WT/DS505/ARB/Add.1  
 
13 July  2022 
(22-5341) Page: 1/45 
  Original: English  
 
  
UNITED STATES – COUNTERVAILING MEASURES ON  
SUPERCALENDERED PAPER FROM CANADA  
RECOURSE TO ARTICLE 22.6 OF THE DSU BY THE UNITED STATES  
DECISION BY THE ARBITRATOR  
Addendum  
 
This addendum  contains Annexes A to C to the Decision of the Arbitrator to be found in document  
WT/DS505/ARB . 
 
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  WT/DS505/ARB/Add.1  
 
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  LIST OF ANNEXES  
ANNEX  A 
WORKING PROCEDURES OF THE ARBITRATOR  
Contents  Page  
Annex  A-1 Working Procedures of the Arbitrator  4 
Annex  A-2 Additional Working Procedures of the Arbitrator Concerning Business 
Confidential Information  9 
Annex  A-3 Additional Working Procedures of the Arbitrator Concerning Meetings with 
Remote Participation  11 
Annex A -4 Additional Working Procedures of the Arbi trator regarding Open Meetings of 
the Arbitrator (Delayed Online Broadcast)  14 
ANNEX  B 
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of the United States  16 
Annex B -2 Integrated executive summary of the arguments of  Canada  28 
ANNEX  C 
DATA INPUTS AND CALCULATIONS OF THE ARBITRATOR  
Contents  Page  
Annex  C-1 STATA code of Arbitrator's Model  40 
Annex  C-2 Excel Input Sheet of Arbitrator's Model  44 
Annex C -3 Excel Spreadsheet Template for US Customs Data  45 
 
 
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  ANNEX  A 
WORKING PROCEDURES OF THE ARBITRATOR  
Contents  Page  
Annex  A-1 Working Procedures of the Arbitrator  4 
Annex  A-2 Additional Working Procedures of the Arbitrator Concerning Business 
Confidential Information  9 
Annex  A-3 Additional Working Procedures of the Arbitrator Concerning Meetings with 
Remote Participation  11 
Annex A -4 Additional Working Procedures of the Arbitrator regarding Open Meetings of 
the Arbitrator (Delayed Online Broadcast)  14 
 
 
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  ANNEX  A-1 
WORKING PROCEDURES OF THE ARBITRATOR  
Adopted on 28 August 2020  
 
 
General  
 
1. (1) In this proceeding, the Arbitrator shall follow the relevant provisions of the 
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU").  In 
addition, the following Working Procedures apply.  
(2) The Arbitrator reserves the right to  modify these procedures as necessary, after 
consultation with the parties.  
Confidentiality  
 
2. (1) The deliberations of the Arbitrator  and the documents submitted to it  shall be kept 
confidential. Members shall treat as confidential information that is submitted to the Arbitrator 
by another Member which the submitting Member has designated as confidential.  
(2) In accordance with the DSU, nothing in these Working Procedures shall preclude a party 
from disclosing statements of its own positions to the public.   
(3) If a party submits a confidential version of its written submissions to the Arbitrator , it 
shall also, upon request of a Member, provide a non -confidential summary of the information 
contain ed in its submissions that could be disclosed to the public. A party should endeavour 
to promptly provide a non -confidential summary to any Member requesting it, and if possible , 
within 10 days of receiving the request.  
(4) Upon request, the Arbitrator may  adopt appropriate additional procedures for the 
treatment and handling of confidential information after consultation with the parties.  
Submissions  
 
3. (1) Before the substantive meeting of the Arbitrator with the parties, Canada shall transmit 
to the Ar bitrator and to the United States a communication explaining the basis for its request, 
including the methodology and data supporting it, in accordance with the timetable adopted 
by the Arbitrator.  
(2) Each party to the dispute shall also transmit to the A rbitrator a written submission in 
which it presents the facts of the case and its arguments, in accordance with the timetable 
adopted by the Arbitrator.  
(3) The Arbitrator may invite the parties to make  additional submissions during the 
proceeding,  including with respect to requests for preliminary rulings in accordance with 
paragraph 4 below.  
Preliminary  rulings  
 
4. (1) If the United States considers that the Arbitrator  should make a ruling before the 
issuance of the Decision  that certain measures, claims or issues are not properly before the 
Arbitrator , the following procedure applies . Exceptions to this procedure shall be granted upon 
a showing of good cause.  
a. The United States  shall submit any such request for a preliminary ruling at the earliest 
possible opportunity. Canada shall submit its response to the request at a time to be 
determined by the Arbitrator in light of the request.    WT/DS505/ARB/Add.1  
 
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  b. The Arbitrator  may issue a preliminary ruling on the issues raised in such a preliminary 
ruling request before, during or after the substantive meeting , or the Arbitrator  may defer 
a ruling on the issues raised by a preliminary ruling until it issues its Decision  to the parties.  
c. If the Arbitrator  finds it appropriate to issue a preliminary ruling before  the issuance of its 
Decision , the Arbitrator  may provide  reasons for the ruling at the time that the ruling is 
made, or subsequently in its Decision . 
(2) This procedure is without prejudice to the parties' right to request other types of 
preliminary  or procedural rulings during  the proceeding, and to the procedures that the 
Arbitrator  may follow with respect to such requests.  
Evidence  
 
5. (1) Each party shall submit all evidence to the Arbitrator  no later than the substantive 
meeting , except evidence  necessary for purposes of rebuttal, or evidence necessary for 
answers to questions or comments on answers provided by the other party. Additional  
exceptions may be granted upon a showing of good cause.  
(2) If any new evidence has been admitted upon a showing of good cause, the Arbitrator  
shall accord the other party an appropriate period of time to comment on the new evidence 
submitted.  
6. (1) If the original language of an exhibit  or portion thereof is not a WTO working language, 
the submitting party shall simultaneously submit a translation of the exhibit or relevant portion 
into the WTO working language of the submission . The Arbitrator may grant reasonable 
extensions of time for the translation of exhibit s upon a showing of good cause.  
(2) Any objection as to the accuracy of a translation should be raised promptly  in writing, 
preferably no later than the next filing or the meeting (whichever occurs earlier) following the 
submission which contains the trans lation in question. Any objection shall be accompanied by 
an explanation of the grounds for the  objection and an alternative translation.  
7. (1) To facilitate the maintenance of the record of the dispute and maximize the clarity of 
submissions, each party shall sequentially number its exhibits throughout the course of the 
dispute, indicating the submitting Member and the number of each exhibit on its cover page. 
Exhibits submitted by Canada should be numbered CAN -1, CAN -2, etc. Exhibits submitted by 
the Uni ted States should be numbered USA -1, USA -2, etc. If the last exhibit in  connection 
with a submission was numbered CAN-5, the first exhibit in connection with the next 
submission thus would be numbered CAN-6. If a party withdraws an exhibit or leaves one or  
more exhibits intentionally blank, it should indicate this on the cover page that provides the 
number of the blank exhibit.  
(2) Each party shall provide a n updated  list of exhibits  (in Word or Excel format) together 
with each of its submissions, oral stat ements, and responses to questions.  
(3) If a party submits a document that has already been submitted as an exhibit by the 
other party, it should explain why it is submitting that document again.  
(4) Insofar as a party cons iders that the Arbitrator should take into account a document 
already submitte d as an exhibit in the prior panel  proceeding s, it should resubmit that 
document as an exhibit for the purpose of this proceeding. In its list of exhibits, it should refer 
to the number of the original exhibit i n the original panel proceeding (OP) and Article 21.5 
panel proceedings (CP) , if applicable  (example: CAN-1 (CAN-21-OP)).  
(5) If a party includes a hyperlink to the content of a website in a submission, and intends 
that the cited content form part of the official record, the cited content of the website shall be 
provided in the form of an exhibit along with an indication of the date that it was accessed.  
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  Editorial  Guide  
 
