WORLD TRADE
ORGANIZATIONWT/DS212/1
G/L/415
G/SCM/D37/1
27 November 2000
(00-5010)
Original:  English
UNITED STATES – COUNTERVAILING MEASURES CONCERNING
CERTAIN PRODUCTS FROM THE EUROPEAN COMMUNITIES
Request for Consultations by the European Communities
The following communication, dated 10 November 2000, from the Permanent Delegation of
the European Commission to the Permanent Mission of the United States and to the Chairman of theDispute Settlement Body, is circulated in accordance with Article 4.4 of the DSU.
_______________
The European Communities request consultations with the Government of the United States
of America under Article 4 of the Understanding on Rules and Procedures Governing the Settlement
of Disputes, Article XXII of the General Agreement on Tariffs and Trade 1994 and Article 30 of the
Agreement on Subsidies and Countervailing Measures (the SCM Agreement).
This request relates to the continued application by the United States of countervailing duties
based on an irrebuttable presumption that non-recurring subsidies granted to a former producer of
goods, prior to a change of ownership, "pass through" to the current producer of the goods following
the change of ownership.  This is what the US Department of Commerce (DOC) calls its " change in
ownership" methodology
1.
This approach was found by the WTO Appellate Body in "United States – Imposition of
Countervailing duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in
the United Kingdom" (AB-2000-1), to be inconsistent with the SCM Agreement, since the US had not
properly examined whether the financial contribu tions made prior to the change of ownership
conferred a benefit to the current producer of the subject goods.  The Appellate Body also confirmed
that a change of ownership at fair market value el iminated the benefit of any prior subsidies to the
privatized company.2
In the light of these findings, the European Communities consider that the continued
application of the " change in ownership" methodology, and the continued imposition of duties based
on it, are in breach of Articles 10, 19 and 21 of the SCM Agreement, because there is no properdetermination of a benefit to the producer of the goods under investigation, as required by
Article 1.1(b) of the SCM Agreement.
                                                     
1 The currently applicable version of this methodology was developed by the US in 1993 and is
contained in the General Issues Appendix (GIA) attached to the DOC notice of Final Countervailing Duty
Determination;  Certain Steel Products from Austria, et.al., 58 FR 37217 (July 9, 1993).
2 The WTO panel, in paragraph 8.2 of its report WT/DS138/R of 23 December 1999, concluded that:
"….we note that the United States has continued to apply its change-in-ownership methodology during thecourse of the present dispute. We would suggest that the United States takes all appropriate steps, including arevision of its administrative practices, to prevent th e aforementioned violation of Article 10 of the SCM
Agreement from arising in the future".WT/DS212/1
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The European Communities refer to, and include in this request for consultations, 14 US
countervailing duty measures where this illegal " change in ownership" methodology was applied;  the
specific allegations relating to each measure on which consultations are requested are set out in theattached text.  All these cases involve alleged non-recurring subsidies granted to firms prior to a
change of ownership.  The measures in question are listed in the table below.
Furthermore, the European Communities consider that if the US had properly examined the
nature of the change of ownership in each of the cases below, it would have found that it took place
for fair market value, and that in such a case no benefit, as defined by Article 1.1(b) of the
SCM Agreement read in conjunction with Article 14, was conferred on the producers of the goodssubject to the duties by previous financial contributions from the Government to other producers. In
these circumstances, the amount of countervailing duty would have been greatly reduced, or in some
cases, zero.
This request is without prejudice to the issue of the countervailability of certain government
measures which have been subjected to countervailing duties by the US in the cases below.
We look forward to receiving your reply to this request and to fixing a mutually acceptable
date for consultations.WT/DS212/1
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WTO request for consultations – List of specific measures in question
US Change-in-Ownership methodology
Original imposition of countervailing duties (post-WTO measures)
1 Stainless Sheet and Strip in Coils from France C-427-815
2 Certain Cut-to-Length Carbon Quality Steel from France C-427-817
3 Certain Pasta from Italy C-475-819
4 Stainless Steel Sheet and Strip in coils from Italy C-475-821
5 Certain Stainless Steel Wire Rod from Italy C-475-823
6 Stainless Steel Plate in coils from Italy C-475-825
7 Certain Cut-to-length Carbon-quality steel plate from Italy C-475-827
Administrative reviews
8 Cold-Rolled Carbon Steel Flat Products from Sweden C-401-401
9 Cut-to Length Carbon Steel Plate from Sweden C-401-804
10 Grain-oriented electrical steel from Italy * C-475-812
Sunset reviews
11 Cut-to-Length Carbon Steel Plate from United Kingdom C-412-815
12 Certain Corrosion-Resistant Carbon St eel Flat Products from France C-427-810
13 Cut-to-Length Carbon Steel Plate from Germany C-428-817
14 Cut-to-Length Carbon Steel Plate from Spain C-469-804
* Preliminary determination, plus final sunset resultsWT/DS212/1
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United States – Countervailing Duties on Imports of
Stainless Steel Sheet and Strip in Coils from France
Specific Case No. 1
This case concerns the imposition of countervailing duties on Stainless Steel Sheet and Strip in Coils
from France, produced and exported by Usinor -S ollac S.A. (Usinor), on 8 June 1999.  The US case
number is C-427-815; (64 FR 30774 of 29 June 1999).  The rate of countervailing duty for Usinor was
5.38 % ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14 and 19 of the SCM Agreement 1.
The above countervailing duty was imposed on the basis of alleged subsidies which derived from
financial contributions made by the French Government to the state-owned French steel industry prior
to the privatization of Usinor (1995-1997) 2.  The US Department of Commerce ("DOC"), in
conducting this investigation, never properly examined whether these financial contributions
conferred a benefit to Usinor, the producer and exporter of the subject goods during the investigationperiod (1997), but presumed (irrebuttably) that certain subsidies had passed through to Usinor on the
basis of the DOC's so-called "change of ownership" methodology. The European Communities
consider that this failure to demonstrate the existe nce of a  benefit to the company under investigation
is a clear breach of the above-mentioned provisio ns of the SCM Agreement.  This violation was
confirmed by the conclusions of the WTO Appellate Body in " United States – Imposition of
Countervailing duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in
the United Kingdom" (AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information on the DOC record
demonstrates that Usinor was privatized for fair market value. The DOC did not take account of this
fact when deciding whether Usinor had received countervailable subsidies.  In these circumstances,
the European Communities consider that no benefit was conferred to Usinor from the previousfinancial contributions made by the French Government to its state-owned steel industry.  This is also
confirmed by the conclusions of the UK lead and bismuth findings referred to above.
Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of anyoutstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of the
SCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration".  The method used by
investigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of ownership" methodology are not consistent with them.
                                                     
