|
|
espa�ol - fran�ais - portugu�s |
Search
|
UNITED STATES - MEASURES TREATING
(Continuation)
"In our 1997 Proposed Regulations, we did not address indirect subsidies in
detail. Instead, we note that the SAA directs the [DOC] to proceed on a
case-by-case basis . . .
. . .
[T]he phrase 'entrusts or directs' could encompass a broad range of meanings. As
such, we do not believe it is appropriate to develop a precise definition of the
phrase for purposes of these regulations. Rather, we believe that we should
follow the guidance provided in the SAA to examine indirect subsidies on a
case-by-case basis.
. . .
The SAA . . . lists a number of cases where the [DOC] has found indirect
subsidies in the past, and these cases serve to provide examples of situations
where we believe the statute would permit the [DOC] to reach the same result."201
Thus, in this sense, as we noted above, the Preamble simply incorporates by
reference and defers to the SAA in respect of the interpretation of the
definitional elements of a "subsidy", in particular the meaning of "entrusts or
directs".
8.116 Concerning export restraints specifically, the Preamble states in relevant
part:
"With regard to export restraints, while they may be imposed to limit parties'
ability to export, they can also, in certain circumstances, lead those parties
to provide the restrained good to domestic purchasers for less than adequate
remuneration . . . [I]f the [DOC] were to investigate situations and facts
similar to those examined in Lumber and Leather in the future, the new statute
would permit the [DOC] to reach the same result."202
The language "would permit" clearly does not connote a requirement. We thus see
this statement as reflecting the DOC's view or belief that it could, under the
new statute, continue to treat export restraints as countervailable subsidies,
rather than reflecting the view or belief that it is required to do so.
8.117 Certainly, the Preamble expresses the view that there are circumstances
similar to those in Leather and Lumber in which the DOC might find that an
export restraint constitutes a financial contribution. The rationale in Leather,
which was also adopted in Lumber, was, however, that two conditions had to be
fulfilled for a subsidy to exist: specificity and benefit.203 It was not necessary
in either of those cases, as it is necessary today, to consider separately
whether there is a financial contribution, this now being an essential element
of a "subsidy" under Article 1.1 of the SCM Agreement.
8.118 We attach importance, however, to the fact that the Preamble refers to the
interpretive guidance in the SAA concerning indirect subsidies and export
restraints. For the reasons given in paragraph 8.105, we have concluded that the
SAA correctly indicates that primacy is to be given to Section 771(5)(B)(iii),
which contains the test of financial contribution. Accordingly, the Preamble,
like the SAA, ensures that the DOC is to apply the test of financial
contribution.
8.119 Thus, far from casting doubt on our conclusion as to the interpretation of
the statute, the language in the Preamble is fully consistent with that
conclusion, namely, that the DOC is not required under US law to treat export
restraints as financial contributions.
(iv) US "Practice"
8.120 Canada defines US "practice" as "an institutional commitment to follow
declared interpretations or methodologies that is reflected in cumulative
determinations"204. Canada considers that there is an existing US administrative
"practice" of treating export restraints as meeting the "financial contribution"
requirement of Article 1.1(a)(1)(iv) of the SCM Agreement, which "practice",
according to Canada, is defined in large part by the pre-WTO US practice of
countervailing export restraints where they "directly led to a discernible
benefit". In this regard, Canada cites Leather and Lumber. Canada submits that,
while the practice in those cases should have become irrelevant after the SCM
Agreement came into force, the SAA expressly provides that it is to continue
under the SCM Agreement and the revised US CVD law.
8.121 Canada further considers that the DOC's determinations in the Korean
Stainless Steel cases and Live Cattle from Canada confirm the DOC's view that
its Regulations, like the SAA, foreclose any discretionary consideration of
"financial contribution" in the case of "indirect subsidies". Canada makes it
clear, however, that while practice is related to precedent, the US "practice"
of which it complains is not individual determinations in CVD cases. Canada's
arguments in respect of US "practice" therefore seem to comprise essentially two
elements - references to certain pre-WTO US CVD cases in the SAA and the
Preamble, and certain post-WTO US CVD cases - both of which effectively make up
the "institutional commitment" alleged by Canada.
8.122 While Canada acknowledges that "[a] 'practice' identified in a [DOC]
determination differs from 'legislation', because it is not statutory and has
not been validly promulgated as a legislative rule"205, Canada seeks to persuade
the Panel that US "practice" has an operational existence in and of itself by
arguing that "[a]gencies, including [the DOC] normally follow the precedents of
prior determinations, and are required by US courts to do so absent a reasoned
explanation"206.