8. In order to facilitate the work of the Arbitrator , each party is invited to make its submissions 
in accordance with the WTO Editorial Guide for Submissio ns (electronic copy provided).  
Questions  
 
9. The Arbitrator may pose questions to the parties at any time, including:  
a. Before the meeting, the Arbitrator  may send written  questi ons, or a list of topics it 
intends to pursue in questioning orally during the meeting. The Arbitrator may ask different 
or additional questions at the meeting.  
b. The Arbitrator  may put questions to the parties orally during  the meeting, and in writing 
following the meeting, as provided for in paragraph 16 below.  
Substantive meeting  
 
10. The Arbitrator  may open its meetings with the parties to the public, either in whole or in part, 
subject to appropriate procedures to be adopted by the Arbitrator after c onsulting with the parties . 
11. The parties shall be present at the meetings only when invited by the Arbitrator  to appear 
before it.  
12. (1) Each party has the right to determine the composition of its own delegation when 
meeting with the Arbitrator . 
(2) Each party shall  have the responsibility for all members of its delegation and shall 
ensure that each member of its delegation acts in accordance with the DSU and these Working 
Procedures, particularly with regard to the confidentiality of the proceeding a nd the 
submissions of the parties.  
13. Each party shall provide to the Arbitrator the list of members of its delegation no later than 
5.00 p.m. (Geneva time ) three working days before  the first day of the meeting with the Arbitrator . 
14. A request for interpretation by any party should be made to the Arbitrator as early as possible, 
preferably at the organizational stage, to allow sufficient time to ensure availability of interpreters.  
15. There shall be one substantive meeting with the parties.  
16. The substantive meeting of the Arbitrator with the parties shall be conducted as follows:  
a. The Arbitrator shall invite the United States to make an opening statement to present 
its case first. Subsequently, the Arbitrator shall invite Canada to present its p oint of view. 
Before each party takes the floor, it shall provide the Arbitrator with a provisional written 
version of its statement. If interpretation is needed, each party shall provide additional copies 
for the interpreters.  
b. Each party should avoid l engthy repetition of the arguments in its submissions. Each  
party is invited to limit the duration  of its opening statement to not more than 60 minutes. If 
either party considers that it requires more time for its opening statement, it  should inform 
the Arbitrator  and the other party at least 10 days prior to the meeting, together with  an 
estimate of the expected duration  of its statement. The Arbitrator  will accord equal time to 
the other party.  
c. After the conclusion of the opening statements, the Arbitrator shall give each party the 
opportunity to make comments or ask the other party questions.  
d. The Arbitrator may subsequently pose questions to the parties.  WT/DS505/ARB/Add.1  
 
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  e. Once the questioning has concluded, the Arbitrator shall afford each pa rty an 
opportunity to present a brief closing statement, with the United States presenting its 
statement first. Before each party takes the floor, it shall provide the Arbitrator  and other 
participants at the meeting with a provisional written version of i ts closing statement , if 
available . 
f. Following the meeting:  
i. Each party shall submit a final written version of its opening statement no later than 
5.00 p.m. (Geneva time) on the first working day following the meeting.  At the same 
time, each party should  also submit a final written version of any prepared closing 
statement that it delivered at the meeting.  
ii. Each party shall send in writing, within the timeframe established by the Arbitrator 
before the end of the meeting, any questions to the other party to  which it wishes to 
receive a response in writing.  
iii. The Arbitrator shall send in writing, within the timeframe established by the Arbitrator, 
any questions to the parties to which it wishes to receive a response in writing.  
iv. Each party shall respond in writi ng to the questions from the Arbitrator, and to any 
questions posed by the other party, within the timeframe established by the Arbitrator.  
Descriptive part and executive summaries  
 
17. The description of the arguments of the parties in the Decision  of the  Arbitrator shall consist  
of executive summaries provided by the parties, which shall be annexed  as addenda to the Decision. 
These executive summaries shall not in any way serve as a substitute for the submissions of the 
parties in the Arbitrator's examina tion of the case.  
18. Each party shall submit one integrated executive summary , which shall summarize the facts 
and arguments as presented to the Arbitrator  in the party's  submissions and statements , and may 
also include a summary of  its responses to questions and comments thereon  following the 
substantive  meeting.  
19. Each integrated executive summary shall be limited to 15 pages.  
20. The Arbitrator  may request the partie s to provide executive summaries of facts and arguments 
present ed in any other submissions to the Arbitrator  for which a deadline may not be specified in 
the timetable.  
Service of documents  
 
21. The following procedures regarding service of documents apply to all documents submitted by 
parties during  the proceeding:  
a. Each party shall submit all documents to the Arbitrator  by submitting  them via the WTO 
e-filing system by 5.00 p.m. (Geneva time) on the due dates established by the Arbitrator . 
The electronic  version uploaded into the WTO e -filing system shall constitute t he official 
version for the purposes of submission deadlines and the record of the dispute. Upload of 
a document into the WTO e -filing system  shall constitute electronic service on the 
Arbitrator and the ot her party . 
b. By 5.00 p.m. (Geneva time) the next working day following the electronic submission, 
each party shall submit one paper copy of all documents it submits to the Arbitrator, 
including the exhibits, with the DS Registry (office No. 2047) . The DS Registrar shal l stamp 
the documents with the date and time of the submission.  If an exhibit is  in a format that 
is impractical to submit as a paper copy, then the party may submit such exhibit in 
electronic format  (on a CD -ROM or DVD). In this case, the cover page of th e exhibit should 
indicate that the exhibit is only available in electronic format.  WT/DS505/ARB/Add.1  
 
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  c. All documents and communications issued by the Arbitrator during the proceeding will be 
provided to the parties via the WTO e -filing system.  
d. If the parties  have any questio ns or technical difficulties relating to the WTO e -filing 
system , they are invited to contact the DS Registry (DSRegistry@wto.org ).  
e. If any party  is unable to meet the 5 .00 p.m. deadline because of technical diffic ulties in 
uploading these documents into the  WTO e -filing system, the party concerned shall inform 
the DS Registry without delay and provide an electronic version of all documents to be 
submitted to the Arbitrator  by email including any exhibits . The email  shall be addressed 
to DSRegistry@wto.org , the Secretary  to the Arbitrator , and the other party. The  
documents sent by email  shall be submitted no later than 6.00 p.m. on the due date 
established by the Arbitrator . If the file size of specific exhibits makes transmission by 
email  impossible, or it would require more than five email  messages, owing to the number 
of exhibits to be filed, to transmit all of them by email , the specific large file size exhibits, 
or those  that cannot be attached to the first five email  messages, shall be filed with the 
DS Registry (office No. 2047) and provided to the other party by no later than 9 .30 a.m. 
the next working day on a CD -ROM or DVD. In that case, the party concerned shall send 
a notification to the DS Registrar, copying the Secretary  to the Arbitrator and the other 
party via email , identifying the numbers of the exhibits that cannot be transmitted by 
email . 
f. In case any party  is unable to access a document filed through the WTO e -filing system 
because of technical difficulties, it shall promptly, and in any case no later than 5 .00 p.m. 
on the next working day after the due date for the filing of the document, inform the 
DS Registr ar, the Secretary  to the Arbitrator , and the party that filed the document, of the 
problem by email  and shall, if possible, identify the relevant document(s). The 
DS Registrar will promptly try to identify a solution to the technical problem. In the 
meantime, the party that filed the document(s) shall, promptly after being informed of the 
problem, provide an electronic version of the relevant document(s) to th e affected party 
by email , with a copy to the DS  Registry ( DSRegistry@wto.org ) and the Secretary to allow 
access to the document(s) while the technical problem is being addressed. The 
DS Registrar may provide an electronic version of the relevant document(s) by email  if 
the affected party so requests. The DS  Registrar shall in that ca se copy the party  that filed 
the document(s) on the email  message.  
Correction of clerical errors in submissions  
 
22. The Arbitrator  may grant leave to a party to correct clerical errors in any of its submissions 
(including paragraph numbering and typographical mistakes). Any such request should identify the 
nature of the errors to be corrected and should be made promptly following the filing of the 
submission in question.  
 
