WORLD TRADE
ORGANIZATIONWT/DS213/R
3 July 2002
(02-3609)
Original:  English
UNITED STATES – COUNTERVAILING DUTIES ON
CERTAIN CORROSIO N-RESISTANT CARBON
STEEL FLAT PRODUCTS FROM GERMANY
Report of the Panel
The report of the Panel on United States – Countervailing Duties on Certain Corrosion-Resistant
Carbon Steel Flat Products from Germany  is being circulated to all Members, pursuant to the DSU.
The report is being circulated as an unrestricted document from 3 July 2002 pursuant to the
Procedures for the Circulation and Derestricti on of WTO Documents (WT/L/452).  Members are
reminded that in accordance with the DSU only parties to the dispute may appeal a panel report.  An
appeal shall be limited to issues of law covered in the Panel report and legal interpretations developed
by the Panel.  There shall be no ex parte  communications with the Panel or Appellate Body
concerning matters under consideration by the Panel or Appellate Body.
Note by the Secretariat:  This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the
date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report .
If the Panel Report is appealed to the Appellate Body, it sha ll not be considered for adoption by the DSB until after the
completion of the appeal.  Information on the current status of the Panel Report is available from the WTO Secretariat.WT/DS213/R
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TABLE OF CONTENTS
Page
I. INTRO DUCTION ................................................................................................................. ...1
A. COMPLAINT OF THE EUROPEAN COMMUNITIES ...........................................................................1
B. ESTABLISHMENT AND COMPOSITION OF THE PANEL ...................................................................1
C. PANEL PROCEEDINGS ...................................................................................................................2
II. FACTUAL ASPECTS ............................................................................................................. .2
III. PARTIES' REQUESTS FOR FINDINGS AND RECO MMENDATIONS ........................3
A. EUROPEAN COMMUNITIES ...........................................................................................................3
B. UNITED STATES ............................................................................................................................4
IV. REQUEST OF THE UNITED STAT ES FOR A PRELIM INARY RULIN G ....................4
A. REQUEST OF THE UNITED STATES ................................................................................................4
B. RESPONSE OF THE EUROPEAN COMMUNITIES ..............................................................................4
V. ARGUMENTS OF THE PART IES ........................................................................................5
A. FIRST WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES .................................................5
1. Introduction................................................................................................................. ..............5
2. Factual Background ........................................................................................................... ......6
3. Standard of Review........................................................................................................... ........6
4. Legal Arguments.............................................................................................................. .........8
(a) The standards of initiation of sunset review lead to a violation of Article 21.3 of the
SCM Agreement ..........................................................................................................................8
(b) The domestic authority is under an obligation to "determine" the likelihood of
continuation or recurren ce of subsid isation ................................................................................9
(c) The de minimis  rule...................................................................................................................13
(d) The Obligation to Bring its Law Into Conformity with the WTO Agreements........................15
5. Conclusions.................................................................................................................. ............15
B. FIRST WRITTEN SUBMISSION OF THE UNITED STATES ................................................................15
1. Introduction................................................................................................................. ............15
2. Factual Background ........................................................................................................... ....16
(a) Sunset Reviews under US Law................................................................................................. 16
(b) Certain Corrosion-Resistant Carbon Steel Flat Products from Germany .................................16
3. Standard of Review........................................................................................................... ......17
4. Substantive Argument......................................................................................................... ...18
(a) Automatic Self-Initiation of Sunset Reviews is Consistent with the SCM Agreement............18
(b) There is no de minimis  Standard for Sunset Reviews...............................................................18WT/DS213/R
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(c) Commerce Properly Determined that the Expiry of the Countervailing Duty Order
would be likely to lead to Continuation or Recurrence of Subsidization Based upon an
Appropriately Conducted review of all Re levant and Properly Submitted Facts .....................20
(d) The Panel should make a Preliminary Ruling that the EC’s Claims Regarding the
Expedited Sunset Review Procedure are not within the Panel’s Terms of Reference..............22
5. Conclusion ................................................................................................................... ............22
C. ORAL STATEMENT OF THE EUROPEAN COMM UNITIES AT THE FIRST MEETING OF THE
PANEL ............................................................................................................................... .........23
1. Introduction................................................................................................................. ............23
2. Factual Background ........................................................................................................... ....23
3. Legal Arguments.............................................................................................................. .......24
(a) The US standard of initiation applied to sunset reviews leads inevitably to a violation
of Article 21.3 of the SCM Agreement ......................................................................................24
(b) The domestic authorities are under an obligation to "determine" the likelihood of
continuation or recurren ce of subsid isation ..............................................................................25
(c) The de minimis  rule under Article 21.3 of the SCM Agreement ...............................................27
(d) The Obligation to Bring its Law Into Conformity with the WTO Agreements........................28
4. Standard of review........................................................................................................... .......29
5. US Request for preliminary ruling........................................................................................29
6. Conclusions.................................................................................................................. ............29
D. ORAL STATEMENT OF THE UNITED STATES AT THE FIRST MEETING OF THE PANEL ...................30
1. Commerce Properly Determined That Expiry Of The Duty Would Be Likely To
Lead To Continuation Or Recurrence Of Subsidization ....................................................30
2. It is impossible to act inconsistently with an obligation that does not exist.......................32
E. RESPONSES OF THE EUROPEAN COMMUNITIES TO QUESTIONS FROM THE PANEL
FOLLOWING THE FIRST MEETING ...............................................................................................34
F. RESPONSES OF THE UNITED STATES TO QUESTIONS FROM THE PANEL FOLLOWING THE
FIRST MEETING OF THE PANEL ...................................................................................................55
G. RESPONSES OF THE UNITED STATES TO QUESTIONS FROM THE EUROPEAN
COMMUNITIES FOLLOWING THE FIRST MEETING OF THE PANEL ...............................................63
H. COMMENTS OF THE EUROPEAN COMMUNITIES ON THE RESPONSES OF THE UNITED
STATES TO QUESTIONS FROM THE PANEL FOLLOWING THE FIRST MEETING OF THE
PANEL ............................................................................................................................... .........68
I. COMMENTS OF THE EUROPEAN COMMUNITIES ON THE RESPONSES OF THE UNITED
STATES TO QUESTIONS FROM THE EUROPEAN COMMUNITIES FOLLOWING THE FIRST
MEETING OF THE PANEL ............................................................................................................78
J. COMMENTS OF THE UNITED STATES ON THE RESPONSES OF THE EUROPEAN
COMMUNITIES TO QUESTIONS FROM THE PANEL FOLLOWING THE FIRST MEETING OF
THE PANEL ............................................................................................................................... ..81
K. SECOND WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES ...........................................84
1. Introduction................................................................................................................. ............84WT/DS213/R
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2. Standard of Review........................................................................................................... ......85
3. Article 21.3 of the SCM Agreement ......................................................................................86
4. Initiation of Sunset Reviews................................................................................................. ..87
(a) By automatically initiating sunset reviews the US acts inconsistently with the
obligation of termination laid down in Article 21.3 of the SCM Agreement . ...........................87
(b) The self-initiation of sunset reviews requires sufficient evidence of the likelihood of
continuation or recurrence of subsid isation, causality and injury.............................................87
5. US law, regulations and administrative practices are inconsistent with the
obligation to "determine" the likelihood of continuation or recurrence of
subsidization and injury....................................................................................................... ..88
6. The de minimis rule requirement...........................................................................................92
7. Conclusion ................................................................................................................... ............93
L. SECOND WRITTEN SUBMISSION OF THE UNITED STATES ...........................................................94
1. Introduction................................................................................................................. ............94
2. With respect to its claims concerning US Sunset Review Procedures, the EC has
failed to demonstrate that the United States has acted inconsistently with any
obligation under the SCM Agreement ..................................................................................94
(a) Automatic Self-Initiation of Sunset Reviews is consistent with the SCM Agreement
because Article 21.3 explicitly authorizes authorities to initiate Sunset Reviews on
their own in itiative ........................................................................................................... .........95
(b) There is no de minimis  standard for Sunset Reviews in the SCM Agreement .........................96
3. With respect to Commerce’s Sunset determination involving corrosion-resistant
steel from Germany, the EC has failed to demonstrate that the United States
acted inconsistently with any obligation under the SCM Agreement ................................97
4. Conclusion ................................................................................................................... ............98
M. ORAL STATEMENT OF THE EUROPEAN COMMUNITIES AT THE SECOND MEETING OF THE
PANEL ............................................................................................................................... .........99
1. Introduction................................................................................................................. ............99
2. Interpretation of Article 21.2 SCM Agreement ...................................................................99
(a) Generally accepted rules on treaty inte rpretation .....................................................................99
(b) Initiation of a sunset review and interpretation of the term "to determine" the
likelihood of continuation or recurren ce of subsidisati on and in jury .....................................100
(c) Article 21.3 and likelihood of continua tion of subsidisa tion and injury.................................100
(d) Need to conduct prior administrative reviews, timely submission of data, and
obligation to consider the record fr om the original investigat ion...........................................102
(e) The de minimis rule in sunset reviews and the meaning and scope of Footnote 52................103
3. Conclusions.................................................................................................................. ..........104
N. ORAL STATEMENT OF THE UNITED STATES AT THE SECOND MEETING OF THE PANEL ............104
O. RESPONSES OF THE EUROPEAN COMMUNITIES TO QUESTIONS FROM THE PANEL
FOLLOWING THE SECOND MEETING OF THE PANEL .................................................................107WT/DS213/R
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P. RESPONSES OF THE UNITED STATES TO QUESTIONS FROM THE PANEL FOLLOWING THE
SECOND MEETING OF THE PANEL ............................................................................................118
Q. COMMENTS OF THE EUROPEAN COMMUNITIES ON THE RESPONSES OF THE UNITED
STATES TO QUESTIONS FROM THE PANEL FOLLOWING THE SECOND MEETING OF THE
PANEL ............................................................................................................................... .......127
R. COMMENTS OF THE UNITED STATES ON THE RESPONSES OF THE EUROPEAN
COMMUNITIES TO QUESTIONS FROM THE PANEL FOLLOWING THE SECOND MEETING OF
THE PANEL ............................................................................................................................... 130
VI. ARGUMENTS OF TH E THIRD P ARTIES ......................................................................134
A. THIRD -PARTY SUBMISSION OF JAPAN ......................................................................................134
1. Introduction................................................................................................................. ..........134
2. Article 21.3 of the SCM Agreement ....................................................................................134
(a) The Proper Scope of Article 21 of the SCM Agreement ........................................................134
(b) Automatic Initiation by DOC of a Sunset Review Violates Article 21.3 of the SCM
Agreement...................................................................................................................... .........137
(c) Failure to “Determine” the Likelihood of Continued Subsidization Based on Positive
Evidence of Current and Prospective Subsidization Violates Article 21.3 of the SCMAgreement...................................................................................................................... .........138
(d) The US d e minimis  standard applied in Sunset Review is inconsistent with the SCM
Agreement...................................................................................................................... .........138
3. Conclusion ................................................................................................................... ..........140
B.
THIRD -PARTY SUBMISSION OF NORWAY .................................................................................141
1. Introduction................................................................................................................. ..........141
2. The United States Department of Commerce (DOC) initiation of the Sunset
Review for countervailing duties on import of corrosion-resistant steel products
from Germany has infringed Article 21 of the Agreement on Subsidies and
Countervailing Measures (SCM) in a number of ways .....................................................141
(a) Automatic reviews infringe Articles 21.1 and 21.3 of the SCM Agreement and Article
10 of the SCM Agreement in combination with Article VI of GATT 1994...........................141
(b) Expedited reviews are biased towards the continuation of countervailing duties and
violate Article 21.3 of the SCM Agreement ...........................................................................142
(c) The self-initiation of sunset reviews by the domestic authorities does not correspond
to the requirements set out in Article 21.3 as complemented by Article 11.1 and 11.6
of the SCM Agreement ........................................................................................................... 142
3. The US  standard of investigation for Sunset Reviews violates the requirements
of the SCM Agreement in particular Article 21.3 because: ..............................................143
(a) Not making  a new investigation in sunset reviews represents an infringement to
Article 21.3 and 21.1 and the purpose of Part V of the SCM Agreement ..............................143
(b) Not requiring the application of the 1 % de minimis  rule in sunset reviews is in
violation of Article 21 3. in conjunction with Articles 21.1 and 11.9 of the  SCM
Agreement...................................................................................................................... .........144
4. US countervailing legislation is inconsistent with Article 32.5 of the SCM
Agreement and Article XVI:4 of the WTO Agreement.....................................................145WT/DS213/R
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5. Conclusion ................................................................................................................... ..........145
C. ORAL STATEMENT OF JAPAN AT THE FIRST MEETING OF THE PANEL ......................................145
D. ORAL STATEMENT OF NORWAY AT THE FIRST MEETING OF THE PANEL ..................................147
1. Introduction................................................................................................................. ..........147
2. The United States Department of Commerce (DOC) initiation of the Sunset
Review for countervailing duties on import of corrosion-resistant steel products
from Germany has infringed Article 21 of the Agreement on Subsidies and
Countervailing Measures (SCM) in a number of ways .....................................................147
(a) Automatic reviews infringe Articles 21.1 and 21.3 of the SCM Agreement and Article
10 of the SCM Agreement in combination with Article VI of GATT 1994...........................147
(b) Expedited reviews are biased towards the continuation of countervailing duties and
violate Article 21.3 of the SCM Agreement ...........................................................................148
(c) The self-initiation of sunset reviews by the domestic authorities does not correspond
to the requirements set out in Article 21.3 as complemented by Article 11.1 and 11.6
of the SCM Agreement ........................................................................................................... 148
3. The US standard of investigation for sunset reviews violates the requirements of
the SCM Agreement in particular Article 21.3 because: ..................................................149
(a) Not making a new investigation in sunset reviews represents an infringement to
Article 21.3 and 21.1 and the purpose of Part V of the SCM Agreement ..............................149
(b) Not requiring the application of the 1 per cent de minimis  rule in sunset reviews is in
violation of Article 21 3. in conjunction with Articles 21.1 and 11.9 of the  SCM
Agreement...................................................................................................................... .........150
4. US countervailing legislation is inconsistent with Article 32.5 of the SCM
Agreement and Article XVI:4 of the WTO Agreement.....................................................151
5. Conclusion ................................................................................................................... ..........151
VII. INTERIM  REVI EW............................................................................................................. 152
A. REQUEST OF THE EUROPEAN COMMUNITIES FOR INTERIM REVIEW ........................................152
B. REQUEST OF THE UNITED STATES FOR INTERIM REVIEW .........................................................155
VIII. FINDINGS OF THE PANEL ..............................................................................................156
A. REQUEST OF THE UNITED STATES FOR A PRELIMINARY RULING .............................................156
1. Arguments of the parties..................................................................................................... .156
(a) United States............................................................................................................... ............156
(b) European Commun ities........................................................................................................ ...157
2. Findings of the Panel ........................................................................................................ ....157
B. WHETHER US CVD LAW AS SUCH IS INCONSISTENT WITH THE SCM  AGREEMENT IN
RESPECT OF THE APPLICATION OF EVIDENTIARY STANDARDSD FOR THE SELF -
INITIATION OF SUNSET REVIEWS .............................................................................................160
1. Arguments of the parties..................................................................................................... .160
(a) European Commun ities........................................................................................................ ...160
(b) United States............................................................................................................... ............161WT/DS213/R
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2. Findings of the Panel ........................................................................................................ ....162
C. WHETHER US CVD LAW AS SUCH AND AS APPLIED IN THE INSTANT SUNSET REVIEW
ARE INCONSISTENT WITH THE SCM AGREEMENT IN RESPECT OF THE APPLICATION OF A
DE MINIMIS STANDARD TO SUNSET REVIEWS ..........................................................................172
1. Whether US CVD law as such is inconsistent with the SCM Agreement in
respect of the application of a de minimis standard to sunset reviews ............................172
(a) Arguments of  the parties.................................................................................................... .....172
(b) Findings of  the Panel ....................................................................................................... .......173
2. Whether US CVD law as applied in the instant sunset review is inconsistent with
the SCM Agreement in respect of the application of a de minimis standard to
sunset reviews................................................................................................................. .......181
(a) Arguments of  the parties.................................................................................................... .....181
(b) Findings of  the Panel ....................................................................................................... .......182
D. WHETHER US LAW AS SUCH AND AS APPLIED IN THE INSTANT SUNSET REVIEW ARE
INCONSISTENT WITH THE SCM  AGREEMENT IN RESPECT OF THE INVESTIGATING
AUTHORITY 'S OBLIGATION TO DETERMINE THE LIKELIHOOD OF CONTINUATION OR
RECURRENCE OF SUBSIDISAT ION IN A SUNSET REVIEW ..........................................................182
1. Whether US law as such is inconsistent with the SCM Agreement in respect of
the investigating authority's obligat ion to determine the likelihood of
continuation or recurrence of subsidisation in a sunset review........................................182
(a) Arguments of  the Parties.................................................................................................... .....182
(b) Findings of  the Panel ....................................................................................................... .......183
2. Whether US CVD law as applied in the instant sunset review is inconsistent with
the SCM Agreement in respect of the investigating authority's obligation to
determine the likelihood of continuation or recurrence of subsidisation in a
sunset review .................................................................................................................. .......188
(a) Arguments of  the Parties.................................................................................................... .....188
(b) Findings of  the Panel ....................................................................................................... .......189
E. WHETHER US CVD LAW AS SUCH AND AS APPLIED IN THE INSTANT SUNSET REVIEW
ARE INCONSISTENT WITH THE SCM  AGREEMENT IN RESPECT OF THE INVESTIGATING
AUTHORITY 'S OBLIGATION TO PROVIDE AMPLE OPPORTUNITY TO INTERESTED
MEMBERS AND PARTIES TO SUBMIT RELEVANT EVIDENCE IN A SUNSET REVIEW ...................191
1. Arguments of the parties..................................................................................................... .191
(a) European Commun ities........................................................................................................ ...191
(b) United States............................................................................................................... ............192
2. Findings of the Panel ........................................................................................................ ....193
IX. CONCLUSIONS AND RECOMMENDAT IONS..............................................................196
X. DISSENTING OPINION OF ONE MEMBER OF THE PANEL ON THE
ASSESSMENT OF THE PANEL RELATING TO THE APPLICATION OF ADE MINIMIS STANDARD TO SUNSET REVI EWS ......................................................197WT/DS213/R
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I. INTRODUCTION
A. COMPLAINT OF THE EUROPEAN COMMUNITIES
1.1 On 10 November 2000, the European Communities requested consultations1 with the
United States pursuant to Article 4 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes ("DSU"), Article XXII:1 of the General Agreement on Tariffs and Trade 1994("GATT 1994"), and Article 30 of the Agreement on Subsidies and Countervailing Measures ("SCM
Agreement"), regarding countervailing duties ("CVDs") imposed by the United States on imports of
certain corrosion-resistant carbon steel flat products originating in Germany, in particular, the sunset
review of these CVDs.
1.2 The European Communities and the United States held consultations on 8 December 2000,
but failed to reach a mutually satisfactory solution.
1.3 On 5 February 2001, the European Communities requested further consultations
2 with the
United States, regarding certain aspects of the procedure followed by the United States in sunset
reviews, both as such and as applied in the sunset  review in question, in particular, the evidentiary
standards applied for the self-initiation of these reviews.
1.4 The European Communities and the United States held further consultations
on 21 March 2001, but failed to reach a mutually satisfactory solution.
1.5 On 8 August 2001, the European Communities requested the establishment of a panel3
pursuant to Article 6 of the DSU, Article XXIII of GATT 1994, and Article 30 of the
SCM Agreement.
B. ESTABLISHMENT AND COMPOSITION OF THE PANEL
1.6 The Dispute Settlement Body ("DSB") established a panel on 10 September 2001, with
standard terms of reference.  The terms of reference of the Panel are:
To examine, in the light of the relevant provisions of the covered agreements cited by
the European Communities in document WT /DS213/3, the matter referred to the DSB
by the European Communities in that document, and to make such findings as will
assist the DSB in making the recommendations or in giving the rulings provided forin those agreements.
1.7 On 18 October 2001, the European Communities requested the Director-General to determine
the composition of the Panel, pursuant to paragraph 7 of Article 8 of the DSU.  This paragraph
provides:
If there is no agreement on the panelists within 20 days after the date of the
establishment of a panel, at the request of either party, the Director-General, in
consultation with the Chairman of the DSB and the Chairman of the relevant Councilor Committee, shall determine the composition of the panel by appointing the
panelists whom the Director-General considers most appropriate in accordance with
any relevant special or additional rules or procedures of the covered agreement or
covered agreements which are at issue in the dispute, after consulting with the parties
                                                     
1 See WT/DS213/1.
2 See WT/DS213/1/Add.1.
3 See WT/DS213/3.WT/DS213/R
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to the dispute.  The Chairman of the DSB shall inform the Members of the
composition of the panel thus formed no later than 10 days after the date the
Chairman receives such a request.
1.8 On 26 October 2001 , the Director-General accordingly composed the panel as follows4:
1.9 Chairman: Mr. Hugh McPhail
Members: Mr. Ronald W. Erdmann
Mr. Wieslaw Karsz
1.10 Japan and Norway reserved their rights to participate in the panel proceedings as third parties.
C. PANEL PROCEEDINGS
1.11 The Panel met with the parties on 29 January 2002, and on 19 March 2002.  The Panel met
with the third parties on 29 January 2002.
1.12 The Panel submitted its interim report to the parties on 14 May 2002.  Comments were
received from the parties on the interim report on 23 May 2002, and on each other's comments on
30 May 2002 ( See Section VII, infra ).  The Panel submitted its final report to the parties on
14 June 2002.
II. FACTUAL ASPECTS
2.1 At issue in this dispute is the US law as such in respect of sunset reviews of CVDs, as well as
its application in a sunset review carried out by the United States of a CVD order on imports of
certain corrosion-resistant carbon steel flat products from Germany.  The United States Department of
Commerce ("DOC") determined that revocation of the order "would be likely to lead to continuation
or recurrence of a countervailable subsidy".5  The DOC transmitted this determination to the
United States International Trade Commission ("IT C"), along with a determination regarding the
magnitude of the net countervailable subsidy likely to prevail in case of revocation of the order – 0.54
per cent  in the review at issue.  The ITC determined that revocation of the order "would likely lead to
continuation or recurrence of material injury to an industry in the United States within a reasonably
foreseeable time".6  Accordingly, the United States decided not to revoke the CVD order under
review7 on imports of the product in question.
2.2 The European Communities considers that the relevant US laws, regulations, administrative
procedures, and statement of policy practices in respect of sunset reviews of CVDs, as well as their
application in this instance, violates the SCM Agreement and the Marrakesh Agreement Establishing
the World Trade Organization ("WTO Agreement").  The European Communities' claims therefore
relate to the US sunset review system as such, as well as the specific sunset review determination by
the DOC in respect of certain corrosion-resistant carbon steel flat products from Germany.
                                                     
4 See WT/DS213/4.
5 Certain Corrosion-Resistant Carbon  Steel Flat Products, etc.; Final Results of Full Sunset Reviews
("Commerce Sunset Final"), 65 FR 47407 (2 August 2000) (Exhibit EC-9).
6 Certain Carbon Steel Products, etc.; Inju ry Determination, 65 FR 75301 (1 December 2000)
(Exhibit EC-11).
7 Countervailing Duty Orders and Amendment to Final Affirmative Countervailing Duty
Determinations: Certain Steel Products from Germany, 58 FR 43756 (17 August 1993) (Exhibit EC-4).WT/DS213/R
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2.3 The measures that the European Communities challenges as violating Articles 10, 11.9, 21,
and 32.5 of the SCM Agreement , and XVI:4 of the Agreement establishing the World Trade
Organization are:
1. the US CVD law in respect of sunset reviews: Section 751(c), as complemented by
Section 752, of the Tariff Act of 1930 ("Tariff Act")8, as amended;
2. the accompanying Implementing Regulations: Procedures for Conducting Five-year
("Sunset") Reviews of Anti-Dumping a nd Countervailing Duty Orders, or "Sunset
Regulations"9;
3. the accompanying statement of policy practices: Policies Regarding the Conduct of
Five-year ("Sunset") Reviews of Anti-D umping and Countervailing Duty Orders;
Policy Bulletin, or "Sunset Policy Bulletin"10; and
4. their application in this instance, in the sunset review determination in respect of
certain corrosion-resistant carbon steel flat products from Germany.11
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
A. EUROPEAN COMMUNITIES
3.1 The European Communities requests that the Pane l find that the measures identified by the
European Communities ( See paragraph 2.3, supra ):
1. infringe Article 21, paragraphs 3 and 1, as well as Article 10, of the SCM Agreement,
by requiring that sunset reviews are automatically initiated for all existing CVD
measures under the conditions specified therein;
2. violate Article 21, paragraphs 3 and 1, in conjunction with Articles 10 and 11, of the
SCM Agreement, by applying expedited reviews, through automatic initiation andpresumption of likelihood of continuation or recurrence;
12
3. violate Article 21.3, in conjunction with Article 11, of the SCM Agreement, by
requiring the automatic self-initiation of sunset reviews;
4. establish a standard of investigation for sunset reviews that violates the requirements
of the SCM Agreement; and
5. violate Article 21.3, in conjunction with Article 21.1 and Article 11.9, of the
SCM Agreement, by not requiring the application of the 1 per cent de minimis  rule in
sunset reviews and by enabling the continuation of CVDs for five more years in
circumstances where there is no need to counter subsidisation which is likely to cause
                                                     
8 Codified in 19 USC 1675(c) (Exhibit EC-13).
9 63 FR 13516 (20 March 1998), codified in 19 CFR part 351 (Exhibit EC-14).
10 63 FR 18871 (16 April 1998) (Exhibit EC-15).
11 Continuation of Antidumping and Countervailing Duty Orders on Certain Carbon Steel Products
from [16 countries, including Germany], 65 FR 78469 (15 December 2000) (Exhibit EC-12).  See also  Certain
Corrosion-Resistant Carbon Steel Flat Products, etc.; Final Results of Full Sunset Reviews ("Commerce Sunset
Final"), 65 FR 47407 (2 August 2000) (Exhibit EC-9), and accompanying Decision Memorandum ("CommerceSunset Final Decision Memorandum") (Exhibit EC-10).
12 Please note that the United States made a request for a preliminary ruling in respect of this claim of
the European Communities.  See Section 8, infra.WT/DS213/R
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injury, and, because, in the present instance, the US authority continued a measure
despite having found that the rate of subsidisation likely to prevail was less than 1 per
cent.
3.2 Accordingly, the European Communities requests the Panel to find the US CVD law,
regulations, and statement of policy practices to be inconsistent with Article 32.5 of the
SCM Agreement and, consequently, also inconsistent with Article XVI:4 of the WTO Agreement.
B. UNITED STATES
3.3 The United States disputes the claims of the European Communities, and requests that the
Panel find that:
6. the US procedure for the automatic self-initiation of sunset reviews by the DOC is not
inconsistent with the SCM Agreement;
7. in not applying the 1 per cent de minimis  standard of Article 11.9 of the SCM
Agreement to sunset reviews, the United States has not acted inconsistently with its
obligations under the SCM Agreement; and
8. the DOC sunset review determination in respect of certain corrosion-resistant carbon
steel flat products from Germany is not inconsistent with US obligations under the
SCM Agreement.
IV. REQUEST OF THE UNITED STATES FOR A PRELIMINARY RULING
A. REQUEST OF THE UNITED STATES
4.1 The United States requests that the Panel make a preliminary ruling that the European
Communities' claims with respect to the expedited sunset review procedure are not before the Panel
because this procedure is not a measure within the Panel's terms of reference.
4.2 The United States submits that the European Communities did not identify any measure or
type of proceeding in consultations other than (i) the sunset review determination in carbon steel;
(ii) the initiation of sunset reviews by the DOC;  and (iii) the de minimis  standard employed by the
DOC in sunset reviews.  Nor, argues the United  States, did the European Communities identify the
expedited sunset review procedure in its request for consultations or in its request for the
establishment of a panel.
4.3 The arguments of the United States in this regard are reflected below ( See Section V, infra ).
B. RESPONSE OF THE EUROPEAN COMMUNITIES
4.4 The European Communities disagrees with the United States, and submits that the European
Communities' claims regarding the United States' expedited sunset review procedure are within the
Panel's terms of reference.  The European Communities asserts that, given the reference in its request
for establishment to Section 751(c) of the Tariff Act, which contains procedural rules on sunset
reviews, including expedited sunset reviews, the issue of expedited reviews has also been raised bythe European Communities and is therefore within the Panel's terms of reference.
4.5 The arguments of the European Communities in this regard are reflected below
(See Section V, infra ).WT/DS213/R
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V. ARGUMENTS OF THE PARTIES
5.1 The arguments presented by the parties in their written submissions, oral statements,
responses to questions, and comments on each other's responses to questions are reflected below.13
A. FIRST WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES
1. Introduction
5.2 This dispute concerns the compatibility of the United States (the "US") basic countervailing
duty law (Tariff Act of 1930)14, its accompanying regulations (Sunset Regulations)15 and policy
practices (Sunset Policy Bulletin)16, and their concrete application in the sunset review of
countervailing duties on imports of certain corrosion-resistant carbon steel flat products ("corrosion
resistant steel") from Germany.  This decision violates the US WTO obligations in several ways.
5.3 First, the Agreement on Subsidies and Countervailing Measures (the " SCM Agreement" )
provides for a presumption of termination of countervailing duty measures after 5 years.  In the EC’sview, the automatic initiation of sunset reviews under US practice (without a requirement for any
evidence to be produced) disregards this presumption for termination.  As such, it contravenesArticle 21.3 of the SCM Agreement .
5.4 Second, the SCM Agreement requires that an investigating authority determines that the
expiry of the duty would be likely to lead to recu rrence of subsidisation.  In not considering changes
or terminations in subsidy programmes in the co urse of the sunset review, the US Department of
Commerce ("DOC")  effectively refused to con duct a proper investigation of the likelihood or
recurrence of subsidisation.  Therefore, the US breaches Article 21.3 of the SCM Agreement also
under this instance.
5.5 Third, the SCM Agreement  provides that a level of subsidisation which is less than 1 per cent
is de minimis .  In this case,  the investigation should be terminated without the imposition of measures.
Under US law, this de minimis threshold does not apply in sunset reviews. Instead, the US practice is
to apply a de minimis threshold of 0.5 per cent. In not applying the de minimis threshold provided for
in the SCM Agreement , DOC effectively imposes and collects countervailing duties which are below
the de minimis level. As a result, these provisions are in violation of Article 21.3, in conjunction with
Articles 21.1 and 11.9, of the SCM Agreement .
5.6 Finally, for the same reasons identified above, the US has failed to ensure that its laws,
regulations and administrative procedures are in conformity with and Article 32.5 of the SCM
Agreement  and consequently with its WTO obligations under Article XVI:4 of the Marrakesh
Agreement Establishing the World Trade Organization  (the "WTO Agreement").
                                                     
13 Except in cases where parties submitted executive summaries of their written submissions, oral
statements,  responses to questions, and comments on each other's responses, the texts – rather than executivesummaries – of such documents have been incorporated  into this section.  In cases where the executive
summaries were submitted, however, such summaries have been incorporated in place of the original
documents.
14 Codified in 19 USC 1675(c) (Exhibit EC-13).
15 Implementing Regulations on anti-dumping and countervailing duties issued by DOC, Section 351 of
Title 19 of the US CFR (Exhibit EC-14).
16 DOC Policies Regarding the Conduct of Five-year ("Sunset") Reviews of Antidumping and
Countervailing Duty Orders (Exhibit EC-15).WT/DS213/R
Page 6
2. Factual Background
5.7 Following the initiation of an investigation on 24 July 1992, DOC issued, on 9 July 1993, its
final affirmative determination that exports of corrosion resistant steel from Germany were
subsidised. DOC found that 5 subsidy programmes conferred a benefit to the German exporters. The
subsidy level was determined at 0.60 per cent17. DOC found that two of the above programmes, the
Capital Investment Grants ("CIG") and the Aid for Closure of Steel Operations (which account for
0.45 per cent of the total subsidy amount), were non-recurring grants because the recipient could not
be expected to receive benefits on an ongoing basis.  On the basis of the US methodology for non-recurring grants, the benefit was allocated over a 15-year period.
5.8 Following the introduction of sunset provisions in the Uruguay Round, DOC was obliged to
review all of its outstanding CVD orders by the end of 1999. On 1 September 1999, DOC
automatically initiated a sunset review of the definitive countervailing duties on corrosion-resistantsteel from Germany
18. Following the publication of the notice, the domestic interested parties filed a
notice of intent to participate.  Subsequently, the foreign interested parties, i.e., the German producers,
the Government of Germany and the European Commission filed substantive responses within 30
days after the publication of the Notice of Initiation.
5.9 Following the investigation, on 20 March 2000, DOC issued the preliminary results of the full
sunset review19.  DOC preliminary concluded that revocation of the CVD order was likely to lead to
recurrence of continuation or recurrence of a countervailable subsidy at a net subsidy rate of 0.54 per
cent. The German producers argued that the benefit stream would become de minimis after the sunset
review. As regards the CIG programme, DOC stated  that some payments were given up to 1990 and,
based on DOC's 15-year allocation period, would continue to confer a benefit to the Germanproducers beyond the end of the sunset review.
20   Only regarding the Structural Improvement Aids,
DOC concluded that recurring benefits were granted up to 1986 and that no evidence was brought
forward that benefits would occur after the sunset review.
5.10 In calculating the amount of benefit, DOC simp ly took the subsidy rate from the original
investigation in 1993 and deducted the amounts related to the Structural Improvement Aid programmeand the Zonal Area programme. Therefore, the original countervailing duty rate was decreased by the
amount of 0.06 per cent resulting in a net subsidy rate of 0.54 per cent being reported to ITC as the
rate likely to prevail.
5.11 On 2 August 2000, the DOC published the final results of its sunset review, in which the
preliminary findings were confirmed.
3. Standard of Review
5.12 By virtue of Article 30 of the SCM Agreement, the provisions of the DSU are applicable to
the settlement of disputes under the SCM Agreement, "except as otherwise specifically provided
[t]herein."  In the absence of any specific standard of review provided for in the SCM Agreement on
the issues raised in the present dispute, the EC considers that the standard of review set forth in
                                                     
17 This amount was imposed as the final CVD rate on 17 August 1993, having been increased from
0.59 per cent to 0.60 per cent due to a "ministerial error".
18 64 FR 47767, 1 September 1999 (Exhibit EC-5).
19 65 FR 16176, 27 March 2000 (Exhibit EC-6).
20 Exhibit EC-7, pages 24-25.WT/DS213/R
Page 7
Article 11 of the DSU is applicable in this case.  The same has already been held by the panel and the
Appellate Body reports in the United States – Leaded Bars case.21
5.13 As regards the standard of review contained in Article 11 of the DSU, in the European
Communities – Hormones  case, the Appellate Body stated that "the applicable standard is neither de
novo  review as such, nor 'total deference', but rather the 'objective assessment of the facts' ".22 This
does not mean that panels must simply accept  the conclusions of the competent authority.  To the
contrary, a panel can assess whether the US competent authority's explanation for its determination
under Article 21.3 is reasoned and adequate only if the panel critically examines that explanation, in
depth, and in the light of all the facts before the pa nel.  Panels must, therefore, review whether the
competent authority's explanation fully addresses the nature, and, especially, the complexities, of the
data, and responds to other plausible interpretations of that data.23
5.14 The Panel is required to "make an objective assessment of the matter before it", including an
objective assessment of the applicability of and conformity with the SCM Agreement  of the US laws
and regulations that are the subject matter of the present proceedings.24  For the purposes of
interpreting the SCM Agreement , therefore, Article 11 of the DSU imposes upon panels a
comprehensive obligation to make an "objective asse ssment of the matter" as a whole, an obligation
which embraces all aspects of a panel's examination of the "matter", both factual and legal.  Thus,panels should make an "objective assessment of the facts", of the "applicability" of the covered
agreements, and of the "conformity" of the measure at stake with those covered agreements.
Therefore, the text of Article 11 DSU and of the SCM Agreement  clearly necessitate an active  review
or examination of all the pertinent facts.
25
5.15 The requirement to conduct an "objective assessment" of a claim has, in principle, two
elements.  First, a panel must review whether competent authority has evaluated all the relevant
factors26 and, second, a panel must review whether the authority has provided a  reasoned and
                                                     
21 See Panel Report, United States – Imposition of Countervailing Duties on Certain Hot-Rolled Lead
and Bismuth Carbon Steel Products Originating in the United Kingdom ("United States – Leaded Bars") ,
WT/DS138/R, adopted 7 June 2000, at para. 6.18, as upheld by the Appellate Body Report, WT/DS138/AB/R,adopted 7 June 2000, at para. 51.  These cases have also established that the standard of review set out inArticle 17.6 of the Anti-Dumping Agreement  is not applicable in the context of the SCM Agreement .
22 Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones) ("European
Communities – Hormones") , WT/DS26/AB/R-WT/DS48/AB/R, adopted 13 February 1998, para. 117.
23 Appellate Body Report, United-States – Safeguard Measures on Imports of Fresh Chilled or Frozen
Lamb Meat from New Zealand and Australia ("United-States – Lamb Safeguards") , WT/DS177/AB/R,
WT/DS178/AB/R, adopted 16 May 2001, para. 106.
24 This approach is entirely consistent with statements made by the Appellate Body in the European
Communities – Hormones  case, cit. supra , para. 118.  In that report (at para. 133) the Appellate Body said:
"The duty to make an objective assessment of the facts is, among other things, an obligation to consider
the evidence presented to a panel and to make factual findings on the basis of that evidence". (emphasis added)
25 Appellate Body Report, United States – Anti-Dumping Measures on Certain Hot-Rolled Steel
Products from Japan , WT/DS184/AB/R, adopted 23 August 2001, paras. 54 and 62.
26 The Appellate Body clarified the appropriate standard of review, in particular the quantitative aspect
of the assessment, in Appellate Body Report, Korea – Definitive Safeguard Measure on Imports of Certain
Dairy Products ("Korea – Dairy Safeguards") , WT/DS98/AB/R, adopted 12 January 2000, at para. 137, as
follows:
"…However, under Article 11 of the DSU, a panel is charged with the mandate to determinethe facts of the case and to arrive at factual findings.  In carrying out this mandate, a panel hasthe duty to examine and consider all the evidence before it, not just the evidence submitted by
one or the other party, and to evaluate the relevance and probative force of each piece
thereof." (emphasis added).WT/DS213/R
Page 8
adequate explanation of how the facts support their determination.27  Thus, the panel's objective
assessment involves a formal  aspect and a substantive  aspect.28
5.16 The relevant provisions of the DSU and SCM Agreement  and the Appellate Body findings in
the above cases require that the Panel in the present case is obliged to examine all the relevant facts
and evidence presented to it by the parties to this dispute or obtained through the Panel’s own
initiative.  It follows that the Panel is obliged to assess whether the national authority provided a
reasoned and adequate explanation of how the facts in the record or otherwise available to the US
competent authority supported the determinations that were made by them in the contested measure.Obviously, this goes to the heart of the panel’s role in a dispute settlement case, as it relates to the
panel’s discretionary authority to examine and weigh all factual evidence and to assess the
applicability of and conformity with the relevant covered agreements of the measure under
consideration.
4. Legal Arguments
(a) The standards of initiation of sunset review lead to a violation of Article 21.3 of the SCM
Agreement
(i) Initiation
5.17 Under US law, sunset reviews are automatically and initiated by DOC on its own initiative
five years after the publication of the CVD order
29. Under Article 21.3  SCM Agreement , WTO
Members have an unequivocal obligation to terminate countervailing measures on a date no later than
5 years from their imposition, unless it is determined, following a review, that the expiry of the duties
would be likely to lead to continuation or recurren ce of subsidisation and injury. The rationale of this
provision should be read in conjunction with Article 21.1 SCM Agreement  which provides that a
countervailing duty shall remain in force only as long as necessary and to the extent to counteract
subsidisation which is causing injury. Therefore, Article 21.3 reinforces the requirement of
Article 21.1 by creating a presumption that duties lapse after 5 years. These provisions provide that
the continuation of measures beyond the five years is an exceptional situation (demonstrated by the
term "unless"). This corresponds to the object and the purpose of Part V of the SCM Agreement  to
guarantee that trade defence measures are to be imposed and maintained only if they are necessary to
offset injurious subsidisation.
5.18 By requiring that sunset reviews are automatically initiated, the US effectively transforms this
exception into a general rule, thus infringing Article 21, paragraphs 1 and 3, of the SCM Agreement.
(ii) Expedited reviews will "normally" result in the continuation of countervailing duties
5.19 The automatic initiation under US law is also biased towards the continuation of
countervailing duties and not towards the presumption of their termination. This is clear in the case of"expedited" sunset reviews. Under this procedure, if domestic interested parties file a "notice of intent
to participate", the sunset procedure continues and interested foreign parties, i.e., exporters and the
                                                     
27 In the context of the Safeguards Agreement , the Appellate Body clarified the concept of "objective
assessment" in Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear ("Argentina –
Footwear Safeguards") , WT/DS121/AB/R, adopted 12 January 2000, at para. 121 in fine, as follows:
"… [T]o determine whether the safeguard investigation and the resulting safeguard measure applied by
Argentina were consistent with Article 4 of the Agreement on Safeguards , the Panel was obliged, by the very
terms of Article 4, to assess whether the Argentine authorities had examined all the relevant facts and had
provided a reasoned explanation of how the facts supported their determination". (emphasis added).
28 Appellate Body Report, United-States – Lamb Safeguards , cit. supra , para. 103.
29 19 USC §1675(c)(1).WT/DS213/R
Page 9
foreign government, are required to file substantive responses. If the foreign government, or exporters
accounting for at least 50 per cent of exports, do no t file substantive responses, DOC will shorten the
timeframe for the review and normally presume that subsidisation continues.30  Therefore, the US
procedure of expedited reviews, through automatic initiation and presumption of likelihood of
continuation or recurrence, is clearly biased towards continuation of countervailing duties, in violationof the duty to terminate them set in Article 21 of the SCM Agreement.
(iii) The self-initiation of sunset reviews requires sufficient evidence of continuation or recurrence
of subsidisation
5.20 Article 21.3 SCM Agreement  states that a sunset review can be initiated either on the initiative
of the domestic producers or upon a duly substantiated request made by or on behalf of the industry.
In the first case, the EC considers that Article 11 of the SCM Agreement  on the initiation and conduct
of the original subsidy investigation is of application in the case of sunset review as context toArticle 21.3 of the same Agreement.  It results from Article 1 1.2 that the initiation of an investigation
to determine the existence of subsidisation should normally be based on the existence of a
substantiated request made by or on behalf of the domestic industry.  On the contrary, self-initiation
by the domestic authority is the exception, which is justified only if domestic authority have the same
level of sufficient evidence of subsidisation, injury and causal link (Article 11.6).  In the same way, it
follows that in order to initiate a sunset review  on its own initiative, the domestic authority should be
in possession of the same level of evidence that would be required in a "duly substantiated request"
from the domestic industry. The automatic initiation requirement under US law converts the exception
into a general rule, thus leading to the violation of Article 21.3 SCM Agreement .
(b) The domestic authority is under an obligation to "determine" the likelihood of continuation or
recurrence of subsidisation
(i) The requirements of the SCM Agreement
5.21 Article 21.3 SCM Agreement  set out the requirements under which the investigating authority
can deviate from the presumption of termination of CVD orders after five years. It requires that
authorities determine that the expiry of the duty w ould be likely to lead to continuation or recurrence
of subsidisation and injury. The Appellate Body in the case United States – Leaded Bars, considered
that in a review under Article 21.2 the domestic authorities are required to make a finding of
subsidisation during the period of review31. If this applies for Article 21.2 reviews, a fortiori  a positive
finding that all the conditions are fulfilled is necessary in the context of an Article 21.3 investigation.
The parallel drawn between sunset reviews and origin al investigations is confirmed by the findings of
the Panel in Brazil – Desiccated Coconut .  There, called to judge of the applicability of the SCM
Agreement  to measures taken prior to the entry into force of the WTO Agreement, the Panel
recognised that:
even measures maintained and imposed under the pre-WTO regime, and not subject
to a review under Article 21.2 of the SCM Agreement, will ultimately be brought
under WTO disciplines under this sunset provision32.
(ii) US law and practice
                                                     
30 19 C.F.R. §351.218(e)(1)(ii)(B) and (C).
31 Appellate Body Report, United States – Leaded Bars , para. 54
32 Panel Report, Brazil - Measures Affecting Desiccated Coconut ("Brazil - Desiccated Coconut") ,
WT/DS22/R, adopted 20 March 1997, as upheld by the Appellate Body Report, WT/DS22/AB/R, para. 277.WT/DS213/R
Page 10
5.22 US law, however, requires the DOC to consider (a) the net countervailable subsidy
determined in the investigation or a review and (b ) whether any changes in the subsidies occurred that
may affect the countervailing duty. This is clearly stated in Section 752(b)(1) of the Tariff Act,
URAA Statement of Administrative Action and Paragraph III.B.1 of the Sunset Policy Bulletin.  In
practice, DOC normally selects the CVD rate from the original investigation or a review, on the basisthat it is the only rate that reflects the behaviour of governments and exporters without the discipline
of an order in place. In the EC's view, this provision establishes a standard for sunset reviews that
violates the SCM Agreement . This is clearly demonstrated in the case of corrosion resistant steel from
Germany. Since there have not been any administra tive reviews since the original investigation, the
only available subsidisation rate is the original 1 993 subsidy rate. DOC refused, in the course of the
sunset review, to consider changes or terminations of subsidy programmes despite the concrete
evidence submitted by the German exporters in the sunset review. DOC justified this decision bystating that no full investigation is conducted in a sunset review and decisions should be based on
investigated and verified results.
5.23 The EC considers that the DOC refusal to co nduct any meaningful investigation in a sunset
review is in violation of the requirements of Article 21.3 of the SCM Agreement .  This practice not
only contravenes the duty placed by Article 21.3 on the domestic authorities to "determine" thelikelihood of continuation or recurrence of a subsidy, but it also shifts the burden of proving a change
in circumstance on the foreign exporters and to a stage of the procedure, the administrative review,
which is considered by the SCM Agreement  as non-obligatory and which is in any event overtaken by
the sunset review. The fact that a party did not request an administrative review cannot relieve the
domestic authorities from their duties to "determine" the likelihood of continuation or recurrence ofsubsidisation. In any case, in the present case the German exporters did all they could to submit
relevant information.
(iii) The US DOC refused to conduct a proper determination of the likelihood of continuation or
recurrence of subsidization
5.24 In the sunset review concerning corrosion resistant steel from Germany, the German
producers stated that the major subsidy programme involved in the original investigation, the CIG
programme, had been terminated and did not provide any further benefits.  In particular they claimed
that this programme, which provided non-recurring benefits, applied only to investments made prior
to 1 January 1986.33 DOC had already determined in the original investigation that this programme
applied in fact only to investments made prior to 1 January 1986.34 This was confirmed in the sunset
review.35
5.25 Despite this evidence, DOC rejected the claims of the German exporters. It stated that since
no administrative reviews of these orders had been conducted, it was unable to determine whether any
additional benefits under these programmes were received subsequent to the period of investigation. It
should be stressed that DOC had both the non-confidential version of the questionnaire response andthe calculation memorandum as part of the record of the original investigation and could have easily
verified whether the benefits received by the German manufacturers of the subject merchandise under
the CIG after 1 January 1986 were de minimis . The fact that DOC referred back to the original
subsidy rate for CIG, violated Article 21.3 SCM Agr eement because it did not take into consideration
the termination of the CIG programm e despite evidence on the record.
(iv) The CIG programme should have been considered as terminated
                                                     
33 Exhibit EC-7, at p. 26-28.
34 Exhibit EC-2, at pp. 37316-17.
35 Exhibit EC-10, at p. 34WT/DS213/R
Page 11
5.26 In the present case, the German producers claimed that the CIG programme , had been
terminated and did not provide any further benefits.  In particular they claimed that this programme,
which provided nonrecurring benefits, applied only to investments made prior to 1 January 198636.
The calculation memorandum of the original investigation37 shows that Thyssen last received
payments under the CIG programme in 1989, and that the amount received after 1985 was so smallthat it would have been automatically expensed in the year of receipt under the DOC 0.5 per cent
rule
38. Therefore, in accordance with their obligations under Article 21.3, the DOC should have taken
this into account. DOC had already determined in  the original investigation that this programme
applied in fact only to investments made prior to 1 January 1986.39  DOC reaffirmed this finding in
the final results of the sunset review, stating th at: "We agree with Dillinger and the German Group's
contention that … the CIG is applicable only to investments made prior to January 1, 1986."40
5.27 Thus, the issue in the sunset review was not whether the programme continued to exist but
whether any of the old benefit would continue after the end of the sunset review41. In their response,
the US producers claimed that Preussag, the predecessor to Salzgitter AG, had received benefits under
this programme as late as 199042.  In their rebuttal of 15 October 1999, the German producers
clarified that 99.4 per cent of the CIG paid to Preussag were received prior to the end of the 1985/86
fiscal year.43  Given that, using the 15-year allocation period applied by DOC, only 0.6 per cent of the
original grants should have been considered by DOC as remaining to be countervailed after the end of
the sunset review, the original subsidy rate for this programme of 0.39 per cent should have
diminished to only 0.00234 per cent.44  Because DOC only calculates subsidy rates to the second
decimal place, a rate of 0.00234 per cent would have been equivalent to zero.
5.28 In its response, the US authorities did not directly discuss this evidence or respond in
substance to the German producers’ evidence and arguments submitted in this regard during thesunset review.  In fact, DOC rejected the German producers claim on the basis that the record of these
sunset reviews is not sufficient for us to definitely conclude whether the benefits received by the
German manufacturers of the subject merchandis e under the CIG and/or IPA after January 1, 1985
were less than 0.5 percent of the corresponding beneficiary's annual net sales and, consequently,
whether the benefits should be expensed in the year they were received. Furthermore, since noadministrative reviews of these orders were conducted, we are unable to determine whether any
additional benefits under these programmes were received subsequent to the period of investigation.
As a result, as we did in our preliminary results, we determine that benefit streams from the CIG and
IPA continue beyond the end of these sunset reviews and that, therefore, a countervailable subsidy
from the CIG and IPA to manufacturers of subject merchandise would be likely if the orders wererevoked
45.
                                                     
36 Ibidem , at p. 26-28.
37 Exhibit EC-20 (business confidential information).
38 See 19 C.F.R. § 351.524(b)(2).
39 Exhibit EC-2, at pp. 37316-17.
40 Exhibit EC-10, at p. 34.
41 Ibidem , footnote 34.
42 Ibidem , at p. 32-33. See also U.S. Producers Substantive Response of 1 October 1999, at p. 9-10
(Exhibit EC-17).
43 German Producers Rebuttal of 15 October 1999, at p.2 (Exhibit EC-18).
44 0.39 per cent (original subsidy rate) x 0.6 per cent (grant received after 1985/86 fiscal year) =
0.00234 per cent.
45 Exhibit EC-10, at pp. 34-35. DOC's reference to "January 1, 1985" is apparently a clerical error.
There can be no dispute under DOC's declining balance methodology with a 15-year allocation period, any non-recurring assistance received in 1985 would be finally amortised no later than 1999 (i.e. before completion of
the sunset review).WT/DS213/R
Page 12
5.29 On the issue of the insufficiency of the record of the sunset review, it has to be noted that, on
28 April 2000, the US producers filed a submission containing a copy of the public version of
Preussag’s questionnaire response in the original investigation.  Although the public version of the
questionnaire response did not contain any payment amounts, it showed that of the fourteen CIG
payments made to Preussag, only three were received after the end of the 1985/86 fiscal year.46  DOC,
however, had both the non-confidential version of the questionnaire response and the calculation
memorandum as part of the record of the original investigation and could have easily verified whether
the benefits received by the German manufacturers of the subject merchandise under the CIG after
1 January 1986 were de minimis .  The German producers were, therefore, not asking the DOC to rely
upon speculative, unverified information, but simply to acknowledge the evidence that it had collected
and verified itself in the original investigation.
5.30 With regard to the argument that no administrative review had been conducted, DOC seems
to argue that it was somehow prevented by law from considering the evidence because the German
producers of corrosion-resistant flat products had not requested an administrative review.47  As seen
above, Section 752 of the Act specifically requires the DOC to consider "the net countervailable
subsidy determined in the investigation and subs equent reviews, and whether any change in the
programme which gave rise to the net countervailable subsidy … has occurred that is likely to affectthe net countervailable subsidy".  There can be no doubt that the termination of a subsidy programme
and the cessation of payments thereunder should be regarded as "change in the programme" that must
be considered by the DOC.  Moreover, while the relevant provisions of US law states that the DOC
shall "normally" choose a net countervailable subsidy from the original investigation or an
administrative review when determining the net counterva ilable subsidy that is likely to prevail if the
order is revoked, this did not prohibit DOC from using in this case other rates or making adjustments
to the rates found in an original investigation or an administrative review
48.
5.31 It follows from the above that the facts on record in this case require that the responsible US
authorities should have adjusted the original subsidy rate to account for the termination of the CIG
programme despite the fact that there were no administrative reviews of the countervailing duty orderon corrosion-resistant flat products.  In any case, the fact that the amount of the net countervailable
subsidy likely to prevail was close to zero and, hence, de minimis , should have led the US authorities
to terminate the duty in accordance with Article 21.3 of the SCM Agreement .  The US has, therefore,
erred in not accounting for the termination of the CIG programme, when it calculated the net
countervailable subsidy that was likely to prevail if the countervailing duty order were revoked, and
this is a violation of Article 21.3 of the SCM Agreement .
(v) Application of DOC's declining balance methodology
5.32 DOC should also have reached the conclusion that the effects of the CIG programme had
ended on the basis of its declining balance methodology.  Under this methodology , DOC allocates
non-recurring subsidies over time and in order to account for the "time value of money", it "front-
loads" the amounts allocated to the early years of the allocation period. This inevitably results in a
gradual year-by-year decline of the subsidy amount.   In the present case, even without any
consideration of individual programmes being made, it would have taken the subsidy amount even
further below de minimis .
(vi) Treatment of evidence
                                                     
46 Letter from Dewey Ballantine LLP to Secretary of Commerce of 28 Apr 2000 (Exhibit EC-19) .
47 See Exhibit EC-10, p. 18-22.
48 19 USC §1675a(b)(3).WT/DS213/R
Page 13
5.33 Finally, the EC considers that the US violated the standards of Article 21. 3 SCM Agreement
regarding the treatment of evidence. The German producers presented to DOC the reasons why the
CIG programme should have been considered as terminated and as not providing any further benefits.Based upon this evidence, the German producers believed that DOC would find that subsidisation
under the CIG programme would not be likely to continue or recur.  However, in its preliminaryresults of 20 March 2000, DOC continued to assign a 0.39 per cent subsidy rate for this programme.
5.34 The counsel for the German producers contacted DOC and stated that, if there were any
doubts about how much was paid under the CIG programme after 1986, then DOC should make its
calculation memoranda from the original investigation part of the record in the sunset review.  On
13 April 2001, the German producers made a written request that DOC places the calculation
memoranda on the record of the sunset review.
49  DOC never took any action on the German
producers’ request concerning the calculation memoranda and, in its final results of 27 July 2000, itclaimed that the German producers’ request was untimely since it should have been submitted prior to
15 October 1999.
50 .
5.35 The EC considers that such a short deadline violates the provisions of Article 21.3, in
conjunction with Articles 12.1 and 21.4, of the SCM Agreement  because it fails to afford the
producers with an "ample opportunity" to present in writing all evidence which they consider relevantin respect of the sunset review.
(c) The de minimis  rule
5.36 The EC considers that the U.S. interpretation and application of the sunset provisions in
Article 21.3, as regards the de minimis  requirement, is inconsistent with the  SCM Agreement .
(i) The US law and practice
5.37 Under the Sunset Regulations
51  and the Sunset Policy Bulletin,52 the US will treat as de
minimis any countervailable subsidy rate that is less than 0.5 per cent. In initial investigations, the US
applies a de minimis threshold of 1 per cent53. The US’ Statement of Administrative Action made it
clear that the US considers that the de minims requirements of Articles 11.9 of the  SCM Agreement
only apply to initial investigations.
(ii) Interpretation of the relevant provisions of the SCM Agreement
5.38 Article 21.3 of the SCM Agreement provides that any definitive countervailing duty shall be
terminated not later than five years from its imposition, unless the authorities make a positive
determination in a review that the expiry of the countervailing duty would be likely to lead to
continuation or recurrence of subsidisation and injury. The continuation of the duty after a sunset
review for five more years will be possible only if two conditions are met: a) a review is initiated ; and
b) the determination is made that subsidisation and injury would be likely to continue or recur if the
duty were to expire. The Appellate Body in the United States – Leaded Bars  case held that in order to
establish the continued need for countervailing duties,  an investigating authorit y will have to make a
                                                     
49 Letter from deKieffer & Horgan to Secretary of Commerce of 13 April 2000 (Exhibit EC-21) .
50 Exhibit EC-10, at p. 18.
51 Section 351.106(c)(1) of the Sunset Regulations
52 Section III.A.6.(b) of the Sunset Policy Bulletin  provides that: In accordance with section
752(b)(4)(B) of the Act and 19 CFR 351.106(c)(1), the Department will treat as de minimis  any countervailable
subsidy rate that is less than 0.5  per cent ad valorem or the equivalent specific rate".
53 Section 703(b)(4)(a) of the ActWT/DS213/R
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finding on subsidisation , i.e., whether or not the subsidy continues to exist.  If there is no longer a
subsidy, there would no longer be any need for a countervailing duty54.
5.39 Therefore, in the context of a review under Article 21.2, the object and purpose of the
requirement to demonstrate subsidisation and injury must be the same as when subsidisation and
injury were determined in the original in vestigation.  It follows then that if the de minimis rule is
applied in original investigations, it must also remain applicable in reviews under Article 21.2. The
EC submits that the above analysis in case of Article 21.2 reviews applies all the more so in the
context of sunset reviews under Article 21.3. Indeed, there are compelling reasons to conclude that a
countervailing duty, which is anyhow supposed to expire upon five years, will not be maintained
without a clear demonstration of " subsidisation " and " injury ". The Appellate Body further held that
Article 21.2 sets out a review mechanism to en sure that Members comply with the rule of
Article 21.1. The EC submits that the same reasoning applies a fortiori  as regards the object and
purpose of the sunset review mechanism laid down in Article 21.3 and renders sunset reviews similar
to the original investigations, thus imposing on the authorities the burden of demonstrating the
likelihood of a continuation or recurrence of subsidisation  and injury  (from a subsidy that is not de
minimis ), if the duty is not to expire.
5.40 The term "subsidisation", in Articles 21.1, 21.2 and 21.3, can only interpreted in a
systematically coherent manner, in context and in the light of the other relevant provisions of the SCM
Agreement as a whole.  One of these relevant provisions is clearly Article 11.9.  This is because
Article 11.9, in the context of original investigations, prevents the authorities from making a finding
on subsidisation and injury on the basis of an amount of subsidy that is less than 1 per cent ad
valorem , since it requires "immediate termination" of investigations in such circumstances. In
addition, the US practice of applying a de minimis rule of (albeit at a WTO-inconsistent rate of 0.5 per
cent) in, inter alia , sunset reviews provides an implicit confirmation of the need to apply a de minimis
rule in the context of Article 21.3.  Indeed, it is in herently contradictory for the US to argue that the
rule of Article 11.9 of the SCM Agreement does not apply to sunset reviews, but nevertheless continue
applying such a de minimis rule in practice.  The US inconsistent and contradictory approach may
seem to reduce the legal debate from one of principle to one about the actual amount or level of
subsidy that is considered to be de minimis  (i.e., in practice to 0.5 instead of 1 per cent).  However, a
closer examination of the US law and practice, as applied to the facts of the present case, would
demonstrate that it could produce very perverse and inconsistent results.
(iii) Application of the de minimis rule to the corrosion-resistant steel products case
5.41 In the case of corrosion resistant steel from Germany, the countervailing duty rate determined
in the original investigation, which stemmed essentially from non-recurring subsidies allocated overtime, was 0.59 per cent.  This was only 0.09 per cent above the de minimis  level of 0.50 per cent
applied in the US before the entry into force of the WTO Agreements.
55  Thus, if the original
investigation had been conducted under the currently applicable rules for de minimis  subsidies, the
investigation should have been immediately terminated without the imposition of any countervailing
duties, in accordance with Article 11.9 of the SCM Agreement. In the sunset review, which was
conducted under WTO rules, the US, despite finding that the subsidy rate likely to prevail would be
0.53 per cent, nevertheless continued the measure, since its practice is to apply a 0.5 per cent de
minimis threshold in sunsets. The EC submits that, for the reasons stated above, this threshold is not
appropriate, and that since 0.53 per cent is below the 1 per cent de minimis level which should apply
in sunset reviews, the US was in breach of Article 21.3 in continuing the measure
                                                     
54 Appellate Body Report, United States – Leaded Bars , para. 54.
55 See Exhibits EC -7, at pp. 24-25, and EC-10, at pp. 12-16.WT/DS213/R
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(d) The Obligation to Bring its Law Into Conformity with the WTO Agreements
5.42 Article XVI:4 of the WTO Agreement and Article 32.5 of the SCM Agreement oblige
Members to bring their domestic law into conformity with their obligations under the WTO
Agreements. Indeed, as the panel report in Brazil – Desiccated Coconut has found,56 countervailing
duty measures applied before 1995 would have to be  brought under the disciplines of WTO over time
pursuant to reviews under Article 21.2 or under the sunset provision of Article 21.3 of the SCM
Agreement. The EC has demonstrated that the basic US law, the accompanying regulations and
practices relating to sunset reviews of countervailing duties and their concrete application to the facts
of the present case are inconsistent with a number of provisions of the SCM Agreement, i.e.,
Articles 21, paragraphs 1, 3 and 4, Article 10 and Article 11.9. For those reasons, the EC submits that
the US failed to bring its domestic law in confor mity with WTO obligations and, thereby, violating
Article 32.5 of the SCM Agreement and Article XVI.4 of the WTO Agreement.
5. Conclusions
5.43 For these reasons, the EC respectfully requests that the Panel finds that the US basic
countervailing duty law (Tariff Act of 1930), its accompanying regulations (sunset regulations) and
policy practices (sunset policy bulletin) as such, and their concrete application to imports of certain
corrosion-resistant carbon steel flat products from Germany in the present case are inconsistent withArticle 21 paragraphs 3, 1 and 4, Article 10 and Ar ticle 11.9 of the SCM Agreement.  For the above
reasons, the US countervailing duty law, regulations and practice should also be considered to be
inconsistent with Article 32.5 of the SCM Agreement and, consequently, should be found to violate
also Article XVI.4 of the WTO Agreement.
B. 
FIRST WRITTEN SUBMISSION OF THE UNITED STATES
1. Introduction
5.44 The crux of the EC’s case that is properly before the Panel consists of allegations that the US
countervailing duty law, as well as the sunset revi ew determination in certain corrosion-resistant
carbon steel flat products from Germany based upon that law, are inconsistent with the SCM
Agreement because:  (1) Commerce automatically in itiates sunset reviews without first gathering
evidence regarding the continuation or recurrence of subsidization; and (2) Commerce does not apply
the SCM Agreement’s de minimis  standard for countervailing duty investigations to sunset reviews.
The EC argues that the Panel should read into Article 21.3 – the provision of the SCM Agreement that
deals with sunset reviews – the requirements of Articles 11.6 and 11.9.
5.45 The EC’s claims, however, run afoul of a basic principle of treaty interpretation.  As stated by
the Appellate Body in India Patent Protection , “the principles of treaty interpretation set out in
Article 31 of the Vienna Convention  . . . neither require nor condone the imputation into a treaty of
words that are not there . . . .”  This is precisely what the EC is asking the Panel to do here; impute
into Article 21.3 of the SCM Agreement “words that are not there".
5.46 The EC tries to overcome this problem by repeatedly asserting that sunset reviews are
“exceptions” to some other principle and, thus, must be interpreted in such a manner as to read into
Article 21.3 “words that are not there.”  As discu ssed below, sunset reviews are not “exceptions” to
something else, but instead are merely one part of an overall balance of rights and obligations
negotiated during the Uruguay Round.  However, even if one were to treat the provision on sunset
reviews as an “exception” to something else, th e EC’s arguments run afoul of another principle,
articulated in EC Hormones , which is that “merely characterizing a treaty provision as an ‘exception’
                                                     
56 Panel Report, Brazil - Desiccated Coconut , cit. supra , at para. 277.WT/DS213/R
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does not by itself justify a ‘stricter’ or ‘narrower’ interpretation of that provision than would be
warranted . . . by applying the normal rules of treaty interpretation.”
2. Factual Background
(a) Sunset Reviews under US Law
5.47 Commerce and the USITC jointly conduct sunset reviews pursuant to sections 751(c) and 752
of the Act. Pursuant to section 751(d)(2) of the Act, a countervailing duty order must be revoked after
five years unless both Commerce and the USITC make respective affirmative determinations that
subsidization and injury would be likely to co ntinue or recur.  Under the statute, Commerce
automatically initiates a sunset review on its own initiative within five years of the date of publication
of a countervailing duty order.
5.48 Commerce has the responsibility of determining whether revocation of a countervailing duty
order would be likely to lead to continuation or recurrence of subsidization, whereas the USITC hasthe responsibility of determining whether revocation of a countervailing duty order would be likely to
lead to continuation or recurrence of injury.  If Commerce’s determination is negative – i.e., if
Commerce finds that there is no such likelihood – Commerce must revoke the order.  If Commerce’s
determination is affirmative, Commerce transmits its determination to the USITC, along with a
determination regarding the magnitude of the net counte rvailable subsidy that is likely to prevail if the
order is revoked.  Under US law, the applicable de minimis  standard in sunset reviews is the same as
the standard in other types of reviews ( e.g., duty assessment reviews) – 0.5 per cent.
5.49 Commerce’s 1998 Sunset Regulations  describe specifically the information to be provided by
all interested parties in a sunset review and invite parties to submit, with the required information,
“any other relevant information or argument that  the party would like [Commerce] to consider.”
These regulations function as the standard questionnaire.  The Sunset Regulations  also provide that
substantive responses to a notice of initiation are due 30 days after the date of publication in the
Federal Register  of the notice of initiation; rebuttals are due five days later.  The regulations provide
that Commerce normally will not accept or consider any additional information from a party after the
time for filing rebuttals has expired.
5.50 On 14 May 1998, Commerce published the schedule for initiation of sunset reviews of pre-
1995 anti-dumping and countervailing duty orders, indicating that the sunset review of the
countervailing duty order on corrosion-resistant steel would be initiated in September 1999.
5.51 Thus, with the applicable information requirements, deadlines, and initiation schedule
published in the Federal Register  by May 1998, the EC and German producers had over 15 months to
prepare  for the sunset review of the countervailing duty order on certain corrosion-resistant carbon
steel flat products from Germany.
(b) Certain Corrosion-Resistant Carbon Steel Flat Products from Germany
5.52 On 9 July 1993, Commerce published its final affirmative countervailing duty determination
on certain corrosion-resistant carbon steel flat products from Germany.  Commerce calculated a
country-wide total ad valorem  countervailing duty rate of 0.59 per cent, based on the German
producers receipt of countervailable benefits under the following five programmes:  (1) CapitalInvestment Grants (hereinafter “CIG”);  (2) Structural Improvement Aids;  (3) Special Subsidies for
Companies in the Zonal Border Area;  (4) Aid for Closure of Steel Operations; and (5) ECSC
Redeployment Aid Under Article 56(2)(b).  On 9 August 1993, the USITC notified Commerce of its
final affirmative injury determination.  On 17 August 1993, Commerce amended its finalWT/DS213/R
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determination to correct a ministerial error, which increased the ad valorem  rate to 0.60 per cent, and
issued the countervailing duty order.
5.53 On 26 August 1999, Commerce notified representatives of the EC, the German Government,
and German producers, by mail, that the sunset review of the countervailing duty order on certain
corrosion-resistant carbon steel flat products from Germany would be initiated on or about1 September 1999 (consistent with the Sunset Initiation Schedule ).  On 1 September 1999, Commerce
published its notice of initiation.  In both its letters to German producers and the published initiation
notice, Commerce highlighted the 30-day deadline for filing substantive responses, as well as the
applicable information requirements.
5.54 By 4 October 1999, the EC, the German Government, German producers, and domestic
interested parties filed their substantive responses.  The EC, the German Government, the German
producers, and the domestic interested parties filed rebuttal comments on 15 October 1999.  On20 October 1999, Commerce determined to conduct a full sunset review based on its receipt of
complete substantive responses from the EC, the German Government, and German producers
accounting for a significant portion of German exports to the United States.
5.55 On 27 March 2000, Commerce published its preliminary sunset determination finding
likelihood of continuation or recurrence of subsidization.  Based on its finding that benefit streamsfrom non-recurring grants under the CIG programme would continue beyond the five-year mark and
that the Aid for Closure of Steel Operations a nd ECSC programmes continue to exist, Commerce
determined there was likelihood of continuation or recurrence of subsidization.
5.56 As required under US law, Commerce also determined the net countervailable subsidy likely
to prevail if the order were revoked.  As a general matter, and starting with the total ad valorem  rate
determined in the original investigation, Commerce considers whether, since the investigation, it has
found subsidy programmes to be terminated and/or new programmes to be countervailable.  Based on
findings, which normally are made in the context of administrative reviews under section 751(a) of
the Act, Commerce may adjust the rate determined  in the original investigation to take these
subsequent findings into account.  Although no administrative reviews of the order on certaincorrosion-resistant carbon steel flat products from Germany were ever conducted, Commerce agreed
with the EC and the German producers that the St ructural Improvement Aids and Special Subsidies
for Companies in the Zonal Border Area programmes had been terminated with no continuing
benefits and adjusted the net countervailable subsidy rate accordingly.  Because no administrative
reviews had been conducted, Commerce did not consider the domestic interested parties’ allegations
concerning additional countervailable subsidies.  For the same reason, Commerce did not recalculate
the subsidy rates determined in the original investigation.  Based on this analysis, Commercedetermined a net countervailable subsidy rate of 0.54 per cent.
5.57 In its final determination, published 2 August 2000, Commerce did not change the basis for
its likelihood determination or its determination concerning the net countervailable subsidy likely to
prevail.  On 1 December 2000, the USITC published its determination that revocation of the
countervailing duty order would be likely to lead to continuation or recurrence of injury.  On15 December 2000, the United States published notice of the continuation of the countervailing duty
order on certain corrosion-resistant carbon steel flat products from Germany based on the decisions by
Commerce and the USITC finding likelihood of continuation or recurrence of subsidization and
injury.
3. Standard of Review
5.58 With respect to disputes involving a determination made by a domestic authority based upon
an administrative record, the Appellate Body, in US Cotton Yarn , recently summarized the standard ofWT/DS213/R
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review under DSU Article 11.  The United States does not disagree with this standard.  The EC
erroneously argues, however, that the Panel cannot “disregard or refuse to consider facts and evidence
submitted to it ” by the parties to the dispute.  The United States disagrees with the EC’s implication
that a panel has unfettered discretion to consider any evidence in deciding the issues before it and, as
discussed below, the Panel should decline to consider the document submitted by the EC.
4. Substantive Argument
(a) Automatic Self-Initiation of Sunset Reviews is Consistent with the SCM Agreement
5.59 Article 21.3 authorizes authorities to initiate  a sunset review “on their own initiative or upon a
duly substantiated request made by or on behalf of the domestic industry” (emphasis added).  This
disjunctive language is unambiguous, and, under the customary rules of interpretation, must be read
according to its ordinary meaning, which is that a Member may either  self-initiate a sunset review or
initiate a sunset review in response to a duly subs tantiated request.  The right of an investigating
authority to initiate a sunset review on its own initiative is unqualified and the Panel may not
“diminish” this right.  Despite the plain language of Article 21.3, the EC argues that the Article 11.6
requirements for self-initiation of an investigation are applicable to self-initiation of sunset reviews.
The obvious flaw in the EC’s argument is that there is no reference to the Article 11.6 requirements in
the text of Article 21.3 or vice versa.  Furthermore, the SCM Agreement itself distinguishes betweenthe investigatory phase and the review phase of a countervailing duty proceeding, e.g., Article 11
deals with investigations, while Article 21 deals with reviews.
5.60 The EC’s arguments, therefore, find no support under customary rules of treaty interpretation.
Article 21.3 explicitly provides for initiation of s unset reviews on an authority’s own initiative.
Furthermore, nothing in the text of Article 21.3, or Article 11.6, imposes any evidentiary requirementson authorities who initiate sunset reviews on their own initiative.  It is impossible to violate an
obligation that does not exist.  Therefore, the United States’ automatic initiation of sunset reviews is
not inconsistent with the SCM Agreement.
(b) There is no de minimis  Standard for Sunset Reviews
5.61 The focus of a sunset review under Article 21.3 is future behaviour, i.e., the likelihood of
continuation or recurrence of subsidization – not whether or to what extent subsidization currently
exists.  The analysis is perforce predictive.  Under these circumstances, mathematical certainty or
precision as to the exact amount of likely future subsidization is not necessarily practicable and
certainly not required.
5.62 Under Article 11.9, Members must apply a one per cent de minimis  standard in countervailing
duty investigations .  The EC erroneously argues that the Article 11. 9 de minimis  standard is
applicable in sunset reviews under Article 21.3.  There is no textual or contextual support for the EC’sclaim.
5.63 In Korea DRAMs , Korea argued that the de minimis  standard in Article 5.8 of the AD
Agreement applied to reviews as well as to investigations.  Article 5.8 of the AD Agreement is the
parallel provision to Article 11.9 of the SCM Agreement.  The panel rejected Korea’s arguments,
finding that “the term ‘investigation’ [used in th e context of Article 5.8] means the investigative phase
leading up to the final determination of the investigating authority.”  Thus, the Korea DRAMs  panel
found no textual or contextual support for Korea’s claim that the de minimis  standard applied beyond
the investigative phase.
5.64 The EC’s argument is not only devoid of suppo rt in the text of the SCM Agreement, it also
fails to mention, much less reconcile, its position with relevant language in the text.  Specifically,WT/DS213/R
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note 52 of Article 21.3 provides that “a finding in the most recent assessment proceeding that no duty
is to be levied shall not by itself require the auth orities to terminate the definitive duty”.  Thus, the
current level of subsidization is not decisive as to whether subsidization is likely to recur.  The EC’s
claim that a de minimis  standard is required in the context of Article 21.3 sunset reviews would render
note 52 meaningless.
5.65 The EC would also have the panel read into the use of the word “subsidization” in Article 21
an implicit reference to Article 11.9 because authorities must terminate an investigation if the amount
of the subsidy is de minimis .  However, nothing in the word “subsidization”, as defined in the SCM
Agreement implies anything about a de minimis  standard.  The term “subsidization” simply means the
existence of a subsidy as defined in Article 1 of the SCM; Article 1 contains no de minimis  standard.
5.66 In sum, giving the text of the Agreement its ordinary meaning, the only conclusion one can
reach is that there is no obligation to apply the Article 11.9 de minimis  standard in an Article 21.3
sunset review.  The EC’s arguments concerning the object and purpose of Article 21.3 fail to
overcome the obvious lack of any textual support for their claim.
5.67 The EC argues that a sunset review is equivalent to an investigation because it could result in
re-“imposition ” of an order and, as such, the same de minimis  standard is applicable in a sunset
review.  This argument completely ignores the fundamental difference between investigations, in
which a de minimis  standard is required under Article 11.9, and sunset reviews.  In the context of
Article 11.9, the function of the de minimis  test is to determine whether foreign government subsidies
warrant the imposition of a countervailing duty order in the first instance.  For example, in an
investigation, if the investigating authority found that a government programme had provided
recurring subsidies at a rate of more than one per cent, imposition of a countervailing duty would bewarranted if the subsidized imports were found to cause injury.
5.68 In contrast, the focus of the sunset review is the future.  The mere continued existence of this
same programme could warrant maintaining the duty beyond the five-year point, even if  the amount of
the subsidy was currently zero, as stated in footnote 52, because subsidization may be likely to recur
absent the discipline of the duty.  This distinction between the object and purpose of an investigation
and the object and purpose of a sunset review supports the conclusion that, absent an express
reference to the contrary, there is no basis to assume or infer an intent that the de minimis  standard for
investigations applies in sunset reviews.
5.69 In an attempt to bolster its non-existent textual argument, the EC cites the fact that the
United States applies a de minimis  standard in sunset reviews as “confirmation” of the requirement to
apply a de minimis  rule in the context of Article 21.3 sunset reviews.  In addition, the EC argues that,
given the provisions of Article 32.4, it had a “reasonable and legitimate expectation” that theUnited States would terminate the duty.   The EC is wrong on both accounts.
5.70 The United States’ de minimis  “practice” is legally irrelevant.  As demonstrated above, there
is no de minimis  standard in sunset reviews.  Thus, Members are free to determine what, if any,
de minimis  standard they will apply.  Furthermore, while Article 31.3(b) of the Vienna Convention
permits consideration of “any subsequent practice in the application of the treaty which establishes theagreement of the parties regarding its interpretation,” policy decisions made by one Member for
purposes of its domestic legislation do not constitute “subsequent practice” within the meaning of
Article 31.3(b).
5.71 In addition, the EC’s only legitimate expectations with respect to Articles 32.4 and 21.3 are
those reflected in the Agreement itself.  As the Appellate Body, in India Patent Protection , stated:
“[P]rinciples of interpretation neither require nor condone the imputation into a treaty of words that
are not there or the importation into a treaty of concepts that were not intended.”WT/DS213/R
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5.72 In sum, applying customary rules of treaty interpretation, the Panel should find that there is no
de minimis  standard for sunset reviews in the SCM Agreement and, therefore, the United States’
application of a 0.5 per cent de minimis  standard in sunset reviews does not constitute a violation of
its obligations under the SCM Agreement.
(c) Commerce Properly Determined that the Expiry of the Countervailing Duty Order would be
likely to lead to Continuation or Recurrence of Subsidization Based upon an Appropriately
Conducted review of all Relevant and Properly Submitted Facts
5.73 As demonstrated above, the United States’ automatic self-initiation of sunset reviews and its
application of a particular de minimis  standard do not breach any provision of the SCM Agreement.
The remaining claims raised by the EC concern Commerce’s findings and procedural actions in this
case.  An “objective assessment” of Commerce’s findings and actions, pursuant to Article 11 of the
DSU, would focus on the consistency of the sunset  review with the requirements of Articles 21.3 and
12.
5.74 As a starting point for making its likelihood determination in the sunset review, Commerce
considered the countervailable subsidies and programmes used, and the amount of the subsidy
determined, in the original investigation.  As explained in Commerce’s preliminary sunset
determination, the rationale for this approach is that  the findings in the original investigation provide
the only evidence reflecting the behaviour of the respondents without the discipline of countervailing
measures in place.  This approach makes sense given that, in a sunset review under the Article 21.3,
an authority is considering whether, without the discipline of the duty, subsidization would likely
continue or recur, i.e., what would happen without the discipline of the order.
5.75 In the original investigation, Commerce determined that German producers of corrosion-
resistant steel benefitted from five different subsidy programmes.  In the sunset review, Commerce
found that the benefit streams from non-recurring grants under the CIG programme will continue
beyond the five-year mark; the Structural Improvement Aids and Special Subsidies for Companies in
the Zonal Border Area programmes had been terminated; and the Aid for Closure of Steel Operations
and ECSC Redeployment Aid Under Article 56(2)(b) programmes continue to exist.  Significantly,
the EC has not disputed or disproved these findings.  As an initial matter, therefore, it was reasonable
for Commerce to find likelihood given the continued existence and availability of countervailable
subsidy programmes previously found to have been used by German producers of corrosion-resistant
steel and the continuation of benefit streams from grants under the CIG programme.
5.76 Although the EC essentially concedes the continued existence of some benefits from the CIG
programme, it claims that, based on routine amortization, Commerce should have considered the
programme terminated without residual benefits to the German producers.  With respect to non-recurring benefits (such as the benefits from the CIG programme), Commerce uses a “declining
balance” formula to determine the amount of subsidization to be allocated in each period.  An
ad valorem  subsidy rate, for a particular period, is derived by dividing a numerator – the subsidy
benefit properly attributable to the subject merchandise – by a denominator – the value of the sales of
the merchandise at issue (in the case of a domestic subsidy).  Without knowing the sales volume, thead valorem  subsidy rate for any period cannot be determined despite the use of a “declining balance”
methodology generally .  The EC’s claim, therefore, fails as a factual matter because there is no basis
for its assumption that the sales volumes will remain constant.
5.77 The EC’s amortization arguments, furthermore, are based in part on a calculation
memorandum from the original countervailing duty investigation that is not part of the recordconsidered in the sunset review (Exhibit EC-20).  The request to submit this business confidential
document was untimely submitted and Commerce properly declined to consider it.  The German
producers’ request to submit this document also implicated Commerce’s rules concerning treatment ofWT/DS213/R
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confidential information (“business proprietary information” or “BPI” in US parlance).  Pursuant to
US law, release of that information is not permitted without the consent of the person that submitted
it.  Commerce could not ignore previous requests for confidential treatment and automatically place
this information from the original 1993 investigat ion on the record of the sunset review.  Further,
other parties without prior access to the document would have been prejudiced by its untimelyinclusion on the record.
5.78 Under these circumstances, Commerce did not consider it practicable or appropriate to
consider the document.  Commerce’s decision to enforce procedural rules governing deadlines for
submission of evidence and the release of confidential business information was proper and
consistent with Article 12.  (The evidentiary and procedural requirements of Article 12 are applicable
to sunset reviews by virtue of Article 12.4.)  As such, the Panel should find that Commerce
appropriately declined to consider the information and that it is not this Panel’s role to consider
evidence which could have been timely presented to the decision maker but was not.  Furthermore,
even if the Panel should consider the document, it does not prove the EC’s arguments.  The
calculation memorandum only provides the absolute subsidy amounts ( i.e., the numerator) – it does
not shed any light on the value of the sales of the merchandise at issue ( i.e., the denominator).  As
demonstrated above, without a denominator, there is no way to calculate the ad valorem  subsidy rate.
5.79 Consistent with the Appellate Body’s ruling in UK Lead Bar  and Article 21.3, Commerce
properly considered that the existing benefit streams from the CIG programmes constituted evidence
of the “continuation” of subsidization.  Furthermore, the continued existence of other programmes
previously found to be countervailable is not in dispute.  As a result, Commerce’s finding of
likelihood of continuation or recurrence of subsidization is consistent with its obligations underArticles 21.3 and 12 of the SCM Agreement.  In addition, as demonstrated below, Commerce’s
evidentiary and procedural actions also were consistent with its obligations under Article 12.
5.80 Article 12.1 requires domestic authorities to give interested Members and parties an ample
opportunity to present in writing all evidence which they consider relevant to the proceeding.  The
facts do not support the EC’s claims that Commerce failed to do so.
5.81 The Sunset Regulations  describe specifically the information required to be provided by all
interested parties in a sunset review, i.e., they constitute the standard questionnaire.  In addition, the
Sunset Regulations  specifically invite parties to submit, with the required information, “any other
relevant information or arguments that the party would like [Commerce] to consider”.  Consistent
with Article 12.1.1, Commerce’s regulations also provide 30 days for parties to submit the required
information and provide for extensions of time to meet this deadline.  The EC and the German
producers were on notice of the information requirements and options, as well as the applicabledeadlines and extension options, over 15 months ahead of the scheduled date for initiation of the
sunset review.
5.82 Yet over six months after the deadline for responding to the sunset questionnaire and
submitting optional information, the German producers attempted to place new factual information on
the record.  The EC asserts that Commerce’s rejection of these untimely submissions was contrary totheir “right” under the SCM Agreement to have an  “ample opportunity to present in writing all
evidence which they consider relevant in respect of the sunset review”.  As a factual matter, however,
the German producers and the German Government had ample time to submit factual information in
the sunset review.  Furthermore, as a legal matter, Commerce’s filing deadlines and its decision not to
accept late-filed information fully comport with its obligations under Article 12.
5.83 Specifically, the German producers had 30 days to respond to the questionnaire.  In addition,
Commerce’s rejection of the German producers late-filed information was reasonable under the
circumstances of this case, i.e., the German producers attempted to file new factual information overWT/DS213/R
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six months after Commerce’s deadline.  Although an authority “should” grant extensions “whenever
practicable”, nothing required Commerce to find that it was practicable to accept and consider
documents filed six months late, particularly given the fact that the EC and the German producers had
over 15 months to gather any data they considered appropriate and to prepare their submission of
required and optional information.  Finally, the EC’s argument, that Commerce arbitrarily applied itsregulation to submissions from the various parties, ignores relevant factual distinctions between the
submissions from the German producers rejected  by Commerce and those submissions from the US
producers and the German Government that were accepted by Commerce.  In particular, the accepted
submissions involved public documents containing no new factual information.
5.84 In sum, the Panel should dismiss the EC’s cl aims with respect to treatment of evidence.
Commerce followed reasonable, appropriate procedures that fully comply with the evidentiary and
procedural requirements of Articles 21 and 12.
(d) The Panel should make a Preliminary Ruling that the EC’s Claims Regarding the Expedited
Sunset Review Procedure are not within the Panel’s Terms of Reference
5.85 The United States requests that the Panel make a preliminary ruling that the EC’s claims
regarding the US expedited sunset review procedur e are not properly before the Panel, because this
procedure is not a measure within the Panel’s terms of reference.  Not until its first written submissionto the Panel did the EC ever give any indication that it was complaining about this procedure.
5.86 In its initial request for consultations, the EC identified Commerce’s determination in the full
sunset review of the countervailing duty order on certain corrosion-resistant carbon steel flat products
from Germany as the challenged measure, alleging that Commerce’s determination is inconsistent
with Articles 10, 11.9 and 21 of the SCM Agreement.  In its second request for consultations, the ECidentified Commerce’s procedures for initiation  of sunset reviews, both as applied by Commerce in
the sunset determination in question and in general, as an additional challenged measure, alleging that
such initiation procedures are inconsistent with Articles 21.1, 21.3 and 32.5 of the SCM Agreement
and Article XIV:4 of the Marrakesh Agreement.  The EC did not allege that any other sunset
determination or procedure violated US WTO obligations.  Furthermore, the parties did not discussthe expedited sunset review procedure at either the 8 December 2000, or 21 March 2001
consultations.  Finally, there is no mention of the expedited sunset review procedure in the EC’s
request for the establishment of a panel.
5.87 Articles 4.7 and 6.2 of the DSU, therefore, pr eclude the EC’s claims  with respect to the
expedited sunset review procedure, because the EC never identified this procedure as a measure in its
consultation requests, in the consultations themselves, or in its panel request.  It is well-established
that a complaining party cannot add new measures after a panel’s terms of reference have beenestablished.
5. Conclusion
5.88 For the reasons set out in this submission, the United States respectfully requests that the
Panel make the following findings:
(1) The US procedure for the automatic self-initiation of sunset reviews by Commerce is
not inconsistent with the SCM Agreement;
(2) In not applying the 1 per cent de minimis  standard of Article 11.9 of the SCM
Agreement to sunset reviews, the United States has not acted inconsistently with its
obligations under the SCM Agreement;WT/DS213/R
Page 23
(3) The Commerce sunset review determination in certain corrosion-resistant carbon steel
flat products from Germany is not inconsistent with United States obligations under
the SCM Agreement.
5.89 In addition, the United States respectfully requests that the Panel make a preliminary ruling
that the EC’s claims with respect to the expedited sunset review procedure are not within the Panel’s
terms of reference.
C. ORAL STATEMENT OF THE EUROPEAN COMMUNITI ES AT THE FIRST MEETING OF THE PANEL
1. Introduction
5.90 The complaint concerns the decision of the US authorities to continue the countervailing
duties on imports of corrosion-resistant carbon stee l flat products from Germany (the product).  The
decision of the US authorities in this case is a result that is mandated by the basic US statute, theimplementing legislation and administrative practice on sunset reviews of countervailing duty orders.
For these reasons, the present proceeding covers certain aspects of the US basic sunset review
legislation, their procedures and their implementation which led to the unlawful continuation of the
countervailing duties in this case.
57
5.91 The oral statement is organised as follows:  (a) a presentation of the facts, (b) a review of the
substantive legal claims, and (c) the issue of standard of review and the US request to make a
preliminary ruling on expedited reviews.
5.92 The basic thrust of the EC case is that countervailing duty measures are exceptional, non-
MFN measures that are permitted only and so long as it is necessary to offset injurious subsidies.
This is true as regards both the original imposition of countervailing duties and their review under thesunset provisions of the SCM Agreement .
2. Factual Background
5.93 On 9 July 1993, DOC decided that exports of the product were subsidised.  DOC
countervailed five subsidy programmes (CVD rate 0.60 per cent). DOC found that two
 programmes,
the Capital Investment Grants (CIG) (0.39 per cent) and the Aid for Closure of Steel Operations
(0.06 per cent) were non-recurring grants and the benefit was allocated over a 15-year period. The
other three programmes were found to be recurring subsidies (0.15 per cent of the total subsidy
amount).
5.94 On 1 September 1999, DOC automatically initiated a sunset review of the definitive duties.
On 20 March 2000, concluded that revocation of the CVD order was likely to lead to recurrence of
continuation or recurrence of a countervailable subsidy at a net subsidy rate of 0.54 per cent.  DOC
found that the CIG programme would continue to confer a benefit beyond the end of the sunset
review. The US simply took the subsidy rate from the original investigation in 1993 and deducted the
amounts related to two programmes. On 2 August 2000, the DOC confirmed these findings in the
final results.
                                                     
