RESTRICTED
WORLD TRADE G/SCM/W/411
7April 1998
ORGANIZATION(98-1406)
Committee onSubsidies
andCountervailing Measures
DRAFT PROCEDURES FOR ARBITRATION UNDER ARTICLE 8.5OFTHE
AGREEMENT ONSUBSIDIES AND COUNTERVAILING MEASURES
Note from theChairman
TheattachedpaperonproceduresforarbitrationunderArticle8.5oftheAgreementonSubsidies
andCountervailing Measures isaChairman 'stextwhich wasproduced onthebasis ofinformal
consultations oftheCommittee onSubsidies andCountervailing Measures ("theCommittee") heldsince
October 1997. Those consultations usedastheirstarting point thepreviously-circulated textcontained
indocument G/SCM/W/5, dated 11May1995.
Thispaper isproposed forconsideration attheCommittee 's23-24 April 1998regular meeting.
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Introduction
TheCommitteeonSubsidiesandCountervailingMeasureshasdiscussedatlengththeprovisions
contained inArticle 8.5oftheAgreement onSubsidies andCountervailing Measures. Inviewofthe
importance ofthese provisions, aswellasthelimited timespecified inArticle 8.5forthecompletion
ofarbitration proceedings andtheabsence ofdetailed guidance fortheirconduct, theCommittee has
developed thefollowing procedures withtheaimoffacilitating theoperation ofarbitration proceedings
andenhancingtransparencyandpredictabilityforallMemberswithrespecttotheapplicationofArticle8
oftheAgreement.
TheCommittee notes thattheprovisions ofArticle 8.5cannot beviewed strictly inisolation,
insofar astheyform anintegrated partofthewhole ofPartIVoftheAgreement. Inthisregard, the
Committee recognizes theimportance ofthereview procedure under Article 8.4andtheseriousness
withwhich Members areexpected totreatit.Inparticular, totheextent thatMembers mayhave
questions about theconsistency ofanotified programme withtheconditions andcriteria provided for
intheprovisions ofArticle 8.2,theCommittee would expect Members tomake fullandsubstantive
useoftheprocedures under Article 8.4inorder toclarify allrelevant questions regarding anotified
programme. Inthesame vein, theCommittee notes that,pursuant toArticle 8.3,aMember which
isnotifying aprogramme isrequired toprovide sufficiently precise information toenable otherMembers
toevaluate theconsistency oftheprogramme withtherelevant conditions andcriteria ofArticle 8.2.
TheCommittee would, therefore, expect notifying Members tocooperate asfully aspossible in
responding tothequestions ofother Members inthecourse oftheArticle 8.4review procedure.
Inshort, theCommittee exhorts allMembers toparticipate constructively andingood faith
inthenotification andreview process provided forinparagraphs 3and4ofArticle 8soastoresolve
anyquestions andconcerns about notified programmes attheearliest opportunity. Where appropriate,
itisrecognized thatsuchefforts encompass thepossibility ofconcerned Members consulting informallyG/SCM/W/411
Page2
prior torequesting arbitration inorder toavoid unnecessary arbitration requests. Finally, without
prejudice toMembers ’rights asprovided forunder article 8.5,theCommittee notesthat:(i)theinterests
ofclarity, predictability andgreater legalcertainty would bebestserved ifarbitration requests involving
Committee determinations under Article 8.4(orthefailure oftheCommittee tomake adetermination)
weremade assoonaspracticable following theconclusion oftheprocedure setforth inArticle 8.4;
and(ii)arbitration procedures would befacilitated ifrequesting Members fullyidentify anddescribe
those issues which were notraised during theArticle 8.4procedure.G/SCM/W/411
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Procedures forArbitration under Article 8.5ofthe
Agreement onSubsidies andCountervailing Measures
TheCommitteeonSubsidiesandCountervailingMeasuresherebydecidestoadoptthefollowing
proceduresforuseinbindingarbitrationconductedpursuanttoArticle8.5oftheAgreementonSubsidies
andCountervailing Measures. These procedures shallnotaddtoordetract from theexisting rights
andobligations ofMembers under theAgreement onSubsidies andCountervailing Measures orunder
anyother WTO Agreement. Inthiscontext, theCommittee affirms inparticular thatthisdecision
shallnotprevent theParties tosuchanarbitration from agreeing onother procedures assetforth in
paragraph 5,below.
