export restraints) on a case-by-case basis²⁰⁰ (See paragraph 8.115, infra). Thus, the Preamble makes clear that no specific regulation has been adopted, and then incorporates by reference, and defers to, the interpretive guidance contained in the SAA, in respect of export restraints. We thus conclude that the Preamble has no operational life of its own - it does not do anything. We however have no reason to, and do not, exclude the Preamble from consideration as possible interpretive guidance regarding the treatment of export restraints in US CVD investigations pursuant to Section 771(5)(B)(iii).

(b) Content in respect of export restraints