57 These acts are: 1) Section 751(c) of the Tariff Act of 1930, as amended, (hereinafter "the Act") , 2)
the Implementing Regulations on anti-dumping and countervailing duties issued by DOC, now Section 351 ofTitle 19 of the US Code of Federal Regulations (hereinafter the " Sunset Regulations ") and 3)the DOC Policies
Regarding the Conduct of Five-year ("Sunset") Reviews of Antidumping and Countervailing Duty Orders (so-
called " Sunset Policy Bulletin ").WT/DS213/R
Page 24
3. Legal Arguments
(a) The US standard of initiation applied to sunset reviews leads inevitably to a violation of
Article 21.3 of the SCM Agreement
5.95 Pursuant to Article 21.3  SCM Agreement,  WTO Members have an obligation to terminate
CVD measures no later than 5 years from their imposition, unless the authorities determine that the
expiry of the duties would be likely to lead to continuation or recurrence of subsidisation and injury.
The EC considers that Article 21.3 reinforces the requirement of Article 21.1 by creating an obligation
to terminate duties not later than 5 years from their imposition. Therefore, the effect of these
provisions is that the continuation of CVD measures beyond the five years period is the exception.
Indeed, a proper interpretation of the provisions of Article 21.1 and of the terms "not later than" in
Article 21.3 suggest clearly that a CVD should be terminated even before 5 years, if its application is
not necessary to counteract injurious subsidisation.  Therefore, the combined effect of these
provisions is that the continuation of CVD measures beyond the five years period is an exceptionalsituation.  This corresponds to the object and the purpose of the SCM Agreement,  which – as
explained above – is to guarantee that trade defence measures are to be imposed and maintained only
if they are necessary to offset injurious subsidisation.
5.96 The EC considers that self-initiation without the necessary supporting evidence is in violation
of the above principle. In this respect, self-initiation is justified only if the domestic authorities have
an equivalent level of evidence that would be required in such a request from the domestic industry.
Indeed, without requiring a sufficient amount of evidence of subsidisation and injury in sunset
reviews, these become biased in favour of keeping in place unjustified CVD measures. It is clear that
the investigating authority has the burden of demonstrating that subsidisation and injury is  likely to
continue or recur and cannot devise and apply a system that shifts this burden on the exporters and
third countries.
5.97 The US attempts (at para. 63-66) to justify this inconsistency by reading the terms of
Article 21.3 in "clinical isolation" and out of c ontext, and without taking into account the proper
object and purpose of these provisions.  The US also draws (at para. 67) the wrong conclusions fromthe distinction between the investigation phase and the review
 phase of a CVD proceeding.  Contrary
to what the US argues in para. 67, it follows from Article 22.7, in conjunction with Article 21.1 andArticle 11.6 of the SCM Agreement , that without sufficient evidence the authorities should not self-
initiate automatically sunset reviews, but they should leave CVD orders to expire (unless a valid
request is made by the domestic industry).  Sunset reviews are not a neutral exercise and do not
involve, as the US claims (at para. 58), "taking stock of the situation".  Rather, in such cases there is a
presumption of expiry of duties and the investigating authority is required to demonstrate that it hassufficient evidence when initiating the sunset review , and that the conditions for initially imposing the
CVD measure would still be present in the absence of such measure.  It is clear from the language of
Article 21.3, read in context and in the light of the object and purpose of these provisions, that the
investigating authority has the burden of demonstrating that subsidisation and injury is
 likely to
continue or recur.
5.98 The EC submits that there is no difference as regards the object and purpose of the initial
investigations and of sunset reviews.  Their common objective is to determine if there is subsidisation
and injury which will enable the application of CVD measures in principle for the next five years.  It
is generally admitted that every text, no matter how clear on its face it is claimed to be, as the US
argues here of Article 21.3, requires to be scrutinised in its context and in the light of the object andpurpose which is designed to serve.  The US arguments throughout their written submission also run
counter to the basic principle of good faith interpretation, because they lead unavoidably to resultsWT/DS213/R
Page 25
which are manifestly absurd and unreasonable58 and, as explained above, would reduce parts of
Article 21.3 to inutility.  So, the question is not whether the Community proposes to read into
Article 21.3 words which are not there, as the US now argues, but whether the interpretation it
proposes makes sense in the light of the object and purpose of these provisions in their context.
5.99 The EC claim will be better understood if the automatic initiation under US law is examined
in two situations: first, in the case of "expedited" sunset reviews, and, second, as applied to the facts
in the present case.
5.100  Under the expedited procedure, if domestic interested parties file a "notice of intent to
participate", the sunset procedure continues and interested foreign parties, i.e. exporters and the
foreign government, are required to file substantive responses.  This of course imposes serious
economic and other costs on foreign exporters and other WTO Members.  If the foreign government,
or exporters accounting for at least 50 per cent of exports, do not file substantive responses for
whatever reason, DOC will shorten the timeframe fo r the review and will normally presume without
further investigation that subsidisation continues.59  Therefore, the US procedure of expedited
reviews, through automatic initiation and presump tion of likelihood of continuation or recurrence, is
applied so as to absolve the US authorities from their basic duty of investigation and demonstration of
likely subsidisation and injury and, hence, is clearly biased towards continuation and perpetuation ofcountervailing duties, in violation of the duty to terminate them as set in Articles 21.3 and 21.1 of the
SCM Agreement .  It also enables the DOC, without any support in the SCM Agreement , to potentially
ignore information submitted by a significant number of exporters.
(b) The domestic authorities are under an obligation to "determine" the likelihood of continuation
or recurrence of subsidisation
5.101  Article 21.3 SCM Agreement  requires that the authorities determine that the expiry of the duty
would be likely to lead to continuation or recurr ence of subsidisation and injury. However, US law
does not require a new investigation but requires in sunset reviews the DOC to consider only: (a) the
net countervailable subsidy determined in the original investigation, and (b) whether there were any
changes in the subsidies since the original invest igation. In the EC's view, DOC’s refusal to conduct
any meaningful fresh investigation in a sunset review is in violation of the requirements of
Article 21.3 of the SCM Agreement.
5.102  The EC considers that the DOC’s refusal to co nduct any meaningful fresh investigation in a
sunset review is in violation of the requirements of Article 21.3 of the SCM Agreement.  The US
practice not only contravenes the duty placed by Article 21.3 on the domestic authorities to make a
fresh "determination" about the likelihood of continuation or recurrence of a subsidy, but, by arguing
that administrative reviews should have been request ed, it also shifts the burden of proving a change
in circumstances on the foreign exporters and at a previous stage of the procedure. Such reviews,
however, are considered by the SCM Agreement  as non-obligatory and are in any event overtaken by
the sunset review.  The fact that a party did not request an administrative review cannot, therefore,
relieve in any way the domestic authorities from their basic and primary duty to "determine" the
likelihood of continuation or recurrence of subsidisation [In the present case, the exporters could notrequest an administrative reviews, as no shipments to the US had been made since the original CVD
order].  In fact, DOC sunset practice has been to consistently ignore reduced subsidy rates found in
administrative reviews. At any rate, in the present case the German exporters did all they could to
submit relevant information to DOC.
                                                     
58 See Sinclair, pp.116, 120.
59 19 C.F.R. §351.218(e)(1)(ii)(B) and (C).WT/DS213/R
Page 26
5.103  In this case, the German producers stated that the CIG programme had been terminated and
could not provide any further benefits. DOC had already determined in the original investigation that
this programme applied only to investments made prior to 1 January 1986. Despite this evidence,
DOC stated that it was unable to determine whether any additional benefits under these programmes
were received subsequent to the period of investigation.   The US admits that DOC did not recalculate
the rate but used the original subsidy rate for CIG.  This violates Article 21.3 SCM Agreement  because
DOC did not take into consideration the termination of the CIG programme despite evidence on the
record.
5.104  Despite this evidence, DOC rejected the claims of the German exporters. It stated that since
no administrative reviews of these orders had been conducted, it was unable to determine whether any
additional benefits under these programmes were received subsequent to the period of investigation.
It should be stressed that, DOC had also the comple te record from the original investigation, including
the questionnaire responses and the calculation memoranda, and could have easily verified whether
the benefits received by the German manufacturers of the subject merchandise under the CIG after
1 January 1986 were de minimis.  The US now admits (at para. 40) that DOC did not recalculate the
rate but referred back to the original subsidy rate for CIG.  This violates Article 21.3 SCM Agreement
because DOC did not take into consideration the termination of the CIG programme despite evidenceon the record.  Indeed, the grounds of the US explanation violate the "likely to lead" requirement in
Article 21.3 and the "necessity" requirement laid down in Article 21.1 of the Agreement.  It also runs
counter to Article 21.4, in conjunction with Article 12.5, because the US authorities did not make any
effort to satisfy themselves of the accuracy of the claims made by the German exporters.  Therefore,
the US failed to provide an adequate and reason able explanation of how the facts support their
decision in this case.
5.105  Moreover, DOC should have also reached the conclusion that the effects of the CIG
programme had ended on the basis of its declining balance methodology.
5.106  As the Appellate Body held several times, the requirement to conduct an "objective
assessment" of a claim imposes upon the Panel the obligation to review, first, whether the competentauthorities have evaluated all the relevant factors
60 and, second, whether the authorities have provided
a reasoned and adequate explanation of how the facts support their determination.61  It follows that
although panels are not entitled to conduct a de novo  review of the evidence, nor to substitute  their
own conclusions for those of the competent authorities, this does not mean that panels must simply
accept  the conclusions of the competent authorities.  Panels should instead examine the explanation
offered in depth and in the light of all the facts before it.
5.107  It should further be stressed that in the present case, the calculation memorandum of the
original investigation62 shows that Thyssen last received payments under the CIG programme in 1989,
and that the amount received after 1985 was so small that it would have been automatically expensed
in the year of receipt unde r the DOC 0.5 per cent rule.63  Therefore, in accordance with their
obligations under Article 21.3 and 4, the DOC should have taken this into account.
5.108  The EC also considers that in the present case the US violated the standards of Article 21.3
SCM Agreement regarding the treatment of evidence.  The German producers presented to DOC
during the sunset review the reasons why the CIG programme should have been considered as
                                                     
60 See Appellate Body Report in Korea – Definitive Safeguard Measure on Imports of Certain Dairy
Products ("Korea – Dairy Safeguards"), WT/DS98/AB/R, adopted 12 January 2000, at para. 137.
61 See the Appellate Body Report in Argentina – Safeguard Measures on Imports of Footwear
("Argentina – Footwear Safeguards") , WT/DS121/AB/R, adopted 12 January 2000, at para. 121.
62 Exhibit EC-20.
63 See 19 C.F.R. § 351.524(b)(2).WT/DS213/R
Page 27
terminated and as not providing any further benefits.  Based upon this evidence, the German
producers believed that DOC would find that s ubsidisation under the CIG programme would not be
likely to continue or recur.  However, in its preliminary results of 20 March 2000, DOC continued to
assign a 0.39 per cent subsidy rate for this programme.
5.109  It follows from the above that DOC’s refusal to  conduct any fresh investigation in a sunset
review and take into account all relevant and available evidence is in violation of the requirements of
Article 21.3 of the SCM Agreement
(c) The de minimis  rule under Article 21.3 of the SCM Agreement
5.110  The EC considers that the U.S. interpretation and application of the sunset provisions in
Article 21.3 as regards the de minimis  requirement is inconsistent with the  SCM Agreement . The de
minims requirements of Articles 11.9 of the  SCM Agreement are applied by the US only to original
investigations (but a 0.5 per cent de minimis  rule is applied in sunset and administrative reviews under
its domestic laws).
5.111  The EC believes that the object and purpose of the sunset reviews and of the original
investigations is the same, i.e. the application of a CVD measure for the next five years and, therefore,
the de minimis  rule of 1 per cent in Article 11.9 should apply to sunset reviews.
5.112  Indeed, a systematic and good faith interpretation of Article 21.3 with Articles 21.1, 22.1,
22.7 and 11.9 of the SCM Agreement , would suggest clearly that the de minimis  rule of 1 per cent
should be applied also in sunset reviews.  The US  has failed to demonstrate so far how it is that
essentially non-recurring and expensed subsidies of 0.60 per cent in the original investigation are
likely to continue and cause injury in a sunset review.64  The absurdity of the US approach is that a
subsidy that, if examined in a new investigation after 1995, would have been found to be de minimis
under Article 11.9 of the SCM Agreement , would now become not de minimis  under a sunset review
and would continue to be applied for 5 more years, even in the absence of a  change of circumstances.
It is therefore particularly revealing to examine the application of the US approach to the facts of the
present case.
5.113  There is common agreement that of the five subsidy programmes examined in the original
investigation, 2 have been terminated, i.e. the Structural Improvement Aids (0.05 per cent) and the
Zonal Border Area (0.01 per cent).  Two of the three programmes that, according to DOC, continued
to exist, i.e. the Aid for Closure for Steel Oper ations (0.06 per cent) and the ECSC Redevelopment
Aid (0.08 per cent) would have expired definitively  in 2002.  The last and most important programme,
the Capital Investment Grants, was found by DOC to  be non-recurring, and its original net subsidy
rate of 0.39 per cent would have been reduced to 0.00234 per cent in accordance with the DOC’s 15-
year allocation period and calculation methodology.  Because DOC only calculates subsidy rates tothe second decimal point, a net rate of 0.00234 per cent would have been equivalent to zero.
Therefore, on the basis of DOC’s own calculation me thods, the only 2 likely to continue subsidies
would have provided a net amount of 0.14 per cent (i.e. 0.06% + 0.08%).
5.114  The US provides now no credible explanation.  In particular, we fail to see the reason for
which the US cites (at para. 94) that there were 2 more programmes under the ECSC treaty whichprovided zero benefit to these products in the period of investigation, and the reason for which it
                                                     
64 In footnote 98, the US states that the EC is not challenging the injury determination in this
proceeding but draws no conclusion.  The EC in this pr oceeding is not challenging the injury requirement only
for the purpose of verifying the accuracy of the ITC injury determination as such, but it is doing so for thepurpose of the de minimis  challenge, i.e. as a requirement that needs to be demonstrated in the context of a
sunset review under Article 21.3 of the Agreement.WT/DS213/R
Page 28
states (at para. 34) that "domestic parties made allegations concerning new subsidy programmes
providing benefits to the German steel industry", but later rejected these claims (at para. 40) because
no administrative reviews had been conducted.65  We cannot help but come to the conclusion that this
is yet another ingenious way of DOC and the US to  convey the impression (e.g., at paras. 95-96) that
there were in place a number of important subsidy programmes ready to be re-deployed soon after theCVD order were to expire.  One need only look carefully into the facts of this case to realise that this
is absolutely not correct.
5.115  The US states that original investigations and sunset reviews are different and the SCM
Agreement does not require recalculation of CVD in sunsets. However, there is nothing in Article 21.3
to prevent the US DOC from recalculating 
the amount of subsidy in a sunset by establishing a relevant
investigation period and doing a recalculation.  Moreover, it is required to quantify the amount of
subsidy likely to prevail in the absence of measures.  DOC should have based its quantification on thefacts, and examine whether it can meet its burden of proof by positively demonstrating likelihood of
continuation of subsidisation and injury.  It has failed to do so in this case.
5.116  The US advanced further the argument that "the mere continued existence of the CIG
programme could warrant maintaining the duty beyond the five-year point, even if  the amount of the
subsidy was currently zero, as stated in footnote 52, because subsidisation may be likely to recur
absent the discipline of the duty" (at para. 81).  Footnote 52 refers only to assessment proceedings,
which are carried out annually on demand and involve retrospective calculations of the amount of
subsidy for a particular period.  Sunset reviews are completely different and involve an element of
prospective analysis, i.e. whether subsidisation and in jury is likely to recur.  There is, consequently,
no basis for the argument which the US is attempting to draw from the text of Footnote 52 of the SCM
Agreement .
5.117  The US also alleges that the current level of subsidisation is not decisive as to whether
subsidisation is likely to recur (at para. 74).  Although the current level of subsidy might not be
decisive as to whether a subsidy is likely to recur, it is nevertheless a very important factor.
Especially in the case of a non-recurring subsidy which is already at de minimis  level, because the
future level of the subsidy is known and, under the US declining balance methodology, the subsidy
amount will always go down in the future.  In the present case, the CVD was based on non-recurring
subsidies allocated over time (0.60 per cent).  Because no new  subsidies were granted and on thebasis of all available facts in this case, the US should have terminated this measures as the level of
subsidy likely to continue in this case was by far too low, even much lower than the 0.50 per cent
applied unilaterally by the US domestically.  The EC submitted that the 0.50 per cent de minimis
threshold applied by the US domestically is not appropriate, and that since the rate of 0.54 per cent inthe review is below the 1 per cent de minimis level which should apply in sunset reviews, the US was
in breach of Article 21.3 in continuing the CVD measure.
(d) The Obligation to Bring its Law Into Conformity with the WTO Agreements
5.118  Article XVI:4 of the WTO Agreement and Article 32.5 of the SCM Agreement oblige
Members to bring their domestic law into conformity with their obligations under the WTOAgreements. The EC has demonstrated that the basic US law, the accompanying regulations and
practices relating to sunset reviews of countervailing duties and their concrete application to the facts
of the present case are inconsistent with a number of provisions of the SCM Agreement, i.e.
Articles 21, paragraphs 1, 3 and 4, Article 10 and Article 11.9. For those reasons, the EC submits that
                                                     
65 Incidentally, the record shows that as regards new subsidy allegations DOC did not reject the
petitioners’ new subsidy allegations because no administrative reviews had been conducted.  It rejected them
because the petitioners failed to show good cause, i.e. their allegations were vague and unsupported by
evidence.  DOC should have investigated if  the petitioners had indeed shown good cause.WT/DS213/R
Page 29
the US failed to bring its domestic law in confor mity with WTO obligations and, thereby, violating
Article 32.5 of the SCM Agreement and, conseque ntly, Article XVI.4 of the WTO Agreement.
4. Standard of review
5.119  The applicable standard is Article 11 DSU. However, the US claims that the panel cannot
consider facts and evidence which were not considered by the US authorities in the sunset review. TheEC disagrees based on Appellate Body decisions regarding Article 11 DSU.  In European
Communities – Hormones , it stated that "the applicable standard is neither de novo  review as such, nor
'total deference', but rather the 'objective assessment of the facts'
 ". In Argentina – Footwear
Safeguards , the Appellate Body clarified the concept of "objective assessment". The requirement to
conduct an "objective assessment" of a claim has t hus two elements: a review of whether competent
authorities have evaluated all the relevant factors and, second, a review of whether the authorities
have provided a reasoned and adequate explanation of how the facts support their determination. TheEC believes the US has failed to provide an adeq uate and reasonable explanation of how the facts
support their decision in this case.
5.120  As with regard to requirement of a reasonable and adequate explanation , in the United States
- Lamb Safeguards case, the Appellate Body held that panels must review whether the competent
authorities' explanation fully addresses the nature, and, especially, the complexities, of the data, andresponds to other plausible interpretations of that data.
66
5.121  It follows also that although panels are not entitled to conduct a de novo  review of the
evidence, nor to substitute  their own conclusions for those of the competent authorities, this does not
mean that panels must simply accept  the conclusions of the competent authorities.  Panels should
instead examine the explanation offered in depth and in the light of all the facts before it.
5. US Request for preliminary ruling
5.122  The EC consider without foundation the US request that the Panel issue a preliminary ruling
that the EC's claims regarding the expedited sunset review procedure are not within its terms of
reference.
5.123  This Panel was established by the DSB on 10 September 2001 with standard terms of
reference.  The matter referred to it is, therefore,  the one described by the EC in its request for the
establishment of the Panel (document WT/DS213/3).  The EC referred explicitly to Section 751. c) of
the Tariff Act of 1930, which sets out the procedures to conduct sunset reviews and this includes also
expedited reviews.  The expedited reviews have also been discussed explicitly or implicitly in the
consultations, as the procedural and substantive requirements on evidence which foreign producers
have to provide in all types of sunset reviews were indeed the subject of the consultations.  The US
was therefore not deprived of its rights of defence.
6. Conclusions
5.124  For these reasons, the EC respectfully requests that the Panel finds that the US basic
countervailing duty law (Tariff Act of 1930), its accompanying regulations (sunset regulations) and
policy practices (sunset policy bulletin), and their concrete application to imports of certain corrosion-
resistant carbon steel flat products from Germany in the present case are inconsistent with Article 21paragraphs 3, 1 and 4, Article 10 and Article 11.9 of the SCM Agreement .  For the above reasons, the
                                                     
66 Appellate Body Report, United-States – Safeguard Measures on Imports of Fresh Chilled or Frozen
Lamb Meat from New Zealand and Australia ("United-States – Lamb Safeguards"), WT/DS177/AB/R,
WT/DS178/AB/R, adopted 16 May 2001, para. 106.WT/DS213/R
Page 30
US countervailing duty law, regulations and practice should also be considered to be inconsistent with
Article 32.5 of the SCM Agreement  and, consequently, should be found to violate also Article XVI.4
of the WTO Agreement .
D. ORAL STATEMENT OF THE UNITED STATES AT THE FIRST MEETING OF THE PANEL
5.125  On behalf of the United States delegation, I would like to thank the Panel for this opportunity
to comment on certain issues raised by the EC in its First Written Submission.  We do not intend to
offer a lengthy statement today; you have our written  submission, and we will not repeat all of the
comments that we made there.  We will be pleased to receive any questions you may have at the
conclusion of our statement.
5.126  Mr. Chairman, this proceeding presents three basic questions.  The first is a purely legal
question:  Does the United States act inconsistently  with Article 21.3 by self-initiating sunset reviews
without regard to the evidentiary provisions of Article 11.6?  The second is also a purely legalquestion:  Does the United States act inconsistently with Article 21.3 by not applying the de minimis
provisions of Article 11.9 in sunset reviews?  The answer to both of these questions is no, for a
simple, yet fundamental reason – it is impossible to act inconsistently with an obligation that does not
exist.
5.127  I will return to these two issues in a moment, but first let me address the third question, which
goes to the specific CVD determination at issue in this proceeding – Commerce’s determination that
expiry of the countervailing duty on certain co rrosion-resistant carbon steel flat products from
Germany would be likely to lead to continuation or recurrence of subsidization.  The question here is
whether Commerce’s determination was based upon an appropriately conducted review of all relevant
and properly submitted facts.  An “objective assessment” of Commerce’s findings and actionssupports an answer in the affirmative.
1. Commerce Properly Determined That Expiry Of The Duty Would Be Likely To Lead
To Continuation Or Recurrence Of Subsidization
5.128  Article 21.3 defines the point in time at which the authorities must take stock of or terminate a
duty – that is every five years.  Article 21.3 also defines the circumstances under which maintaining aduty may be considered “necessary” – that is when  continuation or recurrence of subsidization and
injury is likely.  An authority’s decision to maintain a duty must be supported by evidence of these
requisite circumstances.
5.129  Setting aside the issue of injury, which is not being challenged in this case, what does it mean
to determine likelihood of continuation or recurrence of subsidization?
5.130  First, we consider, individually, the words establishing the circumstances under which
maintaining a duty may be considered necessary.  The word “likely” carries with it the ordinarymeaning of “probable”.  Where continuation or recurrence of subsidization is probable, this
probability would then constitute a proper basis for entitlement to the continued imposition of a
countervailing duty.
5.131  The word “continuation” expresses a temporal relationship between past and future.
Something that happened in the past may continue in the future.  An example might be where benefits
from an untied, non-recurring financial contribution continue to flow.
5.132  The word “recurrence” also expresses a temporal relationship between past and future.
Something that happened in the past may happen again in the future.  An example might be where
there was not a recent financial contribution under a particular subsidy programme, but theWT/DS213/R
Page 31
programme still exists and may be used in the future.  In this situation, the existing programme is a
source for new financial contributions – in other words, its continued existence enables recurrence of
subsidization.
5.133  Considered together then, these words indicate that determining likelihood of continuation or
recurrence requires a consideration of future, rather than present , circumstances.  What are the
prospects of subsidization in the future?  Without the discipline of the duty, is subsidization likely to
continue or recur?  The analysis required in a sunset review, therefore, is necessarily prospective in
nature.
5.134  Support for this proposition is found in the text of Article 21.3 itself.  As discussed in our
First Written Submission, note 52 provides that a finding in the most recent assessment proceeding
that no duty is to be levied shall not by itself require the authorities to terminate the definitive duty.
This indicates that the current level of subsidization is not decisive as to whether subsidization islikely to continue or recur.
5.135  In the sunset review involving German corr osion-resistant steel, Commerce found likelihood
based on two unrefuted facts.  The first fact is the continued existence and availability of
countervailable subsidy programmes previously found to have been used by German producers.  The
second fact is the continued existence of  benefit streams from a countervailable subsidy programmepreviously found to benefit German producers.
5.136  The EC argues that there are a number of factual and procedural flaws with Commerce’s
sunset determination, such that Commerce’s determination is in violation of provisions of the SCM
Agreement.  In out First Written Submission, we address and rebut the EC’s claims in greater detail.
Today, I will only briefly touch upon the EC’s two main claims.  The first concerns the CapitalInvestment Grants, or CIG, Prog ramme; the second concerns whether the German producers and the
EC were afforded “ample opportunity” to participate in the underlying sunset review.
5.137  At the outset, I would note that rather than demonstrating that Commerce’s findings or
procedural actions were inconsistent with the SCM Agreement, the EC’s claims present essentially
another view of the facts.  However, Article 11 of the DSU directs panels to make an “objectiveassessment” of the facts of the case and of the applicability and conformity with relevant agreements.
This “objective assessment” must necessarily focus on the consistency of the sunset review with the
requirements of Article 21.3 and Article 12.
5.138  With respect to the CIG Programme, the EC theorizes that, using Commerce’s declining
balance methodology, the benefits remaining from the programme would be de minimis .  You will
recall that in the original investigation, Commer ce found that German producers of corrosion-resistant
steel benefitted from non-recurring grants under this programme.  In the sunset review, Commercefound that benefit streams from the CIG grants would continue beyond the five-year period.  While
the EC’s declining balance theories are not unreasonable, they only address half of the equation.  In
particular, it is not possible to calculate a particular rate of subsidization using this methodology
without information concerning sales of the subject merchandise.  The EC’s claim presumes that sales
volumes have remained constant, a presumption for which there is no evidence in the record.
5.139  In addition, the EC’s argument in this regard is based partly on a calculation memorandum
which Commerce properly declined to consider in the sunset review below.  As we demonstrate in our
First Written Submission, it is not appropriate for th e Panel to now consider this business confidential
document.  Nevertheless, even if this document were appropriately part of the record before the Panel,
it does not prove the EC’s argument.  This is because the memorandum only provides absolutesubsidy amounts; it does not contain the information on sales volumes necessary to calculate the ad
valorem  rate of subsidization.WT/DS213/R
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5.140  Nothing in the SCM Agreement requires consideration of the magnitude of subsidization in
determining the likelihood of continuation or recurrence of subsidization.  Furthermore, as the
Appellate Body recognized in UK Lead Bar , benefits from a non-recurring subsidy continue to flow.
As a result, Commerce’s “continuation of subsidization” finding with respect to the CIG programme
is correct.
5.141  With respect to Commerce’s procedural actions in the sunset review, the EC argues that
Commerce did not provide an “ample opportunity” to present in writing all evidence which the parties
considered relevant to the proceeding.  As a factual matter, this assertion is simply incorrect.
5.142  Commerce’s published Sunset Regulations  contain the standard sunset questionnaire and
provide an opportunity for parties to submit any argument and information they consider relevant to
Commerce’s sunset determination.  Commerce’s regulations also set a 30-day deadline for the
submission of such information and provide for ex tensions of that 30-day deadline.  The German
Producers and the EC were on notice of these inform ation requirements and options, as well as the
applicable deadlines, at least 15 months  prior to the initiation date for the sunset review.
5.143  The EC has not demonstrated how Commerce’s actions in this regard violate any of the
evidentiary and procedural requirements of Article 12.  Fifteen months certainly seems to provide
“ample opportunity” to gather and present any evidence the German Producers and the EC consideredpertinent to Commerce’s sunset determination.  I w ould also note that 15 months is longer than the
normal deadline in Article 21.4 for the conduct and completion of sunset reviews.  That the German
Producers and the EC failed to avail themselves of th e ample opportunity to present evidence is not a
dereliction that can be ascribed to Commerce’s procedural actions in this case.
2. It is impossible to act inconsistently with an obligation that does not exist
5.144  I will turn now to the two purely legal claims raised by the EC.  The first claim is that an
authority must satisfy the evidentiary requirements of Article 11.6 before self-initiating a sunset
review under Article 21.3.  The second claim is that application of the Article 11.9 de minimis
standard in a sunset review is required under the SCM Agreement.  As set out more fully in our First
Written Submission, there is no support in the SCM Agreement for these claims.
5.145  Article 31 of the Vienna Convention  contain some very basic principles of treaty
interpretation.  As articulated by the Appellate Body, these principles “neither require nor condone the
imputation into a treaty of words that are not there. ...”  The EC’s arguments in this case run afoul of
this fundamental proposition.
5.146  With respect to the self-initiation issue, th e EC argues that the Panel should read into
Article 21.3, the requirements of Article 11.6 – the provision of the SCM Agreement that deals with
evidentiary requirements for self-initiation of an investigation .  With respect to the de minimis  issue,
the EC argues that the Panel should read into Article 21.3, the requirements of Article 11.9 – the
provision of the SCM Agreement that deals with the de minimis  standard for an investigation .  There
is no support in the Agreement for the EC’s theories.
5.147  With no textual foundation, the EC simply asserts that, under the SCM Agreement, sunset
reviews are essentially nothing more than new investigations.  It then takes that unsupported assertionand makes a further leap of logic to the conclusion that various provisions of Article 11 (addressing
“Initiation and Subsequent Investigation”) must  therefore apply in sunset reviews carried out under
Article 21 (addressing “Duration and Review of Countervailing Duties”).
5.148  Japan, in its third party submission, makes an even more impressive leap of logic, arguing
that Article 11 requirements are made applicable to Article 21.3 sunset reviews by virtue of the factWT/DS213/R
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that Article 22 – which addresses “Public Notice and Explanation of Determinations” – applies to
reviews under Article 21 (pursuant to paragraph 7 of Article 22).  Apparently, according to Japan, the
mere mention  of Article 11 in Article 22.1 creates an obligation to apply  Article 11 in Article 21.3
sunset reviews.  I would also note that the provisions of Article 22 apply “ mutatis mutandis ” to
reviews.  This means that the public notice and explanation provisions are applicable to reviews, butwith “necessary changes” or “changes as appropriate.”
5.149  Mr. Chairman, it goes without saying that treaty interpretation does not work that way.  One
cannot create a new set of international obligations through unsupported theories and unfounded
suppositions that ignore the very words of the treaty being interpreted.  It is well-accepted that, under
the Vienna Convention , the ordinary meaning of a treaty is the basis for interpreting that treaty.  The
fact that the EC and Japan have to try so hard to find a connection between Article 11 and Article 21
is itself evidence of the lack of the very connection that they seek.  Put differently, the United Statesagrees with the EC and Japan that Article 11 provides context for purposes of interpreting Article
21.3; but it is context that disproves their assertions.
5.150  As discussed in our First Written Submission, the drafters clearly knew how to cross-
reference a particular provision to make it applicable in the context of Article 21 reviews.  For
example, Article 21.4 expressly makes the evidentiary requirements of Article 12 applicable inArticle 21 reviews.  Even Japan’s argument proves the point – Article 22.7 makes the public notice
and explanation requirements of Article 22 applicable in Article 21 reviews on a mutatis mutandis
basis.
5.151  The uncontested fact is that the drafters did not make the initiation and subsequent
investigation requirements of Article 11 applicable in Article 21 reviews.  And no amount oflawyering can override the plain text of the SCM Agreement or create an obligation that does not
exist.  The Article 11.6 evidentiary prerequisite simply does not apply to Article 21.3 sunset reviews;
and neither does the Article 11.9 de minimis  standard.
5.152  The EC makes claims based on its “reasonable and legitimate expectations” on these issues;
yet it is the legitimate expectations of the Members as a whole, as expressed in the agreed text of thetreaty, that are at risk of being infringed in this case.  As the Appellate Body has stated in India Patent
Protection at paragraph 45:
The legitimate expectations of the parties to a treaty are reflected in the language of
the treaty itself.  The duty of a treaty interpreter is to examine the words of the treaty
to determine the intentions of the parties.  This should be done in accordance with the
principles of treaty interpretation set out in Article 31 of the Vienna Convention.  But
these principles of interpretation neither require nor condone the imputation into a
treaty of words that are not there or the importation into a treaty of concepts that
were not intended .
(Emphasis added.)  If the Members had actually agreed that various provisions of Article 11 should
apply in sunset reviews carried out under Article 21, th e text would reflect that agreement, just as it
does with respect to the application of Article 12 to Article 21 reviews.  The EC is improperly tryingto have the Panel do what the negotiators did not.
5.153  The EC is asking the Panel to read into Article 21.3 words, and hence obligations, that are not
there.  For this reason, the EC’s claims concerning self-initiation and de minimis  must fail.WT/DS213/R
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E. RESPONSES OF THE EUROPEAN COMMUNITIES TO QUESTIONS FROM THE PANEL FOLLOWING
THE FIRST MEETING
Both parties
Q1. In your view:
(a) Is the de minimis  standard contained in Article 11.9 of the Agreement on
Subsidies and Countervailing Measures ("SCM Agreement" or "theAgreement") applicable to reviews under Article 21.2?
Reply
5.154  Article 21.2 deals with reviews during the lifetime of the measure with the aim of examining
whether the continued imposition of the measure remains necessary (based on the principle set out in
Article 21.1).  In the EC's view, with regard to the US system, we should distinguish between two
types of review under Article 21.2, i.e. duty a ssessment reviews (administrative reviews under US
law) and reviews where the effective need for continued imposition of the measure is examined
(changed circumstances review under US law).  As regards a changed circumstances review, the
de minimis  standard under 11.9 is applicable because Article 21.2 requires that if the authorities
determine that the countervailing duty is no longer  warranted, it shall be terminated immediately.
Changed circumstances reviews can thus affect the scope and, indeed, the continued imposition of the
measure.  Under Article 11.9 of the Agreement, the subsidy amount must be above 1 per cent to
permit the imposition of a countervailing duty in the first place.  It follows that if an interested party
can show, in a changed circumstances review, that the subsidy amount will not rise above 1 per cent
upon removal of the measure, the measure should be terminated immediately.  It should be noted thatvirtually the same terminology "immediate termina tion" and "immediately terminated" is used in
Articles 11.9 and 21.2 respectively.
5.155  On the other hand, a de minimis  amount of subsidy found during a simple administrative
review would not by itself oblige the authorities to terminate the proceeding, since the purpose of such
a review is only to determine what amount of duty has to be collected. (Footnote 52 of the
SCM Agreement ).  Thus, as the Korea – DRAMS  panel determined, simple administrative reviews
have no effect on the scope and continued imposition of a measure and cannot lead to its termination.
As the EC explained in  its first submission, administrative reviews in the SCM Agreement  appear to
fall under Article 21.2 by default, whereas in the Anti-Dumping Agreement (Footnote 21) they are not
considered to be reviews at all.
(b) Are the negligible import volume and in jury standards contained in Article 11.9
and the negligible injury standard cont ained in Article 15.3 applicable to reviews
under Article 21.2?
Reply
5.156  Negligible import volume and injury standards are provided for in the SCM Agreement
because WTO members consider that such a small volume of imports can not be the cause of any
injury sustained by the domestic industry.  The use of the term "shall" indicates that this is not a
refutable presumption.  Therefore, if a certain volume of imports cannot cause injury at the initiationof an investigation, this irrefutable presumption applies to reviews under Article 21.2. in cases where
it is demonstrated that the amount of the subsidy is less than 1 per cent ad valorem and is not going toincrease above this level or that imports would not rise above de minimis upon removal of the
measure.  The terms, object and purpose of Article 21.2  in context compel such a conclusion.WT/DS213/R
Page 35
(c) Are the negligible import volume and injury standards contained in Article 11.9
and the negligible injury standard cont ained in Article 15.3 applicable to reviews
under Article 21.3?
Reply
5.157  Article 21.3 lays down clearly a presumption of termination ("shall be terminated").  The
authorities are required, therefore, to show that the conditions for imposing the original measure
would, in its absence, continue to exist or recur and it is for the domestic industry and the
investigating authority to show that, if the measure were removed, imports would be likely to again
rise above de minimis .  For essentially the same reasons stated in the reply to the previous question
above and those explained more detail in the first wr itten submission of the EC, the EC considers that
the standards contained in Articles 11.9 and 15.3 of the SCM Agreement  are applicable to reviews
under Article 21.3 thereof.
(d) Are the negligible import volume standards for developing countries set out in
Article 27.10 applicable to reviews under Article 21 in general, and to reviews
under Article 21.3 in particular?  Is the 2 per cent de minimis standard fordeveloping countries set out in Article 27.10(b) applicable to reviews under
Article 21 in general, and to reviews under Article 21.3 in particular?  And is the
3 per cent de minimis level for certain developing countries set out in
Article 27.11 applicable to reviews under Article 21 in general, and to reviews
under Article 21.3 in particular?
Please explain in detail.
Reply
5.158  The higher de minimis  thresholds for developing countries are equally applicable to initial
investigations and reviews examining the need for continued imposition of the CVD (under
Article 21.2) and sunset reviews (under 21.3).  The purpose of special de minimis  thresholds for
developing countries lies in Article 27.1 of the SCM Agreement . WTO members recognize that
subsidies play an important role in the further economic development of developing countries and,
therefore, agreed in Articles 27.10 and 27.11 to increase the minimum import volumes and subsidy
amounts below which injury is presumed not to be caused.  Likewise, this is an irrefutablepresumption.
5.159  Article 27.10 states that "Any countervailing duty investigation of a product originating in a
developing country Member shall be terminated as soon as the authorities determine…".  It would be
contrary to the explicit provisions of the SCM Agreement  to grant certain exemptions because they are
considered essential for development needs and only apply them to original countervailinginvestigations.  It would also be contrary to the terms of Articles 27.10 and 27.11, read in conjunction
with Articles 21.1, 21.2 and 21.3, not to apply them in reviews.  Clearly the reference to
"subsidization" in these Articles must be taken to refer to a level of subsidization which has been
determined to be injurious with reference to the Member concerned.
5.160  An example may illustrate this point.  Article 27.11 provides for a developing country
Member, which eliminates export subsidies in less than eight years to benefit from an increased
de minimis subsidy threshold of 3 per cent instead of 2 per cent.  This provision aims to reward
developing countries which have accelerated compliance with their obligations.  Suppose a certain
Member were able to benefit from this provision and the following year was involved in a US CVD
sunset review involving one of its products.  If the rate of subsidy likely to prevail was found to be2.5 per cent, i.e. below the de minimis rate now applicable to the Member concerned, the US wouldWT/DS213/R
Page 36
continue to impose a CVD order and the Member involved would have obtained absolutely no benefit
from its efforts to remove early the export subsidies.
European Communities
Q2. The Panel notes the European Communities' argument regarding the presumption of
termination of all countervailing duties ("CVDs") contained in Article 21 of the SCM
Agreement and the claim that the US law and statement of policy practice in reviews under
Article 21.3 disregard this presumption through the automatic initiation of reviews under
Article 21.3, and thereby violate Article 21.3.  In what precise manner would the US law and
statement of policy practice have had to be different for them to be WTO-consistent?  Please
respond in light of the phrase "in a review initiated . . . on their own initiative" contained in
Article 21.3 of the SCM Agreement.
Reply
5.161  The current US law requires the automatic initiation of sunset reviews without any evidence.
This ignores the presumption of termination under Article 21.3 and reverses the burden of proof,
which should be on the petitioners or the investigating authority to justify the initiation of a review
and not on the exporters to justify the termination and the non-initiation of such a review.
5.162  The problem with US law is that it transforms the text and basic rationale of Article 21.3 and
provides for self-initiation without taking account of the standard of evidence required under
Articles 21.3 and 4 to meet the burden of proof of either the petitioner or the investigating authority in
conjunction with Articles 11.6, 22.1 and 22.7 of the SCM Agreement .  It follows that the investigating
authority must be in possession of the same or an equivalent amount of sufficient evidence as the
domestic industry at the time of initiating the review.  The basic US law and its implementing
regulations would have to provide for this in order to be WTO consistent.  In particular, the US law
will have to provide that:
• An applied CVD order shall terminate 5 years after its imposition and will not be reviewed unless
the authorities, at the time of initiating the revi ew, possess an amount of relevant evidence that is
the same or equivalent to that required in original investigations;
• The burden of providing such evidence is placed on domestic industry or the authorities
themselves;
• No reverse or negative inference is drawn from the fact that foreign exporters or producers or third
countries do not participate at the initial call for the sunset review, except where Article 12.7 isapplicable.
Q3. How, if at all, do the European Communities' own statutory and regulatory provisions
in respect of the initiation of reviews under Article 21.3 give meaning to the presumption of
termination of all CVDs that the European Communities considers is contained in Article 21 of
the SCM Agreement?
Reply
5.163  Article 18 of Council Regulation (EC) No 2026/97 of 6 October 1997, the Community’s basic
CVD regulation, contains the relevant provisions on sunset reviews (known as "expiry reviews").  Inaccordance with Article 18.4, the Commission publishes a notice of impending expiry of a
countervailing measure during the last year of it s duration; our practice is to do this nine months
before the date of expiry (the five-year anniversary date).WT/DS213/R
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5.164  The notice of impending expiry states that unless a review is initiated, the measures will
expire.  In order for a review to be initiated, Community producers must, no later than three months
before the expiry date, lodge a request containing sufficient evidence that the removal of the measures
would be likely to result in continuation or recurr ence of subsidy and injury.  If the EU Commission
considers that the request contains sufficient evidence, it initiates an expiry review.  If there is norequest, or if the request contains insufficient evidence, the Commission publishes a notice of expiry
and the measures lapse on the five-year anniversary date.  This notice of expiry is of purelydeclaratory nature.
5.165  There is consequently a presumption of termination, since in the absence of the provision of
sufficient positive evidence by the Community producers justifying a review, the measures lapse
automatically.
Q4. Does the European Communities consider self-initiation of reviews under Article 21.3 by
investigating authorities to be in and of itself WTO-inconsistent?
Reply
5.166  No.  Article 21.3 explicitly provides for the possibility of self-initiation, as does Article 18.1
of Regulation 2026/97.  In fact, Article 21.3 provides for either self-initiation or initiation on the basis
of a "duly motivated request" from the domestic industry.  The Community’s claim is that the
investigating authority must be in possession of sufficient evidence, that is the same level or an
equivalent amount of relevant evidence that woul d be required from the domestic industry if it
initiates on its own initiative, as in the case in the initiation of new investigations (Articles 11.1 and11.6).  Otherwise, self-initiation would become the ea sy option and would lead to inconsistent results.
Q5. The Panel notes the European Communities' arguments contained in paragraph 15 of
its oral statement at the first meeting of the Panel.
(a) Does the European Communities consid er that there is a presumption in the
SCM Agreement that all provisions of the Agreement are applicable to reviews
under Article 21.3?
Reply
5.167  The EC believes that no provision of the SCM Agreement  can be read in isolation, and that all
provisions are potentially applicable mutatis mutandis  to Article 21.3, to the extent that they are
relevant to the issues covered by Article 21.3 and that their application to Article 21.3 does not create
a situation of conflict or is not specifically excluded.
(b) In what circumstances might some provisions of the Agreement not apply to
reviews under Article 21.3?
Reply
5.168  Subject to the above, there are provisions which clearly have no relevance to Article 21.3.  As
explained below, the provisions concerning multilateral subsidy disciplines, to the extent that they do
not apply to countervailing duties at all, are not applicable to sunsets.  Furthermore, a small number ofprovisions which concern countervailing duties cannot, for practical reasons, apply to sunsets.
However, one has to be very careful before determining that a certain provision has no such
relevance, since certain WTO Members may choose to take account of them in their own practice.
For instance, the US, in its sunset practice, takes account of whether the subsidies fall under Articles 3WT/DS213/R
Page 38
or 6.1 of the SCM Agreement , although neither of these provisions has any obvious relationship to
countervailing duties.
(c) If there are particular provisions that, in the view of the European
Communities, do not apply to reviews under Article 21.3, what are they, and
why do they not apply?
Reply
5.169  The SCM Agreement  contains two major divisions: multilateral obligations for WTO
members and provisions regarding the conduct of countervailing investigations.  It is obvious that
certain provisions imposing multilateral obligations on WTO members by nature do not apply to
countervailing investigations.
5.170  The EC will provide an overview of the different parts of the SCM Agreement  and explain
whether provisions apply to countervailing procee dings and reviews under Article 21.3 in particular.
Part I:
5.171  Article 1 applies to sunset reviews since only subsidies as defined in Article 1 could fall
within the concept of "subsidization".
5.172  Article 2 regarding specificity applies equally to sunset reviews.
Part II:
5.173  Article 3: the prohibition of certain subsidies as  such does not apply to CVD.  However, read
in conjunction with Article 2.3 SCM Agreement , the definition of prohibited subsidies plays a role for
CVD and reviews under Article 21.3 because these subsidies are deemed to be specific.
5.174  Article 4: is not applicable for CVD and sunsets since it covers specific dispute settlement
rules regarding those prohibited subsidies.
Part III:
5.175  This part deals with actionable subsidies and possible multilateral remedies against those
subsidies.  It does not apply to CVD and sunsets.  In addition, Article 6.1 has now expired.
Part IV:
5.176  Expired pursuant to Article 31 SCM Agreement  on 31.12.99.  When applicable, it created a
category of non-actionable subsidies which made them non-countervailable in all CVD actions,including sunsets.  For example, a regional aid countervailed pre-1995 could have been green-lighted
and found non-countervailable in a post-1995 sunset review.
Part V:
5.177  All provisions of Part V regarding countervail ing investigations is in principle applicable
mutatis mutandis to sunset reviews under 21.3.  For Article 12, there is an explicit reference.  For
other provisions, e.g. Article 15 on injury, it is clear that the word "injury" in Article 21.3 can only be
interpreted with reference to Article 15.  The same is true for "domestic industry" with relation to
Article 16.WT/DS213/R
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5.178  In those cases where there is no explicit reference to a specific article or term in Article 21.3,
the EC submits that all provisions are in principle applicable to Article 21.3.  The only exceptions are
provisions which cannot, for practical reasons, serve any purpose in a sunset review. For instance:
– Article17 regarding provisional measures can only apply to new investigation, where no measure
is yet in force.  Provisional measures can be imposed when a preliminary determination is made
that a subsidy exists and there is injury.  It is mainly intended to prevent injury during the
remainder of the investigation and also serves to  provide interested parties with an opportunity to
comment on the preliminary finding regarding subs idies and injury.  It is obvious that this
provision is not relevant to a sunset review, where a duty is already in force and can remain
effective pending the outcome of the review.
– Article 20 covers issues of retroactive collection of duties.  This provides for the retroactive
collection of provisional duties, and in critical circumstances, retroactive assessment for up to
90 days prior to the provisional stage.  Since in a sunset review the duty is already in force this
provision does not apply.
5.179  Part VI regards the establishment and the operation of the Committee on Subsidies and
Countervailing Measures.  As such, it does not have an impact on the conduct of countervailing
proceedings including sunsets.  However, the Committee may deal with issues regarding sunset
investigations if a WTO Member puts a particular investigation on the agenda for discussion in the
Committee.
5.180  Part VII deals with notifications and does not impact on the conduct of sunset reviews.
5.181  Part VIII deals with special and differential treatment for developing country members.
Articles 27.10 to 27.12 refer to special CVD de minimis  thresholds for developing countries, which
are equally applicable to new investigations and sunset reviews (Question 1(d)).  Article 27.15 deals
with Committee review of any CVD measure, including the result of a sunset review.  Article 27.1 is a
declaratory provision which contributes to justifying the S&D provisions, including those relating toCVD.
5.182  Part IX does not apply to CVD since it covers some transitional multilateral obligations.
5.183  Part X concerning dispute settlement covers all aspects of the SCM Agreement . It also covers
sunset reviews.
5.184  Part XI.  Its provisions on "other final provisions" apply to sunsets.
5.185  Article 31. - The expiry of Article 8 removed the non-countervailable category of specific
subsidies ; these are now countervailable in sunsets, even if, to reverse the example given underPart IV, the original subsidy had been green lighted in the first investigation.
5.186  Article 32 applies to sunsets (Article 32.4 explicitly).
Q6. With respect to reviews under Article 21.3, does the European Communities consider
that:
(a) All the requirements of Articles 11.4, 11.5, and 11.11 apply to the initiation or
self-initiation of reviews under Article 21.3?  Why or why not?WT/DS213/R
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Reply
5.187  The standing requirements in Article 11.4 apply to reviews initiated under Article 21.3.
These two articles require that applications or requests must be made "by or on behalf of the domestic
industry", which is defined in Article 11.4.
5.188  Article 11.5 also applies to both.  There is no reason why Members should be required to
avoid publicising applications under Article 11, but should be allowed to publicise review requests
under Article 21.3.  Applications under 11.5 and requests under 21.3 are aimed at securing the sameobjective, that is to avoid unjustified disruptions in international trade on the basis of allegations and
claims that are manifestly incorrect.  Article 11.11 does not apply to Article 21.3 reviews.
Article 21.4 explicitly governs the timing and duration of all reviews under Article 21, and its
provisions differ from those of Article 11.11.
(b) Article 13.1 applies to reviews under Article 21 in general, and to reviews under
Article 21.3 in particular?  Why or why not?
Reply
5.189  Article 13.1 refers explicitly to applications under Article 11 and "in any event before the
initiation of any investigation". Footnote 44 refers to the fact that "no affirmative determination" shall
be made without reasonable opportunity for consulta tions having been given.  Such a determination
may be made in either a new investigation or review, which implies that consultations should have
been offered in the framework of a sunset.  T hus, it would seem that Articles 13.1 and 13.2 would
apply mutatis mutandis  to Article 21.3 reviews.
(c) Article 19.4 applies to reviews under Article 21 in general, and to reviews under
Article 21.3 in particular?  Why or why not?
Reply
5.190  Yes, it applies to both types of reviews ("no countervailing duty…").  Moreover, this
interpretation is in conformity with the overriding principles laid down in Articles 10 and 21.1 of the
SCM Agreement .
Q7. The Panel notes the European Communities' arguments contained in paragraph 37 of
its oral statement at the first meeting of the Panel.
(a) Could the European Communities explain its view that the object and purpose
of reviews under Article 21.3 and original in vestigations is the same, in light of
the fact that an original investigation determines the existence of subsidization
and injury ab initio , while a review under Article 21.3 occurs in the context of
the existence of a prior finding of subsidization and injury?
Reply
5.191  New investigations and Article 21.3 reviews with a positive outcome both have the same
result – the application of a countervailing duty for a period of up to 5 years.  In order for such dutiesto be imposed or maintained, the investigating authority must in both cases determine that the
conditions for the imposition of a countervailing duty, as laid down in Article 19.1, are fulfilled.  The
only difference is that Article 21.3 reviews take place with a measure already in force, so that the
investigating authority must determine whether, in the absence of that measure, the Article 19.1
conditions would be met.  The difference in the wording of the provisions on new investigations andWT/DS213/R
Page 41
sunset reviews merely reflects the fact that, in the latter case, there is a need to take account of an
existing measure in establishing whether the conditions still exist for applying countervailing
measures; the object and purpose of both provisions, however, remains the same.
(b) Could the European Communities addre ss specifically the difference, if any,
between a finding of "the existence of and amount of the subsidy and that,through the effects of the subsidy, the su bsidized imports are causing injury", so
as to justify imposition of a CVD under Article 19.1, and a finding that "expiry
of the duty would be likely to lead to continuation or recurrence of subsidization
and injury" sufficient to justify continuation of the CVD under Article 21.3?
Reply
5.192  There are not differences except that in the case of Article 21.3 there are CVD measures
already in force.  The purpose of an Article 21.3 re view is to determine whether, absent the measures
in force, all the conditions for the imposition of a duty under Article 19.1 would still be present.
Since an Article 21.3 review always takes place with a measure in force, this inevitably involves a
certain element of prediction based on the facts presented of what would happen if the measures wereleft to expire.  The investigating authorities are required to meet the "likely" standard, while applying
the provisions of Article 21.1.  However, the concepts of subsidization, causality and injury have to be
interpreted in the same way in the context of both provisions.  Moreover, it has to be based on
“evidence”, not on pure conjecture and speculation.  This follows from Article 21.4, which makes
Article 12 relating to evidence applicable to reviews.  Moreover, the requirement to re-establish the
existence of the Article 19.1 conditions in a sunset review flows from the general presumption of
termination in Article 21.3, in conjunction with the basic requirements of Article 21.1.
5.193  In this regard, it should be noted that, regardless of  the presence or absence of measures,
some factual situations are inherently more predictable than others.  For example, while it may be
relatively difficult to determine to what extent a company will resume dumping practices if a measureis dropped, sovereign States normally behave differently and in a more predictable way as regards the
granting of subsidies.  Moreover, a non-recurring subsidy in a CVD case (as is the case here) will
always be predictable, since the benefit stream calculated is known for the whole allocation period of
the subsidy.  In such a case, it would be for th e investigating authority to justify, on the basis of
positive evidence, a finding that any other related factors, e.g. the denominator, would change.
Q8. The European Communities refers, in paragraph 3 of its oral statement at the first
meeting of the Panel, to the fact that CVD measures are exceptional, non-MFN measures.  TheEuropean Communities further relies on a characte rization of continuation of a measure after a
review as an "exception" in arguing that the provisions of Article 21.3 must be strictly
interpreted.
(a) First, does the European Communities consider that this requirement of strict
interpretation applies to the entire ty of Part V of the SCM Agreement?
Reply
5.194  The EC considers that the provisions of Article 21.3 SCM Agreement  relating to continuation
of a CVD measure constitute an exception to the general rule which provides that CVD orders should
in principle expire after 5 years.  The exceptional character of continuation of the duty beyond the
five-year period is reflected in the use of "unless" which introduces the exception.  The EC considers
that a number of provisions of the SCM Agreement  (e.g. Articles 10, 11.3, 11.5, 11.9, 19.4, 21.1, etc.)
provide implicit support for the proposition that CVD orders should be imposed after careful and strictinterpretation of all the provisions of the SCM Agreement .WT/DS213/R
Page 42
(b) Second, could the European Communities explain how, in its view, reading the
text of Article 21.3 to include obligations not explicitly set out therein, but set out
in Article 11.6 (or 11.9), is a "strict interpretation" of Article 21.3?
Reply
5.195  The phrase "strict interpretation" in this context simply stands for the proposition that the
terms of Article 21.3 have to be interpreted also in light of their object and purpose and in context,
which is the entire SCM Agreement  and, in particular, Articles 11.6, 11.9 and 15.3 thereof.  It is
further meant to clarify the proposition that a subsidy which is found to be less than 1 per cent in the
original investigation - before the entry into force of the SCM Agreement  - would not benefit from a
lenient or relaxed interpretation of Article 21.3 so as to permit its unjustified continuation even if it islikely to be below the 1 per cent de minimis  rule in the sunset review.  This relaxed interpretation is
the basic US argument which proposes to read the terms of Article 21.3 in complete isolation of the
rest of the Agreement.
Q9. What precise  evidentiary standards does the Euro pean Communities consider as being
required for the initiation of reviews under Article 21.3, particularly in light of the linkages theEuropean Communities sees between Articles 21.3 and 11.6?  In the view of the European
Communities, is there any difference betwee n the evidentiary standards required for the
initiation of original investigations and those required for the initiation of reviews under
Article 21.3?
Reply
5.196  When an investigating authority decides to initiate a review under Article 21.3, it should have
sufficient evidence of subsidization, injury and a causal link between those requirements.  The level of
evidence required in a sunset review is the same or equivalent  to the evidence required in an originalinvestigation.  Article 21.3 requires the investigating authority to make a determination of likelihood
of continuation or recurrence of subsidization and injury.  Therefore, before opening the sunset review
there should be sufficient evidence of the two aspects which are likely to continue or recur.  The finalreview determination should positively demonstrate both likelihood of subsidization causality and
injury.
5.197  Article 11.6 requires that when an investigating authority self-initiates an original
investigation, the standard of evidence is sufficient evidence.  Since an original investigation and asunset review have the same object and purpose, this standard should apply to self-initiated sunset
reviews, as it is the practice under US law.  Articles 22.1 and 22.7 confirm this proposition.
Q10. Please comment on the relevance, if any, of the retrospective and prospective nature of
the assessment to be made, respectively, in original investigations and in reviews under
Article 21.3.  In particular, how is an assessment of the existence of injurious subsidizationsimilar to and/or different from an assessment of the effects of the revocation of a duty in terms
of injurious subsidization?  How precisely wo uld the European Communities suggest that the
relevant subsidization rate for a review under Article 21.3 should be calculated?
Reply
5.198  Both types of investigation involve some retr ospective and prospective assessment.  This is
because original investigations and sunset reviews are quite similar by nature and operation.  The
original investigation must necessarily involve retrospective calculations of the amount of subsidy for
a particular period (an investigation period prior to the initiation of the case or the review).  The
purpose is to determine the amount of benefit granted to a particular company during a specific periodWT/DS213/R
Page 43
of time.  Likewise, sunset reviews also involve a re trospective analysis since the subsidization of the
past years is often the basis for the sunset finding, especially when the subsidy is non-recurring.  The
retrospective analysis is consequently extrapolated for the five coming years (prospective nature).
5.199  In view of the prospective character of the measure which is the outcome of the original
investigation and the sunset review, it is essential that a determination is made of the amount ofsubsidy.  According to Article 19.1, an original inve stigation aims to measure the need for offsetting
injury while in a sunset review the purpose is to examine in addition at what level subsidization will
recur or continue if the measure were to be removed.
5.200  However, in a sunset review, as in an original investigation, the subsidy rate should be
calculated exactly during the period of review sinc e the investigating authority (particularly for non-
recurring subsidies for which the benefit is known) should use this as the basis for establishing the
level at which subsidization will continue or recur if the measure were to be  removed.  The"likelihood" element of the determination relates to  the continuation or recurrence of the subsidy and
injury, but if the amount found likely to continue or recur, on the basis of the amount found in the
review period, is de minimis , the case should be terminated immediately.
Q11. Article 11.6 allows investigating authoritie s to proceed to initiation without having
received a written application by or on behalf of a domestic industry "only if they havesufficient evidence of the existence of a subs idy, injury and causal link, as described in
paragraph 2".  Article 11.2 of the SCM Agreement sets out, in subparagraph (iii), that this
evidence should include "evidence with regard to the existence, amount and nature of the
subsidy in question".  Could the European Communities comment on the proposition that the
CVD order itself, or the results of the most recent review under Article 21.2, is evidence of theexistence, amount, and nature of the subsidy in question, consistent with the requirements of
Article 11.2(iii)?
Reply
5.201  The EC would agree that a sufficient amount of evidence on the existence, nature and amount
of the subsidy is necessary for initiating a sunset review.  However, the initial CVD order, dating from
five or more years ago, is not by itself sufficient to meet the burden of proof for initiating a sunset
review.  There must be the same or equivalent evidence that the original subsidy is likely to continue
to exist and to confer a benefit to the current exporters of the product, or there must be evidence of
new subsidies.
5.202  The evidence of a more recent Article 21.2 review may in principle be more relevant, but it
will not by itself be sufficient either.  Furthermore, such evidence, as applied in the US system, must
work both ways.  For instance, if a recent admini strative review shows that a subsidy amount is
de minimis and the subsidy is non-recurring, this should confirm the presumption against initiating,
unless compelling evidence of new subsidies is broug ht forward.  Under the present US rules, the US
takes no account of such factors when initiating reviews or when continuing CVD measures.
Q12. Please respond to the following:
In the view of the European Communities, is there any similarity between the
evidentiary standards required for the self-initiation of reviews under Article 21.2 ("where
warranted") and those required for the self-initiation of reviews under Article 21.3?WT/DS213/R
Page 44
Reply
5.203  Subject to the kind of review that is to be carried out under Article 21.2, there is similarity to
the extent that, in both cases, the investigating auth ority would need to be in possession of the same or
equivalent amount of sufficient information required from an interested party ("positive information"in the case of a 21.2 review) or the domestic industry ("a duly motivated request" in the case of a 21.3
review).  This similarity stems from the fact that in both cases the authorities are required to possess a
sufficient amount of evidence in order to initiate re view.  This is because both types of review are not
neutral, in the sense that both may impose costs on the parties involved and disrupt international trade.
(b) Could the European Communities explain its view – expressed in response to an
oral question from the Panel at its first meeting – that the requirements for
evidence necessary to justify self-initiation under Article 21.2 are lower than therequirements necessary to justify self-initiation under Article 21.3?
Reply
5.204  This will essentially depend on the type of review carried out under Article 21.2.  In 21.2
reviews, the investigating authority, reflecting th e burden of proof imposed on interested parties,
would need to be convinced that the continued imposition of the duty was no longer necessary
("where warranted" in Article 21.2).  Such a conviction may sometimes require a high standard of
evidence but may sometimes be based on very simple evidence, for instance, the allocation period for
a subsidy may have expired or domestic production in the country imposing the measure may haveceased.  In addition, a 21.2 review may be limited to an examination of either subsidy or injury.
Therefore, a 21.2 review may, in some circumstances, require a smaller amount of evidence.
5.205  In contrast, the purpose of sunset reviews under 21.3 is to rebut the presumption of
termination of the measure.  Such reviews always require a minimum (and rather high) standard of
evidence to demonstrate that both subsidy and injury is likely to continue or recur if the measure were
to be removed.
(c) Where in the SCM Agreement does the European Communities find the support
for lower evidentiary standards applicable to self-initiation under Article 21.2?
Reply
5.206  See answer above.  It will essentially depend on the kind of Article 21.2. reviews under
consideration (i.e. administrative review, charge of circumstances reviews, etc.).  The term "were
warranted" can provide the basis for such a proposition.
(d) How is an assessment of the need for the continued imposition of the duty
similar to and/or different from an assessment of the effects of the revocation of
a duty in terms of injurious subsidization?
Reply
5.207  Leaving aside the situations where the authorities initiate the review, the assessment
concerning the need for continued imposition (Article 21.2) and the effects of revocation of a duty(Article 21.3) are quite similar.  Both examinations focus on the prospective nature of the exercise, i.e.
would the removal of the duty lead to continued subs idization and injury.  The main difference is the
burden of proof.  For example, in an Article 21.2 review, the burden of proof is essentially on the
interested party (usually a foreign exporter) to ju stify that there is no need for continued imposition.
In an Article 21.3 review, in contrast, the domestic industry must meet the burden of proof to rebut theWT/DS213/R
Page 45
presumption of expiry of a duty.  In both cases, however, the authorities are required to make a
positive determination about subsidization, causality and injury.
Q13. The European Communities argu es that, "in order to initiate a sunset review on its own
initiative, the domestic authorities should be in  possession of the same level of evidence that
would be required in a 'duly substantiated request' from the domestic industry".67
(a) What does the European Communities understand by the term "duly
substantiated request"?
Reply
5.208  In the EC's view, therefore, a "duly substantiated request" is a request by or on behalf of the
domestic industry that contains sufficient evidence that the expiry of the measures would be likely to
result in a continuation or recurrence of subsidization and injury, in order to justify a review under
Article 21.3.  Such a likelihood may, for example, be indicated by evidence of continued subsidization
and injury, or evidence that the removal of existing injury is due to the existence of measures.  A
"duly substantiated" request should normally, inter alia, contain information on:
- the volume and value of domestic production
- the volume and value of the production of petitioners
- volume and value of total imports
- volume and value of subsidized imports
- evidence with regard to the existence, amount and the nature of the subsidy, plus -
evidence relating to its continuation or recurrence
- information regarding the effect of imports on prices, production, lost sales
- causality between subsidized imports and injury, and evidence of why such injury
will continue or recur.
Although the exact content of a duly substantiated request under Article 21.3 will differ in some ways
from the content of an application under Article 11.2, since an Article 21.3 request will relate to a
situation where measures are in force and injurious subsidization has already been established, the
elements contained in an Article 11.2 should normally be present.
(b) In the view of the European Communities, is there any difference between the
evidentiary standards required for the initiation of reviews under Article 21.3upon request from the domestic industry and those required for the self-
initiation of reviews under Article 21.3 by investigating authorities?
Reply
5.209  The evidence required in a request from the industry and self-initiation should for all practical
purposes be the same.  The purpose of the evidentiary standard is to guarantee that genuine cases are
brought which are backed-up by concrete evidence.  If a different standard would apply to self-
initiation, this would seriously alter the rights of affected parties and would allow circumvention of
these mandatory provisions.  This would open the door for situations where the domestic industrydoes not succeed in creating a prima facie case, but the investigating authority could circumvent it by
self-initiating since the evidentiary standard would be different (i.e. lower).
5.210  The EC’s point is that a correct interpretation of the purpose of Article 21.3 requires
investigating authorities to self-initiate reviews only on the basis of sufficient evidentiary support.
                                                     
67 First Written Submission of the European Communities, para. 65.WT/DS213/R
Page 46
Where investigating authorities are free to initiate, as it is the case in the US, without any evidentiary
support at all, a major distortion of the system as established by the SCM agreement  was a parallel
between the EC "automatic" notice of impending expiry and the US "automatic" notice of initiation of
a CVD measure.  The EC duly emphasized the fundamental difference between the "legal effect"
attached to these notices: one (the EC) notifies that an expiry is impending, and placing the onus onthe domestic industry to produce evidence, without putting any burden on the exporters; the other (the
US) actually initiates an investigation without evidence and requires an important and burdensome
action from exporters to produce evidence that the measure should not expire.  This is a clear reversal
of the burden of proof.
5.211  However, it should be noted that de facto  the actual function and scope of the EC notice of
impending expiry and the US notice of initiation is the same: to notify the domestic industry the
imminent deadline.  Actually, the two documents look quite alike and contain the same type ofinformation.  The substantial difference is that, u nder EC law, following a notice of impending expiry
the domestic industry must produce a "duly substantiated request" in order to have the sunset review
initiated, whereas under US law it is enough for one company to simply manifest its interest.  Without
such so-called "adequate response" from a domestic producer (which can be a two-line letter), DOC
must terminate the sunset review by law.
68  This clearly shows that the automatic self-initiation by
DOC is simply a device for lowering the level of evidence required from the domestic industry in
order to initiate a sunset review.  Such is possible only if one admits that an investigating authority
can initiate a sunset review automatically, i.e. by definition without any shred of evidence.
Q14. In paragraph 52 of its oral statement at the first meeting of the Panel, the European
Communities comments that "a panel must not on ly revise the evidence submitted to it by the
parties, but also all other evidence, including evid ence it might consider necessary to get it [sic]
itself under Article 13 DSU".  Could the European Communities explain this view in light of the
recent decision of the Appellate Body in United States – Cotton Yarn69 concerning the evidence a
panel may consider in reviewing a determination by a Member?
Reply
5.212  The EC agrees with the Appellate Body’s findings in paragraphs 62-81 of the report in
United States – Cotton Yarn .  The Appellate Body has taken particular care to clarify that its findings
in that case were limited only "to facts which predate the determination, but which was not in
existence at the time the determination was made" by the competent authorities of a Member (at
paragraphs 67 and 78).  It also clarified that the evidence it was dealing with in that case was"evidence in the form of data that had not been compiled at the time of the determination and, hence,
could not have been known." (at footnotes 39 and 51).   It follows from the above description that the
factual basis of the EC’s claim in the present case is very different from the one examined by the
Appellate Body in the Cotton Yarn  case.  The evidence the EC claims the US authorities should have
taken into account is evidence that definitively existed at the time the determination made by the DOCand, moreover, it was well known to the US authorities since they were the actual authors of that
evidence (which is also in the form of data on the declining balance methodology and the level of
subsidization of the German exporters under the CIG programme).  The accuracy of the above is not
                                                     
68 Section 751(c)3(A) of the Tariff Act 1930 states under the heading "No response": " If no interested
party responds to the notice of initiation under this subsection, the administering authority shall issue a final
determination , within 90 days after the initiation of a review, revoking the order  or terminating  the suspended
investigation to which such notice relates ".
69 United States – Transitional Safeguard Measure on Combed Cotton Yarn from Pakistan
("United States – Cotton Yarn "), Report of the Appellate Body, WT/DS192/AB/R, adopted 5 November 2001,
paras. 67-81.WT/DS213/R
Page 47
denied even by the DOC in its final determination in this case nor by the US’s submissions to the
Panel so far.
5.213  The EC also agrees with the summary of the "key elements" the Appellate Body laid down on
the standard of review that panels should follow under Article 11 of the DSU (at para. 74).  The EC
notes that the Appellate Body cited with approval its previous finding that the national authorities"must undertake additional investigative steps, when the circumstances so require, in order to fulfil
their obligation to evaluate all relevant factors" (at para. 73).  That is why the EC considers that for
the purpose of determining whether the US authorities have evaluated all relevant factors and
examined all pertinent facts, the Panel can take advantage of the provision of Article 13 of the DSU.
It is also noteworthy that in the view of the Appellate Body "in describing the duties of competent
authorities, we simultaneously define the duties of panels in reviewing the investigations and
determinations carried out by competent authorities" (at para. 73).  Furthermore, the EC agrees thatthe standard of review laid down by the Appellate Body with respect to the Safeguards Agreement are
equally applicable to the standard of review to be applied under the SCM Agreement  (at para. 76).
5.214  What is particularly important is the finding by the Appellate Body that "a panel reviewing
the due diligence exercised by a Member in making its determination … has to put itself in the place
of that Member at the time it makes its determination" (at para. 78).  Application of this principle tothe facts of the present case would clearly require the present Panel to consider the evidence that
existed and was made available to the US DOC but which it refused to take into account on the
erroneous allegation that it was submitted outside th e time limit.  This was not only relevant evidence
but evidence indispensable for the proper conduct of the sunset review.  The legal consequence of the
US DOC’s refusal to consider it should lead to the reversal of the DOC’s findings.  The EC does notrequest the Panel to carry out a de novo  review in this case but simply to find that the DOC’s
determination is inconsistent with the US obligations under Article 21.3 of the SCM Agreement  to
determine subsidization, causality and injury, and because it refused to consider highly relevant
evidence that existed at the time of the determination and of the existence of which they were fully
aware at that time.
Q15. The Panel notes the following US statement: "As a starting point for making its
likelihood determination in the sunset re view, Commerce considered the countervailable
subsidies and programmes used, and the amount of the subsidy determined, in the original
investigation.  As explained in Commerce's prel iminary sunset determination, the rationale for
this approach is that the findings in the original investigation provide the only evidence
reflecting the behaviour of the respondents with out the discipline of countervailing measures in
place".
70  The Panel further notes the European Communities' arguments contained in
paragraph 23 of its oral statement at the first meet ing of the Panel.  On what legal basis does the
European Communities challenge the US Department of Commerce's ("DOC") use of the CVD
rate from the original investigation (or a review under Article 21.2), and the rationale for the
use of this rate?
Reply
5.215  The legal basis is Article 21.3, which  imposes a clear obligation on the US authorities to
make a fresh determination of likelihood of subsidization, causality and injury.  The CVD rate from
the original investigation may in some cases be  an element to take into account in the fresh
determination in a sunset review.  However, the US law and practice is to use invariably this rate from
the original investigation in sunset reviews, even in cases, such as the present one, where exporters
and foreign governments have presented concrete and verifiable evidence to show that the subsidy has
changed or ceased to exist.
                                                     