1 These consultations relate only to the countervailing by the US of  financial contributions made prior
to Usinor's privatization, such as 1) Loans with Sp ecial Characteristics 2) Shareholders Advances 3) Steel
Intervention Fund. These amount to all but no more than 0.10% of  the countervailing duty imposed by the
DOC.
2 Prior to the public offering of shares in July 1995, the French Government owned 80% of Usinor
shares, and Crédit Lyonnais (of which the French Government held a majority interest: 69% direct, 13%indirect) owned 20% of the shares. After the July 1995 public offering, the French Government held 9.8% of theshares. By October 22, 1997, the French government had sold all but 1% of its interest in the company.WT/DS212/1
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United States – Countervailing Duties on Imports of
Certain Cut-to-Length Carbon Quality Steel Plate from France
Specific Case No. 2
This case  concerns the imposition of countervailing duties on Certain Cut-to-Length Carbon Quality
Steel Plate from France, produced and exported by Usinor -Sollac S.A. (Usinor) and GTS Industries
S.A. (GTS), on 29 December 1999.  The US case number is C-427-817; (64 FR 73277 of
29 December 1999).  The rate of countervailing duty for Usinor and GTS was respectively 5.56 % and6.86 % ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14 and 19 of the SCM Agreement 
3.
The above countervailing duty was imposed on the basis of alleged subsidies which derived from
financial contributions made by the French Government to the state-owned French steel industry prior
to the privatization of Usinor (1995-1997)  and the changes of ownership of GTS 4 (1992 and 1996).
The US Department of Commerce ("DOC"), in conducting this investigation, never properly
examined whether these financial contributions conferred a benefit to Usinor and GTS, the producers
and exporters of the subject goods during the investigation period (1998), but presumed (irrebuttably)
that certain subsidies had passed through to Usinor and GTS on the basis of the DOC's so-called
"change of ownership" methodology. The European Communities consider that this failure to
demonstrate the existence of a benefit to the company under investigation is a clear breach of theabove-mentioned provisions of the SCM Agreem ent.  This violation was confirmed by the
conclusions of the WTO Appellate Body in " United States – Imposition of Countervailing duties on
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom"
(AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information on the DOC record
demonstrates that Usinor and GTS were privatized for fair market value (See above). The DOC didnot take account of this fact when deciding whet her Usinor and GTS had received countervailable
subsidies.  In these circumstances, the European Communities consider that no benefit was conferred
to Usinor and GTS from the previous financial contributions made by the French Government to its
state-owned steel industry.  This is also confirmed by the conclusions of the UK lead and bismuth
findings referred to above.
Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of any
                                                     
3 These consultations relate only to the countervailing by the US of  financial contributions made prior
to Usinor's privatization and the changes in ownership of  GTS, such as 1) Loans with Special Characteristics 2)
Shareholders Advances 3) Steel Intervention Fund. These account for the bulk of the countervailing dutiesimposed.
4 Prior to 1992, AG der Dillinger Hütte ("Dillinger") owned 10.27% of GTS shares. On December 28,
1992, the remaining shares were transferred to Dillinger,  so that Dillinger owned 100% of GTS at this time.
Dillinger's parent company, DHS - Dillinger Hütte Saar stahl AG, was held by Usinor (70% since 1989), the
Government of the Saarland (27.5%) and Arbed SA (2.5%). DHS held at that time 95.3% of Dillinger. The U.S.
Department of Commerce thus calculated that Usinor retained a 66.71% interest in GTS after the 1992transaction.  In April 1996, Usinor reduced its interest in DHS to 48.75%.  The U.S. Department of Commercetreated both the 1992 and the 1996 transactions as changes in ownership of GTS. All the alleged subsidies inquestion were granted to Usinor and allocated pro-rata to GTS.WT/DS212/1
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outstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of the
SCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration".  The method used byinvestigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of ownership" methodology are not consistent with them.
United States – Countervailing Duties on Imports of
Certain Pasta from Italy
Specific Case  No. 3
This case concerns the imposition of countervailing duties on Certain Pasta from Italy, produced and
exported by Delverde S.r.l. (Delverde), on 14 June  1996.  The US case number is C-475-819; (61 FR
30287 of 14 June 1996).  The rate of countervailing duty for Delverde was 5.9 % ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14 and 19 of the SCM Agreement 5.
The above countervailing duty was imposed on the basis of alleged subsidies which derived from
financial contributions made by the Italian Government to an unrelated private company, from whichDelverde purchased a pasta factory and related production assets, name and trademark, in 1991.  The
US Department of Commerce ("DOC"), in conduct ing this investigation, never properly examined
whether  Delverde, the producer and exporter of the subject goods during the investigation period
(1994), itself received a financial contribution from  the Italian Government, or whether a benefit was
conferred to Delverde. DOC presumed (irrebuttably) that certain subsidies had passed through to
Delverde on the basis of the DOC's so-called "change of ownership"  methodology. The European
Communities consider that this failure to demonstrate the existence of a benefit to the company underinvestigation is a clear breach of the above-mentioned provisions of the SCM Agreement.  This
violation was confirmed by the conclusions of the WTO Appellate Body in " United States –
Imposition of Countervailing duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products
Originating in the United Kingdom" (AB-2000-1) ("UK lead and bismuth").  
6
Furthermore, the European Communities consider that the information on the DOC record
demonstrates that Delverde purchased the assets of the unrelated company for fair market value.  The
DOC did not take account of this fact when deci ding whether Delverde had received countervailable
subsidies.  In these circumstances, the European Communities consider that no benefit was conferred
to Delverde from the previous financial contributions made by the Italian Government to thecompany's prior owner. This is also confirmed by the conclusions of the UK lead and bismuth
findings referred to above.
                                                     
