4 December 1992

147. The United States made the following comments in response to Norway's argument that in its analysis of price depression the USITC had relied on a comparison of United States/Canadian prices with Norwegian import prices. In an effort to gather as complete pricing data as possible, the USITC had sought data on US prices from two sources. The first source was the responses to questionnaires which the Commission had sent to producers and purchasers. These data were explicitly limited to prices for US produced salmon, and did not include any Canadian prices. Thus, through the questionnaires, the USITC had specifically relied on data limited to US prices. The second set of data was published data of the Urner Barry company, an established industry authority. These data were combined United States and Canadian prices. However, the inclusion of Canadian prices in the Urner Barry figures had had no material effect on the USITC's analysis. First, the Commission had been aware that the data included Canadian prices, and had specifically addressed the issue, noting that "prices for Atlantic salmon from the two countries are believed to be comparable". ¹⁰⁹ Second, the Annex indicated that the questionnaire prices (which were limited to US prices) revealed the same trends over time, and the same pattern of overselling and underselling, as the Urner Barry data. Thus, this Annex noted that "Monthly net f.o.b. price data collected through questionnaires for US- and Norwegian-produced Atlantic salmon generally showed the same decline in price as the published price data" and "Similar to published price data and to reports from industry representatives, Norwegian importers' prices were generally higher than US producers' prices". ¹¹⁰

148. The United States also noted in this context that, although Norway now took issue with the use by the USITC of the Urner Barry figures, the Norwegian respondents in the investigation had explicitly urged the Commission to use those figures while the matter was before the Commission. In arguing that the Commission should employ the Urner Barry data, the Norwegian respondents had described Urner Barry as "the recognized price authority in the industry". ¹¹¹

149. Norway contested that, as stated by the USITC on page 20 of its determination, "... until late 1990 prices for Norwegian and United States Atlantic salmon followed a very similar pattern". ¹¹² Norway noted again that it had no access to the information underlying the data on which the USITC based its conclusions. All comparisons between Norwegian price trends and domestic price trends in the United States appeared to be based on United States and Canadian price information. If the USITC had based itself on this information, its determination was not based on positive evidence. At most, this information showed that Canadian prices were likely to have a profound impact on domestic prices in the United States. The Annex to the USITC's determination stated that "United States/Canadian and Norwegian price trends for Atlantic salmon were similar from mid-1988 through mid-1989 (figures 5-7). In 1990, the two trends began to diverge...". ¹¹³ This statement implied that after mid-1989 the price trends in the two countries had not followed a "very similar pattern". Moreover, figures 5-7 supported the interpretation that the divergence had begun in mid-1989, not in late 1990, although it had become more pronounced in late 1990. Finally, figures 8-10 in the Annex demonstrated that United States/Canadian prices had tracked Chilean prices much more closely than they had tracked Norwegian prices after mid-1989.

150. Regarding Norway's argument on the timing of the divergency of the price movements of Norwegian imported salmon and domestic salmon, the United States noted that in the Annex to the determination of the USITC it had been observed that "US/Canadian and Norwegian price trends for Atlantic salmon were similar from mid-1988 through mid-1989. In 1990, the two trends began to diverge...". ¹¹⁴ Contrary to what Norway attempted to read into these sentences, they did not state that price trends began to diverge at any time in 1989; they stated that prices had begun to diverge in 1990. Indeed, the text of the opinion of the Commission described Norwegian and US prices as following similar trends into 1990. This was confirmed by the price charts found at pages A-56-57 of the Annex. Even a cursory examination of those charts revealed that prices for Norwegian and US Atlantic salmon had exhibited similar trends through 1989 and the early part of 1990, and had only diverged to some degree starting in the second half of 1990, during the Commission's investigation.

151. In response to a question of the Panel, Norway explained that it was not arguing that, as a matter of law, the fact that imported products were priced above domestic products precluded a finding of price depression under Article 6:2 of the Agreement. However, Article 6.2 required that it be shown that price depression was the effect of the imports under investigation. When imported products were priced above domestic products it was obviously more difficult to demonstrate that those higher priced imports had caused price depression. Norway considered that in the present case the USITC had not demonstrated that price depression had been the effect of the Norwegian imports subject to investigation.