70 First Written Submission of the United States, para. 92 (footnote deleted).WT/DS213/R
Page 48
5.216  The US argument that "…the findings in the or iginal investigation provide the only evidence
reflecting the behaviour of the respondents without the discipline of countervailing measures in place"
is without merit, particularly in the case of a subsidy recognized by the US DOC to be a non-recurring
one.  In such a case, in the absence of new subsidies, it is definitively known that the amount of the
subsidy will fall and is bound to disappear within the determined period of time in the originalinvestigation.
5.217  The US DOC systematically refuses to change the original duty rate likely to prevail, even
where administrative reviews have shown massive fall in non-recurring subsidies.  In such cases, it
always recommends the original rate, even if, as in some cases, this rate dates back to 15 years.  For
example, in the case of Certain carbon steel products from Sweden, for which the expedited review
was concluded on 29 March 2000, the US DOC alleged that the Swedish exporters will continue to
benefit from two subsidy programmes beyond the end of the review.  In light of this position, DOChas decided to confirm the original subsidy rate of 8.77 per cent, which dates from October 1985,
even though in the most recent administrative revi ew (covering the year 1997) the subsidy rate was
determined to be only 0.72 per cent.  Since the subsidies in question are long-term loans allocated
over time, the future amounts of benefit are clearly predictable and are not going to increase.  It is,
therefore, hard to see how the subsidy amount will ever go beyond 0.72 per cent.
5.218  Similarly, in the case of Corrosion-resistant carbon flat steel products from France , also
concluded on 29 March 2000, the DOC has opted for the rate from the original investigation of
15.13 per cent, first imposed in 1993.  Although no administrative reviews have been carried out in
this case, a recent new countervailing duty investigation71,  presumably reflecting the level of subsidy
without the discipline of an order in place, found a subsidy rate of 5.38 per cent for the company
Usinor, the same exporter as in the above case.  Given that the subsidies appear to be untied in both
cases, there is no reason for the US DOC not to refer to  sheet and strip rate in the context of the sunset
review and to report a lower rate to the ITC.  Furthermore, the US DOC appears to have much more
flexibility when it comes to i ncreasing  the rate of a countervailing duty likely to prevail.  In the Cut-
To-Length Carbon Steel Plate from Belgium case (C-423-806),  DOC increased the CVD rate
which is likely to prevail from 0.96 per cent in the original investigation (of 1993) to 1.05 per cent in
the sunset review.  Although one administrative review was conducted by DOC in which the CVD
rate was established at 0.69 per cent, DOC did not take these findings into account because it
considers that all the subsidy programmes countervailed in the original investigation remained in
place. Likewise, in the sunset review in the case of Sugar from the EC (C-408-046) , a measure
which dates from 1978, the CVD rate was increased from 10.8 cts/pound to 23.69 cts/pound.
5.219  If a final determination of likelihood of recurrence or continuation of subsidization and injury
in a sunset review had to be based exclusively on evidence reflecting the behaviour of the exporters in
the original investigation without taking into acc ount the order in force, it is self-evident that a
respondent will never succeed in getting rid of a CVD duty on such basis.  As a matter of fact this is
what happens in the US: DOC has never found until now that there was no likelihood of recurrence or
continuation of subsidization in a CVD sunset review against EC exports.
5.220  There is, therefore, a need to understand what exactly the US means by using the terms "the
findings in the original investigation provide the only evidence reflecting the behaviour of the
respondents without the discipline of the countervailing measures in place".  This reference to the so-
called "discipline in place" in fact assimilates CVD orders to antidumping duties.  The rationale of
granting subsidies and imposing CVD orders are, however, drastically different from those pertainingto dumping and the imposition of AD duties.  In the latter case there is one actor, the individual
exporter, who can swiftly decide the whole strategy of the company regarding when, where and at
what price to export, if the AD duty were to expire.  Conversely, in the case of subsidies the situation
                                                     
71 Stainless steel sheet and strip from France, July 1999.WT/DS213/R
Page 49
is not the same, because governments normally do not behave commercially in the same way as
individual companies.  For instance, in case of non-recurring subsidies, it is more reasonable to
assume that governments will not rush again to grant a new subsidy if a CVD order were allowed to
expire.  The principle is that granting a new subsidy or increasing the level of an existing one is
normally subject to rather different considerations (e.g. availability of funds, existence of social,regional, restructuring, environmental or other reasons in favour of continuing the subsidy, etc.),
which distinguish them clearly from the natural desire of individual companies to swiftly divert
exports in order to increase profits when an AD order is left to expire.  Moreover, subsidies take
normally time to be discussed and decided in national parliaments and this further distinguishes them
from dumping practices.  To speak of a "discipline in place", therefore, is to disregard completely the
peculiarities and specificities of the reasons for which governments usually grant subsidies, compared
to the risk of recurrence of dumping.  It follows that as a matter of fact and law a CVD order is not a"discipline" in particular in case of non-recurrin g, declining subsidies, since such a subsidy has been
given in the past, has been consumed for the period of time lapsed and is known that it will not recur
in the future.  It can, therefore, be said with confidence that in such cases the CVD order has no
"disciplining" effect on exporters’ behaviour.  It also follows that applying again the rate of subsidy
determined in the original investigation is a clear violation of Article 21.3 and the obligation to makea fresh determination on likelihood of subsidization, causality and injury.
Q16. Please respond to the following:
(a) Could the European Communities comm ent on the difficulty inherent in a
review under Article 21.3 of making a forward-looking assessment, given thatthe data for the previous five years reflect government and exporter behaviour
with "the discipline of countervailing measures in place"
72?
Reply
5.221  First, as explained above, the EC contests the US assumption that there is "a discipline in
place" which is likely to modify in any significant way the behaviour of governments and of the
exporters in case a CVD order were allowed to expire.  Second, a determination about the likelihood
of continuation or recurrence of subsidization, causality and injury must necessarily be based on
projections extrapolating from existing data.  There is nothing unusual or especially difficult in this
regard because governments are quite used to make this type of determinations in a number of
situations.  For example, in a different but, mutatis mutandis , comparable situation, the Appellate
Body said in United States – Lamb Safeguard  report the following:
"As facts, by their very nature, pertain to the present and the past, the occurrence of
future events can never be definitively proven by facts .  There is, therefore, a tension
between a future-oriented "threat" analysis, which, ultimately, calls for a degree of
"conjecture" about the likelihood of a future event, and the need for a fact-baseddetermination.  Unavoidably, this tension must be resolved through the use of facts
from the present and the past to justify the conclusion about the future, namely that
serious injury is "clearly imminent ".
73
Had the US used facts from the present, and if necessary from the past, to justify its conclusions about
the future in the present case, there should have b een only one possible outcome, i.e. the termination
of the CVD order in question because the level of the subsidy would have been clearly below the
                                                     
72 First Written Submission of the United States, para. 92.
73 See Appellate Body Report, United States - Safeguard Measures on Imports of Fresh or Frozen
Lamb Meat from New Zealand and Australia ("United States - Lamb Safeguard") , WT/DS177/AB/R,
WT/DS178/AB/R, adopted 16 May 2001, para. 136, emphasis added.WT/DS213/R
Page 50
1 per cent ad valorem de minimis  rule applicable in reviews.74  As explained time and time again, the
CIG programme was determined by the US to be a non-recurring, declining subsidy.  Applying the
US’s own calculation methodology, the amount that would have continued after 2000 is equivalent to
zero.  No new subsidies have been shown by DOC to exist or were likely to be granted in the period
in question.  There were, therefore, clearly no present or past facts that could justify a conclusionabout the future different from the need to terminate immediately the CVD order applicable to the
products in question.
5.222  The EC does not accept, therefore, the view  that a review under Article 21.3 involves
difficulties.  Governments are used to this type of calculations and there can be no excuse to merely
side step any need to undertake a fresh froward-lookin g determination in a sunset review on the basis
of such alleged difficulties.  Therefore, the EC considers that, as a general rule, the same elements,which the investigating authorities took into account in the original investigation in a retrospective
manner, should be analysed in a prospective way during the sunset review.
(b) What range of factors needs to be taken into account, in the view of the
European Communities, in making this forward-looking assessment?
Reply
5.223  As explained above, the EC considers that, as a general rule, the same elements and factors
that the investigating authorities took into accoun t in the original investigation in a retrospective
manner should be analysed in a prospective way during the sunset review.  These are laid downessentially in Articles 11, 12 and 15 of the SCM Agreement .  However, the range of factors to be
taken into account in making the forward-looking assessment necessary to establish the likelihood of
recurrence or continuation of subsidization has to be evaluated on case by case basis, as it mainly
depends on the kind of subsidy under examination.  For example, if it is a recurring unemployment
subsidy, the investigating authorities should consider the likelihood of lay-offs within the reasonablefuture.  In the case at issue, however, the main subsidy was a non-recurring subsidy that by definition
cannot recur.  There could have been no continuation of benefits in such a case, if the US authorities
were simply to take into consideration the calculation memorandum that was part of the file of the
original investigation.
5.224  As noted above, an aspect to be considered in order to determine the likelihood of recurrence
or continuation of subsidization may also be the CV D rate from the original investigation. But there
are several other factors and some of them may be more relevant and important ones.  For example,consideration should be given to old subsidy programmes now terminated, new subsidy programmes
that did not exist at the time the original inve stigation was made, changes in existing programmes,
economic situation of the exporting company, its production, etc.  These are some very important
factors to be taken into account in a sunset review, together with the expected behaviour of the foreign
government.  In a sunset review, the forward-looking aspect of the assessment, implied by the terms
"would be likely to lead to", refers in particular to the continuation or recurrence of subsidization,
causality and injury.  Because this involves a certain amount of projections extrapolating from
existing data, it may be argued that Article 21.3 somewhat "softens" the requirements in particular of
Articles 11.2 and 11.3 of the SCM Agreement relating to the “existence” of subsidization and injury.
However, a sunset review determination that is based only on the CVD rate established in the originalinvestigation or one that does not apply the 1 per cent de minimis  rule violates clearly the whole
object and purpose of the SCM Agreement .  The US, instead of conducting a fresh "determination" in
the proper sense of this term, advance as excuse reasons pertaining to the difficulties in calculating the
numerator or denominator in the formula used to calculate the subsidy.  These are not exceptional nor
                                                     
74 Moreover, it would have also been below the 0.5 per cent ad valorem de minimis  rule applied by the
US under national law.WT/DS213/R
Page 51
insurmountable difficulties, however, and the US takes no concrete steps and does absolutely nothing
positive to deal with them, other than simply acknowledge their existence.
(c) In this regard, the Panel notes the view of the European Communities –
expressed in response to an oral question posed by the Panel at its first meeting –
that the CVD rate from the original investigation can only be "a starting-point".Please explain in detail.
Reply
5.225  As explained above, the CVD rate from the original investigation may be just one of the
factors to take into account in a sunset review.  In this sense only it is a "starting point".  For example,
it is obvious that in a case of a non-recurring, declining subsidy the original CVD rate cannot be usedas such, since the benefits of the subsidy are bound to expire.
5.226  On a more general plane, it should be noted that the text of Article 21.3 does not state
expressly how exactly to conduct a sunset determination.  However, there is nothing unusual in that,
as other provisions of the same Agreement or of  other WTO Agreements do not always laid down in
detail provisions about their concrete application and implementation.  This is because the applicablerules can be easily inferred.  The identification of those rules is normally done on the basis of the
customary rules of interpretation of public international law (Art. 3.2 DSU).  One such recent example
provides the Appellate Body report in United States – Cotton Yarn  case, where the Appellate Body
recognized the lack of explicit provisions on how to conduct a comparative analysis of the effects of
imports under Article 6.4, second sentence, of the ATC Agreement (at paragraph 117), and resolvedthe issue by having recourse to the generally accep ted rules of interpretation in the ensuing paragraphs
(paras. 117-121) before turning to the specific provision of Article 6.4 and the facts of that case (at
paras. 122-127).
5.227  This is what the EC proposes the Panel to do also in the present case.  As explained above, as
well as in the written and oral submissions, a sunset determination has, as a starting point, to takeaccount of the same elements and factors that the investigating authorities took into account in the
original investigation.  This is, however, obviously not enough in the context of a sunset review for a
number of reasons, e.g. because old subsidy programmes may now be terminated, new subsidy
programmes may enter into force that did not exist at the time the original investigation was made,
changes in existing programmes, economic situation of the exporting company, its production, etc.
The non-recurring and declining nature of the subsidy is also a very important factor to take into
account.  To interpret the text of Article 21.3 otherwise would be to reduce the terms "shalldetermine" and the whole object and purpose of sunset  reviews to inutility, as the Appellate Body said
in the United States – Cotton Yarn  case (at para. 121), because this will lead to the unjustified
continuation of CVD measures for five more years.  The US law and practice on sunset reviews
provides a concrete example of such a flagrant violation of these basic principles of interpretation,
because the US does not apply the 1 per cent de minimis  rule in sunset reviews.  The result is that a
subsidy that was found to be below the 1 per cent de minimis  rule in the original investigation will
continue for five more years because the US uses in sunset reviews the CVD rate established in the
original investigation.
Q17. Please explain what the European Communities understands by the term "total steel
sales", contained in paragraph 5 of the Europe an Communities' oral statement at the first
meeting of the Panel, and how it applies to th e calculation of likely ad valorem subsidy rates.WT/DS213/R
Page 52
Reply
5.228  The term "total steel sales" contained in paragraph 5 of the EC’s oral statement refers to the
total sales of the respondent companies in 1991.  Pu rsuant to its regulations, the US DOC calculates
an ad valorem subsidy rate for domestic subsidies by dividing the amount of the benefit allocated tothe period of investigation by the sales value of all products sold by the respondent during the period
of investigation (19 C.F.R. § 351.525(a) & (b)(3)).
Q18. In the view of the European Communities, were the EC respondent parties given
"ample opportunity [by the DOC] to present in  writing all evidence which they consider[ed]
relevant in respect of the investigation in qu estion", within the meaning of Article 12.1:
(a) Prior to the DOC's determination of 20 October 1999 to conduct a full review
under Article 21.3;
(b) Following such determination and prior to the DOC's preliminary
determination of 27 March 2000;  and
(c) Following such determination and prior to the DOC's final determination
of 2 August 2000?
Why or why not?
Reply
5.229  As regards (a) above, the EC respondent parties were not given any opportunity, let alone an
ample one, to present in writing "all evidence which they considered relevant in respect of the
investigation in question".  This is because the US authorities initiated automatically and of theirinitiative the sunset review.  The US argument that the affected respondents had 15 months to prepare
(e.g. para. 103 of 1
st US written submission) is, therefore, totally misleading, false and irrelevant
because the type of comments the respondents could and were allowed to submit before the initiation
concerned only "the proposed schedule and grouping of reviews", not the substance of the conditions
applicable for a sunset review (see Exhibit US-1, Federal Register/Vol. 63, No. 103/Friday,
29 May 1998/Notices, page 29373).
5.230  As regards (b) above, the US informed the respondents by letter of 26 August 1999, i.e. four
days before the actual initiation of the reviews (1  September 1999) (See Exhibit US-2).  This letter
provided 15 days to file a "notice of intent to participate" and 30 more days therefrom to file
"substantive responses".  The rest of the informat ion contained in the letter provided information on
the formalities on such filings.  The vague nature of the US DOC’s information request, however,
coupled with its refusal to accept any factual inform ation after the initial 35 days of a sunset review
proceeding violate the provisions of Article 12.1.  Unlike in new countervailing duty investigations
and administrative reviews, the US DOC does not i ssue questionnaires in a sunset review.  Instead,
the US DOC requires the interested parties to res pond to a short list of questions contained in its
regulations (see 19 C.F.R. § 351.218(d)(3)).  Most of these questions are perfunctory in nature,
seeking information concerning the name and address of the party’s legal representative and theparty’s historic countervailing duty rates (see 19 C.F.R. § 351.218(d)(3)(ii)(A) & (iii)(A)).  For
example, with respect to the key issue of the likely continuation or recurrence of subsidization, the US
DOC regulations simply request the interested pa rty to provide a "statement regarding the likely
effects of revocation of the order...under review, which must include any factual information,
argument, and reason to support such statement." (see 19 C.F.R.  § 351.218(d)(3)(ii)(F)).WT/DS213/R
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5.231  In addition to this vague request for informat ion, the US DOC regulations provide that "the
Secretary normally will not accept or consider any additional information from a party after the time
for filing rebuttals has expired." (see 19 C.F.R. § 351.218(d)(4)).  Under the sunset regulations,
rebuttals are required to be filed within 35 days of the publication of the notice of initiation in the
Federal Register (see 19 C.F.R. § 351.218(d)(3) & (4)).  Thus, under the US DOC’s regulations, aninterested party, guided only by the vague request  to provide any factual information regarding the
likely effects of revocation of the countervailing duty order, has merely 35 days to provide all of its
factual information in the sunset review.  Moreover, until the preliminary determination is made it
knows completely nothing of the information possibly submitted by the other parties, the domestic
industry or taken ex officio into account by DOC.  In  light of the fact that the sunset review statute
provides DOC with 240 days in which to make its sunset review determination, there can be no
justification for such a restrictively short period for providing factual information and to respond to
the information submitted by the other interested parties (see 19 U.S.C. § 1675(c)(5)).  Moreover, the
fact that the US DOC’s decision as to whether or not to conduct a full sunset review is not issued until
50 days after publication of the notice of initiation means that, even after the US DOC makes a
determination to conduct a full sunset review, the parties will be given no additional opportunity
whatsoever to submit factual information in this regard (see 19 C.F.R. § 351.218(e)(1)(ii)(C)(1)).  TheEC submits that in order to comply with the prov isions of Article 12.1, the US DOC must inform the
parties of the specific information it requires to complete its determination in the particular case,
allow the parties access to the information submitted by the other interested parties and give all the
parties ample opportunity to provide the information at a meaningful point in the proceedings.  That is
not done by the US in sunset reviews under the existing laws, regulations and practices and it wasdefinitively not done in the present case.
5.232  As regards (c) above, the first time that  the US DOC commented on the information
submitted by the parties in this case was in its preliminary results of 20 March 2000.  In its issues and
decision memo, the US DOC ignore the evidence submitted by the Government of Germany and the
German producers showing that the CIG programm e applied only to investments made prior to
1 January 1986 and that the amount of Capital Investme nt Grants paid after 1986 was so small that no
countervailable benefit would remain after the e nd of the sunset review (see Issues and Decision
Memo at p. 24-25, Exhibit EC-7).  The DOC simply stated that, because there was evidence that
Capital Investment Grants were received as late as 1990, it would "determine that benefit streams
from this programme continue beyond the end of this sunset review." (Ibidem, at 25).  It is important
to underline that the US DOC did not give the German respondents any opportunity to submit
additional evidence to respond to its comments in the preliminary determination.  As explained in ourwritten and oral submissions, the US DOC even refused a request to review its own calculation
memoranda from the original investigation to de termine the exact amount of the original grant
payments made after 1986.  The EC believes that such a procedure that leaves respondents in
complete darkness as to precisely what information an investigating authority requires until it is too
late to provide the information cannot satisfy the requirements of Article 12.1.  The US law andpractice does not respect several provisions of Article 12 of the SCM Agreement , which by virtue of
Article 21.4 is fully applicable to sunset reviews.   In particular, Articles 12.1 and 12.1.1 lay down a
general obligation to provide "ample opportunity" to exporters to present in writing all evidence they
consider relevant.  Article 12.2 allows also for the right to present information orally.  Article 12.3
establishes in effect a procedure of mutual dialogue by providing that the affected exporters should begiven timely opportunity "to see all information that is relevant to the presentation of their cases …
and to prepare presentations on the basis of this information".  Moreover, Article 12.8 provides that
before the final determination is made, disclosure should take place "in such sufficient time for the
parties to defend their interests".  The principle underlying Article 12 of the SCM Agreement ,
therefore, is that during all stages of the reviews the interested parties should be give ampleopportunity to present evidence, to have access to the evidence presented by the other parties (except
where confidentiality applies), to present counter-evidence and to defend their interests at all stagesWT/DS213/R
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leading up to the final determination.  As explained above, all these procedural rights and due process
requirements are not respected by the US DOC in sunset reviews and in the present case.
Q19. Does the European Communities consider that a review under Article 21.3 must involve
a full CVD investigation?  Please explain.
Reply
5.233  In principle yes.  As stated above in response to question 7, investigating authorities in a
sunset review must determine that all the conditions for the imposition of a countervailing duty, as
laid down in Article 19.1, will continue or recur if the duty is terminated.  However, since a CVD
measure is already in force, this cannot be entirely identical to a new countervailing duty
investigation.  However, the investigating authority must collect, consider and, where appropriate,verify all available and relevant evidence in making its sunset determination.  As explained above, it
must also allow parties access to and provide them with ample opportunity to comment and defend
their interests at all stages of the review, as happens in an original investigation.
5.234  The US DOC failed to do this in the present sunset review.  For example, with respect to the
CIG programme, US DOC ignored evidence that the CIG programme applied only to investments
made prior to 1 January 1986 and that the amount of Capital Investment Grants paid after 1986 was so
small that no countervailable benefit would remain after the end of the sunset review.  The US DOC
made no attempt to actually measure the benefit that would remain under the CIG programme after
the end of the sunset review or to adjust the subsidy rate for the grants that were made prior to the end
of 1986, the benefit of which would have expired under the 15-year allocation period.  The US DOCsimply continued to apply the 0.39 per cent subsidy rate calculated for this programme for the 1991
period covered by the original investigation, as if the programme were likely to confer the same
benefit in 2001 as it did ten years earlier in 1991.  The US DOC even refused to consult its calculation
memoranda from the original investigation to determine the amount of grants paid after 1986.
5.235  This irrefutable presumption that the benefit of the CIG programme remained unchanged
since 1991 is directly contrary to the evidence presented in the case.  Because the CIG programme
applied only to investments made prior to 1 January 1986, there is no conceivable way that the benefit
in 2001 would continue at the same level as in 1991.  This is especially true in light of the evidence
that the last grant payment under this programme was made in 1990.  Even the US producers
conceded that the CIG programme had expired (see Issues and Decision Memo at 25 n.36
(Exhibit EC-7)).
Q20. In the view of the European Communities, does the SCM Agreement require the record
of the original investigation, in its entirety, to  be made part of the record of the review under
Article 21.3?  Please explain in detail.
Reply
5.236  Yes.  It is beyond doubt that Article 21.4 requires ("shall apply") the authorities to give parties
in a sunset review access to the entire record (t hat is all information and evidence relevant to an
investigation and not covered by the confidentiality provisions) in the same way as in the original
investigation.  For example, to the extent that the US DOC relies upon the rates calculated in its
original investigation, it must, at minimum, make its original determination and all documentsshowing how the rates therein were calculated (i.e., the calculation memoranda) part of the record of
the sunset review.  Moreover, Article 12.2 requires that any decision must be based only on
information what is in the record and which has been made available to all parties.  Article 12.3
requires that all parties should be able to see all information that is relevant, and Article 12.8 requiresWT/DS213/R
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that all essential facts should be made available in sufficient time for the parties to defend their
interests.
5.237  It follows that the US DOC cannot evade this responsibility by claiming that it is somehow
prohibited by US law from making the memoranda part of the record in the sunset review (see U.S. 1st
written submission, at para. 104).  The US International Trade Commission ("ITC") is subject to the
same procedures regarding the treatment of business proprietary information as the US DOC.
However, unlike DOC, the US ITC in its sunset reviews automatically makes the confidential version
of its original determination, as well as the complete staff report from the original investigation, part
of the record of the sunset review.  This is done automatically right at the beginning of the review so
that all parties will be able to use this informat ion in preparing their arguments.  The ITC simply
provides the documents the same confidential status in the review that they enjoyed in the original
investigation.
F. RESPONSES OF THE UNITED STATES TO QUESTIONS FROM THE PANEL FOLLOWING THE FIRST
MEETING OF THE PANEL
5.238  With respect to the Panel’s question concerning the Article 11.9 de minimis  standard and
reviews under Article 21.2, for essentially the same reasons set forth in the United States’ First
Written Submission and Oral Statement, the de minimis  standard contained in Article 11.9 is not
applicable to reviews under Article 21.2.  In particular, as is the case with respect to Article 21.3,
there is no reference to Article 11.9 or any other de minimis  standard in Article 21.2.  It seems evident
that had the drafters of the SCM Agreement wished such a reference, one could have been easily
made.  Furthermore, the panel in Korea DRAMs  addressed this issue (albeit in the context of
antidumping administrative reviews) and came to the same conclusion.
5.239  With respect to the Panel’s question concerning negligible import volume and injury
standards under Article 11.9 and the negligible injury standard under Article 15.3, and reviews under
Article 21.2, with respect to Article 11.9, as stated above, Article 21.2 neither refers to nor
incorporates any provisions of Article 11.9.  With respect to Article 15.3, the United States directs the
Panel’s attention to the fact that this article does not refer to a “negligible injury  standard.”  Rather, in
connection with cumulation, Article 15.3 addresses the question of whether the volume of imports  in
an original investigation is negligible.  Article 21.2 does not incorporate the provisions of
Article 15.3.
5.240  With respect to the Panel’s question concerning negligible import volume and injury
standards under Article 11.9 and the negligible injury standard under Article 15.3, and reviews under
Article 21.3, the negligibility provisions do not apply to Article 21.3 for the same reasons they do not
apply to Article 21.2.
5.241  With respect to the Panel’s questions concerning the applicability of the Article 27.10
negligible import volume standards and the Article 27.10(b) and Article 27.11 de minimis  standards to
reviews under Article 21, these negligibility provisions, like those contained in Articles 11.9 and 15.3,
apply only to original investigations.  Similarly, the de minimis  standards for various developing
countries, like the standard contained in Article 11.9, only apply to original investigations.
5.242  With respect to the Panel’s questions concerning the impact of the large volume of
“transition” orders on the genesis of the United States’ sunset rules, on January 1, 1995, the date on
which the WTO Agreement entered into force with re spect to the United States, there were over 300
antidumping and countervailing duty orders in existence.  Pursuant to its obligations under
Article 32.4 of the SCM Agreement (and Article 18.3.2 of the AD Agreement), the United Statesdeemed all of these “transition” orders to be imposed on January 1, 1995.  Consequently, the
United States was obligated to initiate sunset reviews of all of these transition orders no later thanWT/DS213/R
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1 January 2000, the de jure  five-year anniversary date of the orders.  In its First Written Submission,
the United States described in detail the process it used to determine and publicly announce the
schedule for the conduct of the sunset reviews of the transition orders.
5.243  When developing its procedures for sunset re views, the United States certainly took into
account the monumental task of initiating over 300 sunset reviews of transition orders.  However, it isdifficult to measure the extent to which the volume  of the transition orders initially shaped both the
procedural and substantive rules now in place.  Procedurally, the rules with respect to sunset reviews
of transition orders and those of non-transition orders differ very little.  One notable difference that
takes into account the volume of transition orders concerns Commerce’s ability to extend its deadlines
for its preliminary and final determinations.  Substantively, Commerce’s analysis is the same for
transition orders and non-transition orders.
5.244  With respect to the Panel’s question concerning when a sunset review is considered to be
initiated, section 351.218(c)(1) of Commerce’s Sunset Regulations  provides that no later than 30 days
before the fifth anniversary date of an order or suspension of an investigation, the Secretary will
publish a notice of initiation of a sunset review.  In order to provide to the public advance notice of
the initiation of sunset reviews, Commerce provides on its website
(http://ia.ita.doc.gov/sunset/schedule.htm) the schedule for sunset review initiations through calendaryear 2005.  With respect to the sunset reviews of transition orders, Commerce published its initiation
schedule in the Federal Register  on 28 May 1998.
5.245  With respect to the Panel’s question concerning Commerce’s adequacy determination and
information collected after that determination, following normal procedures, Commerce promulgated
its determination to conduct a full sunset review in the form of a decision memorandum issued andmade public on October 20, 1999.  The specific factual information needed to determine whether to
conduct a full sunset review ( i.e., aggregate export figures) is only a small part  of the information and
argument contained in the original substantive responses submitted by the interested parties.
Commerce normally does not collect additional information after it makes its adequacy determination.
Commerce, therefore, did not collect any additional information between its 20 October 1999,adequacy determination and its 27 March 2000, pre liminary determination.  Between the time of its
adequacy determination and its preliminary determination, Commerce analyzes and considers all of
the remaining information and argument provided by the parties; i.e., the bulk of the responses.
5.246  With respect to the Panel’s questions concerning whether there is a “presumption” in the
SCM Agreement that no provision of the Agreement is applicable to reviews under Article 21.3
unless specifically indicated, the United States considers that, in light of the text and context of
Article 21.3, no provisions are applicable to reviews under Article 21.3, unless specifically indicated.In the view of the United States, it is not a matter of there being a “presumption”.  Instead, it is a
matter of what the text of Article 21.3 provides, as interpreted in accordance with the rules of
Article 31 of the Vienna Convention on the Law of Treaties .  There are several ways in which other
provisions of the Agreement may be applicable to the provisions of Article 21.3.  There could be a
cross-reference between the two provisions, a refere nce in one provision to the other, or a general
statement that a provision applies throughout the Agreement or throughout Part V of the Agreement.
There are no such references with respect to the Article 11.6 evidentiary requirements for self-
initiation or the Article 11.9 de minimis  standard.
5.247  The United States considers that other provisions of the SCM Agreement would apply to
reviews under Article 21.3 where the Agreement says they apply.  Examples of other provisions thatapply to Article 21.3 are: the definition of “subsidy” in Article 1 (“For the purpose of this
Agreement”); the definition of “interested parties” in Article 12.9 (“for the purposes of this
Agreement”); calculation of the amount of a subsidy under Article 14 (“For the purpose of Part V”);
definition of “injury” under Article 15 and footnote 45 (“Under this Agreement”); definition of “likeWT/DS213/R
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product” under footnote 46 (“Throughout this Agreement”); definition of domestic industry in
Article 16 (“For the purposes of this Agreement”); definition of “levy” under footnote 51 (“As used in
this Agreement”).
5.248  With respect to the Panel’s questions concerning the methodology for the calculation of the
level of subsidization and the ad valorem  rate in reviews under Article 21.3 versus in original
investigations, the United States notes, as an initial matter, that the SCM Agreement does not specify
a methodology for calculating the ad valorem  rate.  If Commerce were to calculate the level of
subsidization in the context of reviews conduc ted under Article 21.3, it certainly would apply the
same calculation methodology as it applies in original investigations conducted under Article 11.
However, Commerce does not calculate  the level of subsidization in sunset reviews.  Article 21.3
does not require such a calculation.  What Article 21.3 does require is that a countervailing duty be
terminated not later that five years from the date upon which it is imposed, unless the authoritiesdetermine that expiry of the duty would be likely to lead to continuation or recurrence of subsidization
and injury.
5.249  With respect to the Panel’s question as to whethe r the injury test applicable to investigations
is also applicable to reviews under Article 21.3, the Article 21.3 injury standard is not the same as the
standard for injury in original investigations, although it contains some of the same elements.  Theinjury determinations in original investigations ar e governed by the provisions of Article 15 of the
SCM Agreement and Article VI of GATT 1994.  Para graph 6 of Article VI conditions the levying of
countervailing duties on a determination that the effects of the subsidized imports are “such as to
cause or threaten material injury to an established domestic industry, or [ ] such as to retard materially
the establishment of a domestic industry.”  Article 15 of the SCM Agreement further specifies thefactors that investigating authorities must consider in reaching “[a] determination of injury for
purposes of Article VI of GATT 1994”.
5.250  The aim of the Article 21.3 review is to determine whether revocation of the countervailing
duty would be likely to lead to continuation or recurrence of injury.  Footnote 45 to Article 15
indicates that the term injury  as used throughout the Agreement “shall be interpreted in accordance
with the provisions of this Article.”  In turn, Article 15 specifies three general criteria – volume, price
effects and impact on the domestic industry – that are pertinent to any injury  determination under the
Agreement.
5.251  The focus of a review under Article 21.3, however, differs from that of an original
investigation under Article 15.  The nature and practicalities of the two types of inquiries demonstrate
that the tests for the two cannot be identical.  In an  original investigation, the investigating authorities
examine the condition of an industry that has been exposed to the effects of the subsidized imports.  Inthat investigation, an authority examines the re lationship between import-related factors (such as
relative and absolute increases in import volumes and underselling and other price effects) to
industry-related factors (such as trade, financial and employment data that have a bearing on the state
of the industry and that may be indicative of present injury or imminent threat of injury).  See
Articles 15.5 and 15.7.  Five years later, as a result of the countervailing duty order, subsidizedimports may have either decreased or exited the mark et altogether, or if they maintain their presence
in the market, may be priced higher than they were during the original investigation, when they were
entering the market unencumbered by any additional duties.  Thus, the inquiry contemplated in a
review conducted pursuant to Article 21.3 is counterfactual in nature, and entails application of a
somewhat different standard with respect to the volume, price and relevant industry factors.  Anauthority must decide the likely impact of a prospective change in the status quo, i.e., the revocation
of the countervailing duty order and the elimination of its restraining effects on volumes and prices of
imports.WT/DS213/R
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5.252  With respect to the Panel’s question as to whether, under US law, the Article 11.4 industry
support provisions are applicable in a review under Article 21.3, the conditions of Article 11.4, with
respect to industry support,  are not required to be fulfilled in order for Commerce to conduct a sunset
review under US law.  Article 21.3 itself contains no requirement in this regard and contains no
reference to Article 11.4 or the industry support requirements of that provision.
5.253  With respect to the Panel’s question as to whether the Article 16 definition of domestic
industry must be taken into account in the USITC's assessment of the likelihood of continuation or
recurrence of injury in a review under Article 21.3, the answer is yes.  Article 21.3 addresses the
inquiry into whether revocation of the countervailing  duty would be likely to lead to continuation or
recurrence of injury .  Footnote 45 to Article 15 of the SCM Agreement specifies that, “[u]nder this
Agreement, the term ‘injury’ shall, unless otherwise specified, be taken to mean material injury to a
domestic industry , threat of material injury to a domestic industry , or material retardation of the
establishment of such industry ...”.  (Emphasis added).  Article 21.3 does not contain an exception to
the general definition, and therefore, the injury  referred to in that Article is relative to the condition of
the domestic industry .  Article 16 addresses the definition of the domestic industry “[f]or the purposes
of this Agreement,” and therefore applies in the co ntext of addressing the continuation or recurrence
of injury under Article 21.3.
5.254  With respect to the Panel’s question as to what textual support exists in the SCM Agreement
for the proposition that no de minimis  standard is applicable to reviews under Article 21.3 as it is in
original investigations, under Article 11.9, Members must apply a 1 per cent de minimis  standard in
countervailing duty investigations .  Nothing in the text of Articles 11.9 or 21.3 requires application of
the Article 11.9, 1 per cent de minimis  standard in Article 21.3 sunset reviews, or any other type of
review.  As discussed above, there is no reference in Article 21.3 to a de minimis  standard and the text
of Article 11.9 makes no reference to Article 21.3.
5.255  With respect to the Panel’s request that the United States respond to arguments in the EC’s
Oral Statement concerning the use and relevance of footnote 52, in its Oral Statement, the EC opined
that the United States has confused the purposes of an administrative ( i.e., assessment) review and a
sunset review and the application of footnote 52.  It is the EC that is confused.  Pursuant to
Article 21.3 and footnote 52, the mere existence of a subsidy programme, even with a net
countervailable subsidy rate of zero, could form the basis for a determination of likelihood of future
subsidization in accordance with Article 21.3 and footnote 52.  The United States agrees with the EC
that footnote 52 refers to a situation where the authority determines that the subsidy rate for a
particular time period is zero and that, in the United States, that determination takes place in the
context of an administrative review.  (Although not necessarily germane to the instant dispute, theUnited States does not agree with the EC’s statement that footnote 52 refers to a situation where a
subsidy is “ de minimis ” in an administrative review.  Footnote 52 only discusses a finding in the most
recent assessment proceeding that “no duty” is to be levied.)  The EC seems to think, however, that
footnote 52 serves no other purpose than to make a point about administrative reviews.  The EC posits
that “[s]unset reviews under Article 21.3 are completely different from administrative reviews”.  Ifthat is so, why then did the Members include footnote 52 in Article 21.3, the provision governing
sunset reviews?  There must be a reason.  The United States considers that footnote 52 means that the
current level of subsidization is not decisive as to whether subsidization is likely to recur.  The EC has
not offered any alternative interpretation.  The reason for this gap in the EC’s argumentation is that
the EC’s claim that a de minimis  standard is required in the context of Article 21.3 sunset reviews
would render note 52 meaningless.
5.256  With respect to the Panel’s question concerning the rationale for the United States’
application of a 0.5 per cent de minimis  standard in sunset reviews, as a matter of domestic policy,
Commerce has long applied a 0.5 per cent de minimis standard in administrative ( i.e., assessment)
reviews.  The application of this standard pre- dates the Uruguay Round negotiations.  The entry intoWT/DS213/R
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force of the WTO Agreement did not require a change in this standard, because the Article 11.9
de minimis  standard is only applicable to investigations.  For this same reason, when the United States
amended its law in 1994 to provide for sunset reviews, it chose to apply its long-standing 0.5 per cent
de minimis  standard to sunset reviews.  The United States could have chosen to apply no de minimis
standard to sunset reviews at all.
5.257  In a sunset review, the de minimis standard has particular application in several respects.  For
example, if  Commerce determined in a sunset pr oceeding, based on the original  investigation and
any administrative reviews, that the existing count ervailable subsidy programmes had been terminated
and that the likely net countervailable rate of subsidization was de minimis ,   Commerce normally
would determine that there was no likelihood of continuation or recurrence of subsidization.  In
addition, if the combined benefits of all programmes considered in the sunset review have never been
above de minimis at any time the order was in effect, and there is no likelihood that the combined
benefits of such programmes would be above de minimis in the event of removal of the duty,
Commerce normally would determine that there is no likelihood of continuation or recurrence of
subsidization.
5.258  In 1987, following a notice and comment rulemaking proceeding, Commerce published a
final regulation codifying its long-standing practice of applying a 0.5 per cent de minimis  standard in
investigations and administrative reviews.  In response to Commerce stated that “[t]he doctrine of
de minimis non curat lex , that the law does not concern itself with trifles, is a basic tenet of Anglo-
American jurisprudence, inherent in all US laws.  With respect to the antidumping and countervailing
duty laws, the Department has concluded that the potential benefits to domestic petitioners from
orders on dumping margins or net subsidies below 0.5% are outweighed by the gains in productivityand efficiency provided by a de minimis  rule.... [I]t would be unreasonable for the Department and the
US Customs Service to squander their scarce res ources administering orders for which the dumping
margins or the net subsidies are below 0.5%”.  52 FR at 30661.
5.259  With respect to the Panel’s question concerning the relationship between duty assessment
proceedings ("administrative reviews") and reviews under Article 21.3, the United States has a“retrospective” assessment system under which the amount of final liability for countervailing duties
is determined after the subject merchandise is imported.  The normal procedure used for determining
the amount of final liability is the administrative review procedure.  In contrast, a sunset review is not
a procedure for determining the amount of final countervailing duty liability.  The purpose of the
sunset review is to determine the likelihood of the continuation or recurrence of subsidization in the
event that the countervailing duty is revoked.  Thus, a sunset review involves a prediction of a
government’s future behaviour without the discipline of an  order in place.  The focus of the analysisis predictive, as opposed to a focus on the present or the past.
5.260  With respect to the Panel’s question concerning the ability of the German producers, the
German government, and the EC Commission to  request an administrative review of the
countervailing duty order on certain steel flat products from Germany, Commerce’s regulations
provide no absolute requirement for shipments as a pre-requisite to an administrative review and
provide Commerce with the discretion to conduct a “no shipment” administrative review of an order.
Concerning the textual basis for this in the SCM Agreement, as discussed above, Commerce’s
regulations do not make the existence of shipments an absolute prerequisite for an administrative
review.  Instead, the regulations provide Commerce with the discretion to conduct a “no shipment”
administrative review of an order.  In this regard, Articles 19 and 21.2 of the SCM Agreement do notpreclude no shipment administrative reviews.
5.261  In response to the Panel’s question concerning the option of a changed circumstances review,
yes, a “changed circumstances” review is discretionary and may be initiated when Commerce (or theWT/DS213/R
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USITC) determines that conditions warranting such a review exist.  Such reviews normally are
initiated based on a request from an interested party.
5.262  In response to the Panel’s questions concerning the administrative record from the original
investigation, no, the administrative record from Commerce’s original countervailing duty
investigation does not automatically become part of  the administrative record of the sunset review.
Under US law and Commerce regulations, each indivi dual review (whether administrative, sunset, or
changed circumstances) by Commerce is considered a separate segment of the proceeding, with a
separate and distinct administrative record, and separately reviewable by domestic courts.  Pursuant to
section 751(c) of the Act and consistent with Article 21.3 of the SCM Agreement, Commerce
automatically self-initiates sunset reviews.  Therefore, Commerce did not use any information from
the original investigation to initiate the sunset review of the order on corrosion-resistant carbon steel
flat products from Germany.
5.263  In response to the Panel’s question concerning a particular calculation memorandum from the
original investigation, yes, 13 April 2000 was the first time that the German exporters made a request
to have the calculation memorandum placed on the administrative record of the sunset review.  In
response to the Panel’s questions concerning other requests to place information from the
administrative record in the original investigation on the administrative record of the sunset review,
with respect to business confidential information, no other interested parties placed, or requested that
Commerce place, such information on the administrative record during the sunset review.  As
discussed in the United States’ First Written Submission, in the instant case, Commerce accepted and
considered submissions or parts of submissions from the US producers and the German Government
which included public information from the original investigation.  Specifically, Commerce accepteda submission from the US producers dated 28 April and portions of a German government submission
of 18 April.
5.264  In accepting the US producers’ submission, Commerce considered that the submission
contained the public  version of Preussag’s questionnaire response from the original investigation and
that the US producers had submitted the document because the German producers had cited to thequestionnaire response in one of their submission s prior to the deadline for factual information
without submitting the document itself.  Commerce also accepted portions of the German
Government’s 18 April submission.  Commerce, however, only accepted those portions of the
German Government’s submission that were part of the original investigation, contained no new
factual information , and were publicly available .  None of the information accepted by  Commerce in
this instance was confidential information that would have been unavailable to other parties such as
the US producers.
5.265  With respect to the Panel’s question concerning the use of the word “determine” as used in
Article 21.3, Article 21.3 establishes that in the context of the sunset review, Commerce is obligated
to determine whether expiry of the countervailing  duty would be likely to lead to continuation or
recurrence of subsidization.  The definition of “determine” in the  context of Article 21.3 requires a
decision about something.  In The New Shorter Oxford English Dictionary , “determine” is defined as
to “settle or decide (a dispute, controversy, etc., or a sentence, conclusion, issue, etc.) as a judge or
arbiter.”  Further, this entry contains the notation “foll{owed} by simple obj{ect}, subord{inate}
cl{ause} w{ith} that, what, whether, etc. ”  The United States considers that this is precisely the
manner in which the word “determine” is used in Article 21.3.  Article 21.3 requires the authorities to
determine or decide something, i.e., whether subsidization is likely to continue or recur.   The
United States considers that it may determine, in accordance with Article 21.3, whether subsidization
is likely to continue or recur without conducting its own investigation, but, rather, by making its
decision based on the evidentiary record developed during the sunset review because all parties, both
foreign and domestic, have every opportunity under the US system to provide any information they
deem relevant.WT/DS213/R
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5.266  With respect to the Panel’s question concerning the methodology used by the United States to
determine the likelihood of continuation or recurrence of subsidization and injury, the substantive
provisions governing likelihood of continuation or recurrence of subsidization are contained in
Commerce’s Sunset Policy Bulletin .  In determining whether subsidization is likely to continue or
recur, Commerce will consider the net countervailable subsidy determined in the investigation andsubsequent reviews, and whether any change has occurred in programmes which gave rise to the net
countervailable subsidy determined in the inves tigation and subsequent reviews.  The USITC’s
regulations, at 19 CFR 207.60-207.69, address the procedures for conducting five-year review
investigations to determine whether continuation of the countervailing duty would be likely to lead to
continuation or recurrence of material injury.
5.267  With respect to the Panel’s question as to whether, under the US system, original
investigations and reviews under Article 21.3 are diff erent segments of one proceeding, the answer is
yes.  Under the US system, a “proceeding” begins on the date of the filing of a petition and ends on,
inter alia , the revocation of an order.  A countervailing duty proceeding consists of one or more
“segments”.  “Segment” refers to a portion of the proceeding that is separately judicially reviewable.
For example, a countervailing duty investigation, an  administrative review, or a sunset review each
would constitute a segment of a proceeding.  Each  segment contains its own discrete administrative
record.  A final determination, and the discrete record upon which it is based, is subject to judicial
review.
5.268  With respect to the Panel’s questions concerning whether administrative reviews are
prerequisites for conducting sunset reviews, under the US system, administrative reviews are not
prerequisites for conducting full sunset reviews.  However, as a starting point for making itslikelihood determination in a sunset review, Commerce considers the countervailable subsidies and
programmes found to be used, and the amount of the subsidy determined, in the original investigation.
The rationale for this approach is that the findi ngs in the original investigation provide the only
evidence reflecting the behaviour of the respondents without the discipline of countervailing measures
in place.  This makes sense given that, in a sunset review under Article 21.3, an authority isconsidering whether, without the discipline of the duty, subsidization would likely continue or recur;
i.e., what would happen without the discipline of the duty.  Commerce also considers its findings in
administrative reviews subsequent to the original investigation because information developed during
administrative reviews concerning subsidization –  e.g., additional subsidies and accompanying
benefits granted after issuance of an order or programme terminations – may be an indicator of
possible future subsidization or may demonstrate the cessation of subsidization.  Finally, even if there
has been no administrative review, Commerce will consider if is evidence demonstrating thatprogrammes have been terminated with no residual benefits.  In the instant case, even though no
administrative review had been conducted, Commerce agreed with the EC and German producers that
two programmes had been terminated with no resi dual benefits and adjusted the net subsidy rate
accordingly.
5.269  With respect to the Panel’s questions concerning a particular calculation memorandum and
the use of this business confidential document in Commerce’s sunset review, on 13 April 2000, the
German producers in the sunset review sought to have all the calculation memoranda from the
original investigation placed on the record of the sunset review.  Commerce, however, could not move
business confidential information from  the record of one segment of the proceeding ( i.e., the
investigation) to another separate segment of the proceeding ( i.e., the sunset review) without the
express permission of the person who submitted the confidential information.
5.270  Article 12.4 of the SCM Agreement provides that confidential information shall not be
disclosed without the specific permission of the party submitting it.  Consistent with the obligations
concerning the treatment of confidential information under Article 12, US law and Commerce
regulations provide stringent requirements and safeguards regarding the disclosure and use ofWT/DS213/R
Page 62
business confidential information in the context of countervailing duty proceedings under what is
called an administrative protective order or “A PO”.  The APOs granted during the original 1993
investigation would only have allowed for the disclosure of business confidential information in the
context of that investigation, per the agreement of  the party submitting the confidential information.
As a result, Commerce could not accede to the Germ an producers’ request in the sunset review to
move all the calculation memoranda from the record of  the original investigation to the record of the
sunset review without the permission of the partie s who originally submitted the information.  The
request from the German producers in the sunset review contained no indication of such permission.
5.271  Under US law and regulations, certain information provided by interested parties in an
administrative proceeding, whether an investigation or review, may be accorded business confidential
treatment.  Section 351.304 of Commerce’s regulations sets forth the requirements for parties to claim
that factual information should be considered business proprietary information and affordedprotection from public disclosure.  The claim for proprietary treatment must be made by the owner of
the information, the information must be clearly identified, and the claim must be accompanied by an
explanation why the information should be afforded proprietary treatment.  The calculation
memoranda from the original investigation would have contained the business confidential
information of the three German producers of certain corrosion-resistant carbon steel flat products thatwere involved in the original investigation:  Hoesch, Preussag, and Thyssen.  These producers would
have requested business confidential treatment for their data at the time they submitted the data during
the original countervailing duty investigation in 1992-93.  The German producers in the sunset review
were Thyssen Krupp Stahl AG, Stahlwerke Brem en GmbH, EKO Stahl GmbH, and Salzgitter AG.
The request from the German producers in the sunset review to move the business confidentialinformation from the record of the original investiga tion to the record of the sunset review contains no
indication that the German producers in the sunset review were authorized to permit the movement of
such information.  The particular document submitted by the EC in the instant case appears to contain
business confidential information for Thyssen.  In its First Written Submission, the EC itself notes
that this exhibit contains business confidential information.
5.272  With respect to the Panel’s questions concerning acceptance and consideration of certain
evidence from respondent interested parties, section 351.218(d)(3)(v)(B) of Commerce’s Sunset
Regulations  provides that interested parties may submit any relevant information or argument that the
party would like Commerce to consider.  Generally, therefore, Commerce will accept any evidence
from foreign respondents, including evidence with resp ect to the issues set out in the Panel’s question.
In the context of a sunset review (or any other segment of a countervailing duty proceeding),
Commerce considers all relevant evidence that is timely filed.  Regarding the extent to whichCommerce might base a particular determination on such evidence, it is difficult to say in the abstract.
The relevance and probative value of a particular piece of evidence will vary from case to case.
Suffice it to say that in the sunset review at issue in this dispute, Commerce considered information
and argument from the EC and German producers in finding that two programmes had been
terminated with no residual benefits.  As a general proposition, Commerce’s Sunset Policy Bulletin
provides detailed guidance on analytical issues related to Commerce’s determination of likelihood of
continuation or recurrence of subsidization and the net countervailable subsidy rate likely to prevail if
the duty were revoked.
5.273  With respect to the Panel’s request for a schematic representation of the timing and
information requirements under US law for sunset reviews, the United States provided copies ofAnnex VIII of Commerce’s Sunset Regulations , which contains detailed schedules with timing and
information requirements for Commerce sunset reviews, and Annex B of the ITC’s Sunset
Regulations , which provides a sample schedule for five-year reviews.
5.274  With respect to the Panel’s request for certain figures concerning the United States’ initiation
and conduct of sunset reviews under Article 21.3, the United States indicated as follows:  The numberWT/DS213/R
Page 63
of sunset reviews under Article 21.3 initiated since 1 January 1995 is 56.  The number of such reviews
which resulted in revocation of the CVD order in question due to no filing by the domestic industry of
a notice of intent to participate is 17.  The number of expedited sunset reviews conducted since
1 January 1995 is 24.  The number of such reviews which resulted in revocation of the CVD order in
question, due to a finding of no likelihood of continuation or recurrence of subsidisation is 0, and dueto a finding of no likelihood of continuation or recurrence of injury is 5.  The number of full sunset
reviews conducted since 1 January 1995 is 15.  The number of such reviews which resulted in
revocation of the CVD order in question, due to a finding of no likelihood of continuation or
recurrence of subsidisation is 3, and due to a find ing of no likelihood of continuation or recurrence of
injury is 4.
G. 
RESPONSES OF THE UNITED STATES TO QUESTIONS FROM THE EUROPEAN COMMUNITIES
FOLLOWING THE FIRST MEETING OF THE PANEL
5.275  As an introductory matter, the United States observes that the EC in its questions makes
various assumptions regarding the “purposes” of SCM Agreement provisions.  In this regard, it is
important to recall the explanation of the Appellate Body in Japan – Alcoholic Beverages :  “the
treaty’s ‘object and purpose’ is to be referred to  in determining the meaning of the ‘terms of the
treaty’ and not as an independent basis for interpreta tion.”  In this dispute, the EC purports to find or
discern various “purposes” without reference to the text of the SCM Agreement, and then refers to
obligations not found in the text which presumably derive from these “purposes”.   This use of
“purposes” is precisely the “independent basis for interpretation” which the Appellate Body described
as incorrect, and operates to circumvent the requirement in DSU Article 3.2 that Dispute Settlement
Body rulings cannot add to or diminish the rights and obligations provided in the covered agreements.
5.276  With respect to the EC’s question concerning the meaning of “duly substantiated request”,
Article 21.3 of the SCM Agreement authorizes authorit ies to initiate a sunset review “on their own
initiative or upon a duly substantiated request made by or on behalf of the domestic industry”
(emphasis added).  Under US law, Commerce auto matically initiates a sunset review on its own
initiative within five years of the date of publication of a countervailing duty order.  US law does notcontain a provision regarding initiation of sunset reviews based upon a “duly substantiated request”.
5.277  With respect to the EC’s question concerning “expression of interest” as applicable to
initiation of sunset reviews, section 351.218(d)(1)(i) of Commerce’s regulations provides for filing of
a notice of intent to participate by domestic interested parties that intend to participate in a sunset
review.  Section 351.218(d)(1)(ii) sets forth the required contents of the notice of intent to participate,
which includes, inter alia , information related to the identity of the domestic interested party and its
legal counsel, whether the domestic interested party is related to foreign producers or exporters, thesubject merchandise and country subject to the sunset review, and the applicable Federal Register
citation.  Section 351.303 of Commerce’s regulations governs the filing, format, translation, service,
and certification of documents, and applies to all persons submitting documents to Commerce for
consideration in any segment of an antidumping or countervailing duty proceeding, including sunset
reviews.  All filings, including a notice of intent to participate in a sunset review, must be in writing in
accordance with the provisions of section 351.303.
5.278  With respect to the EC’s question concerning burden of proof in sunset reviews, Article 21.3
does not impose a burden of proof on US authorities.  In order to withstand scrutiny under Article 11
of the DSU, however, an Article 21.3 sunset determination must be supported by sufficient evidence
and be based on proper legal interpretations.  The burden of proof is on the complaining party – in thisinstance, the EC – to demonstrate that Commerce’s determination was not supported by adequate
evidence or proper legal interpretations.WT/DS213/R
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5.279  Article 21.3 does not contain the word “demons trate”.  Instead, Article 21.3 provides for
termination of a countervailing duty unless the authorities “determine” that the expiry of the duty
would likely lead to continuation or recurrence of subsidization and injury.  In the case at issue,
Commerce determined that expiry of the countervailing duty on certain corrosion-resistant carbon
steel flat products from Germany would be likely to lead to continuation or recurrence ofsubsidization.  Commerce’s determination is supported by adequate evidence and is based on a proper
legal interpretation of the applicable provisions.
5.280  With respect to the EC’s questions concerning the purpose and consequence of an
investigation versus a sunset review, the purpose of a countervailing duty investigation is to determine
the existence and degree of foreign government subsidization and whether the subsidized imports are
causing injury.  In contrast, the purpose of a sunset review is to determine whether revocation of a
countervailing duty order would be likely to lead to continuation or recurrence of subsidization andinjury.  The consequence of an affirmative finding of subsidization and injury in an investigation is
the imposition of a countervailing duty.  The consequence of an affirmative finding of likelihood of
continuation or recurrence of subsidization and injury  in a sunset review is the continued maintenance
of the countervailing duty.  The completion of a sunset review does not trigger the assessment of
duties or change cash deposit requirements.
5.281  With respect to the EC’s questions concerning preliminary determinations under US system,
the purpose of Commerce’s preliminary determinatio n in a full sunset review is to provide an
explanation of Commerce’s findings concerning the likelihood of continuation or recurrence of
subsidization and the net countervailable subsidy likely to prevail if the countervailing duty were
revoked.  Commerce’s preliminary determination takes into account the factual information andarguments submitted by the parties in their substantive responses and rebuttals.
5.282  Section 351.218(d)(3)(i) of Commerce’s Sunset Regulations  provide that substantive
responses to a notice of initiation are due 30 days after the date of publication in the Federal Register
of the notice of initiation.  Rebuttal to a substantive response is due five days after the date the
substantive response is filed.  (Section 351.218(d)(4).)  Section 351.218(d)(4) of the Sunset
Regulations  also provide that Commerce normally will not accept or consider any additional
information from a party after the time for filing rebuttals has expired.  Section 351.302(c), however,
provides that a party may request an extension of a specific time limit.  Unless expressly precluded by
statute, Commerce may, for good cause, extend any time limit established by its regulations.  (Section
351.302(b).)  The US countervailing duty statute does not contain deadlines for submission of
information in a sunset review.
5.283  The preliminary determination provides interested parties with an opportunity to review
Commerce’s analysis of the information on the record.  Commerce issues preliminary determinations
in investigations and administrative reviews as well.  Preliminary determinations provide interested
parties with an opportunity to comment, in case and rebuttal briefs, on Commerce’s preliminary
findings.  Commerce is not precluded from requesting factual information after the issuance of a
preliminary determination, but normally it does not do so.
5.284  With respect to the EC’s questions concerning data collection periods, section
351.301(c)(2)(iii) of Commerce’s regulations provides that interested parties will have at least 30 days
from the date of receipt to respond to a questionnaire.  This rule applies to original countervailing
duty investigations.  Similarly, section 351.218(d)(3)(i) provides for a 30-day deadline with respect to
a response to the sunset questionnaire.  Furthermore, as discussed above, a party may request anextension of a specific time limit.WT/DS213/R
Page 65
5.285  With respect to the EC’s question concerning Article 12, the United States agrees that
Article 21.4 of the SCM Agreement expressly provides  that the provisions of Article 12 – as opposed
to the provisions of Article 11 – apply to these types of reviews.
5.286  With respect to the EC’s questions concerning Commerce’s application of a 0.5 per cent
de minimis  standard in sunset reviews, as well as its questions concerning the subsidy rate Commerce
reports to the USITC, because Article 21 of the SCM Agreement does not contain any de minimis
standard, these questions is not relevant to the issues raised in this dispute.  Nevertheless, the
United States notes that, as a matter of domestic policy, Commerce has applied a 0.5 per cent de
minimis standard in administrative ( i.e., assessment) reviews.  The application of this standard pre-
dates the Uruguay Round negotiations.  The entry into force of the WTO Agreement did not require a
change in this standard, because the Article 11.9 de minimis  standard is only applicable to
investigations.  For this same reason, when the United States amended its law in 1994 to provide forsunset reviews, it chose to apply its long-standing 0.5 per cent de minimis  standard to sunset reviews.
The United States could have chosen to apply no de minimis  standard to sunset reviews at all.
5.287  Commerce’s de minimis  standard in reviews is different from its de minimis  standard in
investigations.  Prior to the entry into force of  the WTO Agreement, Commerce applied a 0.5 per cent
de minimis  standard in investigations.  However, in order to conform to Article 11.9 of the SCM
Agreement, Congress amended the US statute so as to require the use of a 1 per cent de minimis
standard in investigations.
5.288  In a sunset review, the de minimis standard has particular application in several respects.  For
example, if  Commerce determined in a sunset pr oceeding, based on the original  investigation and
any administrative reviews, that the existing count ervailable subsidy programmes had been terminated
and that the likely net countervailable rate of subsidization was de minimis ,   Commerce normally
would determine that there was no likelihood of continuation or recurrence of subsidization.
5.289  In addition, the Sunset Policy Bulletin  (section III.A.6.b) provides that, if the combined
benefits of all programmes considered in the sunset review have never been above de minimis at any
time the order was in effect, and there is no likelihood that the combined benefits of such programmeswould be above de minimis in the event of removal of the duty, Commerce normally would determine
that there is no likelihood of continuation or recurrence of subsidization.
5.290  In 1987, following a notice and comment rulemaking proceeding, Commerce published a
final regulation codifying its long-standing practice of applying a 0.5 per cent de minimis  standard in
investigations and administrative reviews.  52  FR 30660 (17 August 1987).  Pursuant to the
regulation, net aggregate subsidies (and ad valorem dumping margins) of less than 0.5 per cent would
be disregarded for purposes of publishing or revoking orders, setting cash deposit rates, or assessingcountervailing duties.  In response to comments regarding Commerce’s decision to set 0.5 per cent as
the de minimis  threshold, Commerce stated as follows:
The doctrine of de minimis non curat lex , that the law does not concern itself with
trifles, is a basic tenet of Anglo-American jurisprudence, inherent in all US laws.
With respect to the antidumping and countervailing duty laws, the Department hasconcluded that the potential benefits to domestic petitioners from orders on dumping
margins or net subsidies below 0.5% are outweighed by the gains in productivity and
efficiency provided by a de minimis  rule.  Even in price-sensitive markets, the effect
of requiring a deposit or assessment of duty based on a rate of 0.5% ad valorem
would be negligible.  No party submitting comments has provided any information tosupport a different conclusion.  Accordingly, it would be unreasonable for the
Department and the US Customs Service to squander their scarce resources
administering orders for which the dumping margins or the net subsidies are belowWT/DS213/R
Page 66
0.5%.  The fact that the Department of Treasury and Commerce may not always have
applied a uniform de minimis  standard in the past is an additional reason supporting
the adoption of a fixed standard which can be applied consistently in the future.
52 FR at 30661.  In response to comments that the de minimis  threshold be set at 1 per cent,
Commerce also stated that,
After many years of applying a 0.5 per cent de minimis  threshold, the Department has
developed no basis to conclude that 1 per cent represents a level of benefit not worth
the expense of investigations or annual reviews....
5.291  As explained in the United States First Written Submission, Commerce starts with the total
ad valorem  rate determined in the original investigation and considers whether, since the
investigation, it has found subsidy programmes to be terminated and/or new programmes to becountervailable.  Based on findings, which normally are made in the context of administrative
reviews, Commerce may adjust the rate determined  in the original investigation to take these
subsequent findings into account.
5.292  With respect to the EC’s question concerning the amount of subsidy in the context of a sunset
review, Article 21.3 provides for consideration of whether expiry of a countervailing duty wouldlikely lead to a continuation or recurrence of subsidization and injury.  Footnote 52 states that a
finding, in the most recent administrative review, that no duty is to be levied shall not by itself require
the authorities to terminate the definitive duty.  This is consistent with the prospective nature of a
sunset review.  Thus, the level of subsidization at the time of a sunset review is not necessarily
determinative of the outcome of a sunset review.  However, if Commerce determined in a particularsunset review that there was no likelihood that the net countervailable subsidy rate would exceed
0.5 per cent ad valorem  in the event of revocation of the countervailing duty, Commerce would
determine that there was no likelihood of continuation or recurrence of subsidization and revoke the
duty.
5.293  With respect to the EC’s question concerning use of the 1 per cent, Article 11.9 de minimis
standard, for the reasons set forth in the United States’ First Written Submission and Oral Statement,
the Article 11.9 de minimis standard does not apply to Article 21.3 sunset reviews.  Article 21.3 does
not contain any de minimis  standard.  Commerce does apply a 0.5 per cent de minimis  standard in
sunset reviews, but does not do so because of any obligation imposed by the SCM Agreement.  In the
final results of the full sunset review of corrosion resistant steel from Germany, Commerce
determined that revocation of the order would be li kely to lead to continuation or recurrence of a
countervailable subsidy and found that the net countervailable subsidy likely to prevail if the orderwas revoked was 0.54 per cent ad valorem , which is above the de minimis  standard under US law.
5.294  With respect to the EC’s questions concerning calculation of a current rate of subsidization in
a sunset review, Commerce normally does not determine the present net countervailable subsidy rate
in a sunset review, and it did not calculate the level of subsidization present at the time of the sunset
review in the corrosion-resistant steel from Germany case.  Commerce did, however, adjust the netcountervailable subsidy rate determined in the in vestigation to account for two programmes that the
EC and German producers argued had been terminated with no continuing benefits.  Nevertheless,
nothing in Article 21.3 or any other provision of the SCM Agreement mandates a particular
methodology for determining whether subsidization is likely to continue or recur if the duty were
revoked.
5.295  The focus of a sunset review is necessarily on the possible future behaviour of foreign
governments and exporters.  The best evidence of that behaviour is the net countervailable subsidy
rate determined in the original investigation because it is indicative of behaviour without theWT/DS213/R
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discipline of a countervailing duty in place.  Star ting with the net countervailable subsidy rate from
the original investigation, Commerce may make adju stments, including adjustments for subsidies for
which benefits were allocated over time, in accordance with the Sunset Policy Bulletin .  (See section
III.B.3.)  Commerce, however, normally makes such  determinations in the context of an annual
administrative review where interested parties may submit, inter alia , information concerning the
level of subsidization present during the period of review for Commerce’s examination.
5.296  With respect to the EC’s question regarding Commerce’s declining balance methodology, as
explained in the United States’ First Written Submission, the ad valorem  subsidy rate for any period
cannot be determined without knowing the applicable sales volume.
5.297  With respect to the EC’s questions concerning the rationale for the 1 per cent de minimis
standard, the only de minimis standard found in the SCM Agreement is in Article 11.9 which, by its
terms, is limited to investigations.  Neither Article 11.9 nor any other provision of the SCMAgreement provides a rationale for the de minimis  standard.  This standard is a product of
negotiations.  As discussed in more detail above, when Commerce codified its own de minimis
standard in its regulations, it considered several rationales, including administrative efficiency, as
providing a basis for the standard.
5.298  With respect to the EC’s questions concerning new countervailable subsidies granted since
1993, as discussed in Commerce’s preliminary sunset determination, there were no administrative
reviews of this order.  As a result, Commerce had not considered whether German producers
benefitted from additional subsidies granted since the original investigation.  Commerce did not
consider domestic interested parties’ allegations concerning new subsidies in the context of the sunset
review because US law intends that such allegations should normally be made in the context ofadministrative reviews and the lack of any administrative reviews, in and of itself, was not sufficient
to constitute good cause to consider the petitioners ’ allegations in the context of the sunset review.
Furthermore, once Commerce found likelihood based on previously investigated subsidies, a finding
of additional new subsidies would not have changed its affirmative likelihood determination.
5.299  With respect to the EC’s question concerning the application of footnote 52, footnote 52
stands for the proposition that an existing subsidy programme could be the basis for a determination
in a sunset review that the expiry of the counterva iling duty would likely lead to the continuation of
subsidization even if Commerce found a net countervailable subsidy rate of zero attributable to that
programme in the most recent administrative review .  In other words, footnote 52 means that the
current level of subsidization is not decisive as to whether subsidization is likely to recur.
5.300  With respect to the EC’s questions concerning Commerce’s findings in other sunset
determinations, the dispute before this Panel involves Commerce’s sunset determination concerningcertain corrosion-resistant carbon steel flat products from Germany.  As a general matter, Commerce
sunset determinations involving other merchandise and other countries are available as public,
published documents and can be found on Commerce’s website, the website of the US Government
Printing Office, or through commercial database services such as Lexis.  We note, however, that to
date, Commerce has found no likelihood of continuation or recurrence of subsidization in thefollowing three full sunset reviews:  C-122-404, Live Swine from Canada, 64 Fed. Reg. 60301
(November 4, 1999); C-333-401, Cotton Shop Towels from Peru, 64 Fed. Reg. 66884 (November 30,
1999); and C-201-505, POS Cookware from Mexico, 65 FR 284, (January 4, 2000).
5.301  With respect to the EC’s question concerning the effect of the net subsidy rate on volume of
exports, issues concerning the volume of exports to the United States are properly considered in thecontext of the USITC’s injury determination, which has not been challenged by the EC in this dispute.
Nevertheless, the United States would point out that the ad valorem  countervailing duty rateWT/DS213/R
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determined in the investigation was 0.60 per cent and, according to the EC, the German producers
stopped shipping to the United States once this  0.60 per cent countervailing duty was in place.
5.302  With respect to the EC’s questions concerning amounts for certain denominators or
numerators, Commerce’s finding of likelihood of con tinuation or recurrence of subsidization is based
on and supported by the administrative record of the sunset review.  The EC’s questions are not reallyquestions.  Rather, the EC is asking the United States to research and perform new calculations in the
context of the EC’s challenge to the United States’ laws and regulations concerning sunset reviews
and to a particular Commerce sunset determination.  The United States does not believe it is
appropriate to do so in this context.
H. 
COMMENTS OF THE EUROPEAN COMMUNITIES ON THE RESPONSES OF THE UNITED STATES TO
QUESTIONS FROM THE PANEL FOLLOWING THE FIRST MEETING OF THE PANEL
Introduction
5.303  The US points (para. 2) that the EC is not challenging the injury determination in this
proceeding.  However, the EC in this proceeding is not challenging the injury requirement only for the
purpose of verifying the accuracy of the ITC injury determination as such, but it is doing so for the
purpose of the de minimis  challenge, i.e. as a requirement that needs to be demonstrated positively in
the context of a sunset review under Article 21.3 of the SCM Agreement (see First Oral Statement of
EC, footnote 27).
Question 1(a)
5.304  Throughout its responses to the questions from the Panel, the US espouses a formalistic
interpretation of Article 21.3 SCM Agreement  that would essentially strip Articles 21.1 and 21.3 of
any practical effect.  An example of this is the US’s statement in paragraph 5 that Article 21.3
contains “no requirement to quantify the amount of subsidization likely to continue or recur”.
Article 21.3 permits the continuation of a countervailing duty order only if the authorities
affirmatively determine that “the expiry of the duty would be likely to lead to continuation orrecurrence of subsidization and injury”.  In turn, Article 15.5 defines “injury” as that injury caused by
subsidized imports “through the effects of subsidies”.  Thus, an authority can only make a proper
determination concerning the continuation or recurrence of injury if it considers the amount of
subsidization that is likely to continue or recur if the duties were to expire.  Under the US system, this
means that DOC must provide the ITC with an accu rate calculation of the amount of subsidization
that is likely to continue or recur if the countervailing duty order were revoked.  The US DOC has
failed to do that in this case but simply continue d to apply the countervailing duty rate calculated for
1991 despite the clear and indisputable evidence provided by the Government of Germany and the
German producers establishing that this rate was no longer accurate.
5.305  As regards the references to paragraph 6.87 of the Korea DRAMS  panel report, the US draws
the wrong conclusions.  In that report, the Panel had not dealt with a sunset review in the sense of
Article 11.3 of the AD Agreement, but a claim for a duty assessment review under Article 9.3 of theAD Agreement.  But there is no exact equivalent of Article 9.3 AD Agreement in the SCM
agreement.  Such duty assessment reviews fall by default within the scope of Article 21.2 of the SCM
Agreement.  In addition, and more importantly, the basic reason for which that Panel interpreted
Articles 5.8 and 9.3 of the AD Agreement in the way it did is stated in paragraph 6.90 of the report, to
which the US omits to make any reference.  There the Panel held that:  “In the context of Article 9.3duty assessment procedures, however, the function of any de minimis  test applied by Members is to
determine whether or not an exporter should pay a duty .  A de minimis  test in the context of an
Article 9.3 duty assessment procedure will not remove an exporter from the scope of the order.”
(emphasis added)  This is clearly not the case of a CVD sunset review determination, because theWT/DS213/R
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basic principle laid down by Article 21.3 and 21.1 of the SCM Agreement is the termination of the
CVD order unless a fresh, positive finding about likelihood of subsidization, injury and causality is
made by the authorities.
Questions 1(b) and (c)
5.306  Contrary to the US responses, the US ITC does consider negligibility in its sunset review
determinations.  Under US law, cumulation is specifically prohibited in a sunset review if “imports
are likely to have no discernable adverse impact on the domestic industry”.  19 U.S.C. § 1675a(a)(7).
This provision was added to US law by the Uruguay Round Agreements Act.  In its report to that Act,
the US Senate specifically stated that this cumulation provision was being added because Congress
“believe[d] that it is appropriate to preclude cu mulation where imports are likely to be negligible”.
S. Rep. No. 103-412, at 51 (1994).  Similarly, the US ITC also considers differences in the“conditions of competition” in making its cumulation decision in a sunset review.  See Sugar from the
European Union, USITC Pub. No. 3238 at 15 (1999) <ftp://ftp.usitc.gov/pub/reports/
opinions/PUB3238.pdf>.
5.307  Moreover, for the reasons explained in the comment to the previous question, the combined
effect of paragraphs 6.43-6.6.50 of the Korea DRAMS  panel report supports the proposition that the
standards of Article 11.9 and 15.3 should apply to Article 21.2 and to Article 21.3 reviews.
Questions 1(d)
5.308  Acceptance of the US position would render the provisions of Article 27, paragraphs 10 to 12,
useless once the initial CVD order is in place.  This position is totally unreasonable when properconsideration is given to the context, object, purpose and scope of special rules for developing country
members laid down in the SCM and, more generally, the WTO Agreements.
Question 21
5.309  As the US readily admits, its rules apply with equal force to both “transition orders” and
“non-transition” orders.  Article 21.3 also makes no distinction between transition and non-transition
orders and does not in any way permit an authority to apply a lower level of review or procedure with
respect to transition orders.
Question 23
5.310  The US’s response to this question reveals how its system of automatic self-initiation results
in the conduct of a sunset review without the requirement that the domestic industry ever provideevidence substantiating the likelihood of the continuation or recurrence of subsidization.  In
paragraph 18, the US concedes that the “ only specific factual information” that it considers in making
the decision as to whether to conduct a full sunset review is the “aggregate export figures provided by
respondent interested parties”.  The other factual information submitted by the parties does not play
any role in DOC’s adequacy determination and is not discussed by DOC until its preliminary
determination, which occurs after the time for submitting additional factual information has long
expired (See EC Second Written Submission at paras. 41-42).
Question 24
5.311  The US arguments omit to mention another generally accepted principle of interpretation that
“omissions in different contexts may have different meanings, and omission, in and of itself, is not
necessarily dispositive”.  This is what the Appellate body has held in several cases.  For example, in
the Canada – Automotive Industry  report, the Appellate Body held that the panel in that case hadWT/DS213/R
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erred because it failed to examine the ordinary m eaning of the terms in their relevant context and in
light of the object and purpose of the entire SCM Agreement in order to identify the proper meaning of
an omission in the text.75  Another example provides the US reasoning in paragraph 48 of its response
to question no 32(b) from the Panel, where it states that “Articles 19 and 21.2 of the SCM Agreement
do not preclude no shipment administrative reviews”.  Without passing judgment on the substance ofthis US claim , what is im portant to note here is the reasoning by inference  resorted to by the US,
which is an accepted method of interpretation under the generally principles of public international
law on treaty interpretation.
Question 25
5.312  In its response, the US concedes that it does not calculate the level of subsidization in a sunset
review but simply reports to the US ITC the ra te that was already calculated in the original
investigation (at paras. 23-24).  This in turn taints the US ITC injury determination because it is not
based upon the level of subsidization that would be likely to continue or recur if the countervailing
duties were terminated as required by Article 21.3.  While the US contends that the rate from the
original investigation is the “only calculated rate that reflects the behaviour of exporters and foreign
governments without the discipline of an order in place”, this reliance upon the rates from the originalinvestigation cannot be applied as an irrefutable presumption.  To do so would render the provisions
of Articles 21.1 and 21.3, requiring the termination of countervailing duties after five years,
meaningless because the fact that countervailing duties were originally imposed would be used as the
justification for keeping those duties in place indefinitely.
5.313  The US’s discussion (at para. 25) demonstrates a blatant violation of Article 12 SCM
Agreement  as made applicable to sunset reviews by virtue of Article 21.4.  In paragraph 25 of its
replies, the US states that, in making its determination in a sunset review, it “ only uses information
developed in the original investigation or prior administrative proceedings” (emphasis added).  The
US tries to justify this practice by stating that “this information has been subject to the rigors of the
administrative process in those proceedings, such as interested party briefing and onsite verification”.In our view, what the US fails to discuss is th at reviews under Article 21.3 are, by virtue of
Article 21.4, subject to the same evidentiary and procedural requirements as investigations and
administrative reviews, including the ability to conduct onsite verifications.
5.314  Moreover, DOC’s stated preference for information developed in the original investigation
cannot justify its refusal to adjust the subsidy dete rmination for changes in the CIG programme.  All
of the information submitted by the Government of Germany and the German producers, showing the
termination of the CIG programme with no significant residual benefit after 2000, comes directlyfrom the original investigation and was subject to full briefing and verification in that case.  The
conditions and requirements of Article 12 are fully a pplicable to sunset reviews and no distinction is
made therein whether the information is collected in the original investigation or in an Article 21.2 or
an Article 21.3 review.  Most importantly, what the US terms “ a relationship of …convenience ” (at
para. 25) under its domestic law cannot derogate from the basic principles of Articles 21.3 and 21.4 ofthe SCM Agreement to make a fresh, proper determination of likelihood of subsidization, injury and
causality on the basis of positive evidence.
Question 26
5.315  While the United States concedes that the definition of injury contained in Article 15 applies
throughout the SCM Agreement, it reads (at paras. 26-29) unduly restrictively  Article 15, by applying
only those provisions that it finds favourable.  By doing so, however, it seems to contradict its
                                                     
75 Appellate Body Report , Canada – Certain Measures Affecting the Automotive Industry (“Canada –
Automotive Industry”) , WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, paras. 138-143.WT/DS213/R
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previous replies to question 24 (a) and (b) from the Panel (at paras 19-21).  Indeed, the reference in
Footnote no 45 to “threat of material injury”76  appears already to accommodate, albeit in a different
context, the prospective nature of the analysis claimed by the US under the “likelihood” test of an
Article 21.3 sunset review.  Moreover, as stated in the comment to question 1(a) above, the definition
of injury must include the element of causation.  Article 15.3 also makes clear that the de minimis  and
negligibility provisions of Article 11.9 are an integral part to the definition of injury.  As the Korea
DRAMS  panel has held, in the comparable situation of an Article 11.2 of the AD Agreement review,
“while mathematical certainty of recurrence of dumping is not required, the conclusions must still be
demonstrable on the basis of the evidence adduced ” (at paras. 6.43 and 6.50 of the report).  The
obligation to adduce such “evidence” in a CVD sunset review is squarely place, by virtue of
Article 21.4, on the authorities undertaking the review for the purpose of making a “determination”
under 21.3.
Question 27
5.316  The US reply to question no 27(a) is another illustration of the isolationist interpretation of
Article 21.3 advanced by it.  There is indeed no valid reason to interpret the term “domestic industry”
in Article 21.3 differently from that laid down in Article 11.4 in conjunction with Article 16 of theSCM Agreement.  It follows that a request made by “at least one domestic interested party” is not a
“duly” made request under Article 21.3 because it would not comply with the initiation requirements
of Article 11.4.
Question 28
5.317  Here the US appears to be placing undue importance on the use of the word “investigation” in
Article 11.9, as opposed to the use of the word “ review ” in Article 21.3.  The same undue reliance on
the word “investigation” is shown by the US in its reply to question 1(d) above concerning
Article 27.10.  Although it is true that Article 11 la ys down provisions on “initiation and subsequent
investigation”, the term “investigation” denotes the “process or an instance of investigating” or “a
formal examination or study”.77  It follows that although this term encompasses a substantive exercise
relating to this process of fact finding, it is more accurate to say that its scope is narrower than the
scope of the term “determine” as this is used in a number of Articles in the Agreement, such as in
Articles 19 or 21.3.  Indeed, an investigation may lead to the imposition and collection of
countervailing duties when the Member makes a final “determination” under the conditions laid down
in Article 19.  Therefore, what is particularly important in Article 11.9 is not the use of the term
“investigation”, as the US claims, but rather the use of the terms “ the authorities concerned are
satisfied that”78, which is the equivalent to the concept of making a “ determination ” used in
Article 19 or Articles 21.3 of the SCM Agreement.  In other words, Article 11.9 comports an element
of substantive determination, which, although made in the process of the original investigation , is not
different from the substantive point of view of the finding that needs to be made in a sunset
determination  about likelihood of subsidization, injury and causality.  What is significant, therefore, is
the substantive determination that should be made by the authorities about the level of subsidization
under both Articles 11.9 and 21.3, which must in both cases entail a determination on de minimis  level
of the subsidy, injury and causal link rather than the procedural process or stage at which this occurs.
In other words, a determination in a sunset review requires the conduct of an investigation as much as
an investigation is required prior to the original  determination.  Therefore, the fact that the word
“investigation” does not appear in Article 21.3 makes no difference.  Investigating authorities are not
absolved of their obligation to investigate  from the day after an original measure is imposed.  This
would amount to saying that authorities are entitled to apply a lower standard of examination to issues
                                                     
