RESTRICTED
WORLD TRADE G/SCM/M/15
28January 1998
ORGANIZATION(98-0298)
Committee onSubsidies
andCountervailing Measures
MINUTES OFTHE MEETING HELD
ON23-24 OCTOBER 1997
Chairman: Mr.Gilles Gauthier (Canada)
1. TheCommittee onSubsidies andCountervailing Measures ("theCommittee") helditsregular
meeting on23-24 October 1997.
2. TheCommittee adopted thefollowing agenda:
Page
A. Observers -International intergovernmental organizations 3
B. National legislations 3
(i) Review ofcountervailing dutylegislation and/or regulations (Article 32.6)
-Neworamended texts:
(i) Korea (G/ADP/N/1/KOR/3 -G/SCM/N/1/KOR/2)
(ii) Namibia (G/ADP/N/1/NAM/1 -G/SCM/N/1/NAM/1)
(iii) Paraguay (G/ADP/N/1/PRY/2 -G/SCM/N/1/PRY/2)
(iv) United Arab Emirates (G/ADP/N/1/ARE/1 -G/SCM/N/1/ARE/1)
(ii) Continuing review ofpreviously reviewed notifications (Article 32.6):
(i) India (G/ADP/Q1/IND/6 -G/SCM/Q1/IND/6)
(G/ADP/Q1/IND/7 -G/SCM/Q1/IND/7)
(ii) Singapore (G/ADP/Q1/SGP/9 -G/SCM/Q1/SGP/9)
(iii) United States (G/ADP/Q1/USA/3 -G/SCM/Q1/USA/3)
C. 1995 newandfullnotifications (Article 25.1oftheSCM Agreement and 4
Article XVI:1 ofGATT 1994):
(i) Antigua andBarbuda (G/SCM/N/3/ATG)
(ii) Argentina (G/SCM/N/3/ARG/Suppl.1)
(iii) Bahrain (G/SCM/N/3/BHR)
(iv) Bulgaria (G/SCM/N/3/BGR)
(v) Cuba (G/SCM/N/3/CUB)
(vi) South Africa (G/SCM/N/3/ZAF)
(vii) United Arab Emirates (G/SCM/N/3/ARE)G/SCM/M/15
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D. 1996 updating notifications (Article 25.1oftheSCM Agreement and 6
Article XVI:1 ofGATT 1994):
(i) Antigua andBarbuda (G/SCM/N/16/ATG)
(ii) Bahrain (G/SCM/N/16/BHR)
(iii) Burkina Faso(G/SCM/N/16/BFA)
(iv) Canada (G/SCM/N/16/CAN)
(v) Colombia (G/SCM/N/16/COL &Suppl.1)
(vi) Côted'Ivoire (G/SCM/N/16/CIV)
(vii) Czech Republic (G/SCM/N/16/CZE)
(viii) European Community (G/SCM/N/16/EEC/Suppl.1 &Suppl.2)
(ix) Japan (G/SCM/N/16/JPN/Suppl.1)
(x) Philippines (G/SCM/N/16/PHL)
(xi) Slovenia (G/SCM/N/16/SVN)
(xii) South Africa (G/SCM/N/16/ZAF)
(xiii) United Arab Emirates (G/SCM/N/16/ARE)
E. Requests pursuant toArticles 25.8and25.10: 7
(i) G/SCM/Q2/EEC/13
(ii) G/SCM/Q2/JPN/13
(iii) G/SCM/Q2/USA/11
F. Procedures forarbitration under Article 8.5 8
G. Format forArticle 8.3updating notifications (G/SCM/W/410) 8
H. Informal Group ofExperts -Status Report (G/SCM/W/415) 9
I. Semi-annual reports ofcountervailing dutyactions (Article 25.11) 9
(G/SCM/N/30 andAddenda)
J. Reports ofpreliminary andfinalcountervailing actions (Article 25.11) 10
(G/SCM/N/27, 28,29,31,32,and33)
K. Graduation from Annex VII 10
L. Mexico -Countervailing dutyinvestigation oncanned peaches from Greece 10
M. NewZealand -Countervailing dutyinvestigation oncanned peaches 11
from theEC
N. Other business: 12
(i) Questions from theECregarding Australia 'sand
Korea 'supdating notifications
(ii) Requests under Article 25bytheECtoEgypt andJapan
(iii) Provisional measures imposed byArgentina regarding
wheat gluten from theEC
(iv) Presentation onAnti-dumping andCountervailing Duty Database
O. Annual Report totheCouncil forTrade inGoods (Article 32.7) 14
P. Dateofnextregular meeting 14G/SCM/M/15
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A. OBSERVERS -INTERNATIONAL INTERGOVERNMENTAL ORGANIZATIONS
3. TheChairman recalled that,atitsmeeting of1-2May1997, theCommittee hadgranted regular
observer status toanumber ofinternational intergovernmental organizations. Ithadnot,however,
granted observer status totheACP Group andtheOECD, forwhich requests hadalsobeenmade.
Regarding observer status fortheOECD, anumber ofMembers hadraised questions atthemeeting
regarding reciprocity and,inparticular, theissue ofobserver status fortheWTO intheGroup of
Participants totheArrangement onOfficially-Supported Export Credits andExport Credit Guarantees.