152. Regarding the manner in which the USITC had taken account of the substitutability between Norwegian imported salmon and domestically produced salmon, Norway considered that, if all imports of Atlantic salmon were highly substitutable and imports from third countries were both lower priced and increasing their market share, the logical conclusion was that it was the lower priced product which was depressing domestic prices in the United States, not the higher priced product. If the products were highly substitutable, buyers would buy the lower priced item, not the higher-priced one. Thus, the lower priced product would be dragging down the higher prices, not vice versa. United States prices had been constrained by the increasing volume of lower priced imports, not by the higher priced imports. Norway also argued in this context that the United States had not presented any valid explanation of why domestic prices in the United States had followed the development of prices of imports from Norway instead of Norwegian suppliers having to reduce their prices due to constant price undercutting by competitors from third countries. The United States had also not provided any data demonstrating that price developments of Norwegian salmon had a time lead on price developments for salmon produced in the United States.

153. The United States argued that it was a fundamental principle that price depression could occur even when the imported product was priced above the domestic product. If two products were substitutable for each other at a given price differential, the narrowing or increasing of the differential would have an effect on the demand and/or price for each product. In this case, as the price for Norwegian salmon declined, US producers had been forced to lower their prices to maintain the differential; if they had not lowered their prices, they would have lost yet more sales to the Norwegian imports. Thus, the Commission's citation to the fact that Atlantic salmon - including Norwegian and US salmon - was a "near-commodity type product" lent support to the Commission's finding of price depression by Norwegian salmon.

154. The United States further recalled in this context that the Commission's finding of price depression had been based on several factors, including the significant increase in the volume of imports of Atlantic salmon from Norway through 1989, the substitutability between US and Norwegian salmon, and the similar price trends exhibited by US and Norwegian salmon. The Commission's determination made clear that the price depression finding was not dependant on any source being a "price leader" through undercutting the prices of other sources. Rather, the Commission's finding of price depression was grounded in increased supply of salmon to the US market, an increase to which Norwegian salmon had been the major contributor. It should come as no surprise that when supply of a commodity increased substantially, there might be adverse effects on prices. Not only did the analysis of the USITC comport fully with basic economic principles, but the Agreement expressly anticipated this kind of analysis. The Agreement mandated an examination of whether imports undercut domestic prices, "or" whether imports "otherwise" depressed or suppressed prices. Thus, price undercutting and price depression/suppression were treated in the Agreement as separate elements of an examination of price effects. A finding of price depression was not dependent on a finding of price undercutting. The present case was a good example of a situation in which imports under investigation "otherwise" depressed prices for the like product, through the imports' substantial contribution to increased market supply of a commodity type product. In sum, (1) substitutability between Norwegian and US Atlantic salmon had provided support for the Commission's finding of price depression; and (2) any notion that investigating authorities must look to see which supplier was undercutting to determine which was causing price depression was not supported by economic logic or by the text of the Agreement.

5.4 Impact of the imports under investigation on domestic producers of the like product (Articles 6:1 and 6:3)

155. Norway submitted that the analysis of the USITC of the impact of the imports under investigation on domestic producers of the like product was inconsistent with the requirements of Articles 6:1 and 6:3 of the Agreement. Article 6:1 required an objective examination of the consequent impact of the subsidized imports on domestic producers, while Article 6:3 required that such an examination include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry. The list of those factors contained in Article 6:3 was not exhaustive, nor could one or several of those factors necessarily give decisive guidance. Norway considered that the conclusion of the USITC regarding the negative impact of the imports on the domestic producers was unfounded. The record showed that the allegedly injured industry had experienced a most impressive growth since its start in 1984, as shown by data on the annual increases in the volume of production by the domestic producers. ¹¹⁵ During the period 1987-89, the capacity of United States' firms to produce juvenile Atlantic salmon had risen substantially. US shipments had increased more than fourfold in this period. Production of "adult" salmon had expanded by more than 200 per cent from harvest season 1987-88 to 1989-90. Data available also showed that the number of production and related workers had increased steadily, as had the hours worked, total compensation, and hourly compensation. ¹¹⁶ In the view of the foregoing, Norway submitted that the USITC had not carried out an objective examination of the impact on the domestic producers of the imports under investigation.