I. REQUESTS FOR ARBITRATION
1. AnyMember wishing torequest arbitration under Article 8.5shalladdress awritten request
tothateffect totheChairman oftheCommittee onSubsidies andCountervailing Measures ("the
Committee"), aswellastotheMember whose notified programme isbeing submitted toarbitration.
Therequest shallinclude:
(a) thebasis fortherequest, i.e.adetermination bytheCommittee under Article 8.4,
afailure bytheCommittee tomake suchadetermination, and/or theviolation in
individual cases ofsubsidization oftheconditions setoutinasubsidy programme
notified under Article 8.3;
(b) thespecific questions tobeaddressed bythearbitration body, asrelated torequirements
under theprovisions ofArticle 8.2,andastatement oftheposition taken bytheMember
requesting thearbitration withrespect toeachsuchquestion;
(c) abriefsummary oftheinformation onwhich therequest isbased.
2. Anyrequest forarbitration shallbecirculated promptly totheMembers.
3. Members should takeintoaccount theneed toavoid undue multiplication ofarbitration
proceedings inrespect ofthesameprogramme, andshould therefore availthemselves oftheprocedures
under paragraph 4forbecoming Parties, ortheprocedures under paragraph 17forbecoming Third
Parties, toanarbitration, without prejudice totherightofMembers torequest arbitration.
4. Inorder tobecome Parties tothearbitration proceeding, other Members shallhaveaperiod
of15daysafterthedateofcirculation oftherequest forarbitration toprovide theChairman ofthe
Committee andtheMember whose notified programme isbeing submitted toarbitration witha
communication which shallconform withtherequirements forrequests forarbitration setforth in
paragraph 1.Anysuchcommunication shallbecirculated promptly totheMembers.
5. Duringthe30-dayperiodreferredtoinparagraph10,Partiesalsomayagreetoanysupplemental
oralternative procedures forarbitration under Article 8.5tothose specified herein. Anysuch
supplemental oralternative procedures shallbepromptly notified totheMembers. Intheevent that
there isnoagreement onsuchsupplemental oralternative procedures, theprocedures specified herein
shallapply exclusively andinfull.G/SCM/W/411
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II. REFERRAL TOARBITRATION
6. Assoonasthecomposition ofthearbitration body hasbeendecided, anotice tothateffect
shallbecirculated promptly totheMembers.
7. Forpurposes ofArticle 8.5,thedateofcirculation ofthenotice under paragraph 6shallbe
deemed tobethedateonwhich thematter isreferred tothearbitration body.
III. PARTIES TOTHE ARBITRATION PROCEEDING1
8. TheParties tothearbitration proceeding shallbetheMember which hasnotified thesubsidy
programme inquestion, theMember which requests thearbitration, andanyother Member which has
become aParty tothearbitration inaccordance withparagraph 4.
IV. COMPOSITION OFTHE ARBITRATION BODY
9. Thearbitration body shallconsist ofthree arbitrators, unless theParties agree toadifferent
uneven number.
10. Themembers ofthearbitration bodyanditspresident shallbeappointed byagreement ofthe
Parties. IftheParties donotreach agreement within 30daysafterthedateofcirculation oftherequest
forarbitration, unless theParties agree onalonger period, anyParty mayrequest theDirector-General
oftheWTO toappoint, inconsultation withtheChairman oftheCommittee, thearbitrator orarbitrators
notyetappointed. Suchappointment shallbemade, afterconsultation withtheParties, within 10days
oftherequest.
11. Except astheParties otherwise agree, thearbitrators shallnotbecitizens ofanyoftheParties
orThird Parties tothearbitration proceeding.2
12. Thearbitrators shallbechosen fromamong persons withrelevant legal, economic, financial
ortechnical expertise, including expertise intheAgreement onSubsidies andCountervailing Measures,
withrespect tothematter referred tothearbitration body.