8.123 We find Canada's notion of US "practice", however expressed, to be
imprecise. Given that Canada has not clearly identified what it refers to when
it uses the term "practice"207, we have great difficulty in conceiving of
"practice" as a measure in this dispute, in whichever formulation proffered by
Canada.
8.124 In respect of the references in the SAA and the Preamble to pre-WTO US CVD
cases, we note that Canada argues that "pre-WTO practice was brought forward
into post-WTO law and practice by virtue of the SAA and the Preamble"208. We
consider, however, that such references would not constitute US "practice", but
would simply be part of the SAA and the Preamble. That is, we do not see how any
past practice as incorporated in the SAA or the Preamble could constitute a
separate measure with an existence independent of that of the SAA and Preamble.
8.125 In respect of "practice" as embodied in post-WTO CVD cases, while Canada
may well be correct in principle that "an interpretation or methodology will
often be developed in a single case or group of cases, and becomes the
'practice' followed in subsequent cases"209, this principle is not directly
relevant to the present dispute, as there has been no post-WTO case where the
United States has countervailed an export restraint. Further, even if there had
been such cases, and even if the DOC had set out the methodologies it "normally"
applied in such cases, Canada itself admits that under US law, the DOC could
depart from those methodologies as long as it explained its reasons for doing
so.210
8.126 Thus, while Canada may be right that under US law, "practice must normally
be followed, and those affected by US [CVD] law . . . therefore have reason to
expect that it will be"211, past practice can be departed from as long as a
reasoned explanation, which prevents such practice from achieving independent
operational status in the sense of doing something or requiring some particular
action. The argument that expectations are created on the part of foreign
governments, exporters, consumers, and petitioners as a result of any particular
practice that the DOC "normally" follows would not be sufficient to accord such
a practice an independent operational existence. Nor do we see how the DOC's
references in its determinations to its practice gives "legal effect to that
'practice' as determinative of the interpretations and methodologies it applies"212. US "practice" therefore does not appear to have independent operational status
such that it could independently give rise to a WTO violation as alleged by
Canada.
8.127 Moreover, although there has been no post-WTO case in which the United
States has countervailed an export restraint, Canada further submits that there
is nevertheless relevant post-WTO practice in several concrete cases. Canada
argues in particular that the initiation of the Live Cattle case expressly
relied on the pre-WTO decisions in Leather and Lumber, and that in the Korean
Stainless Steel cases, the DOC made it clear that it would apply the same
standard to "indirect subsidies" as was applied pre-WTO. In Canada's view,
"[t]he decision to initiate the Live Cattle case is of precedential value,
because it reflects [the DOC's] decision that the standard that there be
'sufficient evidence' of all the elements of a countervailable subsidy,
including financial contribution, had been met. Thus, while a decision to
initiate an investigation may not have the same precedential value as a final
determination because it applies a different standard, under both standards the
same legal elements are required to be present".213 We note, however, that, in
Live
Cattle, the DOC did not even address the question of whether the export
restraint at issue constituted a financial contribution, as it found that there
was no benefit. In the Stainless Steel cases, because the practice at issue was
not export restraints, but the direction of credit, we see little if any
relevance in Stainless Steel for the treatment of export restraints. These cases
therefore cannot be considered as reflecting a post-WTO US "practice" of
treating export restraints as financial contributions.
8.128 Finally, we note that Canada submits that "practice" in the form of an
"institutional commitment" is "normally reflected in writing"214. It does not,
however, explain how that is the case in the present dispute, except for the
vague statement that "practice" is "reflected in DOC regulations when those are
issued". We therefore do not see what form of expression this "institutional
commitment" might take or where such an expression might be made.
8.129 For the foregoing reasons, we consider that there is before us no measure
in the form of US "practice" in the sense used by Canada that requires the
treatment of export restraints as financial contributions. Nor, given that
Canada has not identified concretely what US "practice" is, can any US
"practice" provide interpretive guidance in this dispute. Therefore, practice in
the sense used by Canada cannot require any particular treatment of export
restraints in US CVD investigations.215
(v) Summary
8.130 We have found that, of the measures that are the subject of Canada's
claims, only the statute has an independent operational life of its own. We have
nevertheless found that the statute must be read in light of the SAA, and we
have therefore looked to the SAA as the principal interpretive guide thereto. We
have concluded that the statute read in light of the SAA does not require the
treatment of export restraints as financial contributions in CVD investigations.