TheCommittee hadthusdecided todeferaction ontheOECD 'srequest toallow timeforconsultations.
Meanwhile, theOECD continued tobeinvited toattend Committee meetings onanadhocbasis. The
Chairman informed theCommittee thathehadundertaken informal consultations onthismatter, both
withdelegations andwiththeChairman oftheOECD Participants 'Group. Hehadhighlighted tothe
latter thatreciprocity wasakeyconsideration indeciding whether togrant observer status inWTO
bodies, andhadlearned from hiscontacts thattheissue ofobserver status fortheWTO wasonthe
agendaofameetingoftheParticipants'GroupinearlyNovember.TheChairmanindicatedthatalthough
hewasnotyetprepared tomake precise suggestions toresolve thisquestion, heconsidered thathis
contacts hadbeenuseful andintended tocontinue hisefforts inthisregard.
4. TheChairman proposed thattheCommittee again defer action ontheOECD 'srequest and
continue toinvite theOECD toattend Committee meetings onanadhocbasis.
5. TheCommittee sodecided.
6. Turning totheACP Group 'srequest, theChairman recalled that,atitslastmeeting, the
Committee hadasked himtoconduct consultations onthisrequest andreport backtotheCommittee.
Since thelastmeeting, theACPGroup hadbeengranted regular observer status inanumber ofWTO
bodies. There wasahorizontal process underway attheCouncil levelregarding therequests bythe
ACPGroup andotherinternational intergovernmental organizations thathadnotrequested observership
inthisCommittee. Onthebasis ofinformal consultations, itappeared thattheCommittee wasnot
inaposition togrant regular observership atthispoint. TheChairman proposed thattheCommittee
invite theACP Group toattend itsmeetings onanadhocbasis pending theoutcome oftheongoing
horizontal process.
7. TheCommittee sodecided.
B. NATIONAL LEGISLATIONS
(i) Review ofcountervailing dutylegislation and/or regulations (Article 32.6) -
Neworamended texts
(ii) Continuing review ofpreviously reviewed notifications (Article 32.6):
8. TheCommittee agreed thatsincealllegislations andrelated questions ontheagenda werealso
ontheagenda oftheCommittee onAnti-Dumping Practices foritsmeeting of30-31 October 1997,
therewasnoneedtoduplicatethatdiscussion.However,sincequestionno.3posedbyCanadaregarding
thenotificationofSingapore(G/SCM/Q1/SGP/9)andSingapore'sresponse(G/SCM/Q2/SGP/11)thereto
focused specifically oncountervail issues, theywould beaddressed inthisCommittee.
9. Therepresentative ofCanada indicated thathisdelegation hadnotyetbeenabletoreview
Singapore 'sresponse, butwould dosoandreport backtotheCommittee.G/SCM/M/15
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10. TheChairman reminded Members that,forapreviously reviewed notification oflegislation
toappear ontheagenda oftheCommittee 'sregular meeting inApril 1998, questions mustbesubmitted
totheSecretariat andtotheconcerned Member nolaterthansixweeks before themeeting, i.e.,
9March 1998.
C. 1995NEW AND FULL NOTIFICATIONS (Article 25.1oftheSCM Agreement andArticle
XVI:1 ofGATT 1994)
11. TheChairman indicated thatthere wereseven newandfullnotifications forreview before the
Committee aswellasfollow-up questions fromtheECandKorea regarding thenewandfullnotification
ofAustralia.
12. Thequestions regarding Argentina 'snotification canbefound inthefollowing documents:
G/SCM/Q2/ARG/11 (Submitted byJapan)
G/SCM/Q2/ARG/12 (Submitted byPoland)
13. Theanswers provided byArgentina tothesequestions canbefound inthefollowing documents:
G/SCM/Q2/ARG/13 (Toquestions submitted byJapan andPoland)
14. Thequestions regarding Bahrain 'snotification canbefound inthefollowing documents:
G/SCM/Q2/BHR/1 (Submitted byJapan)
G/SCM/Q2/BHR/2 (Submitted bytheEC)
15. Theanswers provided byBahrain tothese questions canbefound inthefollowing document:
G/SCM/Q2/BHR/3 (Toquestions submitted byJapan andtheEC)
16. Thequestions regarding Bulgaria 'snotification canbefound inthefollowing documents:
G/SCM/Q2/BGR/1 (Submitted byJapan)
G/SCM/Q2/BGR/3 (Submitted byPoland)
17. Theanswers provided byBulgaria tothesequestions canbefound inthefollowing documents:
[NOANSWERS HAVE YET BEEN PROVIDED BYBULGARIA]
18. Thequestions regarding South Africa 'snotification canbefound inthefollowing documents:
G/SCM/Q2/ZAF/3 (Submitted bytheEC)
G/SCM/Q2/ZAF/4 (Submitted byJapan)
G/SCM/Q2/ZAF/5 (Submitted bytheUS)
19. Theanswers provided bySouth Africa canbefound inthefollowing documents:
[NOANSWERS HAVE YET BEEN PROVIDED BYSOUTH AFRICA]
20. Noquestions wereposed regarding thenotifications ofAntigua andBarbuda, Cuba, andthe
United Arab Emirates.G/SCM/M/15
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21. TheChairman reminded Members thatwould likeawritten response totheiroralquestions
orwould liketoposefollow-up questions thatthese questions weretobesubmitted inwriting tothe
notifying Member andtotheSecretariat within twoweeks, i.e.,by6November 1997, andthatwritten
answers were duewithin sixweeks, i.e.by4December 1997.