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  ANNEX A -2 
ADDITIONAL WORKING PROCEDURES OF THE ARBITRATOR CONCERNING BUSINESS 
CONFIDENTIAL INFORMATION1 
Adopted on 28 August 2020  
 
 
1. The following procedures apply to business confidential information (BCI) submitted in the 
course of the present Arbitration proceedings.  
2. For the purposes of these proceedings, BCI is defined as any information that has been 
designated as such by a party submitting the information to the Arbitrator. The parties shall only 
designate as BCI information that is not available in the public domain, the release of which would 
cause serious harm to the interests of the originator(s) of the information. BCI may include 
informati on that was previously treated by the US Department of Commerce as confidential or 
proprietary information protected by Administrative Protective Order in the course of the 
countervailing duty proceeding entitled Supercalendered Paper from Canada (C -122-854). In 
addition, these procedures do not apply to any BCI if the entity  which  provided the information in 
the course of the aforementioned investigation  has agreed  in writing to make the information publicly 
available.  
3. If a party considers it necessary to submit to the Arbitrator  BCI as defined above from an 
entity that submitted that information in investigation  C-122-854, the party shall, at the earliest 
possible date, obtain an authori zing letter from the entity and provide such authori zing letter to the  
Arbitrator , with a copy to the other party. The authori zing letter from the entity shall authori ze both 
Canada and the United States  to submit in this arbitration proceeding , in accordance with these 
procedures, any confidential information submitted by t hat entity in the course of investigation C -
122-854. Each party shall, at the request of the other party, facilitate the communication to an entity 
in its territory of any request to provide an authori zing letter referred to above. Each party shall 
encoura ge any entity in its territory that is requested to grant the authori zation referred to in this 
paragraph  to grant such authori zation.  
4. No person may have access to BCI except a member of the Secretariat or the Arbitrator, an 
employee of a party, or an outside advisor to a party for the purposes of this arbitration proceeding. 
However, an outside advisor to a party is not permitted access to BCI if that advisor is an officer or 
employee of an enterprise engaged in the production, sale, export, or import of the products that 
were the subject of investigation C -122-854, or an officer or employee of an association of such 
enterprises.  
5. A person having access to BCI shall treat it as confidential, i.e. shall not disclose that 
information other than to persons authorized to have access to it pursuant to these procedures. 
Each party is responsible for ensuring that its employees and/or outside advisors comply with these 
procedures. BCI obtained under these procedures may be used only for the purpose of providing 
information and argumentation in this arbitration proceeding and for no other purpose. All 
documents and electronic storage media containing BCI shall be stored in such a manner as to 
prevent unauthorized access to such information.  
6. A party submitting BCI shall mark the cover and/or first page of the document containing BCI, 
and each page of the document, to indicate the presence of such information. The specific 
information in question shall be placed between double brackets, as follows: [[xx,xxx.xx]]. The  first 
page or cov er of the document shall state " Contains Business Confident ial Information on pages 
xxxxxx" , and each page of the doc ument shall contain the notice " Contains Bu siness Confidential 
Information"  at the top of the page. A party submitting BC I in the form of, or as part of, an Exhibit 
 
1 These procedures are adopted according to, and are an integral part of, the Arbitrator 's Working 
Procedures of the same date . WT/DS505/ARB/Add.1  
 
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  shall, in addition to the above, so indicate by putting "BCI" next to the exhibit number (e.g. Exhibit 
CAN-1 (BCI)).  
7. Where BCI is submitted in electronic format, the file name shall include the terms "Business 
Confidential Information" or "BCI". In addition, where applicable, the label of the storage medium 
shall be clearly marked with the statement "Business Confidential Information" or "BCI".  
8. Where a party submits a document containing BCI to the Arbitrator , the other party referring 
to that BCI in its documents, including written submissions and oral statements, shall clearly identify 
all such information in those documents. All such documents shall be ma rked and treated as 
described in paragraph 6. In the case of an oral statement containing BCI, the party making such a 
statement shall inform the Arbitrator before making it that the statement will contain BCI, and the 
Arbitrator will ensure that only persons authorized to have access to BCI pursuant to these 
procedures are present or observing the session at that time. The written versions of such oral 
statements submitted to the Arbitrator shall be marked as provided for in paragraph 6.  
9. If a party considers that information submitted by the other party should ha ve been 
designated as BCI and objects to its submission without such designation, it shall forthwith bring 
this objection to the attention of the Arbitrator and the other party, together with the reasons for 
the objection. Similarly, if a party considers t hat the other party designated as BCI information which 
should not be so designated, it shall forthwith bring this objection to the attention of the Arbitrator 
and the other party, together with the reasons for the objection. The Arbitrator shall decide wh ether 
information subject to an objection will be treated as BCI for the purposes of these arbitration 
proceedings on the basis of the criteria set out in paragraph 2.  
10. The Arbitrator will not disclose BCI, in its decision or in any other way, to persons no t 
authorized under these procedures to have access to BCI. The Arbitrator may, however, make 
statements of conclusion drawn from such information. Before the Arbitrator circulates its final 
decision to the Members, the Arbitrator will give each party an op portunity to review the decision to 
ensure that it does not contain any information that the party has designated as BCI.  
 
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  ANNEX A -3 
ADDITIONAL WORKING PROCEDURES OF THE ARBITRATOR  
CONCERNING MEETINGS WITH REMOTE PARTICIPATION  
Adopted on 20 August 2021  
General  
 
1. These Additional Working Procedures set out terms for holding meetings with the Arbitrator 
which some participants may attend by remote means.  
Definitions  
 
2. For the purposes of these Additional Working Procedures:  
"Remote participant"  means any registered person  attending the meeting with the Arbitrator 
by remote means.  
"Platform"  means the software or system through which remote participants attend the 
meeting with the Arbitrator.  
"Host"  means the designated person within the WTO Secretariat responsible f or the 
management of the platform.  
Equipment and technical requirements  
 
3. Each party shall ensure that all remote participants of its delegation join the meeting using the 
designated platform, and meet the minimum equipment and technical requirements set ou t by 
the platform provider for the effective conduct of the meeting.  
Technical support  
 
4. (1) The host will assist remote participants in planning, testing and conducting the virtual 
meeting and provide remote participants with technical support pertaining to the platform and 
its functionality.  
(2) In order to guarantee the timely provision of technical support, the host will prioritize 
assisting those remote participants designated as main speakers on the delegations' lists.  
(3) In light of the  limitations  of remote assistance , each party shall be  responsible for  its own 
technical support  pertaining to its computer systems and networks .  
Pre-meeting  
 
Registration  
 
5. Each party shall provide  to the Arbitrator the list of the members of its delegation, on a ded icated 
form to be provided by the WTO Secretariat, no later than 5:00 p.m. (Geneva time) two weeks 
before the first day of the meeting with the Arbitrator. Such list shall include all members of the 
party's delegation, regardless of whether they participat e in person or by remote means. Each 
party shall indicate who among their remote participants will be their main speakers.  
Advance testing  
 