5 These consultations relate to the countervailing by the US of financial contributions granted to the
company which owned the pasta factory later purchased by Delverde.
6 The Delverde  case was also referred by the exporter to the US domestic courts.  The US Court of
Appeals for the Federal Circuit, by a decision dated 2 February 2000, found against DOC and remanded the caseto DOC, concluding that "Commerce's methodology for dete rmining whether Delverde received a
countervailable subsidy is inconsistent with 19 USC § 1677(5)" .  To the Commission's knowledge, the DOC has
not yet issued a decision consistent with the United States WTO obligations in this remand.WT/DS212/1
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United States – Countervailing Duties on Imports of
Certain Stainless Steel Wire Rod from Italy
Specific Case No. 4
This case concerns the imposition of countervailing duties on Certain Stainless Steel Wire Rod from
Italy, produced and exported by Cogne Acciai Speciali S.r.l., on 29 July 1998.  The US case number
is C-475-821; (63 FR 40474 of 29 July 1998).  The rate of countervailing duty for Cogne Acciai
Speciali S.r.l. was 22.22 % ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14 and 19 of the SCM Agreement 7.
The above countervailing duty was imposed on the basis of alleged subsidies which derived from
financial contributions made by the Italian Governme nt to the state-owned Italian steel industry prior
to the privatization of Cogne Acciai Speciali S.r.l., on 31 December 1993.  The US Department of
Commerce ("DOC"), in conducting this investigation, never properly examined whether these
financial contributions conferred a benefit to Cogne Acciai Speciali S.r.l., the producer and exporterof the subject goods during the investigation period, but presumed (irrebuttably) that certain subsidies
had passed through to Cogne Acciai Speciali S.r.l., on the basis of the DOC's so-called "change of
ownership"  methodology. The European Communities consider that this failure to demonstrate the
existence of a benefit to the company under investigation is a clear breach of the above-mentioned
provisions of the SCM Agreement.  This violation was confirmed by the conclusions of the WTOAppellate Body in " United States – Imposition of Countervailing duties on Certain Hot-Rolled Lead
and Bismuth Carbon Steel Products Originating in  the United Kingdom" (AB-2000-1) ("UK lead and
bismuth").
Furthermore, the European Communities consider that the information on the DOC record
demonstrates that Cogne Acciai Speciali S.r.l. was privatized for fair market value. The DOC did not
take account of this fact when deciding whether Cogne Acciai Speciali S.r.l. had receivedcountervailable subsidies.  In these circumstances, the European Communities consider that no benefit
was conferred to Cogne Acciai Speciali S.r.l. from the previous financial contributions made by the
Italian Government to its state-owned steel industry.  This is also confirmed by the conclusions of the
UK lead and bismuth findings referred to above.
Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of any
outstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of the
SCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration".  The method used byinvestigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of ownership" methodology are not consistent with them.
                                                     
7 These consultations relate only to the countervailing by the US of financial contributions made prior
to Cogne's privatization, such as (1) Equity infusions to Finsider and IlVA and (2) Pre-privatization Assistanceand Debt forgiveness.  These amount to at least 21.74 % of the 22.22% countervailing duty.  A corporate historycan be found in the Annex.WT/DS212/1
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United States – Countervailing Duties on Imports
of Stainless Steel Plate in Coils from Italy
Specific Case No. 5
This case concerns the imposition of countervailing duties on Stainless Steel Plate in Coils from Italy,
produced and exported by Acci ai Speciali Terni S.p.A. (AST) 8, on 31 March 1999.  The US case
number is C-475-823; (64 FR 15508 of 31 March 1999) .  The rate of countervailing duty for AST
assigned by the US Department  of Commerce ("DOC") was 15.16 % ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14 and 19 of the SCM Agreement 9.
The above countervailing duty was imposed on the basis of alleged subsidies which derived from
financial contributions made by the Italian Government to the state-owned Italian steel industry prior
to the privatization of Acciai Speciali Terni S.p.A. in December 1994.  The DOC, in conducting this
investigation, never properly examined whether these financial contributions conferred a benefit to
Acciai Speciali Terni S.p.A., the producer and expo rter of the subject goods during the investigation
period (1997), but presumed (irrebuttably) that certain subsidies had passed through to Acciai Speciali
Terni S.p.A. on the basis of the DOC's so-called "change of ownership"  methodology. The European
Communities consider that this failure to demonstrate the existence of a benefit to the company under
investigation is a clear breach of the above-mentioned provisions of the SCM Agreement.  This
violation was confirmed by the conclusions of the WTO Appellate Body in " United States –
Imposition of Countervailing duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products
Originating in the United Kingdom" (AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information on the DOC record
demonstrates that Acciai Speciali Terni S.p.A. was privatized for fair market value. The DOC did not
take account of this fact in its investigation when deciding whether Acciai Speciali Terni S.p.A. had
received countervailable subsidies.  In these circ umstances, the European Communities consider that
no benefit, and therefore no subsidy, was conferred to the privatized Acciai Speciali Terni S.p.A. from
the previous financial contributions made by the Italian Government to its state-owned steel industry.
This is also confirmed by the conclusions of the UK lead and bismuth findings referred to above.
Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of any
outstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of the
SCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration".  The method used by
investigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of ownership" methodology are not consistent with them.
                                                     