22. TheChairman noted thatsome Members hadnotyetsubmitted written answers toquestions
regarding theirnewandfullnotifications. Inparticular, answers hadbeendueby18October 1996
from Brazil ,andwere nowmore ayearoverdue. Further, answers hadbeendueby13June1997
from Brunei Darusalaam ,Cameroon ,Côte d'Ivoire ,andGhana .Finally, Poland stillowed a
response tofollow-up questions posed bytheUnited States. TheChairman encouraged Members which
hadnotyetsubmitted responses tore-double theirefforts.
23. Asregardedthestatusof1995newandfullnotifications,theChairmannotedthattheCommittee
hadreviewed 79notifications todate. Onefurther notification -Burkina Faso-hadbeenreceived,
butcould notbecirculated before thedeadline of15September 1997. While thereview of
79notifications wasquite anachievement, more than50Members hadyettosubmit 1995 newand
fullnotifications, which hadbeendueon30June1995.
24. TheChairman proposed thatthenotification ofBurkina Faso, aswellasanyother notifications
which could becirculated totheCommittee by9March 1998, bereviewed atthenextregular meeting
inApril1998.QuestionsregardingthosenotificationsweretobesubmittedbothtothenotifyingMember
andtotheSecretariat nolaterthan30March 1998.
25. TheCommittee sodecided.
26. TheChairman reminded Members thattheCommittee hadatitslastmeeting begun todiscuss
whether thereview of1998 newandfullnotifications could beconducted more efficiently thanthe
review of1995newandfullnotifications. Specifically, ithadbeensuggested thatbothquestions and
answers besubmitted before themeeting. TheCommittee could thusfocus onthose areas where issues
hadbeen identified. TheChairman hadprepared draft procedures along those lines, andasked
delegations toexamine hisproposal andoffer theirreactions. Hehoped thattheCommittee would
beinaposition toadopt aprocedure atitsnextregular meeting inApril 1998.
27. Therepresentative ofNorway indicated thathisdelegation 'scomments ontheChairman 'sdraft
procedures would besubmitted inwriting shortly.
28. Therepresentative ofSlovenia expressed concern thatthereview of1998notifications inApril
andOctober 1999 wasperhaps toolate.
29. TheChairman explained thatthere wasanissue ofensuring thecirculation ofnotifications
inthethreeWTO languages sufficiently inadvance toenable Members tosubmit questions andanswers.
However, ifnotifications could becirculated around thetarget dateof30June1998, theCommittee
might beinaposition tobegin thereview ofthose notifications inOctober 1998. Theeffort wasdirected
atstreamlining thereview process, andtheCommittee should certainly aimtoensure thatthereview
began assoonaspossible afteranotification wasmade.
30. Therepresentative ofNorway pointed outthat,intheProposed Procedure forReview of1998
New andFull Notifications, theChairman hadindicated twodeadlines, 30June 1998 and
31December 1998, forthesubmission of1998newandfullnotifications, andthatitshould notinvite
Members inamanifest manner todelay notification bysixmonths.
31. TheChairman clarified that30June1998wasindeed thedeadline forMembers tomake their
newandfullnotifications, andthat31December 1998 wasthedatebywhich theSecretariat would
aimtocirculate those notifications inthethree WTO languages.G/SCM/M/15
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D. 1996UPDATING NOTIFICATIONS (Article 25.1oftheSCM Agreement andArticle XVI:1
ofGATT 1994)
32. TheChairman indicated that13updating notifications appeared ontheagenda. However, four
ofthose were double-symbolled documents thatwere identical tothenewandfullnotifications that
hadjustbeenreviewed. Itwould thusbeassumed thatanyquestions regarding those notifications
hadalready beenposed. Written questions hadbeenposed withrespect totwooftheremaining nine
updating notifications, those oftheECandtheCzech Republic.
33. Thequestions regarding theEC'snotification canbefound inthefollowing document:
G/SCM/Q2/EEC/11 (Submitted byJapan)
34. Theanswers provided bytheECcanbefound inthefollowing document:
G/SCM/Q2/EEC/12 (Toquestions submitted byJapan)
35. Thequestions regarding theCzech Republic 'snotification canbefound inthefollowing
document:
G/SCM/Q2/CZE/14 (Submitted byPoland)
36. Theanswers provided bytheCzech Republic canbefound inthefollowing document:
G/SCM/Q2/CZE/15 (Toquestions submitted byPoland)
37. TheChairman pointed outthat,while 1996 updating notifications hadbeendueon30June
lastyear, only55Members hadsubmitted suchnotifications todate. Thesituation withrespect to
1997 updating notifications wasevenworse thanthatof1996 updating notifications, withonly19
Members having submitted suchnotifications todate. TheChairman urged allMembers tomake a
concerted effort tobring themselves uptodateregarding these notifications.
38. Therepresentative oftheECindicated thathisauthorities hadsubmitted their1995 newand
fullnotification aswellastheir1996and1997updating notifications, which hadinvolved agreatdeal
ofwork, andthatitwasbecoming increasingly difficult toaccept thistotalimbalance oftransparency.
