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UNITED STATES - MEASURES TREATING
(Continuation)
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.
8.103 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).
8.105 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.
(iii) The Preamble to the US Countervailing Duty Regulations
(a) Status in US domestic law
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.
"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.
8.113 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.
(b) Content in respect of export restraints
184
Response of the United States to
question 6(a) from the Panel at the first meeting.
185
Response of the United States to question 28 from the Panel following the first
meeting.
186
URAA, footnote 177
supra (emphasis added).
187Response of the United States to question 1 from the Panel following the second
meeting.
188
SAA, pp. 925-926 (Annex B to First Written Submission of Canada � Exhibit
CAN-2).
189
Leather involved, inter alia, a government embargo on exports of
cattle hides, which was found to be a countervailable subsidy to leather
producers on the basis that the embargo had a "direct and discernible effect" on
hide prices and thereby benefited leather producers (55 Federal Register No.
191, p. 40213 � Exhibit CAN-13).
190
Lumber involved, inter alia, certain export restraints on logs,
which were found to be countervailable subsidies to lumber producers on the
basis that the restraints had a "direct and discernible effect" on log prices
and thereby benefited lumber producers (57 Federal Register No. 103, pp.
22609-22610 � Exhibit CAN-14).
191
First Written Submission of Canada, para. 43.
192 Response of Canada to Request by the United States for Preliminary Rulings, para.
26.
193
Id., para. 27.
194
Request by the United States for Preliminary Rulings, para. 81.
195
Id.
196
Id., para. 82.
197Oral Statement of the United States at the first meeting of the Panel, para. 28.
198
Oral Statement of the United States at the second meeting of the Panel, para.
49.
199
Response of Canada to Request by the United States for Preliminary Rulings, para.
26.
200
Regulations, 63 Federal Register, p. 65349 (Annex C to First Written
Submission of Canada � Exhibit CAN-3).
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