76 As this is defined in Article 15.7 of the SCM Agreement.
77 Oxford Concise English Dictionary, 9th ed. 1995.
78 The corresponding phrase in Article 5.8 of the AD Agreement is “the authorities determine  that…”.WT/DS213/R
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raised in reviews, compared to that which applies in original investigations.  It follows that the US
insistence only on the word “investigation” in Article 11.9 or 27.10 of the SCM Agreement, to
exclude the application of the de minimis  rule in sunset reviews, amounts to simply reading these
provisions outside their context, object and purpose.
Questions 29 and 30
5.318  The US claims (at paras. 34-36) that the in terpretation proposed by the EC would render
Footnote 52 a nullity and asserts that there must be a reason for its inclusion in Article 21.3.  This
answer is rather puzzling.  The EC does not dispute that “a finding in the most recent assessment
procedure that no duty is to be levied shall not by itself require the authorities to terminate the
definitive duty”.  Such a finding may be based on a finding on the zero subsidy or on some other
reason.  But Footnote 52 does not support the conclusion the US attempts to draw from it.
5.319  The US argument is based on an understanding of the concept of de minimis  in Article 11.9
that reflects the Latin proverb “ de minimis non curat lex ”.  As the US has explained in several places
(e.g. in its reply to question 30 from the Panel and its reply to question 8 from the EC, respectively at
paras. 41 and 16 of its replies), it applies voluntarily the de minimis  rule of 0.50 per cent under
domestic law for reasons of administrative efficiency because the US law is not supposed to “concernitself with trifles”.
5.320  The preparatory history of Article 11.9 and the corresponding provision in the AD
Agreement, however, indicate that the rationale of the de minimis  rule in these Agreements is different
from that on which the de minimis  rule is applied in the US.  In these two WTO Agreements, the level
of 1 per cent ad valorem was agreed to be the de minimis  threshold not for reasons of administrative
efficiency but because for imports below this level the causal link between subsidized imports
and the material injury to domestic industry would not exist .
79  This is a significantly different
rationale, because it demonstrates that the US continued under its domestic law its old practice going
back to 1980, as codified in the 1987 Guideline on the minimis rule (see Exhibit US-6).  Based on that
understanding of the de minimis  rule, the US then extrapolates from Footnote 52 by making several
illogical leaps:  First, it argues that if a zero rate  of subsidy cannot require the authorities to terminate
the CVD duty, that means that the level of the subsidy, even if zero, is not relevant for deciding
likelihood of continuation or recurrence of subsidization, injury and causality.  Second, it draws the
operational conclusion that it is not necessary to calculate the actual level of subsidy in a sunset
review.  Third, it does consider that the de minimis  rule of Article 11.9 applies to Article 21.3 reviews.
5.321  The EC considers that the current level of subsidy is not always “determinative” of the
outcome of a sunset review.  However, the “prospective nature of a sunset review” is subject to therequirement for the authorities to positively determine that subsidization is likely to continue or recur.
Thus, if the current level of subsidy is zero or de-minimis, this does not by itself  end the measure, but
it does require the US DOC to demonstrate what change of circumstances will lead to the subsidy
increasing to a level above de-minimis, if it wishes to continue the measure.  In the case of a non-
recurring subsidy which is already de-minimis and subject to the US declining balance methodology,the DOC must adduce and rely on positive evidence of new subsidies or of a sharp fall in the
denominator in order to find likelihood of subsidization, injury and causality.
5.322  Moreover, the US states that the “focus” of a sunset review is on the possible future behaviour
of foreign governments and exporters.  This is misleading.  First, we do not see in what respect the
behaviour of the exports  would be relevant in this context.  Second, a sunset review determination
requires positive evidence to demonstrate that subsidization, injury and causality is likely  to continue
or recur.  The review should therefore focus on “demonstrable evidence adduced by the authorities”
                                                     
79 E.g., MTN.GNG/NG10/W/9/Rev. 3,  point E, of 26 may 1988, an d MTN.GNG/NG10/W/4, page 42.WT/DS213/R
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rather than on pure speculation and conjecture derived by applying the level of subsidization from the
original investigation.  The US states that the “best evidence” of future behaviour of governments and
exporters is the rate from the original investigation.  However, in the case of C orrosion-resistant steel
from Germany , how can this be?  The DOC has itself established that there are no new subsidies and
that the non-recurring subsidies found in the original investigation, 9 years ago, have now declined to
a level that is equivalent zero by its own calculation methodology.
5.323  There appears therefore to be only one reasonable conclusion: the US has modified its past
practice after the WTO Agreements on AD and SCM entered into force only as regards
determinations made in the initial investigation, but left its domestic legislation on sunset reviews
unchanged by applying its 0.50 per cent de minimis  rule based on a completely different rationale (i.e.
administrative convenience and efficiency).
Question 30
5.324  In addition to what has been explained above, the US’s response to question 30 again reveals
its refusal to provide parties to a sunset review with the evidentiary and procedural rights established
in Article 12.  In paragraph 39, the US reiterates that its determination in a sunset review is “based on
the original investigation and any administrative reviews”.  It states:
“In a sunset review, the de minimis standard has particular application in several
respects.  For example, if Commerce determined in a sunset proceeding, based on the
original investigation and any administrative reviews, that the existing
countervailable subsidy programs had been terminated and that the likely net
countervailable rate of subsidization was de minimis , Commerce normally would
determine that there was no likelihood of continuation or recurrence of
subsidization.” (emphasis added)
5.325  A closer look into this statement reveals that the US’s reasoning is, from a purely logical
point of view, inherently contradictory.  When th e US DOC finds in a sunset review that the net
subsidy rate is likely to be below its domestic 0.50 per cent rule, it makes a positive empirical findingthat the subsidy is likely to continue at that leve l.  But since this level of subsidy is not considered
under US law worth pursuing, it draws the conclusion (which is literally a legal fiction) that there
“will be no likelihood of continuation or recurrence of subsidization”.  In reality, however, this legal
conclusion of no likelihood of continuation of subsidization is not empirically correct, because the
subsidy will continue albeit at a level below the 0.50 per cent.  Therefore, in reality this legal
conclusion is equivalent to a finding that there is no causal link of material injury for the purposes of a
sunset review under Article 21.3 of the SCM Agreement.  For this reason as well, it simply makes  nosense the US’s refusal to recognize the need to apply in sunsets the 1 per cent de minimis  rule of
Article 11.9, but continue to apply a 0.50 per cent de minimis  rule under its domestic law.
Question 31
5.326  The US’s response to question 31 begs the issue.  In paragraph 44, the US states that it “does
not calculate the present rate [of subsidization in a sunset review] because the purpose of a sunset
review is to determine the likelihood of the continuation or recurrence of subsidization” and that this
“necessarily involves a prediction of a government’s future behaviour without the discipline of a
countervailing duty order in place”.  The issue is not whether DOC must determine the current level
of subsidization rather than the likely future rate of subsidization in a sunset review.  Instead, the issueis whether DOC may irrefutably presume that the likely level of future subsidization is the same as the
rate of subsidization determined in the original investigation.WT/DS213/R
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5.327  Moreover, the US does not answer the basic question why it can conduct on site verifications
and apply the full rigors of an investigation in the context of an administrative review but cannot do or
does not wish to do so in the context of a sunset review.  Attempting to predict the future behaviour of
a government in no way prevents the US authorities from conducting a proper, fresh, new
investigation to find out about the numerator or denominator of the exporters’ sales, the likelihood ofthe subsidy programme been modified or withdrawn or whether there is a non-recurring subsidy the
amount of which has already been expensed and the remaining benefit flowing from it is nearly zero.
5.328  Furthermore, the US Sunset Policy Bulletin  (see Exhibit EC-15) provides in Section III.A.5
some criteria about the way future government behaviour could be predicted.  They include in
particular the legal method  by which the government granted or eliminated a programme, i.e. whether
this is done by administrative  action or through legislative  action.  The US Sunset Policy Bulletin
proposes to the authorities to draw different conclusions depending on the legal method applied.  Thissupports clearly the arguments the EC made in paragraph 34 of its Second Written Submission.  This
is all the more important here, as the programmes under review in the present case and, in particular
the CIG programme, were granted by legislative action and could not as such be reinstated by
administrative action only.
5.329  In addition, the improper nature of the irrefutable presumption used by the US DOC is clear
from the facts of this case.  In this proceeding, DOC determined that the CIG programme would
continue to provide benefits after the end of the sunset review ( i.e., after 2000) in the same amount as
was determined for the year 1991 in the original investigation ( i.e., 0.39 per cent).  This determination
that the CIG programme would continue to pay benefits in the future at the rate of 0.39 per cent is in
direct conflict with all of the evidence submitted in the sunset review, showing that the CIGprogramme applied only to investments made prio r to 1 January 1986 and that the amount of residual
benefits that would continue after the year 2000 wa s close to zero by DOC’s own calculation method.
5.330  The EC would also note the US admission, in its response to question 31, that, in a sunset
review, it “ only uses information developed in the original investigation or prior administrative
review”. (at para. 45, emphasis added).
Question 32
5.331  While the US contends that its regulations theoretically permit “no shipment reviews”, it
readily admits that its “long-standing policy is to refrain from conducting administrative reviews
where there have been no shipments of the subject merchandise” (at para. 47).  In fact, the US points
to no cases in which it has ever conducted a no-shipment administrative review of a countervailing
duty order.  The US DOC’s uniform practice has always been to terminate any reviews in which itfinds that no shipments were made during the administrative review.
80
5.332  With respect the US’s discussion of “change circumstances” reviews, it must be noted that
DOC’s determination whether or not to initiate a change circumstances review is entirely
discretionary.  In addition, the SCM Agreement  does not make a review under Article 21.3 in any way
dependent upon a review under 21.2.  Moreover, the complete evidentiary and proceduralrequirements contained in Article 12 apply in full to reviews under Article 21.3.
5.333  The EC would request the Panel to note the evasive nature of the US replies which stem in
particular from the highly discretionary nature of the basic US law, regulations and practice.  The US
law does not provide any security or predictability to exporters and is, in addition, inconsistent with
the relevant provisions of the SCM Agreement.  The US cannot unilaterally decide simply not to
                                                     
80 See, e.g., Certain Hot-Rolled Lead & Bismuth Carbon Steel Products from Germany , 64 Fed. Reg.
44,489 (DOD 1999) (termination administrative review).WT/DS213/R
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conduct administrative reviews for reasons of ad ministrative convenience in view of the very
important legal consequences this refusal can give rise to, as in the present case.
Question 33
5.334  US law does not prohibit DOC from making confidential documents from the original
investigation part of the confidential record in a sunset review.  In fact, as discussed in the EC’s
second written submission, the US ITC automatically makes the confidential version of its original
determination, as well as the complete staff report from the original investigation, part of the
confidential record in a sunset review (EC Second  Written Submission at para. 39).  The US argument
that these constitute “separate segments of the proceeding” is made exclusively for purposes of
domestic US law which has no basis on the SCM Agreement and in particular Article 12 thereof (see
EC Second Written Submission, at paras. 41-44).
Question 34(a)
5.335  In addition to the written request on April 13, 2000, the German producers in this case made
several oral requests at the beginning of April 2000 ( i.e., directly after issuance of the preliminary
results) that DOC make the calculation memoranda from the original investigation part of the recordin the sunset review.  These requests were prompted by DOC’s failure in the preliminary
determination to properly consider the evidence concerning the termination of the CIG programme
timely submitted by the Government of Germany and the German Producers.  It must be clearly
understood that, even without the calculation memoranda, the Government of Germany and the
German producers submitted sufficient evidence to establish that the CIG programme had been
terminated and ceased to pay any significant benefits after 1986.  There can be no dispute that
under DOC’s own allocation methodology, any nonrecurring subsidies received in 1986 would be
fully amortized no later than 2000.
81
Question 34(b)
5.336  The US DOC’s regulation concerning the deadline for filing factual information does not
make any distinction between confidential and public information.  See 19 C.F.R. § 351.218(d)(4).
Accordingly, the US DOC could not properly treat the German producers’ request concerning the
calculation memoranda as untimely but then accept factual information submitted by other parties
after that date.  Moreover, it is in this case necessary to conclude that the German producers, by
making several specific requests to the DOC to place the data and memoranda from the original
investigation into the sunset file, have renounced the confidential nature of the data, if any suchconfidentiality existed.  It also follows that if  the US DOC had any doubts about this, it should have
taken positive steps and direct contact with the German producers to find out about this question
instead of staying inactive until its final determination made in August 2000 by which it rejected it.
Question 35(a)
5.337  As discussed above in the comments to question 25, the sunset reviews conducted by DOC
violate the provisions of Article 12 and, therefore, cannot be seen as a proper determination under
Article 21.3.  Moreover, the US’s reasoning on this point is belied by the answers it has made to the
Panel’s other questions.  The US claims at para. 58 that:
                                                     
81 Under DOC’s methodology, year one in the allocation period is always the year that the subsidy is
received.  See 19 C.F.R. § 351.524(d).  Accordingly, using a fifteen-year allocation period as DOC did in this
case, the benefit of any nonrecurring subsidies received in 1985 would have expired in 1999 and the benefit of
any nonrecurring subsidies received in 1986 w ould have expired, at the latest, in 2000.WT/DS213/R
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“..it may determine, in accordance with the requirements of
Article 21.3, whether subsidization is likely to continue or recur
without conducting its own investigation, but, rather, by making its
decision based on the evidentiary record developed during the sunset
review because all parties, both foreign and domestic, have everyopportunity under the US system to provide any information they deem
relevant.”
5.338  In numerous other places in its response, however, the US concedes that, in making its
determination in a sunset review, it “ only uses information developed in the original investigation or
prior administrative proceedings”. (e.g., US Answers to Panel Questions at paras. 25, 45 & 75,
emphasis added).  Similarly, the US concedes that, in practice, any foreign producer that does notexport subject merchandise to the US after imposition of countervailing duties would be prohibited
from seeking an administrative review ( Ibid at para. 47).  Thus, the US’s assertions that its
determinations are “based on the evidentiary record developed during the sunset review” and that
parties “have every opportunity under the US system to provide any information they deem relevant”
are purely incorrect and misleading.
5.339  Moreover, accepting the US interpretation of the verb “determine” in Article 21.3 would
entitle the US authorities and the national authorities of any WTO Member to become in reality
passive observers and paper-collecting authorities as regards conducting an investigation and
determining subsidization, material injury and causality (See EC First Written Submission, at
paras. 67-71).
Question 35(b)
5.340  The US’s response well demonstrates that its Sunset Policy Bulletin  establishes a series of
irrefutable presumptions that almost invariably lead  to a determination that subsidization is likely to
continue or recur.  This is confirmed by the results of the available cases so far, as is explained belowand in para. 17 of the EC Second Written Submission.  As regards the US claims in paras. 62-65, the
EC refers the Panel to its previous comments regarding the US replies to questions 28-31.
5.341  In paragraph 67, the US in fact admits that the rate it reports to the ITC for the injury
determination is indeed the net countervailable subsidy determined by DOC.
Question 35(c)
5.342  As regards the US replies in paras. 69-70, the EC refers the Panel to its above comment to the
US reply to question 33.
Question 36
5.343  The US’s response is simply a matter of semantics.  In paragraph 71, the US claims that,
“[u]nder the US system, administrative reviews are not prerequisites for conducting full sunsetreviews” but then, in paragraph 75, it concedes th at, in a sunset review, it “only uses information
developed in the original investigation or prior administrative proceedings”.  In addition, the US’s
statement in paragraph 73 that it makes adjustments to the net countervailable subsidy determined in
the investigation when “there is evidence demonstr ating that programmes have been terminated with
no residual benefits” is proved wrong by the facts of this case.  As detailed in the EC’s writtensubmissions, the Government of Germany and the German producers provided clear evidence that the
CIG programme was terminated without any meaningful residual benefit continuing after the end of
the sunset review (see EC First Written Subm ission at paras. 83-91, and EC Second WrittenWT/DS213/R
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Submission at paras. 38-44).  Despite this evidence, the US DOC refused to adjust the rate from the
original investigation to reflect this change.
5.344  Moreover, in para. 71 the US writes:
“The rationale for this approach is that the findings in the original investigation
provide the only evidence reflecting the behaviour of the respondents without thediscipline of countervailing measures in place.  This makes sense given that, in a
sunset review under Article 21.3, an authority is considering whether, without the
discipline of the duty, subsidization would likely continue or recur; i.e., what would
happen without the discipline of the duty.”
5.345  The EC has replied to this argument in particular with its response to written question no 15
from the Panel (at pages 28-29 of its replies).  In addition to those replies, the EC would like to draw
the attention of the Panel to the fact that an amount of net countervailable subsidy of 0.60 per centdetermined in the original determination or of  0.54 per cent determined in the sunset review do not
constitute nor do they put in place “a discipline” .  This is because a CVD order reflecting that rate
is highly unlikely to discourage exporters from exporting to the US.  There is as much admission of
this reality in the US 1987 De minimis  Guidelines (see Exhibit US-6, at page 30661) where it is
accepted that:
“Even in price-sensitive markets, the effect of requiring a deposit or assessment of
duty based on a rate of a 0.50 per cent ad valorem would be negligible.  No party
submitted comments has provided any information to support a different conclusion”.
5.346  In the same US 1987 De minimis  Guidelines (see Exhibit US-6, at page 30661), “several
parties suggested that the de minimis  threshold be set at 1 per cent, on the basis that 1 per cent
represents a level of benefit not worth the expense of an investigation or annual review”.  This also
partly explains why the 1 per cent ad valorem ru le was laid down in the SCM Agreement, although
the rationale in this latter case is based on the fact that no causality exists between such a level of
subsidization and material injury.  Accordingly, there is no valid substantive reason to apply in sunset
determinations a de minimis  rule that is different from that applied in original determinations.
Question 37
5.347  The US’s assertion that the parties to the sunset review were different than those in the
original investigation and that “the record of the sunset review contains no indication that the German
producers in the sunset review were authorized to permit the movement of [confidential] information”
from the record of the original investigation to the record of the sunset review is patently false ( See
US Answers to Panel Questions at para. 83).  In the substantive response of 1 October 1999, theGerman Producers carefully explained that Thyssen Krupp Stahl AG was the legal successor to
Hoesch and Thyssen and that Salzgitter AG was the legal successor to Preussag (see the German
Producers Substantive Response at 5 (1999), copy attached hereto as Exhibit EC-23 ).  Thus, there
could have been no confusion over the authority of the German Producers to request that the
calculation memoranda be placed on the record of the sunset review.
5.348  It must also be clearly understood that the German producers were not requesting that the
memoranda be disclosed to the public.  Their only request was that the memoranda be made part of
the confidential record in the sunset review, thereby maintaining their confidential status.
Accordingly, contrary to the United States’ asse rtion, granting the German producers’ request would
not have violated the provisions of Article 12.4  (see US Answers to Panel Questions at para. 78).Moreover, as discussed above in the comment to question 33, US law does not prohibit the DOC from
making confidential documents from the original investigation part of the confidential record in aWT/DS213/R
Page 78
sunset review.  In fact, the US ITC automatically makes the confidential version of its original
determination, as well as the complete staff report from the original investigation, part of the
confidential record in a sunset review (s ee EC Second Written Submission at para. 39).
5.349  Moreover, paragraphs 77-79 of the US replies is a clear indication of how the US DOC
perceives its role in sunset investigations and determinations, i.e. as a passive, paper-collectingauthority. See in this regard the US reply to writ ten question no 5 from the EC, at paras. 8-9 of the US
replies.
5.350  As regards the US response in para. 82, this is confusing the EC claim and the level and
venue of this proceeding.
Question 38
5.351  As discussed in the EC’s Second Written Submission, DOC’s vague request for “all relevant
evidence” violates the requirements of Article 12 (see EC Second Written Submission at paras. 40-
44).  It is not until the preliminary results ( i.e., after the time for submitting evidence has already
expired) that DOC comments upon the sufficiency of the evidence submitted by the parties (EC, Ibid
at 42).  Moreover, even when the DOC technically permits the submission of evidence, the
presumptions dictated by the Sunset Policy Bulletin  result in the evidence being either later excluded
or given no weight (see EC Replies to the Panel Written Questions at question 19).
5.352  Moreover, the US in this case did not provide any rational explanation of its decision that the
German producers’ request about placing the data from the original investigation was untimely and
how this would have affected DOC’s decision making.
I. COMMENTS OF THE EUROPEAN COMMUNITIES ON THE RESPONSES OF THE UNITED STATES TO
QUESTIONS FROM THE EUROPEAN COMMUNITIES FOLLOWING THE FIRST MEETING OF THE
PANEL
Question 3
5.353  The word “demonstrate” does not appear for example in Articles 11.1, 11.2, 11.9,
Article 19.1, etc.  Is the US suggesting that in a ll these instances the burden of demonstrating that
subsidization, injury and causal link exist is upon the foreign producers and Members to establish?  In
the view of the EC, the US is confusing the two different level and venue of proceedings and
misinterprets the established case law in the WTO on the burden of proof and burden of persuasion.
Question 4
5.354  The US does not draw the logical conclusions  from its answer.  As the EC says, the
consequences of a CVD investigation and a positive sunset finding are the same – five more years of
countervailing duties.  The fact that a sunset review does not change the deposit rate is irrelevant; the
important point is that duties continue to apply.  In fact, the only real difference between a new
investigation and an investigation in a sunset determination is a question of timing.  The sunset takes
place five years after the original investigation.  If we accept the US argument that the sunset has adifferent purpose and consequence, we effectively reverse the presumption in favour of expiry in
Article 21.3.
Question 6
5.355  The US misstates the length of the data collection period in original investigations.  Pursuant
to 19 C.F.R. § 351.301(b)(1), parties have until 7 days prior to verification to submit factualWT/DS213/R
Page 79
information.  Because verification does not take place until after the preliminary determination, this
gives parties well over 65 days in which to submit factual information.  This compares to only 35 days
in a sunset review although the time for completing a full sunset review is considerably longer than
that for completing an original countervailing duty investigations ( i.e., 240 days in a sunset review
compared to 140 days in an original investigation).  Compare  19 C.F.R. § 351.218(f)(3)(i) with
19 C.F.R. § 351.210(b)(1).  Moreover, the time to submit factual information in a sunset review
expires long before issuance of the preliminary results so that a party can file no additional
information in response to that determination.  See 19 C.F.R. § 351.218(d)(4).
5.356  Moreover, the US approach seems to depend entirely on when a firm is investigated.  This
can be illustrated by the example of a new exporter or “new shipper” review under Article 19.3.  In
this situation, a firm which starts exporting after the original investigation period and therefore could
not have participated during the original investigation even if it had wanted to, is entitled to anindividual CVD rate.  However, in such cases, the US will apply a 0.5 per cent de minimis  threshold,
while a firm investigated on exactly the same basis in an original investigation would have been
subject to a 1 per cent de minimis  level.  There are simply no grounds for such a discrimination.  In
addition, in sunsets the US is asking the Panel to accept discrimination which is nowhere provided for
in the SCM Agreement.  It argues that it is en titled to determine the likelihood of continuation or
recurrence of subsidization, but at only half the rate required at the stage of initiation.
Question 8
5.357  Again, the US comments are very revealing.  The US, having rejected the introduction of a
1 per cent de minimis  threshold in 1987 in favour of a 0.5 per cent rate, does not really accept the use
of the SCM Agreement’s 1 per cent de-minimis threshold in countervailing duty investigations.  It
thus chooses to apply this threshold only in new investigations, and to attempt to make a spurious
distinction between the purpose of such investigati ons and sunset reviews.  It does this in order to
cling on to its pre-Uruguay Round de-minimis rate, which it considers to be the “proper” level for
de minimis .  As well as depriving the EC of the benefit of the correct de-minimis level in sunsets, such
an approach also deprives developing countries of the special and differential treatment embodied in
the 2 per cent and 3 per cent de-minimis thresholds under Articles 27.10 and 27.11.
5.358  Moreover, the EC notes that in sunsets the DOC will take no notice of the progressive decline
in the amount of non-recurring subsidies invariably found in administrative reviews.
Question 9
5.359  The US’s response confirms the fact that it reverses the standard provided in Article 21.3 and
requires foreign producers to prove “no likelihood” of continuation or recurrence of subsidization (see
US Answers to EC Questions at para. 18).  The proper standard under Article 21.3 requires the
automatic termination of countervailing duties unless it is affirmatively determined that “the expiry of
the duty would be likely  to lead to continuation or recurrence of subsidization and injury”
(Article 21.3 SCM  (emphasis added).
Question 12
5.360  To the extent that DOC finds it necessary to have current sales information before it can
calculate an ad valorem  subsidy rate in a sunset review, it is incumbent upon DOC to request such
information from the parties (see US Answers to EC Questions at para. 23).  Although DOC’s sunsetregulations do request that foreign producers provide information on exports to the United States
during the five years preceding initiation of the sunset review, the regulations do not request
information on total sales (see 19 C.F.R. § 351.218(d)(3)(iii)(B)).WT/DS213/R
Page 80
5.361  The US’s statement that it must ignore the annual diminution in the value of nonrecurring
subsidies under its declining balance methodology because it does not have revised sales information
to use as the denominator in its calculation of an ad valorem  subsidy rate is based upon faulty
reasoning.  The effect of the annual diminut ion in the value of a nonrecurring subsidy ( i.e., the
numerator in the calculation of the ad valorem  subsidy rate) can only be offset if there has been a
significant decline in the value of total sales ( i.e., the denominator in the calculation of the ad valorem
subsidy rate) since the original investigation.  In this case, there is no evidence that total sales have
declined.  To the contrary, the sales information submitted by the German producers in their
15 October 1999 rebuttal reveals that the total sales of Preussag/Salzgitter more than doubled between
1991 and 1998 ( Compare  Exhibit EC-18 at Appendix 1 with Exhibit EC-22 at p. 43).  This dramatic
increase in total sales would have resulted in an even greater decline in the ad valorem  subsidy rate,
pushing the rate even further below the de minimis  level.
5.362  Finally, as the US DOC did with respect to the Structural Improvement Aids and Zonal
Border Area programmes, it could have adjusted the subsidy rate calculated for the CIG programme
by subtracting the benefit assigned to that progra mme without needing a revised value for total sales.
As with the Structural Improvement Aids and Zonal Border Area programmes, the German producers
submitted evidence demonstrating that the CIG programme had been terminated without any residualbenefit accruing after the end of the sunset review.
Question 13
5.363  As regards the US statement in para. 24 about the possible rationales for including the de
minimis  rule of 1 per cent ad valorem , it states that there is no rationale for a de-minimis threshold in
the SCM Agreement, and that the 1 per cent standard is the product of negotiations.  Once again, the
US makes little secret of its distaste for the 1 per cent de-minimis threshold.  In fact, all provisions of
WTO Agreements are the product of negotiations, but this does not mean that their appropriate
application can simply be ignored.  As regards the true rationale behind the de minimis  rule of 1 per
cent in the SCM Agreement, we refer the Panel to our comments in paragraphs 17-20 above on theUS replies to questions 29-30 from the Panel.
Question 14
5.364  The US mischaracterize DOC’s reason for rejecting the domestic interested parties’ allegation
of new subsidies (see US Answers to EC Questions at para. 25).  The US DOC did not base its
decision on the lack of administrative reviews alone.  Instead, DOC made clear that the domestic
interested parties failed to provide “concrete evidence” of new subsidies (see Final Results DecisionMemo at 43, Exhibit EC-10).
Question 16
5.365  When one analyses the only 3 cases in which DOC found that a countervailing subsidy is not
likely to continue or recur, it is evident that DOC applied very different procedures in those cases thanthe ones applied in this case.  In Live Swine from Canada , DOC considered new information
submitted by the Government of Nova Scotia specifically because foreign producers had been
prevented from requesting administrative reviews due  to a lack of US shipments.  Final Results of
Full Sunset Review: Live Swine From Canada, 64 Fed. Reg. 60301, 60304 (1999).  In Cotton Shop
Towels from Peru , parties were permitted to submit new evidence, and DOC even conducted
verification.  Final Results of Full Sunset Review & Termination of Suspended Investigation: Cotton
Shop Towels From Peru, 64 Fed. Reg. 66894, 66895 (1999).  Finally, unlike the present proceeding,
Porcelain-on-Steel Cooking Ware from Mexico , exclusively involved recurring subsidies.  See Final
Results of Full Sunset Review & Revocation of Countervailing Duty Order: Porcelain-on-Steel
Cooking Ware from Mexico, 65 Fed. Reg. 284 (2000).  Accordingly, the DOC presumptionWT/DS213/R
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concerning nonrecurring subsidies, under which DOC refused to treat the CIG programme as
terminated, was not applicable in Porcelain-on-Steel Cooking Ware from Mexico .
Questions 18 and 19
5.366  The US is arguing that the EC’s questions 18 and 19 are “not really questions”, and suggests
that the EC is asking the US to research and perform “new calculations”, which were not on the
record of the sunset review.  The fact is that the DOC should have investigated both the projected
denominator and the remaining amount of subsidy, in order to make a determination under 21.3.  It is
therefore saying that it was not required to look at these factors in a sunset.  The EC would request the
Panel to take due note of this statement.
J. COMMENTS OF THE UNITED STATES ON THE RESPONSES OF THE EUROPEAN COMMUNITIES TO
QUESTIONS FROM THE PANEL FOLLOWING THE FIRST MEETING OF THE PANEL
5.367  The United States does not intend to comment on every response by the EC to the Panel’s
questions, particularly where the issues raised have been addressed in prior written submissions of the
United States.  Instead, the United States will comment briefly on those specific responses where
additional points or emphasis is warranted.  First, however, there are several overarching theories or
assumptions in the EC’s answers th at are best addressed in general.
5.368  In particular, the United States observes that the EC in its answers espouses a general
principle that any provision of the SCM Agreement is potentially applicable mutatis mutandis  to any
other provision of the SCM Agreement.82  According to the EC, the only limitation on this free-for-all
application is that a provision must be “relevant to the issues” covered by another Article and that its
application “does not create a situation of conflict or is not specifically excluded”.  The EC’sapproach to treaty interpretation turns the cust omary rule of treaty interpretation on its head.
5.369  Article 31 of the Vienna Convention  reflects the basic principle of treaty interpretation.  In
particular, Article 31(1) provides that a “treaty shall be interpreted in good faith in accordance with
the ordinary meaning to be given to the terms  of the treaty in their context  and in the light of its object
and purpose ”.  (Emphasis added).  The EC’s approach to treaty interpretation is the very antithesis of
this customary rule.  Rather than reading the words of a provision and interpreting them “in light of
the object and purpose” of the Agreement, the EC would require Members to interpret the object and
purpose and then, regardless of the plain meaning of the words, interpret those words in light of the
“object and purpose” as divined by the Member.  This runs afoul of the Appellate Body’s admonition
in Japan – Alcoholic Beverages , that “the treaty’s ‘object and purpose’ is to be referred to in
determining the meaning of the ‘terms of the treaty’ and not as an independent basis for
interpretation.”
83
5.370  In its answers to the Panel’s questions, the EC makes various assumptions regarding the
“purposes” of various provisions of the SCM Agreement without reference to the text of the SCM
Agreement, and then refers to obligations not found in the text which presumably derive from these
“purposes”.   This use of “purposes” is precisely the “independent basis for interpretation” which the
Appellate Body has described as incorrect, and operates to circumvent the requirement in DSU
Article 3.2 that Dispute Settlement Body rulings ca nnot add to or diminish the rights and obligations
provided in the covered agreements.  If every “relevant” SCM Agreement provision applied to every
other SCM Agreement provision ( mutatis mutandis ) unless the application created “a situation of
                                                     
82  See, e.g. , EC responses to Panel Questions 5(a) and (b).
83  Japan – Taxes on Alcoholic Beverages , p.11, n.20 (“[T]he treaty’s ‘object and purpose’ is to be
referred to in determining the meaning of the ‘terms of the treaty’ and not as an independent basis for
interpretation.”).WT/DS213/R
Page 82
conflict”, the purely theoretical questions of what is “relevant” and what creates “a situation of
conflict” would become the focus of every WTO di spute.  The EC’s approach ignores a fundamental
tenet that where the Members wished to have explicit obligations set forth in one provision apply in
another context, they did so expressly. 84  If accepted, the EC’s approach would result in the
nullification the Members’ expectations as explicitly  expressed in the SCM Agreement.85
5.371  Turning now to the EC’s answers to specific questions, with respect to Question 1(a), the EC
has applied its treaty interpretation approach to the Panel’s question as to whether the Article 11.9 de
minimis  standard applies to reviews under Article 21.2.  The result is that, according to the EC,
sometimes Article 11.9 is applicable to reviews under Article 21.2 and sometimes Article 11.9 is not
applicable to reviews under Article 21.2.  Accordin g to the EC, whether Article 11.9 is relevant in
Article 21.2 reviews is dependent on the purpose of th e review.  This type of analysis combines the
worst of the EC’s relevance- and purpose-based treaty interpretation approach and results in what iscertain to be the standard answer to this type of inquiry based on the EC’s approach: it depends.
86
5.372  With respect to Questions 1(b) and (c), the EC’s answers reflect reliance on assumptions
concerning the purpose of the negligibility standard s and its interpretation theory that every provision
can be considered applicable to every other provision barring explicit conflict.  However, as the
United States demonstrated in its responses to the Panel’s questions, neither the text of the SCMAgreement nor the practicalities associated with conducting a five-year review support the EC’s view
that a negligibility test is required under Article 21.3.  Furthermore, even under the EC’s proposed
approach towards negligibility, the EC recognizes that there must be a demonstration that the amount
of the subsidy “is not going to increase above [the current] level or that imports would not rise above
de minimis  upon removal of the measure”.  Thus, the EC and the United States are in concurrence that
current subsidy or volume levels by themselves, without a prospective inquiry into likely future
levels, are not sufficient to require termination of an order.
5.373  The EC’s answer to Question 1(d) relies upon what it claims is “an irrefutable presumption”
as to the purpose of the de minimis  and negligible import standards.  The EC again purports to discern
a purpose without reference to the text of the SCM Ag reement.  The EC then refers to obligations not
found in the text which presumably derive from this “purpose” ( i.e., according to the EC, these
standards must apply in sunset reviews under Article 21.3).  As the United States demonstrated in its
answers to the Panel’s questions, by their very terms, Articles 27.10 and 27.11 apply only in
investigations.  The EC’s use of “purposes” as an independent basis for interpretation in this case is
incorrect and results in imputation into the SCM Agreement of “words that are not there.
87
5.374  With respect to the EC’s answers to Questions 2, 4, 9, and 13(b), the United States notes that
the EC’s responses fail to address the phrase “in a review initiated . . . on their own initiative”
contained in Article 21.3.  The EC merely restates its argument that the evidentiary prerequisites of
                                                     
84 Article 21 itself illustrates this point in paragraph 4, which makes the provisions of Article 12
applicable to Article 21.3 reviews, and in paragraph 5, which expressly makes the provisions of Article 21applicable to Article 18 undertakings.  Examples of provisions that apply in other contexts include: the
definition of “subsidy” in Article 1 (“For the purpose of this Agreement”); the definition of “interested parties”
in Article 12.9 (“for the purposes of this Agreement”); calculation of the amount of a subsidy under Article 14(“For the purpose of Part V”); definition of “injury” under Article 15 and footnote 45 (“Under this Agreement”);definition of “like product” under footnote 46 (“Throughout this Agreement”); definition of domestic industry inArticle 16 (“For the purposes of this Agreement”); definition of “levy” under footnote 51 (“As used in this
Agreement”).
85 See Japan - Taxes on Alcoholic Beverages  (“Japan Taxes ”), page 19 (discussing how the “omission”
in Article III:2 of GATT 1994 to the general principle in Article III:1 “must have some meaning”).
86 See also  EC’s response to Panel Question 12(c).
87 See India Patent Protection , para. 45.WT/DS213/R
Page 83
Article 11.6 apply to sunset reviews under Article 2 1.3.  As demonstrated in the United States First
Written Submission (paras. 60-62), the right of an authority to initiate a sunset review on its own
initiative, as explicitly stated in Article 21.3, is unqualified.  Whether a Member chooses to initiate a
sunset review in every case through self-initiation or to initiate a review only in response to a “duly
substantiated request” from the domestic industry is a decision that the plain text of Article 21.3leaves to the Members.
5.375  With respect to the EC’s answers to Questions 3, 11, and 13(b), the EC’s answers either
assume or specifically claim that Commerce self -initiates sunset reviews “without any shred of
evidence”.  The EC is wrong.  The results of the original countervailing duty order and of the most
recent administrative reviews, if any, in general can be considered evidence of the existence of
subsidization.  The EC’s argument that something more is required prior to initiation of a sunset
review amounts to an argument that an authority must conduct the review before it initiates the
review.
5.376  With respect to the EC’s answers to Questions 5 and 6, the United States demonstrated above
that the EC’s approach to treaty interpretation ( i.e., any provision is in principle applicable mutatis
mutandis  to any other provision) is not consistent with customary rules of treaty interpretation.  At the
very least, the EC’s response to these questions demonstrates the futility of relying on the EC’sapproach to interpret the meaning of the words contained in Article 21.3.  According to the EC,
Members may not rely on the plain text of the SCM Agreement to determine their obligations.
Instead, the “object and purpose” of the SCM Agreement – as identified, of course, by the EC – trump
the text of the Agreement.
5.377  In the US Shrimp  case, the Appellate Body rejected this type of unconventional approach to
treaty interpretation, stating as follows:
88
A treaty interpreter must begin with, and focus upon, the text of the particularprovision to be interpreted.  It is in the words constituting that provision, read in their
context, that the object and purpose of the states parties to the treaty must first be
sought.  Where the meaning imparted by the text itself is equivocal or inconclusive,or where confirmation of the correctness of the reading of the text itself is desired,
light from the object and purpose of the treaty as a whole may usefully be sought.
Thus, while the object and purpose of an agreement can be instructive in interpreting the text, the
object and purpose cannot be used to override the text.  In other words, object and purpose cannot be
used to write into the text “words that are not there”.
89
5.378  In its response to Question 14, the EC suggests that Commerce did not exercise due diligence
in refusing to consider the calculation memorandum from the original investigation.  As the United
States demonstrated in its First Written Submission (paras. 102-105), the calculation memorandum
was not on the administrative record of the sunset review because the German producers failed to
place it there in a timely fashion.  Although cited by the EC as such, the Appellate Body’s decision inPakistan Yarn  does not stand for the proposition that “new” evidence should be considered by a Panel
in a dispute.  The EC emphasizes that in Pakistan Yarn  the Appellate Body addressed only the
                                                     
88 United States - Import Prohibition of Certain Shrimp and Shrimp Products , WT/DS58/AB/R, Report
of the Appellate Body adopted 6 November 1998, para. 114 (footnote omitted).
89 As another blatant example of the EC’s efforts to rewrite the text of the Agreement, the United States
notes that throughout its responses ( e.g., EC Responses to Questions 9, 12, 14, 15, 16(a) and 16(b)),  the EC
misquotes the text of the Agreement by inserting a “causality” test into Article 21.3.  Aside from the EC’sobvious misquoting of the Agreement, the United States finds this particularly troublesome given that the
injury-related aspects of the United States’ action are not within the terms of reference in this dispute.WT/DS213/R
Page 84
question of whether the Panel should have considered extra-record evidence consisting of facts that
were not in existence at the time the administrative determination was made and hence could not have
been known.  However, that was because the United States specifically limited its appeal to the issue
of whether a panel can consider evidence that was not in existence at the time of the national
authority’s determination.  As the United States demonstrated in its First Written Submission (paras.49-51), similar restrictions apply with respect to a panel’s review of other types of extra-record
information. Nothing in Pakistan Yarn  or other Appellate Body or adopted Panel reports suggests that
the restrictions on a Panel’s review of evidence would not likewise apply with respect to properly-
rejected information that had existed at the time the authorities made their determination.
5.379  In response to Question 15, the EC asserts that Commerce systematically “refuses” to change
the rate from the original subsidy rate determined in the investigation.  The EC is wrong.  In the
instant case, Commerce in fact agreed with the EC and the German producers that two programmes
had been terminated with no continuing benefits.  Commerce, therefore, adjusted the net
countervailable subsidy rate accordingly.
90  More importantly however, the United States would point
out that, as demonstrated in our First Written Submission (70-87), nothing in the SCM Agreement
requires consideration of the magnitude of subsidization in determining the likelihood of continuation
or recurrence of subsidization.
5.380  Question 18 addresses the evidentiary and procedural aspects of Commerce’s sunset review.
The EC’s response to this question is disingenuous and misleading.  As a general matter, and as
discussed in greater detail in the United States’ First Written Submission (paras. 14-23, 109-116),
Commerce’s sunset review followed reasonable, appropriate procedures that fully comply with the
evidentiary and procedural requirements of Articles 21 and 12.  The EC is wrong when it claims thatthe respondent interested parties, including the German producers, “were not given any opportunity”
to present all evidence which they considered relevant  in the sunset review.  (Emphasis added).  If the
respondent interested parties failed to gather and prepare  evidence during the 15 months prior to the
scheduled initiation of the sunset review, they have only themselves to blame.  Contrary to the EC’s
response, the United States never suggested that respondent interested parties could submit  this
information prior to initiation of the sunset review.
5.381  The EC’s assertion that sunset information requirements were “vague” or “perfunctory” is
also wrong.  Fifteen months before initiation of the sunset review, the statutory requirements, the
regulatory requirements (including the standard questionnaire), and Commerce’s extensive Sunset
Policy Bulletin , providing detailed guidance on methodological and analytical issues not explicitly
addressed by the statute and regulations, were all available to respondent interested parties.  Again, if
the parties’ failed to review and consider the guid ance provided in these documents in preparation of
their submissions, they have only themselves to blame.  Finally, the EC’s assertion that the respondent
interested parties did not have access to the evidence presented by the other parties in the sunset
review is simply false.  Commerce’s regulations require service of all submissions on all parties to the
proceeding; there is no evidence that the parties did not do so in this case.
K. 
SECOND WRITTEN SUBMISSION OF THE EUROPEAN COMMUNITIES
1. Introduction
5.382  The European Communities (“EC”) will concentrate in this submission on responding to and
commenting on the facts and arguments submitted by the US so far, in particular those that emerged
in the oral statements to the first meeting of  the Panel and in the questions from the Panel.
                                                     
90 See Sunset Calculation Memorandum , p.1 (Exhibit EC-8).WT/DS213/R
Page 85
5.383  It is interesting to see how little the US has had to offer in terms of justifying its position.
This may be summarised as follows: Article 21.3 of the SCM Agreement  has to be read in a literal,
formalistic way, without regard to its object and purpose and in complete isolation from the remaining
provisions of the SCM Agreement .
5.384  At this stage, the EC would also like to point out that it respectfully disagrees with the
preliminary ruling issued by the Panel at its first meeting with the Parties on its terms of reference and
expedited sunset reviews.  Having not yet seen the actual reasoning of the Panel, the EC is obliged to
reserve its right in this respect for the remaining stages of the proceeding.  The EC is firmly of the
view that the Panel’s ruling on this point is an error in law.   For those reasons, the EC will clarify, to
the extent still necessary, only the factual aspects of its argument relating to expedited reviews, as this
may be necessary in subsequent adjudication of this matter.
2. Standard of Review
5.385  The EC agrees with the summary of the “key elements” of the report in the United States –
Cotton Yarn  case,91 where Appellate Body laid down the standa rd of review that panels should follow
under Article 11 of the DSU (at para. 74).  The EC notes that the Appellate Body cited there with
approval its previous finding that the national authorities “must undertake additional investigative
steps, when the circumstances so require, in order to fulfil their obligation to evaluate all relevantfactors” (at para. 73).  Indeed, this echoes the Appellate Body’s finding in particular in the United
States – Lamb Safeguard  case, where it held that:
“…competent authorities have an  independent   duty of investigation and that they
cannot “remain[] passive in the face of possible short-comings in the evidence 
submitted, and  views   expressed, by the  interested parties .” 
92 (emphasis added)  In
short, competent authorities are obliged, in some circumstances, to go beyond the
arguments that were advanced by the interested parties during the investigation.  As
 competent authorities   themselves are obliged, in some circumstances, to go beyond
the arguments of the interested parties in reaching their own determinations, so too,
we believe,  panels are not limited to the arguments submitted by the interested
parties to the competent authorities in reviewing those determinations in WTO
dispute settlement.”93
5.386  That is why the EC considers that for the purpose of determining whether the US authorities
have evaluated all relevant factors and examined all pertinent facts, the Panel can take advantage of
the provision of Article 13 of the DSU.  It is al so noteworthy that in the view of the Appellate Body
“in describing the duties of competent authorities, we simultaneously define the duties of panels in
reviewing the investigations and determinations carried out by competent authorities” (at para. 73).Furthermore, the EC agrees that the standard of review laid down by the Appellate Body with respect
to the Safeguards Agreement is equally applicable to the standard of review to be applied under the
SCM Agreement (at para. 76).
5.387  What is particularly important is the finding by the Appellate Body that “a panel reviewing
the due diligence exercised by a Member in making its determination…has to put itself in the place ofthat Member at the time it makes its determination” (at para. 78).  Application of this principle to the
                                                     
91 Appellate Body Report, United States – Transitional Safeguard Measure on Combed Cotton Yarn
from Pakistan , WT/DS192/AB/R, circulated 8 October 2001, paras. 66-81.
92 Ibid., para. 55.
93 Appellate Body Report, United-States – Safeguard Measures on Imports of Freshn Chilled or Frozen
Lamb Meat from New Zealand and Australia (“United-States – Lamb Safeguards”), WT/DS177/AB/R,WT/DS178/AB/R, adopted 16 May 2001, para. 114.WT/DS213/R
Page 86
facts of the present case would clearly require the present Panel to consider the evidence that existed
and was made available to the US DOC but which it refused to take into account on the erroneous
allegation that it was submitted outside the time limit.  The evidence the EC claims the US authorities
should have taken into account is evidence that definitively existed at the time the DOC made the
determination.  Moreover, it was well known to the US authorities since they were the actual authorsof that evidence. As in the Cotton Yarn  case, this evidence is in the form of data on the declining
balance methodology and the level of subsidisation of the German exporters under the CIG
programme.  The accuracy of the above is not denied even by DOC in its final determination in this
case nor by the US’s submissions to the Panel so far.  It follows that this was not only relevant
evidence but evidence indispensable for the proper conduct of the sunset review.  The legal
consequence of the DOC’s refusal to consider it should lead to the reversal of the DOC’s findings.
5.388  The EC does not request the Panel to carry out a de novo  review in this case but simply to
find that the DOC’s determination is inconsistent with the US obligations under Article 21.3 of the
SCM Agreement  “to determine” subsidisation, causality and injury, also because it refused to consider
highly relevant evidence that existed at the time of the determination and of the existence of which
they were fully aware at that time.
3. Article 21.3 of the SCM Agreement
5.389  The text of Article 21.3 of the SCM Agreement  mandates that WTO Members shall terminate
any countervailing duty on a date not later than five years from its imposition (or from the date of a
most recent review that has covered both subsidisation and injury, or of a sunset review).  Thus, the
obligation clearly spelt out in the text of this Article is that of an ending in the life of any
countervailing duty after five years.
5.390  The text of Article 21.3 then proceeds to envisage one possible exception to this obligation,
which is that a countervailing duty could be continued if the domestic authorities (1) initiate a review
before the five years' deadline on the domestic aut horities' own initiative or on the request of domestic
industry prior to the five years deadline; and (2) dete rmine that the expiry of the duty would be likely to
lead to continuation or recurrence of subsidisation and injury.
5.391  The second of the above requirements reflects the ratio  of the obligation and of its limited
exception.  These are to be found in the first paragraph of Article 21, which provides that “a
countervailing duty shall remain in force only as long as and to the extent necessary to prevent
subsidisation that is causing injury”.  In other words, as a countervailing duty is a trade defence
measure which hinders trade, it can only be justified for a limited period of time – as long as
necessary or, at the most, 5 years – unless the elements which had justified its imposition in the first
place (i.e. subsidisation, causality and injury) are likel y to continue or recur.  In order to ascertain the
likelihood of continuation or recurrence of these elements, a determination should be conducted as
laid down in Article 21.3, as well as a series of other procedural and substantive requirements as laid
down in other provisions of the SCM Agreement  must be undertaken.  These other provisions
constitute therefore the necessary context of Article 21.3 and it is  necessary to take them into account
in order to give proper meaning and apply correctly its provisions.
5.392  In order to ascertain the likelihood of continuation or recurrence of these elements, a
determination should be made as laid down in Article 21.3, and a series of other procedural and
substantive requirements as laid down in other provisions of the SCM Agreement  must be undertaken.
For the purposes of this specific case, Article 21.3 should therefore be read in conjunction with the
other relevant provisions of the SCM Agreement , in particular on initiation and subsequent
investigation (Article 11) and the de minimis  rule (Article 11.9).WT/DS213/R
Page 87
4. Initiation of Sunset Reviews
(a) By automatically initiating sunset reviews the US acts inconsistently with the obligation of
termination laid down in Article 21.3 of the SCM Agreement .
5.393  US law, by requiring that sunset reviews be automatically initiated, violates Article 21.3 of
the SCM Agreement  because it transforms  an exception  into a  general rule.  This is not only contrary
to the letter and the object and purpose of the SCM Agreement  but, coupled with the other
characteristics of US procedure that will be analysed below, leads to the automatic continuation and
perpetuation of countervailing duties.
5.394  As a matter of fact, a simple look at the outc ome of the sunset reviews conducted by the DOC
proves the above point.  It seems that since July 1998, DOC conducted 204 full sunset reviews of
Anti-Dumping and CVD duty orders.  It appears that as far as Anti-Dumping duty orders were
concerned, in only 3 out of about 150 cases, the DOC found that there was no likelihood of recurrenceor continuation of dumping.  On the other hand, with regard to CVD orders, of the 54 sunset reviews
conducted, DOC did not find likelihood of recurrence or continuation of subsidisation and injury only
in 3 cases after a full review. In 2 more cases DOC found likelihood of recurrence or continuation of
subsidisation on de minimis  grounds.  These data provide clear evidence of the fact that the US law
and regulations are biased in favour of keeping and perpetuating unjustified CVD orders.
5.395  Even when DOC “conducts” a full sunset review, the evidentiary presumptions that it applies
are so unyielding that a foreign respondent has no chance of  succeeding in the sunset review.  For
example, as detailed below, DOC irrefutably presumes that, if the allocation period of a non-recurring
subsidy has not expired before the end of the suns et review, then the benefit of the programme will
continue undiminished at the same level calculat ed during the original investigation.  Because DOC
normally applies a 15-year allocation period in cases involving steel, application of this presumption
means that, if a foreign company receives a non- recurring subsidy during the original period of
investigation that results in the assessment of countervailing duties, DOC will automatically find a
likelihood of continuation of subsidisation for the next 15 years regardless of the time period that has
lapsed in the meantime and of any other changes in that subsidy programme.  US law is clearly biasedtowards the unjustified continuation and perpetuation of countervailing duties, in violation of the
undisputed duty to terminate them laid down in Article 21 of the SCM Agreement .
(b) The self-initiation of sunset reviews requires sufficient evidence of the likelihood of
continuation or recurrence of subsidisation, causality and injury.
5.396  Under US law, sunset reviews are always self-i nitiated by DOC not later than 30 days before
the fifth anniversary of an order.  Therefore, as the US has admitted at the first meeting of the Panel,
the possibility of waiting for a request of the domestic industry has just not been implemented in USlaw.
5.397  The purpose and effect of new investigations (under Article 11 of the SCM Agreement ) and
sunset reviews (under Article 21.3) are essentially the same. Under Article 11, the self-initiation of an
original investigation by domestic authorities is an exceptional hypothesis, which is justified only if
the domestic authorities have sufficient evidence of subsidisation, injury and causal link.  Thus,without sufficient evidence the domestic authorit ies should not initiate an investigation.  As
Article 21.3 requires the investigating authority to make a determination of likelihood of continuation
or recurrence of subsidisation and injury, it is reasonable to require that the domestic authorities, in
order to initiate a sunset review on their own initia tive, should be in possession of a level of evidence
that is also sufficient as regards likelihood of continuation or recurrence of subsidisation, causalityand injury.  Articles 22.1 and 22.7 provide further support for this proposition.WT/DS213/R
Page 88
5.398  The response of the US to this claim is esse ntially that the EC purports to read into
Article 21.3 language that is not there.  In other words, the US is proposing a interpretation of the
terms of Article 21.3 which is formalistic and in comp lete isolation of its object, purpose and context.
As the EC has already explained with its previous submissions, all the US arguments in defence
should be rejected.  The Appellate Body has held several times that “omissions in different contextsmay have different meanings, and omission, in and of itself, is not necessarily dispositive”.
94  F o r
example, in the Canada – Automotive Industry  report, the Appellate Body held that the panel in that
case had erred because it failed to examine the ordinary meaning of the terms in their relevant context
and in light of the object and purpose of the entire SCM Agreement .95
5.399  The EC submits that the US arguments in this case suffer from the same defect.  The fact that
US law requires sunset reviews to be automatically self-initiated, without the need that sufficient
evidence of likelihood of continuation or recurrence of subsidisation and injury be present, violateArticle 21.3, read in conjunction with Article 21.1, Article 11, Article 12, Article 15 and Article 22,
because it leads to continuation of CVD measures that are not necessary to counteract subsidisation
and injury.
5. US law, regulations and administrative practi ces are inconsistent wi th the obligation to
"determine" the likelihood of continuation or recurrence of subsidization and injury
5.400  As set out at length in the EC’s first written submission
96, the second requirement that
Article 21.3 of the SCM Agreement  imposes in order to allow a derogation from the presumption of
termination of countervailing duties is that the domestic authorities determine, i.e. make a positive
finding on subsidisation, causality and injury .97
5.401  This requirement is reinforced by the overall object and purpose of Article 21.3 of the SCM
Agreement  as laid down in Article 21.1: that countervailing duties should remain in force only as long
as and to the extent necessary to counteract injurious subsidisation.  In other words, Article 21.1 of the
SCM Agreement  permits a countervailing duty to continue after five years only if it is established in a
proper fresh determination that injurious subsidisation is likely to continue if the order were to expire.
As the Appellate Body held in the comparable case Korea DRAMS, the continued imposition of the
duty  “must be essentially dependent on, and therefore assignable to, a foundation of positive evidence
that the circumstances demand it.  In other words, the need for the continued imposition of the duty
must be demonstrable on the basis of the evidence adduced”98.
5.402  Under US law, Section 751(c), in conjunction with Section 752, mandates the DOC to
consider only: (a) the net countervailable subsidy determined in the original investigation, and (b)
whether there were any changes in the subsidies since the original investigation that may affect the
countervailing duty.  The EC does not deny that th e CVD rate from the original investigation, which
the DOC normally selects on the basis that it is the only rate that “reflects the behaviour of
governments and exporters without the discipline of an order in place”, may in some cases be a factor
to take into account.  However, as it has been explained, the object and purpose of the terms of
Article 21.3 in context clearly require domestic authorities to make a new, proper “determination”.
                                                     
94 Appellate Body Report, Canada – Certain Measures Affecting the Automotive Industry (“Canada –
Automotive Industry”), WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, para. 138.
95 Ibidem, paras. 139-143.
96 EC first written submission, para. 67-71.
97 Appellate Body Report, United States – Imposition of Countervailing Duties on Certain Hot-Rolled
Lead and Bismuth Carbon Steel Products Originating in the United Kingdom (“United States – Leaded Bars”),
WT/DS138/AB/R, adopted 7 June 2000, at para. 54.
98 Panel Report, United States - Anti-Dumping Duty on Dynamic Random Access Memory
Semiconductors (DRAMS) of One Megabit or Above fr om Korea (“United States – DRAMS”), WT/DS99/R,
adopted 19 March 1999, para. 6.41.WT/DS213/R
Page 89
This is because CVD orders can only be maintained for a limited period of time unless it is
demonstrated that the elements which had justified their imposition in the first place, i.e.
subsidisation, causality and injury, are likely to continue or recur in the absence of the order.
5.403  The US admitted in its first written submission and in the oral hearing that no fresh
investigation is ever conducted in a sunset review99.  This practice is in violation of the requirements
of Article 21.3 of the SCM Agreement  to make a new “determination” about the likelihood of
continuation or recurrence of subsidisation and injury.  Moreover, by in fact requiring that likelihood
of continuation or recurrence of a subsidy be undertaken in previous administrative reviews, it in
reality shifts the burden of proving a change in circumstances on the foreign exporters.Administrative reviews are considered by the SCM Agreement  as non-obligatory.  Therefore, the fact
that a party did not request an administrative review cannot relieve in any way the domestic
authorities from their basic and primary duty to make a fresh determination about the likelihood ofcontinuation or recurrence of subsidisation under Article 21.3 sunset reviews.
5.404  Moreover, in the case of a non-recurring subsidy, maintaining that  “the findings in the
original investigation provide the only evidence reflecting the behaviour of the respondents without
the discipline of countervailing measures in place” is misleading.  In such a case, it is positively
known that, in the absence of new subsidies or other evidence, the amount of the subsidy isdiminishing and is bound to disappear in accord ance with DOC’s method of calculation.  For
example, in the present case, the main subsidy, the CIG programme, was a non-recurring subsidy.
Thus, the continuation or not of its benefits was easy to establish by taking into account DOC’s
calculation memorandum, which was part of the file of the original investigation.  DOC was the actual
author of this memorandum and it was fully aware of  its existence and relevance in determining that
there could be no “likelihood” of continuation or recurrence of subsidisation and injury in this case
100.
5.405  If a final determination of likelihood of recurrence or continuation of subsidisation in a sunset
review had to be based exclusively on evidence reflecting the behaviour of the respondents without
the order in force, it is self-evident that a respondent will never get rid of a CVD duty on such basis.
For those reasons, the EC considers that, as a general rule, the same elements and factors that theinvestigating authorities took into account in the original investigation in a retrospective manner can
be analysed in a prospective way during a sunset review. These are laid down essentially in
Articles 11, 12 and 15 of the SCM Agreement .  However, the range of factors to be taken into account
in making the forward-looking assessment necessary to establish the likelihood of recurrence or
continuation of subsidisation has to be evaluated on case by case basis, as it mainly depends on the
kind of subsidy under examination.  For example, if it is a recurring unemployment subsidy, the
investigating authorities should consider the likelihood of lay-offs within the reasonable future.  In thecase at issue, however, the main subsidy was a non-recurring subsidy that by definition cannot recur.
There could have been no continuation of benefits in such a case, if the US authorities were simply to
take into consideration the calculation memorandum that was part of the file of the original
investigation.
5.406  The US argues that “…the findings in the or iginal investigation provide the only evidence
reflecting the behaviour of the respondents without the discipline of countervailing measures in
place”.  There is, therefore, a need to understand what exactly the US means by using the terms
“discipline in place”.  The EC submits that this reference in fact assimilates CVD orders to
antidumping duties.  The rationale of granting subsidies and imposing CVD orders are, however,
                                                     
99 At pp. 21-22.
100 A copy of the calculation memorandum that DOC pr epared for Preussag in the original investigation
is attached to this submission as Exhibit EC-22.  As  shown, this memorandum confirms the evidence submitted
by the Government of Germany and the German producers during the sunset review demonstrating that no
meaningful amount of subsidies were paid under the CIG programme after 1986.WT/DS213/R
Page 90
drastically different from those pertaining to dumping and the imposition of AD duties.  In the latter
case there is one actor, the individual exporter, who can swiftly decide the whole strategy of the
company regarding when, where and at what price to export, if the AD duty were to expire.
Conversely, in the case of subsidies the situation is not the same, because governments normally do
not behave commercially in the same way as individual companies.  For instance, in case of non-recurring subsidies, it is more reasonable to assume  that governments will not rush again to grant a
new subsidy soon after  a CVD order were allowed to expire. To speak of a “discipline in place”,
therefore, is to disregard completely the peculiarities and specificities of the reasons for which
governments usually grant subsidies, compared to the risk of recurrence of dumping.  It follows that,
as a matter of fact and law, a CVD order is not a “discipline” in particular in case of non-recurring,
declining subsidies, since such a subsidy has been given in the past, has been consumed for the period
of time lapsed and is known that it will not recur in the future.  It can, therefore, be said that in suchcases the CVD order has no “disciplining” effect on exporters’ behaviour.  It also follows that
applying again the rate of subsidy determined in the original investigation is a clear violation of
Article 21.3 and the obligation to make a fresh determination on likelihood of subsidisation, causality
and injury.
5.407  It follows that the US defence is without merit, particularly in the case of a subsidy
recognised by the US DOC to be a non-recurring one.  In such a case, in the absence of new subsidies,
it is definitively known that the amount of the subsidy will fall and is bound to disappear within the
determined period of time in the original investig ation.  The EC does not accept, therefore, the view
that a review under Article 21.3 involves difficulties.  Governments are used to this type of
calculations and there can be no excuse to merely side step any need to undertake a fresh forward-looking determination in a sunset review on the basis of such alleged difficulties.
5.408  In a sunset review, the forward-looking aspect of the assessment, implied by the terms “would
be likely to lead to”, refers in particular to the continuation or recurrence of subsidisation, causality
and injury.  Because this involves a certain amount  of projections extrapolating from existing data, it
may be argued that Article 21.3 somewhat “softens” the requirements in particular of Article 11.2 and11.3 of the SCM Agreement relating to the “existence” of subsidy, injury and causal link.  However, a
sunset review determination that is based only on the CVD rate established in the original
investigation or one that does not apply the 1 per cent de minimis  rule violates clearly the whole
object and purpose of the SCM Agreement .  The US, instead of conducting a fresh “determination” in
the proper sense of this term, advance as excuses reasons pertaining to the difficulties in calculating
the numerator or denominator in the formula used to calculate the subsidy.  These are neither
exceptional nor insurmountable difficulties, however, and the US takes no concrete steps and doesabsolutely nothing positive to deal with them, other than simply acknowledging their existence.
Article 21.3 does not provide a particular methodology to be followed in making the “likelihood”
determination.  However, this is nothing exceptional or unusual as other WTO Agreements are
equally short in providing all the details about the application and implementation of comparable
provisions.
101  For example, the Appellate Body has found recently with regard to Articles 4.1(b) and
4.2(a) of the Agreement on Safeguards that:
“As facts, by their very nature, pertain to the present and the past, the occurrence of
future events can never be definitively proven by facts.  There is, therefore, a tension
between a future-oriented “threat” analysis, which, ultimately, calls for a degree of
“conjecture” about the likelihood of a future event, and the need for a fact-baseddetermination.  Unavoidably, this tension must be resolved through the use of facts
                                                     
101 See Appellate Body Report, United States – Safeguard Measures on Imports of Fresh, Chilled or
Frozen Lamb Meat from New Zealand and Australia  (“United States – Lamb Safeguard ”), WT/DS177/AB/R,
WT/DS178/AB/R, adopted 16 May 2001, para. 137.WT/DS213/R
Page 91
from the present and the past to justify the conclusion about the future, namely that
serious injury is “clearly imminent”.102
5.409  As the Appellate Body has stressed in both the Thailand – H-Beams  and in the United States
– Lamb Safeguard  reports, omissions in the text of WTO Agreements are not dispositive and the true
meaning of the provision in question should be examined in the light of its object and purpose in theappropriate context.  In the present case, by virtue of Article 21.4, the determination of “likelihood” of
continuation or recurrence of subsidisation and injury has to be made on the basis of “evidence”, as
this is defined in Article 12 of the SCM Agreement.  Moreover, the term “likelihood” means “the state
or fact of being likely”.
103  Therefore, the domestic authorities in a sunset review cannot base their
determination on mere conjecture or speculation in total disregard of the factual record and evidence
available.  In addition, the domestic authorities cannot escape of their duty to conduct a fresh, proper
determination, on the ground that this is a difficult exercise or that some factors, as the US arguesabout the numerator or denominator in this case, are missing or difficult to calculate.
5.410  In this regard, the Panel should take account of the fact that DOC even refused to consult its
own calculation memoranda from the original investigation to determine the amount of grants paid
under the CIG programme after 1986.  In fact, to the extent DOC relied upon the rates calculated in its
original investigation, the duty of investigation laid down in Article 21.3 of the SCM Agreement
would also require at a minimum that DOC ma de all documents showing how the rates were
calculated in the original investigation also part of the record in the sunset review.
5.411  The US DOC cannot hide behind the argument that it is prohibited by US law from making
the memoranda of the original investigation part of the record in the sunset review
104.  The US
International Trade Commission (“ITC”) is subject to the same procedures regarding the treatment ofbusiness proprietary information as DOC.  Howeve r, unlike DOC, the ITC in its sunset reviews
automatically makes the confidential version of it s original determination, as well as the complete
staff report from the original investigation, part of  the record of the sunset review.  This is done
automatically right at the beginning of the sunset re view so that all parties will be able to use this
information in preparing their arguments.  The ITC simply provides the documents the sameconfidential status in the review that they enjoyed in the original investigation.
5.412  Furthermore, the US DOC did not give to th e EC respondent parties “ample opportunity” to
present in writing all evidence to present in writin g all evidence which they consider[ed] relevant in
respect of the investigation in question”, as required by Article 21.3, in conjunction with Articles 12.1
and 21.4, of the SCM Agreement .
5.413  Before DOC's determines to conduct a full review under Article 21.3, interested parties are
only requested to provide responses to the notice of initiation.  The vague nature of the US DOC’sinformation request, however, coupled with its refusal to accept any factual information after the
initial 35 days of a sunset review proceeding violate the provisions of Article 12.1. In addition to this
vague request for information, the US DOC regulations provide that “the Secretary normally will not
accept or consider any additional information from a party after the time for filing rebuttals has
expired.”
105  Under the sunset regulations, rebuttals are required to be filed within 35 days of the
publication of the notice of initiation in the Federal Register.106  Thus, under the US DOC’s
regulations, an interested party, guided only by the vague request to provide any factual information
regarding the likely effects of revocation of the countervailing duty order, has merely 35 days to
                                                     
102 See United States – Lamb Safeguard , para. 136, emphasis added.
103 Concise Oxford English Dictionary, 1995.
104 See US First Written Submission at para. 104.
105 19 C.F.R. § 351.218(d)(4).
106 19 C.F.R. § 351.218(d)(3) & (4).WT/DS213/R
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provide all of its factual information in the sunset review, despite that fact that the sunset review
statute provides DOC with up to 240 days to make its determination. Moreover, the fact that the US
DOC’s decision as to whether or not to conduct a full sunset review is not issued until 50 days after
publication of the notice of initiation means that, even after the US DOC makes a determination to
conduct a full sunset review, the parties will be given no additional opportunity whatsoever to submitfactual information in this regard.
107
5.414  With regards to the rights of defence and provision of information in the present case, the first
time that the US DOC commented on the information submitted by the parties was in its preliminary
results of 20 March 2000.  In its issues and decision memo, the US DOC ignored the evidence
submitted by the Government of Germany and the German producers showing that the Capital
Investment Grants (“CIG”) programme applied only  to investments made prior to 1 January 1986 and
that the amount of CIG paid after 1986 was so small that no countervailable benefit would remainafter the end of the sunset review.
108  The DOC simply stated that, because there was evidence that
CIG funds were received as late as 1990, it would “determine that benefit streams from this
programme continue beyond the end of this sunset review.”109  It is important to underline that the US
DOC did not give the German respondents any opportunity to submit additional evidence to respond
to its comments in the preliminary determination.  As explained in our written and oral submissions,the US DOC even refused a request to review its own calculation memoranda from the original
investigation to determine the exact amount of the original grant payments made after 1986.
5.415  The EC believes that such a procedure that leaves respondents in complete darkness as to
precisely what information an investigating authority requires until it is too late to provide the
information cannot satisfy the requirements of Article 12.1.  The US law and practice does not respectseveral provisions of Article 12 of the SCM Agreement , which by virtue of Article 21.4 is fully
applicable to sunset reviews.  In particular, Articles 12.1 and 12.1.1 lay down a general obligation to
provide “ample opportunity” to exporters to present in writing all evidence they consider relevant.
Article 12.2 allows also for the right to present information orally.  Article 12.3 establishes in effect a
procedure of mutual dialogue by providing that the affected exporters should be given timelyopportunity “to see all information that is relevant to the presentation of their cases…and to prepare
presentations on the basis of this information”.  Moreover, Article 12.8 provides that before the final
determination is made, disclosure should take place “in such sufficient time for the parties to defend
their interests”.  The principle underlying Article 12 of the SCM Agreement , therefore, is that during
all stages of the reviews the interested parties sh ould be given ample opportunity to present evidence,
to have access to the evidence presented by the other parties (except where confidentiality applies), to
present counter-evidence and to defend their interests at all stages leading up to the finaldetermination.  As explained above, none of these procedural rights and due process requirements are
respected by the US DOC in sunset reviews and in the present case.
6. The de minimis rule requirement
5.416  US law does not provide for the application of de minimis  requirement for CVD reviews.
Section 703(b)(4)(a) of the Act, in fact, establishes a 1 per cent de minimis rule only for the initial
determination of a countervailable subsidy.  It is in Section 351.106(c)(1) of the Sunset Regulations
and in Section III. A.6.(b) of the Sunset Policy Bulletin  that a general rule requiring to apply a 0.5 per
cent de minimis  rule in all reviews, including sunset reviews, is to be found.
                                                     
107 19 C.F.R. § 351.218(e)(1)(ii)(C)(1).
108 Issues and Decision Memo, at p. 24-25, Exhibit EC-7.
109 Ibidem, at 25.WT/DS213/R
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5.417  As explained at length in its first written submission110 and oral statement111, the EC considers
that the 0.5 per cent de minimis threshold applied by the US in sunsets differs from the 1 per cent de
minimis level which should  apply in sunset reviews, and thus is in breach of Article 21.3, in
conjunction with Article 11.9.  The US response to this claim is again that the EC purports to read into
Article 21.3 language that is not there.  In other words, the US is proposing again a formalisticinterpretation of the terms of Article 21.3 and in complete isolation of its object, purpose and context.
As the EC has already explained with its previous submissions, all the US arguments in defence
should be rejected.  The Appellate Body has held several times that “omissions in different contexts
may have different meanings, and omission, in and of itself, is not necessarily dispositive”.
112
5.418  Article 21.3 of the SCM Agreement  clearly establishes a presumption of termination.  It is
only where the domestic authorities establish likelihood of the  continued existence of an injurious
subsidy that the countervailing duty under review can  be maintained in place.  However, in the SCM
Agreement  a subsidy level of less than 1 per cent is irrefutably presumed not to cause injury.  This
practice is codified in Article 11.9 of the SCM Agreement , which prevents the authorities from making
a finding on subsidisation and injury on the basis of an amount of subsidy that is less than 1 per cent
ad valorem .  The EC sees no valid reason to depart from the application of the definition of injurious
subsidisation under Article 11.9 in the context of sunset reviews under Article 21.3.  Indeed, thereappears to be no reason in the SCM Agreement that would plead in favour of a different interpretation.
The ordinary meaning of the terms “subsidisation” a nd “injury” in context, taking also into account
the object and purpose of the SCM Agreement as a whole, suggests that if there can be no
“subsidisation” and “injury” finding in case of a de minimis amount of subsidy in an original
investigation, the same must hold true a fortiori  in the case of sunset reviews.  Indeed, holding
otherwise would run contrary to the very object and purpose of the SCM Agreement  and would most
likely lead to contradictory results and unjustified protectionism.  It would also violate the text of
Articles 21.3 and 21.1 of the SCM Agreement because it would allow the continuation of
countervailing duties for five more years without there being any real need to counter subsidisation
which is likely to cause injury.
5.419  The US has been arguing until now that it is being generous in applying the 0.5 per cent de
minimis  threshold under domestic law in sunsets.   However, the absurdity of the US approach is that
a subsidy that, if examined in a new investigation after 1995, would have been found to be de minimis
under Article 11.9 of the SCM Agreement , would now become not de minimis  under a sunset review
and would continue to be applied for 5 more years.  This is contrary not only to the text, context, and
object and purpose of Article 21.3, but also to the WTO report Brazil – Desiccated Coconut  where
Article 21.3 was interpreted as the means by which, ultimately, even measures taken prior to the entryinto force of the WTO Agreement  will be brought in line with the disciplines of the SCM
Agreement .
113
7. Conclusion
5.420  In conclusion, the EC requests the Panel to find that the US basic countervailing duty law
(Section 751(c), as complemented by Section 752, of the Act), its accompanying regulations ( Sunset
Regulations ) and policy practices ( Sunset Policy Bulletin ), and their concrete application to imports of
certain corrosion-resistant steel products from Germany in the present case are inconsistent with
Article 21 paragraphs 3, 1 and 4, Article 10 and Article 11.9 of the SCM Agreement .
                                                     
110 See under Heading 6.3.
111 See paragraphs 35-46.
112 Appellate Body Report , Canada – Automotive Industry cit. supra, para. 138.
113 Panel Report, Brazil - Desiccated Coconut , cit. supra.WT/DS213/R
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5.421  The US countervailing duty law, regulations and practice should also be considered to be
inconsistent with Article 32.5 of the SCM Agreement  and, consequently, should be found to violate
also Article XVI.4 of the WTO Agreement.
L. SECOND WRITTEN SUBMISSION OF THE UNITED STATES
1. Introduction
5.422  We are now midway through this very straight forward dispute.  The questions generated by
the Panel after the first meeting address most of the issues arising in this case, and the United States’
answers to those questions are separately provided together with this submission.  Given the
comprehensive nature of the Panel’s questions, the United States intends to use this second
submission to highlight the major legal and factual errors underlying the EC’s claims.
5.423  At the outset, the United States reiterates that most of the EC’s claims can be disposed of
merely by applying fundamental principles of treaty interpretation.  With respect to the EC’s systemicchallenge to US sunset review procedures, the EC asserts that the initiation standards and de minimis
requirement of Article 11 must be read into Article 21.3.  The EC’s assertion, however, finds no
support in the SCM Agreement and runs afoul of basic principles of treaty interpretation reflected in
Article 31 of the Vienna Convention on the Law of Treaties  (“Vienna Convention ”), which “neither
require nor condone the imputation into a treaty of words that are not there ... .”
114  The Panel should
reject the EC’s assertion and refuse to impute into  Article 21.3 of the SCM Agreement “words that are
not there.”
5.424  The EC also is wrong with respect to its case-specific claims regarding the sunset
determination by the US Department of Commerce (“Commerce”) in corrosion-resistant carbon steel
flat products from Germany.  Commerce’s determination that the expiry of the countervailing dutyorder would be likely to lead to the continuati on or recurrence of subsidization is based on the
continued existence and availability of the two programmes
115 previously found to have been used by
German producers and the continued existence of benefit streams from the CIG programme
previously found to benefit German producers.  The EC has not disputed or refuted these facts.  Thus,
the Panel should reject the EC’s claims concerning Commerce’s sunset determination.
5.425  With this overview of the case as background, the United States will now briefly discuss
some of the specific issues that have been raised in the case.
2. With respect to its claims concerning US Sunset Review Procedures, the EC has failed to
demonstrate that the United States has acted inconsistently with any obligation under
the SCM Agreement
5.426  As noted, the Panel can dispose of the EC’s claims concerning US sunset review procedures
simply by applying basic rules of treaty interpretation.  Article 3.2 of the DSU directs panels to“clarify” WTO provisions “in accordance with customary rules of interpretation of public
international law.”  The Appellate Body has recognized that Article 31 of the Vienna Convention
reflects customary rules of interpretation.  Article 31(1) provides that a “treaty shall be interpreted in
good faith in accordance with the ordinary meaning to be given to the terms  of the treaty in their
context  and in the light of its object and purpose .”  (Emphasis added).  In applying Article 31,
                                                     
114 India - Patent Protection for Pharmaceutical and Agricultural Chemical Products  (“India Patent
Protection ”), WT/DS50/AB/R, Report of the Appellate Body adopted 16 January 1998, para. 45.
115 The two programmes are the Aid for Closure of Steel Operations and the ECSC Redeployment Aid
under Article 56(2)(b).  Both of these programmes still exist.  Furthermore, during the sunset review, theGerman Government, the EC, and German producers admitted that both of these programmes continued to
provide some benefits.  See Commerce Sunset Preliminary Decision Memorandum , p.12-14 (Exhibit EC-7).WT/DS213/R
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however, the Appellate Body has cautioned that an interpreter’s role is limited to the words and
concepts used in the treaty, and that the principl es of interpretation set out in Article 31 “neither
require nor condone the imputation into a treaty of words that are not there ... .”116  It goes without
saying that a panel cannot “clarify” a treaty provision that does not exist.
(a) Automatic Self-Initiation of Sunset Reviews is consistent with the SCM Agreement because
Article 21.3 explicitly authorizes authorities to initiate Sunset Review s on their own initiative
5.427  The EC alleges that the provisions of US law providing for the automatic self-initiation of
sunset reviews by Commerce are inconsistent with  Article 21.3 of the SCM Agreement. For purposes
of evaluating the EC’s claims, customary rules of treaty interpretation dictate that the words of a
treaty form the starting point for the process of interp retation.  Therefore, the analysis begins with the
text of Article 21.3, which provides:
Notwithstanding the provisions of paragraphs 1[117] and 2[118], any definitive
countervailing duty shall be terminated on a date not later than five years from its
imposition . . ., unless the authorities determine,  in a review initiated before that date
on their own initiative or upon a duly substantiated request made by or on behalf of
the domestic industry within a reasonable period of time prior to that date, that the
expiry of the duty would be likely to lead to continuation or recurrence ofsubsidization and injury.
52 The duty may remain in force pending the outcome of such
a review.
52 When the amount of the countervailing duty is assessed on a retrospective
basis, a finding in the most recent assessment proceeding that no duty is to be levied
shall not by itself require the authorities to terminate the definitive duty.
5.428  The plain text of Article 21.3 clearly and unambiguously permits authorities to initiate a
review on “their own initiative.”  Notwithstanding this clear and unqualified text, the EC argues that
authorities should not be able to self-initiate suns et reviews unless they have first satisfied the
evidentiary requirements for the initiation of an investigation under Article 11.  The EC believes that
this is so because, according to the EC, a “parallelism” exists between the investigation and sunsetreview provisions of the SCM Agreement.
119  The EC’s parallelism theory is just that – a theory.
Under customary rules of treaty interpretation, a theory cannot overcome the ordinary meaning of the
words of a treaty, taking into account their “context” and the “object and purpose” of the agreement.
5.429  If, as the EC posits, the SCM Agreement implicitly incorporates a parallelism between
investigation and sunset review provisions, why then did the Members feel it necessary to provide
explicitly  that the evidentiary and procedural requirements for conduct of an investigation in
Article 12 are made applicable in the conduct of sunset reviews pursuant to Article 21.4 ?  Where
Members wished to have an obligation set forth in one provision apply in another context, they did so
expressly.  The fact is that the Members chose not to incorporate the evidentiary requirements of
                                                     
116 India Patent Protection , para. 45; see also United States - Definitive Safeguard Measures on
Imports of Circular Welded Car bon Quality Line Pipe from Korea , WT/DS202/AB/R, Report of the Appellate
Body circulated 15 February 2002 (unadopted) (“[W]ords must not be read into the Agreement that are notthere.”).
117 Paragraph 1 of Article 21 provides that “[a] countervailing duty shall remain in force only as long as
and to the extent necessary to counteract subsidization which is causing injury.”
118 Paragraph 2 of Article 21 is relevant to types of reviews, other than sunset reviews, such as
countervailing duty assessment reviews.  See, e.g., United States - Imposition of Countervailing Duties on
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom  (“UK Lead
Bar”), WT/DS138/AB/R, Report of the Appellate Body adopted 7 June 2000, para. 53.
119 EC Oral Statement, paras. 13-15.WT/DS213/R
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Article 11.6 for the self-initiation of sunset review s.  The Panel should decline the EC’s request to
create an evidentiary obligation for self-initiation under Article 21.3 where no textual support exists
for such an interpretation.
(b) There is no de minimis  standard for Sunset Reviews in the SCM Agreement
5.430  The other systemic challenge by the EC involves its claim that the de minimis  standard of
Article 11.9 applies to sunset reviews under Article 21.3.  As the United States demonstrated in its
First Written Submission and Oral Statement, nothing in Article 21.3 or elsewhere in the Agreement
establishes a de minimis  standard for sunset reviews.  Furthermore, a contextual analysis of Article
21.3, in light of the object and purpose of the SCM Agreement and the particular provisions at issue,
provides no support for the EC’s claim that the Article 11.9 de minimis  standard is applicable in
sunset reviews under Article 21.3.  Once again, the EC is asking the Panel to read into Article 21.3
“words that are not there.”
5.431  The EC has failed to refute the United States’ textual and contextual arguments.  Instead, the
EC attempts to commingle its factual, case-specific claims regarding the Commerce sunset
determination on corrosion-resistant steel with the separate, purely legal issue of whether the
Article 11.9 de minimis  standard applies to sunset determinations under Article 21.3.120  The factual
and the legal issues are distinct, however, and the United States has addressed them separately insignificant detail in its First Written Submission and Oral Statement.  In addition, the United States
addresses certain of the EC’s factual claims in more detail below.
5.432  With respect to the purely legal issue, the EC merely reiterates its previous argument that the
de minimis standard for investigations contained in Article 11.9 “should” apply in sunset reviews
conducted pursuant to Article 21.3 because investigations and sunset reviews serve the samepurpose.
121  The United States disagrees.  The purpose of an investigation is to determine whether and
to what extent subsidization exists.  In this context, the function of the one percent de minimis
standard contained in Article 11.9 is to determine whether foreign government subsidies warrant the
imposition of a countervailing duty in the first instance.  Using the example given in our First Written
Submission (para. 80), if the investigating authority found that a government programme hadprovided recurring subsidies at a rate of more than one percent, imposition of a countervailing duty
would be warranted if the subsidized imports were found to cause injury.  In contrast, the focus of a
sunset review is the future, i.e., whether subsidization is likely to continue or recur.  Therefore, the
mere continued existence of a subsidy programme could warrant maintaining the duty beyond the
five-year point, even if the amount of the subsidy were currently zero , because subsidization may be
likely to recur absent the discipline of the countervailing duty.  To read a particular de minimis
requirement  for sunset reviews into the Agreement would render footnote 52 a nullity.
5.433  In its Oral Statement, the EC opined that the United States has confused the purposes of an
administrative ( i.e., assessment) review and a sunset review and the application of footnote 52.
122  It is
the EC that is confused.  Pursuant to Article 21.3 and footnote 52, the mere existence of a subsidy
programme, even with a net countervailable subsidy rate of zero, could form the basis for a
determination of likelihood of future subsidization in accordance with Article 21.3 and footnote 52.The United States agrees with the EC that footnote 52 refers to a situation where the authority
determines that the subsidy rate for a particular time  period is zero and that, in the United States, that
determination takes place in the context of an administrative review.
123  The EC seems to think,
                                                     