Thequestion arose astohowlongthissituation could goonandwhatcould bedoneabout it.The
ECwould continue totakeapro-active approach inthisareabyreminding Members oftheirnotification
obligations.
39. Therepresentative oftheUnited States expressed support fortheEC'scomments andindicated
thathisgovernment hadalsomade efforts toimprove upon itscompliance record. Henoted thatthe
United States '1997 updating notification wasstilloutstanding, inpartbecause hisauthorities were
endeavouring tofurther amplify thescope ofthemeasures included inthe1996updating notification.
Healsoemphasized theirefforts toexpand theirnotification toinclude measures atasub-central level,
andhoped tofinalize thatinformation aswellasinformation regarding sub-central programmes
maintained byother Members shortly. TheUnited States might initiate bilateral contacts withother
Members inorder toseekamore comprehensive improvement inreporting those subsidy programmes.
40. Therepresentative ofNorway indicated thathisgovernment hadsubmitted its1995 newand
fullnotification aswellasits1996 and1997 updating notifications andthatitwasalsoconcerned by
theimbalance intransparency. IfMembers could notsteadily improve theirnotification record, it
might infactbegin todeteriorate astheMembers whohadfulfilled theirnotification obligations wouldG/SCM/M/15
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havelessincentive todosointhefuture. Henoted thattheNotifications Handbook might provide
assistance toMembers inthiscontext. With regard totheUnited States 'comments, hefound it
encouraging thatitsfuture notifications would include information onsub-federal subsidies andhoped
thatthatsignal would persuade other Members toalsoconsider expanding theirnotifications.
E. REQUESTS PURSUANT TOARTICLES 25.8AND 25.10
41. TheChairman stated thatthree requests forinformation hadbeen received pursuant to
Articles 25.8and25.10 oftheAgreement.
(i) G/SCM/Q2/EEC/13
42. Therepresentative oftheUnited States indicated thathisdelegation would needsome time
toexamine theEC'sresponse (G/SCM/Q2/EEC/14). TheUnited States 'request forinformation had
included some specific questions which didnotappear, atfirstglance, tohavebeenanswered bythe
EC,although hisdelegation understood thecarethatmustbetaken inconsulting withauthorities below
thelevelofthenotifying Member. TheUnited States might havefollow-up questions topose.
43. Therepresentative oftheECstated thathisdelegation would beprepared torespond toany
follow-up questions thattheUnited States might pose. TheCommittee 'sattention should bedrawn
toParagraph 4oftheEC'sresponse andnoteshould betaken ofthepoints made therein.
(ii) G/SCM/Q2/JPN/13
44. Therepresentative oftheECindicated thathisdelegation hadnotyethadthetimetoexamine
Japan'sresponse (G/SCM/Q2/JPN/15), andwould return withcomments orfollow-up questions after
studying theresponse.
45. Therepresentative ofJapan indicated thatthesubsidy inquestion wasnotpredominantly used
byenterprises intheleather industry, andhisauthorities hadadifferent recognition oftheprogramme
from theEC'sclaim thatitmayconstitute asubsidy within thenotification requirement under
Article 25oftheSCM Agreement.
(iii) G/SCM/Q2/USA/11
46. Therepresentative oftheECindicated that,although therequest inquestion hadbeensent
totheUSMission andtheWTO on10July1997, hisdelegation hadnotyetreceived anyresponse.
Members hadtheobligation tonotify allspecific subsidies granted byanylevelofgovernment and
theEChadmade aparticular effort tonotify subsidies granted bothintheCommunity andinMember
States, notonlyatthenational level, butalsoattheregional andlocallevel. Agreat dealofwork
andcoordination hadgoneintotheECnotification. Other Members hadnotbeenprepared tonotify
sub-federal subsidies, andthishadledtoalarge imbalance intheareaoftransparency. TheECwas
aware thattheUnited States, inparticular, hadlarge numbers ofsubsidies, granted atstate, city,and
possibly other levels, many ofwhich were specific andshould benotified under Article 25.While
theUnited States 'earlier indication thatefforts werebeing made todecide onwhether certain schemes
should benotified waswelcome, thefactremained that,asofOctober 1997, theUnited States had
notnotified asingle sub-federal subsidy. Nosatisfactory explanation hadbeenprovided inthereview
process todateastowhysuchschemes hadnotbeennotified. Thatwasthereason fortheEC'srequest
forinformation, inwhich theECauthorities hadidentified tenprogrammes invarious USstates, which
theECconsidered asbeing specific within theterritory ofthatstate. Amuch larger number of
programmes wascited intheEC'squestions ontheUnited States '1995 newandfullnotification.
TheECwould like,asaninitial response, areply onthetenprogrammes cited initsrequest forG/SCM/M/15
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information. Having putinagoodamount ofeffort itself, theECcould notlettheissuego,alsolinked
asitwastothatoftimeliness andcompleteness ofnotifications ingeneral.
47. Therepresentative oftheUnited States indicated thathisdelegation wasnotinaposition to
provide aspecific response onthetenprogrammes cited intheEC'srequest, butitunderstood the
EC'sconcern. TheUnited States wasundertaking every effort toprovide information about measures
atthesub-federal level, andhadmade useoftheEC'srequest tomaximize itsability tomake a
comprehensive notification. Further, anykindofpolitical system involving governmental bodies below
thelevelofthecentral government waspresumably within thescope ofanexercise toidentify potentially
notifiable measures. Federally organized Members should thusnotbetheonlyMembers whoperhaps
needed toexamine closely themeasures thatexisted within theirterritory.