13. TheSecretariat shall maintain anindicative list,based upon nominations putforward by
delegationsandapprovedbytheCommittee,ofqualifiedpersonsfromwhicharbitratorsmaybeselected.
Thislistshallinclude anidentification ofeachperson 'sacademic and/or professional background and
qualifications.
14. WheretheMembernotifyingtheprogrammethathasbeensubmittedtoarbitrationisadeveloping
country, thearbitration bodyshall, ifthedeveloping country Member sorequests, include atleastone
arbitrator from adeveloping country Member.
1Asusedthroughout thistext,theterms "Party" and"Parties" donotencompass theterms "Third
Party" and"Third Parties" provided forinSection VI,infra.
2Inthecasewhere acustoms union oracommon market isaParty orThird Party toanarbitration,
thisprovision applies tocitizens ofallmembers ofthatcustoms union orcommon market.G/SCM/W/411
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V. TERMS OFREFERENCE OFTHE ARBITRATION BODY3
15. Ifarequest forarbitration pertains toadetermination oftheCommittee under Article 8.4,
orafailure oftheCommittee tomake suchadetermination, thearbitration body shalldetermine, in
lightofthespecific questions raised under paragraphs 1and4bytheParties tothearbitration, whether
thesubsidyprogrammenotifiedunderArticle8.3doesnotmeettheconditionsandcriteriaofArticle8.2.
16. Ifarequest forarbitration pertains toalleged violation inindividual cases oftheconditions
setoutinasubsidy programme notified under Article 8.3,thearbitration bodyshalldetermine whether
ornotindividual cases ofsubsidization violate theconditions setoutinthesubsidy programme notified
under Article 8.3.IfaParty sorequested under paragraph 1,thearbitration bodyalsoshalldetermine
whether theprogramme inquestion doesnotmeettheconditions andcriteria ofArticle 8.2.
VI. THIRD PARTIES
17. AMember notwishing tobecome aParty tothearbitration, butwishing instead toparticipate
inthearbitration onalimited basis, shallhaveaperiod of20daysafterthedateofcirculation ofthe
request forarbitration toinform theChairman oftheCommittee inwriting thatitwishes tobecome
aThird Party tothearbitration proceeding. AThird Party mayintervene onlywithrespect tospecific
questions raised byParties.
18. AMember thathasinformed theCommittee under paragraph 17ofitsinterest toparticipate
asaThird Party inthearbitration proceeding shallhavetherighttomake awritten submission tothe
arbitration bodyandtoreceive copies ofwritten submissions oftheParties tothearbitration proceeding,
andshallhaveanopportunity tobeheard atthose meetings ofthearbitration bodywhich include Third
Parties. AThird Party maynotparticipate intheselection ofarbitrators orintheestablishment of
thearbitration body'sworking procedures.
VII. WORKING PROCEDURES
19. Thearbitrationproceedingsshallbeconductedonthebasisofwrittensubmissionsanddocuments.
TheParties andThird Parties tothearbitration proceedings shallmake written submissions within time
periods tobedetermined bythearbitration body afterconsultation withtheParties. Thearbitration
bodyshalldecide whether further written submissions arenecessary andshallfixaperiod oftimefor
suchsubmissions afterconsulting theParties.
20. Thearbitration bodyalsomayholdmeetings withtheParties andshallholdonesuchmeeting
ifanyParty sorequests atanappropriate stage oftheproceedings. Ifthearbitration body holds a
meeting withParties, thearbitration bodyalsoshallholdonesession forThird Parties topresent their
views, atwhich Parties shallbepresent. Written textsoftheoralstatements made byParties and,
where applicable, Third Parties shallbesubmitted tothearbitration body, andshallconsist onlyof
theinformation andviews actually presented orally.
VIII. PROCESS
21. Theproceedings ofthearbitration body shall beconfidential. Written submissions tothe
arbitration bodyshallbetreated asconfidential. Thearbitration bodyandallParties andThird Parties
toaproceeding shalltreatasconfidential anyinformation submitted tothearbitration bodywhich the
3These terms ofreference apply equally torequests forsecond orlaterarbitrations.G/SCM/W/411
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submitter hasdesignated asconfidential. Nothing intheseprocedures shallpreclude aParty oraThird
Party toanarbitration from disclosing statements ofitsownpositions tothepublic.