120 See EC Oral Statement, para. 38.
121 EC Oral Statement, para. 37.
122 EC First Oral Statement, para.44.
123 EC Oral Statement, para. 44.  Although not germane to the instant dispute, the United States does
not agree with the EC’s statement that footnote 52 refers to a situation where a subsidy is “ de minimis ” in anWT/DS213/R
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however, that footnote 52 serves no other purpose th an to make a point about administrative reviews.
The EC posits that “[s]unset reviews under Article 21.3 are completely different from administrative
reviews.”  If that is so, why did the Members include footnote 52 in Article 21.3, the provision
governing sunset reviews?  There must be a reason.
5.434  The United States considers that footnote 52 means that the current level of subsidization is
not decisive as to whether subsidization is likely to recur.  The EC has not offered any alternative
interpretation.  The reason for this gap in the EC’s  argumentation is that the EC’s claim that a de
minimis  standard is required in the context of Article 21.3 sunset reviews would, if accepted, render
note 52 meaningless.
5.435  In sum, the EC’s claim that a de minimis standard exists for sunset reviews under Article 21.3
is without merit.  Applying customary rules of tr eaty interpretation, the Panel should find that there is
no de minimis  standard for sunset reviews in the SCM Agreement.
3. With respect to Commerce’s Sunset determination involving corrosion-resistant steel
from Germany, the EC has failed to demonstrate that the United States acted
inconsistently with any obligation under the SCM Agreement
5.436  In the original countervailing duty investigation, Commerce determined that German
producers of corrosion-resistant steel benefitted from five different subsidy programmes.  In thesunset review, Commerce made the following find ings with respect to these five programmes:
124
1. Capital Investment Grants (“CIG”).  The benefit streams from non-recurring grants
will continue beyond the five-year mark.
2. Structural Improvement Aids.  The programme has been terminated.
3. Special Subsidies for Companies in the Zonal Border Area.  The programme has been
terminated.
4. Aid for Closure of Steel Operations.  The programme continues to exist.
5. ECSC Redeployment Aid Under Article 56(2)(b).  The programme continues to exist.
5.437  Commerce also found that two additional subs idy programmes which were found to provide a
zero-benefit to corrosion-resistant products in the pe riod of investigation still existed:  ECSC Article
54 Long-Term Loans, and Interest Rebates on ECSC Article 54 Loans.125
5.438  Significantly, the EC has not disputed the facts which form the basis for Commerce’s sunset
determination.  On the contrary, the EC admits in  its Oral Statement that payments under the CIG
                                                                                                                                                                    
administrative review.  Footnote 52 only discusses a fi nding in the most recent assessment proceeding that “no
duty” is to be levied.
124 Commerce Sunset Preliminary Decision Memorandum , pp.24-29 (Exhibit EC-7); Commerce Sunset
Final Decision Memorandum  (Exhibit EC-10).
125 Commerce Sunset Preliminary Decision Memorandum , p.29 (Exhibit EC-7); Commerce Sunset
Final Decision Memorandum  (Exhibit EC-10).  In the investigation, Commerce determined that long-term loans
under ECSC Article 54 had been provided to the following German producers of corrosion-resistant carbon steelflat products:  Hoesch, Preussag, and Thyssen.  Commerce also determined that Preussag and Thyssen receivedinterest rebates with respect to interest expenses incurred on ECSC Article 54 loans.  See Commerce
Investigation Final , 58 FR at 37316-21 (Exhibit EC-2).WT/DS213/R
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programme were made as late as February 1990.126  The EC also admits in its Oral Statement that the
Aid for Closure of Steel Operations and the ECSC Redeployment Aid under Article 56(2)(b)
programmes continue to exist.127  Also, during the sunset review itself, the German Government, the
EC, and German producers admitted that both of these programmes continued to provide some
benefits.128
5.439  The EC, however, continues to assert that Commerce acted inconsistently with the SCM
Agreement by failing to consider the CIG programme terminated and its benefits expired based on the
EC’s theory that a de minimis standard of one percent is required in sunset reviews.  Based on this
theory, the EC argues that Commerce should have terminated the countervailing duty.
5.440  In advocating this position, the EC misconstrued, in its Oral Statement, the United States’
position with respect to the CIG programme and the effect of footnote 52.129  Concerning the CIG
programme, Commerce determined that benefits from the non-recurring grants would continuebeyond the five-year mark.
5.441  With respect to the effect of footnote 52 in s unset determinations, the United States stated in
its First Written Submission that “[t]he mere continued existence of this same programme could
warrant maintaining a duty beyond the five-year point, even if the amount of the subsidy was currently
zero, as stated in footnote 52, because subsidization may recur absent the discipline of the duty.”
130
The reference to the “same programme” was not to the CIG programme , per se , but to a hypothetical
programme discussed by the United States as an example in the preceding paragraph 80 in drawing a
distinction between the object and purpose of an investigation versus the object and purpose of a
review.131  In its sunset determination, Commerce found that the CIG programme was terminated, but
its benefit stream continued past the sunset review period.  In paragraph 81, however, the UnitedStates was explaining that footnote 52 stands for the proposition that an existing subsidy programme
could be the basis for a determination in a sunset review that the expiry of the countervailing duty
would likely lead to the continuation of subsidization even if Commerce found a net countervailable
subsidy rate of zero attributable to that programme in the most recent administrative review.
5.442  Article 11 of the DSU directs panels to make an “objective assessment” of the facts of the
case.  The facts in this case include the continuation of benefit streams and the continued existence
and availability of countervailable subsidy programmes previously found to have been used by
German producers of corrosion-resistant steel.  The Panel’s objective assessment of these facts should
result in a finding that Commerce’s determination was not inconsistent with the SCM Agreement.
4. Conclusion
5.443  Based on the foregoing, the United States renews its request that the Panel make the findings
described in paragraph 127 of its First Written Submission.
                                                     
126 EC First Oral Statement, para. 26.  Using the 15-year allocation period, the benefit stream from
subsidies received after 1985 would continue past the five-year mark ( i.e., 1 January 2000).
127 EC First Oral Statement, para. 39.
128 See Commerce Sunset Preliminary Decision Memorandum , p.12-14 (Exhibit EC-7).
129 EC First Oral Statement, para. 44.
130 US First Submission, para. 81 (emphasis in original).
131 US First Submission, para. 80.WT/DS213/R
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M. ORAL STATEMENT OF THE EUROPEAN COMMUNITIES AT THE SECOND MEETING OF THE PANEL
1. Introduction
5.444  The European Communities ("EC") presentation aims at responding at the basic US
arguments by focusing mainly on four issues: (1) the proper interpretation of Article 21.3 of the SCM
Agreement  as regards the obligation to conduct a sunset review and to apply the de minimis  rule of
1 per cent ad valorem ; (2) what does it mean to determine in a sunset review whether the expiry of the
duty is likely to lead to continuation or recurrence of subsidisation and injury; (3) the meaning and
scope of Footnote 52 in sunset reviews; (4) the extent to which the Opinion of the US Court of
International Trade (CIT) of 28 February 2002 has clarified some legal issues raised also in this Panel
proceedings (Exhibit EC-24).
5.445  The US has offered very little to justify its laws, regulations and practices in the present case
and even this very little explanation has now been substantially disapproved by the Opinion of the USCIT of 28 February 2002.  Unfortunately, the CIT had to interpret the case on the basis of the US law,
which is inconsistent with the SCM Agreement , and therefore it could not go as far as the EC would
have liked it to go in clarifying the legal situation.  Moreover, the judgement is not final and it does
not ensure that the underlying dispute in the present case will be resolved in a way that is consistent
with the US obligations under the WTO and SCM Agreements.
2. Interpretation of Article 21.2 SCM Agreement
(a) Generally accepted rules on treaty interpretation
5.446  Whilst the US pretends to agree that the principles laid down in Articles 31 and 32 of the
Vienna Convention should be used to interpret the terms of Article 21.3, in reality it quotes the
Appellate Body report in India - Patent  to rely on one criterion only, the wording of Article 21.3.  The
US pays no attention at all to the context and to the object and purpose of the SCM Agreement .
However, as it is evident from the whole of paragraph 45 of the India - Patent  and from the recent
report in US - Safeguard of Line Pipe from Korea , the Appellate Body maintains that its customary
approach is to seek the meaning of the terms of a provision in their context and in the light of the
object and purpose of the Agreement (at para. 251).  This is what the EC proposes the Panel to do inthe present case, i.e. to read the terms of Article 21.3 in their context, and in light of the object and
purpose of the SCM Agreement .
5.447  On the contrary, the US interpretation does not conform to the object and purpose of the SCM
Agreement  - which is to allow a CVD only as long as and to the extent necessary to counteract
subsidisation and injury - as it is also evident by the clear terms of Article 21. In particular, it does not
explain how is that a subsidy rate of less than 1 per cent would lead to subsidisation, injury and
causality in a sunset review, when the same rate  found in the original investigation would lead to
automatic termination.  If an interpretation is incomp atible with the object and purpose of a treaty, this
interpretation may well be wrong (Oppenheim, p. 1273).
5.448  The strict textual and isolationist interpretation proposed by the US runs also counter to the
basic principle of good faith interpretation, because they will lead unavoidably to results which are
manifestly absurd and unreasonable and would reduce Article 21.3 to inutility (Sinclair, p. 116, 120),and to the principle of effectiveness, according to which the parties to a treaty are assumed to intend
its provisions to have the fullest value and effect and not to be meaningless (Oppenheim, p. 1281).
5.449  "Good interpretation is often no more that the application of common sense" (Aust, p. 202).
Indeed, although it is normally not for an internati onal tribunal to revise a treaty by reading into it
provisions which it does not contain, it is nevertheless sometimes necessary to interpret its terms asWT/DS213/R
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implying such a term (Aust, p. 201). The EC prov ided several examples of panel and Appellate Body
reports which, despite an identified omission in the relevant text, interpreted the provisions in the light
of the object and purpose of the WTO Agreement in question so as not to render it a nullity (e.g. AB
report in US - Safeguard of Line pipe from Korea , the AB report in Brazil - Desiccated Coconut , the
AB report in Argentina - Footwear Safeguards , the AB report in Korea - Dairy Safeguards , the AB
report in US - Section 211 Omnibus Appropriations Act ).  This well established case law suggests that
the determination of the ordinary meaning cannot be done in the abstract, but only in the context of
the treaty and in the light of its object and purpose.  The task of interpreting a treaty is one of
ascertaining "the logic inherent in the treaty" (Aust, p. 185) in its entirety.  The interpretation
proposed by the EC of the terms of Article 21.3 is consistent with the above principles and with the
preparatory history.
(b) Initiation of a sunset review and interpretation of the term "to determine" the likelihood of
continuation or recurrence of subsidisation and injury
5.450  The US argues that it does not have to conduct its own investigation in order "to determine"
whether the expiry of the duty is likely to lead to continuation or recurrence of subsidisation and
injury.  The EC submits that this interpretation is inconsistent with the SCM Agreement , which places
upon the national authorities the clear obligation to conduct an investigation and to determine on the
basis of positive evidence whether expiry of the duty  is likely to lead to continuation or recurrence of
subsidisation and injury. The duty "to determine" entails the obligation to carry out a new, fresh
investigation on continuation or recurrence and provide a rational explanation why this is likely to
lead to subsidisation and injury.
5.451  The US CIT opinion of 28 February 2002 confirmed that the DOC (even under US law) did
not fulfil its obligations pursuant to a full sunset review, because “it failed to consider adequately the
evidence on the record, or to seek additional evidence necessary to make its determination”.
(c) Article 21.3 and likelihood of continuation of subsidisation and injury
5.452  The US argument has constantly been that it "does not calculate the present rate of
subsidization in a sunset review because the purpos e of a sunset review is to determine the likelihood
of the continuation or recurrence of subsidization", and that this "necessarily involves a prediction of a
government’s future behaviour without the discipline of a countervailing duty order in place".  For
this reason, the US "uses only information developed in the original investigation or prior
administrative reviews because this information has been subject to the rigors of the administrative
process in those proceedings".  The EC respectfully disagrees with these propositions.
5.453  The EC agrees that there is a forward-looking aspect to a sunset review, but submits that a
sunset review determination that is based only on the CVD rate established in the originalinvestigation or one that does not apply the 1 per cent de minimis  rule violates clearly the whole
object and purpose of the SCM Agreement.
5.454  The determination of "likelihood" of continuation of subsidisation and injury has to be made
on the basis of "evidence", as this is defined by Articles 21.4 and 12 of the SCM Agreement . The
domestic authorities cannot escape of their duty to conduct a fresh, proper investigation, on theground that this is a difficult or time consuming exercise or that some factors, as the US argues about
the numerator or denominator in this case, are missing or difficult to calculate.
5.455  The US argues that "the findings in the original investigation provide the only evidence
reflecting the behaviour of the respondents without the discipline of countervailing measures in
place".  There is, therefore, a need to understand what exactly the US means by using the terms"discipline in place".  The EC submits that this reference in fact assimilates CVD orders toWT/DS213/R
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antidumping duties.  The rationale of granting subsidies and imposing CVD orders are, however,
substantially different from those pertaining to dumping and the imposition of AD duties.  In the latter
case there is one actor, the exporter, who can swiftly decide the whole strategy of the company
regarding when, where and at what price to export, if the AD duty were to expire.  In the case of
subsidies the situation is not the same as AD, because governments normally do not behavecommercially in the same way as individual companies.  For instance, in case of non-recurring
subsidies, it is more reasonable to assume that governments will not rush to grant again a new subsidy
soon after a CVD order were allowed to expire.  The principle is that granting a new subsidy
increasing the level of an existing one is normally subject to rather different considerations which
distinguish them clearly from the natural desire of individual companies to swiftly divert exports in
order to increase profits when an AD order is left to expire.  Moreover, subsidies take normally time
to be discussed and decided in national parliaments, depending also on the type of procedure to befollowed, and this further distinguishes them from dumping practices.  To speak of a "discipline in
place", therefore, is to disregard completely the p eculiarities and specificities of the reasons for which
governments usually grant subsidies, compared to the risk of recurrence of dumping.
5.456  Moreover, as the CIT Opinion clarified, the US does not answer the basic question why it can
conduct on site verifications and apply the full rigors of an investigation in the context of anadministrative review, but claims that it cannot do so in the context of a sunset review.  Attempting to
predict the future behaviour of a government in no way prevents the US authorities from conducting a
proper, fresh, new investigation.  In this regard, the Panel should take account of the fact that DOC
even refused to consult its own calculation memoranda from the original investigation to determine
the amount of grants paid under the CIG programme after 1986.
5.457  The above proposition is as much acknowledged by the US law and regulations in place,
which lay down the following criteria in deciding continuation or recurrence.  The US Sunset Policy
Bulletin  (see Exhibit EC-15) provides, in Section III.A.5, some criteria about the way future
government behaviour could be predicted.  They include in particular the legal method by which the
government granted or eliminated a programme, i.e. whether this is done by administrative action or
through legislative action.  The US Sunset Policy Bulletin  proposes to the authorities to draw different
conclusions depending on the legal method applied.  This is all the more important here, as the
programmes under review in the present case and, in particular the CIG programme, were granted by
legislative action and could not as such be reinstated by administrative action only.
5.458  It follows that a CVD order is not a "discipline in place" in the sense these terms are used by
the US, in particular in case of a non-recurring, declining subsidy, since such a subsidy has been given
in the past, has been largely consumed for the pe riod of time up to the sunset review, and is known
that it will not recur in the future.  The US law th at allows the DOC to use the subsidy rate determined
in the original determination, unless a programme is terminated, is inconsistent with the provisions of
Article 21.3 of the SCM Agreement .
5.459  Moreover, as the CIT Opinion clarified, the US does not answer the basic question why it can
conduct on site verifications and apply the full rigors of an investigation in the context of anadministrative review, but claims that it cannot do so in the context of a sunset review.  Attempting to
predict the future behaviour of a government in no way prevents the US authorities from conducting a
proper, fresh, new investigation to find out about the numerator or denominator of the exporters’
sales, the likelihood of the subsidy programme been modified or withdrawn or whether there is a non-
recurring subsidy the amount of which has already been expensed and the remaining benefit flowingfrom it is nearly zero.  As the US CIT has put it:
Commerce cannot justify its failure to consider Plaintiffs arguments based on its
conjecture that this information might be unavailable or otherwise incapable of beingWT/DS213/R
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verified   Presumably, sales values since 1993 would be readily available to
commerce had it requested submissions regarding this information.132
(d) Need to conduct prior administrative reviews, timely submission of data, and obligation to
consider the record from the original investigation
5.460  The US claims that "under the US system, administrative reviews are not prerequisites for
conducting full sunset reviews" but then it concedes th at, in a sunset review, it "only uses information
developed in the original investigation or prior administrative proceedings." This is just one typical
example of how fluid and sometimes contradictor y is the US law and practice on sunset reviews,
characterised by the use of terms such as "normally", "as a general rule", etc.  In addition, the US
argues that "normally" it makes adjustments to th e net countervailable subsidy determined in the
investigation when "there is evidence demonstrating that programmes have been terminated with no
residual benefits".  However, this apparent flexibility of US law in sunsets is not borne out in practice.Moreover, this flexibility and plasticity of US law are not virtues but serious legal defects, because
they eliminate legal security and predictability in the interpretation and application of the US law on
sunset reviews to the detriment of foreign exporters and international trade. In this case, the
Government of Germany and the German producers provided clear evidence that the CIG programme
was terminated without any meaningful residual benefit continuing after the end of the sunset review.Despite this evidence, the US DOC refused to adjust the rate from the original investigation to reflect
this change. There could have been no continuation of benefits in such a case, if the US authorities
had simply taken into consideration the calculation memorandum that was part of the file of the
original investigation.
5.461  The US has been claiming that the German exporters had 15 months to prepare for the sunset
review and that they are alone to blame if they  did not submit in time the evidence regarding the
calculation memoranda from the original investigation.  This has been a particularly ingenious attempt
by the US to exclude crucial evidence from th e sunset review.  The US CIT Opinion now lends
support to the EC's claims in this regard.  The CIT said:
The record from the original investigation may be incorporated into the record for
purposes of the sunset review … Further, in the past, even in an expedited sunset
review Commerce apparently has accepted untimely submissions relating to
"important factual information that is already on the record of this [sunset review]
proceeding, i.e., in the [prior] administrative review segment."…Thus, it is sufficient
that Plaintiffs alerted the agency in their substantive response or rebuttal to the other
interested parties’ substantive response that the countervailable benefits accruing
from the nonrecurring subsidies would be de minimis  … The court finds that the issue
was raised with sufficient clarity to put Commerce reasonably on notice in a timely
manner that it needed to consider the data underlying the calculation of the original
CVD rate … To the extent Commerce needed information beyond these calculation
memoranda, it could have requested the information from the parties or from a third
source … Accordingly, Commerce shall consider the calculation memoranda as partof the record in this proceeding.
133
                                                     
132 Exhibit EC-24,  at page 25 and footnote 22 thereto.
133 Exhibit EC-24 , at pages 17-18, references and footnotes omitted.  Moreover, the UC CIT found on
page 24 of its Opinion that "Commerce does not dispute that the information in the calculation memoranda andPreussag's questionnaire had been verified in the original investigation".  The CIT also clarified (on page 38)that: "Commerce ignores the statutory provision that it may seek an extension of time for "extraordinarily
complicated" sunset reviews."WT/DS213/R
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5.462  For those reasons, the EC considers that under the SCM Agreement , as a general rule, the
same elements and factors that the investigatin g authorities took into account in the original
investigation in a retrospective manner can be analysed in a prospective way during a sunset review.
These are laid down essentially in Articles 11, 12 and 15 of the SCM Agreement .  However, the range
of factors to be taken into account in making th e forward-looking assessment necessary to establish
the likelihood of recurrence or continuation of subsidisation has to be evaluated on case by case basis,
as it mainly depends on the kind of subsidy under examination.  For example, if it is a recurring
unemployment subsidy, the investigating authorities should consider the likelihood of lay-offs within
the reasonable future.  In the case at issue, how ever, the main subsidy was a non-recurring subsidy
that by definition cannot recur.  There could have been no continuation of benefits in such a case, if
the US authorities had simply taken into consideration the calculation memorandum that was part of
the file of the original investigation.
(e) The de minimis rule in sunset reviews and the meaning and scope of Footnote 52
5.463  The US argues that there is no rationale for including the 1 per cent de minimis  rule in sunset
reviews.  This proposition does not explain, howev er, why the US considers useful to apply the
0.50 per cent de minimis  rule under its domestic law; nor has the US offered any credible explanation
for doing so.
5.464  The EC submits that Article 21.3 of the SCM Agreement  clearly establishes a presumption of
termination, and sees no valid reason to depart from the application of the definition of injurious
subsidisation under Article 11.9 (that a subsidy of less than 1 per cent cannot cause injury) in the
context of sunset reviews under Article 21.3.  The pr eparatory history of Article 11.9 indicates that the
de-minimis  rule is based on a presumption that levels below de-minimis  do not cause injury, rather
than, as the US suggests, reasons of administrative efficiency.  Exhibit EC-25 demonstrates that other
WTO Members have also understood the preparatory history and the interpretation to be given to
Article 21.3 as regards de minimis  in the same way as the one proposed here to the Panel by the EC.
5.465  The US claims that the interpretation proposed by the EC would render Footnote 52 a nullity.
It also asserts that there must be a reason for the inclusion of Footnote 52 in Article 21.3.  Thesesuggestions are puzzling.  The EC does not dispute the essential function of this Footnote. A
determination not to terminate the CVD order may indeed be compatible with a finding of zero
subsidy rate in the most recent administrative  review or be based on some other reason.  But
Footnote 52 does not support the extrapolation made of  it by the US in order to reach the conclusion
that there is no de minimis  rule of 1 per cent ad valorem  in sunset reviews.  Furthermore, based on
that understanding of the de minimis  rule, the US then extrapolates from Footnote 52 by making
several illogical leaps.  First, it argues that a zero rate of subsidy cannot require the authorities toterminate the CVD duty.  That means that the level of the subsidy, even if zero, is not relevant for
deciding likelihood of continuation or recurrence of subsidisation, injury and causality.  Second, it
draws the operational conclusion that it is not necessary to calculate the actual level of subsidy in a
sunset review.  Third, it does consider that the de minimis  rule of Article 11.9 does not apply to
Article 21.3 reviews.
5.466  The preparatory history of Article 11.9 and the corresponding provision in the AD
Agreement, however, indicate that the rationale of the de minimis  rule in these Agreements is different
from that on which the de minimis  rule is applied in the US.  In these two WTO Agreements, the level
of 1 per cent ad valorem  was agreed to be the de minimis  threshold not for reasons of administrative
efficiency but because for imports below this level the causal link between subsidised imports and thematerial injury to domestic industry would not exist.
134  This is a significantly different rationale,
                                                     
134 E.g., MTN.GNG/NG10/W/9/Rev. 3,  point E, of 26 may 1988, an d MTN.GNG/NG10/W/4, page 42.WT/DS213/R
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because it demonstrates that the US wrongly continued under its domestic law its old practice going
back to 1980, as codified in the 1987 Guideline on the minimis rule (see Exhibit US-6).
5.467  The EC considers that the current level of subsidy is not always dispositive of the outcome of
a sunset review. If the current level of subsidy is zero or de minimis , this does not by itself end the
measure, but it does require the US DOC to demonstrate what change of circumstances will lead to
the subsidy increasing to a level above de minimis , if it wishes to continue the measure.  In the case of
a non-recurring subsidy, which is already de minimis , and subject to the US declining balance
methodology, the DOC must adduce and rely on positive evidence of new subsidies or of a sharp fall
in the denominator in order to find likelihood of subsidisation, injury and causality.
5.468  Moreover, the US states that the "focus" of a sunset review is on the possible future behaviour
of foreign governments and exporters.  This is misleading.  First, as already explained, a sunset
review determination requires positive evidence to demonstrate that subsidisation, injury and causality
is likely to continue or recur. The US keeps repeating that the "best evidence" of future behaviour of
governments and exporters is the rate from the original investigation.  However, in the case of
Corrosion-resistant steel from Germany , how can this be?  The DOC has itself established that there
are no new subsidies and that the non-recurring subsidies found in the original investigation, 9 years
ago, have now declined to a level that is equivalent zero by its own calculation methodology.
5.469  The US has modified its past practice after the WTO Agreements on AD and SCM entered
into force only as regards determinations made in the initial investigation, but left its domestic
legislation on sunset reviews unchanged by applying its 0.50 per cent de minimis  rule based on a
completely different rationale (i.e. administrative convenience and efficiency).
3. Conclusions
5.470  The EC considers that not only the application of the basic US laws, regulations and policy
guidelines in the present case are inconsistent  with the US obligations under the WTO and SCM
Agreement , but these US laws, regulations and guidelines are in themselves incompatible with the
WTO and the SCM Agreement.
5.471  As the US CIT Opinion of 28 February 2002 put it, the DOC cannot act irrationally and
arbitrarily.  The DOC cannot accept domestic parties’ "late" submissions and reject those of
respondents.  It cannot make some adjustments to an original CVD rate and then state it will not
consider evidence of other adjustments because all adjustments are barred.  It cannot avoid applying
changes in the law because it is burdensome or inconvenient.  It must conduct meaningful sunset
reviews.  It cannot erect barriers simply to avoid considering complicated problems.
5.472  In conclusion, the EC respectfully asks the Panel to find in accordance with our request as
stated in the conclusions of our first written submission.
N. ORAL STATEMENT OF THE UNITED STATES AT THE SECOND MEETING OF THE PANEL
5.473  On behalf of the United States delegation, I would like to thank the Panel for this opportunity
to comment on certain issues raised in this proceed ing.  We do not intend to offer a lengthy statement
today.  Instead, we will focus briefly on the central issues in this dispute.
5.474  Mr. Chairman, as we stated in our Oral Statement at the First Meeting of the Panel, this
proceeding presents three basic questions.  The first question is, does the United States act
inconsistently with Article 21.3 of the Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade 1994  (“Anti-Dumping Agreement”) by self-initiating sunset reviews
without regard to the evidentiary provisions of Article 11.6?  The second question is, does the UnitedWT/DS213/R
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States act inconsistently with Article 21.3 by not applying the de minimis  provisions of Article 11.9 in
sunset reviews?  The third question is, whether Commerce’s determination in the sunset review on
corrosion-resistant steel was based upon an appropriately conducted review of all relevant and
properly submitted facts?
5.475  The purely legal issues – can an authority automatically self-initiate a sunset review?  is there
a de minimis  standard applicable to sunset reviews?  what are the evidentiary and procedural
requirements applicable to sunset reviews? – are all addressed in the SCM Agreement.  This, of
course, is no great revelation to any of us.  Where the United States and the EC diverge, however, is
on how the Panel should interpret what the SCM Agreement says on these issues.
5.476  Consistent with accepted WTO jurisprudence, the United States has argued that the Panel
should interpret the SCM Agreement, and in particular Article 21.3, in accordance with the ordinary
meaning of the terms of the Agreement in their cont ext and in light of their object and purpose.  This
should be a straightforward exercise becaus e the terms themselves are straightforward.
5.477  Simply put, Article 21.3 provides that a defini tive countervailing duty must be terminated
unless the requisite finding – likelihood of continuation or recurrence of subsidization and injury – is
made.  This likelihood finding is made in the context of a sunset review that, according to the explicit
terms of Article 21.3, may be initiated on one of two bases – on an authority’s “own initiative” or
upon a “duly substantiated request” by or on the behalf of the domestic industry.  There is no
requirement in Article 21.3 or elsewhere in the Agreement to consider the magnitude of current
subsidization in determining the likelihood that, absent the countervailing duty, subsidization would
be likely to continue or recur.  Finally, under the terms of Article 21.4, a sunset review must be
conducted in accordance with the evidentiary and procedural requirements of Article 12.Commerce’s sunset determination in corrosion-resistan t steel comports with all of these terms of the
SCM Agreement.
5.478  In contrast to the United States’ text-based analysis, the EC makes various assumptions
regarding the “purposes” of various provisions of the SCM Agreement without  reference to the text of
the SCM Agreement, and then refers to obligations not found in the text which presumably derivefrom these “purposes.”  According to the EC, the Panel should derive the object and purpose of the
SCM Agreement and then ignore the plain meaning of  the words in order to achieve that object and
purpose.  This, of course, is the very antithesis of the basic principles of treaty interpretation reflected
in Article 31 of the Vienna Convention .
5.479  For example, despite the plain text permitting initiation of a sunset review on an authority’s
“own initiative,” the EC argues that the Article 11.6 evidentiary prerequisites for self-initiation of
investigations must be satisfied in sunset reviews as well.  Similarly, the EC reads a de minimis
requirement into Article 21.3, notwithstanding that no such obligation exists.  In both instances, the
EC’s arguments are based on its assumptions as to the purpose of investigations and sunset reviews.
This approach to treaty interpretation runs afoul of the Appellate Body’s admonition in Japan -
Alcoholic Beverages , that “the treaty’s object and purpose is  to be referred to in determining the
meaning of the ‘terms of the treaty’ and not as an independent basis for interpretation.”
135
5.480  In the US Shrimp  case, the Appellate Body rejected th e EC’s type of unconventional approach
to treaty interpretation, stating that “[a] treaty interpreter must begin with, and focus upon, the text of
the particular provision to be interpreted.  It is in  the words constituting that provision, read in their
context, that the object and purpose of the states parties to the treaty must first be sought.”136
                                                     
135 Japan - Alcoholic Beverages , p.11, n.20.
136 US Shrimp , para. 114 (footnote omitted).WT/DS213/R
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5.481  The Appellate Body went on to say that “[w]here the meaning imparted by the text itself is
equivocal or inconclusive ... light from the object and purpose of the treaty as a whole may usefully be
sought”.  The United States submits that the meaning imparted by the text of Article 21.3 is neither
equivocal nor inconclusive.  Article 21.3 states unequivocally, and without qualification, that
authorities may initiate sunset reviews on “their own initiative.”  There is not a shred of textualsupport for the notion that some sort of evidentiar y prerequisite applies to this explicit right.
Similarly, Article 11.9 states unequivocally that the one percent de minimis  standard applies in
investigations.  Again, there is not a shred of textual support for the notion that this standard must  be
applied in sunset reviews as well.
5.482  The Appellate Body in US Shrimp  also stated that “where confirmation of the correctness of
the reading of the text itself is desired, light from the object and purpose of the treaty as a whole may
usefully be sought.”  So let us consider for a moment whether the object and purpose of the treaty as awhole confirms the correctness of the United States’ reading of the text.
5.483  The United States submits that the object and purpose of the SCM Agreement as a whole is to
define certain trade distorting practices, that is, subsidies, and to establish a framework for addressing
such practices, for example, application of countervailing measures.  Both the definitions and the
framework reflect a carefully negotiated balance of obligations and rights – obligations to, forexample, eliminate certain types of subsidies, and rights to, for example, take countervailing measures
against certain types of subsidies.
5.484  The United States’ reading of the text of Article 21.3 – that it permits automatic self-initiation
of a sunset review and that it contains no explicit requirement to quantify the current rate of
subsidization when considering the likelihood of continuation or recurrence of subsidization – isconsistent with the notion that the SCM Agreement sets out an agreed upon framework for addressing
trade distorting practices.  In other words, the SCM Agreement recognizes that it is appropriate to
continue to apply countervailing measures where trade distorting practices are likely to continue or
recur absent that countervailing measure.
5.485  In addition to the general legal issues just discussed, the EC also has made case-specific
claims regarding Commerce’s sunset determination involving corrosion-resistant carbon steel flat
products from Germany.  Commerce’s determination – th at the expiry of the countervailing duty order
would be likely to lead to the continuation or recurrence of subsidization – is based on the continued
existence and availability  of programmes previously found to have been used by German producers
and the continued existence of benefit streams from programmes previously found to benefit German
producers.
5.486  The EC has focused almost exclusively on the Capital Investments Grant, or CIG,
programme, arguing that the benefit stream that continues to exist after the five-year mark is very
small.  The United States has already demonstrated that there is no de minimis  standard in the
Agreement with respect to sunset reviews and the fact that a benefit stream continues after the five-
year mark can be a basis for finding likelihood of continuation of subsidization.  As important in
Commerce’s likelihood determination, however, are its findings concerning the continued existenceand availability of subsidy programmes previously found to have been used by the German producers.
5.487  In particular, Commerce determined that the Aid for Closure of Steel Operations and the
ECSC Redeployment Aid und er Article 56(2)(b) programmes continue to exist.  The EC has admitted
as much in its Oral Statement.  In addition, during the sunset review itself, the German Government,
the EC, and German producers admitted that both of these programmes continued to provide somebenefits.  Commerce’s findings regarding these programmes remain undisputed and unrefuted by the
EC.  Thus, with or without the CIG programm e, an “objective assessment” of Commerce’sWT/DS213/R
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determination supports its finding of likelihood of continuation or recurrence of subsidization beyond
the five-year mark.
5.488  Finally, we would like make a few points with respect to the 28 February ruling of the US
domestic court mentioned in the EC’s March 4th letter to the Panel.  A WTO panel is required to
construe the meaning of a treaty provision and the consistency of, for example, a US statutory
provision, with that treaty provision.  In contrast, a US domestic court is required to interpret the US
statutory provision itself.  The United States’ domestic court in the  Dillinger  case did just that; it did
not interpret the WTO SCM Agreement or the consistency of US statutory provisions with the SCM
Agreement.
5.489  Second, the decision is interlocutory.  In other words, it is not a final court decision.  The
Court has remanded the case back to the US Department of Commerce to consider the Court’s ruling
and issue a new administrative determination.  The Department of Commerce is in the process ofdoing just that in order to issue a re-determination on remand.
5.490  Third, although we are in the process of analyzing the Court’s ruling, as an initial matter we
believe that the Court’s ruling is wrong as a matter of US law on a number of issues.
5.491  Finally, we note that the US Government, and private parties, have the right to appeal a Court
of International Trade ruling and frequently do so.  As a result, decisions of the Court of InternationalTrade are often reversed by the appellate court.  Thus the EC’s desire for the Panel to consider and be
guided by the US domestic court’s interlocutory ruling is misplaced.
5.492  The United States would like to highlight and respond to two points in the oral statement of
the EC today.  Of course highlighting these two points is not to imply agreement with the other points
contained in that statement.
5.493  First, in paragraph 5 of that statement, the EC says that the interpretation advanced by the
United States in this proceeding “is not a good faith interpretation.”  The United States is quite
surprised to see such a statement and takes sharp exception to this characterization.  It should be
obvious by now that the US interpretation is offered in good faith.  It is completely inappropriate for
the EC to make such a claim.
5.494  Second, the United States notes that the EC has referred to “uncertainty and predictability” in
its oral statement, for example in paragraph 41 and elsewhere.  In paragraph 41 the EC has said that
the US measures at issue are inconsistent with the WTO because they “create uncertainty and
unpredictability in international trade.”  The EC  is again reading words into the text.  The EC
apparently is confusing the language in Article 3.2 of the DSU, which is a narrative statement that the
WTO dispute settlement system is a central element in providing security and predictability to the
multilateral trading system, with some obligation on Members to provide security and predictability in
international trade through their measures.  There of course is no such vague obligation in the WTO.
5.495  This concludes our presentation today.  We will be pleased, of course, to answer any
questions you may wish to pose.  Thank you.
O. RESPONSES OF THE EUROPEAN COMMUNITIES TO QUESTIONS FROM THE PANEL FOLLOWING
THE SECOND MEETING OF THE PANEL
Both parties
Q41. Do you consider it impossible that the drafters might have intended there to be different
rules for sunset reviews from those for investi gations?  In other words, in your view, would itWT/DS213/R
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have been irrational for the drafters to establish a set of disciplines in respect of investigations,
and intend some of them apply to sunset reviews and others not?  If so, what might be the
reasons for such differences?  If not, why not?
Reply
5.496  The EC looked into the preparatory history of the SCM Agreement, and in particular
Article 21.3 thereof, in order to verify what was the intention of the drafters on these issues.  To the
extent use can be made of the available texts, they seem to confirm the interpretation of Article 21.3
proposed by the EC.  This interpretation is based on the terms of Article 21.3 in their context and
takes also into account the object and purpose of the SCM Agreement (and the WTO Agreement) as a
whole.  In the context of a legal interpretation of texts, it is probably more appropriate to speak in
terms of unreasonable rather than impossible  or irrational (see Article 32 of 1969 Vienna
Convention).
5.497  The EC has explained in its submissions (e.g ., EC comments on the US answer to question
no 28 from the Panel) why the US proposition, that in sunset reviews a proper, fresh investigation is
not required, seems unreasonable.  A systematic interpretation of Articles 21.3, 21.4, 22.1, 22.7, 12and 11 of the SCM Agreement does not support the suggestion that some elements or requirements in
the conduct of an original investigation are not required in the context of sunset reviews.  Unless
Article 21.3 excludes explicitly such elements, the most reasonable and generally accepted
interpretation is to consider that they are all applicable.  This is in conformity with a more classic way
of drafting and interpreting treaties.  The use of the word "determine" also supports this view, becausethe determination must necessarily entail the conduct of an investigation by the domestic authorities
(or how else could they determine?).  Article 10 also confirms the above view because it clearly states
that to impose any type of CV duties, i.e. whether in  the context of an initial determination or in the
context of sunset determination, the conduct of an investigation is required.  In this regard, as the EC
has noted before, the effect of new investigations and sunset reviews is the same, i.e. they may bothlead to the imposition of a countervailing duty for up to 5 years.  Therefore, if the drafters of the SCM
Agreement had wished to exclude in sunset reviews certain elements from the set of the disciplines
from the original investigations they would have explicitly said so, as they did for instance in
Article 21.4 as regards the 12 months period for the co mpletion of a sunset review.  It follows that the
domestic authorities have to demonstrate in their sunset investigation and determination that expiry of
the duty is likely to lead to continuation or recurrence of subsidization and injury.  Consequently, in
sunset determinations the only notable difference with  determinations made in original investigations,
as the EC has explained (e.g. with its answers to written question no 16(b) of the Panel and in para. 36
of its second written submission), is that in the fo rmer it is not the existence but only the "likelihood"
of continuation or recurrence of subsidization and injury that is required to be demonstrated.
Moreover, because the terms subsidization and injury need to be interpreted consistently throughout
the Agreement, it follows that a rate of subsidy that is below 1 per cent ad valorem  is not
countervailable because it is irrefutably presumed not to cause injury whether in an original or sunset
determination.  This is further confirmed by the text of Article 15, in particular paragraph 5, of the
SCM Agreement.
Q42. Footnote 37 to the SCM Agreement states:
The term "initiated" as used hereinafter means procedural action by which a
Member formally commences an investigation as provided in Article 11.
Please comment on the meaning of this footnote in the context of the issues in this
dispute.WT/DS213/R
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Reply
5.498  This footnote provides further support to the position advocated by the EC in the present
dispute.  Indeed, the placing of this footnote in  the SCM Agreement and the ordinary meaning of its
terms suggest that:  first, an investigation is obligatory before any kind of CV duties can be imposed(i.e. whether following an original or sunset determination);  second, the term "initiated" has to be
understood in the same way throughout the entire SCM Agreement, that is as provided (i.e. laid down)
in Article 11;  third, the term "initiated" refers to  the commencement rather than to the actual conduct
of an investigation, as the text of Article 10 clearly distinguished these two terms.  Therefore, in
addition to Article 11, other provisions of the SCM Agreement have also to be applied in the conduct
of any kind of investigation, such as Articles 12 or 22.
5.499  Finally, one of the claims of the EC in the present case is that the US laws, regulations and
practices as such and as applied to the present case violate also Article 10, including footnote 37,
because:
• they permit the automatic initiation of a sunset review without the authorities having a sufficient
amount of evidence in their possession or even the slightest amount of evidence as in the case ofexpedited reviews; and
• they shift the burden of proof on foreign exporters and governments to demonstrate no likelihood
of continuation or recurrence of subsidization and injury in violation of Articles 21.1 and 21.3,which require termination of CVD unless the domestic authorities demonstrate the opposite.
Q43. What textual support, if any, is there, in your view, for the proposition that the term
"investigation" includes sunset reviews?  Please comment, in particular, on the relevance, ifany, of footnote 37 to and Article 32.3 of the SCM Agreement.
Reply
5.500  As explained with the answer to the previous question, footnote 37 and accompanying text
provide clear support for the proposition that a determination in a sunset review requires the conduct
of a proper, fresh investigation.  The same can be said of Article 32.3, whose text clearly states that
the provisions of the entire SCM Agreement apply to investigations and reviews of existing measures
initiated on or after the entry into force of the WTO Agreements.  In addition, both these provisions
provide relevant context for the purpose of interpreting the terms of Article 21.3, as the EC hasexplained with its submissions to the Panel.
Q44. Please explain why, in your view, the draf ters established a de minimis standard for
investigations, providing support from the text and/or the negotiating history of the
SCM Agreement.  Do the mandatory nature and the strong language of the statement in
Article 11.9 ("There shall be immediate termination in cases where the amount of a subsidy is
de minimis . . . ") indicate anything about the rationale for this standard?
Reply
5.501  The EC has already explained in detail the reasons for which it considers that a de minimis
standard was established in investigations (see, e.g., paragraphs 114-117 of the first EC written
submission; paragraphs 37-40 of EC oral statement in first substantive meeting of the Panel with theparties; paragraph 47 of the second EC written submission;  EC replies to written questions no 1(b)
and (c) from the Panel; EC comments on US responses to written questions no 28, 29 and 30 from the
Panel; and paragraphs 32-40, in particular paragraph 36, of the EC oral statement in the second
substantive meeting of the Panel with the parties).WT/DS213/R
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5.502  To summarize the arguments again, the de minimis  threshold was introduced in the Uruguay
Round negotiations.  The EC considers that the rational for this introduction was that a certain level of
subsidization could not be the cause of any injury sustained by the domestic industry, in the sense the
term injury is given in the Agreement.  For this r eason, it was clearly written into the text of the SCM
Agreement as an irrefutable presumption ("shall be immediate termination").
5.503  This rationale was clearly spelled out in the negotiating history of the SCM Agreement.
Thus, in the Checklist of issues for negotiation in the Uruguay Round, the Secretariat prepared in
1987 a paper stating:
"Article 2:12 of the Code provides that an investigation shall be terminated when the
investigating authorities are satisfied either that no subsidy exists or that the effect of
the alleged subsidy on the industry is not such as to cause injury.  It stands to reason
that in case of a de minimis  subsidy, a causal link does not exist between subsidized
imports and material injury to a domestic industry.  It would be useful to reach
agreement on the level below which a subsidy should be deemed to be de minimis ."137
5.504  Moreover, later in the negotiations, the rationale of introducing a de minimis threshold was
further discussed.  What it emerges from this preparatory history is that the rationale of the de minimis
rule in the SCM Agreement is different from that on which the de minimis  rule is applied in the US.
In the SCM Agreement, the level of 1 per cent ad valorem  was agreed to be the de minimis  threshold
not for reasons of administrative efficiency but because for imports below this level the causal link
between subsidized imports and the material injury to domestic industry would not exist.138  This is a
significantly different rationale from that claimed to be applied by the US domestically, because it
demonstrates that the US wrongly continued under its domestic law its old practice going back to1980, as codified in the 1987 Guideline on the minimis rule (see Exhibit US-6).  The preparatory
history, therefore, appears to confirm the view that the rationale for introducing de minimis  standards
was exclusively the effect of low subsidization on injury, and not reasons of administrative efficiency
or convenience as suggested by the US.  Norway and Japan who submitted third party submissions in
the present case appear to read in the same way th e preparatory history on this point.  Administrative
efficiency is something left to the discretion of Members and is not normally the basis for
international trade provisions, such as Article 11.9 of the SCM Agreement.  For instance, some WTO
Members find it inefficient or unnecessary to have any countervailing or anti-dumping laws at all.
5.505  Further support for this interpretation can be found in the text of Article 15.5 SCM
Agreement, which states that it must be demonstrated that subsidized imports are, through the effects
of subsidies, causing injury. It should be stressed that this provision was already present in the Tokyo
Round Subsidies Code (Article 6) and the Ur uguay Round drafters reproduced in the SCM
Agreement.  The EU is of the view that there is  clear link between Article 15.5 and Article 11.9 SCM
Agreement.  The "effects" of a subsidy necessarily include the level of subsidization.  The terms of
those Articles and the preparatory history make, ther efore, plainly clear that a subsidy can only impact
on the injury if it reaches a certain level.  Footnote 45 defines injury as “material”, which means that
injury must reach a certain level before it becomes material.  Therefore, this provision further impliesthat a low level of subsidization cannot produce the required effect as provided for in Article 15.5 of
the SCM Agreement.
5.506  There is even more evidence elsewhere in the SCM Agreement that the drafters intended the
amount of subsidy to be linked to the extent of the injury.  In Article 6.1(a), subsidies which exceed
5 per cent ad valorem are deemed to cause serious prejudice, which means that it is for the subsidizing
                                                     
137 Negotiating Group on Subsidies and Countervailing Measures, Checklist of issues for negotiations,
Note by the Secretariat, MTN. GNG/GNG/NG10/W/9/Rev. 2, 2 December 1987.
138 E.g., MTN.GNG/NG10/W/9/Rev. 3,  point E, of 26 may 1988, an d MTN.GNG/NG10/W/4, page 42.WT/DS213/R
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country to rebut this presumption under Article 6.2.  This provision, which the preparatory history
indicates that it was inserted at the insistence of the US, is based on the argument that subsidization
above a certain amount triggers a presumption of injury.  Although the application of the provision of
Article 6.1(a) expired on 31 December 1999 (See Article 31), it is nevertheless supports the argument
that the level of the subsidy, by itself, creates certain presumptions regarding injury.
5.507  Still another example is Article 6.3(c) of the Ag reement.  This relates to cases where serious
prejudice must be demonstrated and covers, for exampl e, the situation where “the effect of the subsidy
is a significant price undercutting".  This language suggests that the “effect” of a subsidy can only be
“significant” price undercutting if the amount of the subsidy is itself significant.  This implies that a
certain minimum level of subsidy is required to lead to a serious prejudice and, by analogy, material
injury.
Q45. Assuming for the sake of argument, and wi thout prejudice to the outcome in the matter
before the Panel, that a de minimis  standard applies in respect of subsidization to sunset
reviews, would this de minimis  standard be based on:  (i) the rate of subsidization during the
period of application of the countervailing duty ("CVD");  (ii) the rate of subsidization at the
time of sunset review; or (iii) the rate at which subsidization is likely to continue or recur?  How
would you calculate that rate of subsidization on which the de minimis  standard would be
based?
Reply
5.508  The rate that should determine the outcome of a sunset review is the third one, i.e. the rate
likely to continue or recur if the CVD measure were allowed to expire.  Article 21.3 permits the
continuation of a countervailing duty only if it is demonstrated, on the basis of positive evidence, that
if the CVD measure were left to expire this is likely to lead to continuation or occurrence of
subsidization, injury and causality.  Some guidance may be drawn, inter alia , from the rate of
subsidization applicable at the time of the sunset review, the existence of new programmes or theelimination of existing ones, the nature of the subsidies in question, etc., for the purpose of making the
likelihood determination.  However, subsidization does not exist in the abstract, and quantification of
the rate at which continuation or recurrence of subsid ization is likely to continue or recur in the future
should always be feasible.  The US DOC does much the same when it reports the rate to the US ITC
under its domestic rule of 0.50 per cent, but it now claims that this is done on an autonomous,
voluntary basis!
5.509  As to the method of calculation, it is acknowledg ed that it is for the in vestigating authorities
to establish the level of subsidy likely to continue or recur, on a verifiable and reasonable basis and
taking account of relevant evidence and data obtained in the course of the sunset review.  If the
amount of subsidy is currently below the 1 per cent de minimis  threshold, it is for the investigating
authorities to show that it will rise above the de minimis  threshold in the near future.  In the case of a
non-recurring subsidy, the amount of which is declining year by year, this means showing that thedenominator will fall sufficiently to take the ad valorem  level of the subsidy above the de minimis
threshold.  In the case of a recurring subsidy, this means showing that circumstances will change
sufficiently enough for the subsidy to go above the de minimis  threshold.  The US has demonstrated
none of the above in the present case.
European Communities
Q46. The European Communities states:WT/DS213/R
Page 112
[T]he US law and practice to automatically self-initiate sunset reviews violate
Articles [sic] 21.3 of the SCM Agreement, as complemented by Article 11.139
Is the Panel correct in understanding that the European Communities is making a claim
that the evidentiary standards of Article 11.6 ar e incorporated into Article 21.3, or is it the
European Communities' claim that these standa rds apply to sunset reviews on the face of
Article 11.6?
Reply
5.510  It is not entirely clear what the Panel means by the terms "apply in the face of" as opposed to
"incorporated".  As to their practical legal effects, however, it does not appear to the EC that there is
much of a difference between the two.  The EC follows the generally accepted rules on treatyinterpretation.  The EC claim is that an interpretation of Article 21.3 should be made in context and in
the light of the object and purpose of Article 21.3 and of the SCM Agreement.  Articles 21.1, 22.1,
22.7, 10 and 11.6 provide relevant context and help define its object and purpose.  Such an
interpretation, in particular of the terms"…unless the authorities determine, in a review initiated…"in
Article 21.3, requires that the evidentiary standards of Article 11.6 should be implied, and henceapplied, also to the evidentiary requirements in sunset reviews.
Q47. The European Communities states:
[S]ince 0.53 per cent [sic] is below the 1 per cent de minimis level which should
apply in sunset reviews, the US was in breach of Article 21.3, in conjunction withArticle 11.9, in continuing the measure
140.
Is the Panel correct in understanding that the European Communities is making a claim
that the de minimis  standard of Article 11.9 is incorporated into Article 21.3, or is it the
European Communities' claim that this standa rd applies to sunset reviews on the face of
Article 11.9?
Reply
5.511  As with the previous question, it is not entirely clear what the Panel means by the terms
"apply in the face of" as opposed to "incorporated".  As to their practical legal effects, however, it
does not appear to the EC that there is much of a difference between the two.  The EC follows the
generally accepted rules on treaty interpretation.  The EC claim is that an interpretation of the terms ofArticle 21.3 should be made in context and in the light of the object and purpose of Article 21.3 and
of the SCM Agreement.  Articles 21.1, 11.9, 15 and 10 provide relevant context and help define its
object and purpose.  Such an interpretation, in pa rticular of the terms "would be likely to lead to
continuation or recurrence of subsidization and injury" in Article 21.3, requires that the 1 per cent
de minimis  level of Article 11.9 should be implied, and hence applied, also to investigations and
determinations made in sunset reviews.
Q48. Please provide the Panel the relevant stat utory, regulatory, or other texts, including
internal guidelines, if any, wh ich set out the European Communities' methodology in respect of
the determination of likelihood of continuation or recurrence of subsidization and injury in a
sunset review, including calculation of the relevant rate of subsidization and application of anyde minimis  standard.
                                                     
139 First Written Submission of the European Communities, para. 66.
140 First Written Submission of the European Communities, para. 119.WT/DS213/R
Page 113
Reply
5.512  The relevant statutory provision is Arti cle 18 of Council Regulation (EC) 2026/97 of
6 October 1997 (see Exhibit EC-26).141  This provision reflects the relevant provisions of the SCM
Agreement, in particular Article 21.3.  Paragraphs 1 and 2 of Article 18 of Council Regulation (EC)2026/97 provide:
"1. A definitive countervailing duty shall expire 5 years from its imposition or 5
years from the most recent review which has both covered subsidization and injury,
unless it is determined in a review that the expiry of the duty would be likely to lead
to continuation or recurrence of subsidizatio n and injury. Such an expiry review shall
be initiated on the initiative of the Commission or upon a request made by or on
behalf of the Community producers, an the measure shall remain in force pending theoutcome of such a review.
2. An expiry review shall be initiated where the request contains sufficient
evidence that the expiry of the measures would be likely to result in a continuation or
recurrence of subsidization and injury. Such a likelihood may, for example, be
indicated by evidence of continued subsidization and injury or evidence that theremoval of injury is partly or solely due to the existence of measures or evidence that
the circumstances of the exporters, or ma rket conditions, are such that they would
indicate the likelihood of further injurious subsidization."
5.513  There are no other regulatory or administrative texts or guidelines concerning the conduct of
countervailing duty expiry reviews in the EC.  Howeve r, it should be noted that the EC has conducted
one countervailing duty expiry review since the entry into force of the WTO SCM Agreement, which
clearly demonstrates the EC's practice in expiry reviews.
5.514  This investigation concerned imports of polyester fibres and polyester yarns originating in
Turkey (Exhibit EC-27).
142  This investigation was terminated on 12 June 1998 because the amount of
subsidization was found to be de minimis,  i.e. less than 2 per cent (as Turkey was considered to be a
developing country).  Following the publication of a notice of impending expiry, the investigation was
initiated on 21 September 1996, on the basis of a duly substantiated request by the Community
industry alleging that the repeal of the measures would be likely to result in a continuation or
recurrence of injury.  Following the initiation of  the investigation, the European Commission sent
questionnaires to the Community producers, exporting producers in Turkey and the Turkish
government.  After the examination of the questionnaire responses and verification visits in the
Community and Turkey (see preambular paragra ph 6, Exhibit EC-27), the European Commission
found that the levels of subsidization lied between 0.55 per cent and 1.15 per cent.  It concluded that
the level of benefit for all producers was de minimis  and, consequently, terminated the proceeding
(see preambular paragraph 34, Exhibit EC-27).
                                                     
141 Council Regulation (EC) 2020/97 of 6 October 1997 on the protection against subsidized imports of
countries not members of the European Community, OJ L 288, 21.10.1997, p.1.
142 Commission Decision of 12 June 1998 terminatin g the countervailing duty proceeding concerning
imports of polyester fibres and polyester yarns originating in Turkey, O.J. L168, 1.6.1998, p.46.WT/DS213/R
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Q49. The European Communities states:
In that case [United States – Imposition of Countervailing Duties on Certain
Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United
Kingdom], the Appellate Body considered  that a finding on the part of the
domestic authority was needed for the purposes of reviews under Article 21.2 of
the SCM Agreement.  If this is true for a review under Article 21.2, which is not
obligatory and takes place during the life time of the original countervailing
duty, a fortiori a positive finding that all the conditions are fulfilled is necessary
in the context of an Article 21.3 investig ation, where the basic obligation is the
termination of the original duty and the possibility of continuing a duty
following a sunset review rep resents only an exception.143
Could the European Communities explain in what sense it uses the term a fortiori  and
why a fortiori reasoning applies here.
Reply
5.515  The EC uses the terms a fortiori  here to mean all the more so .  Indeed, if a positive finding on
subsidization is necessary for an interim review under Article 21.2, it should all the more so apply to
an Article 21.3 review.  In an article 21.2 review, ther e is no presumption of termination.  It is for the
exporters or the foreign government to allege that circumstances have changed sufficiently to warrant
the removal of the measures or, in the case of an administrative review, a reduction in the level ofduty payable.  Conversely, the finding on likelihood of continuation or recurrence of subsidization
and injury is deviating from the general presumption laid down in Article 21.3, which is termination
of the CVD.  Of course, although a positive finding on subsidization is necessary under both
paragraphs, the actual content of what is required to be determined or found is different.  Under
Article 21.3 what is required to be determined is wh ether expiry of the duty "would be likely to lead
to continuation …of subsidization…", whereas under Article 21.2 demonstration of the actual
existence of subsidization is required.
Q50. The European Communities states:
The EC in this proceeding is not challeng ing the injury requirement only for the
purpose of verifying the accuracy of the ITC injury determination as such, but it
is doing so for the purpose of the de minimis  challenge, i.e. as a requirement that
needs to be demonstrated in the context of a sunset review under Article 21.3 of
the Agreement.
144
Please explain in detail.
Reply
5.516  In a sunset review under Article 21.3 the domestic authorities have to establish that expiry of
the CV duty would be likely to lead to co ntinuation or recurrence of subsidization and injury .  In the
request for consultations and in the request for th e establishment of the Panel, the EC has clearly
based its claims on Article 21.3 in its entirety and explained that a subsidy rate below the 1 per centde minimis  rule can never cause injury.  This was clearly discussed during the consultations held with
the US.  The EC claim, therefore, is that the US laws, regulations and practices as such and their
concrete application to the facts of the present case are inconsistent with Article 21.3 because there
                                                     
143 First Written Submission of the European Communities, para. 70 (emphasis in original).
144 Oral Statement of the European Communities at the First Meeting of the Panel, footnote 27.WT/DS213/R
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cannot be injurious subsidization of a subsidy rate likely to be below the 1 per cent ad valorem
threshold.  Because the US does not contest that the ra te of subsidy likely to continue in this case is
below 1 per cent (indeed DOC found that the rate of subsidization likely to continue here is 0.53 per
cent), the EC considers that it is not necessary at this stage to initiate separate panel proceedings in
order to verify whether the US ITC has correctl y followed all the procedural and substantive
requirements and accurately concluded that this le vel of subsidy is likely to cause injury to US
industry.  As said, such proceedings against the actual ITC findings are not necessary for the time
being because the EC's point of departure and claim is that there can never be injurious subsidization,
in the sense of Article 21.3, from the subsidy found likely to continue in this case by the US DOC.
The US has never contested before the EC claim on this point, nor does it deny that a condition
necessary in a sunset review determination is to establish whether injurious subsidization is likely to
continue or recur.
Q51. In the context of its argument that "[t]he domestic authorities are under an obligation to
'determine' the likelihood of continuation or  recurrence of subsidization", the European
Communities claims:
[T]he EC considers that Section 751(c) of  the Act, as complemented by Section
752 and by US regulations and administrative practices, establishes a standard
of investigation for sunset reviews that violates the requirements of the
SCM Agreement.145
Is the Panel to understand that the European Communities is making a claim that US
law as such violates the SCM Agreement in re spect of the obligation to "'determine' the
likelihood of continuation or recurrence of  subsidization" contained in Article 21.3?
Reply
5.517  Yes.  The US law as such is a web of provisions (basic law, regulations and guidelines) which
permit the authorities to maintain CVD measures without there being any need to counter injurious
subsidization.  The US law as such allows the authorities to reach this result by laying down a
standard of investigation in a sunset determination which is inconsistent with Article 21.3 of the SCM
Agreement.
Q52. The European Communities states:
In fact, to the extent DOC relied upo n the rates calculated in its original
investigation, the duty of investigation laid down in Article 21.3 of the SCM
Agreement would also require at a minimum that DOC made all documents
showing how the rates were calculated in the original investigation also part of
the record in the sunset review.146
Please explain this argument.
Reply
5.518  The EC has explained with its written and oral submissions that the relevant authority in a
sunset review must determine that all the conditions  for the continued imposition of the countervailing
duty are fulfilled.  For that purpose, the relevant authority must carry out an investigation so as to
collect, consider and verify all available and relevant evidence that is necessary in making the sunset
                                                     
145 First Written Submission of the European Communities, para. 76.
146 Oral Statement of the European Communities at the Second Meeting of the Panel, para. 26.WT/DS213/R
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determination.  It must also allow parties acces s to and provide them with ample opportunity to
comment on and defend their interests at all stages of the review, as happens in an original
investigation.
5.519  It is beyond doubt that Article 21.4 makes the application of Article 12 obligatory ("shall
apply").  Thus, in a sunset review the interested parties must have access to the entire record on thebasis of which the sunset determination is made, that is all the information and evidence relevant to an
investigation, in the same way as in the original investigation (Article 12.1).   For example, to the
extent that the US DOC relies upon  the rates calculated in its original investigation, it must, at
minimum, make its original determination and all documents showing how the rates therein were
calculated (i.e., the calculation memoranda) part of the record of the sunset review.  This is a basic
requirement of due process and respect of the rights of defence.  Indeed, Article 12.2 requires that any
decision must be based only on information what is in the record and which has been made availableto all parties.  Article 12.3 requires that all parties should be able to see all information that is
relevant, and Article 12.8 requires that all essential facts should be made available in sufficient time
for the parties to defend properly their interests.  It follows that the US DOC cannot evade this
responsibility by claiming that it is somehow pr ohibited by US law from making the memoranda part
of the record in the sunset review or that they are confidential.  The US International TradeCommission ("ITC") is subject to the same procedures regarding the treatment of business proprietary
information as the US DOC.  However, unlike DOC, the US ITC in its sunset reviews automatically
makes the confidential version of its original determination, as well as the complete staff report from
the original investigation, part of the record of th e sunset review.  This is done automatically right at
the beginning of the review so that all parties will be able to use this information in preparing theirarguments.  The ITC simply provides the documents the same confidential status in the review that
they enjoyed in the original investigation.
Q53. The European Communities states:
[T]his flexibility and plasticity of US law are not virtues but serious legal defects,
because they eliminate legal security and predictability in the interpretation and
application of the US law on sunset reviews to the detriment of foreign exporters
and international trade.
147
Please explain why, in the view of the European Communities this "flexibility and
plasticity" are inconsistent with the SCM Agreement, and the textual basis for this assertion.
Reply
5.520  The WTO lays down certain rights and obligations and provides the means to ensure that they
are observed.  The WTO Agreement states, in its last preambular paragraph, that the Members are
"determined to preserve the basic principles and to further the objectives underlying this multilateral
trading system".  Security and predictability in international trade have been recognized both underthe previous GATT 47 and the new WTO system to constitute part of the pursued objectives.
148  I t
should also be noted that one of the objectives of any system of law, including that of the WTO, is to
lay down rules that are clear and enforceable.  Discretion in the interpretation and application of the
                                                     
147 Oral Statement of the European Communities at the Second Meeting of the Panel, para. 29.
148 As the Appellate Body has clarified in the Shrimps  case: "Maintaining, rather than undermining, the
multilateral trading system is necessarily a fundamental and pervasive premise underlying the WTO Agreement;but it is not a right or an obligation, nor is it an interpretative rule which can be employed in the appraisal of agiven measure under the chapeau of Article XX".  See Appellate Body report in United States - Import
Prohibition of certain Shrimp and Shrimp Products , AB-1998-4, WT/DS58/AB/R, 12 October 1998, at para.
116.WT/DS213/R
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WTO provisions is tolerated as long as it does not undermine the rights and obligations of the
Members.149  This principle underlies also the DSU, which in Article 3.2 states: "The dispute
settlement system of the WTO is a central element in providing security and predictability to the
multilateral trading system."  For this reason, too, Article 3.2 and Article 19.2 of the DSU provide
that: "Recommendations and rulings of the DSB cannot add to or diminish the rights and obligations
provided in the covered agreements".
5.521  More specifically, the SCM Agreement, in particular Articles 10, 19 and 21 thereof, lay down
the basic principle that no countervailing duty shall be imposed or remain in force if it is not
necessary to counteract subsidization that is causing injury.  This basic obligation is bound to be
frustrated if a Member does not interpret in good faith the provisions of the SCM Agreement, as laid
down in Articles 31 and 32 of the 1969 Vienna Convention.  The argument of the Community quoted
by the Panel in this question aims to underscore this basic premise and objective.  The basic US laws,regulations and administrative guidelines on the issue of sunset reviews are as such incompatible for
the additional reason that they leave too much of a discretion and room for interpretation in their
application to the relevant authorities which is inconsistent with the provisions of the Article 21.3 as
interpreted by the EC, that is in context and in light of its object and purpose.
Q54. In the context of a discussion of the de adline for the submission of information by a
party to the United States Department of Co mmerce ("DOC") in a sunset review, the European
Communities states:
Such a short deadline violates the provisions of Article 21.3, in conjunction with
Articles 12.1 and 21.4, of the SCM Agreement because it fails to afford theproducers with an 'ample opportunity' to present in writing all evidence which
they consider relevant in respect of the sunset review
150.
Is the Panel to understand, from this statement, that the European Communities is
making a claim that the US law as such violates  the SCM Agreement in respect of the obligation
to "give[] [interested Members and all interested parties] . . . ample opportunity to present inwriting all evidence which [the authorities] consider relevant in respect of the investigation in
question" contained in Article 12.1?
Reply
5.522  Yes, the EC has explained in detail (e.g., in paras. 40-44 of its second written submission) that
the US law as such violates Articles 21.3 and 4 and Article 12, in particular paragraph 1 thereof.  TheEC claim is that in order to comply with the prov isions of Article 12.1, the US DOC must inform the
parties of the specific information it requires to complete its determination in the particular case,
allow the parties access to the information submitted by the other interested parties and give all the
parties ample opportunity to provide the information at a meaningful point in the proceedings.
Article 12.2 allows also for the right to present information orally.  Article 12.3 establishes in effect aprocedure of mutual dialogue by providing that the affected exporters should be given timely
opportunity “to see all information that is relevant to the presentation of their cases…and to prepare
presentations on the basis of this information”.  Moreover, Article 12.8 provides that before the final
determination is made, disclosure should take place “in such sufficient time for the parties to defend
their interests”.  The principle underlying Article 12 of the SCM Agreement , therefore, is that during
                                                     
149 A related aspect of this proposition is that under the WTO system, as under the previous GATT 47,
even non-mandatory provisions of a Member, such as an administrative guidance, may qualify as a measure theconsistency of which with the WTO Agreements can be examined and has indeed been found in some cases toviolate certain provisions of such Agreements.
150 First Written Submission of the European Communities, para. 99.WT/DS213/R
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all stages of the reviews the interested parties sh ould be given ample opportunity to present evidence,
to have access to the evidence presented by the other parties (except where confidentiality applies), to
present counter-evidence and to defend their interests at all stages leading up to the final
determination.  All these due process and rights of defence requirements should take place before the
final determination is made in a sunset review.  As explained above, all these procedural rights anddue process requirements are not respected by the US  DOC in sunset reviews under the existing laws,
regulations and practices and were definitively not respected in the present case.  The EC submits that
a law or regulation that is open in fact to any type of interpretation by, or leaves too much of
unbounded discretion to, the administrative authorities violates as such the provisions of the SCM
Agreement in question.
P. 
RESPONSES OF THE UNITED STATES TO QUESTIONS FROM THE PANEL FOLLOWING THE SECOND
MEETING OF THE PANEL
Questions to Both Parties
Q41. Do you consider it impossible that the drafters might have intended there to be different
rules for sunset reviews from those for investi gations?  In other words, in your view, would it
have been irrational for the drafters to establish a set of disciplines in respect of investigations,
and intend some of them apply to sunset reviews and others not?  If so, what might be the
reasons for such differences?  If not, why not?
Reply
5.523  As the United States previously discussed in response to the Panel’s first set of questions,
applying the customary rules of interpretation of public international law to Article 21.3 of the
Agreement on Subsidies and Countervailing Measures  (“SCM Agreement”), the United States
considers that no provisions of the SCM Agreement are required to be applied to reviews under
Article 21.3 unless expressly indicated.151  Where the drafters intended to require that the rules for
sunset reviews and investigations be the same, they made an express provision to that effect.152  As a
result, it is both possible and rational that the drafters intended there to be different rules for sunset
reviews and investigations.153
5.524  The reason for such differences is straightforward – investigations and sunset reviews serve
different functions and, in essence, gauge different things.  The purpose of an investigation is to
determine whether the conditions necessary for the imposition  of a countervailing duty currently exist;
i.e., injury caused by subsidized imports.  The purpose of a sunset review is to determine whether the
conditions necessary for continued imposition  of a countervailing duty exist; i.e., expiry of the duty
would be likely to lead to continuation or recurr ence of subsidization and injury.  The focus of a
sunset review under Article 21.3 is likely future behaviour if the remedial measure is removed, not
whether or to what extent subsidization currently  exists, which is the focus of an investigation.
                                                     
151  Answers of the United States  to Questions from the Panel  (“US Answers ”), 21 February 2002,
paras. 19-21.
152  Id., paras. 19 and 21, providing examples of provisions that apply to both investigations and sunset
reviews.
153  Of course, the United States is mindful that it is problematic to speculate on the intent of the drafters
of treaty text and that the text itself is the best evidence of the drafters’ intent.WT/DS213/R
Page 119
Q42. Footnote 37 to the SCM Agreement states:
The term "initiated" as used hereinafter means procedural action by which a Member
formally commences an investigation as provided in Article 11.
Please comment on the meaning of this footnote in the co ntext of the issues in this
dispute.
Reply
5.525  Footnote 37 defines the term “initiated” as used initially in Article 10 in the context of
investigations.  Article 10 provides that countervailing duties “may only be imposed pursuant toinvestigations initiated” in accordance with the SCM Agreement.  Footnote 37 defines “initiated” in
this context to mean “procedural action by which a Member formally commences an investigation as
provided in Article 11”.  The term “initiated” in Article 21.3 is used in a different context, one to
which footnote 37 does not apply.  “Initiated” in Article 21.3 cannot be a reference to an
“investigation as provided in Article 11”  because sunset reviews are not “an investigation as providedin Article 11”, and Article 21.3 states that the administering authority, on its own initiative, may
“initiate” a “review” to determine the likelihood of continuation or recurrence of subsidization and
injury.  Thus, the definition of “initiated” in footnote 37 is limited to those instances where it refers to
a procedural action - an investigation -  “as provided in Article 11”.
Q43. What textual support, if any, is there, in your view, for the proposition that the term
"investigation" includes sunset reviews?  Please comment, in particular, on the relevance, if
any, of footnote 37 to and Article 32.3 of the SCM Agreement.
Reply
5.526  There is no textual support in the SCM Agreement for the proposition that the term
“investigation” includes Article 21.3 sunset reviews.
5.527  The SCM Agreement distinguishes between the investigatory phase and the review phase of a
countervailing duty proceeding.  Article 11 deals with investigations, while Article 21 deals with
reviews.  This structure is reflected in other provisions of the SCM Agreement.  For example,
Articles 22.1 through 22.6 set forth obligations concerning the contents of public notices issued
during an investigation, while Article 22.7 sets forth comparable obligations with respect to reviews.As the panel in Korea DRAMs  concluded, “the term ‘investigation’ means the investigative phase
leading up to the final determinatio n of the investigating authority”.
154
5.528  Article 32.3, which is a transition rule, also distinguishes between “investigations” and
“reviews of existing measures”.  In Brazil Desiccated Coconut , the Appellate Body specifically
recognized this distinction between the initial investigation and the post-investigation phase, notingthat the imposition of “definitive” duties (an “order” in US parlance) ends the investigative phase.
155
5.529  As discussed in response to Question 42 above, footnote 37 defines the term “initiated” as
used in the context of the commencement of an investigation under Article 11.  Footnote 37 has no
application to reviews under Article 21.
                                                     
154  United States - Anti-Dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS)
of One Megabit or Above from Korea , WT/DS99/R, Report of the Panel adopted 19 March 1999, para. 6.48,
note 494.
155  Brazil - Measures Affecting Desiccated Coconut , WT/DS22/AB/R, Report of the Appellate Body
adopted 20 March 1997, p. 9.WT/DS213/R
Page 120
Q44. Please explain why, in your view, the drafters established a de minimis  standard for
investigations, providing support from the text and/or the negotiating history of the SCM
Agreement.  Do the mandatory nature and the stro ng language of the statement in Article 11.9
("There shall be immediate termination in cases where the amount of a subsidy is de minimis
...") indicate anything about the rationale for this standard?
Reply
5.530  As demonstrated in the United States’ previous submissions in this case, an analysis of the
text and context of Article 21.3 and the object and purpose of the SCM Agreement leads to the
conclusion that the Article 11.9 de minimis  standard does not apply to reviews under Article 21,
including sunset reviews under Article 21.3.  This should be the end of the analysis.  However, the EChas brought up the negotiating history of the SCM Agreement in a vain attempt to overcome the
conclusion to which the text, context, and object and purpose inexorably lead.  Significantly, in its
attempted reliance on negotiating history, the EC do es not explain how its invocation of negotiating
history is justified under the customary rule of treaty interpretation reflected in Article 32 of the
Vienna Convention , which permits recourse to supplementary means of interpretation:
in order to confirm the meaning resulting from the application of Article 31, or to
determine the meaning when the interpretation according to Article 31:
(a) leaves the meaning ambiguous or obscure;  or
(b) leads to a result which is manifestly absurd or unreasonable.
5.531  Nothing in the SCM Agreement with respect to the Article 11.9 de minimis  standard is
ambiguous or obscure.  Under Article 11 .9, Members must apply a one per cent de minimis  standard
in countervailing duty investigations .  Nothing in Article 21.3 or elsewhere in the Agreement sets a de
minimis  standard for sunset reviews.  Nothing in the Agreement requires Members to quantify an
amount of subsidization when determining likelihood of continuation or recurrence of subsidization.
5.532  Furthermore, this absence of a de minimis standard or quantification requirement for sunset
reviews does not lead to a manifestly absurd or unreasonable result.  Determining likelihood of
continuation or recurrence of subsidization requires a consideration of future, rather than present
circumstances.  What are the prospects of subsidization in the future?  Without the discipline of the
duty, is subsidization likely to continue or recur?  The analysis required in a sunset review, therefore,is necessarily prospective and predictive in nature.
5.533  In the context of an investigation, the function of the Article 11.9 de minimis  test is to
determine whether foreign government subsidies warrant the imposition of a countervailing duty
order in the first instance.  For example, in an in vestigation, if the investigating authority found that a
government programme had provided recurring subsidies at a rate of more than one per cent,imposition of a countervailing duty would be warranted if the subsidized imports were found to cause
injury.  In contrast, the focus of the sunset review is the future.  The mere continued existence of this
same programme could warrant maintaining the duty beyond the five-year point, even if  the amount of
the subsidy was currently zero, as stated in footnote 52, because subsidization and injury may be
likely to recur absent the discipline of the duty.  This distinction between the object and purpose of aninvestigation and the object and purpose of a sunset review supports the conclusion that, absent an
express reference to the contrary, there is no basis to assume or infer an intent that the de minimis
standard for investigations applies in sunset reviews.
5.534  Moreover, contrary to the EC’s claim in its S econd Oral Statement (para. 36), the negotiating
history of the SCM Agreement reveals not one, but two theoretical justifications for the de minimisWT/DS213/R
Page 121
concept.  The EC’s claim is all the more astonishin g given that the document it cites explicitly sets out
both theories as follows:
There are two alternative (and not mutually exclusive) theoretical
justifications for the de minimis  concept.
– The first view holds that countervailing duty actions and measures may be
taken only when the trade distorting effect of the subsidy and its effects on
the industry in the importing country so require.  Thus, no action should be
taken where it would be clearly out of proportion to the objective sought, or
as Article 2:12 states, ‘where the effect of the subsidy on the industry in the
importing country is not such as to cause material injury’.
– The second theory treats the issue of de minimis subsidy as a completely
separate issue from the determination of injury in an investigation.   If it can
be established that the totality of subsidies on the product investigated are
minimal (so small per unit that they are practically non-existent), the
investigating authorities may determine that, as Article 2:12 states, ‘nosubsidy exists’.  Thus, as the maxim states, ‘ de minimis non curat lex ’: the
law does not take notice of minimal matters.”[
156]
In other words, one of the two plausible and recognized theories, which is similar to the justification
under US law for a de minimis  standard, is unrelated to the subject of injury and merely considers that
the law should not concern itself with subsidization that is of a trifling amount.
5.535  Thus, the only thing the negotiating history demonstrates is that there was no consensus or
single reason why the drafters established a de minimis  standard for investigations.  Furthermore,
under either theoretical justification for a de minimis  standard, there is no magic or empirical
economic logic in the choice of the one per cent standard currently set forth in Article 11.9.  Rather,
the one per cent standard is simply a negotiated number.  The negotiating history itself reflects that
the original proposal for the de minimis  standard set the threshold at 2.5 per cent.157  The negotiators
did not agree to include a de minimis  standard in Article 21.3 for sunset reviews.
5.536  In addition, it is difficult to reconcile the EC’s assertion that the de minimis  standard relates to
the question of whether there is injury when the SCM Agreement reflects not one, but three different,
de minimis  standards.158  Furthermore, the de minimis  standard in these provisions depends on the
economic level of development of the exporting country .  It is difficult to see how the injury in the
importing Member from subsidized imports depends on the level of economic development in the
exporting Member.
Q45. Assuming for the sake of argument, and wi thout prejudice to the outcome in the matter
before the Panel, that a de minimis  standard applies in respect of subsidization to sunset
reviews, would this de minimis  standard be based on: (i) the rate of subsidization during the
period of application of the countervailing duty ("CVD"); (ii) the rate of subsidization at the
time of sunset review; or (iii) the rate at which subsidization is likely to continue or recur?  How
                                                     
156  MTN.GNG/NG10/W/4 (28 April 1987), page 51 (emphasis added) (copy attached as Exhibit US-7).
This document, prepared by the Secretariat, was a reference paper which reproduced existing GATT rules on
countervailing measures and subsidies and which summarized the status of the discussions concerning possiblemodifications of those rules.
157  Id. page 50 (Exhibit US-7).
158  See SCM Agreement, Articles 11.9, 27.10(a), and 27.11.WT/DS213/R
Page 122
would you calculate that rate of subsidization on which the de minimis  standard would be
based?
Reply
5.537  There is no obligation under the SCM Agreement to quantify an amount of subsidization in
the context of a sunset review.  All three of the options posited in this question demonstrate the error
in suggesting that there is a requirement to do so.  I ndeed, just the fact that it is necessary to ask the
question as to the relevant time period demonstrates that there was no agreement to include a de
minimis  standard - these are the types of questions that would have had to have been asked and
negotiated at the time.
5.538  The consideration in a sunset review is whether subsidization and injury are likely to continue
or recur  in the absence of the duty.  The rate of subsidization during the period of the application of
the duty (option i), if above zero, would certainly demonstrate that subsidization continued with the
discipline of the duty in effect and that, therefore, one could find a likelihood that subsidization would
continue  were the duty removed – for example, if benefits were being received under a recurring
subsidy programme or the benefit stream from a non-recurring subsidy would continue.  The same
logic would apply if the rate of subsidization at the time of the sunset review (option ii) also was
above zero.  Nevertheless, even if the rate of subsidization were zero under either of these options,
one might find a likelihood of recurrence  of subsidization159 – for example, if subsidy programs,
whether providing recurring or non-recurring benefits, originally found to benefit exporters still exist.With respect to the rate at which subsidization is likely to continue or recur (option iii), one could
never calculate  a future rate of subsidization for obvious reasons, although it may be possible to infer
a future rate based on past rates (which is in essence what the US Department of Commerce does
under US law).
5.539  In sum, all of these options might inform a determination of the likelihood of continuation or
recurrence of subsidization – but they just as easily might not.  The only obligation in a sunset review
under Article 21.3 is to determine whether expiry of the duty would be likely to lead to the
continuation or recurrence of subsidization and injury.  This is an inherently predictive exercise which
may call for a reliance upon findings made in the original investigation or subsequent administrative
(assessment) reviews, if any.  However, nothing in the SCM Agreement requires  a consideration of
the magnitude of subsidization in determining the likelihood of continuation or recurrence of
subsidization and injury.
Questions to the EC
5.540  Consistent with the Panel’s instructions, the United States intends to file comments on the
EC’s answers to questions 46-54 on Tuesday, 9 April 2002.
Questions to the United States
Q55. The European Communities states:
In fact, to the extent DOC relied upo n the rates calculated in its original
investigation, the duty of investigation laid down in Article 21.3 of the SCMAgreement would also require at a minimum that DOC made all documents
                                                     