8 ILVA S.p.A. (old, state-owned) was demerged on 31 October 1993. Two new companies were
created: ILVA Laminati Piani S.r.l. (ILP) and Acciai Speciali Terni S.r.l. (AST). In December 1994, AST was
sold to KAI Italia S.r.l.  A more detailed corporate history can be found in the Annex.
9 These consultations relate to the countervailing by the US of alleged financial contributions made
prior to AST's privatization, such as (1) Equity infusions to Terni, TAS and ILVA;  (2) Benefits from the1988-90 Restructuring of Finsider;  (3) Debt forgiveness:  ILVA to AST.  These amount to at least 13.42% ofthe 15.16% countervailing duty.WT/DS212/1
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United States – Countervailing Duties on Imports of
Stainless Steel Sheet and Strip in Coils from Italy
Specific Case No. 6
This case concerns the imposition of countervailing duties on Stainless Steel Sheet and Strip in Coils
from Italy, produced and exported by  Acciai Speciali Terni S.p.A. (AST) 10, on 8 June 1999.  The US
case number is C-475-825; (64 FR 30624 of 8 June 1999).   The rate of countervailing duty assigned
by the US Department of Co mmerce ("DOC") for AST was 12.22 % ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14 and 19 of the SCM Agreement 11.
The above countervailing duty was imposed on the basis of alleged subsidies which derived fromfinancial contributions made by the Italian Governme nt to the state-owned Italian steel industry prior
to the privatization of Acciai Speciali Terni S.p.A. in December 1994.  The DOC, in conducting this
investigation, never properly examined whether these financial contributions conferred a benefit to
Acciai Speciali Terni S.p.A., the producer and expo rter of the subject goods during the investigation
period (1997), but presumed (irrebuttably) that certain subsidies had passed through to Acciai Speciali
Terni S.p.A. on the basis of the DOC's so-called "change of ownership"  methodology. The European
Communities consider that this failure to demonstrate the existence of a benefit to the company under
investigation is a clear breach of the above-mentioned provisions of the SCM Agreement.  This
violation was confirmed by the conclusions of the WTO Appellate Body in " United States –
Imposition of Countervailing duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products
Originating in the United Kingdom" (AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information on the DOC record
demonstrates that Acciai Speciali Terni S.p.A. was privatized for fair market value. The DOC did not
take account of this fact in its investigation when deciding whether Acciai Speciali Terni S.p.A. had
received countervailable subsidies.  In these circ umstances, the European Communities consider that
no benefit, and therefore no subsidy, was conferred to the privatized Acciai Speciali Terni S.p.A. from
the previous financial contributions made by the Italian Government to its state-owned steel industry.
This is also confirmed by the conclusions of the UK lead and bismuth findings referred to above.
Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of any
outstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of the
SCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration".  The method used by
investigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of ownership" methodology are not consistent with them.
                                                     
10 See Footnote 8.
11 These consultations relate to the countervailing by the US of alleged financial contributions made
prior to AST's privatisation, such as (1) Equity infusions to Terni, TAS and ILVA;  (2) Benefits from the1988-90 Restructuring of Finsider;  (3) Debt forgiveness: ILVA to AST.  These amount to at least 10.49% of the12.22% countervailing duty.WT/DS212/1
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United States – Countervailing Duties on Imports of
Certain Cut-to-Length Carbon-Quality Steel Plate from Italy
Specific Case No. 7
This case concerns the imposition of countervailing duties on Certain Cut-to-Length Carbon-Quality
Steel Plate from Italy, produced  and exported by ILVA S.p.A. 12, on 29 December 1999.  The US case
number is C-475-827; (64 FR 73244 of 29 December 1999).  The rate of countervailing duty for
ILVA was 26.12 % ad valorem .
The European Communities consider the imposition of  countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14 and 19 of the SCM Agreement 13.
The above countervailing duty was imposed on the basis of alleged subsidies which derived fromfinancial contributions made by the Italian Governme nt to the state-owned Italian steel industry prior
to the privatization of ILVA S.p.A. on 16 March 1995 
14. The US Department of Commerce ("DOC"),
in conducting this investigation, never properly examined whether these financial contributions
conferred a benefit to ILVA S.p.A., the producer and exporter of the subject goods during theinvestigation period (1998) 
15, but presumed (irrebuttably) that certain subsidies had passed through to
ILVA S.p.A. on the basis of the DOC's so-called "change of ownership"  methodology. The European
Communities consider that this failure to demonstrate the existence of a benefit to the company under
investigation is a clear breach of the above-mentioned provisions of the SCM Agreement.  This
violation was confirmed by the conclusions of the WTO Appellate Body in " United States –
Imposition of Countervailing duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products
Originating in the United Kingdom" (AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information on the DOC record
demonstrates that ILVA S.p.A. was privatized for fair market value. The DOC did not take account of
this fact when deciding whether ILVA S.p.A. had received countervailable subsidies. In these
circumstances, the European Communities consider that no benefit was conferred to ILVA S.p.A.from the previous financial contributions made by the Italian Government to its state-owned steel
industry.  This is also confirmed by the conclusions of the UK lead and bismuth findings referred to
above.
                                                     