48. Therepresentative oftheECexpressed hisdisappointment attheUnited States 'inability to
provide aresponse atthispoint. While theECtooknoteoftheUnited States 'generally positive attitude
anddidnotunderestimate thedifficulties involved inproviding suchinformation, theimbalance of
transparency remained aproblem. Progress hadtobemade. There should alsobenoconfusion between
theobligation Members hadofnotifying subsidies andthepossibility ofpointing outtheexistence of
notifiable subsidies inother Members 'territories.
49. TheChairman considered thismatter veryimportant andasked Members toreflect onthe
comments made.
F. PROCEDURES FOR ARBITRATION UNDER ARTICLE 8.5
50. TheChairman stated that,while draftprocedures forarbitration under Article 8.5hadbeen
developed more thantwoyears agoandtheissue discussed extensively, nofinalagreement hadbeen
reached. Thedisagreement wasoverdraftlanguage thatforesaw thepossibility foranarbitration body
nottoconsider issues thatwerenotraised during theCommittee review oftheoriginal notification,
ifthearbitration body wasnotsatisfied withtheexplanation regarding whytheissues hadnotbeen
raised atthetime. Atinformal consultations on4February 1997, theprevious Chairman hadproposed
toleave ittothearbitration bodyitselftodetermine whether ornotissues notraised during Committee
review could beomitted fromthescope ofanarbitration. Consultations hadbeenheldonthatbasis,
andthere appeared tobesome willingness tore-focus thecurrent texttowards purely procedural and
administrative aspects. Consultations would thuscontinue withaviewtofinding asolution, possibly
intimeforthenextCommittee meeting inApril 1998.
G. FORMAT FOR ARTICLE 8.3UPDATING NOTIFICATIONS (G/SCM/W/410)
51. TheChairman stated thattheWorking Party onSubsidy Notifications hadatlastagreed on
anupdating notification format, which hadbeenforwarded totheCommittee foradoption. Heasked
whether theCommittee could agree toadopt theformat.
52. Therepresentative ofArgentina stated fortherecord thattheformat could innowayalterthe
rights andobligations oftheparties under theAgreement.
53. TheChairman affirmed thattheformat wasnotintended toalteranyoftherights andobligations
ofMembers under Article 8oftheAgreement andwasmerely atoolfortheuseoftheCommittee
inreviewing Article 8.3notifications.
54. Therepresentative ofBrazil seconded thecomments made byArgentina andconfirmed bythe
Chairman. Healsoexpressed concern overtheinclusion ofpopulation information intheproposedG/SCM/M/15
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format andindicated thathesawnoproportionality links intheAgreement between subsidies and
population factors.
55. TheCommittee adopted theformat.
H. INFORMAL GROUP OFEXPERTS -STATUS REPORT (G/SCM/W/415)
56. TheChairman recalled thattheInformal Group ofExperts hadbeencreated bydecision of
theCommittee inorder toconsider issues relating tothecalculation of5percent advalorem subsidization
inthecontext ofArticle 6.1(a) oftheAgreement. TheIGE'sreport contained anumber of
recommendations withrespect toparticular issues arising under Article 6.1(a) andAnnex IVofthe
Agreement andsummarized theGroup 'sdiscussions onalltheissues thatithadconsidered. Asthis
wasthefirstmeeting atwhich thereport wasbefore theCommittee, theChairman proposed thatany
general statements beheard before thenextsteps wereconsidered, withaviewtoputting thereport
upforadoption atafuture Committee meeting.
57. Therepresentative oftheUnited States considered thereport asignificant contribution tothe
operation oftheAgreement, particularly given theimportance hisdelegation attached toArticle 6.1.
Hisgovernment required additional timetostudy thereport before itcould agree toitsformal adoption.
Therepresentatives ofBrazil, Canada, theEC,Japan, Korea, Mexico, Norway, andThailand also
indicated thattheyneeded additional timetoexamine thereport.
58. Therepresentative ofPoland requested theIGEforadditional comments oncertain issues:
Wastheopportunity costofasubsidy tobealways imputed asthecostofthesubsidy, andifso,would
itnotbelogical tousetheyield tomaturity ongovernment securities asaproxy forthatextra cost?
Regarding expensed grants, hisunderstanding wasthattheydidnotcarry anyextracostsbeyond their
facevalue (Paragraph 77).Inthecaseofordinary loans, wastheIGErecommending thattheappropriate
government bondratebeused, andwhatwerethereasons fordifferent treatment ofanallocated grant
andaloanwitha10-year repayment period? Withrespect toRecommendation 9inPartBofthereport,
wasittheIGE'sintention tounderline thefactthat"...theamount repaid ..."meant "...theamount
repaid above theprincipal", andnotjustthesumofrepaid money? Relating toRecommendation 10,
wasitcorrect tosaythat,since inthesituation described inParagraph 89ofthereport, interest rate
subsidies weretobetreated asaseries ofrecurring grants, noallocation came intoplayandthere was
therefore noneedtoimpute anextracosttothegovernment? Finally, regarding Recommendation 11
(Paragraph 92),since anoverdue loanturned intoagrant under thedebtforgiveness concept, there
wasaquestion astohowtheperiod before thedebtwasforgiven should betreated. Forcosttothe
government inthatcase, should thelowinterest rateofapreferential loancontract beusedora
government bondratecorresponding totheloaninquestion? What wasthecostoftheloan-turned-into-
grant andhowwasthattobeallocated?