156. In response to a question of the Panel as to whether Norway considered that the information relied upon by the USITC in its analysis of the impact of the imports on domestic producers was factually incorrect, that the conclusions drawn by the USITC regarding this impact were not supported by the facts in the record of the investigation, or that the analysis by the USITC had not involved the correct application of a legal requirement imposed by the Agreement, Norway observed that it could not determine whether the information relied upon by the USITC was factually incorrect because it did not know what information the USITC had relied upon. From the information available to Norway, it did not appear that the conclusions drawn by the USITC were supported by the facts in the record of the investigation. The United States had had ample opportunity to provide the facts relied upon by the USITC in order to dispel Norway's belief. Finally, Norway considered that the USITC had not correctly applied a legal requirement imposed by the Agreement in that it had not made a determination based on an objective examination of positive evidence.

157. In response to a question of the Panel as to whether Norway considered that the factors which it had mentioned ¹¹⁷ had not been considered by the USITC or whether it was of the view that the USITC had not given adequate weight to these factors, Norway stated that Article 6:3 provided a list of factors to be examined in an analysis of the impact of imports on the domestic producers of the like product and noted that "no one or several of the factors necessarily give decisive guidance". The USITC, however, had based its conclusion regarding the impact of the imports on domestic producers on just a few financial indicators, rather than on a thorough review of all factors. Thus, the USITC had allowed a few factors to give decisive guidance.

158. On the statement in the statement of the USITC that "the financial performance of the domestic industry stands in stark contrast to the production and trade figures", Norway observed that certain facts before the USITC discounted the financial indicators as evidence of harm from subsidized imports. The pre-hearing brief on behalf of the Norwegian respondents had described many other factors which affected the financial performance of the domestic producers. Thus, while the financial indicators might have been poor, their value as indicators of the consequent impact of subsidized imports was limited in this case.

159. The United States argued that, as required under Article 6:3, the USITC had considered the injurious impact which the volume and price effects of Norway's imports had on the domestic industry. The USITC had found that the price depressive effect of the large and increasing volume of Norwegian imports was directly reflected in the injured financial condition of United States producers:

The USITC had described the financial condition of the domestic industry as follows:

The USITC had also noted that the domestic industry's operating losses in 1989 totalled $4.3 million, or more than half of the industry's net sales for that year. ¹²⁰ As a specific example of negative cash flow effects caused by depressed prices, the USITC had mentioned the experience of the largest US Atlantic salmon producer, Ocean Products, which had been forced into bankruptcy as a result of the impact of ever-decreasing prices, due to the downward spiral of Norwegian prices.

160. The United States noted that the USITC had also described other negative effects of the depressed prices on the industry:

All of the above-mentioned effects were specifically-enumerated factors under Article 6:3. The USITC had explained that the negative price effects due to the large volume of Norwegian imports were not past effects, but were present effects that were being experienced by US producers through 1990:

In sum, the USITC had demonstrated in step-by-step fashion how the subject imports had caused material injury, first describing volume of imports from Norway, relating that volume to negative price effects in the US market, and relating those price effects to the injured condition of US producers. It had found that price depression attributable to the Norwegian imports had resulted in lower sales revenues, which in turn had caused massive financial losses, substantially decreased cash flow, and significantly diminished production of juvenile salmon.

161. The United States considered that Norway ignored the negative financial data which underlay the determination of the USITC, arguing instead that production, shipments, and certain employment data showed increases. Thus, Norway argued that the domestic industry could not have been injured. Norway's argument was without merit for three reasons. First, Norway had focused on isolated factors and bits of information, including new information which had not been on the record before the USITC. The USITC, by contrast, had considered all of the factors specified in the Code and all of the evidence of record in reaching its determination. Factors mentioned in the Agreement ignored by Norway included profits, cash flow, growth, ability to raise capital, and factors affecting domestic prices. Second, the USITC had explained why the factors that Norway had presented were consistent with a finding of material injury by pointing out that an increase in capacity, production, and employment indicators was only to be expected in a new industry, especially one where there was a delay of several years between the decision to expand production and the actual harvesting of the mature product. ¹²³ Third, Norway's argument disregarded the express admonition in Article 6:3 of the Agreement that "this list is not exhaustive, nor can one or several of these factors necessarily give decisive guidance". The USITC, by contrast, had considered all the factors specified by the Agreement and all the evidence in reaching its determination. In sum, the seemingly positive indicators cited by Norway were belied by the industry's dire financial condition, which stemmed directly from the collapse in salmon prices caused by the oversupply of Norwegian imports. The USITC had considered the factors mandated by the Agreement and had determined that the domestic industry was materially injured by reason of the subsidized Norwegian imports. Its conclusions concerning the industry's condition were supported by positive evidence and were, for the most part, not even contested by Norway.