We also recall that we have found that the Preamble, while it could provide
interpretive guidance to the statute, in fact contributes little or no substance
in this regard. Nevertheless, what it says in respect of the treatment of export
restraints is consistent with our conclusion in respect of the statute read in
light of the SAA. Finally, we recall that Canada has not concretely or clearly
identified what it means by US "practice", nor in what way any such practice
either has an independent operational status, or can provide interpretive
guidance (binding or otherwise) concerning the treatment of export restraints in
CVD investigations. Thus, given that we are not persuaded that there is any
"practice" in the sense used by Canada, such practice cannot require any
particular treatment of export restraints in US CVD investigations.
(d) Conclusion
8.131 In sum, therefore, we find that the statute - including as read in light
of the SAA and the Preamble - does not mandate the treatment of export
restraints as financial contributions (which treatment we have found, however,
would violate the SCM Agreement). Accordingly, we find that Section
771(5)(B)(iii) of the Tariff Act as such does not violate the SCM Agreement, and
we reject the claims of Canada under SCM Article 1.
C. CLAIMS UNDER OTHER PROVISIONS
8.132 The claims of Canada under SCM Articles 10 (and SCM Articles 11, 17, and
19, as they relate to SCM Article 10) and 32.1, on the one hand, and SCM Article
32.5 and WTO Article XVI:4, on the other, are entirely dependent on the claim
that the treatment of export restraints as financial contributions is
WTO-inconsistent and that US law requires such treatment contrary to SCM Article
1. In light of our finding that, while such treatment of export restraints is
WTO-inconsistent, US law does not require such treatment and therefore is
not WTO-inconsistent, we need not, and thus do not, consider Canada's claims under
these provisions.
IX. CONCLUSIONS AND RECOMMENDATIONS
9.1 In light of the above findings, we conclude that:
- An export restraint as defined in this dispute cannot constitute
government-entrusted or government-directed provision of goods in the sense of
subparagraph (iv) and hence does not constitute a financial contribution in the
sense of Article 1.1(a) of the SCM Agreement.
- Section 771(5)(B)(iii) read in light of the SAA and the Preamble to the US CVD
Regulations is not inconsistent with Article 1.1 of the SCM Agreement by
"requir[ing] the imposition of countervailing duties against practices that are
not subsidies within the meaning of Article 1.1".
9.2 With respect to those of Canada's claims not addressed above, we have
concluded that:
In light of considerations of judicial economy, it is neither necessary nor
appropriate to make findings thereon.
9.3 We therefore make no recommendations with respect to the United States'
obligations under the SCM and WTO Agreements.
201Regulations,
63 Federal Register, pp. 65349-65350 (Annex C � Exhibit CAN-3).
202
Id., p. 65351.
203
As the DOC observed in Lumber: "The rationale underlying that
determination [Leather] was that (1) the embargo on raw hides 'applie[d]
only to [raw] cattle hides, which are sold primarily, if not exclusively, to
leather tanners [and, therefore,] [was] limited to a specific industry', and (2)
the export embargo 'caused hide prices to be lower than they would have been
absent the embargo' and, thereby, enabled the leather tanners to sell the
finished product, leather, at a lower price" (57 Federal Register No. 103, p.
22606 � Exhibit CAN-14).
204
Response of Canada to question 16(c) from the Panel following the first meeting.
205
Id.
206
Response of Canada to question 15 from the Panel following the second meeting.
207
We note here, as one example, Canada's statement that practice is "simply what
the agency systematically does" (Response of Canada to question 14 from the
Panel following the second meeting).
208
Id.
209
Response of Canada to question 16(c) from the Panel following the first meeting.
210
Response of Canada to question 15 from the Panel following the second meeting.
211
Response of Canada to question 14 from the Panel following the second meeting.
212
Second Written Submission of Canada, para. 40.
213
Response of Canada to question 15 from the Panel following the second meeting.
214 Response of Canada to question 14 from the Panel following the second meeting.
215
In light of our findings in this section, we need not, and thus do not, address
the request by the United States for preliminary rulings as follows: (i) that
the SAA and the Preamble are not identified as "measures" in the request for
establishment, that in any event neither one is a measure, and that therefore
the claims concerning them are not within the Panel's terms of reference; (ii)
that US "practice" (past, present, or future) is not a measure properly before
the Panel, and that any "practice" that might exist does not constitute binding
precedent; and (iii) that "practice" was neither identified in Canada's request
for consultations, nor was it the subject of consultations; nor did the request
for establishment sufficiently identify the US "practice" in question, in
violation of Articles 4.7 and 6.2 of the DSU, which therefore means that
"practice" is not properly before the Panel.
__________
Return to
Contents |
|