159  See US First Submission , para. 81; US Second Submission , paras. 11-12 and 19; and US Answers ,
paras. 34-36.WT/DS213/R
Page 123
showing how the rates were calculated in the original investigation also part of
the record in the sunset review.
Please respond to this argument.
Reply
5.541  There is no “duty of investigation” contained in Article 21.3, nor has the EC demonstrated
that any such obligation exits.  Article 21.3 requires that the administering authority “determine”
whether the expiry of the duty would likely lead to a continuation or recurrence of subsidization and
injury.  The United States considers that an appropriate definition for the term ”determine” as used in
Article 21.3 is “to decide” something – namely, that the administering authority is required to decidethe likelihood issue in the affirmative or terminate the duty.
160  This is the only obligation under
Article 21.3.  Nothing in the SCM Agreement requires  consideration of the magnitude of
subsidization in determining the likelihood of continuation or recurrence of subsidization and injury.
5.542  In conducting sunset reviews, the US Depart ment of Commerce determines whether the
expiry of the duty would be likely to lead to the continuation or recurrence of subsidization and, if so,
the level of that subsidization.  The US Department of Commerce’s likelihood determination does not
“rely” on any particular level  of subsidization.  The US Department of Commerce does not calculate
the level of subsidization in the context of the sunset review.  Rather, as explained in the US
Department of Commerce’s Sunset Policy Bulletin  (Section III.B)161, the US Department of
Commerce relies on rates previously calculated in the original investigation.  These rates arecontained in public, published determinations in the Federal Register .  If the EC and the German
producers believed that the data and documents underlying these public, published figures were
germane to their arguments in the sunset review, they had ample opportunity to place such
information on the sunset review record.
Q56. Could the United States point to the statutor y or regulatory provisions, if any, of US law
which provide an indication to interested Members and parties as to the parts of the record of a
CVD investigation that would normally be expected to be made part of the record of the sunset
review of any resulting CVD order.  Please also point to any such provisions of US law in
respect of the parts of the record of a duty assessment proceeding as well as the parts of the
record of a review under Article 21.2 that would normally be expected to be made part of the
record of the sunset review of the CVD order in que stion.  Please provide the relevant statutory
or regulatory texts, if any.
Reply
5.543  As the United States has explained previously162, under the US system, a “proceeding” begins
on the date of the filing of a petition and ends on, inter alia , the revocation of an order.163  A
countervailing duty proceeding consists of one or more “segments”.164  “Segment” refers to a portion
of the proceeding that is separately judicially reviewable.  For example, a countervailing duty
                                                     
160  See US Answers , paras. 57-58.
161  Exhibit EC-15.
162  US Answers , paras. 69-70.
163  19 CFR 351.102 (definition of “proceeding”).  A copy of section 351.102 and other regulatory
provisions discussed herein is attached as Exhibit US-8.
164   19 CFR 351.102 (definition of “segment of proceeding”) (Exhibit US-8).WT/DS213/R
Page 124
investigation, an administrative review, or a sunset review each would constitute a segment of a
proceeding.165
5.544  Under the US statute and the US Department of Commerce regulations, the administrative
record from one segment of a proceeding never automatically becomes part of the administrative
record of another segment of the proceeding.  In other words, the administrative record from the
investigation (one segment) or an administrative (duty assessment) review (another segment), never
automatically become parts of the administrative re cord of a sunset review (yet another segment).
Each segment of a proceeding contains its own discrete administrative record.  Each final
determination is based solely on the information placed upon and contained in the administrative
record for that segment.  Each final determinati on made in a particular segment, and the discrete
record upon which it is based, is subject to judicial review.
Q57. The United States indicated, in response to an oral question from the Panel at the second
meeting of the Panel, that the DOC's final determination in a CVD investigation is not made
part of the record of the sunset review of any resulting CVD order, because that final
determination is published and, therefore, publicly available.  Is the Panel to understand, from
this statement, that the DOC only makes part of the record of a sunset review
information/documents which are not publicly available?  If so, is the Panel to understand thatthe DOC may base its determination in a sunset review on publicly available information
without making that information part of the record of the sunset review?  Please explain in
detail.
Reply
5.545  The administrative record of a sunset review (or any other segment of a proceeding) before
the US Department of Commerce consists of all factual information, written argument, or other
material developed by, presented to, or obtained  by the US Department of Commerce during the
course of the sunset review.166  This record may include public as well as business proprietary
information.167  However, a relevant public, published decision, such as a prior US Department of
Commerce determination ( e.g., the final determination in the original investigation which is published
in the Federal Register ) or a decision from a US court, need not be placed on the record to be
considered by the US Department of Commerce in making its determination.  This is simply a
generally accepted precept of US administrative law.
Q58. The Panel notes the following comment in the Statement of Administrative Action
accompanying the Uruguay Round Agreements Act:
[The DOC] normally will select . . . net countervailable subsidies determined in
the original investigation or in a prior review.
The Panel further notes that the United States indicated, in response to an oral question
from the Panel at the second meeting of the Panel, that no information/documents from the
record of a CVD investigation are automatically made part of the record of the sunset review of
any resulting CVD order.  Is the Panel to understand, from this statement, that the DOC relies
in a sunset review on the net countervailable subsidy determined in the original investigation,
where there have been no prior reviews, with out taking into account the information /
                                                     
165   See 19 CFR 351.102 (definition of “segment of proceeding”, examples under para. 2) (Exhibit US-
8).
166  See 19 CFR 351.104 (record of proceedings) (Exhibit US-8).
167  Id.WT/DS213/R
Page 125
documents underlying the calculation of such subs idy?  If so, could the United States explain
how the DOC does so.  In particular, how does the DOC make any appropriate adjustments to
the subsidy without reliance on  such information/documents?  Please explain in detail.
Reply
5.546  There is no obligation under the SCM Agreement to quantify an amount of subsidization in
the context of a sunset review.  Under US law, how ever, the USITC has the discretion to consider the
magnitude of the net countervailable subsidy that is likely to prevail if the order is invoked.168  As
reflected in the portion of the SAA quoted by the Panel, the US Department of Commerce determines
the likely magnitude in order to report it to the Commission.169
5.547  In determining the magnitude of the net countervailable subsidy, the US Department of
Commerce begins with the net countervailable subsidy rate determined in the investigation.  As
explained in prior US submissions to the Panel, th e US Department of Commerce begins with this rate
because it is the only evidence reflecting the behaviour of the respondents without the discipline of
countervailing measures in place.  The US Depa rtment of Commerce may make adjustments to the
net countervailable subsidy in accordance with the guidance contained in the Sunset Policy Bulletin .170
However, a sunset review is not a procedure for determining the amount of final countervailing duty
liability.  Instead, a sunset review is conducted to determine the likelihood of the continuation or
recurrence of subsidization and injury in the event that the countervailing duty order is revoked.
Consequently, the US Department of Commerce does not calculate  the net countervailable rate of
subsidization in a sunset review.  Rather, the US Department of Commerce starts with the ratedetermined in the investigation and may adjust that rate by simple subtraction or addition – for
example, if, since the investigation a programme has been terminated without residual benefits, the
US Department of Commerce will subtract the rate determined for that particular programme from the
total rate determined for all programmes.  This is, in  fact, what happened in this case.  The mechanics
of this kind of adjustment are set forth in Exhibit EC-8.
Q59. The Panel notes the following statement of the DOC in its final determination in the
sunset review on carbon steel:
With respect to Dillinger's contention that the [DOC] should have included in
the record of these sunset reviews the calculation memoranda the [DOC]
prepared in the original investigation, we disagree.  Insofar as Dillinger could
have submitted some version of the memoranda in the sunset reviews, wedetermined that, in these sunset reviews, Dillinger did not file the information in
a timely manner.
Did the DOC communicate to Dillinger, or any other German producer, notably
Hoesch, Preussag, or Thyssen, prior to publication of this final determination, the DOC'srefusal to include in the record of these suns et reviews the calculation memoranda the DOC
prepared in the original investigation and its reas ons therefor?  If so, please indicate when and
provide a copy of this communication.
                                                     
168  Section 752(a)(6) of the Act.
169  Section 752(b)(3) of the Act.
170  See US Answers , paras. 59-66.WT/DS213/R
Page 126
Reply
5.548  On 13 April 2000, the German producers in the sunset review – Thyssen Krupp Stahl AG,
Stahlwerke Bremen GmbH, EKO Stahl GmbH, and Salzgitter AG – sought to have all the calculation
memoranda from the original investigation placed on the record of the sunset review.  Three Germanproducers of certain corrosion-resistant carbon steel flat products were involved in the original
investigation: Hoesch Stahl AG (Hoesch), Preussag Stahl AG (Preussag), and Thyssen Stahl AG
(Thyssen).  Prior to the issuance of the final determ ination in the sunset review, the US Department of
Commerce did not communicate to Dillinger (who was not a party in the corrosion-resistant case) or
any other German producer that the request to have all calculation memoranda placed on the record of
the sunset review was determined to be untimely submitted.
Q60. Does the DOC make the full record of a sunset review available to parties (including
under administrative protective orders) prior to or after the publication of its preliminary
determination?  Is this a matter of law or policy?  If the former, please point to the relevant
statutory or regulatory provisions of US law, and provide the statutory or regulatory texts.  Did
the DOC make the full record of the sunset review on carbon steel  available to parties?  If so,
when?
Reply
5.549  Under the US statute and the US Department of Commerce regulations, the public portion of
the record of the sunset review, updated on a daily basis as information is placed on the record, ismaintained in the US Department of Commerce’s Central Record Unit, which is open to the public
during normal business hours.
171  Under the US statute and the US Department of Commerce
regulations, the business proprietary portion of the record of the sunset review is available to any
person covered by, and subject to, an Administrative Protective Order (“APO”) for the sunset review
segment of the proceeding.172  All documents submitted by interested parties must be served on all
other interested parties at the same time as they are filed with the US Department of Commerce.  This
includes service of public documents on all parties and service of business proprietary documents on
all parties under APO.173  A copy of the proprietary portion of the record of the sunset review also is
kept in the US Department of Commerce’s Central Records Unit.174  The respondents in the sunset
review on carbon steel had continuous access to the administrative record as it was continuously
updated.
Q61. Please respond to paragraphs 34 and 46 of the European Communities' comments on
the responses of the United States to the questi ons from the Panel following the first meeting of
the Panel, regarding the use - as opposed to disclosure - by the DOC of confidential
information/documents in sunset reviews.
Reply
5.550  In paragraph 34, the EC suggests that the US De partment of Commerce could have placed the
proprietary calculation memoranda from the investigation on the record of the sunset review because,
by making requests to place such data on the sunset review record, the German producers have
“renounced the confidential nature of the data”.  There is no merit to the EC’s argument.
                                                     
171  See section 777(a)(4) of the Act.  A copy of section 777(a)(4) and certain other provisions of the US
statute discussed herein is attached as Exhibit US-9.  See also  19 CFR 351.103 and 351.104(b) (Exhibit US-8).
172  See section 777(c)(1) of the Act (Exhibit US-9); 19 CFR 351.305 (Exhibit US-8).
173  See section 777(d) of the Act (Exhibit US-9); 19 CFR 351.303(f) (Exhibit US-8).
174  See 19 CFR 351.103 and 351.104(a) (Exhibit US-8).WT/DS213/R
Page 127
5.551  Article 12.4 of the SCM Agreement provides that business confidential information “shall not
be disclosed without specific permission of the party submitting it”.  In other words, before business
confidential may be disclosed: 1) the party submitting it, 2) must have given specific permission.
Notwithstanding the EC’s assertions, neither of those factors is present in this case.  Furthermore, on
such an extremely serious matter as the protection of business proprietary information, it isirresponsible to suggest that an administering authority simply should infer  that a particular party has
given the requisite permission.
5.552  Consistent with Article 12.4, the US statute provides that information submitted to the US
Department of Commerce “which is designated as proprietary by the person submitting the
information shall not be disclosed to any person without the consent of the person submitting the
information ... .”
175 The parties that submitted the business proprietary information in the original
investigation were Hoesch Stahl AG, Preussag Stahl AG, and Thyssen Stahl AG.  The Germanproducers in the sunset review were Thyssen Kr upp Stahl AG, Stahlwerke Bremen GmbH, EKO Stahl
GmbH, and Salzgitter AG.  In the record of the sunset review, there is no evidence of express consent
to move the information from the record of one segm ent of the proceeding to another, nor is there any
explicit claim that the parties in the sunset review had the authority to give such consent.
5.553  There is no distinction between “use” and “disclosure” on this issue.  Any information used
by the US Department of Commerce as a basis for a determination is subject to disclosure.  If the
information is public, it must be disclosed to the public; if the information is business proprietary, it
must be disclosed to any party under APO.  The concern is not, as the EC asserts in paragraph 46, that
placing the business proprietary information from the investigation on the record of the sunset review
might result in public disclosure.  Business proprietary information remains proprietary unless anduntil the submitter explicitly indicates otherwise.  Ra ther, the issue in this case is that the original
submitter of the business proprietary information relied upon the fact that its proprietary information
would only be used during the investigation phase and would be subject to disclosure only to parties
under APO involved in the investigation phase for their use during that phase.  The EC’s suggested
cavalier treatment of business proprietary information is not consistent with either US law orMembers’ obligations under the SCM Agreement.
Q. 
COMMENTS OF THE EUROPEAN COMMUNITIES ON THE RESPONSES OF THE UNITED STATES TO
QUESTIONS FROM THE PANEL FOLLOWING THE SECOND MEETING OF THE PANEL
US response to Panel's question 44
5.554  In paragraph 13 of its responses, the US affirms that the Uruguay Round negotiators did not
agree on the inclusion of a de minimis standard for sunset reviews.  The European Communities
contests this statement.  There is nothing in the legislative history of the SCM Agreement  that suggests
such a conclusion.  A de minimis  threshold was simply not expressly included in Article 21.3 because
it is clear from the overall context and object and purpose of the Agreement that this requirement
applies to initial as well as sunset investigations alike.
5.555  Furthermore, in paragraph 14 of its responses, the US contests the EC's position that the
de minimis standard is related to injury on the basis that the SCM Agreement contains three different
de minimis standards.
5.556  The increased de minimis  thresholds, established respectively by Articles 27.10(a) and 27.11
SCM Agreement for developing (2 per cent) and least developed (3 per cent) countries, do not affect
the inherent relationship between de minimis  level of subsidization and injury.  They are, in fact, part
of the special development package included in Article 27 of the SCM Agreement together with a
                                                     
175  Section 777(b)(1)(A) of the Act (Exhibit US-9).WT/DS213/R
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number of concessions granted to developing countries in order to meet their development needs.  An
increased de minimis  threshold does therefore not alter the ratio legis of the de minimis  principle.  For
example, developing country members were also entitled to maintain export subsidies for a period of
eight years (Article 27.2).  This does not alter the principle that export subsidies are prohibited
because they are presumed to be trade distorting.  It is simply a relaxation of, an exemption to WTOrequirements, as there are many in the WTO Agreements, granted in order to meet the development
needs of specific WTO members.
5.557  Incidentally, if the US logic that the different de minimis  thresholds of Article 27 have not to
be interpreted as exceptions has to be followed, it appears difficult to reconcile these thresholds with
the rationale of administrative efficiency put forward by the US for the de minimis  rule.  It is, in fact,
difficult to understand how the administrative efficiency of collecting a countervailing duty at the
border can depend on the origin of a product.
US response to Panel's question 45
5.558  In paragraph 16 of its responses, the US claims that a finding of likelihood of continuation or
recurrence of a subsidy could be made if benefits were being received under a recurring subsidy
programme or the benefit stream of a non-recurring programme would continue.  The EC does notdispute that fact but the US argument evades the basic argumentation of the EC.  Indeed, the US has
to demonstrate the subsidization is likely to continue or recur above the de minimis  threshold set out
in Article 11.9 SCM Agreement .  In the corrosion-resistant steel case from Germany, it was clear that
subsidization (originally found at 0.54 per cent in 1993) could not continue or recur above the de
minimis level of 1 per cent since a major proportion of the subsidy margin, i.e. the CIG programme,
was based on a non-recurring subsidy programme where, in addition, the benefit stream is declining
and would expire in the near future.
5.559  Likewise, if the rate of subsidization is zero, the investigating authority has to demonstrate
how this zero-rate will increase above the de minimis threshold.  A failure to do so results in a
violation of Article 21.3 SCM Agreement .  With regard to subsidy programmes, it is not sufficient to
show that they “still exist”.  The investigating authority, in a sunset review, must demonstrate that
such programmes are likely to be used, and explain why.  In addition, it is not sufficient to “infer a
future rate” of subsidy; a sunset review requires a determination of subsidization, and subsidization
does not exist in the abstract.
Question 55
5.560  In its response, the US forgets that the conditions and requirements of Article 12 SCM
Agreement  are fully applicable to sunset reviews.  Accordingly, the same rules regarding the
disclosure of evidence that applies to invest igations would also apply to sunset reviews.
Question 56
5.561  The response of the US to this question points to no statutory provision and discusses only
two general regulatory provisions dealing with “segments” of a proceeding.  From the conduct of the
US ITC in similar sunset review proceedings, it is clear that US law does not prohibit automatic
inclusion of key documents, even confidential documents, from the original investigation in the record
of these sunset reviews.
Questions 57 & 58
5.562  It must be noted that the US’ statement that there is no obligation under the SCM Agreement
to quantify an amount of subsidization in the context of a sunset review is erroneous.  This statementWT/DS213/R
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is also belied by the DOC’s own policy bulletin, which makes it clear that “the purpose of the net
countervailable subsidy in the context of sunset reviews is to provide the Commission with a rate
which represents the countervailable rate that is likely to prevail if the order is revoked or the
suspended investigation is terminated.”  DOC Sunset  Policy Bulletin at para. III B3 (Exhibit EC -15).
It is contradictory for the US to put so much im portance on the rates from the original investigation
and claim that they are the best evidence of the conduct of foreign producers and governments but
then staunchly refuse to place DOC’s own calcul ation memoranda on the record, showing how these
rates were calculated.  DOC’s refusal to place the calculation memoranda on the record of this case
was found to be unlawful by the US Court of International Trade.  AG der Dillinger Hüttenwerke v.
United States, Slip Op. 02-25 at 16-18 (Exhibit EC- 24).  It must be remembered that, under the US
legal system, this decision has the force and effect of law and must be followed by the DOC.  The
decision is presumed correct unless later overturned by a court of competent jurisdiction.
Question 59
5.563  As previously explained by the EC, the parties to the corrosion-resistant sunset review were
the legal successors to the parties in the original investigation (EC Comments to US responses after
the first meeting with the Panel, at para. 45).  Acco rdingly, there can be no dispute but that the parties
to the review were authorized to request placement of the calculation memoranda from the original
investigation on the record of the review.  Ind eed, during the sunset review, DOC never questioned
the parties’ authority to make their request concerning the memoranda.
Question 60
5.564  The problem faced by the German Producers was not that DOC did not make the record of the
sunset review available to the parties prior to the preliminary determination.  The German Producers
timely submitted substantial evidence showing that subsidization was not likely to continue or recur if
the countervailing duty order were revoked.  The German Producers also timely submitted evidence
rebutting all of the claims made by the US producers.
5.565  The problem was that the preliminary determina tion was the first time that the DOC made any
statements concerning the adequacy of this evidence.  Thus, despite the fact that the German
Producers submitted evidence to rebut the claims of the US producers on every point, DOC claimed
that it required even more evidence to confirm the German Producers’ arguments.  DOC, however,
then proceeded to reject all additional evidence from the German Producers or even consult its own
calculation memoranda from the original investigation, claiming that such information was untimely.
DOC made this claim despite the fact that it ha d accepted additional information from other parties.
The US Court of International Trade strongly rebuk ed DOC for this conduct, stating that “Commerce
cannot act irrationally and arbitrarily.”  (Dillinger v. United States, at 41).
Question 61
5.566  Throughout this proceeding, the US has continually changed its rationale for refusing to make
the calculation memoranda from the original investigation part of the record of the sunset review.  In
the final results of the sunset review, DOC stated simply that the request to make the calculation
memoranda part of the record was untimely.  At the beginning of this proceeding, the US stated that it
was prohibited from granting the request because it could not disclose confidential information.  Now
the US claims that it is not a question of disclosing confidential information but one of “moving”confidential information from one segment of the proceeding to another segment without the party’s
consent.  As stated above in the comments to question 59, the US completely ignores the fact that the
parties to the sunset review were the legal successo rs to the parties in the original investigation.  In
their 1 October 1999 substantive response, the German Producers carefully explained that Thyssen
Krupp Stahl AG was the legal successor to Hoesch and Thyssen and that Salzgitter AG was the legalWT/DS213/R
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successor to Preussag.  (German Producers Substantive Response at 5 (1999), submitted as Exhibit
EC-23).  Thus, there could have been no confusi on over the authority of the German Producers to
request that the calculation memoranda be placed on the record of the sunset review.
5.567  The EC is not suggesting any “cavalier” treatment of business proprietary information as
claimed by the US.  The EC is merely arguing that confidential information from the originalinvestigation that is necessary to the determination in the sunset review should have been made part of
the confidential record in the sunset review.  This is precisely what is done by the US ITC in its sunset
review and therefore is clearly not inconsistent with US law.  This procedure would also be fully
consistent with Article 12.4 SCM Agreement.
R. 
COMMENTS OF THE UNITED STATES ON THE RESPONSES OF THE EUROPEAN COMMUNITIES TO
QUESTIONS FROM THE PANEL FOLLOWING THE SECOND MEETING OF THE PANEL
5.568  The United States does not intend to comment on every response by the European
Communities (“EC”) to the Panel’s second set of questions, particularly where the issues raised have
been addressed in prior written submissions of the United States.  Instead, the United States will
comment briefly on those specific responses where additional points or emphasis is warranted.
5.569  At the outset, however, the United States notes the faulty assumption underlying many of the
EC’s arguments.  In its answers, the EC discusses the SCM Agreement as if the text issued from abody of drafters that shared a common vision.  In f act, the text was drafted by countries that did not
agree on a lot of things.  It is a negotiated  text.  As such, it simply reflects those areas where countries
did manage to agree on something.  For example, the negotiators agreed on a 1 per cent de minimis
standard for investigations, but the negotiating history reveals no agreement on the theory underlying
this negotiated rule.
176
5.570  As the United States previously has demonstrated, if one applies customary rules of treaty
interpretation, the issues in this case are fairly straightforward.  In response, the EC has proposed an
approach to treaty interpretation – what it alleges is “a more classic way of drafting and interpreting
treaties”177 – that is contradicted by numerous Appellate Body reports.  The EC’s approach in fact
simply attempts to impute into the SCM Agreement words and obligations that are not there.
5.571  Turning now to the EC’s answer s to specific questions, with respect to Question 41, the EC’s
answer reflects a reliance on assumptions that:  (1) the purpose of a sunset review is the same as that
of an initial investigation; and (2) every provision of the SCM Agreement automatically should  be
considered applicable to every other provision.  As the United States previously has demonstrated,
these assumptions simply are incorrect.178
5.572  Furthermore, the EC’s approach ignores the fact that where the drafters wished to have
obligations set forth in one provision apply in another context, they did so expressly.  Article 21 itself
illustrates this point.  Paragraph 4 of Article 21 makes the provisions of Article 12 applicable to
Article 21.3 reviews.  If, as the EC argues, the draf ters intended that the provisions of other articles
                                                     
176  See Responses of the United States of America to the Questions from the Panel Following the
Second Meeting  (“US Second Responses ”), April 2, 2002, paras. 12-13.
177  Replies of the European Communities to the second set of written questions from the Panel at the
Second Substantive Meeting with the Parties  (“EC Replies ”), 2 April 2002, page 2.
178 With respect to the purpose of a sunset review, see US First Submission , paras. 79-81; US Second
Responses , para. 2; and Answers of the United States of American to Question from the European Communities ,
February 21, 2002, para. 6.  With respect to the EC’s approach to treaty interpretation, see Answers of the
United States of America to Questions from the Panel , February 21, 2002, paras. 19-21; and Comments of the
United States of America on the EC’s Answers to Questions from the Panel , February 28, 2002, paras. 2-4 and
10-11.WT/DS213/R
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apply to Article 21, why did they bother with the first sentence of Article 21.4?  Under the EC
approach, the first sentence becomes superfluous, an outcome which violates the principle of
effectiveness of treaty interpretation.179
5.573  With respect to Question 42, the EC’s assertion that it has made a “claim” with respect to an
alleged shifting of the burden of proof under the US  system is incorrect.  In its panel request (which
established the terms of reference in this proceeding), the EC’s “claim” was that, under Article 21.3,
the United States cannot automatically self-initiate a sunset review.180  In making this claim, the EC
panel request included only an argument  that automatic initiation somehow shifted the burden of
proof.  Accordingly, the Panel should treat the EC’s discussion of burden of proof as an argument , not
as a separate and independent claim .
5.574  Moreover, as a substantive matter, the EC is wrong when it asserts that the United States
imposes a burden of proof on foreign exporters and governments to demonstrate no likelihood ofcontinued or recurring subsidization and injury.
181  As a matter of US administrative law, there is no
burden of proof – in the sense of the ultimate burden of persuasion – imposed on either foreign
exporters/governments or the US industry.  Instead, the burden is on Commerce to make a
determination that can withstand review by a domestic court.
5.575  With respect to the EC’s answer to Question 44, the EC omits any explanation – let alone a
demonstration – as to how its invocation of negotiating history is justified under the customary rules
of treaty interpretation reflected in Article 32 of the Vienna Convention .182  N e v e r t h e l e s s ,  a s  t h e
United States has demonstrated, the only thing the negotiating history demonstrates is that there was
no consensus or single reason why the drafters established a de minimis standard.183  M o r e
importantly, however, an analysis of the text and context of Article 21.3 and the object and purpose ofthe SCM Agreement leads to the conclusion that the Article 11.9 de minimis  standard does not apply
to reviews under Article 21, including sunset reviews under Article 21.3.
5.576  With respect to the EC’s answer to Question 49, by using the terms “presumption” and “all
the more so”, the EC seems to suggest that a sunset review is some sort of exceptional procedure that
warrants a stricter interpretation of Article 21.3, as opposed to Article 21.2.  Articles 21.2 and 21.3,however, are specific implementations of the general rule, found in Article 21.1, that a countervailing
duty order shall remain in force only as long as and to the extent necessary to counteract subsidization
that is causing injury.  Nothing in the general rule found in Article 21.1 suggests any presumption
concerning how long countervailing duties may continue to be necessary.  Article 21.3 simply defines
the point in time ( i.e., after five years) at which the authorities must do one of two things:
automatically terminate the countervailing duty or take stock of the situation by conducting a review
to determine whether continuation or recurrence of subsidization and injury is likely.  If so, the dutymay be maintained; if not, the duty must be terminated.  As the Appellate Body has stated,
“describing [or] characterizing a treaty provision as an ‘exception’ does not by itself justify a ‘stricter’
                                                     
179  See, e.g., United States - Standards for Reformulated and Conventional Gasoline , WT/DS2/AB/R,
Report of the Appellate Body adopted 20 May 1996, page 23 (“[I]nterpretation must give meaning and effect to
all the terms of a treaty.”).
180  WT/DS213/3 (10 August 2001).
181  EC Replies , page 3.
182  As discussed in the US Second Responses , para. 8, Article 32 permits recourse to supplementary
means of interpretation to confirm the meaning resulting from the application of Article 31, or to determine themeaning when the interpreta tion according to Article 31:  (a) leaves the meaning ambiguous or obscure; or (b)
leads to a result which is manifestly absurd or unreasonable.  See also US Second Responses , paras. 9-10.
183  US Second Responses , paras. 12-13.WT/DS213/R
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or ‘narrower’ interpretation of that provision than  would be warranted by . . . applying the normal
rules of treaty interpretation.”184
5.577  In its answers to Questions 50-54, the EC asserts new claims that were not included in its
panel request.  Because these claims were not included in the Panel’s terms of reference, the Panel
should dismiss them.
5.578  With respect to Question 50, the EC’s asserts that it has made a “claim” that there can never
be “injurious subsidization” as a result of a subsidy rate below1 per cent.  This is incorrect.  There is
no mention of “injury” or “injurious subsidization” in the EC’s panel request.  Rather, the EC’s claim
in its panel request was that the Article 11.9 de minimis standard for investigations applies also in
sunset reviews.  Thus, the EC’s new claim with resp ect to non-injurious subsidization is not within the
Panel’s terms of reference, but instead is at most an argument in support of the EC’s claim.
5.579  Furthermore, as the United States has demonstrated in prior submissions, nothing in the text
of Article 11.9 or 21.3 requires the application of the Article 11.9 one per cent de minimis  standard in
Article 21.3 sunset reviews, or any other type of review.  Finally, the provision of a de minimis
standard in Article 11.9 is not reflective of the EC’s theory that subsidization below one per cent is
non-injurious.  Rather, the de minimis standard for investigations under Article 11 is a creature of
negotiation.185
5.580  With respect to Question 51, the EC now asserts that it has made a “claim” that US law as
such violates the SCM Agreement in respect of the obligation to “determine” the likelihood of
continuation or recurrence of subsidization.  The EC now argues that US law is equivalent to a “web
of provisions (basic law, regulations and guidelines)” which allegedly violate the obligations of the
SCM Agreement.
5.581  It is impossible to read the EC’s panel request as articulating this type of claim.  In its panel
request, the EC essentially challenged three things:  (1) the US system of automatic self-initiated
sunset reviews, as such; (2) the US failure to apply a 1 per cent de minimis  standard in sunset reviews,
as such; and (3) Commerce’s application of the principles described in (1) and (2) in the sunset review
on corrosion-resistant steel from Germany.  The EC’s new claims concerning the definition of“determine” and the issue of “injurious subsidization” are simply not within the terms of reference of
this dispute.
5.582  With respect to Question 52, the EC now alleges that by not making certain documents part of
the record of the sunset review, Commerce violated various provisions of Article 12 of the SCM
Agreement.  However, Article 12 is nowhere menti oned in the EC’s panel request, nor does the panel
request refer to the alleged inadequacy of the record of Commerce’s sunset review.  Thus, once again,
the EC appears to be advancing claims that are not within the Panel’s terms of reference.Accordingly, the Panel should dismiss these new and improper claims.
5.583  In any event, the EC’s statement that the USITC is “subject to the same procedures regarding
the treatment of business proprietary information as the US DOC” is patently false.  Commerce and
the USITC each have practices and regulations which govern the collection, protection, and use of
business proprietary information.  There are significant differences between Commerce and USITCpractices and regulations.  One of those differences is that the USITC automatically makes certain
                                                     
184  European Communities - Measures Concerning Meat and Meat Products (Hormones) ,
WT/DS26/AB/R, WT/DS48/AB/R, Report of the Appellate Body adopted 13 February 1998, para. 104.
185  US Second Responses , paras. 12-13.WT/DS213/R
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parts of the record of the original investigation part of the record of the sunset review;186 Commerce,
by regulation, can not and does not automatically do the same.  The EC is well aware of the fact that
Commerce and the USITC have distinct roles in the United States’ conduct of sunset reviews and that
the two agencies have distinct sets of practices and regulations on this issue in particular.
5.584  In its response to Question 53, the EC appears to advance a new claim that US law violates
the SCM Agreement because it provides too much discretion to Commerce in making a sunset
determination, thereby allegedly eliminating “legal s ecurity and predictability” in the review “to the
detriment of foreign exporters and international trad e.”  It is not entirely clear from the EC answer
which provisions of the SCM Agreement allegedly have been violated by the existence of “too much
discretion”, but the Panel need not concern itself with  the lack of precision in the EC’s answer.  Here,
too, the Panel should dismiss the EC’s claim, becau se the claim was not included in the EC’s panel
request.
5.585  Nevertheless, the United States notes that it has statutory provisions (sections 751(c) and 752
of the Tariff Act) governing sunset reviews which provide the basic legal and procedural requirements
for the conduct of a sunset review.  In additi on, Commerce has promulgated regulatory provisions
(e.g., portions of sections 351.102, 351.104, 351.218, 351.221-222, 351.308-310), primarily
procedural in nature, to formalize the sunset review process and provide guidance for effectiveparticipation in sunset reviews.  Commerce also has issued its Sunset Policy Bulletin  which outlines
the methodology Commerce will employ in making its sunset determination. These provisions
provide parties with all the information on the procedural and substantive requirements necessary to
participate meaningfully in a sunset review.
5.586  By contrast, the EC provides extremely limited guidance under its own system with respect to
the conduct of sunset reviews.  As explained in its answer to Panel Question 48, the EC has
promulgated a Council Regulation which governs su nset reviews (Exhibit EC-26).  This regulation
does little more than mirror Article 21.  The EC then admits that it has “no other regulatory or
administrative texts or guidelines concerning the conduct of countervailing duty expiry reviews” and
cites a single sunset review to illustrate the EC’s “practice” in sunset reviews.  Thus, while the UnitedStates provides expansive guidance on its conduct of sunset reviews, through statutory, regulatory and
policy provisions, the EC provides no guidance beyond the limited language of the Council
Regulation and the single instance where the EC has made a final countervailing duty sunset
determination.  Therefore, it would seem that if, arguendo , the EC’s assertions regarding the US
system were correct (and within the Panel’s terms of reference), it must follow automatically that the
EC system also violates the SCM Agreement.  Also in violation would be those Members who have
chosen to implement their obligations by simp ly incorporating the SCM Agreement into their
domestic law.
5.587  In its response to Question 53, the EC also asserts that the “flexibility and plasticity” of US
law eliminates security and predictability in the in terpretation and application of that law, and thereby
violates the SCM Agreement.  Again, however, the EC is reading words into the text of the SCM
Agreement that are not there.  The EC apparently is confusing the language in Article 3.2 of the DSU,which is a narrative statement that the WTO dispute settlement system  is a central element in
providing security and predictability to the mult ilateral trading system, with some obligation on
Members  to provide security and predictability in international trade through their measures.  Of
course, there is no such vague obligation in the WTO.
                                                     
186   See USITC’s Notice of Proposed Amendments to Rules of Practice and Procedure , 62 FR 55185,
55190 (October 23, 1997) ; and USITC’s Rules of Practice and Procedure , 63 FR 30599, 30606 (June 5, 1998)
(final rulemaking) (“[T]he material from the record of the original investigation that the Commission will
release to the parties will include the Commission opinion(s) in the original investigation and staff reports and
non-privileged memoranda, where available.”).WT/DS213/R
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5.588  Finally, with respect to Question 54, the EC states  that it is alleging violations of various
provisions of Article 12 of the SCM Agreement relating to what it describes as “due process and
rights of defense requirements”.  Of course, in its panel request, the EC does not reference Article 12
at all (let alone any particular paragraph of Article 12) or the fact pattern which the EC believes gives
rise to a violation of Article 12 (allegedly short deadlines for submissions).  While the EC’s panelrequest does mention Article 21, the only reference to particular paragraphs of Article 21 are to
paragraphs 1 and 3.
5.589  This new claim comes nowhere close to satisfying the standards of Article 6.2 of the DSU,
which requires that panel requests “identify the specific measures at issue and provide a brief
summary of the legal basis of the complaint sufficient to present the problem clearly.”  No objective
person could read the EC’s panel request and discern that the EC had a problem concerning the
deadline for submissions in Commerce sunset review s.  Accordingly, the Panel should dismiss this
new EC claim.
VI. ARGUMENTS OF THE THIRD PARTIES
6.1 The arguments presented by the third parties – Japan and Norway – in their written
submissions and oral statements are reflected below.
A. 
THIRD -PARTY SUBMISSION OF JAPAN
1. Introduction
6.2 The WTO Agreement, in particular the Agreement on Subsidies and Countervailing Measures
(hereinafter referred to as “the SCM Agreement”), permits the use of countervailing duty measures, to
offset prohibited subsidies only under strict conditions.  A Member must adhere strictly to the rules of
the SCM Agreement when initiating a countervailing duty investigation or a sunset review of aprevious investigation.  The Government of Japan (hereinafter “Japan”) has increasingly become
concerned with how the United States (hereinafter  “US”), and particularly the US Department of
Commerce (hereinafter “DOC”), has conducted sunset reviews pursuant to its interpretation and
application of the SCM Agreement.
6.3 The Government of Japan supports the European Communities’ (hereinafter “EC”) position in
this case.  Japan believes the proper interpretation of the SCM Agreement has broader implications
for the WTO Agreements as a whole.  The facts of this case illustrate the extent to which the DOC
will go to maintain import restrictions under Title VII of the Tariff Act of 1930 (hereinafter
“Title VII”) that are directly contrary to US obligations under the SCM Agreement.
6.4 We believe the EC submission appropriately summarizes the key facts of this case.  Before
turning to our analysis of the legal issues in this case, we simply wish to note the rather extreme facts
in this case.  Continuing a CVD order at the level of 0.54 per cent -- an order that never would havebeen imposed under the standards of the SCM Agr eement - shows just how extreme the US has been
in continuing orders regardless of the circumstances.
2. Article 21.3 of the SCM Agreement
(a) The Proper Scope of Article 21 of the SCM Agreement
(i) The provisions of Article 21 of the SCM Agreement must be read as an integrated part of  the
entire SCM AgreementWT/DS213/R
Page 135
6.5 Article 31 of the Vienna Convention on the Law of Treaties  ("Vienna Convention ") provides
that the words of a treaty must form the starting point for the process of interpretation.  In this regard,
words must be interpreted according to their “ordin ary meaning” taking into account their “context”
(i.e., other provisions of the treaty) and the “object and purpose” of the agreement187.  Although
recourse to a treaty’s object and purpose is permissible, it may not override the clear meaning of thetext.  As the Appellate Body in the Japan Taxes  case recognized, a “treaty’s ‘object and purpose’ is to
be referred to in determining the meaning of the ‘terms of the treaty’ and not as an independent basis
for interpretation”.
188  All the provisions of the SCM Agreement must be given their ordinary meaning
taking into account the context and purpose of the provision.
(ii) Article 21.3 of the SCM Agreement expressly re quires the termination of the CVD duty after
five years
6.6 The provisions of  Article 21.3 of the SCM Agreement create a specific obligations that a
countervailing duty (“CVD”) order  must be terminated five years after the date of its imposition.  The
Article states:
Notwithstanding the provisions of paragraphs 1 and 2, any definitive countervailing
duty shall  be terminated on a date not later than five years from its imposition . . . ,
unless  the authorities determine , in a review … that the expiry of the duty would be
likely to lead to continuation or recurrence of subsidization.189
6.7 This language stands for the proposition that termination of countervailing duties after five
years is the rule, not the exception.  First, the verb “shall” signals that termination is an obligation.
Second, the term “[n]otwithstanding the provisions of paragraphs 1 and 2” sets forth that a CVD order
shall be terminated even though continuation of the order would be justified under Articles 21.1 or21.2.  Finally, the ordinary meaning of the term “unless” means that the continuation of an CVD order
is an exception of the general rule that a definitive countervailing duty must be terminated.
(iii) Article 21.3 requires that the administering authority must have sufficient evidence to initiate
a sunset review  before determining whether to continue the order   
6.8 The language in Article 21.3 sets forth evidentiary standards that the administering authority
must follow to initiate a sunset review.  Arti cle 21.3 also obliges the administering authority to
establish with positive evidence that subsidization will continue or recur in the absence of the order.
The mere possibility of continuation or recurrence of subsidization is not enough.
6.9 The EC correctly states that the self-initiation of sunset reviews requires sufficient evidence
of the continuation or recurrence of subsidization.
190
6.10 In addition to arguments made by the EC, Articles 22.1, 22.7, and 11.6 further clarify the
point that Article 21 requires the authorities to satisfy themselves that sufficient evidence exists toself-initiate an investigation.  Article 22.1 provides that, “[w]hen the authorities are satisfied that there
is sufficient evidence  to justify the initiation of an investigation pursuant to Article 11 , the …
interested parties … shall be notified and a public notice shall be given.”  (emphasis added)
                                                     
187 See, e.g., Competence of the General Assembly for the Admission of a State to the United Nations
(Second Admissions Case) , [1950], ICJ Rep., at 8 (“The Court considers it necessary to say that the first duty of
a tribunal which is called upon to interpret and apply the provisions of a treaty, is to endeavour to give effect tothem in their natural and ordinary meaning in the context in which they are occur.”)
188 Appellate Body Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/AB/R, WT/DS10/AB/R,
WT/DS11/AB/R, at 10 (1 November 1996).
189 Agreement on Subsidies and Countervailing Measures, Art. 21.3 (emphasis added).
190 See EC Submission, at para 65.WT/DS213/R
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Article 22.7 provides that Article 22.1 “apply mutatis mutandis  to the initiation and completion of
reviews pursuant to Article 21”.  Thus, Article 22.1 obliges the authorities to give notice when
initiating a sunset review.  The Article further obliges the authorities to have sufficient evidence to
justify the initiation of the sunset review pursuant to Article 11.
6.11 Paragraph 6 of  Article 11 provides that the authorities “shall proceed only if they have
sufficient evidence of the existence of a subsidy, injury and causal link . . . to justify the initiation of
an investigation”.  By operation of Article 22.1 and 22.7, therefore, the authorities are required to
have sufficient evidence to self-initiate a sunset review under Article 21.3.
6.12 In addition to the “sufficient evidence” requirem ent to initiate sunset reviews, Article 21.3
further requires the authorities to have “positive evidence” on a prospective basis to warrant
continuing a CVD order.
6.13 Article 21.3 requires the authorities to “determine” that the expiry of a CVD order would be
likely to lead to continuation or recurrence of subsidization in the absence of the order.  The plain and
ordinary meaning of “determine” is to establish, or ascertain definitely.191  The plain meaning of
“determine” thus requires the authorities to make a new analysis, not simply repeat stale conclusions.
6.14 Previous Appellate Body and Panel decisions instruct that a determination of continued or
recurrent subsidization must be based on positive evidence.  In the context of Article 11.2 of the Anti-Dumping Agreement, the Panel in United States - DRAMs,
192 determined that “the continued
imposition must, in our view, be essentially dependen t on, and therefore assignable to, a foundation of
positive evidence”.193  Since both Article 11.2 and 11.3 of AD Agreement require the determination of
necessity to continue an anti-dumping duty, the rationale in DRAMs  also applies to Article 11.3 of AD
Agreement.  The rationale in DRAMs  applies with equal force to the SCM Agreement because the
language in Article 11 of the AD Agreement is nearly  identical to the language in Article 21 in the
SCM Agreement.  Further, Vienna Convention Article 31 requires that these Articles must be given
the same meaning because the object and purpose of both articles is the same.194
6.15 The Appellant Body in United States -- Leaded Bars  confirmed this textual interpretation
where it found that, “in order to establish the continued need for countervailing duties, aninvestigating authority will have to make a finding on subsidization, i.e. whether or not the subsidy
continues to exist”.
195  The Appellant Body’s finding therefore, lends further support to the
interpretation in the DRAM panel.
6.16 Article 21.3 requires that the positive evidence of subsidization  must be prospective, while
current subsidization may be relevant.  The panel  in DRAMs  found that the authorities need to
                                                     
191 See American Heritage Dictionary , at 235 (3rd ed. 1994).
192 See Panel Report, United States - Anti-dump ing Duty on Dynamic Random Access Memory
Semiconductors (DRAMS) of one Megabit or Above from Korea , (“United States -- DRAMs”), WT/DS99/R, at
para. 6.40 (29 Jan. 1999) (finding that Article 11.1 of the AD Agreement contains a general rule that anti-
dumping duties shall remain in force only as long as and to the extent necessary to counteract dumping which iscausing injury; this the general rule is implemented through Article 11.2 (and Article 11.3)).
193 See id . at para. 6.42 (“In other words, the need for the continued imposition of the duty must be
demonstrable on the basis of the evidence adduced.”).
194 This fundamental principle was recognized by the Dispute Settlement Panel in United States -
DRAMs.  See United States - DRAMS , WT/DS99/R, at para. 4.65 -- 4.67 (29 Jan. 1999) (citing the Vienna
Convention on the Law of Treaties, art. 31.2 (23 May 1969)).
195 Appellate Body Report, United States - Imposition of Countervailing Duties on Certain Hot-Rolled
Lead and Bismuth Carbon Steel Products Originating in the United Kingdom , (“United States -- Leaded Bars”)
WT/DS138/AB/R, at para. 54 (7 June 2000) (finding that the US, in an administrative review regarding a non-
recurring subsidy allocated over time, should have made a finding on subsidization).WT/DS213/R
Page 137
establish “a status regarding the prospects of dumping”196 in determining likely to continue or recur.197
The Panel in DRAMs  also noted that “there is nothing in the text of Article 11.2 of the AD Agreement
that explicitly limits a Member to a ‘present’ analysis, and forecloses a prospective analysis”.198
Thus, the potential  subsidization and the current CVD order are relevant to the determination in thesunset review.
6.17 In sum, Article 21.3 obliges the authorities to have sufficient evidence to initiate a sunset
review.  It also obliges the authorities to base their determination on positive evidence illustrating the
likelihood of future subsidization.  Indeed, the very  purpose of a sunset review is to examine whether
an injurious subsidy will continue for the next five years.  The only proper way for the administering
authority to determine whether or not subsidization will continue is to undertake a prospective
analysis.
(b) Automatic Initiation by DOC of a Sunset Review Violates Article 21.3 of the SCM
Agreement
6.18 The US statute and DOC practice of automatic initiation of sunset reviews is contrary to US
obligations under the SCM Agreement.
6.19 Both the US. statute and DOC’s practices mandate automatic initiation of a sunset review five
years after imposition of the original order.  Section 751(c)(2) of the Tariff Act of 1930 (hereinafter“the Act”) mandates that DOC publish a “notice of initiation” in the Federal Register no later than 30
days before the fifth anniversary of the CVD order’s publication.
 199  DOC’s regulations contain the
identical obligation.200  Section 351.218(c)(1) of DOC’s regulations provides that, “no later than
30 days before the fifth anniversary date of an order … the Secretary will publish a notice of initiation
of a sunset review (see section 751(c)(2).”  Finally, DOC published the initiation schedule of upcoming sunset reviews based solely on the date of the original order.
201  DOC in fact initiated this case
five years from the date of the imposition of the original order.202  DOC has never showed sufficient
evidence to initiate a sunset review.  In fact, DOC initiates all sunset reviews without any evidence to
justify initiation.  The United States admitted as much in their 15 January submission.203
6.20 As we discuss above, however, the authorities must have sufficient evidence to justify the
initiation of sunset reviews.  The automatic initiation by the United States of sunset reviews thus does
not satisfy the sufficient evidence requirement under Article 21.3.
                                                     
196 Id. at para 6.28
197 As discussed above, the decision regarding ADA Article 11.2 is applicable to Article 11.3 of AD
Agreement, and Article 21.3 of SCM Agreement.
198 Id. at para. 6.29.
199 19 U.S.C. § 1675(c)(1).
200 19 C.F.R. § 351.218(c)(1).
201 See 19 C.F.R. §351, Annex VIII-A-B-C; see also Transition Orders; Final Schedule and Grouping
of Five-Year Reviews, 63 Fed. Reg. 29372, 2 9380 (29 May 1998) (“Sunset  Initiation Schedule”);  Sunset
Reviews - Upcoming Deadlines by Initiation Month , available at  www.ita.doc.gov/ia/
suncase.nsf/aeab85e5a579ee7a852568950050843d!OpenView (visited 17 January 2002).
202 Compare Countervailing Duty Order and Amendment to Final Determinati on of Certain Corrosion-
Resistant Carbon Steel Flat Products from Germany , 58 Fed. Reg. 43756 (17 Aug. 1993), with Notice of
Initiation  of Five-Year (“Sunset”) Reviews of Antidumping and Count ervailing Duty Orders or Investigations of
Carbon Steel Plates and Flat Products , 64 Fed Reg. 47767 (1 Sep. 1999).
203 United States - Countervailing Duties on Certain Corrosion-Resistant Carbon Steel Flat Products
From Germany, First Written Submission of the United States of America, WTDS213, at para. 7
(15 January 2002).WT/DS213/R
Page 138
6.21 Japan believes that the Panel should find the US statute, regulations, and practices to be
inconsistent with the SCM Agreement.
(c) Failure to “Determine” the Likelihood of Continued Subsidization Based on Positive
Evidence of Current and Prospective Subsidization Violates Article 21.3 of the SCM
Agreement
6.22 The US determination of likelihood of continuation or recurrence of dumping is inconsistent
with Article 21.3.
6.23 As discussed above, Article 21.3 requires the determination be based on a prospective
analysis, with the presumption being termination of the duty.  Also as discussed above, the obligations
of Article 21.3 requires positive evidence to make the determination to continue CVD orders.  
6.24 The US rules and practices do not satisfy these requirements.  The SAA specifically states
that:
Commerce normally will select … net countervailable subsidies determined in the
original investigation or in a prior review .… Commerce normally will select the rate
from the investigation, because that is the only calculated rate that reflects the
behaviour or the exporters and foreign governments without the discipline of an order
or suspension agreement in place.204
6.25 The United States admits, in its 15 January submission, that it based the sunset review
determination in question on the CVD finding in the original investigation.
6.26 The SAA language and the United States’ admission of its own practice are not based on
positive evidence of continued or future subsidization as required by Article 21.3, as discussed above.
Japan thus submits that the use of the out-dated information, instead of current or prospective CVDrates, is inconsistent with Article 21.3.
(d) The US d e minimis  standard applied in Sunset Review is inconsistent with the SCM
Agreement
6.27 Contrary to the US argument, the proper de minimis  standard for the sunset review is 1 per
cent ad valorem  as provided in Article 11.9.  The United States’ application of the 0.5 per cent
de minimis  standard to the sunset review is inconsistent with the SCM Agreement.
(i) The US statute provides for two different de minimis standards:  1 per cent in an original
investigation and 0.5 per cent in a sunset review
6.28 Section 703(b)(4)(a) of the Trade Act of 1930 st ates that in the original investigation US
authorities shall regard a CVD rate of less than 1 per cent as de minimis .
205  The statute is silent,
however, on the de minimis  standard applicable to sunset reviews.  The DOC regulations provide that
a de minimis  rate of less than 0.5 per cent ad valorem shall apply to sunset reviews.206  T h e
                                                     
204 Statement of Administrative Action, at 890.
205 See 19 U.S.C. § 1671b(b)(4)(A) “In making a determination under this subsection, the administering
authority shall disregard any de minimis countervailable subsidy.  [A] countervailable subsidy is de minimis ifthe administering authority determines that the aggregat e of the net countervailable subsidies is less than 1
percent ad valorem or the equivalent specific rate for the subject merchandise.”  Id.
206 19 C.F.R. § 351.106(c)(1) (“In making any determination other than a preliminary or final
antidumping or countervailing duty determination in an in vestigation …, the Secretary will treat as de minimisWT/DS213/R
Page 139
United States confirmed in its submission that it applied a 0.5 per cent de minimis  standard to the
sunset review in question.
(ii) The One Per cent  De Minimis Standard Must Apply to  Sunset Reviews
6.29 The 1 per cent de minimis  standard under Article 11.9 applies to both the original
investigations and sunset reviews.  The arguments of the United States on this issue should berejected.
6.30 Evidentiary standards of the sunset review require that the 1 per cent de minimis  standard of
Article 11.9 apply to the sunset re view.  As discussed above, Article 21.3 requires the authorities to
have sufficient evidence to initiate sunset reviews.  Also as discussed above, Articles 22.1 and 22.7
set forth that the sufficient evidence rule under Arti cle 11 applies to the initiation of sunset reviews.
The sufficient evidence rule under Article 11 includes Article 11.9, which states that the subsidy of
less than 1 per cent ad valorem  does not constitute sufficient evidence of subsidization.  The
authorities, therefore, may not initiate a sunset revi ew if the evidence demonstrates that the subsidy is
less than 1 per cent ad valorem .
6.31 In the same token, the positive evidence rule under Article 21.3, as discussed above, also
prohibits the authorities from finding a likelihood of continuation or recurrence of subsidization when
they have already found the subsidy to be less than the 1 per cent.  These reasons are supported byArticle 22.5, which requires the authorities to publish their “reasons for acceptance or rejection of
relevant arguments” in the final determination.  Article 22.7 states that these notice requirements
mutatis mutandis  apply to Article 21 reviews.  The provisions of Article 11, referenced in
Article 22.1, therefore fully apply to reviews under Article 21.  Thus, the de minimis  standard in
Article 11.9 should apply to the sunset review under Article 21.3 .
6.32 Moreover, the purposes of the sunset review and the original investigation are essentially
identical.  The purpose of a sunset review under Article 21.3 is to determine whether CVD orders
should be imposed for the next five years or should be terminated.  The original investigation is also
to determine whether or not a CVD order should be imposed for the next five year period.
6.33 Vienna Convention Article 31 requires that “a treaty shall be interpreted . . . in light of its
object and purpose”.
 207  The sunset review and the original investigation share the same object and
purpose.  Determinations in these two proceedings thus must apply the same standard.
6.34 Indeed, the underlying purpose provides no justification for a stricter standard for sunset
reviews.  The sunset review is no t to determine a precise level of subsidization, as the United States
does in annual reviews of countervailing duty orde rs called "administrative reviews".  Rather, the
sunset review addresses the continued existence of the order itself - precisely the same function served
by the original investigation.
6.35 As such, the authorities are obliged not to initiate the sunset review, and not to determine
continuation of the CVD order for the next five year in the sunset review, if the subsidy is less than
the 1 per cent.
                                                                                                                                                                    
any weighted-average dumping margin or countervailable subsidy rate that is less than 0.5 per cent ad
valorem”.).
207 Vienna Convention on the Law of Treaties  ("Vienna Convention "), Articles 31 and 32, U.N. Doc.
A/CONF.39/27* (23 May 1969).WT/DS213/R
Page 140
(iii) The Panel finding in United States  - DRAMs , that different de minimis standards in
Articles 5.8 and 9.3 of the AD Agreement do not  violate the Agreement, is distinguishable
6.36 Contrary to the US argument, the Panel’s finding in United States - DRAMs208, regarding the
applicability of Article 5.8 of the AD Agr eement in fact supports our view that the de minimis
standard for the original investigation also apply to the sunset review under Article 21.3 of the SCM
Agreement.
6.37 The scope of the Panel’s consideration of the non-applicability of Article 5.8 in DRAMs was
limited to the retroactive duty assessment procedures under Article 9.3 of the AD Agreement.  The
Panel analyzed the term “case” in Article 5.8, and concluded that the de minimis  standard in
Article 5.8 of the AD Agreement did not a pply to the duty assessment procedures.209
6.38 A sunset review is clearly distinguishable from the duty assessment procedures.  The duty
assessment procedures determines the exact amount of antidumping (or countervailing) duty to becollected from importers for their past imports of su bject merchandise.  The US calls these procedures
“administrative reviews”.  A sunset review, on the other hand, considers the prospect of future
dumping or subsidization, not the past history thereof.
6.39 The Panel’s construction of applicability of Article 5.8 to the duty assessment procedures thus
does not apply to the sunset review.
6.40 To the contrary, the Panel in DRAMs  in fact supports the point that Article 5.8 may apply to a
sunset review.  The Panel stated that:
in the context of Article 5.8, the function of the de minimis  test is to determine
whether or not an exporter is subject to an anti-dumping order.  In the context of
Article 9.3 duty assessment procedures, however, the function of any de minimis  test
applied by Members is to determine whether or not an exporter should pay a duty.210
6.41 As discussed above, the function of the sunset review is, to determine whether or not an
exporter should be subject to anti-dumping or countervailing duties for the next five years.  The sunset
review is thus analogous to the original investigation.  The DRAMs  Panel’s logic thus supports our
argument that Article 5.8 of the AD Agreemen t and its complementary Article 11.9 in the SCM
Agreement apply to the sunset review.
6.42 In sum, the de minimis  standard under Article 11.9 of SCM Agreement applies to the sunset
review.  Japan believes the Panel should find that the US practice of applying 0.5 per cent to sunset
review proceedings is inconsistent with the SCM Agreement.   
3. Conclusion
6.43 For the reasons stated above, Japan requests the Panel find that the US countervailing duty
law (Section 751(c), as complemented by Section 752,  of the Act), its accompanying regulations and
policy practices ( Sunset Policy Bulletin ), and their concrete application to imports of certain
corrosion-resistant steel products from Germany in the present case are inconsistent with Article 21
paragraphs 3, 1, and 4, Article 10, and Article 11.9 of the SCM Agreement.
                                                     
208 United States -- DRAMs , WT/DS99/R, at para. 6.87 (29 Jan. 1999).
209 Id. at para. 6.87.
210 Id. at para. 6.90.WT/DS213/R
Page 141
B. THIRD -PARTY SUBMISSION OF NORWAY
1. Introduction
6.44 The present case concerns whether the US basic countervailing duty law (Tariff Act of 1930,
Sunset regulations) and policy practices (Sunset Policy Bulletin) and their concrete application to
imports of certain corrosion-resistant steel products from Germany are inconsistent with theobligations of the United States under the WTO Agreement and annexed agreements.
6.45 Norway has systemic interests in the interpretation and application of the “sunset provisions”
of the Agreement on subsidies and countervailing measures (SCM), and thus reserved its third party
rights in the case during the Dispute Settlement Body meeting on 10 September 2001 (WT/DS213/3).
6.46 In deciding the case, Norway submits that the Panel should base its arguments on the
following:
2. The United States Department of Commerce (DOC) initiation of the Sunset Review for
countervailing duties on import of corrosion-resistant steel products from Germany has
infringed Article 21 of the Agreement on Subsidies and Countervailing Measures (SCM)
in a number of ways
(a) Automatic reviews infringe Articles 21.1 and 21.3 of the SCM Agreement and Article 10 of
the SCM Agreement in combination with Article VI of GATT 1994
6.47 Under Article 21.3 of the SCM Agreement, WTO Members are required to terminate
countervailing measures on a date no later than five years from their imposition, unless it is
determined in a review, that the expiry of the duties would be likely to lead to continuation or
recurrence of subsidization and injury.  This corresponds to the purpose of Article 21.1 of the SCM
Agreement, which provides that a countervailing duty shall be maintained only as long as necessaryand to the extent to counteract subsidization which is causing injury.
6.48 Article 10 of the SCM Agreement that refers to Article VI of GATT 1994 also sustains these
provisions. Article VI paragraph 6 (a) of GATT 1994 provides that:  No contracting party shall levy
any anti-dumping or countervailing duty on the importa tion of any product of the territory of another
contracting party unless it determines that the effect of anti dumping or subsidization, as the case maybe, is such as to cause or threaten material injury to an established domestic industry, or is such as to
retard materially the establishment of a domestic industry.
6.49 It follows from Article 21.3 that as a main rule countervailing duties shall be terminated no
later than five years from their imposition - the presumption being that subsidization is counteracted
after such period.  A review is meant only to take place on exceptional occasions when there is a clear
assumption based on the situation existing at the time of review that the expiry of the duty would be
likely to lead to continuation or recurrence of both subsidization and injury.
6.50 Under US law sunset reviews are automatically initiated by DOC on its own initiative five
years after the publication of the countervailing duty order.  Regardless of the situation existing at the
time of initiation of review, or the complete lack of information supporting an assumption that
continuation or recurrence of both subsidization and injury will occur, a review is initiated.
6.51 In this way the United States transforms an exception into a general rule, thus infringing
Articles 21.1 and 21.3 of the SCM Agreement and Article 10 of the SCM Agreement in conjunction
with Article VI of GATT 1994.WT/DS213/R
Page 142
(b) Expedited reviews are biased towards the continuation of countervailing duties and violate
Article 21.3 of the SCM Agreement
6.52 The Norwegian Government is of the opinion that a sunset review has to be unbiased and
independent of the original investigation.  It follows from the letter of Article 21.3 of the SCM
Agreement that if exception from the presumption of terminating countervailing duties after five yearsis to be made, the authorities have to determine in a review that the expiry of the duty would be likely
to lead to continuation or recurrence of subsidization and injury.
6.53 It’s our assertion that the US procedures of expedited sunset reviews are biased towards the
continuation of countervailing duties.  If domestic interested parties file a ”notice of intent to
participate” in the sunset review, the foreign gove rnment or exporters counting at least 50  per cent of
exports are required to file substantive responses to the notice of initiation within a 30 days deadline.
If no responses are given by those instances within 30 days, DOC will shorten the timeframe for thereview and base the review on the facts available. This normally leads to a presumption of  continued
subsidization and thus to   continuation of the countervailing duty.
6.54 This is also the case if the foreign respondents do not account for 50 percent or more of total
exports of the subject product to the US.  DOC then normally will conduct an expedited review and,
not later than 120 days after the date of publication in the Federal Register of the notice of initiation,issue without further investigation, final results of review based on the facts available.
6.55 Norway considers that this represents a violation of the duty to terminate the countervailing
measures set forth in Article 21.3 of the SCM Agreement.
(c) The self-initiation of sunset reviews by the domestic authorities does not correspond to the
requirements set out in Article 21.3 as complemented by Article 11.1 and 11.6 of the SCMAgreement
6.56 Article 21.3 of the SCM Agreement states that a  review can be initiated either on the
initiative of the domestic authorities or upon a duly substantiated request made by or on behalf of the
industry.  Norway considers that Article 11 on the initiation and conduct of the original subsidy
investigation also applies to sunset reviews as refe rred to in Article 21.3 of the SCM Agreement.  In
fact also the procedures and procedural guarantees of the other articles of Chapter V of the SCM
Agreement are meant to apply, and not to be disregarded in a sunset review context.  The reference
made to Article 12 in Article 21 is but one particular example of this.  The contrary solution would
otherwise create a “free for all” for the duty-imposing Member, and leave the foreign exporters
without proper legal guarantees.
6.57 Article 11.1 of the SCM Agreement provides that the initiation of an investigation to
determine the existence of subsidization should normally be based on the existence of a substantiatedrequest made by or on behalf of the domestic industry. Self-initiation by domestic authorities
constitutes on the other hand an exceptional measure, which is only to be accepted if domestic
authorities have sufficient evidence of the existence of a subsidy, injury and causal link as described
in Article 11.6
211.
                                                     
211 Article 11.6 reads:
“If, in special circumstances, the authorities concerned decide to initiate an investigation withouthaving received a written application by or on behalf of a domestic industry for the initiation of suchinvestigation, they shall proceed only if they have sufficient evidence of the existence of a subsidy,
injury and causal link, as described in paragraph 2, to justify the initiation of an investigation.”WT/DS213/R
Page 143
6.58 In the United States, sunset reviews are always self-initiated by the domestic authorities.
According to Section 751-(c) (1) and (2) of the Tariff Act of 1930 and of Section 351.218 of the
Sunset regulations, DOC does not even have to wait for a request by the domestic industry before
initiating sunset reviews.
6.59 Thus the United States hereby makes a general rule out of a clear exception, disregarding the
requirement that sufficient evidence of continuation or recurrence of subsidization be present.
Norway claims that this represents a violation of Article 21.3 in conjunction with Article 11.1 and
11.6 of the SCM Agreement.
3. The US  standard of investigation for Sunset Reviews violates the requirements of the
SCM Agreement in particular Article 21.3 because:
(a) Not making  a new investigation in sunset reviews represents an infringement to Article 21.3
and 21.1 and the purpose of Part V of the SCM Agreement
6.60 Article 21.3 of the SCM Agreement provides that:
”..Any definitive countervailing duty shall be terminated on a date not later than five
years from its imposition...unless the authorities determine, in a review initiated
before that date on their own initiative or upon a duly substantiated request made byor on behalf of the domestic industry within a reasonable period of time prior to thatdate, that the expiry of the duty would be likely to lead to continuation or recurrence
of subsidization”. (emphasis added)
6.61 This represents a positive obligation upon the domestic authorities to ”determine” the
likelihood of continuation or recurrence of subsidization.  In the case United States-Leaded Bars the
Appellate Body considered that (in the context of a review under Article 21.2)212:
”In order to establish the continued need for countervailing duties, an investigating
authority will have to make a finding on subsidization  i.e. whether or not the subsidy
continues to exist”.
6.62 When such requirements are applied to a review under Article 21.2, which is not obligatory
and takes place during the life time of the original countervailing duty, it should be clear that apositive finding on subsidization is necessary also in the context of an Article 21.3 investigation.
6.63 In an Article 21.3 investigation the basic obligation is the termination of the original duty,
while the possibility of continuing a duty following a sunset review constitutes the exception.  In the
opinion of the Norwegian government the latter requires an unbiased review independent of the
results of the original investigation to be undertak en in full conformity with all the procedural and
substantive requirements for an initial determinati on of subsidy and injury set forth in Articles 10
et sec . There is no reason to understand the requirement of “determination” of subsidization and
injury differently in Article 21.3 as compared to inter alia Articles 11 and 15.  This is also
sustained/supported by Article 21.1 and the purpose of Part V of the SCM Agreement.
6.64 According to the written submission of the European Communities, the factual situation of
the present case seems to be as follows:  In de termining whether any changes in the subsidies have
                                                     
212 See Panel Report, United States – Imposition of Countervailing Duties on Certain Hot-Rolled Lead
Bismuth Carbon Steel Products Originating in the United Kingdom (”United States – Leaded Bars”),WT/DS138/R, adopted 7 June 2000, at para. 6.18, as upheld by the Appellate Body Report, WT/DS138/AB/R,
adopted 7 June 2000, at para. 51.WT/DS213/R
Page 144
occurred that may affect the countervailing duty, DOC normally selects the countervailing duty from
the original investigation or a review, on the basis that it is the only rate that reflects the behaviour of
governments and exporters without the discipline of an order in place.  This means that no new
investigation takes place during the sunset review. In the case of corrosion resistant steel from
Germany no administrative reviews have taken place since the original investigation and the only(available) subsidization rate applied is the original 1993 subsidy rate.  Even though German
exporters have delivered concrete evidence, according to the first written submission of the EC, DOC
refused during the sunset review, to consider changes/terminations of subsidy programmes.  The
reason for this decision given by the DOC was that no full investigation is conducted in a sunset
review.
6.65 Norway considers that to the extent that United States’ legislation or practice requires or
implies that a full, objective and unbiased review is not undertaken, Article 21.3 of the SCMAgreement is violated.
(b) Not requiring the application of the 1 % de minimis  rule in sunset reviews is in violation of
Article 21 3. in conjunction with Articles 21.1 and 11.9 of the  SCM Agreement
6.66 Article 21.1 of the SCM Agreement provides:
”A countervailing duty shall remain in force only as long as and to the extent
necessary to counteract subsidization which is causing injury.”
6.67 The purpose of the countervailing action is to counteract subsidization, which is causing
injury.  According to Article 21.3 of the SCM Agreem ent the authorities are obliged to ”determine” if
the expiry of the duty would be likely to lead to continuation or recurrence of subsidization and
injury.
6.68 As stated above Norway considers that Article 11 of the SCM Agreement is applicable also
for sunset reviews. Article 11.9 of the SCM Agreement provides in the context of original
investigations:
”[...] There shall be immediate termination in cases where the amount of a subsidy is
de minimis .[...] For the purpose of this paragraph, the amount of a subsidy shall be
considered to be the minimis if the subsidy is less than 1 per cent ad valorem. “
6.69 The Member States of the WTO have agreed that subsidization below this threshold does not
permit a countervailing action.  There is no exception to this rule, and immediate termination shall be
the result in such cases.
6.70 The relevant US laws and administrative practice is to apply a 1 per cent de minimis  rule in
the initial determination of a countervailable subsidy as required by the SCM Agreement, but to
apply, as a general rule, a 0.5 per cent de minimis  rule in all reviews, including sunset reviews.
6.71 According to the facts submitted by the European Communities in its written submission, in
the case of corrosion resistant steel from Germany, the countervailing duty rate determined in the
original investigation was only 0.09 per cent above de minimis level of 0.50 per cent applied in the US
before the entry into force of the WTO Agreements.  The sunset review was conducted under the
WTO rules and hence a de minimis  level of 1 per cent.  Despite finding that the subsidy rate likely to
prevail would be 0.53 per cent, the US continue d the measure because of their 0.5 per cent de minimis
threshold in sunset reviews.WT/DS213/R
Page 145
6.72 Reviewing the need for a duty to continue under Article 21.3, in conjunction with
Articles 21.1 and 11.9 has the same implications as determining whether the original substantive
conditions on the basis of which it was initially imposed continue to exist .  The de minimis  provision
in the SCM Agreement is based on the fact that a subsidy level of less than 1 per cent is presumed not
to cause injury. If this subsidy cannot cause injury  in an original investigation, it is logically and
legally unavoidable to conclude that it cannot cause injury in a sunset investigation.  Consequently the
United States should have lifted the countervailing duties and changed the de minimis  threshold to
1 per cent in all review processes.
6.73 Based on the above, Norway submits that the 0,5% level used by the United States for sunset
reviews represents a clear violation of Article 21.3 of the SCM Agreement read in conjunction with
Article 11.9 of the SCM Agreement.
4. US countervailing legislation is inconsistent with Article 32.5 of the SCM Agreement
and Article XVI:4 of the WTO Agreement
6.74 Article 32.5 of the SCM Agreement provides that:
“Each member shall take all necessary steps, of a general and particular character, to
ensure not later than the date of entry in to force of the WTO Agreement for it, the
conformity of it laws, regulations and administrative procedures with the provisionsof this Agreement as they may apply to the Member in question.”
6.75 Furthermore, Article XVI:4 of the WTO Agreement requires that Each Member shall ensure
the conformity of its laws, regulations and administrative procedures with its obligations as provided
in the annexed Agreements.
6.76 Thus, by being inconsistent with Article 21 and related articles of the SCM Agreement as
they apply to a sunset review, the US law, regulations and practices as such, and as applied to the
products in question in this case, are also inconsistent with Article 32.5 of the SCM Agreement and
Article XVI:4 of the WTO Agreement.
5. Conclusion
6.77 For the reasons stated in the submission, Norway respectfully requests the Panel to consider
the US law, regulations and practices inconsistent with the obligations of the United States under
Article 21 and related articles of the SCM Agreement as they apply to a sunset review, Article 32.5 of
the SCM Agreement and Article XVI:4 of the WTO Agreement.
6.78 Finally, Norway respectfully requests the Panel to recommend that the United States bring its
legislation into conformity with the corresponding covered agreements.
C. 
ORAL STATEMENT OF JAPAN AT THE FIRST MEETING OF THE PANEL
6.79 The Government of Japan (“Japan”) would like to appreciate this opportunity to express our
views in this dispute.
6.80 Japan supports the European Communities’ (“EC”) position in this case.  The facts of this
case illustrate vividly the problem with the United States (“US”) laws and practices.  Continuing a
CVD order at the negligible level of 0.54 per cent -- an order that never would have been imposed in
the first place under the standards of the Agreement on Subsidies and Countervailing Measures(“SCM Agreement”)- shows problems with the current US system.  We would like to briefly discuss
today problems with the US system , focu sing on the flaws in the US’s argument.WT/DS213/R
Page 146
6.81 First, the text of Article 21.3 expressly requires the termination of the CVD duty after five
years.  US fundamentally misinterprets Article 21.3.  The text clearly states that any “definitive
countervailing duty shall  be terminated” not later than five years from its imposition … “ unless  the
authorities determine” to continue the order.  The te rms “shall” and “unless” set forth a basic rule and
an exception.  The order may continue beyond the five years only if the authorities make anaffirmative finding that subsidization will continue in  the absence of the order, and follow all the rules
and procedures for invoking the exception.  In addition, Article 21.1 provides greater understanding to
the object and purpose of Article 21.3.  Article 21.1,states that the order “shall only remain in force as
long as  and to the extent necessary  to counteract the subsidization which is causing injury.”
(emphasis added)  For invoking the exception, there must be an affirmative finding based on positive
evidence that subsidization is “likely” to continue or recur.
6.82 Second, Article 21.3 allows the US to self-initi ate sunset reviews only after establishing the
existence of sufficient evidence that subsidization will continue in the absence of the order.  The US
misunderstands the phrase “on their own initiative” in Article 21.3 to argue that it provides the
necessary authority automatically to initiate a sunset  review without any factual basis.  As discussed
in our submission, the appropriate contextual interpretation of Article 21.3 in the context of the SCM
Agreement particularly Articles 22.1 and 22.7, requires the sufficient evidence standard ofArticle 11.6 to be applied to initiation of sunset reviews  “on their own initiative”.
6.83 Third, Article 21.3 requires the authority to conduct, at least to some degree, a new
investigation into whether subsidization is likely to continue or recur.  Use of the present tense verb
“determine” in Article 21.3, followed by “likel y to lead to continuation or recurrence of
subsidization”, requires independent prospective analysis of the future, not mechanical reference tothe past.  US’s simple reference to stale conclusions would not justify a finding of continued
subsidization or constitute a prospective determination.
6.84 The obligation to “determine” under Article 21.3 also must be read in light of “necessary” in
Article 21.1.  The Panel in DRAMs  interpreted “necessary” to require a “foundation of positive
evidence that circumstances” require continuation of the order(WT/DS99/R, para. 6.42).  The Panelalso stated that “mathematical certainty is not required, but the conclusions should be demonstrable on
the basis of the evidence adduced.”(WT/DS99/R, para. 6.43).  The Panel’s finding in DRAMs  with
regard to Article 11 of the AD Agreement provides analysis equally compelling with regard to the
nearly identical language in the SCM Agreement.  This reading of necessary means that an
administering agency’s “determination” must be based on a foundation of positive evidence.  The
US’s practice of applying the original CVD rates to its sunset determination violates Article 21.3.
6.85 Finally, the US’s application of 0.5 per cent de minimis  standard to sunset reviews is
inconsistent with the SCM Agreement.  All of the arguments the US uses to support its inconsistent
application of de minimis standards between the investigation and sunset review reflect flawed treaty
interpretation.  As discussed in our submission, the US’s reading of the SCM Agreement ignores the
textual references in Article 22 to the standards in Article 11 and their applicability to Article 21.3.
6.86 The US also erroneously asserts that the DRAMs ’ Panel found no support for extending the de
minimis  standard beyond the initial investigation.  The Panel’s finding in DRAMs  in fact supports our
view that the de minimis  standard for the original investigation also applies to sunset reviews.  The
Panel of the DRAMs distinguishes proceedings to determine prospective application of antidumping
duties from retroactive duty assessment procedures.  The Panel then concluded that de minimis
standard does not apply to the retroactive duty assessment procedures.  Duty assessment proceduresdetermine the exact amount of antidumping (or countervailing) duty to be collected from importers
for their past imports of subject merchandise.  A sunset review, on the other hand, is to determine
whether or not an exporter should remain subject to the AD or CVD duty for the next five years.WT/DS213/R
Page 147
Therefore, the sunset review is analogous to the original investigation, and consequently, the same de
minimis  standard should apply to both.
6.87 Taking the US’s interpretation to its logical conclusion leads to contradictory results.  If an
exporter found to have a 0.7 per cent net CVD rate in an original investigation would have been
excluded from the original determination.  Howeve r, if the investigation happened to be a sunset
review, the same exporter would have been found to be receiving a countervailable subsidy.  A proper
contextual interpretation of Article 11.9 and 21.3 would not allow such an inconsistent application of
the de   minimis  standard.  If the order could not have been imposed in the first place it makes no
sense for the order to be continued.
6.88 We would like to thank the Panel for their attention today.  Japan believes that when the Panel
examines the US’s countervailing duty law, accompanying regulations and policy practices, it will
find them to be inconsistent with the SCM Agreement.
D. ORAL STATEMENT OF NORWAY AT THE FIRST MEETING OF THE PANEL
1. Introduction
6.89 The present case concerns whether the US basic countervailing duty law (Tariff Act of 1930,
Sunset regulations) and policy practices (Sunset Policy Bulletin) and their concrete application to
imports of certain corrosion-resistant steel products from Germany are inconsistent with theobligations of the United States under the WTO Agreement and annexed agreements.
6.90 Norway has systemic interests in the interpretation and application of the “sunset provisions”
of the Agreement on subsidies and countervailing measures (SCM), and thus reserved its third party
rights in the case during the Dispute Settlement Body meeting on 10 September 2001 (WT/DS213/3).
6.91 In deciding the case, Norway submits that the Panel should base its arguments on the
following:
2. The United States Department of Commerce (DOC) initiation of the Sunset Review for
countervailing duties on import of corrosion-resistant steel products from Germany has
infringed Article 21 of the Agreement on Subsidies and Countervailing Measures (SCM)
in a number of ways
(a) Automatic reviews infringe Articles 21.1 and 21.3 of the SCM Agreement and Article 10 of
the SCM Agreement in combination with Article VI of GATT 1994
6.92 Under Article 21.3 of the SCM Agreement, WTO Members are required to terminate
countervailing measures on a date no later than five years from their imposition, unless it is
determined in a review, that the expiry of the duties would be likely to lead to continuation or
recurrence of subsidisation and injury.  This corresponds to the purpose of Article 21.1 of the SCM
Agreement, which provides that a countervailing duty shall be maintained only as long as necessaryand to the extent to counteract subsidisation which is causing injury.
6.93 Article 10 of the SCM Agreement that refers to Article VI of GATT 1994 also sustains these
provisions.  Article VI paragraph 6 (a) of GATT 1994 provides that: No contracting party shall levy
any anti-dumping or countervailing duty on the importa tion of any product of the territory of another
contracting party unless it determines that the effect of dumping or subsidisation, as the case may be,is such as to cause or threaten material injury to  an established domestic industry, or is such as to
retard materially the establishment of a domestic industry.WT/DS213/R
Page 148
6.94 It follows from Article 21.3 that as a main rule countervailing duties shall be terminated no
later than five years from their imposition - the presumption being that subsidisation is counteracted
after such period.  A review is meant only to take place on exceptional occasions when there is a clear
assumption based on the situation existing at the time of review that the expiry of the duty would be
likely to lead to continuation or recurrence of both subsidisation and injury.
6.95 Under US law sunset reviews are automatically initiated by DOC on its own initiative five
years after the publication of the countervailing duty order.  Regardless of the situation existing at the
time of initiation of review, or the complete lack of information supporting an assumption that
continuation or recurrence of both subsidisation and injury will occur, a review is initiated.
6.96 In this way the United States transforms an exception into a general rule, thus infringing
Articles 21.1 and 21.3 of the SCM Agreement and Article 10 of the SCM Agreement in conjunction
with Article VI of GATT 1994.
(b) Expedited reviews are biased towards the continuation of countervailing duties and violate
Article 21.3 of the SCM Agreement
6.97 The Norwegian government is of the opinion th at a sunset review has to be unbiased and
independent of the original investigation.  It follows from the letter of Article 21.3 of the SCM
Agreement that if exception from the presumption of terminating countervailing duties after five years
is to be made, the authorities have to determine in a review that the expiry of the duty would be likely
to lead to continuation or recurrence of subsidization and injury.
6.98 It’s our assertion that the US procedures of expedited sunset reviews are biased towards the
continuation of countervailing duties. If domestic interested parties file a ”notice of intent to
participate” in the sunset review, the foreign gove rnment or exporters counting at least 50 per cent of
exports are required to file substantive responses to the notice of initiation within a 30 days deadline.
If no responses are given by those instances within 30 days, DOC will shorten the timeframe for the
review and base the review on the facts available.  This normally leads to a presumption of  continued
subsidisation and thus to   continuation of the countervailing duty.
6.99 This is also the case if the foreign respondents do not account for 50 per cent or more of total
exports of the subject product to the US.  DOC then normally will conduct an expedited review and,
not later than 120 days after the date of publication in the Federal Register of the notice of initiation,
issue without further investigation, final results of review based on the facts available.
6.100  Norway considers that this represents a violation of the duty to terminate the countervailing
measures set forth in Article 21.3 of the SCM Agreement.
(c) The self-initiation of sunset reviews by the domestic authorities does not correspond to the
requirements set out in Article 21.3 as complemented by Article 11.1 and 11.6 of the SCMAgreement
6.101  Article 21.3 of the SCM Agreement states that a  review can be initiated either on the
initiative of the domestic authorities or upon a duly substantiated request made by or on behalf of the
industry. Norway considers that Article 11 on the initiation and conduct of the original subsidy
investigation also applies to sunset reviews as refe rred to in Article 21.3 of the SCM Agreement.  In
fact also the procedures and procedural guarantees of the other articles of Chapter V of the SCM
Agreement are meant to apply, and not to be disregarded in a sunset review context.  The reference
made to Article 12 in Article 21 is but one particular example of this.  The contrary solution would
otherwise create a “free for all” for the duty-imposing Member, and leave the foreign exporters
without proper legal guarantees.WT/DS213/R
Page 149
6.102  Article 11.1 of the SCM Agreement provides that the initiation of an investigation to
determine the existence of subsidisation should normally be based on the existence of a substantiated
request made by or on behalf of the domestic industry.  Self-initiation by domestic authorities
constitutes on the other hand an exceptional measure, which is only to be accepted if domestic
authorities have sufficient evidence of the existence of a subsidy, injury and causal link as describedin Article 11.6.
213
6.103  In the United States, sunset reviews are always self-initiated by the domestic authorities.
According to Section 751-(c) (1) and (2) of the Tariff Act of 1930 and of Section 351.218 of the
Sunset regulations, DOC does not even have to wait for a request by the domestic industry before
initiating sunset reviews.
6.104  Thus the United States hereby makes a general rule out of a clear exception, disregarding the
requirement that sufficient evidence of continuation or recurrence of subsidisation be present.Norway claims that this represents a violation of Article 21.3 in conjunction with Article 11.1 and
11.6 of the SCM Agreement.
3. The US standard of investigation for sunset reviews violates the requirements of the
SCM Agreement in particular Article 21.3 because:
(a) Not making a new investigation in sunset reviews represents an infringement to Article 21.3
and 21.1 and the purpose of Part V of the SCM Agreement
6.105  Article 21.3 of the SCM Agreement provides that:
”..Any definitive countervailing duty shall be terminated on a date not later than five
years from its imposition...unless the authorities determine, in a review initiated
before that date on their own initiative or upon a duly substantiated request made by
or on behalf of the domestic industry within a reasonable period of time prior to that
date, that the expiry of the duty would be likely to lead to continuation or recurrence
of subsidisation”. (emphasis added)
6.106  This represents a positive obligation upon the domestic authorities to ”determine” the
likelihood of continuation or recurrence of subsidisation. In the case United States-Leaded Bars the
Appellate Body considered that (in the context of a review under Article 21.2).214
”In order to establish the continued need for countervailing duties, an investigating
authority will have to make a finding on subsidisation  i.e. whether or not the subsidy
continues to exist”.
6.107  When such requirements are applied to a review under Article 21.2, which is not obligatory
and takes place during the life time of the original countervailing duty, it should be clear that a
positive finding on subsidization is necessary also in the context of an Article 21.3 investigation.
                                                     