5.5 Causal relationship between the allegedly subsidized imports and material injury to the domestic industry (Article 6:4)

162. Norway submitted that the affirmative final determination of the USITC in its investigation of imports of fresh and chilled Atlantic salmon from Norway was inconsistent with the requirements of Article 6:4 of the Agreement for the following reasons: first, the USITC had failed to isolate the effect of the allegedly subsidized imports from Norway from the effects of other factors injuring the domestic industry. Second, the USITC had failed to demonstrate that the allegedly subsidized imports from Norway had caused injury to the US domestic industry "through the effects of the subsidy". Third, the USITC had not shown that the imports from Norway had been causing material injury to the US domestic industry at the time the USITC made its determination.

5.5.1 Other factors affecting the domestic industry

163. Norway argued that an interpretation of Article 6:4 in accordance with the ordinary meaning of its terms indicated that the effects of the subsidized imports, by themselves, must be sufficient to have caused material injury. The Vienna Convention on the Law of Treaties required in Article 31:1 that a treaty be interpreted in accordance with the ordinary meaning of its terms in context and in light of the object and purpose of the treaty. When Article 6:4 was read as a whole, the ordinary meaning of the phrase "through the effects of the subsidy, causing injury" was that the effects of the subsidized imports themselves must be causing injury. This was confirmed by the next sentence in Article 6:4 which provided that any injury caused by other factors could not be attributed to the subsidized imports. Thus, according to the authoritative rules of treaty interpretation, a countervailing measure could not be imposed under the Agreement unless, after all injury caused by other factors was removed from consideration, material injury was caused by the effects of the subsidized imports. Thus, those effects must be sufficient to cause injury in and of themselves. This interpretation of the language in Article 6:4 was consistent with the object and purpose of the Agreement which sought to prevent unjustifiable impediments to the flow of international trade, as stated in the Preamble. Therefore, countervailing duties were an exception to basic principles of the General Agreement and as such must be interpreted narrowly. Consequently, a strong demonstration was required that the injury to be prevented was caused by the effects of the subsidy and thus, that the remedy would in fact offset this material injury. If the injury were to be caused by other factors, the countervailing duty would not offset that injury and would impede trade for no lawful purpose. Norway referenced that the standard applied by the United States did not conform to the requirement of Article 6:4. The USITC had stated that its standard of causation was to determine whether "imports are a cause of material injury." In the salmon case, the USITC had expressly relied on several US court cases which had articulated this standard. Norway mentioned in this context LMI - La Metalli Industrialie, S.p.A v. United States ¹²⁴ in which it had been stated that "it is sufficient that the imports contribute even minimally to material injury", and Main Potato Council v. United States ¹²⁵, in which it had been stated that the USITC had to make an affirmative finding of injury if it found that imports were more than a "de minimis" cause of injury.

164. In response to a question of the Panel, Norway explained that it was not arguing that the causation standard of Article 6:4 of the Agreement was met only when the subsidized imports were the sole cause of material injury to a domestic industry. That there could be several causes of material injury was recognized in the text of Article 6:4 and in footnote 20, which referred to other factors which might be causing injury to an industry. However, Article 6:4 stated that "injuries caused by other factors must not be attributed to the subsidized imports". Read together with the requirement to demonstrate that the subsidized imports, through the effects of the subsidies, must be causing material injury, this meant that the subsidized imports alone must be sufficient to cause material injury. This interpretation was confirmed by experts in the area. Thus, Beseler and Williams had analyzed the causation standard contained in the revised Agreement on Implementation of Article VI of the General Agreement (1979) as follows:

Thus, even though other factors may have caused more injury, the causation requirement of the Agreement was met as long as an adequate determination was made that the effects of the subsidies alone - without injury caused by other factors - were sufficient to cause material injury.