6. Before the meeting with the Arbitrator, the WTO Secretariat will hold two testing sessions with 
all remote participa nts of each party: (i) a separate one for each party's remote participants, 
and (ii) a joint session with all participants in the meeting, including all remote participants of WT/DS505/ARB/Add.1  
 
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  the parties and the arbitrators joining remotely. Such sessions will seek to ref lect, as far as 
possible, the conditions of the meeting.  
Confidentiality and security  
 
7. All remote participants shall follow the Additional Working Procedures of the Arbitrator  
concerning Business Confidential  Information and the security rules contained in these Additional 
Working Procedures as well as any additional security guidance that may be provided by the 
host. 
8. Remote participants shall connect to the virtual meeting through a secure internet connection  
and shall avoid the use of an open or public internet connection.  
9. The parties are strictly prohibited from:  
(1) Recording, via audio, video or screenshot, the virtual meeting or any part thereof; and  
(2) Permitting any non -participant to record, via aud io, video or screenshot, the virtual meeting  
or any part thereof.  
Conduct of the meeting  
 
Access to the virtual meeting room  
 
10. (1) The host will invite remote participants via email to join the virtual meeting room on the 
platform.  
(2) For security reasons , access to the virtual meeting room will be password -protected and 
limited to registered participants. Remote participants shall not forward or share the meeting 
link or password with non -remote participants.  
(3) Each party shall ensure that only registe red participants from its delegation join the virtual 
meeting room.  
Advance log -on 
 
11. (1) The virtual meeting room will be accessible 60 minutes in advance of the scheduled start 
time of each session of the meeting with the Arbitrator.  
(2) All remote parti cipants shall log on to the platform at least 30 minutes in advance of the 
scheduled start time of each session of the meeting with the Arbitrator.  
Document sharing  
 
12. (1) Each party shall provide the Arbitrator and other participants with a provisional wri tten 
version of its opening statement and, if available, of its closing statement, before delivery at the 
meeting.  
(2) Any participant wishing to share a document with the Arbitrator and other participants during 
the meeting shall do so before first referr ing to such document at the meeting.  
Communication breakdown  
 
13. (1) Each party shall designate a contact person who can liaise with the host during the course 
of the meeting to report any technical issues that arise with respect to the platform. The host 
can be contacted via the platform, by sending an email to madeleine.mitchell@wto.org, or by 
calling +41 (0)22 739 6964.  
(2) After consulting the parties, the Arbitrator may pause the session until the technical issue is 
resolved or may continue the proceeding s with those participants that continue to be connected 
or are physically present in the meeting room at the WTO.  WT/DS505/ARB/Add.1  
 
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  Relation with the Working Procedures of the Arbitrator  
 
14. These Additional Working Procedures complement the Working Procedures of the Arbitrator and 
prevail over the latter to the extent of any conflict.  
 
 
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  ANNEX A -4 
ADDITIONAL WORKING PROCEDURES OF THE ARBITRATOR REGARDING OPEN MEETINGS  
(DELAYED ONLINE BROADCAST)  
Adopted on 17 December 2021  
 
1. The Arbitrator adopted Additional Working Procedures of the Arbitrator Concerning an Open 
Meeting on 28 August 2020 at the req uest of the parties. Those additional working procedures were 
repealed by the Arbitrator on 3 September 2021, because such procedures envisioned an in -person 
meeting occurring in Geneva, and the meeting ultimately occurred in a virtual format. These new 
Additional Working Procedures of the Arbitrator Regarding Open Meetings (Delayed Online 
Broadcast) have been adopted to replace the repealed Additional Working Procedures of the 
Arbitrator Concerning an Open Meeting.  
2. The Arbitrator has agreed to make the rel evant portions of the recordings of the meeting with 
the parties available to the public in a delayed online broadcast format set out in these additional 
working procedures. The meeting with the Arbitrator was held in a virtual format with the possibility 
for limited participation on the WTO premises.  
3. The Arbitrator will make available to the public, via a registration process, the audio recordings 
of the relevant portions of the meeting with the parties, together with the "as delivered" written 
versions of  the parties' statements at the meeting and the written versions of the parties' responses 
to the Arbitrator's questions following the meeting submitted by the parties on 29 October 2021, 
excluding exhibits (collectively, the Materials). The Materials will  be available in English and no 
interpretation or translation will be provided.  
4. The Materials will be available to the registered participants through a password -protected 
web-link during a limited period of 72 hours. At the beginning of the period, all re gistered participants 
will receive an email with the web -link and access credentials. The registered participants may access 
the web -link at any time within the period to listen to and/or read the Materials. At the end of the 
period, the Materials will no longer be accessible.  
5. The parties shall inform the Arbitrator by a deadline set by the Arbitrator, which shall be no 
later than two weeks before the delayed online broadcast, whether any parts of their relevant 
Materials shall be redacted in order  to prote ct private or confidential information.  
6. All registered  participants will be informed that sharing the web -link or access credentials with 
other persons and/or any form of recording or sharing of the Materials with other persons is 
prohibited. However, the parties recognize that, given the format of the broadcast, the Arbitrator 
and the WTO Secretariat cannot guarantee or supervise the registered participants' compliance with 
this rule.  
7. Access to the Materials will be open to officials of WTO Members, Observ ers, staff members 
of the WTO Secretariat, journalists, representatives of non -governmental organizations, and the 
interested members of the public upon registration. No later than two weeks before the delayed 
online broadcast, the WTO Secretariat will pla ce a notice on the WTO website informing the public 
of the delayed online broadcast. The notice shall include a link to register directly with the WTO. The 
notice shall also indicate the beginning, duration, and the end of the period during which the 
Mater ials will be available. The deadline for the registration shall be ten days from the date of the 
publication. The WTO Secretariat will inform the parties of publishing the notice no later than two 
days before the publication. The WTO Secretariat will share  the names of the registered participants 
with the parties . 
_______________  
 
 
 WT/DS505/ARB/Add.1  
 
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  ANNEX  B 
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of the United States  16 
Annex B -2 Integrated executive summary of the arguments of  Canada  28 
 
 
 WT/DS505/ARB/Add.1  
 
- 16 - 
 
  ANNEX  B-1 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES  
EXECUTIVE SUMMARY OF THE U.S. WRITTEN SUBMISSION  
I. INTRODUCTION  
 
1. The U.S. views on the appellate document are clearly reflected in the minutes of the March 5, 
2020 and June 29, 2020 DSB meetings, as well as the U.S. communication to the DSB on April 17, 
2020.  In this submission, the United States will not repeat those objections.  However, the 
United  States emphasizes that its participation in this arbitration is without prejudice to its views 
concerning the invalidity of the appellate document and the purported adoption of recommendations 
by the DSB.  Furthermore, the use of the term challenged "measure " in this arbitration proceeding 
is without prejudice to the U.S. position concerning the DSB adoption procedures and existence of 
DSB recommendations.  
2. Canada 's methodology paper demonstrates that Canada 's request for sus pension of 
concessions is contrary to the requirements of the DSU.  Canada suffers no nullification or 
impairment from a measure that is not applied to it.  Canada has also requested to suspend 
concessions on the basis of a formula, but this cannot generat e an estimate that is equivalent to a 
future level of nullification or impairment because the formula simply speculates as to what duty 
might result from the discovered subsidy "ongoing conduct ".  In the event the Arbitrator proceeds 
to evaluate a future, hypothetical level of nullification or impairment, the United States also provides 
its views on conceptual and methodological flaws in Canada 's approach.  
II. CANADA HAS NO NULLIFICATION OR IMPAIRMENT  
 