12 ILVA S.p.A. (old, state-owned) was demerged on 31 October 1993. Two new companies were
created: ILVA Laminati Piani S.r.l. (ILP) and Acciai Speciali Terni S.r.l. (AST). On 16 March 1995, ILP wassold to a consortium of investors led by Riva Acciaio S.p.A.  On 1 January 1997, ILP was renamed ILVA S.p.A.(new).  For practical reasons, the only name mentioned in this request for consultations is ILVA S.p.A., even
when we make reference to the (old) ILVA or to ILP. A more detailed corporate history can be found in the
Annex.
13 These consultations relate only to the countervailing by the US of financial contributions made prior
to ILVA's privatization, such as (1) Equity infu sions to Nuova Italsider an d (old) ILVA and (2) Debt
forgiveness: 1981, 1988, 1993-1994 Restructuring Plan, (3) Capital Grants to Nuova Italsider under law 675/77.These amount to at least 22.68 % of the 26.12% countervailing duty.
14 At the time of the privatization, ILVA S.p.A. was known as ILP.  Its name was changed to ILVA
S.p.A on 1 January  1997.  During the POI, the subject merchandise was produced and exported to the US byILT, a wholly-owned subsidiary of ILVA S.p.A, which had been transferred to ILP prior to the privatization,and therefore formed part of the company offered for sale.
15 See Footnote above.WT/DS212/1
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Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of any
outstanding subsidy. The US should have made its calculation on the basis of Article 14(d) of theSCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration". The method used by
investigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The
calculation in this case and the US "change of ownership" methodology are not consistent with them.
United States – Countervailing Duties on Imports of
Certain Carbon Steel Products from Sweden
Specific Case No. 8
This case concerns the definitive results of an administrative review which led to the imposition of
countervailing duties on Certain Carbon Steel Products from Sweden, produced and exported by
SSAB Svenskt Stal AB ("SSAB"), on 22 October 1999.  The US case number is C-401-401;(64 FR 57038 of 22 October 1999).  The rate of countervailing duty for SSAB was 0.72 %
ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, inbreach of Articles 1.1, 10, 14, 19 and 21 of the SCM Agreement 
16.
The above countervailing duty was imposed on the basis of alleged subsidies which derived from
financial contributions made by the Swedish Gove rnment to the state-owned Swedish steel industry
prior to the privatization of SSAB, which began in 1987 and was completed on 15 February 1994. The
US Department of Commerce ("DOC"), in conducting this investigation, never properly examined
whether these financial contributions conferred a be nefit to SSAB, the producer and exporter of the
subject goods during the investigation period, but presumed (irrebuttably) that certain subsidies had
passed through to SSAB on the basis of the DOC's so-called "change of ownership"  methodology.
The European Communities consider that this failure to demonstrate the existence of a benefit to the
company under investigation is a clear breach of the above-mentioned provisions of the SCM
Agreement.  This violation was confirmed by the conclusions of the WTO Appellate Body in " United
States – Imposition of Countervailing duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel
Products Originating in the United Kingdom" (AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information on the DOC record
demonstrates that SSAB was privatized for fair market value. The DOC did not take account of thisfact when deciding whether SSAB had received countervailable subsidies.  In these circumstances, the
European Communities consider that no benefit was conferred to SSAB, subsequent to the
privatization, from the previous financial contributions made by the Swedish Government to its state-
owned steel industry.  This is also confirmed by the conclusions of the UK lead and bismuth findings
referred to above.
                                                     
16 These consultations relate to the countervailing by the US of financial contributions made prior to
SSAB's privatization i.e. (1) benefits obtained from Sw edish Structural Loans and (2) Forgiven Reconstruction
Loans.   These represent the totality of the countervailing duty imposed by the US .WT/DS212/1
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Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of any
outstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of theSCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration".  The method used by
investigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of owne rship" methodology is not consistent with them.
United States – Countervailing Duties on Imports of
Cut-to Length Carbon Steel Plate from Sweden
Specific Case No. 9
This case concerns the definitive results of an administrative review which led to the imposition of
countervailing duties on Cut-to Length Carbon Steel Plate from Sweden, produced and exported by
SSAB Svenskt Stal AB ("SSAB"), on 7 April 1997.  The US case number is C-401-804;(62 FR 16551 of 7 April 1997).  The rate of countervailing duty for SSAB was 1.91 % ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14, 19 and 21 of the SCM Agreement 
17.
The above countervailing duty was imposed on the basis of alleged subsidies which derived from
financial contributions made by the Swedish Gove rnment to the state-owned Swedish steel industry
prior to the privatization of SSAB, which began in 1987 and was completed on 15 February 1994. The
US Department of Commerce ("DOC"), in conduct ing this investigation, never properly examined
whether these financial contributions conferred a benefit to SSAB., the producer and exporter of the
subject goods during the investigation period (1994), but presumed (irrebuttably) that certainsubsidies had passed through to SSAB on the basis of the DOC's so-called "change of ownership"
methodology.  The European Communities consider that this failure to demonstrate the existence of a
benefit to the company under investigation is a clear breach of the above-mentioned provisions of the
SCM Agreement. This violation was confirmed by the conclusions of the WTO Appellate Body in
"United States – Imposition of Countervailing duties on Certain Hot-Rolled Lead and Bismuth
Carbon Steel Products Originating in the United Kingdom" (AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information on the DOC record
demonstrates that SSAB was privatized for fair market value. The DOC did not take account of this
fact when deciding whether SSAB had received countervailable subsidies.  In these circumstances, theEuropean Communities consider that no benefit was conferred to SSAB, subsequent to the
privatization, from the previous financial contributions made by the Swedish Government to its state-
owned steel industry.  This is also confirmed by the conclusions of the UK lead and bismuth findings
referred to above.
                                                     
17 These consultations relate to the countervailing by the US of financial contributions made prior to
SSAB's privatization i.e. (1) Equity infusion (2) bene fits obtained from Swedish Structural Loans (3) Forgiven
Reconstruction Loans.  These represent the totality of the countervailing duty imposed by the US.WT/DS212/1
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Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of any
outstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of theSCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration".  The method used by
investigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of ownership" methodology are not consistent with them.
United States – countervailing duties on imports of
Grain-Oriented Electrical Steel from Italy
Specific Case No. 10
This case concerns the preliminary results of an administrative review which led to the continued
imposition of countervailing duties on Grain-Oriented Electrical Steel from Italy, produced and
exported by Acciai Spec iali Terni S.p.A. (AST) 18, on 7 July 2000.  The US case number is
C-475-812; (65 FR 41950 of 7 July 2000).  The rate of countervailing duty preliminarily assigned by
the US Department of Commerce ("DOC") for AST was 12.44 % ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, inbreach of Articles 1.1, 10, 14, 19 and 21 of the SCM Agreement 
19.
The above countervailing duty was determined on the basis of alleged subsidies which derived from
financial contributions made by the Italian Governme nt to the state-owned Italian steel industry prior
to the privatization of Acciai Speciali Terni S.p.A. in December 1994.  The DOC, in conducting this
investigation, has never properly examined whether these financial contributions conferred a benefit
to Acciai Speciali Terni S.p.A., the producer and exporter of the subject goods during theinvestigation period (1998), but presumed (irrebuttably) that certain subsidies had passed through to
Acciai Speciali Terni S.p.A. on the basis of the DOC's so-called "change of ownership"  methodology.
The European Communities consider that this failure to demonstrate the existence of a benefit to the
company under investigation is a clear breach of the above-mentioned provisions of the SCM
Agreement.  This violation was confirmed by the conclusions of the WTO Appellate Body in " United
States – Imposition of Countervailing duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel
Products Originating in the United King dom" (AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information on the DOC record
demonstrates that Acciai Speciali Terni S.p.A. was privatized for fair market value. The DOC did nottake account of this fact in its investigation when deciding whether Acciai Speciali Terni S.p.A. had
received countervailable subsidies.  In these circ umstances, the European Communities consider that
no benefit, and therefore no subsidy, was conferred to the privatized Acciai Speciali Terni S.p.A. from
                                                     