165. Norway argued that in the present case the USITC had not singled out the effect of the allegedly subsidized imports under investigation from the effects of other factors which had affected the domestic industry in the United States, thus potentially attributing injury caused by other factors to the subsidized imports. During the consultations preceding the establishment of the Panel, Norway had asked the United States several questions aimed at determining how the USITC had distinguished between injury caused by the effects of the subsidies and injury caused by other factors. The United States had not responded to these questions. In fact, the United States had refused to answer these questions on the ground that the questions concerned issues that might be raised before a panel.

166. Norway considered that, if the United States fresh Atlantic salmon industry had been materially injured, one or a combination of several factors not related to the subject imports accounted for the alleged material injury to that industry. Among such factors were the strong increase in imports from third countries, and growing supplies of close substitute products such as wild Pacific salmon. In support of its view that the information on Pacific salmon harvests was relevant to an examination of possible alternative causes of injury to the United States Atlantic salmon industry, Norway, responding to a question by the Panel, observed that nothing in Article 6:4 or in footnote 20 required that other factors which could cause injury to the industry be limited to sales of like products. Article 6:4 merely stated that "other factors" might be injuring the domestic industry. Footnote 20 provided an illustrative, not an exhaustive list of items which might constitute other factors in a given case. The term "like product" was found nowhere in Article 6:4 and in footnote 20. Moreover, while the USITC had found that Atlantic and Pacific salmon were not like products, it had found that there was some competition between Atlantic and Pacific salmon. Thus, the impact of Pacific salmon on the domestic Atlantic salmon industry was relevant as a possible alternative cause of injury. The effects of internal problems in the United States industry itself also did not appear to have been properly considered in light of the requirements of Article 6:4. These included problems due to mismanagement and the fact that the United States industry did not market its product on a year-round basis (as did the Norwegian industry). This of course affected continuity in contacts with purchasers. Such factors had been recognized during the proceedings before the USITC but had been disregarded when the USITC had drawn its conclusions. Thus, the USITC had concluded that:

This conclusion was inconsistent with Article 6:4 under which signatories were obliged to exclude any injuries caused by factors other than the subsidized imports under investigation. This necessitated a thorough examination of all possible causes of alleged injury.

167. In support of its view that Article 6:4 of the Agreement required that investigating authorities conduct a thorough examination of all possible causes of the alleged injury, Norway, responding to a question of the Panel, explained that, in order to ensure that the investigating authorities did not attribute injury caused by other factors to the effects of subsidized imports, the investigating authorities must be able to segregate the effects of other factors from the effects of the subsidized imports:

In order to isolate the injuries caused by each factor, the investigating authorities must examine each such factor. Article 6:4 required that it "be demonstrated" that the effects of the subsidized imports were causing material injury. This placed an affirmative obligation on the investigating authority to so demonstrate. A part of that demonstration included demonstrating that the investigating authority had not improperly attributed the injury caused by other factors to injury caused by the effects of the subsidies. Nothing in the language of the Agreement created an obligation for the party opposing the duties to demonstrate the negative, i.e., that the effects of the subsidized imports were not causing material injury. In the present case, the United States had failed to provide any information on how the USITC had ensured that it did not attribute the injury caused by other factors to the effects of the subsidized imports and had failed to demonstrate that the subsidized imports, through the effects of the subsidies, were causing material injury.

168. In response to a question of the Panel as to whether Norway considered that the possible alternative causes it had identified had not been considered by the USITC, or whether it considered that these possible alternative causes had not been given sufficient weight by the USITC, Norway stated that, while the USITC was not obliged to weigh the different factors of injury, it was required to avoid attributing to the subsidized imports injury caused by other factors. While the USITC might perhaps have considered some of these other factors, it had made no effort to avoid attributing injury caused by those other factors to the effects of the subsidies.