3. Under the terms of Article 22.7, the arbitrator  considering the matter "shall determine whether 
the level of such suspension is equivalent to the level of nullification or impairment. "  Article 22.4 of 
the DSU requires that the "level of the suspension of concessions or other obligations authorized by 
the DSB shall be equivalent to the level of the nullification or impairment. "  Therefore, where 
nullification or impairment does not exist, the level of suspension should be set at zero.  To do 
otherwise would breach Articles 22.4 and 22.7 of the DSU becau se the level of suspension of 
concessions would fail to be "equivalent " to the correct level of nullification or impairment, which is 
zero. 
4. The same conclusion follows from the second sentence of Article 22.7.  This provision reads: 
"The arbitrator may als o determine if the proposed suspension of concessions or other obligations is 
allowed under the covered agreement. "  Under Article 1.1 and Appendix 1 of the DSU, the DSU itself 
is a "covered agreement ".  Article 22.4 of the DSU establishes that the level o f suspension shall be 
equivalent to the nullification or impairment.  However, a suspension of concessions that is not zero 
is not equivalent to a level of nullification or impairment that is zero, and therefore, Canada 's 
proposed suspension is not allowed  under the DSU.  
A. The DSU Permits the Arbitrator to Find That Nullification or Impairment 
Does Not Exist  
 
5. Article 3.8 of the DSU plainly provides for the possibility that the Member concerned may 
rebut the presumption of the existence of nullification or impairment by putting forth evidence that 
a breach of WTO obligations does not have an adverse impact on the complaining Member.  This is 
because nullification or impairment and breach are two separate concepts.  
6. Nothing in Article 3.8 of t he DSU, which is one of the "General Provisions " of the DSU, limits 
the opportunity of the Member concerned to make such a rebuttal only during the original panel 
phase of a dispute settlement proceeding.   The more logical time for a Member concerned to ma ke 
such a rebuttal would be in the context of an arbitration under Article 22.6 of the DSU.  In the 
countermeasures arbitration, the question of the level of nullification or impairment – including WT/DS505/ARB/Add.1  
 
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  whether there is any at all – is placed squarely before th e adjudicator that is tasked with evaluating 
the equivalency of the level of suspension and the nullification or impairment.  
7. Furthermore, as is the case in this dispute, the factual circumstances related to the effect of 
a measure on the complaining Member  might change over time, including after a panel report is 
circulated and before a suspension request is made under Article 22.2 of the DSU.  Thus, it is 
incumbent upon the arbitrator to determine whether nullification or impairment exists as part of its 
evaluation of whether the level of suspension is equivalent to the nullification or impairment.  
B. The Challenged Measure Causes No Nullification or Impairment  
 
8. There is no adverse impact on Canada because the "ongoing conduct " measure does not 
continue to exist and be applied to exports from Canada.  In the underlying proceeding, Canada 
used nine CVD determinations to allege an "ongoing conduct " measure; however, only one CVD 
determination involved a Canadian good – that is, Supercalendered Paper .  In July 2018, the 
Supercalendered Paper  countervailing duty order was revoked with retroactive effect to the 
beginning of the CVD proceeding.  With the revocation of the order, Canada is not subject to any 
"ongoing conduct " and suffers from no adverse impact from the challenged measure.  
9. This is a fact acknowledged by Canada in its request for authorization – the request states, "if 
the ‘ongoing conduct ' continues to exist  and applies to exports from Canada in the future ".  As 
Canada itself stated at the June 29, 2020 DSB meeting, "Canada 's request for authorization to 
suspend concessions related to ‘ongoing conduct ' by the United States that was not currently being 
applied to Canada , and would relate to future U.S. investigat ions or administrative reviews of 
Canadian goods. "  As it is undisputed that the "ongoing conduct " measure is not currently applied 
to any imports from Canada, the measure cannot "continue " to exist in relation to Canada.  Rather, 
Canada 's request solely r elates to the existence and application of a measure "in the future ". 
10. Canada 's reliance on past arbitrations that have assessed "measures that have yet to be 
applied against the WTO complainant in the future " is misplaced.  First, the cited arbitrations concern 
"as such " measures, not "ongoing conduct " measures, a distinctly different type of measure in WTO 
dispute settlement.  Second, the arbitrations relied upon by Canada concern instances where 
arbitrators assessed requests where the measure at issue was  currently applied  and would continue 
to be applied .  In contrast, Canada asks for the Arbitrator to consider imposing countermeasures 
because of a measure that is not applied  to any Canadian good today.  Finally, in each of the "as 
such" disputes relied upon by Canada, the measure is easily discernable an d a future application of 
the measure would not be disputed.  Here, in contrast, all aspects of the existence of the "ongoing 
conduct " measure – the precise content, the repeated application, and the likelihood to continue – 
were highly contested between t he parties and involved the evaluation of the specific facts of multiple 
CVD determinations.  
11. Therefore, because the measure does not continue to exist and be applied to Canadian goods, 
the determination that a future application of facts available constitu tes the existence of the measure 
would be subject to dispute, yet that determination would be left solely to the discretion of Canada.  
The fact that such an assessment would be left to the complaining party makes this dispute distinctly 
different from the  arbitration decisions relied upon by Canada.  
12. Accordingly, the United States requests that the Arbitrator determine that Canada 's proposed 
suspension of concessions is not allowed or is not equivalent to the correct level of nullification or 
impairment, wh ich is zero . 
III: IN THE ALTERNATIVE, THE APPROPRIATE CALCULATION OF THE LEVEL OF 
NULLIFICATION OR IMPAIRMENT  
 
13. In the event the Arbitrator proceeds to evaluate the level of nullification or impairment, the 
United States also provides its views on the conce ptual and methodological flaws in Canada 's 
approach . WT/DS505/ARB/Add.1  
 
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  A. Article 22.4 of the DSU Requires that the Proposed Level of Suspension 
Be Equivalent to the Level of Nullification or Impairment  
 
14. Pursuant to Article 22.4 of the DSU, the DSB will not authorize the suspension of concessions 
or other obligations unless "the level " of suspension is "equivalent " to the level of nullification or 
impairment.  Article 22.7 of the DSU further provides that where a matter is referred to arbitration, 
the arbitrator "shall determine whether the level of . . . suspension is equivalent to the level of 
nullification or impairment. "  The starting point in the analysis of a suspension request i s to 
determine the extent to which a measure at issue is maintained following  the expiration of the 
implementation period such that it nullifies or impairs benefits accruing to the complaining Member 
under the relevant covered agreement(s).  An analysis of  the level of nullification or impairment 
must focus on the "benefit " accruing to the complaining Member under a covered agreement that is 
allegedly nullified or impaired as a result of the breach.  
15. In previous Article 22.6 proceedings, the arbitrator has c ompared the level of trade for the 
complaining party under the measure at issue to what the complaining party 's level of trade would 
be expected to be where the Member concerned has brought the measure into conformity following 
the expiration of the implem entation period.  Canada proposes the use of a counterfactual.  The 
United States agrees that the use of a counterfactual analysis is appropriate if the Arbitrator does 
not accept the U.S. argument above that Canada has suffered no nullification or impairm ent, but 
explains why Canada 's counterfactual must be adjusted.  
B. Canada's Counterfactual Fails to Ensure an Estimate that Is Equivalen t 
 