18 See Footnote 8.
19 These consultations relate to the countervailing by the US of alleged financial contributions made
prior to AST's privatization such as (1) Equity infusions to TAS and ILVA;  (2) Debt forgiveness: 1988-90Restructuring Plan; (3) Debt forgiveness: 1993-94 Restructuring Plan;  (4) Pre-Privatization Retirement BenefitsUnder Law 451/94 for ILVA Residua.  These amount to at least 11.50 % of the 12.44% countervailing duty.WT/DS212/1
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the previous financial contributions made by the Italian Government to its state-owned steel industry.
This is also confirmed by the conclusions of the UK lead and bismuth findings referred to above.
Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of any
outstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of the
SCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration".  The method used by
investigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of ownership" methodology are not consistent with them.
_______________
This case concerns the final results, on 26 October 2000, by the US Department of Commerce
("DOC"), in a sunset review which, as of the date of this request, have led to the continuation of the
countervailing measures imposed on Grain-Oriented  Electrical Steel from Italy, produced and
exported by Acciai Spec iali Terni S.p.A. (AST) 20.  The US case number is C-475-812; (65 FR 65295
of 1 November 2000).  The rate of countervaili ng duty assigned by the DOC for AST was 24.2%
ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14, 19 and 21 of the SCM Agreement 21.
The above countervailing duty was originally imposed in 1994 on the basis of alleged subsidies which
derived from financial contributions made by the It alian Government to the state-owned Italian steel
industry. This was prior to the privatization of Acciai Speciali Terni S.p.A. in December 1994.  The
DOC, in conducting the sunset review, was required by Article 21.3 of the SCM Agreement to
determine whether the expiry of the duty would be likely to lead to (i.e. cause) a continuation or
recurrence of subsidization. This was not done. In making this determination, DOC did not examinewhether the above financial contributions conferred a benefit to Acciai Speciali Terni S.p.A., the
producer of the subject goods during the sunset review  investigation, but presumed (irrebuttably) that
these subsidies had passed through to Acciai Specia li Terni S.p.A. on the basis of the DOC's so-called
"change of ownership"  methodology.  The European Communities consider that this failure to
demonstrate the existence of a benefit to the company under investigation is a clear breach of theabove-mentioned provisions of the SCM Agreem ent.  This violation was confirmed by the
conclusions of the WTO Appellate Body in " United States – Imposition of Countervailing duties on
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom"
(AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information on the DOC record in the
context of the above mentioned sunset review, demonstrates that Acciai Speciali Terni S.p.A. was
privatized for fair market value. The DOC did not take account of this fact when deciding that
subsidization was likely to continue.  In these circumstances, the European Communities consider that
no benefit was conferred to Acciai Speciali Terni S.p.A. from the previous financial contributions
                                                     
20 See Footnote 8.
21 These consultations relate to the countervailing by the US of financial contributions made prior to
AST's privatization, such as (1) Benefits Associated With the 1988-90 Restructuring;  (2) Equity Infusions.These amount to bulk of the countervailing duty imposed.WT/DS212/1
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made by the Italian Government to its state-owned steel industry.  This is also confirmed by the
conclusions of the UK lead and bismuth findings referred to above.
Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of any
outstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of the
SCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration".  The method used by
investigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of ownership" methodology are not consistent with them.
United States – countervailing duties on imports of
Cut-to-length Carbon Steel Plate from the United Kingdom
Specific Case No. 11
This case concerns the definitive results of a sunset review which led to the continuation of the
countervailing measures imposed on Cut-to-length Carbon Steel Plate from the United Kingdom,
produced and exported by Corus Plc (a merger of British Steel plc and Hoogovens NV), on
7 April 2000.  The US case number is C-412-815; (65 FR 18309 of 7 April 2000).  The rate of
countervailing duty for Corus was 12.00 % ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14, 19 and 21 of the SCM Agreement 22.
The above countervailing duty was originally imposed in 1993 on the basis of alleged subsidies which
derived from financial contributions made by the British Government to its state-owned steel industry.This was prior to the privatization of British Steel in 1988.  The US Department of Commerce
("DOC"), in conducting the sunset review, was re quired by Article 21.3 of the SCM Agreement to
determine whether the expiry of the duty would be  likely to lead to (i.e. cause) a continuation or
recurrence of subsidization.  In making this determination, DOC did not examine whether the above
financial contributions conferred a benefit to Corus Plc, the producer of the subject goods during thesunset review investigation, but presumed (irrebuttably) that these subsidies had passed through to
Corus Plc on the basis of the DOC's so-called "change of ownership"  methodology.  The European
Communities consider that this failure to demonstrate the existence of a benefit to the company under
investigation is a clear breach of the above-mentioned provisions of the SCM Agreement. This
violation was confirmed by the conclusions of the WTO Appellate Body in " United States –
Imposition of Countervailing duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products
Originating in the United Kingdom" (AB-2000-1) ("UK lead and bismuth").
Furthermore, the company involved here is th e same as that subject to measures in the UK lead and
bismuth case. In this case, the WTO panel and Appellate Body ruled that the privatization at fair
market value  necessarily precluded the pass-through of any benefit (and therefore any subsidy) to the
                                                     