169. The United States argued that the determination of the USITC amply demonstrated that Norway's surging exports of Atlantic salmon to the United States had caused material injury to the domestic industry. In the face of this evidence, Norway pointed to other factors which, it believed, might have caused material injury to the industry. The USITC, however, had determined that material injury was caused by the Norwegian imports; it had expressly considered and rejected the alternative causes proffered by Norway. The determination of the USITC therefore met the requirements of Article 6:4. Contrary to what was argued by Norway, Article 6:4 did not require a signatory to "exclude any injuries caused by factors other than subsidized imports". Rather, the Agreement admonished investigating authorities to consider whether other factors might be injuring the domestic industry. Thus, the investigating authorities must find a causal link between the imports and the injury to the domestic industry, a requirement reflected in both the Agreement and the United States legislation and which had been applied by the USITC in the case at hand.

170. The United States argued that in its analysis the USITC had applied the appropriate Agreement standard in finding a causal link between the subsidized imports and material injury to the domestic industry. The Agreement provided that the standard was whether imports were "causing" injury. This was exactly what the USITC had found in the present case: it had found that injury to the domestic industry had been caused "by reason" of the subsidized imports, or, stated in another way, that imports were a cause of injury. Norway's argument that the Agreement required the authorities to determine whether subsidized imports were, by themselves, the cause of material injury found no support in the language of Article 6:4. A standard along the lines of the standard advocated by Norway had been contained in the 1967 Anti-Dumping Code, which in Article 3 provided that dumped imports must be the "principal" cause of injury. If "principal" cause was no longer the standard, it followed that imports need not be "the" cause of injury by themselves, which was an even higher standard. The test in Article 6:4 was whether subsidized imports "were causing material injury within the meaning of this Agreement". The meaning of this language had to be understood in the context of the change which had occurred in the causal link standard in moving from the 1967 Code to the present Agreement on Implementation of Article VI of the General Agreement. A number of commentators had concluded that the explicit removal of the "principal cause" standard in the present Agreement was a lessening of the causation standard to a standard requiring that the imports be a "contributing cause of injury".

171. In response to the points made by Norway regarding other factors which might have injured the domestic industry, the United States submitted that the USITC in its investigation had found that, although these other factors might have had an effect on the domestic industry, injury was caused by the subsidized Norwegian imports. With respect to Norway's argument on imports from third countries as a possible alternative cause of injury, the United States considered that this argument ignored the dominant position held by Norway in the United States market despite the volume increases of imports from third countries. Imports in 1989 from the next largest importer, Canada, had been only one quarter those of Norway, the increase in Norway's import volume had dwarfed the increase in the volume of any other country's imports and the increase in Norway's imports was larger than the total import volume of Canada, the next largest importer. The USITC had properly focused on the overwhelming and increasing volume of Norwegian imports, rather than on the rate of increase of the volume of imports from the other, far smaller exporters of Atlantic salmon. In sum, Norway's argument was based on an invalid assumption that a smaller importer could have an injurious effect while its imports, which had represented 65 per cent of the market in 1989, did not have such an effect.

172. In the view of the United States, Norway's argument that the Pacific salmon catch had injured the domestic Atlantic salmon industry in the United States ignored the fact that Atlantic and Pacific salmon were commercially competitive only to a limited extent, as the USITC had found in defining the like product. Norway had not contested the USITC's finding that Atlantic and Pacific salmon were not like products. Norway had cited the Pacific salmon harvest totals for 1987-1989 but had failed to note that virtually all of this Pacific salmon was either frozen or canned and had thus been marketed to completely different purchasers than fresh Atlantic salmon. Norway also had failed to note that most of the remaining fresh Pacific salmon was exported from the United States and that nearly all of the 1989 increase in the Pacific salmon catch was chum or pink salmon, which were low quality fish sold in different markets than Atlantic salmon. Norway had not contested these facts; it had merely failed to note them.

173. With respect to Norway's argument that the domestic industry had been adversely affected by mismanagement, the United States considered that this argument overlooked the fact that low prices were the root cause of the industry's injured financial condition. Norway had also pointed to the US industry's marketing of Atlantic salmon on a less than year round basis. As the USITC had found, the domestic industry had been forced to sell its mature salmon right after harvest in order to maintain cash flow in the face of low prices. The inability to sell for a longer portion of the year was, therefore, a symptom of the injurious price effect of Norwegian imports rather than an alternate cause of the injury.