59. TheChairman proposed thatMembers wishing toraiseanyissues orquestions dosobyway
ofverbal orwritten comments tohimortheSecretariat byChristmas, afterwhich aninformal meeting
would beorganized withtheIGEinorder forthemtoparticipate inasubstantive debate ontheirviews.
Ifthatwasdoneinthecourse ofthewinter, thereport could beupforadoption attheApril 1998meeting
oftheCommittee.
60. TheCommittee sodecided.
I. SEMI-ANNUAL REPORTS OFCOUNTERVAILING DUTY ACTIONS (Article 25.11)
61. TheChairman reported that45ofthe117Members hadsubmitted semi-annual reports.G/SCM/M/15
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62. Therepresentative oftheECstated thattherecould onlybeonecountervailing dutyinvestigation
onolive oilfromtheEC,andnottwoagainst theECandSpain asreported byArgentina, given that
Spain wasamember oftheEC.
63. Therepresentative ofArgentina indicated thatthatwasatechnical errorandthatacorrigendum
would beissued tothateffect.
64. TheChairman expressed hisconcern regarding compliance withthisnotification obligation.
Approximately three-quarters oftheMembers hadnotresponded totherequest forsemi-annual reports
andmany which hadbeensubmitted arrived quite late. Some ofthenon-notifying Members were
active users ofcontingent trade remedies. TheChairman reminded Members thattheAnnual Report
oftheCommittee would reflect thestatus ofthese notifications, andurged anyMember which had
notyetsubmitted anotification toattempt todosobefore thereport wasadopted thenextday.
J. REPORTSOFPRELIMINARYANDFINALCOUNTERVAILINGACTIONS(Article25.11)
65. TheChairmanstatedthatArgentina,Australia,NewZealand,SouthAfrica,andtheUnitedStates
hadnotified preliminary and/or finalactions taken since thelastregular meeting oftheCommittee.
66. Therepresentative ofMexico reminded theCommittee thatthey hadalso reported
preliminary/final countervailing actions.
K. GRADUATION FROM ANNEX VII
67. TheChairman informed theCommittee thataccording todatainthe1997World Bank Atlas,
theGNP percapita ofthePhilippines, identified inAnnex VII,nowexceeded $1,000 perannum.
68. Therepresentative ofthePhilippines didnotdispute theWorld Bank'sdata,butindicated that
while thePhilippines 'GNP percapita hadexceeded $1,000 perannum in1995, thatwasnolonger
thecasebased onthecurrent exchange rate,andenquired astowhatwould happen inthissituation.
Healsoraised aquestion astowhether thetransition period of8years forthephase-out ofexport
subsidies thatthePhilippines would nowbesubject towastobecalculated fromthedateofentry into
force oftheWTO Agreement orfrom thedateofthePhilippines 'graduation from Annex VII.
L. MEXICO-COUNTERVAILINGDUTYINVESTIGATIONONCANNEDPEACHESFROM
GREECE
69. Therepresentative oftheECwished topoint outserious procedural inadequacies intheanti-
dumping andcountervailing dutyinvestigations initiated byMexico oncanned peaches fromGreece.
Article 13.1oftheSCM Agreement required theinvestigating Member toholdconsultations prior
toinitiating anyinvestigation, andthisprovision hadbeencompletely ignored byMexico, which was
aserious infraction thatcould result intheinvestigation being rendered anullity. Mexico hadalso
failed toinform theECorGreek authorities oftheinvestigation. Further, Article 13(b)(i) ofthe
Agriculture Agreement required aMember toshow duerestraint ininitiating anycountervailing duty
investigations withrespect todomestic support measures inconformity withtheAgriculture Agreement.
How hadthisrequirement beenfulfilled when theMexican authorities hadnotevenoffered tohold
consultations? Inaddition tothese procedural infractions, there werealsosubstantive inadequacies.
Therequirements ofArticle 11.2(iv) oftheSCM Agreement astoevidence ofinjury hadnotbeen
met,andtheperiod fromApril through December hadbeenchosen arbitrarily. Injury toadomestic
industry wastheonlyrelevant criterion forinitiation ofacountervailing dutyaction, andsince injury
hadonlybeenconsidered forabriefperiod, notrends hadbeenconsidered norhadinformation on
market share beenprovided. Considering thatprices inthedomestic industry hadinfactgoneupduring
theperiod inquestion, where wasproof ofinjury? TheECstressed theimportance offollowingG/SCM/M/15
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procedural rules. Theimposition ofcountervailing measures wasexceptional andrequired good
justification.
70. Therepresentative ofMexico indicated thathisgovernment hadheldinformal consultations
withtheECinJuly1997. Hedidnotwanttoprejudice Mexico 'sposition inother foraandwasthus
unable tomake anyfurther comments atthispoint, buttooknoteoftheEC'sstatement.