22 These consultations relate to the countervailing by the US of financial contributions made prior to
British Steel's privatization, such as (1) Government equity infusions into BSC and (2) Cancelled NLF debt.These accounted for the bulk of the countervailing duty imposed.WT/DS212/1
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privatised company from pre-privatization financial contributions to the state-owned British Steel. In
the present case, the alleged subsidies are the same, and, of course, the circumstances of the
privatization are the same.   In these circumstances, it cannot be disputed that no benefit was conferred
to Corus from the previous financial contributions made by the British Government to its state-owned
steel industry.  The WTO panel findings were avai lable to the DOC at the time of this definitive
determination, and the European Communities submit that it is absurd, in view of Article 21.1 of the
SCM Agreement, that the present measure continues to remain in force.
United States – countervailing duties on imports of
Certain Corrosion-Resistant Carbon  Steel Flat Products from France
Specific Case No. 12
This case concerns the definitive results of a sunset review which led to the continuation of the
countervailing measures imposed on Certain Corros ion-Resistant Carbon Steel Flat Products from
France, produced and exported by Usinor SA (Usinor), on 6 April 2000.  The US case number is
C-427-810; (65 FR 18307 of 6 April 2000).  The rate  of countervailing duty for Usinor was 15.13 %
ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14, 19 and 21 of the SCM Agreement 23.
The above countervailing duty was originally imposed in 1993 on the basis of alleged subsidies which
derived from financial contributions made by the Fr ench Government to the state-owned French steel
industry. This was prior to the privatization of Usinor in 1997.  The US Department of Commerce
("DOC"), in conducting the sunset review, was re quired by Article 21.3 of the SCM Agreement to
determine whether the expiry of the duty would be  likely to lead to (i.e. cause) a continuation or
recurrence of subsidization.  In making this determination, DOC did not examine whether the abovefinancial contributions conferred a benefit to Usinor, the producer of the subject goods during the
sunset review investigation, but presumed (irrebuttably) that these subsidies had passed through to
Usinor on the basis of the DOC's so-called "change of ownership"  methodology.  The European
Communities consider that this failure to demonstrate the existence of a benefit to the company under
investigation is a clear breach of the above-mentioned provisions of the SCM Agreement.  Thisviolation was confirmed by the conclusions of the WTO Appellate Body in " United States –
Imposition of Countervailing duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products
Originating in the United Kingdom" (AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information provided by the French
Government and by the Commission itself in th e context of the above mentioned sunset review,
demonstrates that Usinor was privatized for fair market value. The DOC did not take account of this
fact when deciding that subsidization was likely to  continue.  In these circumstances, the European
Communities consider that no benefit was conferred to Usinor from the previous financial
contributions made by the French Government to its state-owned steel industry.  This is alsoconfirmed by the conclusions of the UK lead and bismuth findings referred to above.
                                                     
23 These consultations relate only to the countervailing by the US of  financial contributions made prior
to Usinor's privatization, such as (1) Equity infusion s under Loans with Special Characteristics (2) Shareholders
Advances (3) Steel Intervention Fund.  These accounted for the bulk of the countervailing duty imposed.WT/DS212/1
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Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of anyoutstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of the
SCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration".  The method used by
investigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of ownership" methodology are not consistent with them.
United States – countervailing duties on imports of
Cut-to-Length Carbon Steel Plate from Germany
Specific Case No. 13
This case concerns the final results of a sunset review which led to the continuation of the
countervailing measures imposed on Cut-to-Length Carbon Steel Plate from Germany, produced andexported by AG Dillinger Hüttenwerke Saarstahl (Dillinger), on 2 August 2000.  The US case number
is C-428-817; (65 FR 47407 of 2 August 2000).  Th e rate of countervailing duty for Dillinger was
14.84 % ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14, 19 and 21 of the SCM Agreement 
24.
The above countervailing duty was originally imposed in 1993 on the basis of alleged subsidies which
derived from financial contributions made by th e German Government to the state-owned German
steel industry. This was prior to the privatization of DHS-Dillinger Hütte Saarstahl AG (DHS) 25.  The
US Department of Commerce ("DOC"), in conducting the sunset review, was required by Article 21.3
of the SCM Agreement to determine whether the expiry of the duty would be likely to lead to (i.e.
cause) a continuation or recurrence of subsidization.  In making this determination, DOC did not
examine whether the above financial contributions conferred a benefit to Dillinger, the producer of the
subject goods during the sunset review investigation, but presumed (irrebuttably) that these subsidies
had passed through to Dillinger on the basis of the DOC's so-called "change of ownership"
methodology.  The European Communities consider that this failure to demonstrate the existence of a
benefit to the company under investigation is a clear breach of the above-mentioned provisions of the
SCM Agreement.  This violation was confirmed by  the conclusions of the WTO Appellate Body in
                                                     