16. Company -specific CVD rate : The United States notes that it would not necessarily be the case 
that removal of the chal lenged measure always results in the portion of the CVD rate being reduced.  
Rather, the removal of the challenged measure could result in the U.S. Department of Commerce 
("Commerce ") continuing to find subsidization because Commerce utilizes the informati on from 
verification to find a countervailable subsidy, and therefore the respondent company 's rate could 
stay the same or even increase.  Therefore, in instances where information exists on the record of 
the future CVD proceeding to use for the discovered  subsidy program, it would be more appropriate 
to use such information to calculate the counterfactual company -specific CVD rate.   If such 
information does not exist, then the total CVD rate for the affected respondent company will be 
reduced by the amount  of the rate attributable to the application of the measure.  
17. All Others rate :  Given that the All Others rate calculation differs depending on the factual 
circumstances of a proceeding, to ensure that the counterfactual will accurately reflect the level of 
nullification or impairment, it would be appropriate that the counterfactual All Others rate be 
calculated in accordance with the All Others rate calculation methodology that is used in the future 
CVD proceeding.  
18. In some instances, the information  needed to calculate the counterfactual All Others rate will 
be publicly available.  If, in a future proceeding, Commerce uses a simple average of the 
individually -investigated respondents or uses a weighted -average of the publicly -ranged values of 
U.S. sa les to calculate the All Others rate, the counterfactual All Others rate would be established 
using the same methodology, and the information needed will be publicly available.  
19. Where Commerce has calculated the All Others rate using actual U.S. sales value s of subject 
merchandise and the information is considered business confidential, Canada will request that the 
individually -investigated respondents in the future CVD proceeding provide written authorization to 
the Government of Canada to permit access to the relevant calculation memoranda, containing the 
confidential sales data, that will be on the record of Commerce 's CVD proceeding for the purpose of 
calculating a counterfactual All Others rate.  
20. Because the calculation of the All Others rate is done on a  case-by-case basis, the same 
methodology applied by Commerce in the future CVD proceeding – taking into account the U.S. 
statute 's requirements to exclude rates that are zero, de minimis, or entirely based on facts available 
– should be used to establish the counterfactual All Others rate.  WT/DS505/ARB/Add.1  
 
- 19 - 
 
  C. The Selected Approach Must Allow for the Level of Nullification or 
Impairment to Be Determined Case by Case  
 
21. The central issue in this proceeding is the impact on trade flows of the future  application of 
the discovered subsidy "ongoing conduct " measure.  Canada has requested to suspend concessions 
on the basis of a formula that is described in its methodology pap er.  As an initial matter, Canada 's 
formula cannot generate an estimate that is equivalent to a future level of nullification or impairment 
because the product and market are unknown, and therefore Canada 's formula rests on pure 
speculation.  Indeed, given  the unique circumstances of this dispute – an "ongoing conduct " measure 
that is not applied  to Canada and only relates to an unknown future application  – the selection of a 
singular analytical framework, as Canada proposes, to assess a hypothetical level of suspension is 
contrary to the requirement of Article 22.4 of the DSU . 
22. In the event the Arbitrator disagrees and seeks to select a singular analytical framework to 
set a hypothetical future nullification or impairment, the United States presents in the sections that 
follow considerations that should be taken into account.  The methodology that is ultimately selected 
must have the flexibility to  capture the nuances of the particular product and market at issue at a 
specific point in time in order to calculate an estimate equivalent to the level of nullification or 
impairment wi th precision.  
1. The Correct  Methodology  
 
23. The appropriate methodology for determining the level of nullification or impairment is to 
evaluate the effects of duty rate changes in an Armington partial equilibrium model.  Both the 
United  States and Canada agr ee that this model is the appropriate starting point.  
24. Canada 's formula is derived from a model with only two sources of supply – imports from 
Canada and supply from all other sources.  It is essential to distinguish among the subject imports 
from Canada be cause in a model with imperfect substitution, w hen duty rates on Canadian imports 
are reduced, the market price of the corresponding varieties falls and the supply of each variety 
increases.  The increase in demand for each individual subject Canadian vari ety will depend not only 
on the magnitude of the reduction in their own duty rate, but also on the magnitude of the reduction 
relative to other subject Canadian varieties.  Similarly, if the duty rates on Canadian imports 
increase, the impact of the rate i ncrease would affect all varieties.  
25. Therefore, the model selected must be able to account for at least five varieties: domestic 
sources, non -subject imports from the rest of the world, and three Canadian varieties – 
individually -investigated subject companies, the subject All Others rate, and non -subject Canadian 
companies – because the change in duty rate of the affected Canadian companies will be at the 
expense of not only U.S. domestic supply and imports from other countries, but will also be at th e 
expense of other Canadian companies.  The appropriate model must account for all of these varieties 
because the total level of nullification or impairment is based on the change in total imports from 
Canada, not just the change in total imports from affe cted companies.  
26. Furthermore, it would be more appropriate to apply the Armington partial equilibrium model 
directly in its non -linear form.  Implementing the model in its non -linear form will avoid introducing 
approximation error – the difference that occu rs from calculating nullification or impairment directly 
in a non -linear model as opposed to solving it in log -linearized formulas . 
2. Canada's Formula Is Derived from a Flawed Model  
 
27. There are several flaws with Canada 's approach.  First, Canada implicitl y assumes domestic 
shipments and imports from all countries other than Canada are one variety.  However, domestic 
supply elasticities are typically assumed to be lower than import supply elasticities to account for 
the greater ability of foreign suppliers to shift supply from other markets.  
28. Second, Canada incorrectly places all Canadian sources into a single variety, thereby treating 
both subject and non -subject Canadian imports together.  However, in an Armington -based partial 
equilibrium model, if everyth ing else is held equal, a reduction in the duty rate on one Canadian 
entity results in an increase in demand for that Canadian variety and a decrease in demand for all 
other varieties, including Canadian varieties not benefitting from the reduction in thei r duty rate.  WT/DS505/ARB/Add.1  
 
- 20 - 
 
  When removal of the challenged measure creates changes in duty rates of varying magnitudes 
across several Canadian exporters, the adjustment of U.S. demand is more complex and depends 
on the change in each entity 's relative duty rate.  As such , the model must be able to capture at 
least three Canadian varieties – the individually -investigated subject company, the subject All Others 
rate, and the non -subject Canadian companies.  
29. Third, Canada sets up its formula to have only one Canadian variety,  arguing that if there are 
multiple groups of exporters with different duty rates, then the formula should be applied to each 
group separately, and the resulting amounts for each group of exporters would then be added 
together to obtain the level of nullif ication or impairment.  However, when there are multiple affected 
Canadian entities, the model must simultaneously account for the effects of multiple changes in duty 
rates, which allows the model to properly account for shifts in imports across Canadian v arieties, as 
well as between Canadian and non -Canadian varieties.  
30. Finally, Canada 's approach remains flawed because it unnecessarily introduces approximation 
error to the model.  Canada 's formula is derived by first solving its incorrect two -variety model 
through the log -linearization method.  Because the Armington model is inherently non -linear, the 
log-linearization method introduces approximation error into the resulting estimates .  The magnitude 
of this error increases with the size of the percent chang e in tariff.  Under Canada 's approach, 
approximation error is particularly problematic because Canada seeks to apply its formula multiple 
times, thereby compounding the issue by introducing approximation error over and over again.   
However, it is unnecessary to introduce approximation error when the model can be run directly in 
its non -linear form, with a sufficient number of sources of supply to differentiate imported varieties 
from their domestic counterparts and allow for nuanced treatment of changes in duties applied to 
different Canadian sources.  
3. Canada's Use of a Pre -determined Scaling Factor Results in an 
Unreasoned Estimate of Nullification or Impairment  
 