M. NEWZEALAND-COUNTERVAILINGDUTYINVESTIGATIONONCANNEDPEACHES
FROM THE EC
71. Therepresentative oftheECexpressed increasing concern about certain interpretations ofthe
countervailing dutyprovisions oftheSCM Agreement. NewZealand hadinitiated aninvestigation
onthebasisofacomplaint, which contained allegations about certain programmes maintained bythe
EC.Having sought andobtained information bymeans ofquestionnaires, NewZealand hadthencome
backwithfurther allegations based onitsowninformation which hadnever beenmade available to
theECbefore ithadanswered theoriginal questionnaire. Initsletter of19September 1997expressing
itsdesire toinitiate thatsecond investigation, NewZealand hadprovided noevidence oftheexistence
ofsubsidies asrequired byArticle 11.2oftheSCM Agreement and,inparticular, noevidence to
demonstrate thatanyoftheprogrammes were likely tohavebenefited theproduction ortheexport
ofcanned peaches. Itshould alsobenoted thatArticle 25.7oftheSCM Agreement made clearthat
thenotification ofameasure didnotprejudge itslegalstatus. Given thattheECwasalready inthe
midst ofaninvestigation, NewZealand 'sapproach seemed tohavebeentoreverse theburden ofproof
byrequiring theECtoshow thatanumber ofarbitrarily chosen programmes werenotcountervailable
subsidies instead ofproviding positive evidence itself. Further, New Zealand hadattempted to
circumvent therequirement ofArticle 13.1astotheneedforconsultations, andhadthusdenied the
ECtheopportunity todemonstrate thattheinvestigation wasnotappropriate asregards theprogrammes
inquestion. Given thatthose programmes hadnever beenraised bythecomplainant, NewZealand
hadeffectively self-initiated asecond investigation, eventhough no"special circumstances" asper
Article 11.6hadbeenexplained. Duetothedelay innotifying theEC,theEChadnotbeenprovided
sufficient timetorespond adequately totheallegations ordefend itsinterests asperArticle 12.1. It
hadtherefore requested NewZealand toterminate thesecond investigation, which thelatter hadnot
done. TheECalsofound itself inanextremely difficult position astoitsobligations vis-à-vis the
investigatingauthority,anditconsideredthatNewZealandshouldtakeapositiononthenewprogrammes
sothattheECmayknow whatitsrights andobligations were. Thematter would bediscussed inbilateral
consultations withNewZealand thefollowing week.
72. Therepresentative ofNewZealand stated thattheinvestigating authorities considered thatthe
subject ofaninvestigation wastheeffect ofsubsidized imports, andsubsidies identified inthecourse
ofaninvestigation didnotneedtobesubject toanewinitiation process, butshould beincluded in
theinvestigation totheextent thattheirinclusion wasreasonable. Thatwasnotself-initiation andthe
"special circumstances" provision ofArticle 11.6didnotarise. There hadbeennoattempt toreverse
theburden ofproof; NewZealand hadobtained information indicating theexistence ofsubsidies which
might beapplicable tocanned peaches imported toNewZealand, could notignore thatinformation,
andhadsought thecomments oftheEContheapplicability ofthose programmes. Norhadtherebeen
anyattempt tointroduce delays ordeprive theECofitsconsultations rights. NewZealand looked
forward totheconsultations withtheECthefollowing week.
73. Therepresentative oftheECcould notaccept theargument thatNewZealand hadnotreversed
theburden ofproof anddidnotthinkthattheinvestigating authority should besubject toalower standard
ofproof byidentifying programmes; Itshould demonstrate thatsubsidization benefited theproduct
concerned. Hestated thatthenewsubsidies hadnotbeenidentified inthecourse oftheinvestigation,
butrather, chosen tobebrought upwiththegovernments concerned toseeifbychance there might
havebeenbenefit conferred. TheECcould notaccept thatasawayofconducting countervailing
investigations andwished tobring thepractice totheattention oftheCommittee.G/SCM/M/15
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74. TherepresentativeoftheUnitedStateswasreassuredbythelastinterventionoftheECregarding
theexamination ofsubsidies uncovered inthecourse ofaninvestigation. Healsoindicated thathis
authorities would beveryinterested infollowing thesubject matter ofthisinvestigation andtheMexican
one.Questions hadbeenraised about apossible increase intheuseofsubsidies affecting theproduction
orsaleofcanned peaches intheEC,andthematter wasofsome concern totheUSdomestic industry.