213 Article 11.6 reads:
“If, in special circumstances, the authorities concerned decide to initiate an investigation without
having received a written application by or on behalf of a domestic industry for the initiation of such
investigation, they shall proceed only if they have sufficient evidence of the existence of a subsidy, injury andcausal link, as described in paragraph 2, to justify the initiation of an investigation.”
214 See Panel Report, United States – Imposition of Countervailing Duties on Certain Hot-Rolled Lead
Bismuth Carbon Steel Products Originating in the United Kingdom (”United States – Leaded Bars”),WT/DS138/R, adopted 7 June 2000, at para. 6.18, as upheld by the Appellate Body Report, WT/DS138/AB/R,
adopted 7 June 2000, at para. 51.WT/DS213/R
Page 150
6.108  In an Article 21.3 investigation the basic obligation is the termination of the original duty,
while the possibility of continuing a duty following a sunset review constitutes the exception.  In the
opinion of the Norwegian government the latter requires an unbiased review independent of the
results of the original investigation to be undertak en in full conformity with all the procedural and
substantive requirements for an initial determination of subsidy and injury set forth in Articles 10 et
sec.  There is no reason to understand the requirement of “determination” of subsidisation and injury
differently in Article 21.3 as compared to inter alia Articles 11 and 15.  This is also
sustained/supported by Article 21.1 and the purpose of Part V of the SCM Agreement.
6.109  According to the written submission of the European Communities, the factual situation of
the present case seems to be as follows:  In de termining whether any changes in the subsidies have
occurred that may affect the countervailing duty, DOC normally selects the countervailing duty from
the original investigation or a review, on the basis that it is the only rate that reflects the behaviour ofgovernments and exporters without the discipline of an order in place.  This means that no new
investigation takes place during the sunset review. In the case of corrosion resistant steel from
Germany no administrative reviews have taken place since the original investigation and the only
(available) subsidisation rate applied is the original 1993 subsidy rate.  Even though German exporters
have delivered concrete evidence, according to the first written submission of the EC, DOC refusedduring the sunset review, to consider changes/term inations of subsidy programmes.  The reason for
this decision given by the DOC was that no full investigation is conducted in a sunset review.
6.110  Norway considers that to the extent that United States’ legislation or practice requires or
implies that a full, objective and unbiased review is not undertaken, Article 21.3 of the SCM
Agreement is violated.
(b) Not requiring the application of the 1 per cent de minimis  rule in sunset reviews is in violation
of Article 21 3. in conjunction with Articles 21.1 and 11.9 of the  SCM Agreement
6.111  Article 21.1 of the SCM Agreement provides:
”A countervailing duty shall remain in force only as long as and to the extent
necessary to counteract subsidisation which is causing injury.”
6.112  The purpose of the countervailing action is to counteract subsidisation, which is causing
injury.  According to Article 21.3 of the SCM Agreem ent the authorities are obliged to ”determine” if
the expiry of the duty would be likely to lead to continuation or recurrence of subsidisation and injury.
6.113  As stated above Norway considers that Article 11 of the SCM Agreement is applicable also
for sunset reviews.  Article 11.9 of the SCM Agreement provides in the context of original
investigations:
”[...] There shall be immediate termination in cases where the amount of a subsidy is
de minimis .[...]  For the purpose of this paragraph, the amount of a subsidy shall be
considered to be the minimis if the subsidy is less than 1 per cent ad valorem. “
6.114  The Member States of the WTO have agreed that subsidisation below this threshold does not
permit a countervailing action.  There is no exception to this rule, and immediate termination shall be
the result in such cases.
6.115  The relevant US laws and administrative practice is to apply a 1per cent de minimis  rule in the
initial determination of a countervailable subsidy as required by the SCM Agreement, but to apply, as
a general rule, a 0.5 per cent de minimis  rule in all reviews, including sunset reviews.WT/DS213/R
Page 151
6.116  According to the facts submitted by the European Communities in its written submission, in
the case of corrosion resistant steel from Germany, the countervailing duty rate determined in the
original investigation was only 0.09 per cent above de minimis level of 0.50 per cent applied in the US
before the entry into force of the WTO Agreements.  The sunset review was conducted under the
WTO rules and hence a de minimis  level of 1 per cent.  Despite finding that the subsidy rate likely to
prevail would be 0.53 per cent, the US continue d the measure because of their 0.5 per cent de minimis
threshold in sunset reviews.
6.117  Reviewing the need for a duty to continue under Article 21.3, in conjunction with
Articles 21.1 and 11.9 has the same implications as determining whether the original substantive
conditions on the basis of which it was initially imposed continue to exist .  The de minimis  provision
in the SCM Agreement is based on the fact that a subsidy level of less than 1 per cent is presumed not
to cause injury.  If this subsidy cannot cause injury  in an original investigation, it is logically and
legally unavoidable to conclude that it cannot cause injury in a sunset investigation.  Consequently the
United States should have lifted the countervailing duties and changed the de minimis  threshold to
1 per cent in all review processes.
6.118  Based on the above, Norway submits that the 0.5 per cent level used by the United States for
sunset reviews represents a clear violation of Article 21.3 of the SCM Agreement read in conjunctionwith Article 11.9 of the SCM Agreement.
4. US countervailing legislation is inconsistent with Article 32.5 of the SCM Agreement
and Article XVI:4 of the WTO Agreement
6.119  Article 32.5 of the SCM Agreement provides that:
“Each member shall take all necessary steps, of a general and particular character, to
ensure not later than the date of entry in to force of the WTO Agreement for it, the
conformity of it laws, regulations and administrative procedures with the provisions
of this Agreement as they may apply to the Member in question.”
6.120  Furthermore, Article XVI:4 of the WTO Agreement requires that Each Member shall ensure
the conformity of its laws, regulations and administrative procedures with its obligations as providedin the annexed Agreements.
6.121  Thus, by being inconsistent with Article 21 and related articles of the SCM Agreement as
they apply to a sunset review, the US law, regulations and practices as such, and as applied to the
products in question in this case, are also inconsistent with Article 32.5 of the SCM Agreement and
Article XVI:4 of the WTO Agreement.
5. Conclusion
6.122  For the reasons stated in the submission, Norway respectfully requests the Panel to consider
the US law, regulations and practices inconsistent with the obligations of the United States under
Article 21 and related articles of the SCM Agreement as they apply to a sunset review, Article 32.5 of
the SCM Agreement and Article XVI:4 of the WTO Agreement.
6.123  Finally, Norway respectfully requests the Panel to recommend that the United States bring its
legislation into conformity with the corresponding covered agreements.WT/DS213/R
Page 152
VII. INTERIM REVIEW
7.1 On 23 May 2002, both parties submitted written requests for interim review by the Panel of
particular aspects of the interim report issued on 14 May 2002.  On 30 May 2002, each party provided
written comments on the other party's request for interim review.  Neither party requested an
additional meeting with the Panel.  The requests made by the parties are addressed below.  Inaddition, certain clarifying changes were made to paragraphs 9.7, 9.30, 12.1, and 13.14 of the interim
report (now paragraphs 8.57, 8.80, 9.1, and 10.15 respectively, infra ).  Finally, the Panel revised the
numbering of certain sections of the interim report to reflect the format normally used in WTO panel
reports.
A. 
REQUEST OF THE EUROPEAN COMMUNITIES FOR INTERIM REVIEW
7.2 In respect of paragraph 7.4 of the interim report (now paragraph 8.4, infra ), the European
Communities requested the Panel to include the co mment made by the European Communities on the
preliminary ruling of the Panel – that the ruling misinterprets the relevant provisions of the DSU,
appears to confuse the distinction between "claims"  and "arguments", and is not in conformity with
the established case law of the Appellate Body as summarised in the Thailand – H-Beams  report.  It is
true that the European Communities did make this comment.  It was, however, made in response to
the Panel's preliminary ruling, and not the request  of the United States for a preliminary ruling.
Paragraph 7.4 – and indeed Section VII.A of the interim report (now Section V, supra ) entitled
"Arguments of the parties" – reflects only those arguments made prior to the ruling of the Panel.  We
therefore decline to include the statement requested by the European Communities.
7.3 In respect of paragraph 8.30 of the interim report (now paragraph 8.45, infra ), the European
Communities suggested that the rest of its response – edited out of the response cited by the Panel –would explain the confusion to which the Panel confessed.  Our point in that paragraph is that merely
the correct interpretation of Article 21.3 yields the result pointed to by the European Communities.
The notion of a "strict" interpretation has no relevance to the analysis at hand.  For the purpose ofclarity, we have nonetheless quoted the European Communities' response in full, and revised this
paragraph accordingly.
7.4 In respect of paragraphs 8.10-8.34 of the interim report (now paragraphs 8.22-8.49, infra ), the
European Communities submitted that the Panel did not address the European Communities'
argument that automatic initiation in effect shifts the US burden of proof to foreign exporters or to
other Members and thus leads to a violation of its obligation to determine continuation or recurrence
of subsidisation.  Accordingly, we have addressed this argument ( See paragraphs 8.40-8.42, infra ).
7.5 The European Communities drew the attention of the Panel to a typographical error in
paragraph 9.5 of the interim report (now paragraph 8.55, infra ), which we have corrected.
7.6 In respect of footnote 286 of the interim report (now footnote 293, infra ), the European
Communities argued that there is no distinction between the expressions Article 11.9 "itself applies"
and Article 11.9 "is applicable" under Article 21.3, and suggests that the latter phrase be replaced by
the phrase "is implied" in Article 21.3.  In light of the fact that the European Communities
characterises its claim as being that Article 11.9 "is implied" in Article 21.3, we have adopted thesame characterisation and revised footnote 286 accordingly.  We consider, however, that there is a
distinction between the expressions Article 11.9 "itself applies" and Article 11.9 "is applicable" underArticle 21.3, and we have revised footnotes 249, 286, and 356 accordingly (now footnotes 253, 293,
and 365, respectively, infra ).  We have also made appropriate revisions to Sections VIII.B.2,
VIII.C.1(b), VIII.C.2(b), and X, infra .WT/DS213/R
Page 153
7.7 In respect of paragraph 9.12 of the interim report (now paragraph 8.62, infra ), the European
Communities considered that this paragraph was too long and not very easy to understand.  We did
not consider that this paragraph was unduly lengthy, or dense.  We have therefore made no change to
this paragraph.
7.8 In respect of paragraph 9.14 of the interim report (now paragraph 8.64, infra ), the European
Communities considered that the last two sentences of this paragraph might be further developed.  We
are of the view that the last two sentences are clear as drafted.  We have nonetheless made a clarifying
change to this paragraph.
7.9 In respect of paragraph 9.17 and footnote 314 of the interim report (now paragraph 8.67 and
footnote 322, respectively, infra ), the European Communities submitted that the Panel include the
United States' argument that the European Communities' claim under Article 21.3 regarding
application of a de minimis standard does not cover injury, as it is not within the Panel's terms ofreference.  We have revised footnote 314 accordingly.
7.10 In respect of paragraph 9.27 of the interim report (now paragraph 8.77, infra ), the European
Communities suggested that the words "among the most relevant factors" in the 9
th line be replaced by
the words "a relevant factor", as the latter language would be more consistent with the Panel's
reasoning (presumably in the preceding paragraph).  We have revised this paragraph accordingly.
7.11 In respect of paragraphs 9.7-9.29 of the interim report (now paragraphs 8.57-8.79, infra ), the
European Communities submitted that inclusion of its argument regarding the principle of
effectiveness in the interpretation of Article 21.3 would strengthen the findings.  We have provided
the reasoning we consider appropriate in addressing this claim.  We therefore decline to include the
argument requested by the European Communities.
7.12 In respect of paragraphs 10.1-10.3 of the interim report (now paragraphs 8.85-8.87, infra ), the
European Communities submitted that the Panel might wish to include and address the European
Communities' arguments regarding Article 22 in support of its claim under Article 21.3.  We note that
we are under no obligation to address each argument made by a party under a particular claim.215
What matters is that we set out clearly what we consider the party's claim to be and provide a
reasoned explanation for granting / rejecting the claim.  We therefore decline to include and address
the argument requested by the European Communities.
7.13 In respect of paragraph 10.7 of the interim report (now paragraph 8.91, infra ), the European
Communities submitted that the first sentence of this paragraph was not very clear.  We have
accordingly revised this sentence.
7.14 In respect of paragraph 10.21 of the interim report (now paragraph 8.105, infra ), the European
Communities argued that an expression of concern by a panel is insufficient to enable appellatereview, and suggested that the Panel explain why it reached the conclusion of WTO-consistency in
                                                     
215 The Appellate Body has stated in this regard:
Just as a panel has the discretion to address only those claims  which must be addressed in
order to dispose of the matter at issue in a dispute, so too does a panel have the discretion toaddress only those arguments  it deems necessary to resolve a particular claim.  So long as it is
clear in a panel report that a panel has reasonably  considered a claim, the fact that a particular
argument relating to that claim is not specifically addressed in the "Findings" section of apanel report will not, in and of itself, lead to the conclusion that that panel has failed to makethe "objective assessment of the matter before it" required by Article 11 of the DSU.(European Communities – Measures Affecting the Importation of Certain Poultry Products ,
Report of the Appellate Body, WT/DS69/AB/R, adopted 23 July 1998, para. 135) (emphasis
in original)WT/DS213/R
Page 154
paragraph 10.22 (now paragraph 8.106, infra ) in spite of the concern it expressed.  We consider that
the last sentence of paragraph 10.21 and the first two sentences of paragraph 10.22 do explain why we
make a finding of WTO-consistency in paragraph 10.22 in spite of the concern we express.  We have
therefore made no change to this paragraph.
7.15 In respect of paragraph 10.28 of the interim report (now paragraph 8.113, infra ), the European
Communities requested that the Panel note that the parties do not dispute that some extremely small
subsidy was paid after 1986 but because it was so small no countervailable benefit would have
remained after the sunset review.  We note, first, that the United States has never agreed with the
European Communities that the amount of subsidy paid after 1986 was small, nor has the United
States agreed that no countervailable benefit would have remained after completion of the sunset
review.  In fact, the US position is that the subsidy rate attributable to the CIG programme cannot be
determined at present because the evidence necessary  to calculate it was not on the record before the
US DOC.216  Second, the purpose of this paragraph is simply to provide the reader basic factual
information about the CIG programme.  Contrary to the suggestion of the European Communities, we
are not at liberty to decide whether, given the amounts received by the German exporters after 1986,
there would have remained any countervailable subsidy after completion of the sunset review.  Any
such assessment would constitute a de novo  review, which would run counter to the teachings of the
Appellate Body.217  We therefore decline to include the statement requested by the European
Communities.
7.16 In respect of paragraphs 11.1-11.2 of the interim report (now paragraphs 8.120-8.121, infra ),
the European Communities submitted that its argument s should be reflected in further detail, and that
the Panel's findings should address those arguments as such.  In particular, the European Communitiesreferred to the obligations that "flow from the requirement to provide ample opportunity as these are
exemplified in the remaining paragraphs of this Article".  We have accordingly elaborated on the
European Communities' arguments ( See paragraph 8.122, infra ).  We note, however, that we find the
European Communities' claims in respect of the ob ligation to provide ample opportunity to be outside
our terms of reference ( See Section VIII.E, infra ).  We therefore do not address these arguments.
7.17 In respect of paragraph 12.1(b) of the interim report (now paragraph 9.1(b), infra ), the
European Communities argued that the Panel should justify further its finding of a violation of
Article 32.5 of the SCM Agreement and Article XVI:4 of the WTO Agreement.  We have accordingly
added paragraph 8.81, infra .  To ensure clarity and consistency in this respect throughout the findings,
paragraphs 8.50, 8.107, and 10.14 have also been added, infra .
7.18 In respect of paragraphs 12.1(a), (d), and (f) of the interim report (the first two are now
paragraphs 9.1(a) and (d), respectively, infra ; paragraph 12.1(f) has been deleted in light of our
findings in Section VIII.E, infra ), the European Communities indicated that it disagreed with the
Panel's findings in these paragraphs and the underlying reasoning.  We consider that there is no
request as such by the European Communities, and have therefore made no change to these
paragraphs.
                                                     
216 Comments of the United States on Request of the European Communities for Interim Review, p. 3.
217 With respect to the issue of de novo  review, the Appellate Body stated in US – Cotton Yarn :
[P]anels must not conduct a  de novo  review of the evidence nor substitute their judgement
for that of the competent authority.  ( United States – Transitional Safeguard Measure on
Combed Cotton Yarn from Pakistan ("US – Cotton Yarn "), Report of the Appellate Body,
WT/DS192/AB/R, adopted 5 November 2001, para. 74)WT/DS213/R
Page 155
B. REQUEST OF THE UNITED STATES FOR INTERIM REVIEW
7.19 In respect of Section IX and footnote 286 of the interim report (now Section VIII.C and
footnote 293, respectively, infra ), the United States considered that the European Communities' claim
in respect of the application of a de minimis standard to sunset reviews is effectively that Article 11.9
itself applies to sunset reviews, and that the Panel's characterisation of this claim as being thatArticle 11.9 "is applicable under Article 21.3" was not a minor error.  According to the United States,
this misstatement of the Panel obscured the fact th at the majority of the Panel effectively applied a
provision to sunset reviews which the majority its elf conceded cannot apply to sunset reviews.  We
consider that the changes made in response to th e European Communities' request regarding its "is
implied" claim address this request of the United States ( See paragraph 7.6, supra ).
7.20 In respect of Section X of the interim report (now Section VIII.D, infra ), the United States
submitted that the Panel should not have made any substantive findings regarding the consistency ofUS law as such with the "obligation to dete rmine", because the European Communities' claims
regarding this obligation were not set out in its request for establishment and are therefore not within
the Panel's terms of reference.  Alternatively, th e United States considered that the Panel should
dismiss these claims due to the failure of the European Communities to provide in its request for
establishment "a brief summary of the legal basis of the complaint sufficient to present the problemclearly", as required by Article 6.2 of the DSU.
7.21 We recall that paragraph 13 of our working procedures states that "[a] party shall submit any
request for a preliminary ruling not later than its first submission to the Panel . . . Exceptions to this
procedure will be granted upon a showing of good cause".  In this regard, while we note that the
United States had raised its objection regarding the European Communities' claims in respect of theobligation to determine prior to interim review (in its comments on the responses of the European
Communities to questions from the Panel following the second meeting of the Panel), we consider
that the United States could reasonably have rais ed this objection by the time of its first written
submission, as required by our working procedures.  It was clear enough, in our view, from the first
written submission of the European Communities that it was making a claim in respect of theobligation to determine, for the United States to be able to do so.  Thus, we do not address this
objection, and have made no change to Section X of the interim report.
7.22 In any event, we consider that the Europ ean Communities' request for establishment does
contain a reference to the "obligation to determine" continuation or recurrence of subsidisation.  We
note that the request reads in relevant part:
Under Article 21.3 of the SCM Agreement, [C VDs] have to be terminated after five
years, unless the investigating authorities determine that their expiry would be likely
to lead to (i.e. cause), inter alia , the continuation or recurrence of subsidisation.  It is
therefore for the DOC to make a positive demonstration to this effect.  In fact, the
DOC has not made such a demonstration; it has merely found that subsidies of less
than the de minimis  level provided for in Article 11.9 will continue.  The European
Communities do not consider that the presence of a level of subsidy which wouldautomatically lead to the termination of a new investigation can be sufficient to
warrant a further five years of countervailing measures in a sunset review, unless it
can be demonstrated, on the basis of positive evidence, that there is a likelihood of the
amount of subsidy increasing.
218
7.23 We further note that  paragraph 11 of the request summarises the European Communities'
challenge as being to the US decision not to revoke CVDs in the review on carbon steel as well as to
                                                     
218 WT/DS213/3, para. 6 (emphasis added).WT/DS213/R
Page 156
"certain aspects of the sunset review procedure which led to it".  In our opinion, this paragraph
includes US law in respect of the obligation to dete rmine continuation or recurrence of subsidisation
as such and as applied in the review on carbon steel.  Articles 21.1 and 21.3 are clearly cited in this
paragraph and, while the European Communities could certainly have been more forthcoming in its
request for establishment, we are of the view that references to the US decision in carbon steel and theaspects of US law which led to it inherently include the requirements set out in Article 21.3 for the
continuation of CVDs beyond the first five years of their application.  We therefore do not consider
that the European Communities' claims regarding the obligation to determine likelihood of
continuation or recurrence of subsidisation are outside the Panel's terms of reference.
7.24 In respect of Section XI of the interim report (now Section VIII.E, infra ) – which originally
contained substantive findings on the European Communities' claims in respect of the obligation to
provide ample opportunity – the United States submitted that the Panel should not have made anysubstantive findings regarding this obligation, because the European Communities' claims regarding
this obligation were not within the Panel's terms of reference because they did not meet the standards
of Article 6.2 of the DSU.  The European Communities argued that the reference in its request for
establishment to Article 21 in toto  would include Article 12, as paragraph 4 of Article 21 expressly
indicates that Article 12 is applicable to suns et reviews.  The European Communities further
submitted that the obligation under Article 12 to provide ample opportunity to submit evidence in a
sunset review is expressly mentioned in its first written submission.  We have addressed these
arguments and found that the European Communities' claims in respect of the obligation to provide
ample opportunity are outside our terms of reference.  Our reasons are set out below ( See
Section VIII.E.2, infra ).
7.25 Finally, in respect of footnote 326 of the interim report (now footnote 334, infra ), the United
States pointed out that the citation contained therein was incorrect.  We have accordingly corrected
this footnote.
VIII.  FINDINGS OF THE PANEL
A. 
REQUEST OF THE UNITED STATES FOR A PRELIMINARY RULING
1. Arguments of the parties
(a) United States
8.1 The United States requests that the Panel make a preliminary ruling that the European
Communities' claims with respect to the expedited sunset review procedure are not before the Panel
because this procedure is not a measure within the Panel's terms of reference.219
8.2 The United States submits that the European Communities did not identify any measure or
type of proceeding in consultations other than (i ) the sunset review determination in carbon steel;
(ii) the initiation of sunset reviews by the DOC; a nd (iii) the de minimis standard employed by the
DOC in sunset reviews.220  Nor, argues the United States, did the European Communities identify the
expedited sunset review procedure in its request for consultations or in its request for the
establishment of a panel.221
                                                     
219 First Written Submission of the United States, para. 122.
220 Id., para. 125.
221 Id., para. 126.WT/DS213/R
Page 157
(b) European Communities
8.3 The European Communities considers the United St ates' request for a preliminary ruling to be
without foundation.  The European Communities submits that, in its request for establishment, it
refers explicitly to Section 751(c) of the Tariff Act, which, among other things, sets out the
procedures for the conduct of sunset reviews, including expedited reviews.222
8.4 The European Communities considers that whether the specific issue of the expedited review
procedure was discussed during consultations is, therefore, irrelevant.  In any event, the European
Communities argues, the issue of the procedural and substantive requirements as to the evidence
which foreign producers must provide in sunset reviews was also discussed in the consultations and,
under US law, whether a full or an expedited review will take place depends precisely on the evidence
provided by the foreign producers.  Finally, the European Communities submits that expedited
reviews were discussed, whether explicitly or implicitly, in consultations.223
2. Findings of the Panel224
8.5 We note that the United States does not make its request for a preliminary ruling on the basis
of a particular provision of the DSU.  We consider the relevant provisions of the DSU to be Article 7,
covering the terms of reference of panels, and Article 6, covering the establishment of panels.
Article 7 clearly indicates that the terms of reference of panels are contained in the request for theestablishment of a panel
225.  With regard to the request for establishment, Article 6.2 of the DSU
provides in part:
The request for the establishment of a panel . . . shall indicate whether consultations
were held, identify the specific measures at issue and provide a brief summary of the
legal basis of the complaint sufficient to present the problem clearly.
The Appellate Body has stated, in respect of the terms of reference of panels:
Thus, "the matter referred to the DSB" for the purposes of Article 7 of the DSU and
Article 17.4 of the Anti-Dumping Agreement  must be the "matter" identified in the
request for the establishment of a panel under Article 6.2 of the DSU.  That provision
requires the complaining Member, in a panel request, to "identify the specific
measures at issue  and provide a brief summary of the legal basis of the complaint
sufficient to present the problem clearly."  (emphasis added)  The " matter  referred to
                                                     
222 Oral Statement of the European Communities at the First Meeting of the Panel, para. 56.
223 Id.
224 The Chairman of the Panel made the following statement at the first meeting of the Panel with the
parties:
The Panel takes note of the United States' request for a preliminary ruling as set out in its firstwritten submission and the European Communities' response to it as set out in its oralstatement at the first meeting of the Panel.
The Panel has considered the arguments of both parties, and has determined that the United
States' expedited sunset review procedure is not within its terms of reference.  We therefore
grant the United States' request for a preliminary ruling, and will not be addressing theEuropean Communities' claim in respect of the United States' expedited sunset reviewprocedure in the present dispute.  The reasons for this will be set out in full in our report.
225 WT/DS213/3 in the present dispute.WT/DS213/R
Page 158
the DSB", therefore, consists of two elements:  the specific measures  at issue and the
legal basis of the complaint  (or the claims ).226
Further, the Appellate Body has stated, in European Communities – Bananas :
As a panel request is normally not subjected to detailed scrutiny by the DSB, it is
incumbent upon a panel to examine the request for the establishment of the panelvery carefully to ensure its compliance with both the letter and the spirit of Article 6.2
of the DSU.  It is important that a panel request be sufficiently precise for two
reasons: first, it often forms the basis for the terms of reference of the panel pursuant
to Article 7 of the DSU; and, second, it informs the defending party and the third
parties of the legal basis of the complaint.
227
8.6 Thus, the United States' request raises two separate, but related, issues: (i) whether the
US expedited sunset review procedure was identified in the request for establishment as a measurechallenged by the European Communities and, if so, (ii) whether the European Communities' request
for establishment provides "a brief summary of the legal basis of the complaint sufficient to present
the problem clearly" and therefore satisfies the standard set out in Article 6.2 of the DSU.
8.7 We shall first examine the request for establishment to determine whether, on its face, the
United States – and any other WTO Member – could have been reasonably expected to know that theexpedited review procedure was part of "the matter referred to the DSB".
8.8 It is clear from the European Communities' request for establishment that the word
"expedited" does not appear in that request.  Nor does the request contain any all-encompassing
reference to US procedures, generally, for sunset review.  Paragraphs 1-2 of the request for
establishment set out the procedural background to the request for establishment, paragraph 3 explainsthat the request relates particularly to the sunset review in carbon steel, paragraphs 4-7 set out the
European Communities' claim in respect of the de minimis standard applied in that review,
paragraphs 8-10 set out the European Communities' claim in respect of the evidentiary standards
applied in relation to the initiation of that review, and paragraph 11 summarises the European
Communities' challenge to the US decision in that review, as well as to "certain aspects of the sunsetreview procedure which led to it".  This latter phrase could not be understood to include the expedited
review procedure, as the sunset revi ew in carbon steel was a full review.
228
8.9 We note that the request for establishment further outlines the statutory and regulatory
underpinnings of the US sunset review procedures as such, and as applied in the sunset review in
carbon steel.  These statutory and regulatory provisions also govern the expedited review procedure,
as pointed out by the European Communities.  We consider, however, that this fact alone is
                                                     
226 Guatemala – Anti-Dumping Investigation Regarding Portland Cement from Mexico ("Guatemala –
Cement I "), Report of the Appellate Body, WT/DS60/AB/R, adopted 25 November 1998, para. 72 (emphasis in
original).
227 European Communities – Regime for the Importation, Sale and Distribution of Bananas  ("European
Communities – Bananas "), Report of the Appellate Body , WT/DS27/AB/R, adopted 25 September 1997,
para. 142.
228 Indeed, while this has no legal relevance to our examination of the European Communities' request
for establishment, we note that a similar phrase is used by the European Communities in its first written
submission:
The present proceeding concerns also certain asp ects of the US basic sunset review legislation
and procedure which led to the continuation of the duties in this case (First Written
Submission of the European Communities, para. 30 (emphasis added)).WT/DS213/R
Page 159
insufficient for us to conclude that the expedited review procedure is identified as a specific measure
at issue.229
8.10 Having found that the expedited review procedure is not identified in the request for
establishment, we shall consider whether that "measure" is sufficiently related to a measure or
measures that are specifically identified so as to bring it within our terms of reference.  We note the
finding of the Panel in Japan – Film :
The question thus becomes whether the ordinary meaning of the terms of Article 6.2,
i.e., that "the specific measures at issue" be identified in the panel request, can be met
if a "measure" is not explicitly described in the request.  To fall within the terms of
Article 6.2, it seems clear that a "measure" not explicitly described in a panel request
must have a clear relationship to a "measure" that is specifically described therein, so
that it can be said to be "included" in the specified "measure".  In our view, therequirements of Article 6.2 would be met in the case of a "measure" that is subsidiary,
or so closely related to a "measure" specifically identified, that the responding party
can reasonably be found to have received adequate notice of the scope of the claims
asserted by the complaining party.  The two key elements – close relationship and
notice – are inter-related: only if a "measure" is subsidiary or closely related to aspecifically identified "measure" will notice be adequate.
230
8.11 The United States explains that, upon automatic initiation by the DOC of a sunset review
within five years of the date of publication of a CVD order, a review can follow one of three basic
paths: (i) revocation of the order; (ii) an expedited sunset review; and (iii) a full sunset review.231  We
do not consider that the European Communities' general discussion of the automatic initiation ofsunset reviews by the DOC is sufficient to put the United States – as well as other Members – on
notice that the expedited review procedure was also under challenge.  We note that the European
Communities' request refers to "certain aspects of the sunset review procedure which led to [the DOC
decision not to revoke the CVDs on carbon steel]".  The challenge is thus apparently to those aspects
of the sunset review procedure that have some relevance to the carbon steel case, which is not true ofthe expedited review procedure, because the carbon steel case involved a full, not expedited, review.
We do not consider the expedited review procedure to be "a 'measure' that is subsidiary, or so closely
related to" any of the measures specifically identified, "that the responding party can reasonably be
found to have received adequate notice of the scope of the claims asserted by the complaining party".
We, therefore, find that the expedited review procedure is not sufficiently related to a measure or
measures that are specifically identified in the request for establishment as to properly bring it within
our terms of reference.
232
8.12 For the foregoing reasons, we consider that the European Communities has failed to set out a
claim in its request for establishment with respect to the United States' expedited sunset review
procedure, and this "measure" is, therefore, outside our terms of reference.  Accordingly, we grant the
United States' request for a preliminary ruling.
                                                     
229 We therefore need not, and do not, address the United States' arguments with regard to the measures
identified by the European Communities in consulta tions, and the European Communities' response thereto
(See paras. 8.2 and 8.4, supra ).
230 Japan – Measures Affecting Consumer Photographic Film and Paper  ("Japan – Film "), Report of
the Panel, WT/DS44/R, adopted 22 April 1998, para. 10.8.
231 First Written Submission of the United States, paras. 7-10.
232 Having concluded that the European Communities ha s not identified the expedited review procedure
as a specific measure at issue in its request for establis hment, we need not, and do not, consider whether the
European Communities has provided "a brief summary of the legal basis of the complaint sufficient to present
the problem clearly" in that request for establishment ( See paras. 8.5-8.6, supra ).WT/DS213/R
Page 160
B. WHETHER US CVD LAW AS SUCH IS INCONSISTENT WITH THE SCM  AGREEMENT IN RESPECT OF
THE APPLICATION OF EVIDENTIARY STANDARDSD FOR THE SELF -INITIATION OF SUNSET
REVIEWS
1. Arguments of the parties
(a) European Communities
8.13 In the view of the European Communities, the non-application of evidentiary standards to the
self-initiation of sunset reviews constitutes a violation of Article 21.3 of the SCM Agreement.
8.14 The European Communities considers that the ordinary meaning of the text of Article 21.3
establishes an unequivocal obligation on WTO Members to terminate any measure imposing CVDs
on a date no later than five years from its imposition.233  The European Communities explains that
Article 21.3 thus renders effective the requirement in Article 21.1 that application of a CVD be
limited to the time necessary to counteract injurious subsidisation, by establishing the presumptionthat this time elapses five years from the imposition of the CVD
234, "unless the authorities determine,
in a review initiated before that date on their own initiative or upon a duly substantiated request made
by or on behalf of the domestic industry within a reasonable period of time prior to that date, that the
expiry of the duty would be likely to lead to co ntinuation or recurrence of subsidisation and injury".
Referring to this language, the European Communities explains that the ordinary meaning of the word"unless", which "introduces an exception to the presumption of termination, clearly conveys the
notion that an exception to the basic rule is introduced"
235.  US law, by requiring that sunset reviews
are automatically initiated for all existing CVD measures no later than 30 days before the fifth
anniversary date of their imposition, "clearly transforms this exception into a rule"236, thus infringing
the letter and the spirit of Article 21, paragraphs 1 and 3, as well as Article 10, of theSCM Agreement.  The European Communities further submits that the US statement of policy
practices "confirms the disregard for the presumption of termination of all [CVDs]"
237 contained in
Article 21 of the SCM Agreement.
8.15 The European Communities argues that, in order to initiate a sunset review on their own
initiative, the domestic authority must be in possession of evidence, as would be required in order toinitiate an investigation on their own initiative,  thus imputing the principle of Article 11.6 into
Article 21.3.  It further argues that, in order to ini tiate a sunset review on their own initiative, the
domestic authority should be in possession of the same level of evidence as would be required in a
"duly substantiated request" from the domestic industry, thus equating the level of evidence required
for self-initiation under Article 21.3 with that required for initiation upon request by the domestic
industry under Article 21.3.  It considers that, as the purpose and effect of initial investigations and of
sunset reviews are the same, it is reasonable and coherent to apply the same standards as regardsinitiation and conduct of reviews in both instances.  Otherwise, "self-initiation would become the easy
option and would lead to inconsistent results"
238.  According to the European Communities, the
purpose of the evidentiary standard is to guarantee that genuine cases are brought which are backed
by concrete evidence.  In the view of the European Communities, the automatic self-initiation of
sunset reviews by the DOC is simply a device for lowering the level of evidence required from thedomestic industry in order to initiate a sunset review
239.
                                                     
233 First Written Submission of the European Communities, para. 48.
234 Id., para. 51.
235 Id., para. 52.
236 Id., para. 53.
237 Id., para. 54.
238 Response of the European Communities to Question 4 from the Panel.
239 Response of the European Communities to Question 13(b) from the Panel.WT/DS213/R
Page 161
8.16 In particular, the European Communities posits that a "duly substantiated request" should
normally contain information, inter alia , on the:
- volume and value of domestic production
- volume and value of the production of petitioners
- volume and value of total imports
- volume and value of subsidised imports
- existence, amount, and nature of the subsidy, plus evidence relating to its 
continuation or recurrence
- effect of imports on prices, production, and sales
- causality between subsidised imports and injury, and evidence of why such
injury will continue or recur240
8.17 More generally – and this is also relevant to the European Communities' claim that the de
minimis standard is applicable to sunset reviews ( See Section C, infra) – the European Communities
considers that "all provisions [of the SCM Agreement] are potentially applicable mutatis mutandis to
Article 21.3, to the extent that they are relevant to the issues covered by Article 21.3 and that their
application to Article 21.3 does not create a situation of conflict or is not specifically excluded"241.
(b) United States
8.18 The United States points to one of the basic principles of treaty interpretation, that a treaty
interpreter cannot read into a treaty "words that are not there"242, which is precisely what, in the view
of the United States, the European Communities is asking the Panel to do here by imputing into
Article 21.3 the obligations contained in Article 11.6.243  The European Communities' claims must
therefore fail, according to the United States.  The United States characterises the EuropeanCommunities' argument that a parallelism exists between the investigation and sunset review
provisions of the SCM Agreement as a theory, and argues that a theory, under customary rules of
treaty interpretation, cannot overcome the ordinary meaning of the words of a treaty, taking into
account their context and the object and purpose of the agreement.
244  In particular, argues the
United States, if the SCM Agreement implicitly incorporates this parallelism, why then did theMembers find it necessary to provide explicitly in Article 21.4 that the requirements contained in
Article 12 for the conduct of investigations are also  applicable to the conduct of reviews, including
sunset reviews?
245
8.19 The United States considers that nothing in the text of Article 21.3, or Article 11.6, imposes
any evidentiary requirements on authorities who initia te sunset reviews on their own initiative.  The
United States also emphasises the distinction between the investigatory phase and the review phase of
a CVD proceeding, as reflected in the provisions of the SCM Agreement.246  In this regard, the
                                                     
240 Response of the European Communities to Question 13(a) from the Panel.
241 Response of the European Communities to Question 5(a) from the Panel.
242 India – Patent Protection for Pharmaceutical and Agricultural Chemical Products ("India –
Patents (US) "), Report of the Appellate Body, WT/DS50/AB/R, adopted 16 January 1998, para. 45.
243 First Written Submission of the United States, para. 2.
244 Second Written Submission of the United States, para. 6.
245 Id., para. 7.
246 First Written Submission of the United States, paras. 67-68.WT/DS213/R
Page 162
United States cites the finding, regarding the Anti-Dumping ("AD") Agreement, of the Panel in
United States – DRAMS :
[T]he term "investigation" means the investigative phase leading up to the final
determination of the investigating authority.247
8.20 The United States does not consider sunset reviews to be an "exception" to a presumption of
termination (or anything else), but instead merely one part of an overall balance of rights and
obligations negotiated during the Uruguay Round.248  In any event, submits the United States249, even
if one were to treat sunset reviews as an "exc eption" to something else, the European Communities'
arguments run afoul of a different principle, that set out by the Appellate Body in European
Communities – Hormones :
[M]erely characterising a treaty provision as an "exception" does not by itself justify
a "stricter" or " narrower" interpretation of that provision than would be warranted . . .by applying the normal rules of treaty interpretation.
250
8.21 More generally, the United States considers that "no provisions are applicable to reviews
under Article 21.3, unless specifically indicated . . . [I]t is a matter of what the text of Article 21.3
provides, as interpreted in accordance with the rules of [treaty interpretation] . . . There could be a
cross-reference between the two provisions, a refere nce in one provision to the other, or a general
statement that a provision applies throughout the Agreement or throughout Part V of the
Agreement"251.  The United States considers that "other provisions of the SCM Agreement would
apply where the Agreement says they apply"252.
2. Findings of the Panel
8.22 We understand the European Communities' claim in respect of the US system of automatic
self-initiation of sunset reviews to be the following: that the US system of automatic self-initiation of
sunset reviews runs counter to the presumption of termination of all CVDs contained in Article 21.3,
because it does not satisfy the evidentiary standards of Article 11.6 that the European Communities
believes are implied in Article 21.3.253  The thrust of the European Communities' argument is,
                                                     
247 United States – Anti-Dumping Duty on Dynamic Random Access Memory Semiconductors
(DRAMS) of One Megabit or Above from Korea  ("United States – DRAMS "), Report of the Panel, WT/DS99/R,
adopted 19 March 1999, footnote 519.
248 First Written Submission of the United States, para. 3.
249 Id.
250 European Communities – Measures Concer ning Meat and Meat Pr oducts (Hormones)  ("European
Communities – Hormones "), Report of the Appellate Body, WT/DS26/AB/R-WT/DS48/AB/R,
adopted 13 February 1998, para. 104.
251 Response of the United States to Question 24(a) from the Panel.
252 Response of the United States to Question 24(b) from the Panel.
253 We do not understand the European Communities to be alleging a violation of Article 11.6, but of
Article 21.3, of the SCM Agreement.  In this regard, we note that the European Communities argues that "aninterpretation of Article 21.3 should be made in context and in the light of the object and purpose of Article 21.3and of the SCM Agreement.  Articles 21.1, 22.1, 22.7, 10, and 11.6 provide relevant context and help define itsobject and purpose.  Such an interpretation . . . requires that the evidentiary standards of Article 11.6 should be
implied, and hence applied, also to the evidentiary requ irements in sunset reviews" (Response of the European
Communities to Question 46 from the Panel (emphasis added)).
Nor could the European Communities successfully allege a violation of Article 11.6.  Article 11 is
entitled "Initiation and Subsequent Investigation", and clearly deals with investigations, such as that term isdistinguished from reviews by the Agreement.  This is also made clear in the text of Article 11.6 itself, whichrefers to investigations.  We therefore consider whether Article 21.3 contains by implication the same type of
obligation as Article 11.6, and whether the United States has violated Article 21.3 in this respect.WT/DS213/R
Page 163
therefore, that automatic self-initiation transforms an exception – possible continuation of a CVD –
into a general rule, because self-initiation, coupled with other characteristics of US procedure, leads to
the automatic continuation of CVDs.254  Further, statistical data, according to the European
Communities, "provide clear evidence of the fact that US law and regulations are biased in favour of
keeping and perpetuating unjustified CVD orders"255.
8.23 In response to a question from the Panel as to whether it considers the self-initiation of sunset
reviews to be in and of itself WTO-inconsistent, the European Communities' states, "No . . . The
[European Communities'] claim is that the investigating authority must be in possession of sufficient
evidence, that is the same level or an equivalent amount of relevant evidence that would be required
from the domestic industry if it initiates on its own in itiative, as in [sic] the case in the initiation of
new investigations."256  It is, therefore, the "automatic" nature of self-initiation in the US sunset
review system – that is, the fact that the DOC is  not required to have any evidence of likelihood of
continuation or recurrence of injurious subsidisation to initiate sunset reviews – to which the
European Communities objects, and not the self-initiation of sunset reviews itself.
8.24 With regard to the evidentiary standards to be met by authorities who initiate sunset reviews
on their own initiative (or "self-initiate"), the European Communities draws a parallel between sunset
reviews and investigations, submitting that the Panel should consider implied in Article 21.3 therequirements of Article 11.6.  The principal question before us, therefore, is whether the text of
Article 21.3 imposes any evidentiary requirements on authorities in the self-initiation of sunset
reviews.  In other words, is the European Commun ities correct in arguing that, as exceptions need to
be strictly interpreted and applied, and the continuation of a duty past the initial five-year period is an
exception to the presumption of termination and thus equivalent to a new imposition of the originalduty, it follows that the self-initiation of sunset reviews must satisfy evidentiary requirements, as is
required in Article 11.6 for the self-initiation of investigations?
8.25 Article 3.2 of the DSU indicates that Members recognise that the dispute settlement system
serves to clarify the provisions of the covered agreements "in accordance with customary rules of
interpretation of public international law".  In this regard, the Appellate Body, in United States –
Gasoline , refers to "a fundamental rule of treaty interpretation [which] has received its most
authoritative and succinct expression in the Vienna Convention on the Law of Treaties "
257 ("Vienna
Convention"), and cites Article 31.1 thereof, which reads as follows:
ARTICLE 31
General rule of interpretation
1. A treaty shall be interpreted in good faith in accordance with the ordinary
meaning to be given to the terms of the treat y in their context and in the light of its
object and purpose.258
The Appellate Body indicates that "[this] general rule of interpretation has attained the status of a ruleof customary or general international law.  As such, it forms part of the 'customary rules of
interpretation of public international law'"
259.  We shall, therefore, begin our analysis of the European
                                                     
254 Second Written Submission of the European Communities, para. 16.
255 Id., para. 17.
256 Response of the European Communities to Question 4 from the Panel.
257 United States – Standards for Reformulated and Conventional Gasoline  ("United States –
Gasoline "), Report of the Appellate Body, WT/DS2/AB/R, adopted 20 May 1996, p. 16.
258 (1969) 8 International Legal Materials  679.
259 United States – Gasoline , Report of the Appellate Body, footnote 257, supra , p. 17 (footnote
omitted).WT/DS213/R
Page 164
Communities' claim under Article 21.3 of the SCM Agreement on the basis of the text of that
provision in its context and in light of the object and purpose of the Agreement.
8.26 We recall that Article 21.3 states:
Notwithstanding the provisions of paragraphs 1 and 2, any definitive [CVD] shall be
terminated on a date not later than five years from its imposition (or from the date ofthe most recent review under paragraph 2 if that review has covered both
subsidisation and injury, or under this paragraph), unless the authorities determine, in
a review initiated before that date on th eir own initiative or upon a duly substantiated
request made by or on behalf of the domestic industry within a reasonable period of
time prior to that date, that the expiry of the duty would be likely to lead to
continuation or recurrence of subsidisation and injury.  The duty may remain in force
pending the outcome of such a review.
260
We note, at the outset, that nothing in the text of Article 21.3 specifically provides that the evidentiary
standards applicable to the initiation of investigatio ns are also applicable to the initiation of sunset
reviews.  We would expect that the drafters would have been able and chosen to include a clear
indication to that effect, should that have been their intention.  Indeed, we agree with the
United States' argument that the absence of a clear indication, for instance, in the form of a cross-reference, is all the more significant given the context of Article 21.3 – that is, the fact that the
drafters did provide explicit indications elsewhere in Article 21, in relation to Articles 12 and 18.  It is
clear that the drafters knew how to have obliga tions set forth in one provision apply in another
context.261  The most obvious inference we can draw from the absence of a clear indication, therefore,
is that the Members chose not to imply in Article 21.3 the evidentiary requirements of Article 11.6.And we must first find that the provision contains such requirements before we can find that the
United States violated the provision on the ba sis of its non-observance of such requirements.
8.27 We cannot, however, conclude on the basis of silence alone that the evidentiary standards of
Article 11.6 necessarily do not apply to sunset reviews.  Doing so would mean that the mere absence
of an explicit statement as to the applicability of the evidentiary standards of Article 11.6 isconclusive.  In our opinion, reading the text of Article 21.3 in its context and in light of the object and
purpose of the treaty, as required by the customary rules of treaty interpretation reflected in the
Vienna Convention, means that we cannot treat silence as to the applicability of Article 11.6 as
conclusive.  An explicit articulation of the scope of application of the evidentiary standards of
Article 11.6 would certainly be conclusive, in that if the Agreement provided that they applied only in
certain circumstances or did not apply in certain circumstances, such articulation would be
determinative; we find it difficult, however, to cons ider that silence has the same dispositive value.
While silence could be explained by the drafters' intention for the requirements of the provision not to
apply in any other context, as suggested by the United States, silence could also be explained by the
drafters' belief that it was obvious that it did.  In other words, we are unable to conclude solely on the
basis of silence that an evidentiary standard is not implied in Article 21.3.  Rather, we believe that wemust consider the context of Article 21.3 – that  is, provisions of the SCM Agreement other than
Article 21.3 – and the object and purpose of the SCM Agreement in reaching a conclusion.
                                                     
260 Footnote deleted.
261 A number of provisions in the SCM Agreement also apply independently of cross-references in that
they contain explicit statements of their scope of application: definition of "subsidy" in Article 1 ("For the
purpose of this Agreement"); definition of "intereste d parties" in Article 12.9 ("for the purposes of this
Agreement"); calculation of the amount of a subsidy under Article 14 ("For the purpose of Part V"); definitionof "initiated" in footnote 37 ("as used hereinafter"); definition of "injury" under Article 15 and in footnote 45("Under this Agreement"); definition of "like product" in  footnote 46 ("Throughout this Agreement"); definition
of domestic industry in Article 16 ("For the purposes of this Agreement"); and definition of "levy" in
footnote 51 ("As used in this Agreement").WT/DS213/R
Page 165
8.28 Article 31 of the Vienna Convention does not, in our view, limit us to a literal reading of the
provision in question.  Were such a reading to be required, provisions such as Article 15.3 – which
deals with the circumstances in which imports may be cumulated for purposes of injury
determinations – and Article 19 – which deals with  the imposition and collection of CVDs – would be
limited in ways that would negatively affect the operation of the Agreement, particularly with respectto sunset reviews, something that cannot have been intended by the drafters.
8.29 Equally persuasive, we consider, is the case of Article 21.1, which reads:
A [CVD] shall remain in force only as long as and to the extent necessary to
counteract subsidisation which is causing injury.
Were this provision to be read literally, the words "is causing injury" would suggest that a CVD could
only remain in place, including under Article 21.3, where there is likelihood of continuation of
subsidisation and injury, not recurrence.  The notion of recurrence contained in Article 21.3, therefore,
has to be implied in Article 21.1, or it would be rendered meaningless.  Finally, Article 32.3262, if read
literally, would apply only to investigations and re views initiated pursuant to applications from the
domestic industry, and not initiated on an ex officio basis.  Again, this cannot be the case.  These
several instances of provisions in the Agreement that, if read literally, would yield irrational results,
confirm our view that we are not limited to a literal reading of the text of Article 21.3.
8.30 We also recall certain statements of the Appellate Body in Canada – Autos .  In addressing the
Panel's finding that Article 3.1(b) of the SCM Agreement  did not apply to subsidies contingent in fact
upon the use of domestic over imported goods, the Appellate Body stated:
As we have said [in Japan – Alcohol ], and as the Panel [in Canada – Autos ] recalled,
"omission must have some meaning"  .  Yet omissions in different contexts may have
different meanings, and omission, in and of itself, is not necessarily dispositive.
Moreover, while the Panel rightly looked to Article 3.1(a) as relevant context ininterpreting Article 3.1(b), the Panel failed to examine other contextual elements for
Article 3.1(b) and to consider the object and purpose of the SCM Agreement .
263
We consider that these statements of the Appellate Body make it clear that silence – or omission – is
not controlling, and that interpretation under Article 31 of the Vienna Convention does not require
that silence must be controlling.
8.31 Accordingly, it is important that we first set out the legal framework within which
Article 21.3 exists and operates.  We recall that paragraph 6(a) of Article VI of the General
Agreement on Tariffs and Trade ("GATT") 1994, whic h deals with anti-dumping and CVDs, states:
No contracting party shall levy any anti-du mping or [CVD] on the importation of any
product of the territory of another contracting party unless it determines that the effectof the dumping or subsidisation, as the case may be, is such as to cause or threaten
material injury to an established domestic industry, or is such as to retard materially
the establishment of a domestic industry.
                                                     
262 Article 32.3 provides:
Subject to paragraph 4, the provisions of this Agreement shall apply to investigations, andreviews of existing measures, initiated pursuant to applications which have been made on orafter the date of entry into force for a Member of the WTO Agreement.
263 Canada – Certain Measures Affecting the Automotive Industry ("Canada – Autos "), Report of the
Appellate Body, WT/DS139/AB/R-WT/DS142/AB/R, adopted 19 June 2000, para. 138 (footnote deleted,
emphasis added).WT/DS213/R
Page 166
Further, Article VI:3 states, in relevant part:
The term "[CVD]" shall be understood to mean a special duty levied for the purpose
of offsetting any bounty or subsidy bestowed, directly, or indirectly, upon the
manufacture, production or export of any merchandise.264
This definition is confirmed for purposes of the SCM Agreement in footnote 36 to that Agreement,
which reads:
The term "[CVD]" shall be understood to mean a special duty levied for the purpose
of offsetting any subsidy bestowed directly or indirectly upon the manufacture,
production or export of any merchandise, as provided for in paragraph 3 of Article VI
of GATT 1994.
The two GATT provisions, in our view, set out the purpose of CVDs and the general circumstances in
which they may be levied as well as give some indication of the object and purpose of theSCM Agreement.
8.32 Part V of the SCM Agreement sets out the specific substantive and procedural conditions that
must be met for the WTO-consistent imposition of CVDs.  Particularly noteworthy are Articles 10
and 19.4, which read, respectively:
Members shall take all necessary steps to ensure that the imposition of a [CVD] on
any product of the territory of any Member imported into the territory of another
Member is in accordance with the provisions of Article VI of GATT 1994 and the
terms of this Agreement.  [CVDs] may only be imposed pursuant to investigations
initiated and conducted in accordance with the provisions of this Agreement and the
Agreement on Agriculture.
265
No [CVD] shall be levied on any imported product in excess of the amount of the
subsidy found to exist, calculated in terms of subsidisation per unit of the subsidised
and exported product.266
Article VI of the GATT 1994 and Part V of the SCM Agreement must, thus, be seen as not onlyexplaining the purpose of CVDs but also constituting the framework of rights and obligations withinwhich CVDs exist.  This complex framework of rights and obligations is the context in which we
consider we must interpret Article 21.3.
8.33 Let us now situate Article 21.3 in its immediate context.  We recall that Article 21.1 sets out a
fundamental obligation, which relates to the abov e provisions of Article VI of the GATT 1994:
A [CVD] shall remain in force only as long as and to the extent necessary to
counteract subsidisation which is causing injury.
In other words, a Member must ensure that any CVD only remains in place under these
circumstances.  Articles 21.2 and 21.3 are, therefore, further articulations, in respect of certain
specific scenarios, of the ongoing obligation contained in Article 21.1.  Article 21.2 provides the
modalities for compliance with this obligation during the period of application of a CVD, while
Article 21.3 provides the modalities for compliance with this obligation upon expiry of that period.
                                                     
264 Ad notes deleted.
265 Footnotes deleted.
266 Footnote deleted.WT/DS213/R
Page 167
Both provisions emphasise the basic discipline on the imposition of CVDs, that they can only apply
where subsidisation causes or is likely to cause injury.
8.34 We now examine Article 11.6, the evidentiary standards of which the European Communities
argues are implied in Article 21.3, and which provides:
If, in special circumstances, the authorities concerned decide to initiate an
investigation without having received a written application by or on behalf of a
domestic industry for the initiation of such investigation, they shall proceed only if
they have sufficient evidence of the existe nce of a subsidy, injury and causal link, as
described in paragraph 2, to justify the initiation of an investigation.
Again, we recognise, at the outset, that nothing in th e text of the provision provides for its evidentiary
standards to be implied in Article 21.3.  What is clear from this language, however, is that a
CVD investigation cannot be self-initiated by an investigating authority unless the requirement ofsufficient evidence of subsidisation, injury, and causation is met.  Investigating authorities must
ensure that they are in the possession of such evidence.  The terms of the provision are unequivocal.
Such mandatory and conditional ("in special circumstances"; "only if"; "to justify") language would
suggest that the drafters had an important consideration in mind in drafting this provision, reflected in
the precise choice of words.  In particular, the mandatory nature and conditional language of theprovision convey, in our view, that the drafters s ought a particular outcome, to protect exporters and
prevent trade harassment through initiation of groundless investigations.
8.35 It is in light of this rationale for the inclusion of evidentiary standards for self-initiation of
CVD investigations and the requirement of sufficient evidence that we must address the European
Communities' claim that such standards are implied in Article 21.3.  In this regard, we must considerwhether the rationale of protection of exporters is equally applicable to sunset reviews as it is to CVD
investigations.  It would seem to us that, while the initiation – whether upon application by a domestic
industry or on the initiative of the investigating authorities – of a CVD investigation clearly has a
chilling effect on trade in the product concerned, it is less clear that the initiation of a sunset review of
an existing CVD has the same effect.
8.36 Essentially, we do not see how trade in a pro duct subject to a CVD would suffer a chilling
effect upon initiation of a sunset review additional to  that already in existence.  And this existing
chilling effect would only be completely mitigated upon actual expiry of the CVD, not the possibility
of its expiry, contrary to the suggestion of the European Communities.  Certainly, the potential for
impact on trade is less in case of the initiation of a sunset review than that of an investigation. If
anything, the initiation of a sunset review while it might not allow for a positive impact that might
otherwise have occurred through the expiry of the CVD, might also have a positive impact on tradeflows (in the expectation of a possible expiry of the CVD), rather than have a negative impact per se.
In sum, given the framework of disciplines that governs the imposition of CVDs and the role of the
SCM Agreement in ensuring that CVDs do not unjustifiably impede international trade, we find it
difficult to see how self-initiation of a CVD investigation could be considered comparable to self-
initiation of a sunset review of a CVD.
8.37 While the European Communities is correct in stating that "[a]pplications under [Article] 11.5
[sic] and requests under [Article] 21.3 are aimed at securing the same objective, that is to avoid
unjustified disruptions in international trade on the basis of allegations and claims that are manifestly
incorrect"267, there is no dispute over the evidentiary standards required to be fulfilled for initiation
upon requests under Article 21.3 by the domestic industry.  Rather, the focus of this claim is self-initiation, and the dispute is over whether, in the absence of language like that contained in
                                                     
267 Response of the European Communities to Question 6(a) from the Panel.WT/DS213/R
Page 168
Article 11.6 – which clearly characterises the self-initiation of investigations as something that occurs
"in special circumstances" and sets out the requirement of "sufficient evidence of a subsidy, injury
and causal link" before an investigating authority may self-initiate – Article 21.3 must in respect of
self-initiation be understood to include a requirement of some degree of evidentiary support as well.
8.38 We recall that Article 11.2 of the Agreement sets out in detail the evidentiary standards to be
met by written applications by or on behalf of a domestic industry, and Article 11.6 indicates that the
investigating authorities must satisfy the same evid entiary standards before they can proceed to self-
initiate.  The marked difference between the terms of Articles 11.2 and 11.6, on the one hand, and
those of Article 21.3, on the other, suggests that the drafters did not intend the self-initiation of sunset
reviews to be held to the same evidentiary standards as the self-initiation of investigations or indeed toany evidentiary standards at all.  To our minds, the terms of Article 21.3 ("in a review initiated . . . on
[the investigating authorities'] own initiative or upon a duly substantiated request made by or onbehalf of the domestic industry") suggest that the drafters considered the self-initiation of sunset
reviews to be simply one of two modalities for th e initiation of sunset reviews – and not something
that occurs "in special circumstances" – and it therefore follows that self-initiation does not require
the fulfilment of particular evidentiary standards.  It is simply one way for investigating authorities to
commence a sunset review, something which must be undertaken to determine whether a CVD mayremain in place past the five-year deadline set out in the Agreement.
8.39 Further, we note the Appellate Body's statement, in EC – Computer Equipment :
The purpose of treaty interpretation under Article 31 of the Vienna Convention is to
ascertain the common  intentions of the parties.
268
Given the marked difference between the terms of Articles 11.2 and 11.6, on the one hand, and those
of Article 21.3, on the other, we cannot conclude that the "common intentions of the parties" were to
have the evidentiary standards of Article 11.6 apply to sunset reviews.  As the Appellate Body has
stated, in India – Patents (US) :
The duty of a treaty interpreter is to examin e the words of the treaty to determine the
intentions of the parties.  This should be done in accordance with the principles oftreaty interpretation set out in Article 31 of the Vienna Convention .  But these
principles of interpretation neither require nor condone the imputation into a treaty of
words that are not there or the importation into a treaty of concepts that were not
intended.
269
8.40 We note that the European Communities argues:
The current US law requires the automatic initiation of sunset reviews without any
evidence.  This ignores the presumption of termination under Article 21.3 and
reverses the burden of proof, which should be on the petitioners or the investigating
authority to justify the initiation of a review and not on the exporters to justify the
termination and the non-initiation of such a review.270
We find this argument to be rather circular.  The claim we are deciding is made in respect of theapplication of evidentiary standards to the self-initiation of sunset reviews.  The above argument
                                                     
268 European Communities – Customs Classification of Certain Computer Equipment  ("EC – Computer
Equipment "), Report of the Appellate Body, WT/DS62/AB/R-WT/DS67/AB/R-WT/DS68/AB/R, adopted
22 June 1998, para. 84.
269 India – Patents (US) , Report of the Appellate Body, footnote 242, supra , para. 45.
270 Response of the European Communities to Question 2 from the Panel (emphasis in original).WT/DS213/R
Page 169
presupposes that evidentiary standards do apply to the self-initiation of sunset reviews.  We do not
find that it provides further grounds for the application of evidentiary standards to the self-initiation of
sunset reviews.
8.41 The European Communities also argues that US CVD law:
"shift[s] the burden of proof on foreign exporters and governments to demonstrate no
likelihood of continuation or recurrence of subsidisation and injury in violation of
Articles 21.1 and 21.3, which require termination of [the] CVD unless the domestic
authorities demonstrate the opposite".271
We recall that Article 21.3 requires that a CVD be terminated after five years unless the investigatingauthority determines that expiry of the duty would be likely to lead to continuation or recurrence of
subsidisation and injury.  What the European Communities characterises as "an important and
burdensome action from exporters"
272 to produce evidence that the measure should expire does not, in
our view, relieve the United States from – or run c ounter to – the obligation to make the determination
required by Article 21.3 before the United States can extend application of a CVD beyond five years.
It seems to us that, while the action of exporters may result in expiry of the measure, it may also result
in a sunset review in which the United States would have to satisfy the conditions of Article 21.3 in
order to take a decision not to revoke the measure.
8.42 Thus, while we neither adopt nor endorse the "shift[s] the burden of proof" language used by
the European Communities – language not used by the Agreement itself – it is clear that, in the
absence of an affirmative determination by an in vestigating authority, CVDs may not be maintained
beyond a five-year period.  It is also clear that any such determination must be correctly reasoned and
based on positive evidence.  We cannot, however, see how the automatic self-initiation of sunsetreviews runs afoul of that obligation in any way.  The initiation of a review is merely the beginning of
a process leading to a determination as to whether or not subsidisation and injury are likely to
continue or recur.  The standards for the initiation of a review – whether on the initiative of an
investigating authority or upon request by the domestic industry – in no way prejudge the standardsapplied by an investigating authority in reaching the substantive determination to be made in that
review.  In sum, it seems to us that the European Communities' argument is based upon an incorrect
equation of the standards for the initiation of a review with those for the substantive determination to
be made in a review.
8.43 We note that the European Communities posits that "the purpose and effect of initial
investigations and of sunset reviews are the same" and "the object and purpose of both provisions . . .
remains the same".  In the view of the European Communities, therefore, the requirement that certain
evidentiary standards be fulfilled for the self-initiat ion of investigations must have its equivalent in
the self-initiation of sunset reviews.  We see no difficulty, however, with an interpretation under
which investigating authorities may not self-initiate investigations without certain evidence, but may
self-initiate sunset reviews without any evidence.273  Given that evidentiary standards for the self-
initiation of investigations are understood to exist for the purpose of avoiding trade harassment, the
drafters could very reasonably have intended such st andards to be inapplicable to the self-initiation of
sunset reviews, as sunset reviews do not have the same potential for trade harassment as
                                                     
271 Response of the European Communities to Question 42 from the Panel.
272 Response of the European Communities to Question 13(b) from the Panel.
273 We note, in this regard, that Article 21.2 – which sets out the obligation of investigating authorities
to review the need for the continued imposition of a CVD – contains the phrase "where warranted".  The markeddifference between the terms of Articles 11.6 and 21.2, on the one hand, and those of Article 21.3, on the other,would support our view that self-initiation of various proceedings – or segments of a proceeding – do notnecessarily require fulfilment of the same evidentiary st andards, and that this situation was intended by the
parties.WT/DS213/R
Page 170
investigations, as discussed above ( See paragraph 8.36, supra ).  We consider it perfectly rational for
them to have established a set of disciplines in respect of investigations, and have some of them apply
to sunset reviews and others not.  To accept the European Communities' proposition would require us
first to accept as fact that "the purpose and effect of initial investigations and of sunset reviews are the
same", and then to conclude that this purpose and effect somehow override conclusions based on ourreading of the text itself.  We see no sound legal basis for the conclusion that the purpose and effect of
proceedings governed by certain provisions trump textual analysis of those provisions in their context
and in light of the object and purpose of the treaty.
8.44 Moreover, it is not a foregone conclusion that "the purpose and effect of initial investigations
and of sunset reviews are the same".  The European Communities argues, in respect of the substantive
assessments to be made in each, "There are not [sic] differences except that in the case of Article 21.3
there are CVD measures already in force . . . [T]his inevitably involves a certain element of predictionbased on the facts presented of what would happen if the measures were left to expire"
274 . . . "The
difference in the wording of the provisions on new investigations and sunset reviews merely reflects
the fact that, in the latter case, there is a need to  take account of an existing measure in establishing
whether the conditions still exist for applying [CVD] measures; the object and purpose of both
provisions, however, remains the same"275.  While it is factually correct that both types of proceedings
(or both segments of the proceeding) have the same effect in that they can result in the imposition /
continuation of CVDs for a period of five years, whether the purpose of, and the substantive
assessment involved in, each is the same is certainly at least debatable.
8.45 The European Communities explains that "[CVD] measures are exceptional, non-MFN
measures that are permitted only and so long as it is necessary to offset injurious subsidies.  This istrue as regards both the original imposition of [CVDs] and their review under the sunset provisions of
the SCM Agreement
276 . . . [T]he provisions of Article 21.3 [of the] SCM Agreement relating to
continuation of a CVD measure constitute an exception to the general rule which provides that CVD
orders should in principle expire after 5 years277 . . . The phrase 'strict interpretation' in this context
[reading the text of Article 21.3 to include obligations not explicitly set out therein] simply stands forthe proposition that the terms of Article 21.3 have to be interpreted also in light of their object and
purpose and in context, which is the entire SCM Agreement and, in particular, Articles 11.6, 11.9
and 15.3 thereof.  It is further meant to clarify the proposition that a subsidy which is found to be less
than 1% in the original investigation – before the entry into force of the SCM Agreement  – would not
benefit from a lenient or relaxed interpretation of Article 21.3 so as to permit its unjustified
continuation even if it is likely to be below the 1% de minimis  rule in the sunset review.  This relaxed
interpretation is the basic US argument which proposes to read the terms of Article 21.3 in completeisolation of the rest of the Agreement"
278.  In our view, the correct – whether or not "strict" –
interpretation of the terms of Article 21.3 would involve precisely the type of analysis proposed by the
European Communities.  Moreover, the Appellate Body has stated, in European Communities –
Hormones :
[M]erely characterising a treaty provision as an "exception" does not by itself justify
a "stricter" or " narrower" interpretation of that provision than would be warranted . . .
by applying the normal rules of treaty interpretation.279
                                                     
274 Response of the European Communities to Question 7(b) from the Panel.
275 Response of the European Communities to Question 7(a) from the Panel.
276 Oral Statement of the European Communities at the First Meeting of the Panel, para. 3.
277 Response of the European Communities to Question 8(a) from the Panel.
278 Response of the European Communities to Question 8(b) from the Panel.
279 EC – Hormones , Report of the Appellate Body, footnote 250, supra , para. 104.WT/DS213/R
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8.46 It would seem to us that it is the very analysis characterised by the European Communities as
"strict" – which we consider simply to be that outlined in Article 31 of the Vienna Convention – that
the European Communities asks us to ignore by focusing on the notion that "the purpose and effect of
initial investigations and of sunset reviews are the same" and "the object and purpose of both
provisions . . . remains the same".  With regard to the object and purpose of parties to a treaty and ofthe treaty, we note that the Appellate Body has stated, in US – Shrimp :
A treaty interpreter must begin with, and focus upon, the text of the particular
provision to be interpreted.  It is in the words constituting that provision, read in their
context, that the object and purpose of the states parties to the treaty must first be
sought.  Where the meaning imparted by the text itself is equivocal or inconclusive,
or where confirmation of the correctness of the reading of the text itself is desired,
light from the object and purpose of the treaty as a whole may usefully be sought.
280
The context of a particular provision and the object and purpose of a treaty – or of the provision at
issue – do not override the plain meaning of the text of the provision; rather, the text is to be read in
its context and in light of the object and purpose of the treaty.  In sum, we do not find that the text of
Article 21.3 lends itself to the interpretation proposed by the European Communities.
8.47 While we do not disagree that application of evidentiary standards to self-initiation of sunset
reviews would ensure a certain balance between the disciplines applicable to investigations and those
applicable to sunset reviews, it is nonetheless difficult to conclude on that basis alone that the same
evidentiary standards apply to self-initiation in both instances.  As the Appellate Body has stated, inEC – Hormones :
The fundamental rule of treaty interpretation requires a treaty interpreter to read and
interpret the words actually used by the agreement under examination, not words the
interpreter may feel should have been used.281
In our opinion, the conclusion to be reached in applying the customary rules of treaty interpretation to
Article 21.3 is quite clear.  Article 21.3 establishes no requirement that investigating authorities have
any evidence before they may self-initiate sunset reviews.
8.48 Seeking to confirm the meaning resulting from the application of Article 31, as permitted by
Article 32282 of the Vienna Convention, we found that the negotiating history of the SCM Agreement
does not provide guidance in respect of this question.  An examination of the work of the Negotiating
Group on Subsidies and Countervailing Measures and, in particular, of the discussion of a sunset
clause, reveals no reference to evidentiary standards for the initiation of sunset reviews, whether for
self-initiation or initiation upon request by the domestic industry.
                                                     
280 United States – Import Prohibition of Certain Shrimp and Shrimp Products  ("US – Shrimp "), Report
of the Appellate Body, WT/DS58/AB/R, adopted 6 November 1998, para. 114.
281 EC – Hormones , Report of the Appellate Body, footnote 250, supra , para. 181 (emphasis added).
282 We recall that Article 32 of the Vienna Convention states:
ARTICLE 32
Supplementary means of interpretation
Recourse may be had to supplementary means of interpretation, including the preparatory work of the
treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application ofarticle 31, or to determine the meaning wh en the interpretation according to article 31:
(a) leaves the meaning ambiguous or obscure; or(b) leads to a result which is manifestly absurd or unreasonable.  ((1969) 8
International Legal Materials  679)WT/DS213/R
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8.49 We therefore find that no evidentiary standards are applicable to the self-initiation of sunset
reviews under Article 21.3.283  We thus conclude that US CVD law and the accompanying regulations
are consistent with the SCM Agreement in respect of the automatic self-initiation of sunset reviews,
and accordingly reject the European Communities' claim in this regard.
8.50 Further, we note that the European Communities cl aims that, owing to the lack of consistency
with Article 21.3 of the SCM Agreement in respect of  the application of evidentiary standards to the
self-initiation of sunset reviews, US CVD law is also inconsistent with Article 32.5 of the
SCM Agreement and Article XVI:4 of the WTO Agreement, which provisions require that Members
ensure the WTO-conformity of their laws, regulations, and administrative procedures.  Having found,
however, that US CVD law and the accompanying regulations are consistent with Article 21.3 of the
SCM Agreement in respect of the application of evidentiary standards to the self-initiation of sunset
reviews, we need not, and do not, consider whether US CVD law and the accompanying regulationsare inconsistent with Article 32.5 of the SCM Agreement and Article XVI:4 of the WTO Agreement.
C. 
WHETHER US CVD LAW AS SUCH AND AS APPLIED IN THE INSTANT SUNSET REVIEW ARE
INCONSISTENT WITH THE SCM AGREEMENT IN RESPECT OF THE APPLICATION OF A DE MINIMIS
STANDARD TO SUNSET REVIEWS
1. Whether US CVD law as such is inconsistent with the SCM Agreement in respect of the
application of a de minimis standard to sunset reviews
(a) Arguments of the parties
(i) European Communities
8.51 In the view of the European Communities, the non-application of a de minimis standard to
sunset reviews constitutes a violation of Article 21.3 of the SCM Agreement.  The EuropeanCommunities considers that a de minimis standard is applicable to the likely future rate of
subsidisation.
8.52 The European Communities submits that the ordinary meaning of the terms "subsidisation"
and "injury" in context, taking also into account the object and purpose of the SCM Agreement as a
whole, suggests that if there can be no "subsidisation" and "injury" finding in case of a de minimisamount of subsidy in an original investigation, the same must hold true a fortiori  in the case of sunset
reviews.
284  The European Communities focuses here on the various paragraphs of Article 21 that
contain the word "review", that is, paragraphs 2, 3, and 4.  It considers that reviewing the need for a
CVD to be continued under Article 21.2 is equivalent to determining whether the original substantive
conditions on the basis of which it was initially imposed (subsidisation causing injury) continue to
exist.285  It follows then, for the European Communitie s, that the same de minimis rule, applied in
investigations – 1 per cent286 – must also be applied in reviews under Article 21.2.  This analysis, in
the opinion of the European Communities, applies all the more so in the context of reviews under
Article 21.3.
                                                     
283 Having found that no evidentiary standards apply for the self-initiation of sunset reviews, we need
not, and do not, consider the question of what those standards might be.
284 First Written Submission of the European Communities, para. 116.
285 Id., para. 111.
286 We note, in this regard, that the European Communities recognises that this threshold does not apply
to developing country Members in investigations, as su ch Members receive special and differential treatment in
the form of higher de minimis thresholds.  It considers that "[t]he higher de minimis thresholds for developingcountries are equally applicable to initial investigations and reviews examining the need for continuedimposition of the CVD (under Article 21.2) and sunset reviews (under Article 21.3)" (Response of the European
Communities to Question 1(d) from the Panel).WT/DS213/R
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8.53 The European Communities argues that the de minimis provision in the SCM Agreement is
based on the fact that a subsidy level of less than 1 per cent is presumed not to cause injury.  If this
subsidy level cannot cause injury in an investigation, it is logically and legally unavoidable, in the
view of the European Communities, to conclude that it cannot cause injury in a sunset review.287
According to the European Communities, holding otherwise would run contrary to the very object and
purpose of the SCM Agreement, most likely lead to "contradictory results and unjustified
protectionism"288, and violate the text of Articles 21.3 and 21.1 because it would allow the
continuation of CVDs for five more years "without there being any real need to counter subsidisation
which is likely to cause injury"289.
(ii) United States
8.54 The United States submits that there is no de minimis standard for sunset reviews, that
nothing in Article 21.3 or elsewhere in the SCM Agreement sets a de minimis standard for sunsetreviews, and that a contextual analysis of Article 21.3 in light of the object and purpose of the
SCM Agreement provides no support for the European Communities' de minimis claims.
8.55 In particular, argues the United States, footnote 52 states that the mere continued existence of
a subsidy programme could warrant maintaining the duty beyond the five-year point, even if the
amount of the subsidy was currently zero, because subsidisation may be likely to recur absent thediscipline of the duty.
290  The United States submits that th e European Communities seems to think
that footnote 52 serves no other purpose than to make a point about administrative reviews.  If that is
so, continues the United States, then why did the Members include footnote 52 in Article 21.3, the
provision governing sunset reviews?  The United States considers that footnote 52 means that the
current level of subsidisation is not decisive as to whether subsidisation is likely to recur, andaccepting the European Communities' claim in respect of a de minimis standard in the context of
sunset reviews would render footnote 52 meaningless.
291
8.56 The United States also submits that the focus of sunset reviews is future behaviour and, thus,
mathematical certainty or precision as to the exact amount of likely future subsidisation is not
necessarily practicable and certainly not required.292
(b) Findings of the Panel
8.57 Again, the overarching question before us is whether a specific obligation applicable to CVD
investigations is also applicable to sunset reviews.   In particular, we must consider whether, applying
the customary rules of treaty interpretation – set out above ( See para. 8.25 and footnote 282, supra ) –
to Article 21.3, we should consider implied in that provision the de minimis standard of
Article 11.9.293  In other words, is the European Communities correct in arguing that, as reviewing the
                                                     
287 First Written Submission of the European Communities, para. 115.
288 Id., para. 116.
289 Id.
290 First Written Submission of the United States, para. 81.
291 Second Written Submission of the United States, para. 12.
292 First Written Submission of the United States, para. 70.
293 We do not understand the European Communities to be alleging a violation of Article 11.9, but of
Article 21.3, of the SCM Agreement.  In this regard, we note that the European Communities argues that "aninterpretation of the terms of Article 21.3 should be made in context and in the light of the object and purpose ofArticle 21.3 and of the SCM Agreement.  Articles 21.1, 11.9, 15, and 10 provide relevant context and helpdefine its object and purpose.  Such an interpretation . . . requires that the 1 [per cent] de minimis level ofArticle 11.9 should be implied, and hence applied, also to investigations and determinations made in sunset
reviews" (Response of the European Communities to Question 47 from the Panel (emphasis added)).WT/DS213/R
Page 174
need for continuation of a CVD past the initial five-year period (involving consideration of whether
expiry of that CVD would be likely to lead to continuation or recurrence of subsidisation and injury)
is equivalent to considering the need for an original duty (involving consideration of whether
subsidisation is causing or threatens to cause injury), it follows that the same de minimis standard
must apply to sunset reviews as to investigations?294
8.58 We recall that Article 21.3 reads:
Notwithstanding the provisions of paragraphs 1 and 2, any definitive [CVD] shall be
terminated on a date not later than five years from its imposition (or from the date of
the most recent review under paragraph 2 if that review has covered both
subsidisation and injury, or under this paragraph), unless the authorities determine, in
a review initiated before that date on th eir own initiative or upon a duly substantiated
request made by or on behalf of the domestic industry within a reasonable period oftime prior to that date, that the expiry of the duty would be likely to lead to
continuation or recurrence of subsidisation and injury.
52  The duty may remain in
force pending the outcome of such a review.
___________________________
                                                                                                                                                                    