24 These consultations relate to the countervailing by the US of  financial contributions made prior to
Dillinger's privatization   (1) Structural Improvement Aids and (2) Subsidies related to the creation of Dillinger.
These amount to full amount of the countervailing duty.
25 In 1986, the Government of Saarland (GOS) acquired 76% of the shares of Saarstahl Völklingen
GmbH (SVK). In 1989, the GOS and Usinor (the then majority owner of Dillinger) reached an agreement underwhich (1) SVK would be privatized and become DHS-Dillinger Hütte Saarstahl AG (DHS), (2) DHS wouldown essential all the shares of Saarstahl AG and Dillinger and (3) Usinor would acquire 70% of the shares of
DHS.  The DOC held in its redetermination that this transaction was at arm's length (Final Results of
Redetermination pursuant to Court Remand on Issue of Privatisation, Consol. Ct. N° 93-09-00550-CVD, SlipOp. 95-17, p. 23).  Following the bankruptcy of Saarstahl AG in 1993, DHS sold its 100% interest in SaarstahlAG to the GOS.  Finally, in 1997, the GOS transferred the majority of its shareholdings in Saarstahl AG to thirdparties pursuant to the plan of reorganization approved in the Saarstahl bankruptcy.WT/DS212/1
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"United States – Imposition of Countervailing duties on Certain Hot-Rolled Lead and Bismuth
Carbon Steel Products Originating in the United Kingdom" (AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information on the DOC record in the
context of the above mentioned sunset review, demonstrates that Dillinger was privatized for fair
market value. The DOC did not take account of this fact when deciding that subsidization was likely
to continue.  In these circumstances, the European Communities consider that no benefit was
conferred to Dillinger from the previous financial contributions made by the German Government to
its state-owned steel industry.  This is also confirmed by the conclusions of the UK lead and bismuth
findings referred to above.
Without prejudice to the above, even if the privatization were not to have occurred for  fair market
value, the European Communities submits that the US has erroneously calculated the amount of any
outstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of the
SCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporterof the subject merchandise constituted "less than adequate remuneration".  The method used by
investigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of ownership" methodology are not consistent with them.
United States – countervailing duties on imports of
Cut-to-length Carbon Steel Plate from Spain
Specific Case No. 14
This case concerns the definitive results of a sunset review which led to the continuation of the
countervailing measures imposed on Cut-to-lengt h Carbon Steel Plate from Spain, produced and
exported by Aceralia SA, on 7 April 2000.  The US case number is C-469-804; (65 FR 18307 of
7 April 2000).  The rate of countervailing duty for Aceralia was 36.86 % ad valorem .
The European Communities consider the imposition of countervailing duties in this case to be
inconsistent with the obligations of the United States under the SCM Agreement, and in particular, in
breach of Articles 1.1, 10, 14, 19 and 21 of the SCM Agreement 26.
The above countervailing duty was originally imposed in 1993 on the basis of alleged subsidies which
derived from financial contributions made by the Spanish Government to the state-owned Spanish
steel industry. This was prior to the privatization of Aceralia in 1997.  The US Department of
Commerce ("DOC"), in conducting the sunset review, was required by Article 21.3 of the SCM
Agreement to determine whether the expiry of the duty would be likely to lead to (i.e. cause) a
continuation or recurrence of subsidization.  In making this determination, DOC did not examinewhether the above financial contributions conferred a benefit to Aceralia, the producer of the subject
goods during the sunset review investigation, but presumed (irrebuttably) that these subsidies had
passed through to Aceralia on the basis of the DOC's so-called "change of ownership"  methodology.
The European Communities consider that this failure to demonstrate the existence of a benefit to the
company under investigation is a clear breach of the above-mentioned provisions of the SCM
                                                     
26 These consultations relate only to the countervailing by the US of financial contributions made prior
to Aceralia's privatization, such as (1) Law 60/78;  (2) Royal Decree 878/81;  (3) The 1984 Council of MinistersMeeting; (4) The 1987 Government delegated commission on Economic affairs.  These represent the bulk of thecountervailing duty imposed.WT/DS212/1
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Agreement.  This violation was confirmed by the conclusions of the WTO Appellate Body in " United
States – Imposition of Countervailing duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel
Products Originating in the United King dom" (AB-2000-1) ("UK lead and bismuth").
Furthermore, the European Communities consider that the information provided by the Spanish
Government and by the Commission itself in th e context of the above mentioned sunset review,
demonstrates that Aceralia was privatized for fair market value. The DOC did not take account of this
fact when deciding that subsidization was likely to  continue.  In these circumstances, the European
Communities consider that no benefit was conferred to Aceralia from the previous financial
contributions made by the Spanish Government to  its state-owned steel industry.  This is also
confirmed by the conclusions of the UK lead and bismuth findings referred to above.
Without prejudice to the above, even if the privatization were not to have occurred for fair market
value, the European Communities submits that the US has erroneously calculated the amount of any
outstanding subsidy.  The US should have made its calculation on the basis of Article 14(d) of theSCM Agreement i.e. on the basis of the amount by which the price paid for the producer and exporter
of the subject merchandise constituted "less than adequate remuneration".  The method used by
investigating authorities for calculating the amount of  subsidy in countervailing duty investigations is
required by Article 14 to be consistent with the guidelines set out in, inter alia, Article 14(d).  The US
calculation in this case and the US "change of ownership" methodology are not consistent with them.
_______________WT/DS212/1
G/L/415
G/SCM/D37/1
Page 20
Annex
The privatization of ILVA S.p.A.: AST, ILP and Cogne
ILVA S.p.A. consisted of four operating divisions: (1) the Carbon Steel Flat Products Division; (2)
Specialty Steel Division (including the Terni and Turin flat-rolled facilities); (3) Pipe Division; and
(4) Long Products Division.  In addition to these operating divisions, the "ILVA Group" (consolidated
ILVA S.p.A. and its subsidiaries) also included a num ber of other steel-related subsidiaries including
service centers, trading companies, etc., totallin g over 100 companies.  ILVA was a state-owned
through the Istituto per la Ricostruzione Industriale ("IRI").
In September 1993, IRI agreed to the reorganization and privatization of ILVA S.p.A. through the sale
on the market of ILVA and IRI's holdings.  The privatization of the ILVA Group was carried out bythe splitting of its core businesses into two new companies: (1) ILVA Laminati Piani S.r.l. ("ILP")
(carbon steel flat products); and (2) Acciai Speciali Terni S.r.l. ("AST")  (specialty steel).  The rest of
the ILVA Group, to be known as ILVA Residua, was to be liquidated with all saleable assets also to
be sold to private owners.  These additional saleable assets within ILVA Residua included, among
others, Cogne (specialty long products) and Dalm ine (tubes).  In October 1993, ILVA S.p.A. entered
into liquidation.
In accordance with this privatization plan, the specialty steels and carbon steels divisions of ILVA
were separately incorporated by a demerger of IL VA into AST S.r.l. and ILP S.r.l., respectively, on
December 31, 1993.  Public offerings for the sale of AST and ILP were prepared and published inItalian and foreign newspapers soliciting purchase offers.  In December 1994, AST was transferred to
the privately-held KAI Italia S.r.l. as the result of an  arm's length sale for fair market value.  In April
1995, ILP was transferred to a consortium of private in vestors led by Riva Acciaio S.p.A. as the result
of an arm's length sale for fair market value. In addition, in December 1993, Cogne Acciai Speciali
S.p.A. was transferred to the privately-held Ferriere di Stabio (through GE.VAL, a company set up by
the controlling shareholder of this company) as the result of an arm's length sale for fair market value.
In each purchase, the buyers paid fully for everything they received.
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