22. AParty orThird Party toanarbitration shallmake available toallother Parties andThird
Parties itswritten submissions. Upon request ofaMember, aParty oraThird Party shallalsoprovide,
within areasonable timeperiod, anon-confidential summary oftheinformation contained initswritten
submissions thatcould bedisclosed tothepublic.
23. There shallbenoexparte communications withthearbitration bodyconcerning matters under
consideration bythearbitration body.
24. Before presenting itsconclusions, thearbitration bodyshallprovide totheParties asummary
statement oftheinformation onwhich itintends tobaseitsconclusions, andtoeachThird Party those
sections ofthissummary statement which pertain tothespecific questions thatithasaddressed. The
arbitration body shallprovide anopportunity fortheParties andThird Parties tocomment, within a
timeperiod tobeestablished bythearbitration body, onthesummary statement.
25. Thearbitration proceedings shalltakeplace attheseatoftheWorld Trade Organization.
26. TheWTO Secretariat shallactasSecretariat tothearbitration body, andshallperform all
administrative functions necessary toassist thearbitration body, including thereceipt andcirculation
ofcommunications related toarbitration requests, andthemaintenance ofanorganized permanent record
foreacharbitration proceeding.
IX. INFORMATION BEFORE THE ARBITRATION BODY
27. Thearbitration body shallproceed onthebasis oftheinformation before it,toinclude such
ofthefollowing asexistandarerelevant:
(a) thenotifications ofthesubsidy programme inquestion, andanyyearly updates ofsuch
notifications;
(b) thefindings oftheSecretariat, theminutes oftheCommittee andthedetermination
bytheCommittee, asrecorded during theprocedure under Article 8.4;
(c) thedocuments andarguments submitted totheSecretariat andtheCommittee inthe
procedure under Article 8.4;
(d) therecord(s) ofanyprevious arbitration(s) related tothesame programme;
(e) anyinformation provided tothearbitration bodybytheParties andThird Parties under
these procedures;
(f) anyinformationortechnicaladviceobtainedbythearbitrationbodyundertheprovisions
ofparagraphs 28and29.
28. AMember should respond promptly andfullytoanyrequest byanarbitration body forsuch
information asthearbitration body considers necessary andappropriate.
29. Thearbitration body shallhavetherighttoseekinformation andtechnical advice from any
individual orbody which itdeems appropriate. However, before anarbitration body seeks such
information ortechnical advice from anyindividual orbody within thejurisdiction ofaMember itG/SCM/W/411
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shallinform theauthorities ofthatMember. TheParties andThird Parties shallhavefullaccess to
anyrequests forinformation ortechnical advice under thisorthepreceding paragraph, aswellasto
anyinformationortechnicaladviceobtainedthereby.Atthetimethatitrequestsinformationortechnical
advice under thisorthepreceding paragraph, thearbitration body shallobtain theagreement ofthe
individual, bodyorMember todisclose totheParties andThird Parties allsuchinformation ortechnical
advice. TheParties andThird Parties shalltreatasconfidential anyinformation ortechnical advice
thatanindividual, bodyorMember hasdesignated asconfidential. Thearbitration bodyshallprovide
anopportunity totheParties andThird Parties tocomment upon anyinformation ortechnical advice
obtained under thisorthepreceding paragraph.
X. CONCLUSIONS OFTHE ARBITRATION BODY
30. Thearbitration body shallpresent totheMembers itsconclusions andthereasons onwhich
those conclusions arebased intheformofasingle, collegial decision, within 120daysfromthedate
ofcirculation ofthenotice under paragraph 6.
31. Theconclusions presented under paragraph 30shallbebinding onallMembers.
XI. REVIEW OFTHESE PROCEDURES
32. Notlaterthanthree years afterthese procedures areusedforthefirsttime, theCommittee
shallinitiate areview oftheiroperation, andmaydecide atthattimeonanymodifications tothem.
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