174. In response to a question of the Panel, the United States explained as follows how the USITC had arrived at the conclusion that, while other factors might have adversely affected the US domestic industry, the industry was materially injured by reason of imports from Norway. The USITC had conducted a thorough analysis of evidence concerning the volume of imports from Norway, their effects on prices in the United States, and their effects on US domestic producers, as provided in the Agreement. Article 6:1, 6:2 and 6:3 specifically envisioned that the focus of an investigation be on those factors. The determination of the USITC also contained findings relating to other suggested factors affecting the industry. As to non-subject imports, the USITC had found that the price depression which had injured the US industry "was due in large part to oversupply in the US market" and that it was "imports from Norway [that] accounted for a large portion of the increased imports in 1989". ¹²⁹ This was fully supported by the facts before the Commission. With regard to Pacific salmon, the USITC had described in detail the many differences between Atlantic salmon and Pacific salmon which restricted their substitutability - and thus their degree of competition with each other. These differences included the form in which the salmon was marketed, distribution channels, prices, and geographical and seasonal differences. Third, as to possible production difficulties or the seasonal marketing of US Atlantic salmon, the USITC had explicitly taken into account these factors which related to the industry's young age, in its determination. For example, the USITC had concluded that the industry's financial performance was "worse than would be anticipated even taking into account start-up conditions". ¹³⁰ In sum, the USITC's determination provided a detailed explanation of how Norwegian imports were causing material injury. This explanation had its focus on the volume of imports from Norway, their price effects, and their effects on US producers, as required by the Agreement. The determination also contained an explicit recognition of respondent's arguments concerning other factors affecting the industry, and contained findings supporting the USITC's conclusion that these other factors did not detract from the fact that imports from Norway had caused injury.

175. Norway considered that the view of the United States that Article 6:4 "admonishes investigating authorities to consider whether other factors may be injuring the industry" rather than requiring the investigating authorities to exclude any injuries caused by other factors rested on a clear misreading of the ordinary meaning of this provision. Article 6:4 provided in relevant part that "There may be other factors which at the same time are injuring the industry, and the injuries caused by other factors must not be attributed to the subsidized imports". This sentence nowhere stated that the investigating authorities were only obliged to consider whether other factors were causing injury. Assuming arguendo that this language was ambiguous, an examination of the drafting history demonstrated that the drafters of this provision did not intend this sentence to require only a consideration of whether other factors were causing injury to a domestic industry.

176. In support of its contention on this latter point, Norway pointed out that in the Draft Subsidies Code, dated 10 July 1978 (document MTN/NTM/W/168), the provision now appearing in Article 6:4 of the Agreement read as follows:

This language indeed "admonished" the investigating authorities to consider other factors. However, this was not the final language. Had the signatories intended the interpretation proposed by the United States, they would not have changed the language to state that "injuries caused by other factors must not be attributed to the subsidized imports." The United States had presented no evidence that the causation analysis of the USITC was consistent with the requirements of Article 6:4 of the Agreement. Thus, the United States had failed to demonstrate that it had conducted an injury investigation in accordance with the requirements of Article 6:4.

177. The United States submitted that Norway's arguments regarding the requirements of Article 6:4 with respect to other factors which might be causing injury to a domestic industry were without merit in view of the text of that provision. Norway had argued that the Agreement required the investigating authorities to conduct a "thorough examination of all possible causes of alleged injury" and that, "in order to isolate the injuries caused by each factor, the investigating authorities must examine each factor". Norway had not cited any specific provision in the Code requiring its preferred analysis. What the Agreement stated was that investigating authorities must not attribute the effects of other factors to the effects of the subject subsidized imports. It did not require any particular analysis of other factors and the language of the Agreement did not support Norway's interpretation that a "thorough examination" of each possible other factor must be undertaken.

