. /.  WORLD TRADE  
ORGANIZATION  WT/DS212/14 
19 March 2004  
 
(04-1237) 
 Original:   English 
   
UNITED STATES – COUNTERVAILING MEASURES CONCERNING 
CERTAIN PRODUCTS FROM THE EUROPEAN COMMUNITIES 
 
Recourse to Article 21.5 of the DSU by the European Communities
 
 
Request for Consultations  
 
  The following communication, dated 17 March 2004, from the delegation of the European Commission to the delegation of the United States and to the Chairman of the Dispute Settlement 
Body, is circulated pursuant to Article 21.5 of the DSU. 
 
_______________ 
 
  On 8 January 2003, the Dispute Settlement Body (the " DSB") adopted the Appellate Body 
Report and the Panel Report, as modified by the Appellate Body, in the case WT/DS212 " United 
States – Countervailing Measures concerning Ce rtain Products from the European Communities ".  
The resulting DSB rulings included the recommendation that the United States brings its administrative practice (the " same person " methodology) and measures found to be inconsistent with 
the Agreement on Subsidies and Countervailing Measures (the " SCM Agreement ") into conformity 
with its WTO obligations. 
 
 On 27 January 2003, the United States informed  the DSB that it intended to implement the 
recommendations and rulings of the DSB in a manne r consistent with its WTO obligations.  The 
parties agreed under Article 21.3(b) of the DSU th at the United States had until 8 November 2003 to 
implement the Appellate Body decision.  
 In June 2003 the United States finalised a new "change-in-ownership"  methodology, 
published in the US Federal Register (" Notice of final modification of Agency practice under 
Section 123 of the Uruguay Round Agreement " published on the US Federa l Register on 23 June 2003 
at 68 FR 120 p. 37125).    
 The new methodology was then applied to the tw elve individual determinations brought by 
the European Communities before th e WTO.  The United States issued its final determinations on 
these determinations on 7 November 2003 (publishe d on the US Federal Register on 17 November 
2003 at 68 FR 221 p. 64858).  In the DSB meeting of 7 November 2003, the United States stated that it had fully complied with the DSB recomme ndations and rulings on this issue. 
 
 The European Communities disagrees.  In par ticular, the following aspects of the measures 
taken by the US to comply with its WTO obligations are unsatisfactory:  WT/DS212/14 
Page 2  
1. The new "change in ownership"  methodology still contains certain elements which are in 
breach of the SCM Agreement .  In particular, it provides
1 that the unamortized amount of any 
pre-sale subsidy continues to be countervailable if  a privatization is found not to be at arm's 
length and for fair market value.  The EC dis putes that this is necessarily the case and that the 
amount of any subsidy that may exist corresponds to the "unamortized amount" of the original subsidy. The new methodology is therefore inconsistent with, inter alia , Articles 10, 14, 19.1, 
19.4 and 21 of the SCM Agreement  and Article VI:3 of GATT 1994 .  
 2. In the sunset review  Certain Corrosion-Resistant Carbon Steel Flat Products from France  
(C-427-810) (Case No. 9), the United Stat es failed to properly determine whether 
subsidization would continue or recur.  Inter alia, with regard to the privatization concerned, 
it failed to properly establish that the price for employees' shares constituted a subsidy or that 
it led to any continuation of a countervailable subsidy 
2.  This is inconsiste nt with Articles 10, 
14, 19.4, 21.1, 21.2 and 21.3 of the SCM Agreement and Article VI:3 of GATT 1994. 
 3. In the following sunset reviews: 
 
• Cut-to-Length Carbon Steel Plate from United Kingdom  (C–412–815) (Case No. 8)
3; 
 
• Cut-to-Length Carbon Steel Plate from Germany  (C-428–817) (Case No. 10)4; 
 
• Cut-to-Length Carbon Steel Plate from Spain  (C–469–804) (Case No. 11).5 
 
 The United States failed to properly determine wh ether, in these cases, there was continuation 
or recurrence of subsidization, because it did not examin e the nature of the privatizations in question.  
This is inconsistent with Articles 10, 14, 19.4, 21.1, 21.2 and 21.3 of the SCM Agreement and 
Article VI:3 of GATT 1994. 
 
 For the reasons mentioned above, and without prejudice to its rights under the WTO, the European Communities hereby requests the United St ates of America to ente r into consultations under 
Articles 4 and 21.5 of the Understa nding on Rules and Procedures Govern ing the Settlement  of Disputes 
( the "DSU" ) and Article 30 of the SCM Agreement  with respect to United States' new "change-in-
ownership"  methodology, its application to the determin ations set out here and the findings in the 
"sunset reviews" referred to above.    
 The European Communities reserves its rights in  respect of all other aspects of the United 
States' purported compliance with its obligations  in this case.  In particular, the European 
Communities reserves its rights with respect to the ev entual outcome of a number of court challenges 
seeking to overturn the revised methodology.   We look forward to receiving your reply to the present request and to fixing a mutually 
convenient date for consultations. 
__________ 
                                                     
 
1 At page 37127, third column of the above mentioned  " Notice of final modification of Agency practice 
under Section 123 of the Uruguay Round Agreement",  the US Department of Commerce states that "if we 
determine that the evidence does not demonstrate that the privatization was at arm's length and for fair market 
value, […] we will find that unamortized amount of any pre-sale subsidy continues to be countervailable" .   
2 See unpublished memorandum of 23 October 2003.   
Note: this memorandum and the other listed below are available at the US Department of Commerce 
site at http://ia.ita.doc.gov/downloa d/section129/section129-index.html. 
3 See unpublished memorandum of 24 October 2003. 
4 See unpublished memorandum of 24 October 2003. 
5 See unpublished memorandum of 24 October 2003.