75. TheCommittee tooknoteofthestatements made.
N. OTHER BUSINESS
(i) Questions from theECregarding Australia 'sandKorea 'supdating notifications
76. Thequestions regarding Australia 'snotification canbefound inthefollowing documents:
G/SCM/Q2/AUS/11 (Submitted bytheEC)
G/SCM/Q2/AUS/13 (Submitted byKorea)
77. Theanswers provided byAustralia canbefound inthefollowing document:
G/SCM/Q2/AUS/14 (Toquestions submitted bytheECandKorea)
78. Thequestions regarding Korea 'snotification canbefound inthefollowing document:
G/SCM/Q2/KOR/13 (Submitted bytheEC)
79. Theanswers provided byKorea canbefound inthefollowing document:
G/SCM/Q2/KOR/14 (Toquestions submitted bytheEC)
(ii) Requests under Article 25bytheECtoEgypt andJapan
80. Therequest toEgypt canbefound inthefollowing document:
G/SCM/Q2/EGY/1 (Submitted bytheEC)
81. Theinformation provided byEgypt canbefound inthefollowing document:
[NOINFORMATION HAS YET BEEN PROVIDED BYEGYPT]
82. Therequest toJapan canbefound inthefollowing document:
G/SCM/Q2/JPN/14 (Submitted bytheEC)
83. Theinformation provided byJapan canbefound inthefollowing document:
G/SCM/Q2/JPN/15 (Totherequest submitted bytheEC)
(iii) Provisional measures imposed byArgentina regarding wheat gluten from theEC
84. Therepresentative oftheECcontended thattherehadbeenaviolation oftheSCM Agreement
intheimposition ofthese provisional measures since thesubsidies hadbeengranted totheusers of
starch which, contrary toArgentina 'sargument, hadnoinfluence ontheproduction orexport ofwheatG/SCM/M/15
Page13
gluten. Despite alltheevidence thattheEChadprovided tothateffect, adutyhadbeenlevied on
wheat gluten. Itwasnottenable thatsubsidies granted totheusers, andnotproducers, ofaby-product,
inthiscasestarch, granted abenefit totheproducers ofwheat gluten, andtheECwould provide further
evidence ofnon-subsidization. Given thatArgentina 'sinterpretation oftheterms subsidy andbenefit
totherecipient violated themost essential provisions oftheAgreement, theECasked Argentina to
apply itslegislation inconformity withtheAgreement.
85. Therepresentative ofArgentina indicated thathewassimply making abriefstatement since
thematter wasbeing discussed under "Other Business". Argentina hadheldconsultations withthe
ECasperArticles 13.1and13.2oftheAgreement, thelastofwhich tookplace inMarch 1997. At
thatmeeting, Argentina hadgiven theECover15pages ofobservations ontheissues discussed and
hadcommitted tonottaking anydecision forthree months. Hisgovernment hadhoped toreceive
similarwrittencommentsfromtheEC,buthadinsteadhadtheissueraisedtodayunder"Otherbusiness".
HetooknoteoftheEC'sstatement, waswilling tocooperate anddiscuss thematter, andawaited future
reactions from theEC.
86. Therepresentative oftheUnited States stated thatthese measures were amatter ofinterest
totheUStoo.TheUnited States found thattheEC'sconcerns interms ofthelegalquestions atissue
under theSCM Agreement hadsome validity, butitalsohadsympathy withrespect tothecommercial
issuefromtheperspective ofArgentina. TheUnited States considered thattheEC'sclaim thatsubsidies
tostarch hadnoinfluence ontheproduction ofwheat gluten defied logicinterms ofeconomic realities,
andthattheparticular programmes hadresulted insome measure ofcommercial disruption inanumber
ofmarkets throughout theworld.
87. Therepresentative oftheECconsidered thatthesubsidies didnotbenefit theproduction of
starch since theyweregranted totheusers, andnottheproducers, ofstarch. Asregards Argentina 's
comment about theEChaving raised thematter under "Other business", theEChadbeenunable to
putthematter ontheagenda forthemeeting because theyhadlearned oftheimposition oftheprovisional
duties onlyveryrecently.
88. Therepresentative ofAustralia supported theUnited States 'remarks, andpointed outthatthe
EC'sexports ofgluten hadhadaserious impact onAustralia 'sexports ofgluten, both tothe
United States andtoanumber ofAsian markets. Thenature oftheconsumption subsidies involved
hadbeenincreasing theconsumption ofstarch intheECandtherefore increasing thedevelopment
oftheby-product, gluten. Certainly thesubsidy programme hadbeenhaving alarge trade impact on
theAustralian industry.
89. Therepresentative ofNorway wished toreiterate theconcerns thathisgovernment hadrecently
raised intheGeneral Council andtheGoods Council astotheuseof"Other Business" forfairly
substantive discussion. Issues under "Other Business" weremore asignalling ofintentions thanareal
discussion.
90. TheChairman affirmed Norway 'sview.
91. TherepresentativeofArgentinastatedthatNorway'sviewreflectedhisgovernment's,inrelation
totheother business issue. Argentina alsoflatly rejected theEC'sdefinitions astotheillegality of
theirmeasures. Therepresentative alsoindicated thattheofficial notification totheSecretariat would
bemade shortly.
92. TheCommittee tooknoteofthestatements made.
(iv) Presentation onAnti-dumping andCountervailing Duty DatabaseG/SCM/M/15
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93. TheChairman informed theCommittee thattheSecretariat hadcompleted work ona
computerized database containing anti-dumping andcountervailing actions dating backto1987, which
would beupdated eachsemester andwasaccessible forconsultation byinterested Members andthe
general public.
O. ANNUAL REPORT TOTHE COUNCIL FOR TRADE INGOODS (Article 32.7)
94. TheCommittee adopted itsAnnual Report totheCouncil forTrade inGoods.
P. DATE OFNEXT REGULAR MEETING
95. TheChairman recalled thatbydecision oftheCommittee, regular meetings would normally
beheldinthelastweek ofApril andOctober. However, given thenumber ofdaysthatwould be
needed forthemeeting oftheCommittee onAnti-Dumping Practices anditssubsidiary bodies, itwas
proposed thatthenextregular meeting beheldintheweek of20April 1998.
96. TheCommittee sodecided.
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