178. The United States considered that apparently Norway's argument was that the sentence in Article 6:4 concerning other factors implied that a specific examination of all other factors was required. However, no such inference could be drawn from this language. As shown by the detailed text of Articles 6:2 and 6:3, required analyses were specifically set forth in the Agreement. The fact that no particular analysis had been set forth regarding the other factors was telling. It was not surprising that the Agreement was structured in this way. It was natural that the mandated focus of the analysis was on the effects of subsidized imports, rather than on some other factors; this was what countervailing duty investigations were all about - the subject imports. Norway would apparently turn the issue on its head and require that the investigating authorities examine, and eliminate, all other possible factors affecting the domestic industry and then decide whether what was left was sufficient for an affirmative determination. In this respect, the standard proposed by Norway was similar to the standard found in the 1967 Anti-Dumping Code. Article 3(c) of that Code provided that "in order to establish whether dumped imports have caused injury, all other factors which, individually or in combination, may be adversely affecting the industry shall be examined". Similarly, Article 3(a) of the 1967 Anti-Dumping Code provided that "the authorities shall weigh, on one hand, the effect of the dumping and, on the other hand, all other factors taken together which may be adversely affecting the industry". This language had been dropped from the present Agreement on Implementation of Article VI of the General Agreement. The 1967 Code had been denounced in Article 16 of that Agreement.

179. The United States further submitted in this context that, to the extent there was a Agreement standard for not misattributing effects of other factors, it was fulfilled through an examination of the effects of the subject imports, as provided in Articles 6:1, 6:2 and 6:3 which addressed the causal link to imports. This view was amply illustrated by the recent decision of the Panel established by the Committee on Subsidies and Countervailing Measures in the dispute between the United States and Canada regarding countervailing duties imposed by Canada on grain corn from the United States. ¹³¹ This Panel had found that the Canadian authorities had given primary emphasis to the effects of the United States subsidy programme on the world price for corn and had given no consideration to the effects of imports. The Panel had found a failure by Canada to meet the requirements of Articles 6:2 and 6:3. The Panel had also found that, because Canada had explicitly based its finding on the effects of something other than the subject imports - the world price for corn - Canada had violated the requirement of Article 6:4 not to attribute the effects of other factors to the subject imports. That decision presented a classic case in which the requirement of Article 6:4 was violated: a signatory's failure to offer any case that it was subsidized imports which were causing injury. The present case, however, was in marked contrast to the facts underlying the Panel's decision in the Grain Corn case. In the salmon case, the USITC had undertaken a detailed and Code-directed analysis of the effects of the subject imports - their volume, effects on prices, and consequent effects on domestic producers. The findings of the USITC regarding these effects were amply supported by the evidence before the USITC.

TO CONTINUE WITH IMPOSITION OF COUNTERVAILING DUTIES ON IMPORTS OF FRESH AND CHILLED ATLANTIC SALMON FROM NORWAY

¹⁰⁹ USITC Determination, p.19.

¹¹⁰ USITC Determination, p.A-59 and p.A-66.

¹¹¹ Prehearing Brief of Norwegian Respondents, 20 February 1991 at p.35, n.57.

¹¹² USITC Determination, p.20.

¹¹³ USITC Determination, P.A 55.

¹¹⁴ Id.

¹¹⁵ USITC Determination, p.A 22.

¹¹⁶ USITC Determination, p.A 29.

¹¹⁷ Supra, paragraph 155.

¹¹⁸ USITC Determination, p.20.

¹¹⁹ USITC Determination, p.14.

¹²⁰ USITC Determination, p.A 30, table 7.

¹²¹ USITC Determination, p.21.

¹²² Id.

¹²³ USITC Determination, p.14.

¹²⁴ 712 F.Supp.959, 971 (CIT 1989).

¹²⁵ 613 F.Supp. 1237. 1244 (CIT 1985).

¹²⁶ Beseler and Williams, Anti Dumping and Anti Subsidy Law: The European Communities (1986), p.15.

¹²⁷ USITC Determination, p.22.

¹²⁸ Beseler and Williams, Anti Dumping and Anti Subsidy Law: The European Communities, (1986), p.167.

¹²⁹ USITC Determination, p.19.

¹³⁰ USITC Determination, p.15.

¹³¹ SCM/140, adopted on 26 March 1992.