Further, the European Communities "objects to the [United States'] suggestion to use only the phrase
'Article 11.9 itself applies to sunset reviews'" (Comments of the European Communities on Request of theUnited States for Interim Review, para. 3).  Indeed, the European Communities argues that it "has takenparticular care to explain that there is an omission in Article 21.3 and that only a systematic interpretation can
fill up [sic] this gap by implying the de minimis standard of Article 11.9" (Comments of the European
Communities on Request of the United States for Interim Review, para. 3 (emphasis added)).  Nor could the
European Communities successfully allege a violation of Article 11.9.  Article 11 is entitled "Initiation andSubsequent Investigation", and clearly deals with investigations, such as that term is distinguished from reviewsby the Agreement.  This is also made clear in the text of Article 11.9 itself, which refers to investigations.  Wetherefore consider whether Article 21.3 contains by implication the same type of obligation as Article 11.9, and
whether the United States has violated Article 21.3 in this respect.
294 We note that US CVD law and the accompanying regulations require the application of a 1 per cent
de minimis  standard to CVD investigations and a 0.5 per cent de minimis standard in reviews, including sunset
reviews.  Section 703(b)(4)(a) of the Tariff Act provides:
In making a determination under this subsection, the administering authority shall disregardany de minimis countervailable subsidy. For purposes of the preceding sentence, a
countervailable subsidy is de minimis if the administering authority determines that the
aggregate of the net countervailable subsidies is less than 1 percent ad valorem or the
equivalent specific rate for the subject merchandise (19 USC Section 1675a(b)(4)(B)).Section 351.106(c)(1) of the Sunset Regulations provides:
In making any determination other than a preliminary or final . . .  [CVD] determination in aninvestigation . . ., the Secretary will treat as de minimis  any . . . countervailable subsidy rate
that is less than 0.5 percent ad valorem , or the equivalent specific rate.
The SAA accompanying the URAA explains:The de minimis  requirements of Articles 11.9, 27.10, and 27.11 of the Subsidies Agreement
are applicable only to initial CVD investigations.  Thus, under section 705(a)(3) thesestandards are not applicable to reviews of CVD orders.  In such reviews, the Administration
intends that Commerce will continue its present practice of waiving the collection of estimated
deposits if the deposit rate is below 0.5 % ad valorem , the existing regulatory standard for de
minimis  (Exhibit EC-16, pp. 938-939).
We further note that the United States submits that "[t]he statute itself does not set forth the de minimis
standard for reviews, but the [Statement of Administrative Action] clarifies the intent of Congress and theAdministration that [the DOC] continue to apply to reviews the pre-URAA standard of 0.5 per cent ad valorem "
(First Written Submission of the United States, para. 13).WT/DS213/R
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52 When the amount of the [CVD] is assessed on  a retrospective basis, a finding in the
most recent assessment proceeding that no duty is to be levied shall not by itself
require the authorities to terminate the definitive duty.
We recognise, at the outset, that nothing in the text of Article 21.3 specifically provides that the de
minimis standard applicable to investigations is also applicable to sunset reviews. For the same
reasons that we could not conclude on the basis of  silence alone that the evidentiary standards of
Article 11.6 necessarily do not apply to sunset reviews ( See paragraphs 8.27-8.30, supra ), however,
we cannot conclude on the basis of silence alone that the de minimis standard of Article 11.9
necessarily does not apply to sunset reviews.  Accordingly, we believe that we must consider the
context of Article 21.3 – that is, provisions of the SCM Agreement other than Article 21.3 – and the
object and purpose of the SCM Agreement in reaching a conclusion.  In particular, we are of the view
that we must interpret Article 21.3 in respect of the de minimis standard set out in Article 11.9 in thecontext of the same complex framework of rights and obligations as we did Article 21.3 in respect of
the evidentiary standards set out in Article 11.6 ( See paragraphs 8.31-8.33, supra ).
8.59 We now examine Article 11.9, the de minimis standard of which the European Communities
argues is implied in Article 21.3, and which provides:
An application under paragraph 1 shall be rejected and an investigation shall be
terminated promptly as soon as the authorities concerned are satisfied that there is not
sufficient evidence of either subsidisation or of injury to justify proceeding with the
case.  There shall be immediate termination in cases where the amount of a subsidy is
de minimis, or where the volume of subsidised imports, actual or potential, or the
injury, is negligible.  For the purpose of this paragraph, the amount of the subsidyshall be considered to be de minimis if the subsidy is less than 1 per cent ad valorem.
Again, we recognise, at the outset, that nothing in th e text of the provision provides for its de minimis
standard to be implied in Article 21.3.  What is clear from this language, however, is that a de minimis
subsidy cannot be countervailed, and that, upon a finding of a de minimis subsidy, the Agreement
mandates but one outcome.  Investigating authorities must not only terminate the investigation, butthey must do so immediately.  The terms of the provision are unequivocal.  Such mandatory ("shall")
and strong ("immediate") language would suggest th at the drafters had an important consideration in
mind in drafting this provision, reflected in the precise choice of words.  In particular, the mandatory
nature and strong language of the provision convey, in our view, that the drafters sought a particular
outcome, to protect exporters under investigation and prevent trade harassment through continuation
of an investigation of a de minimis subsidy.
8.60 Let us first consider the ordinary meaning of the Latin phrase "de minimis", which is defined
in law dictionaries as "lacking significance or  importance: so minor as to be disregarded"
295.  In the
context of the SCM Agreement, we take this to mean that a de minimis level of subsidy lacks
significance or importance because the effects attributable to it are so small as not to be material.  In
this regard, it is useful to consider the rationale for the application of a de minimis standard to
investigations, as reflected in a Note by the Secretariat prepared in April 1987 for the Uruguay RoundNegotiating Group on Subsidies and Countervailing Measures.  This note reads in relevant part:
There are two alternative (and not mutually exclusive) theoretical justifications for
the de minimis concept.
- The first view holds that [CVD] actions and measures may be taken onlywhen the trade distorting effect of the subsidy and its effects on the industry in the
                                                     
295 Merriam-Webster’s Dictionary of Law, Merriam-Webster, Inc., p. 131.WT/DS213/R
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importing country so require.  Thus, no action should be taken where it would be
clearly out of proportion to the objective sought, or as Article 2:12 states, 'where the
effect of the subsidy on the industry in the importing country is not such as to cause
material injury'.
- The second theory treats the issue of de minimis subsidy as a completely
separate issue from the determination of injury in an investigation.  If it can be
established that the totality of subsidies on the product investigated are minimal (so
small per unit that they are practically non-existent), the investigating authorities may
determine that, as Article 2:12 states, 'no subsidy exists'.  Thus, as the maxim states,
'de minimis non curat lex':  the law does not take notice of minimal matters.296
While it is not known which of the two rationales, if not both ("not mutually exclusive"), served as a
basis for Article 11.9, the language of that provision suggests to us that it was the first rationale thatwas the basis for, or was at least paramount in, the drafting of that provision.  Were the basis of
Article 11.9, either solely or principally, simple administrative convenience, that would be a matter
for investigating authorities to decide.  There would arguably be no need for the Agreement to address
the consequences of de minimis subsidisation.  In that case, Article 11.9 might permit or encourage
authorities to terminate an investigation in case of  a finding of de minimis subsidisation, but would
not need to require it, and immediately upon such finding.
8.61 Administrative convenience where a de minimis subsidy is concerned is, after all, a question
of individual Members' policies vis-à-vis trade remedies and vis-à-vis allocation of resources to their
trade remedy regimes, issues over which they should arguably have discretion.  Why require
Members to avail themselves of administrative convenience?  We note, in this regard, that the above-
cited discussion of the rationale of non-injurious subsidisation uses the phrase "no action should be
taken" – suggesting the desirability of such an outcome – while discussion of the rationale of
administrative convenience uses the phrase "the investigating authorities may determine" – suggestingthe possibility of such an outcome.  The clear difference between the two phrases would support our
reasoning that the drafters considered a de minimis subsidy to be non-injurious, as the language of
Article 11.9 mirrors the former phrase, that relating to the rationale of non-injurious subsidisation.
For the foregoing reasons, we are of the view that the sole or principal rationale for the de minimis
standard set out in Article 11.9 is that a de minimis subsidy is considered to be non-injurious.
8.62 We note that, in any event, both the rationale of non-injurious subsidisation and that of
administrative convenience would be as relevant in the context of sunset reviews as in that of
investigations.  We do not see how it would be r easonable to hold the view, on the one hand, that a
rate of subsidy that would be deemed to be non-injurious in investigations should be found to be so insunset reviews as well, but not the view, on the other hand, that a rate of subsidy that would be found
to be minimal in investigations should be deemed to  be so in sunset reviews as well.  In other words,
we see no particular distinction between the tw o rationales that would suggest that, depending on
which one served as the basis for Article 11.9, a de minimis standard might not apply to sunset
reviews.
8.63 We note that Article 11.9 sets out certain other grounds for termination of CVD proceedings
as well: (i) insufficient evidence of either subsidisation or of injury; (ii) negligible volume of
subsidised imports; and (iii) negligible injury.  It would seem clear to us that all three bases for
termination are fundamentally grounded in the notion of, and seek to limit CVD proceedings to cases
of, injurious subsidisation.  We consider that all grounds for termination of CVD proceedings –including de minimis subsidisation – link expressly with the purpose of CVDs and with the object and
purpose of the SCM Agreement as set out in Article VI of the GATT 1994.  The recurrent theme, in
                                                     
296 MTN.GNG/NG10/W/4, p. 2 (emphasis in original).WT/DS213/R
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our view, is that CVD proceedings serve to counter injurious subsidisation and therefore may not
continue if injurious subsidisation does not (or is not likely to) exist.  The nature of the other bases set
out in Article 11.9 for termination of CVD proceedings supports our view that the rationale for the de
minimis standard is that relating to non-injurious subsidisation.
8.64 It would also seem to us that the lack of refe rence to the term "de minimis" in Article 27.10 of
the SCM Agreement – which sets out special and differential treatment for developing countries – is
further recognition of the rationale that the de minimis standard relates to non-injurious subsidisation.
As it is not possible to have different de minimis levels depending on the source of the subsidised
imports, Article 27.10 simply provides for special and differential treatment for developing country
Members.  In this regard, we note that Article 11.9 includes the following sentence:
For the purpose of this paragraph, the amount of the subsidy shall be considered to be
de minimis if the subsidy is less than 1 per cent ad valorem.
The use of the phrase "[f]or the purpose of this paragraph" reflects, in our opinion, a desire to clarify
that the termination requirement is triggered by a 1 per cent subsidy under this paragraph, as opposed
to the differing percentage under Article 27.10.  Accordingly, in our opinion, the language of
Article 11.9 does not prevent its de minimis standard from being implied in Article 21.3.
8.65 It is in light of this rationale of non-injurious subsidisation for the inclusion of the de minimis
standard and the requirement to terminate if de minimis subsidisation is found that we must address
the European Communities' claim that such a standard is implied in Article 21.3.  Given the
framework of disciplines that governs the imposition of CVDs and the role of the SCM Agreement in
ensuring that CVDs do not unjustifiably impede international trade, we find it difficult to see how de
minimis rate of likely subsidisation could be considered injurious at the stage of sunset review andcontinuation of a CVD, when the same rate is considered non-injurious at the stage of investigation
and imposition of a CVD.
8.66 An interpretation of Article 21.3 under which the de minimis standard set out in Article 11.9
does not apply to sunset reviews would, in our view, have serious implications for the operation of the
SCM Agreement and the framework of disciplines it sets out in conjunction with Article VI of theGATT 1994.  To hold that a threshold of injurious subsidisation that applies for the first five years of
the life of a CVD becomes inapplicable for the remainder of its life, should the CVD be continued,would seem to us to run counter to the object and purpose of the Agreement, which is to provide
Members a framework within which to offset injurious subsidisation.
8.67 In particular, we believe it would pave the way for Members to maintain CVDs indefinitely,
when CVDs are typically measures which would otherwise be WTO-inconsistent and are therefore
only permitted upon fulfilment of certain conditions set out in the SCM Agreement: subsidisation,injury, and causation.  We fail to see why the threshold of injurious subsidisation – which we consider
to be an important substantive criterion – would become inapplicable simply by virtue of the age of
the CVD.  We note, in this regard, that if an investigating authority were to revoke the CVD, but
subsequently find the need to initiate a new investigation on the concerned product, this threshold
would once again become applicable.  A suspension of the de minimis standard that is triggered solelyby the fact that the CVD is five years old does not, in our opinion, reconcile with the fundamental
rationale of the SCM Agreement and thereby negates the operation of the Agreement.
8.68 One of the objectives of the SCM Agreement is to discipline the use of CVDs by Members
through the establishment of a set of rules by which WTO Members must abide.  Investigating
authorities would therefore have to be bound by the substantive rules of the Agreement, includingfollowing imposition of a CVD.  Under the US vi ew, no de minimis standard would be implied in
Article 21.2 either.  In other words, the moment a CVD is imposed, no de minimis standard applies.WT/DS213/R
Page 178
A suspension of the de minimis standard is therefore triggered not by the fact that the CVD is five
years old, but by its mere existence, whatever its age.  We find it difficult to reconcile the suspension
of a criterion relating to non-injurious subsidisation in the context of a regulatory framework that
seeks to limit the use of CVDs to cases of injurious subsidisation.
8.69 Equally, as discussed above, an interpretation of Article 21.3 – on the basis of a literal reading
of Article 21.3 – under which the de minimis standard set out in Article 11.9 does not apply to sunset
reviews would render certain provisions of the SCM Agreement inapplicable to sunset reviews so as
to undermine the object and purpose of the Agreement.  Such an interpretation would also yield
irrational results in respect of other provisions of the Agreement.
8.70 As earlier discussed, Article 31 of the Vienna Convention does not, in our view, limit us to a
literal reading of the provision in question.  Were such a reading to be required, provisions such as
Article 15.3 – which deals with the circumstances in which imports may be cumulated for purposes ofinjury determinations – and Article 19 – which deals with the imposition and collection of CVDs –
would be limited in ways that would negatively affect the operation of the Agreement, particularly
with respect to sunset reviews, something th at cannot have been intended by the drafters.
8.71 For the reasons outlined above, we consider equally persuasive the case of Article 21.1, which
reads:
A [CVD] shall remain in force only as long as and to the extent necessary to
counteract subsidisation which is causing injury.
Were this provision to be read literally, the words "is causing injury" would suggest that a CVD could
only remain in place, including under Article 21.3, where there is likelihood of continuation of
subsidisation and injury, not recurrence.  The notion of recurrence contained in Article 21.3 therefore
has to be implied in Article 21.1, or that notion would be rendered meaningless.  Finally, Article 32.3,if read literally, would apply only to investigations and reviews initiated pursuant to applications from
the domestic industry, and not initiated on an ex officio basis.  Again, this cannot be the case.  These
several instances of provisions in the Agreement that, if read literally, would yield irrational results,
confirm our view that we are not limited to a literal reading of the text of Article 21.3.
8.72 We note that the United States is of the view that there is no obligation under the
SCM Agreement to quantify an amount of subsidisati on in the context of sunset reviews: "Indeed, just
the fact that it is necessary to ask the question as to the relevant time period demonstrates that there
was no agreement to include a de minimis  standard – these are the types of questions that would have
had to have been asked and negotiated at the time"
297.  We disagree.  Nor are we persuaded by the
US argument that, as there is no obligation to quantify subsidisation in sunset reviews, there can be no
obligation to apply a de minimis standard.  We consider that, because there is an obligation to apply ade minimis standard, and this cannot be done unless subsidisation is quantified, there is a
consequential obligation to quantify the likely future rate of subsidisation.
8.73 The United States submits that the focus of a sunset review is the future behaviour of foreign
exporters, and there is therefore no need or legal obligation to quantify the amount of subsidy during
such reviews.
298  We note also the United States' argument that "nothing in the SCM Agreement
requires  a consideration of the magnitude of subsidisation in determining the likelihood of
continuation or recurrence of subsidisation and injury"299.  We consider, however, that investigating
authorities are required to assess the rate at which subsidisation is likely to continue or recur for
                                                     
297 Response of the United States to Question 45 from the Panel.
298 Response of the United States to Question 1(a) from the Panel.
299 Response of the United States to Question 45 from the Panel.WT/DS213/R
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purposes of their assessment of likelihood of continuation or recurrence of injury which arises from
the likely continuation or recurrence of subsidisation.  Article 15 of the SCM Agreement sets out the
substantive assessment that must go into making a determination of injury:
A determination of injury for purposes of Article VI of GATT 1994 shall be based on
positive evidence and involve an objective examination of both (a) the volume of thesubsidised imports and the effect of the subsidised imports on prices in the domestic
market for like products and (b) the consequent impact of these imports on the
domestic producers of such products.
300
Further, Article 15.5 states, in relevant part:
It must be demonstrated that the subsidised imports are, through the effects47 of
subsidies, causing injury within the meaning of this Agreement.
_________________________________
47As set forth in paragraphs 2 and 4.
We simply do not see how these provisions of Article 15 can be given meaning in an assessment of
likelihood of continuation or recurrence of subsidisation and injury without assessment of a likely rate
of subsidisation.301
8.74 The United States submits that "one could never calculate  a future rate of subsidisation for
obvious reasons, although it may be possible to infer a future rate based on past rates (which is in
essence what the [US DOC] does under US law)"302.  The European Communities, on the other hand,
argues that "subsidisation does not exist in the abstract, and quantification of the rate at which
continuation or recurrence of subsidisation is likely to continue or recur in the future should always be
feasible"303.  We agree.  While we certainly acknowledge the difficulty of calculating a precise likely
rate and we agree with the United States that it is perhaps better described as "inferred" rather than
"calculated", we are of the view that quantification of the future rate of subsidisation is entirely
feasible.  We do not, in other words, see the difficulty of assessing a likely rate of subsidisation as
being great enough to suggest that a de minimis standard could not possibly have been intended to
apply to sunset reviews.
8.75 The issue of assessment of the rate of subsidisation brings up the related issue of footnote 52
to the SCM Agreement, which reads:
When the amount of the [CVD] is assessed on a retrospective basis, a finding in the
most recent assessment proceeding that no duty is to be levied shall not by itself
require the authorities to terminate the definitive duty.
We note the United States' argument that the location of this footnote in the SCM Agreement – in a
provision governing sunset reviews – indicates that it is relevant to the present question and suggeststhat no de minimis standard is applicable to sunset reviews.  We note also the European Communities'
response that this footnote refers only to duty assessment proceedings and therefore sheds no light on
the possible existence of a de minimis standard as being applicable to sunset reviews.  In our view,
                                                     
300 Footnote deleted.
301 We note, in this regard, that the US DOC is required, under US law, to send to the ITC the net
countervailable subsidy that is likely to prevail if the CVD order is revoked ( See Section 1675(a)(b)(3) of the
Tariff Act (Exhibit EC-13)).
302 Response of the United States to Question 45 from the Panel (emphasis in original).
303 Response of the European Communities to Question 45 from the Panel.WT/DS213/R
Page 180
under both interpretations, footnote 52 has no implications for the question before us.  We do not see
how the results of duty assessment proceedings – which establish a level of duty for a prior period –
could be dispositive of the likelihood of continuation or recurrence of subsidisation or of the rate at
which subsidisation is likely to continue or recur.  Thus, there is no inconsistency, in our opinion,between footnote 52 and the requirement to ap ply a de minimis standard to sunset reviews.
8.76 When asked by the Panel, supposing application of a de minimis standard to sunset reviews,
whether this standard would be based on (i) the rate of subsidisation during the period of application
of the CVD, (ii) the rate of subsidisation at the time of sunset review, or (iii) the rate at which
subsidisation is likely to continue or recur, the European Communities argues that "[t]he rate that
should determine the outcome of a sunset review is . . . the rate likely to continue or recur if the CVD
measure were allowed to expire"
304.  The United States, on the other hand, responds that "all of these
options might inform a determination of the likelihood of continuation or recurrence of subsidisation– but they just as easily might not"
305.  While we accept that, depending on the facts of the case before
the investigating authorities, one, two, or all of the above-mentioned rates might be relevant to an
assessment of the likelihood of continuation or recurrence of subsidisation, there is no doubt in our
minds that the rate to which the de minimis standard is to be applied in sunset reviews is the likely
future rate of subsidisation.
8.77 Whatever the rate of subsidisation at the time of sunset review, any de minimis standard could
not be applicable to that rate, as such a practice would encourage deliberate diminution of subsidies at
the time of sunset review with a view to ensuring that the rate falls below the de minimis threshold.
Nor could a de minimis standard apply to the past rate of subsidisation – that during the period of
application of the CVD – as that would mean that non-subsidisation during that period isdeterminative of the likelihood of continuation or recurrence, which cannot be the case.  Such an
interpretation would seriously call into question the notion of recurrence contained in Article 21.3.  Of
course this is not to suggest that the past level of subsidisation is not a relevant consideration in an
assessment of likelihood of continuation or recurrence; it is without doubt a relevant factor in such an
assessment.  But the existence or absence of past subsidisation cannot be dispositive of the likelihoodof continuation or recurrence of subsidisation.  A ccordingly, the de minimis standard applicable to
sunset reviews could only be based on the rate at which subsidisation is likely to continue or recur.
This also reflects the purpose and substance of a sunset review, i. e., an assessment of the likelihood
of continuation or recurrence of subsidisation and injury.
8.78 The United States cites the decision of the Panel in United States – DRAMS  as support for its
argument that no de minimis standard is required by the Agreement in sunset reviews.
306  The Panel in
that case held that the de minimis standard contained in Article 5.8 of the AD Agreement – theparallel provision to Article 11.9 of the SCM Agreement – did not apply beyond the investigative
phase.
307  It is important to note, however, that that case did not address the question of whether the de
minimis standard was applicable to sunset reviews,  or even in reviews in general.  Rather, the United
States – DRAMS  case addressed the question of whether a de minimis standard was applicable to duty
assessment procedures under Article 9.3 of the AD Agreement.  The retrospective calculation of aduty payable arguably has no relationship with the duration of the duty or the possible continuation of
the duty.  Retrospective calculation is a method of calculation used by some Members for purposes of
calculating the amount of duty payable during the period of application of the duty.  The issue before
us is whether the de minimis standard is applicable to sunset reviews as it is to investigations.Calculating the amount of duty to be collected under an order which is not in and of itself beingreviewed is different from reviewing whether an or der may be continued.  At least in principle, any
                                                     
304 Response of the European Communities to Question 45 from the Panel.
305 Response of the United States to Question 45 from the Panel.
306 First Written Submission of the United States, para. 73.
307US – DRAMS , Report of the Panel, footnote 247, supra , para. 6.87.WT/DS213/R
Page 181
amount of dumping (or subsidy) should lead to a coll ection of that amount of duty.  That any, or less
than the de minimis, level of subsidy should justify continuation of a CVD order would undermine the
object and purpose as well as operation of the SCM Agreement.
8.79 In sum, we consider that the rationale for the de minimis standard set out in Article 11.9 is
clearly that CVDs are to be used to counter injurious subsidisation, and the threshold set out in thisprovision demarcates the level below which subsidisation is deemed to be so small as to be non-
injurious for purposes of the imposition of CVDs.  Having found this to be the case, and having
established that one of the objects and purposes of the SCM Agreement is to regulate the imposition
of CVDs and to create a disciplinary framework th erefor, we are of the view that the de minimis
standard must be applicable to sunset reviews as it is to investigations.  Finding otherwise would
compromise the very object and purpose of the SCM Agreement and the disciplinary framework that
the drafters sought to create through the Agreement.
8.80 We therefore find that the de minimis standard of Article 11.9 is implied in Article 21.3.  We
thus conclude that US CVD law and the accomp anying regulations are inconsistent with the
SCM Agreement in respect of the application of a de minimis standard to sunset reviews, and
accordingly grant the European Communities' claim in this regard.
8.81 Further, we note that the European Communities claims that, owing to inconsistency with
Article 21.3 of the SCM Agreement in respect of the de minimis standard applicable to sunset
reviews, US CVD law is also inconsistent with Article 32.5 of the SCM Agreement and Article XVI:4
of the WTO Agreement, which provisions require that Members ensure the WTO-conformity of their
laws, regulations, and administrative procedures.  On the basis of our finding that US CVD law and
the accompanying regulations are inconsistent with  Article 21.3 of the SCM Agreement in respect of
the de minimis standard applicable to sunset reviews, we find that US CVD law and the
accompanying regulations are also inconsistent with Article 32.5 of the SCM Agreement and
Article XVI:4 of the WTO Agreement, and accordingly grant the European Communities' claim in
this regard.
2. Whether US CVD law as applied in the instant sunset review is inconsistent with the
SCM Agreement in respect of the application of a de minimis standard to sunset reviews
(a) Arguments of the parties
(i) European Communities
8.82 The European Communities considers that the United States violated the SCM Agreement by
failing to apply to the instant sunset review the de minimis standard applicable to investigations.  The
European Communities indicates that the United States, despite finding that the subsidy rate likely to
prevail would be 0.53 per cent, nevertheless continued the CVD. The European Communities submitsthat, for the reasons stated above ( See Section VIII.C.1(a)(i), supra ), this threshold is not appropriate,
and that since 0.53 per cent is below the 1 per cent de minimis  level which should  apply to sunset
reviews, the United States was in breach of Article 21.3, in conjunction with Article 11.9, in
continuing the CVD on carbon steel.
308
(ii) United States
8.83 As stated above ( See Section VIII.C.1(a)(ii), supra ), the United States argues that no de
minimis is applicable to sunset reviews under Article 21.3 of the SCM Agreement.  The United States
also asserts that the fact that it has in its domestic law a de minimis provision for sunset reviews is
                                                     
308 First Written Submission of the European Communities, para. 119.WT/DS213/R
Page 182
legally irrelevant because Members are free to go beyond their obligations under the Agreement.309  In
the view of the United States, therefore, the determination of the US DOC in the instant sunset review
was not inconsistent with the Agreement in this respect.
(b) Findings of the Panel
8.84 We note the US argument, in respect of the previous claim of the European Communities, that
applying the customary rules of treaty interpretation, the Panel should find that there is no de minimis
standard applicable to sunset reviews in the SCM Agreement and, therefore, the United States'
application of a 0.5 per cent de minimis standard in sunset reviews does not constitute a violation of
its obligations under the SCM Agreement.310  We note that the United States accordingly applied this
standard – and not the 1 per cent threshold set out in Article 11.9 – in the instant sunset review.311
Having found that the de minimis standard set out in Article 11.9 is applicable to sunset reviews andthat US CVD law is inconsistent with the SCM Ag reement in this respect, we find that the United
States violated the SCM Agreement by failing to apply such a de minimis standard to the instant
sunset review.
D. 
WHETHER US LAW AS SUCH AND AS APPLIED IN THE INSTANT SUNSET REVIEW ARE
INCONSISTENT WITH THE SCM  AGREEMENT IN RESPECT OF THE INVESTIGATING AUTHORITY 'S
OBLIGATION TO DETERMINE THE LIKELIHOOD OF CONTINUATION OR RECURRENCE OFSUBSIDISATION IN A SUNSET REVIEW
1. Whether US law as such is inconsistent with the SCM Agreement in respect of the
investigating authority's obligation to determine the likelihood of continuation or
recurrence of subsidisation in a sunset review
(a) Arguments of the Parties
(i) European Communities
8.85 The European Communities submits that US law as  such is inconsistent with Article 21.3 of
the SCM Agreement in respect of the investigat ing authorities' obligation to "determine" the
likelihood of continuation or recurrence of subsidisation in a sunset review.  In particular, the
European Communities asserts that Section 751(c) of the Act, as complemented by Section 752 andby US regulations and administrative practices, runs counter to the requirements of Article 21.3 in this
respect.
312
8.86 According to the European Communities, Article 21.3 imposes a positive obligation on the
investigating authorities to find whether subsidisation continues to exist or not.313  This, argues the
European Communities, needs to be a new, proper determination.314  In the view of the European
Communities therefore an investigating authority in a sunset review is required to play an active role
in the process of gathering facts that the authority will use in its likelihood analysis.315
8.87 With respect to the determination of the likelihood of subsidisation, the European
Communities argues that the same factors used by an investigating authority in an original CVD
investigation in a retrospective manner should be analysed prospectively in the sunset review.316
                                                     
309 First Written Submission of the United States, para. 83.
310 First Written Submission of the United States, para. 87.
312 First Written Submission of the European Communities, para. 76.
313 Id., para. 68.
314 Second Written Submission of the European Communities, para. 29.
315 First Written Submission of the European Communities, para. 71.
316 Second Written Submission of the European Communities, para. 32.WT/DS213/R
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According to the European Communities, these factors are those set out in Articles 11, 12 and 15 of
the SCM Agreement.  However, the European Comm unities argues that the range of factors to be
considered as part of the analysis of the likelihood of continuation or recurrence of subsidisation
should be decided on a case by case basis, depending on the type of subsidy involved.317
(ii) United States
8.88 The United States points out that what an inve stigating authority is required to do in a sunset
review under Article 21.3 is to determine whether subs idisation would be likely to continue or recur
without the discipline of the duty in place.318  This analysis, in the view of the United States, requires
a consideration of future rather than present circumstances.  Therefore the analysis required under
Article 21.3, according to the United States, is prospective in nature.319  Thus, in the view of the
United States, there is no contradiction between the provisions of the SCM Agreement and US law in
this respect.
(b) Findings of the Panel
(i) Requirements of Article 21.3 of the SCM Agreement in respect of the investigating authority's
obligation to determine the likelihood of continuation or recurrence of subsidisation in a
sunset review
8.89 We now proceed to our analysis of Article 21.3 of the SCM Agreement in order to address the
obligation to "determine" the likelihood of continuation or recurrence of subsidisation in a sunset
review.  The text of Article 21.3 reads:
Notwithstanding the provisions of paragraphs 1 and 2, any definitive [CVD] shall be
terminated on a date not later than five years from its imposition (or from the date of
the most recent review under paragraph 2 if that review has covered bothsubsidisation and injury, or under this paragraph), unless the authorities determine, in
a review initiated before that date on th eir own initiative or upon a duly substantiated
request made by or on behalf of the domestic industry within a reasonable period of
time prior to that date, that the expiry of the duty would be likely to lead to
continuation or recurrence of subsidisation and injury.  The duty may remain in forcepending the outcome of such a review.
320
8.90 In accordance with customary rules of treaty interpretation as reflected in Article 31 of the
Vienna Convention, we base our interpretation of Article 21.3 on its text read in context and in the
light of the object and purpose of the SCM Agreement.  Accordingly, we shall first consider the
ordinary meaning of the word "determine".  "Determine" is defined, inter alia , as "settle or decide (a
dispute, controversy, etc., or a sentence, conclusion, issue, etc.) as a judge or arbiter"321.  This
definition would seem to fit the usage in Article 21.3, which requires termination of a CVD unless theauthorities "determine … that the expiry of the duty would be likely to lead to continuation or
recurrence of subsidisation and injury".
8.91 Article 21.3 reflects the application of the general rule set out in Article 21.1 – that a CVD
shall remain in place only as long as necessary – in the specific instance where five years have
elapsed since the imposition of a CVD.  Article 21.2 reflects the same general rule in a different
                                                     
317 Id.
318 First Written Submission of the United States, para. 92.
319 First Oral Statement of the United States, para. 9.
320 Footnote deleted.
321 The New Shorter Oxford English Dictionary, Oxford University Press, p. 651.WT/DS213/R
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circumstance, when a reasonable period has elapsed since the imposition of the duty, and it is deemed
necessary to review the need for the continued imposition of the duty. We also note that one of the
principal objects of the SCM Agreement is to regulate the imposition of CVD measures.  Article 21.3
effectuates that purpose by providing that after five years, a CVD should be terminated unless the
investigating authorities determine that there is a likelihood of continuation or recurrence ofsubsidisation and injury.
8.92 The question we must consider next is what it means to "determine" that subsidisation is
likely to continue or recur.
322  In our opinion, although there is no specific language in the
SCM Agreement to that effect, it goes without saying that any determination made by investigating
authorities under the SCM Agreement must be properl y substantiated in order for that determination
to be legally justified.  In this regard, the Appellate Body has stated in US – Lamb :
[C]ompetent authorities must have a  sufficient  factual basis to allow them to draw
reasoned and adequate conclusions concerning the situation of the "domestic
industry".323
We recognise that the Appellate Body's statement refe rs to the basis of an injury determination in a
safeguard investigation.  Yet, as far as the adequacy of the factual basis for a determination is
concerned, we see no reason to distinguish between injury determinations in a safeguard investigationand a determination of the likelihood of continuation or recurrence of subsidisation in a CVD sunset
review.
8.93 We also note the decision of the Panel in US – DRAMS  in which the Panel stated:     
Accordingly, we must assess the essential ch aracter of the necessity involved in cases
of continued imposition of an anti-dumping duty.  We note that the necessity of themeasure is a function of certain objective conditions being in place, i.e. whether
circumstances require continued imposition of the anti-dumping duty.  That being so,
such continued imposition must, in our view, be essentially dependent on, and
therefore assignable to, a foundation of positive evidence that circumstances demand
it.  In other words, the need for the continued imposition of the duty must bedemonstrable on the basis of the evidence adduced.
324
                                                     
322 The European Communities states that it is not challenging the injury determination of the US ITC
per se  in this dispute, but that it is doing so as part of its claim regarding the application of a de minimis
standard (Oral Statement of the European Communities at the First Meeting of the Panel, footnote 27 (emphasis
added)).  The United States argues that the European Communities has not raised the claim of "non-injurious
subsidisation" in its request for consultations nor in it s request for the establishment.  Therefore, according to
the United States, the European Communities' "new claim with respect to non-injurious subsidization is notwithin the Panel’s terms of reference, but instead is at most an argument in support of the [European
Communities'] claim" (Comments of the United States on the Response of the European Communities to
Question 50 from the Panel, paras. 10-11).  We consider – and both parties agree that – the EuropeanCommunities' argument relating to non-injurious subsidisa tion is an additional argument in support of its claim
that the de minimis rule set forth in Article 11.9 also applies in sunset reviews.  Therefore, in our view, theargument of the European Communities regarding non-injurious subsidisation raises no question in respect of
the scope of our terms of reference because we are not, in this dispute, concerned with the question of whether
the ITC properly determined that expiry of the duty was likely to lead to continuation or recurrence of injury,and do not address that issue.
323 United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen Lamb Meat from
New Zealand and Australia ("US – Lamb "), Report of the Appellate Body, WT/DS177/AB/R-
WT/DS178/AB/R, adopted 16 May 2001, para. 131(emphasis in original).
324 US – DRAMS , Report of the Panel, footnote 247, supra , para. 6.42.WT/DS213/R
Page 185
Although the decision of the Panel was made as part of a review under Article 11.2 of the
AD Agreement we believe this excerpt provides help ful guidance for our case relative to the adequacy
of the factual basis for a determination.
8.94 Based on the two foregoing decisions, we consider that a determination of likelihood under
Article 21.3 must rest on a sufficient factual basis.
8.95 An investigating authority's determination of the likelihood of continuation or recurrence of
subsidisation should rest on the evaluation of the evidence that it has gathered during the original
investigation, the intervening reviews and finally the sunset review.  In our view, a likelihood analysis
based on this evidentiary framework would be consistent with the requirements of Article 21.3.
8.96 In our view, one of the components of the likelihood analysis in a sunset review under
Article 21.3 is an assessment of the likely rate of subsidisation.  We do not consider, however, that an
investigating authority must, in a sunset review,  use the same calculation of the rate of subsidisationas in an original investigation.  What the investigating authority must do under Article 21.3 is to assess
whether subsidisation is likely to continue or recu r should the CVD be revoked.  This is, obviously, an
inherently prospective analysis.  Nonetheless, it must  itself have an adequate basis in fact.  The facts
necessary to assess the likelihood of subsidisation in the event of revocation may well be different from
those which must be taken into account in an original investigation.  Thus, in assessing the likelihood ofsubsidisation in the event of revocation of the CVD, an investigating authority in a sunset review may
well consider,  inter alia , the original level of subsidisation, any changes in the original subsidy
programmes, any new subsidy programmes introduced after the imposition of the original CVD, any
changes in government policy, and any changes in relevant socio-economic and political circumstances.
(ii) Is US CVD law as such consistent with the requirements of Article 21.3 of the
SCM Agreement in respect of the investigating authority's obligation to determine the
likelihood of continuation or recurrence of  subsidisation in a sunset review?
8.97 Having addressed the substance of the obligation of investigating authorities to assess the
likelihood of continuation or recurrence of subsidisation, we now turn to the question of whether
US law is consistent with that obligation.
8.98 We recall that the European Communities argues that the governing provisions in US law
(Section 751(c), as complemented by Section 752, of the Tariff Act
325, as amended, the Implementing
Regulations326, and the accompanying statement of policy practices327) preclude the US DOC from
making the determination required under Article 21.3.
8.99 Turning to our analysis, we note that Section 751(c) of the Tariff Act reads, in relevant part:
(b) Five-year review
                                                     
325 19 U.S.C.A. Section 1675(c) (Exhibit EC-13).
326 Procedures for Conducting Five-year ("Sunset") Reviews of Antidumping and Countervailing Duty
Orders, or "Sunset Regulations".  63 FR 13516 (20 March 1998), codified in 19 CFR part 351 (Exhibit EC-14).
327 63 FR 18871 (16 April 1998) (Exhibit EC-15).  The United States explains: "Under [US] law, the
Sunset Policy Bulletin would be considered a non-binding statement, providing evidence of [the DOC's]
understanding of sunset-related issues not explicitly addre ssed by the statute and regulations.  In this regard, the
Sunset Policy Bulletin has a legal status comparable to th at of agency precedent . . . As with its administrative
precedent, [the DOC] normally would follow its policy bulletin or explain why it did not do so"  (First WrittenSubmission of the United States, footnote 37).  In this context, the findings of the Panel in United States –
Export Restraints  in respect of the legal status of the measures challenged by the European Communities in that
case may provide useful guidance.  ( See United States – Measures Treating Exports Restraints as Subsidies
("United States – Export Restraints "), Report of the Panel, WT/DS194/R and Corr.2, adopted 23 August 2001.)WT/DS213/R
Page 186
In general
… 5 years after the date of publication of —
(A) a countervailing duty order …
the administering authority and the Commission shall conduct a review to
determine…whether revocation of the countervailing…duty order…would be likelyto lead to continuation or recurrence of … a countervailable subsidy (as the case may
be) and of material injury…
328
8.100  Section 752 of the Tariff Act provides, in relevant part:
(b) Determination of likelihood of continuation or recurrence of a
countervailable subsidy
(1) In general
In a review… the administering authority shall determine whether revocation of a
countervailing duty order… would be likely to lead to continuation or recurrence  of a
countervailable subsidy… The administering authority shall consider--
(A) the net countervailable subsidy determined in the investigation and
subsequent reviews, and
(B) whether any change in the programme which gave rise to the net
countervailable subsidy … has occurred that is likely to affect that net countervailable
subsidy.
(2) Consideration of other factors
If good cause is shown, the administering authority shall also consider--
(A) programmes determined to provide countervailable subsidies in other
investigations or reviews …
(B) programmes newly alleged to provide countervailable subsidies but only to
the extent that the administering authority makes an affirmative countervailing duty
determination with respect to such progra mmes and with respect to the exporters or
producers subject to the review.
(3) Net countervailable subsidy
The administering authority shall provide to the Commission the net countervailable
subsidy that is likely to prevail if the order is revoked or the suspended investigation
is terminated.329
8.101  With respect to the DOC's obligation to "determine", the Sunset Regulations essentially repeat
the language of the Statute.  They provide, in relevant part:
                                                     
328 19 U.S.C.A. Section 1675(c) (Exhibit EC-13).
329 19 U.S.C.A. Section 1675a (Exhibit EC-13).WT/DS213/R
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 [T]he Secretary must determine whether dumping or countervailable subsidies would
be likely to continue or resume if an order were revoked or a suspended investigation
were terminated…
Even where the Department conducts a full sunset review, only under the most
extraordinary circumstances will the Secretary rely on a countervailing duty rate or adumping margin other than those it calculated and published in its prior
determinations…
330
The Sunset Policy Bulletin and the Statement of Administrative Action331 ("SAA") basically elaborate
further on the provisions of the Statute and the Sunset Regulations within the limits set out in the
Statute.
8.102  In this case, the question we must address is whether US law mandates WTO-inconsistent
behaviour or gives rise to executive authority that can be exercised with discretion.  If we find thatUS law provides the executive branch with discretionary authority, we will conclude that US law as
such is not inconsistent with the SCM Agreement in  respect of the investigating authorities' duty to
"determine" the likelihood of continuation or recurrence of subsidisation.  If, on the other hand, we
find that US law mandates WTO-inconsistent behaviour , we will find that it violates Article 21.3 of
the SCM Agreement.  Our approach in this respect is consistent with the established jurisprudence of
the Appellate Body that distinguishes between mandatory and discretionary legislation in proceedings
where a Member's legislation as such is challenged before a WTO Panel.
332
8.103  At the outset, we observe that the words of Section 751(c) of the Tariff Act reflect closely the
language of Article 21.3 of the SCM Agreement.  Indeed the operative language with which we are
concerned is almost identical.  The US DOC is required to "determine whether revocation" of a CVDwould be likely to lead to the continuation or recurrence of subsidisation and injury in order to extend
the application of a CVD beyond the initial five-year period.  After setting out this general rule,
Section 751(c) lays down further procedural rules that the investigating authorities have to follow in
sunset reviews.
333
8.104  Section 752 of the Tariff Act sets out, in subsection (b), rules on the consideration of the rate
of subsidisation.  Section 751(b) in subsection (1) states that the original rate of subsidisation – or the
rate obtained in a later review – should be taken into account, together with subsequent changes that
occurred in the original subsidy programmes, that affect the net countervailable subsidy.
Section 751(b)(2) stipulates that potential new programmes shall be taken into account.
Section 751(b)(3) states that the administering authority should report to the US ITC the rate of
subsidisation that is likely to continue or recur should the existing measure be revoked.
8.105  We note, however, the following statement in the Sunset Regulations:
                                                     
330 19 CFR 351.218(a) (Exhibit EC-14).
331 We note that US law, 19 U.S.C. Section 3512(d), provides that "[t]he statement of administrative
action approved by Congress under section 3511(a) of this  title shall be regarded as an authoritative expression
by the United States concerning the interpretation and application of the Uruguay Round Agreements and this
Act in any judicial proceeding in which a question aris es concerning such interpretation or application".
332 For the most recent application of this test by the Appellate Body, see, United States – Section 211
Omnibus Appropriations Act of 1998 ("US – Section 211 Appropriations Act "), Report of the Appellate Body,
WT/DS176/AB/R, adopted 2 February 2002, para. 259.
333 Subtitles under this section are: (1) In general, (2) Notice of initiation of review, (3) Responses to
notice of initiation, (4) Inadequate response, (5) Conduct of review, (6) Special transition rules, and (7)
Exclusions from computations.WT/DS213/R
Page 188
Even where the Department conducts a full sunset review, only under the most
extraordinary circumstances will the Secretary rely on a countervailing duty rate or a
dumping margin other than those it calculated and published in its prior
determinations…334
While this statement does not preclude the assessment and provision of a likely rate of subsidisation
by the DOC to the ITC, the introduction of the additional criterion of "the most extraordinary
circumstances" seems to us to be dubious.  The language is strong, and apparently places the burden
of proof to demonstrate "the most extraordinary circumstances" on the exporting parties.  We consider
that this criterion imposes fairly severe legal limitations on the ability of the DOC to come up with a
new rate of subsidisation. While not requiring WTO-inconsistent behaviour in this regard, US law
nonetheless curtails the discretion of the invest igating authority such that, in the absence of
information about what might constitute "the most extraordinary circumstances", we feel compelled toexpress some concern about the effect of this regulation.
8.106  We recall our finding in paragraph 8.102, supra , however, that unless US CVD law mandates
WTO-inconsistent behaviour, we will find that it is not inconsistent with the SCM Agreement.
Having considered the provisions challenged by the European Communities, we find no provision in
US law that mandates  WTO-inconsistent behaviour.  We also note that the Regulations, the Sunset
Policy Bulletin and the SAA do not contain any provision that changes US law in this respect.  We
therefore find that US law is not inconsistent with Article 21.3 of the SCM Agreement with respect to
the obligation that the investigating authorities de termine the likelihood of continuation or recurrence
of subsidisation in a sunset review.
8.107  Further, we note that the European Communities cl aims that, owing to the lack of consistency
with Article 21.3 of the SCM Agreement in respect of  the obligation that the investigating authorities
determine the likelihood of continuation or recurrence of subsidisation in a sunset review,
US CVD law is also inconsistent with Article 32.5 of the SCM Agreement and Article XVI:4 of the
WTO Agreement, which provisions require that Members ensure the WTO-conformity of their laws,
regulations, and administrative procedures.  Having found that US CVD law and the accompanyingregulations are consistent with Article 21.3 of the SCM Agreement in respect of the obligation that the
investigating authorities determine the likelihood of continuation or recurrence of subsidisation in a
sunset review, we need not, and do not, consider whether US CVD law and the accompanying
regulations are inconsistent with Article 32.5 of the SCM Agreement and Article XVI:4 of the
WTO Agreement.
2. Whether US CVD law as applied in the instant sunset review is inconsistent with the
SCM Agreement in respect of the investigating authority's obligation to determine thelikelihood of continuation or recurrence of subsidisation in a sunset review
(a) Arguments of the Parties
(i) European Communities
8.108  The European Communities argues that the DOC failed to "determine" the likelihood of
continuation or recurrence of subsidisation in the instant case.  The European Communities assertsthat during the sunset review in question, the DOC re fused to consider changes or terminations in the
original subsidy programmes that occurred after the imposition of the original CVD order simply
                                                     
334 19 CFR 351.218(e)(2)(i) (Exhibit EC-14).WT/DS213/R
Page 189
because no administrative review had been requested by the German exporters and conducted by the
DOC during this period.335
8.109  According to the European Communities, the US DOC had in its possession the non-
confidential version of the German exporters' responses to the questionnaires in the original
investigation as well as the calculation memorandum as part of the record of the originalinvestigation. Thus, the European Communities ma intains the DOC could have easily determined
whether the benefits received by the German exporters under the CIG programme after
1 January 1986 were de minimis.
336  According to the European Communities therefore the US DOC
failed to fulfill its obligation to determine the like lihood of continuation or recurrence of subsidisation
by declining to consider a document that allegedly contained information that could be relevant in its
likelihood analysis.
(ii) United States
8.110  The United States points out that in the sunset review at issue, the DOC considered the
subsidy programmes and the rate of subsidisation calculated in the original investigation.  According
to the United States, this approach conforms to the requirements of Article 21.3 because what that
article requires an investigating authority to do in a sunset review is to determine the likelihood of
continuation or recurrence of subsidisation.337
8.111  The United States also argues in this respect that even using the calculation memorandum that
was part of the original CVD investigation would not shed light on the rate of subsidisation because
that memorandum contained no information concerning the value of the German exporters' sales.338
(b) Findings of the Panel
8.112  Having found that US law as such is not inconsistent with the SCM Agreement in respect of
the investigating authority's obligation to determine the likelihood of continuation or recurrence of
subsidisation under Article 21.3, we now turn to the consistency of US CVD law as applied in the
instant sunset review with the SCM Agreement in re spect of the investigating authority's obligation to
determine the likelihood of continuation or recurrence of subsidisation under Article 21.3.
8.113  We note that among all the subsidy programmes involved in this sunset review, the Capital
Investment Grants ("CIG") programme had the highest share.  The CIG programme was the major
subsidy programme involved in the original CVD investigation.  There is no dispute between the
parties that this programme was terminated after the imposition of the original CVD order.  It
provided non-recurring subsidies and applied only to investments made  prior to 1 January 1986.339
8.114  In this context, we will consider the analysis and explanation underlying the US DOC's
determination that subsidisation was likely to contin ue or recur in this sunset review. US DOC stated
in its final determination in the instant sunset review  that it had determined that the revocation of the
CVD order at issue would be likely to lead to the continuation or recurrence of subsidisation at the
rate of 0.54 per cent.340
                                                     
335 First Written Submission of the European Communities, para. 77.
336 Id., para. 87.
337 First Written Submission of the United States, para. 92.
338 Id., para. 106.
339 Final Affirmative Countervailing Duty Determinations: Certain Steel Products from Germany, 58
FR 37316 (9 July 1993) (Exhibit EC – 2).
340 Final Results of Full Sunset Reviews, 65 FR 47407 (2 August 2000) (Exhibit EC – 9).WT/DS213/R
Page 190
8.115  Thus, it appears that  the US DOC made an assessment of the rate at which subsidisation was
likely to continue or recur.  We recall, however , our finding above that the determination of the
investigating authority must rest on an adequate factual basis.  We therefore consider whether the
US DOC's assessment of the likelihood of whether subsidisation would continue or recur rested on an
adequate factual basis, consistent with the requirements of Article 21.3.   We consider that in thecontext of a sunset review under Article 21.3 of  the SCM Agreement, an investigating authority
should collect relevant facts and base its likelihood analysis on those facts.  These facts will include,
among others, changes in the original subsidy programmes, any new subsidy programmes introduced
following the imposition of the original CVD, potent ial subsidy programmes, and benefits that flow or
may flow from these programmes to the exporters.  Such relevant facts may be in the possession of
either the investigating authorities or the interested parties.  Article 12 of the Agreement, which
governs, inter alia , the collection of evidence, is specifically incorporated into Article 21.  Therefore,
where necessary in sunset reviews, the investiga ting authorities may make use of the methods provided
for in Article 12 for the collection of eviden ce, as they do in original investigations.
8.116  In the instant case, the DOC took the original CVD rate found in the original investigation as
a starting-point and then subtracted from that rate  the share of two subsidy programmes found to have
been terminated after the imposition of the orig inal CVD.  Thus the factual basis of the DOC's
determination was limited to the original rate of subsidisation and the fact that two of the original
subsidy programmes were terminated after the imposition of the original CVD order.
8.117  In our view, the DOC's likelihood determination, which did not go beyond simple arithmetic
calculation, lacks sufficient factual basis.  In particular, we note that the US DOC refused to accept
information that would have been relevant to the assessment of the likelihood of subsidisation. Withrespect to the obligations of the investigating auth orities regarding the establishment of an adequate
factual basis for their determinations, the Appellate Body, in the US – Cotton Yarn
  case, stated:
[A]n investigation by a competent authority requires a proper degree of activity.
Their "duties of investigation and evaluation preclude them from remaining passive
in the face of possible shortcomings in the evidence submitted."  They "mustundertake additional investigative steps, when the circumstances so require, in order
to fulfil their obligation to evaluate all relevant factors."
341
8.118  In the instant sunset review, as discussed further below, the DOC declined the request made
by the German exporters that the calculation memorandum from the original investigation be placed
on the record of the sunset review on the grounds th at the submission was untimely.  In our view, and
in light of the Appellate Body's ruling in US – Cotton Yarn , the investigating authorities are required to
consider factual evidence already in their possession that is relevant to the assessment of the likelihood
of continuation or recurrence of subsidisation, particul arly where, as in this case, that information may
be relevant to the assessment of the rate at wh ich subsidisation is likely to continue or recur.
Investigating authorities cannot remain completely pa ssive and expect the exporters to formally submit
information that is in the possession of the inves tigating authorities in connection with the original
investigation.  Applying that test to our case, the DOC's failure to accept the German e xporters'
request that the calculation memorandum be placed on the record of the sunset review indicates that
the DOC did not even consider a document that was in its possession and that would have been
relevant in its likelihood analysis, let alone taking additional steps.
8.119  In light of the foregoing, we conclude that  the US DOC failed to properly determine the
likelihood of continuation or recurrence of subsidisation in the instant sunset review because itsdecision regarding the rate at which subsidisation was likely to continue or recur lacked an adequate
factual basis.  Therefore, we conclude that US CVD law as applied in the instant sunset review is
                                                     
341 US – Cotton Yarn , footnote 217, supra , para. 73 (footnotes omitted, emphasis in original).WT/DS213/R
Page 191
inconsistent with the SCM Agreement in respec t of the investigating authority's obligation to
determine the likelihood of continuation or recurrence of subsidisation under Article 21.3.
E. WHETHER US CVD LAW AS SUCH AND AS APPLIED IN THE INSTANT SUNSET REVIEW ARE
INCONSISTENT WITH THE SCM  AGREEMENT IN RESPECT OF THE INVESTIGATING AUTHORITY 'S
OBLIGATION TO PROVIDE AMPLE OPPORTUNITY TO INTERESTED MEMBERS AND PARTIES TOSUBMIT RELEVANT EVIDENCE IN A SUNSET REVIEW
1. Arguments of the parties
(a) European Communities
8.120  The European Communities argues that US law violates Article 12.1 of the SCM Agreement
in that it fails to provide ample opportunity to the interested parties to present in writing all evidence
which they consider relevant in respect of a sunset review.  In particular, the European Communities
refers to Section 351.218(d)(4) of the US Sunset Regulations – which, together withSection 351.218(d)(3), provides 35 days for the parties to respond to the questionnaires –  and submits
that this short deadline violates the provisions of Article 21.3, in conjunction with Articles 12.1
and 21.4, of the SCM Agreement.
342
8.121  The European Communities also asserts that  US CVD law is inconsistent with the
SCM Agreement in that, under US CVD law, the DOC does not send questionnaires to interestedparties in sunset reviews and requires them to respond only to a short list of questions which, in the
European Communities' view, are perfunctory in nature.
343
8.122  Further, the European Communities argues as follows:
The US law and practice does [sic] not respect several provisions of Article 12 of the
SCM Agreement . . . In particular, Articles 12.1 and 12.1.1 lay down a generalobligation to provide "ample opportunity" to exporters to present in writing all
evidence they consider relevant.  Article 12.2 allows also for the right to present
information orally.  Article 12.3 establishes in effect a procedure of mutual dialogue
by providing that the affected exporters should be given timely opportunity "to see all
information that is relevant to the presentation of their cases . . . and to preparepresentations on the basis of this information".  Moreover, Article 12.8 provides that
before the final determination is made, disclosure should take place "in sufficient time
for the parties to defend their interests".  The principle underlying Article 12 of the
SCM Agreement, therefore, is that during all stages of the reviews the interested
parties should be given ample opportunity to present evidence, to have access to the
evidence presented by the other parties (except where confidentiality applies), to
present counter-evidence and to defend their interests at all stages leading up to thefinal determination.
344
8.123  The European Communities also submits that th e United States acted inconsistently with
Article 12.1 of the SCM Agreement by failing to consider in its likelihood analysis in the instant
sunset review the calculation memorandum that was in the DOC's possession as part of the record of
the original investigation.  In the view of th e European Communities, had the US DOC taken this
                                                     
342 First Written Submission of the European Communities, paras. 98-99.
343 Second Written Submission of the European Communities, para. 41.
344 Second Written Submission of the European Communities, para. 44.WT/DS213/R
Page 192
memorandum into account in its sunset determination, it would have found no likelihood of
continuation or recurrence of subsidisation.345
8.124  In response to the US DOC's argument that the calculation memorandum contained
confidential information, the European Communitie s argues that this document was drafted by the
DOC and that it did not contain confidential inform ation that was not known to the DOC or the other
interested parties in this sunset review.346  Similarly, the European Communities counters the US
arguments that the request made by the German exporters was untimely because, in the view of the
European Communities, the US DOC could still conclude this sunset review in a timely manner had it
taken this calculation memorandum into account.347
8.125  In its response to a question from the Panel following the second meeting of the Panel, the
European Communities clarified that it was indeed making a separate claim regarding the obligation
set out in Article 12.1 to provide ample opportunity to interested Members and parties to submit all
relevant evidence.348
8.126  In its comments on the request of the United States for interim review ( See paragraph 8.134,
infra ), the European Communities argued that the reference in its request for establishment to
Article 21 in toto  would include Article 12, as paragraph 4 of Article 21 expressly indicates that
Article 12 is applicable to sunset reviews.  The European Communities further submitted that theobligation to provide ample opportunity under Article 12 is expressly mentioned in its first written
submission.  The European Communities considered that it had fully complied with the standards of
Article 6.2 of the DSU.
8.127  Finally, the European Communities argued that the United States was not only "somewhat
foreclosed", following the first meeting of the Panel,  from raising such an issue but that, in addition,
the Panel had not proceeded "in any extension of its authority or jurisdiction".  The European
Communities based its objection on what it considered "the clear and verifiable evidence" that the
United States was never in any doubt about the European Communities' claims under Article 12
throughout the consultations, request for establishment, and subsequent written and oral submissions
of the European Communities.  The European Commun ities indicated that it had "serious difficulties"
in understanding the US argument that the United States only had the opportunity to raise this issue
following the European Communities' responses to questions from the Panel following the second
meeting of the Panel.
(b) United States
8.128  In response to the European Communities' claim regarding "ample opportunity" under
Article 12 of the Agreement, the United States first points out that, consistent with Article 12.1.1 of
the Agreement, the US Sunset Regulations provide 30 days for the parties to submit the requiredinformation.  The United States also points out that, also consistent with Article 12.1.1, the Sunset
Regulations provide for the extension of this time-limit.
349
8.129  With respect to the European Communities' argument concerning the US' failure to send
questionnaires in sunset reviews, the United States submits that in addition to the information
requirements set out in the Sunset Regulations – which constitute the standard questionnaire inUS sunset reviews – the Sunset Regulations allow interested parties to submit additional information
                                                     
345 Second Written Submission of the European Communities, para. 32.
346 First Oral Statement of the European Communities, para. 33.
347 Id., para. 33.
348 Response of the European Communities to Question 54 from the Panel.
349 First Written Submission of the United States, para. 111.WT/DS213/R
Page 193
that they would like the DOC to consider.350  In the view of the United States, therefore, the
provisions of US law are fully consistent with Article 12 of the SCM Agreement.351
8.130  The United States counters the European Communities' arguments made in respect of the
inclusion of the calculation memorandum from the original investigation basically on two
grounds, i.e., lack of timeliness of the request and the confidential nature of the information containedtherein.
8.131  The United States argues that the request made by the German exporters to have the
calculation memorandum made part of the record of the sunset review was untimely because it was
made over six months after the deadline for filing information in the instant sunset review.
352  The
United States also points out that the German producers failed to file any request for the extension of
this deadline although under US law they were entitled to do so.353  Finally, the United States submits
that the lack of timeliness of the German producers' request is all the more obvious given that theywere on notice of the information requirements and applicable deadlines over fifteen months before
the initiation of this sunset review.
354
8.132  The United States asserts that another reason the US DOC declined to place this
memorandum on the record of the sunset review was because it contained confidential information
that could not be released without the consent of the person submitting it.355  The United States argues
in this respect that the DOC could not ignore previous requests for the confidential treatment of this
document and automatically place it on the record of the sunset review.356
8.133  In its comments on the response of the European Communities to a question from the Panel
following the second meeting of the Panel ( See paragraph 8.125, supra ), the United States submitted
that the European Communities' claims under Article 12 were new, as the European Communities'request for establishment does not reference Article 12 or the fact pattern which the European
Communities believes gives rise to a violation of Article 12.
357  The United States argued that the new
claims did not satisfy the standards of Article 6.2 of the DSU, and requested the Panel to dismiss these
new claims.
8.134  In its request for interim review, the United States again submitted, for the above reasons, that
the Panel should not have made any substantive findings regarding the obligation to provide ample
opportunity to interested members and parties to submit evidence in a sunset review, because the
European Communities' claims regarding this obligation were not within the Panel's terms of
reference.
2. Findings of the Panel
8.135  We recall that paragraph 13 of our working procedures states that "[a] party shall submit any
request for a preliminary ruling not later than its first submission to the Panel . . . Exceptions to thisprocedure will be granted upon a showing of good cause".  In this regard, we note, at the outset, that,
although it was in the course of interim review that we addressed the objection of the United States
regarding the claims of the European Communitie s in respect of the investigating authority's
                                                     
350 Id., para.110.
351 Id., para. 108.
352 First Written Submission of the United States, para. 103.
353 Id.
354 Id.
355 Id., para. 104.
356 Id.
357 Comments of the United States on Responses of the European Communities to Questions from the
Panel following the Second Meeting of the Panel, paras. 21-22.WT/DS213/R
Page 194
obligation to provide ample opportunity, the United States had registered this objection prior to that
time.  The United States first presented this objection in its comments on the responses of the
European Communities to questions from the Panel following the second meeting.
8.136  Further, as the European Communities had up to that point only discussed the obligation to
provide ample opportunity in the context of the obligation to determine continuation or recurrence ofsubsidisation, it was not clear to us that the European Communities was making a separate claim in
respect of the obligation to provide ample opportunity.  It was on this basis that we posed a questionto the European Communities following our second m eeting with the parties, requesting clarification.
And the United States made its objection known following the response by the European
Communities that it was indeed making a separate claim in respect of this obligation.  Therefore, this
is not a situation in which we need to decide whether we can address an objection which could have
been raised in a timely manner, but was not.
8.137  Thus, we have addressed the issue raised by the United States regarding the European
Communities' claims in respect of the obligation to provide ample opportunity
358, and concluded that
these claims are outside our terms of reference.  Our reasons are set out below.
8.138  We note that Article 7 of the DSU covers the terms of reference of panels, and Article 6 the
establishment of panels.  Article 7 clearly indicates that the terms of reference of panels are containedin the request for the establishment of a panel
359.  With regard to the request for establishment,
Article 6.2 of the DSU provides in part:
The request for the establishment of a panel . . . shall indicate whether consultations
were held, identify the specific measures at issue and provide a brief summary of the
legal basis of the complaint sufficient to present the problem clearly.
The Appellate Body has stated, in respect of the terms of reference of panels:
Thus, "the matter referred to the DSB" for the purposes of Article 7 of the DSU and
Article 17.4 of the Anti-Dumping Agreement  must be the "matter" identified in the
request for the establishment of a panel under Article 6.2 of the DSU.  That provision
requires the complaining Member, in a panel request, to "identify the specific
measures at issue  and provide a brief summary of the legal basis of the complaint
sufficient to present the problem clearly."  (emphasis added)  The " matter  referred to
the DSB", therefore, consists of two elements:  the specific measures  at issue and the
legal basis of the complaint  (or the claims ).360
                                                     
358 See also  the following ruling of the Appellate Body, in United States – Anti-Dumping Act of 1916 :
. . . we also agree with the Panel's consideration that "some issues of jurisdiction may be of
such a nature that they have to be addressed by the Panel at any time".  We do not share the
European Communities' view that objections to the jurisdiction of a panel are appropriatelyregarded as simply "procedural objections".  The vesting of jurisdiction in a panel is a
fundamental prerequisite for lawful panel proceed ings.  We, therefore, see no reason to accept
the European Communities' argument that we must reject the United States' appeal because
the United States did not raise its jurisdictional objection before the Panel in a timely manner.
(United States – Anti-Dumping Act of 1916 ("US – 1916 Act "), Report of the Appellate Body,
WT/DS136/AB/R-WT/DS162/AB/R, adopted 26 September 2000, para. 54 (footnoteomitted))
359 WT/DS213/3 in the present dispute.
360 Guatemala – Cement I , Report of the Appellate Body, footnote 226, supra , para. 72 (emphasis in
original).WT/DS213/R
Page 195
Further, the Appellate Body has stated, in European Communities – Bananas :
As a panel request is normally not subjected to detailed scrutiny by the DSB, it is
incumbent upon a panel to examine the request for the establishment of the panel
very carefully to ensure its compliance with both the letter and the spirit of Article 6.2
of the DSU.  It is important that a panel request be sufficiently precise for tworeasons: first, it often forms the basis for the terms of reference of the panel pursuant
to Article 7 of the DSU; and, second, it informs the defending party and the third
parties of the legal basis of the complaint.
361
8.139  Thus, the United States' request raises two separate, but related, issues: (i) whether
US CVD law in respect of the opportunity to submit evidence in a sunset review was identified in the
request for establishment as a measure challenged by the European Communities and, if so, (ii)
whether the European Communities' request for establishment provides "a brief summary of the legalbasis of the complaint sufficient to present the problem clearly" and therefore satisfies the standard set
out in Article 6.2 of the DSU.
8.140  We shall first examine the request for establishment to determine whether, on its face, the
United States – and any other WTO Member – could have been reasonably expected to know that
US CVD law in respect of the opportunity to submit evidence in a sunset review was part of "thematter referred to the DSB".
8.141  It is clear from the European Communities' request for establishment that the words
"opportunity to submit evidence" or the like do not appear in that request.  Nor, as we have noted
above, does the request contain any all-encompassing reference to US procedures, generally, for
sunset review.  Paragraphs 1-2 of the request for establishment set out the procedural background tothe request for establishment, paragraph 3 explains that the request relates particularly to the sunset
review in carbon steel, paragraphs 4-7 set out the European Communities' claim in respect of the de
minimis standard applied in that review, paragraphs 8-10 set out the European Communities' claim in
respect of the evidentiary standards applied in relation to the initiation of that review, and
paragraph 11 summarises the European Communities' challenge to the US decision in that review, aswell as to "certain aspects of the sunset review procedure which led to it".  This latter phrase could not
be understood to include US CVD law in respect of the opportunity to submit evidence.
8.142  We note that the request for establishment further outlines the statutory and regulatory
underpinnings of the US sunset review procedures as such, and as applied in the sunset review in
carbon steel
362.  These statutory and regulatory provisions also govern the opportunity to submit
evidence in a sunset review.  We consider, however, that this fact alone is insufficient for us to
conclude that US CVD law in respect of the opportunity to submit evidence in a sunset review isidentified as a specific measure at issue.
8.143  Having found that US CVD law in respect of the opportunity to submit evidence in a sunset
review is not identified in the request for establishment, we shall consider whether that "measure" is
sufficiently related to a measure or measures that are specifically identified so as to bring it within our
terms of reference.  We note the finding of the Panel in Japan – Film :
The question thus becomes whether the ordinary meaning of the terms of
Article 6.2, i.e., that "the specific measures at issue" be identified in the panel request,
can be met if a "measure" is not explicitly described in the request.  To fall within the
terms of Article 6.2, it seems clear that a "measure" not explicitly described in a panel
                                                     
361 European Communities – Bananas , Report of the Appellate Body , footnote227, supra , para. 142.
362 WT/DS213/3, para. 12.WT/DS213/R
Page 196
request must have a clear relationship to a "measure" that is specifically described
therein, so that it can be said to be "included" in the specified "measure".  In our
view, the requirements of Article 6.2 would be met in the case of a "measure" that is
subsidiary, or so closely related to a "measure" specifically identified, that the
responding party can reasonably be found to have received adequate notice of thescope of the claims asserted by the complaining party.  The two key elements – close
relationship and notice – are inter-related: only if a "measure" is subsidiary or closely
related to a specifically identified "measure" will notice be adequate.
363
8.144  We note that the European Communities' request refers to "certain aspects of the sunset
review procedure which led to [the DOC decision not to revoke the CVDs on carbon steel]".  We do
not consider US CVD law in respect of the opportunit y to submit evidence in a sunset review to be "a
'measure' that is subsidiary, or so closely related to" any of the measures specifically identified, "thatthe responding party can reasonably be found to have received adequate notice of the scope of the
claims asserted by the complaining party".  To consider otherwise would mean that the general
sentence "certain aspects of the sunset review procedure which led to [the DOC decision not to revoke
the CVDs on carbon steel]" put Members on notice that any aspect of US CVD law of relevance in
the sunset review on carbon steel might be before the Panel.  This cannot be, for that universe is
potentially extremely large.  We therefore find th at US CVD law in respect of the opportunity to
submit evidence in a sunset review is not sufficiently related to a measure or measures that are
specifically identified in the request for establ ishment as to properly bring it within our terms of
reference.364
8.145  For the foregoing reasons, we consider that the European Communities has failed to set out a
claim in its request for establishment with respect to the United States' CVD law in respect of the
investigating authority's obligation to provide ample opportunity to interested members and parties to
submit relevant evidence in a sunset review.  This "measure" is therefore outside our terms of
reference.  Accordingly, we do not address the European Communities' claims under Article 12 of the
SCM Agreement.
IX. CONCLUSIONS AND RECOMMENDATIONS
9.1 In conclusion, we find that:
(a) US CVD law and the accompanying regulations are consistent with Article 21,
paragraphs 1 and 3, and Article 10 of the SCM Agreement in respect of the
application of evidentiary standards to the self-initiation of sunset reviews;
(b) US CVD law and the accompanying regulations are inconsistent with Article 21.3 of
the SCM Agreement in respect of the application of a 0.5 per cent de minimis
standard to sunset reviews, and therefore violate Article 32.5 of the SCM Agreement
and, consequently, also Article XVI:4 of the WTO Agreement;
(c) the United States, in applying a 0.5 per cent de minimis standard to the instant sunset
review, acted in violation of Article 21.3 of the SCM Agreement;
                                                     
363 Japan – Film , Report of the Panel, footnote 230, supra , para. 10.8.
364 Having concluded that the European Communities has not identified US CVD law in respect of the
opportunity to submit evidence in a sunset review as a specific measure at issue in its request for establishment,we need not, and do not, consider whether the European Communities has provided "a brief summary of thelegal basis of the complaint sufficient to present the problem clearly" in that request for establishment
(See paras. 8.5-8.6, supra ).WT/DS213/R
Page 197
(d) US CVD law and the accompanying regulations and statement of policy practices are
consistent with Article 21.3 of the SCM Agreement in respect of the obligation to
determine the likelihood of continuation or recurrence of subsidisation in sunset
reviews; and
(e) the United States, in failing to determine properly the likelihood of continuation or
recurrence of subsidisation in the sunset review on carbon steel, acted in violation of
Article 21.3 of the SCM Agreement.
9.2 We recommend that the Dispute Settlement Body request the United States to bring its
measures mentioned in paragraph 9.1(b), (c), and (e) above into conformity with its obligations under
the WTO Agreement.
X. DISSENTING OPINION OF ONE MEMBER OF THE PANEL ON THE
ASSESSMENT OF THE PANEL RELATING TO THE APPLICATION OF A DEMINIMIS STANDARD TO SUNSET REVIEWS
10.1 One member of the Panel dissociated himself from the above assessment relating to the
US CVD law as such and as applied in the sunset review on carbon steel in respect of application of a
de minimis standard to sunset reviews ( See Sections VIII.C.1(b) and VIII.C.2(b), supra ) and
expressed the following dissenting opinion
365:
10.2 I agree with the statement of the majority of the Panel, that "nothing in the text of Article 21.3
specifically provides that the de minimis standard applicable to investigations is also applicable to
sunset reviews"366.  I do not, however, share the view of the ma jority that, such silence in the relevant
provision as to the applicability of a de minimis standard to sunset reviews is not dispositive given an
examination of the text of Article 21.3 in its context and in light of the object and purpose of the
SCM Agreement, as required by Article 31 of the Vienna Convention.  I consider that an examination
of Article 21.3 pursuant to the customary rules of treaty interpretation yields the conclusion that no de
minimis standard is applicable to sunset reviews.
10.3 In my view, the drafters would have been able and chosen to include a clear indication to the
opposite effect, should that have been their intention.  Indeed, I am persuaded by the United States'argument that the absence of a clear indication, for inst ance, in the form of a cross-reference, is all the
                                                     
365 Like the majority of the Panel, I do not understand the European Communities to be alleging a
violation of Article 11.9, but of Article 21.3, of the SCM Agreement.  In this regard, I note that the European
Communities argues that "an interpretation of the terms of Article 21.3 should be made in context and in the
light of the object and purpose of Article 21.3 and of the SCM Agreement.  Articles 21.1, 11.9, 15, and 10provide relevant context and help define its object and pur pose.  Such an interpretation . . . requires that the 1
[per cent] de minimis level of Article 11.9 should be implied, and hence applied, also to investigations and
determinations made in sunset reviews" (Response of the European Communities to Question 47 from the Panel(emphasis added)).
Further, the European Communities "objects to the [United States'] suggestion to use only the phrase
'Article 11.9 itself applies to sunset reviews'" (Comments of the European Communities on Request of theUnited States for Interim Review, para. 3).  Indeed, the European Communities argues that it "has takenparticular care to explain that there is an omission in Article 21.3 and that only a systematic interpretation can
fill up [sic] this gap by implying the de minimis standard of Article 11.9" (Comments of the European
Communities on Request of the United States for Interim Review, para. 3 (emphasis added)).  Nor could theEuropean Communities successfully allege a violation of Article 11.9.  Article 11 is entitled "Initiation andSubsequent Investigation", and clearly deals with investigations, such as that term is distinguished from reviewsby the Agreement.  This is also made clear in the text of Article 11.9 itself, which refers to investigations.  Itherefore consider whether Article 21.3 contains by implication the same type of obligation as Article 11.9, andwhether the United States has violated Article 21.3 in this respect.
366 Para. 8.58, supra .WT/DS213/R
Page 198
more significant given the immediate context of Article 21.3 – that is, the fact that the drafters did
provide explicit cross-references elsewhere in Article 21, to Articles 12 and 18.  It is clear that the
drafters knew how to have obligations set forth in  one provision apply in another context.  The most
obvious inference one can draw from the absence of a cross-reference, therefore, is that the Members
chose not to have the de minimis standard of Article 11.9 be implied in Article 21.3.  There appears tome to be no textual basis to read Article 21.3 in the manner argued for by the European Communities.
Given the marked difference in the terms of Article 21.3 and those of other provisions of the
SCM Agreement which do explicitly establish cross-cutting obligations, I cannot conclude that it was
the drafters' intention to have Article 11.9 be implied in Article 21.3.
10.4 To consider the question of cross-references or other explicit statements of cross-application
in the broader context of Article 21.3 – that is, provisions of the SCM Agreement other than
Article 21 – I note that a number of provisions in the Agreement contain an explicit indication wherethe drafters wished to make their scope of application clear
367.  Take Article 11.9, which sets out the
de minimis standard applicable to investigations (except for products originating in developing
country Members).  I agree with the statement of the ma jority of the Panel, that "nothing in the text of
[Article 11.9] provides for its de minimis standard to be implied in Article 21.3"368.  I therefore cannot
conclude, given the explicit language elsewhere in the Agreement, and in the absence of suchlanguage in Article 11.9, that the de minimis standard set out in that provision must nonetheless be
understood to be implied in Article 21.3.
10.5 I note the Appellate Body's statement, in US – Gasoline :
One of the corollaries of the "general rule of interpretation" in the Vienna Convention
is that interpretation must give meaning and effect to all the terms of the treaty.  Aninterpreter is not free to adopt a reading that would result in reducing whole clauses
or paragraphs of a treaty to redundancy or inutility.
369
I am of the opinion that to consider provisions re lating to investigations applicable by implication
under provisions relating to sunset reviews does not give meaning and effect to the explicit statements
of cross-application in the SCM Agreement, and effectively renders such statements redundant.  Inother words, if all provisions are applicable to sunset reviews, except perhaps where impracticable,
then there would be no need for such explicit statements to exist.
10.6 I recall that Article 11.9 requires the termination of an investigation in cases of de minimis
subsidisation, negligible volume of subsidised imports, or negligible actual or potential injury.  It
seems to me that, if the rationale for the inclusion of a de minimis subsidisation standard were that de
minimis subsidisation is deemed to be non-injurious, as the majority of the Panel considers
(See paragraphs 8.60-8.64), then there would be no need to include a further standard of negligible
actual or potential injury.  It should be noted, in this  context, that negligible actual or potential injury
is nonetheless material injury, as footnote 45 to the Agreement states that "[u]nder this Agreement the
term 'injury' shall, unless otherwise specified, be taken to mean material injury to a domestic industry,threat of material injury to a domestic industry or material retardation of the establishment of such an
industry".
                                                     
367 The definition of "subsidy" in Article 1 ("For the purpose of this Agreement"); the definition of
"interested parties" in Article 12.9 ("for the purposes of this Agreement"); the calculation of the amount of a
subsidy under Article 14 ("For the purpose of Part V"); the definition of "injury" under Article 15 and footnote45 ("Under this Agreement"); the definition of "like product" under footnote 46 ("Throughout this Agreement");definition of domestic industry in Article 16 ("For the purposes of this Agreement"); and the definition of "levy"under footnote 51 ("As used in this Agreement").
368 Para. 8.59, supra .
369 United States – Gasoline , Report of the Appellate Body, footnote 257, supra , p. 23.WT/DS213/R
Page 199
10.7 I recall also that Article 27.10 reads:
Any [CVD] investigation of a product originating in a developing country Member
shall be terminated as soon as the authorities concerned determine that:
(a) the overall level of subsidies granted upon the product in
question does not exceed 2 per cent of its value calculated ona per unit basis;
. . .
The use of the word "investigation" in this provision confirms, in my opinion, that the two de minimis
subsidisation thresholds specified in the SCM Ag reement apply only to investigations.  Were the de
minimis standard to apply to sunset reviews, the special and differential treatment provided to
developing countries in the context of investigations would presumably have been extended to include
sunset reviews.  The word "investigation" in Article 27.10 clearly indicates that that is not the case.  Itis difficult to see why the drafters would intend the de minimis standard to apply to both
investigations and sunset reviews, but provide specia l and differential treatment in this respect only in
the context of investigations.  In other words, the text of Article 27.10 suggests that no de minimis
standard applies to sunset reviews.
10.8 I am of the view that the European Communities' argument is largely contextual; indeed, the
European Communities has characterised its argument as a reading of Article 21.3 "in the context of"
Article 11.9.  It is not a given, however, that, becaus e the negotiators agreed to certain standards for
purposes of investigations, they necessarily agreed to the same for purposes of sunset reviews.  The
context of a legal provision – i.e., other paragraphs of the provision or related provisions elsewhere in
the text – does not in and of itself create a legal obligation.  The legal obligation must be found firstand foremost in the text of the provision.
370  Otherwise, one would be forced to accept the view that
consistency reasons may constitute sufficient grounds for the so-called "implication" of obligations.
10.9 While I do not disagree that application of the same de minimis standard to sunset reviews as
to investigations would ensure a certain balance be tween the disciplines applicable to investigations
and those applicable to sunset reviews, it is difficult to conclude on that basis alone that the same de
minimis standard applies to both instances.  Policy arguments alone are not sufficient for me to find
that this is the case; rather, I would have to find that there is a proper legal basis for the European
Communities' position, interpreting Article 21.3 pursuant to the customary rules of treatyinterpretation.
371  While it would not be illogical – and it would reflect a degree of consistency in the
treatment of investigations and sunset reviews – to apply the same de minimis standard to sunset
reviews as to investigations, I cannot conclude on those grounds alone that that is the case, and I
                                                     
370 In this regard, I recall the statement of the Appellate Body, in Japan – Alc oholic
Beverages II :
Article 31 of the Vienna Convention  provides that the words of the treaty form the foundation
for the interpretive process:  "interpretation must be based above all upon the text of thetreaty".  ( Japan – Taxes on Alcoholic Beverages ("Japan – Alcoholic Beverages II "), Report of
the Appellate Body, WT/DS8/AB/R-WT/DS10/AB/R-WT/DS11/AB/R, adopted1 November 1996, p. 12 (footnote deleted))
371 In this regard, I recall the statement of the Appellate Body, in EC – Hormones , that:
The fundamental rule of treaty interpretation requires a treaty interpreter to read and interpret
the words actually used by the agreement under examination, not words the interpreter may
feel should have been used.  ( EC – Hormones , Report of the Appellate Body, footnote 250,
supra , para. 181 (emphasis added))WT/DS213/R
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consider that the text of the SCM Agreement does not require investigating authorities to do so.  I
consider that the text of Article 21.3 – literally and in its context – clearly fails to establish an
obligation on investigating authorities to apply a de minimis standard to sunset reviews.
10.10  Nor do I consider it impossible that the drafters might have intended there to be different rules
for sunset reviews from those for investigations.  It is arguably perfectly rational for there to be
different disciplines for sunset reviews than for investigations.  For instance, the negotiators might
well have considered that application of a de mini mis standard in the form of a specific numeric
threshold was not feasible in the context of sunset reviews because any assessment of the rate at
which subsidisation is likely to continue or recur would be but an approximation.  One important
observation in this regard is that Article 19.1 of the Agreement requires investigating authorities to
make a final determination of both the existence and the amount of the subsidy (and that the
subsidised imports are causing injury) before they may impose a CVD.  It is therefore entirelyreasonable that a de minimis threshold of 1 per cent is set out in this respect in Article 11.9.  There is,
however, no language similar to that of Article 19.1 in Article 21.3.  In other words, were the de
minimis standard set out in Article 11.9 implied in Article 21.3, the drafters would have set out in
Article 21.3 the requirement to make a determination of both the existence and the amount of the
subsidy.  I consider that there is nothing in a decision that the de minimis standard applicable toinvestigations does not apply to sunset reviews that would undermine the operation of the Agreement
or the ability of investigating authorities to operate under the Agreement.  I see the framework of
CVD disciplines as supporting the conclusion that a de minimis standard is not required under
Article 21.3.  In other words, it is not necessary to – and there could be entirely rational reasons not to
– have the de minimis standard of Article 11.9 be implied in Article 21.3 to make the latter, oranother, provision functional or ensure that the basic framework of CVD disciplines is preserved.
10.11  Finally, I consider that it is worth noting that, while the negotiating history of the
SCM Agreement does not specifically address the question of whether a de minimis standard should
apply to reviews, the questions of definition of a subsidy, investigation, imposition of measures, and
review of need for measures were negotiated as separate items.  De minimis as a concept wasaddressed in the context of the question of the imposition of measures; it does not seem to have been
addressed at all in the context of the discussion of the need for a sunset clause or review mechanism.
I am of the view that this would tend to co nfirm the results of my textual analysis above.
10.12  In sum, I recognise that the negotiators may well have had differing views as to whether it
was desirable to apply the same de minimis standard to sunset reviews as to investigations – and it is
indeed likely that some of them believed it would be.  I do not, however, see that a rigorous and
faithful reading of Article 21.3 in its context and in light of the object and purpose of theSCM Agreement leads to the conclusion that they agreed to impose such an obligation on
investigating authorities.
10.13  I therefore find that the de minimis standard of  Article 11.9 is not implied in Article 21.3.  I
thus conclude that US CVD law and the accomp anying regulations are consistent with the
SCM Agreement in respect of the application of a de minimis standard to sunset reviews, andaccordingly reject the claim of the European Communities in this regard.
10.14  Further, I note that the European Communities claims that, owing to the lack of consistency
with Article 21.3 of the SCM Agreement in respect of the application of a de minimis standard to
sunset reviews, US CVD law is also inconsistent with Article 32.5 of the SCM Agreement and
Article XVI:4 of the WTO Agreement, which provisions require that Members ensure the WTO-conformity of their laws, regulations, and administrative procedures.  Having found that US CVD law
and the accompanying regulations are consistent with Article 21.3 of the SCM Agreement in respect
of the application of a de minimis standard to sunset reviews, I need not, and do not, consider whetherWT/DS213/R
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US CVD law and the accompanying regulations are inconsistent with Article 32.5 of the
SCM Agreement and Article XVI:4 of the WTO Agreement.
10.15  Accordingly, in conclusion, in contrast with  paragraphs 9.1(b) and 9.1(c), I find that:
(a) US CVD law and the accompanying regulations are consistent with Article 21.3 of
the SCM Agreement in respect of the application of a 0.5 per cent de minimis
standard to sunset reviews; and
(b) the United States, in applying a 0.5 per cent de minimis standard to the instant sunset
review, did not act in violation of Article 21.3 of the SCM Agreement.
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