31. In its methodology paper, Canada proposes to use a formula, and to ap ply a limited number 
of pre -determined values for the "scaling factor " based on broad sectors of the U.S. economy.  
Canada characterizes the combination of parameter values and market shares that is multiplied by 
the value of imports and change in duty rat es as a "scaling factor ".  The scaling factor that Canada 
calculates is based on broader categories than any specified product, and it includes pre -determined 
input values that would remain fixed to a specific period of time regardless of supply and demand  
changes in the U.S. market.  
32. However, the use of such a pre -determined scaling factor, composed of a number of fixed 
elements, does not accord with an arbitrator 's mandate to select a methodology that will result in 
setting the level of suspension equivale nt to the level of nullification or impairment.  Past arbitrators 
have expressed the view that the determination of nullification or impairment must be a "reasoned 
estimate " with assumptions that are not based on speculation.  The selection of a formula wi th a 
pre-determined and fixed scaling factor would fail to capture the characteristics of a yet -to-be known 
product in a specific case  or account for future changes in market conditions,  and therefore would 
not result in a reasoned estimate, consistent wit h Article 22.4 of the DSU.  
33. Canada asserts that its approach of using a pre -determined scaling factor is similar to that of 
US – Washing Machines (Korea) (Article 22.6 – US).  Canada 's reliance on that decision is misplaced 
because that proceeding involved an "as such " measure and dealt with consideration of a measure 
that existed  and would continue to exist .  Here, on the other hand, the dispute involves an "ongoing 
conduct " measure that does not continue to exist and be applied  to exports from Canada.  Further, 
in US – Washing Machines (Korea) (Article 22.6 – US), neither Korea nor the United States supported 
the use of a formula with pre -determined scaling factors – referred to as a "coefficient -based 
approach " by the arbitrato r in that dispute.  
34. As discussed below, because the future product and market at issue are unknown, only the 
sources for data inputs should be pre -determined, not the values of the data inputs themselves.  WT/DS505/ARB/Add.1  
 
- 21 - 
 
  D. Correct Model Inputs  
  
35. In its most basic form, an Armington partial equilibrium model requires three types of 
information: (1) U.S. consumption (the value of imports and domestic shipments), (2) duty rates, 
and (3) parameter values (elasticity estimates and market share).  As such, similar inform ation is 
required to calculate nullification or impairment following either party 's approach.  
1. Parameter Values  
 
36. The United States disagrees with Canada 's approach of pre -determining the values of the data 
inputs by using sources that are based on broad sectors of the U.S. economy.  Neither the elasticities 
nor the market shares advocated by Canada are tailored to the product that would be at issue.  The 
elasticities are estimated for a broader product grouping than the product that would be at issue in 
a CVD proceeding, and therefore will not be sufficiently precise.  Further, for each elasticity, Canada 
also uses different sources – each of which is based on different years and a different number of 
broad sectors – thereby generating imprecise input valu es. 
37. Likewise, Canada 's proposal to pre -determine market share inputs is flawed because Canada 's 
input fixes a broader product segment to a year other than the base year for the calculation.  The 
market share should be calculated by dividing imports of the relevant product by the total value of 
the market for the relevant product in the same year . 
38. It would be more appropriate for the selected elasticities and market share inputs to be based 
on data reported by the U.S. International Trade Commission ( "Commission ") in the future CVD 
proceeding at issue.  The Commission estimates demand, substitution, and domestic supply 
elasticities for every product under a CVD (or AD) investigation in its investigation report.  Therefore, 
the elasticity estimates should be the median of the range of the estimated elasticities determined 
by the Commission.  The United  States also considers it appropriate that the Commission report in 
the future CVD proceeding at issue be used as the source for the data necessary to calculate market 
shares.  
39. The parameter estimates made and market share data used by the Commission are 
particularly well suited for use in a model to estimate the level of nullification or impairment because 
the Commission 's estimates are for the specific products at issue.  Further, the estimates are made 
after analyzing responses from domestic producers and  importers, and foreign producers and 
exporters concerning the market of the product under investigation, as well as arguments made by 
interested parties.  The use of estimates from the Commission in this proceeding would also be 
consistent with decisions in US – Anti-Dumping Methodologies (China) (Article 22.6 – US) and US – 
Washing Machines (Korea) (Article 22.6 – US). 
2. Change in Duty  
 
40. The calculation of the change in duties will need to take into account the associated AD rates.  
That is, if there are corresponding dumping rates applied to the product in the proceeding, they 
should be taken into account in the overall duty calculation.  A simulated market that fails to take 
into account relevant antidumping duties will inevitably reflect an inappropriat ely high level of 
nullification or impairment for Canada.  Therefore, the correct calculation for a company 's change in 
duty should be the difference between all duties applied to the specific company with the challenged 
measure in effect, compared to all duties excluding the challenged measure applied to the specific 
company.  
3. Value of Imports  
 
41. For the value of imports, company -specific import data should be obtained directly from U.S. 
Customs and Border Protection ( "Customs ").  For clarity, the United S tates notes that for CVD 
investigations, because Customs does not track the value of shipments of merchandise subject to 
AD or CVD duties before those duties are imposed, data from Customs based on the reference HTS 
codes should instead be used.  The use o f HTS data will likely overstate the value of imports since 
some of the values under the reference HTS code are not subject to duties, but it remains the best 
available information under those circumstances.  For administrative reviews, the data from Custo ms 
will be the value of shipments of merchandise subject to AD or CVD duties.  WT/DS505/ARB/Add.1  
 
- 22 - 
 
  IV. CONCLUSION  
 
42. For the reasons set forth above, the United States respectfully requests that the Arbitrator 
determine that Canada 's proposed suspension of concessions is not allowed or is not equivalent to 
the correct level of nullification or impairment, which is zero.  If the Arbitrator were nonetheless to 
proceed to estimate a future, hypothetical level of nullification or impairment, the Arbitrator should 
reject Canada 's proposed formula because it will not result in a reasoned estimate of nullification or 
impairment consistent with Article 22.4 of the DSU.  
EXECUTIVE SUMMARY OF THE U.S. RESPONSES TO FIRST SET OF QUESTIONS  
U.S. Response to Question 6  
43. The text of Article 23.2  provides context supporting the U.S. interpretation that a Member 
may rebut the "presumption that a breach of rules has an adverse impact " under Article 3.8 of the 
DSU in an Article 22.6 arbitration proceeding.  Article 23.2 of the DSU first links back to  Article 23.1 
by initially stating, "in such cases ".  Article 23.1 provides, "[w]hen Members seek the redress of a 
violation of obligations or other nullification or impairment of benefits under the covered agreements 
or an impediment to the attainment of any objective of the covered agreements, they shall have 
recourse to, and abide by, the rules and procedures of this Understanding. "  The "rules and 
procedures of this Understanding " include Article 3.8.  
44. Article 23.2(a) then provides that in the cases outlined in Article 23.1, Members shall "not 
make a determination to the effect that a violation has occurred, that benefits have been nullified 
or impaired or that the attainment of any objective of the cove red agreements has been impeded ".  
The latter half of Article 23.2(a) then references those determinations, stating, "[Members] shall 
make any such determinations consistent with the findings contained in the panel or Appellate Body 
report adopted by the D SB or an arbitration award rendered under this Understanding ."  Thus, 
Article  23.2(a) plainly provides for the possibility that a determination "that benefits have been 
nullified or impaired " shall be consistent with both "the panel or Appellate Body repor t" or "an 
arbitration award rendered under this Understanding ". 
45. Contrary to Canada 's argument, the reference to "arbitration award " in Article 23.2(a) is not 
limited to an award from an Article 25 arbitration proceeding.  The text of Article 23.2 does not 
provide for such a limitation.  Further, an interpretation that diminishes the rights and obligations in 
Article 23.2(a) is contrary to Article 3.2 of the DSU, which prohibits WTO adjudicators from "add[ing] 
to or diminish[ing] the rights and obligations p rovided in the covered agreements. " 
46. Past arbitrators have also rejected the argument that Article 23.2(a) of the DSU does not 
apply to Article 22 proceedings.  The arbitrator in EC – Bananas  III (US) (Article 22.6 – EC) found 
that the reference to "an arbi tration award " in Article 23.2(a) suggested that the issue of nullification 
of impairment can be determined by arbitration.  
U.S. Response to Question 14  
47. The United States disagrees with Canada 's assertion that part of the precise content of the 
challenged "ongoing conduct " measure relates to refusing to accept information regarding the 
discovered information on to the record of the proceeding.  Rather, the precise content of the 
measure consists of three parts: "[(1)] [Commerce] asking the ‘other forms of a ssistance ' question 
and, [(2)] where [Commerce] ‘discovers ' information that it deems should been provided in response 
to that question, [(3)] applying [adverse facts available] to determine that the ‘discovered ' 
information amounts to countervailable subsidies. "1  Canada seeks to change the precise content of 
the measure by citing to Table 2 of the panel report to argue that the evidence it submitted 
demonstrated that Commerce refuses to accept new information discovered during verification.  
However, an examination of Table 2 reveals otherwise.  Excerpts from bo th Solar Cells from China 
2014 and Solar Cells from China 2015  contain arguments from respondents for Commerce "to use 
the information taken at verification " instead of the applying adverse facts available in the final 
determination.  Therefore, the eviden ce on which Canada relied to demonstrate the precise content 
 
1 US – Supercalendered Paper (Canada) (Panel) , para. 7.316.  WT/DS505/ARB/Add.1  
 
- 23 - 
 
  of the measure does not establish that the information needed to calculate a counterfactual 
company -specific CVD rate is never available.  
U.S. Response to Question 35  
 
48. Subpart (a):  The United St ates considers that Canada would be able to impose 
countermeasures if the challenged measure were applied in assigning a CVD rate in the final 
determination of either a CVD investigation or administrative review of Canadian products and a 
duty were, in fac t, assessed.  A CVD investigation  only results in the collection of estimated  duties, 
but not the assessment of duties.  It would thus be appropriate for Canada to "trigger " the model 
only after duty assessment occurred.  
49. Subpart (b):  The United States doe s not agree with Canada that new shipper reviews, 
expedited reviews, changed circumstances reviews, and sunset reviews are within the scope of this 
arbitration.  The United States recalls that the challenged "ongoing conduct " is an unwritten 
measure, which  imposed upon Canada a high evidentiary burden to demonstrate the measure 's 
existence.  The Appellate Body in Argentina – Import Measures  explained that "the constituent 
elements that must be substantiated with evidence and arguments in order to prove the existence 
of a measure challenged will be informed by how such measure is described or characterized by the 
complainant. "  To demonstrate the existence of the challenged measure, Canada utilized nine CVD 
determinations, consisting of post -2012 investigatio ns or administrative reviews.  Therefore, the 
measure, as defined by Canada, relates only to CVD investigations and administrative reviews.  
U.S. Response to Question 46  
 
50. The use of multiple Canadian varieties is consistent with the theory of demand underlying the 
Armington model.  Canada argues that "Armington models do not typically rely on firm -level 
varieties, " and states that academic literature typically treats indivi dual countries as a single variety.  
The implication that product differentiation based on national borders is necessary for theoretical 
consistency is incorrect.  Individual varieties in an Armington model represent products that are 
imperfect substitutes  for one another.  Defining varieties in terms of country of origin is a simplifying 
assumption that is frequently employed in Armington models.  Armington (1969) explains that 
differentiating varieties by country of origin is a simplifying assumption, not ing, "the assumption 
that products are distinguished by place of production is a very convenient point of departure ".  
Here, in contrast, the focus is on the effect of a "trade policy " that differs across companies.  By 
correctly treating imports from companies subject to different changes in "policy " as imperfect 
substitutes, the U.S. Armington model, in contrast to Canada 's approach, provides the appropriate 
flexibility to explore suc h a circumstance.  
51. Importantly, the United States is not introducing an innovation in this respect.  For instance, 
in one application of the Armington framework, the Commission (2019) defines a model in which 
varieties are distinguished not by country, but by the type of platform through which they are 
purchased.  To study the market for "retail goods " in Mexico and Canada, the model defines three 
varieties: goods purchased at brick -and-mortar retail outlets, goods purchased from non -U.S. e -
commerce firms, a nd goods purchased from U.S. e -commerce firms.   Moreover, the Armington 
model used in US – Anti-Dumping Methodologies (China) (Article 22.6 – US) also defined three 
varieties of subject -country imports, differentiated by duty rates.  
U.S. Response to Quest ion 47  
 
52. Using a market share value that does not correspond to the value of imports used in the 
formula implies that the formula is no longer consistent with the underlying model from which it is 
derived.  Specifically, by associating the value of imports from individual Canadian companies with 
total Canadian market share, Canada 's formula misrepresents Canadian companies ' relative position 
in the U.S. market, and thus misrepresents the impact of a change in duty rates.  
53. Canada presupposes that the predeterm ined market share in the scaling factor will, in fact, 
exceed the actual market share corresponding to the "value of imports " of the specific product in 
the formula 's application.  This is speculation, given that the product and time period are unknown.  
The market shares Canada proposes to use represent Canada 's shares of the U.S. market in broad 
categories of products from a fixed, past year.  Canada 's share in the U.S. market for a specific 
product in a future year could exceed Canada 's market share in t he corresponding Caliendo and WT/DS505/ARB/Add.1  
 
- 24 - 
 
  Parro category, calculated using data from 2018 and 2019.  If so, Canada 's methodology would 
overestimate nullification or impairment.  
U.S. Response to Question 84  
 
54. Both AD and CVD duties affect the U.S. import price, which is  the relevant price in the model 
because it is the price faced by the buyer.  As such, both duties are relevant to the demand generated 
by the model.  To correctly isolate the trade effect solely due to the removal of the challenged CVD 
measure, any corres ponding AD duty must also be taken into consideration.   Therefore, nullification 
or impairment will be overstated if the initial duty rate ( 𝑡𝐼) or counterfactual duty rate ( 𝑡𝐶) used in 
calculating nullification or impairment is not inclusive of all duties in place at the time the challenged 
measure is implemented.  To omit the AD duties that are present in the market would artificially 
reduce the import price of subject Canadian varieties relative to all other imports, and thus inflate 
estimated dema nd for subject varieties.  Such an approach would not produce a reasoned estimate 
of nullification or impairment.  
U.S. Response to Question 105  
 
55. In many cases, subject merchandise may enter under multiple HTS subheadings.  Additionally, 
a particular HTS cl assification may correspond to a broader "basket " HTS category of products that 
include many goods in addition to subject merchandise, and therefore will be over -inclusive.  
Similarly, the arbitrator in US – Washing Machines (Korea) (Article 22.6 – US) noted that, "frequently 
not all imports within the referred HTS 10 -digit codes are affected by the WTO -inconsistent measure.  
Some adjustment is therefore necessary. " 
EXECUTIVE SUMMARY OF U.S. RESPONSES TO SECOND SET OF QUESTIONS  
 
U.S. Response to Question 12 1 
 
56. The precise content of the challenged measure makes it impossible for the prior application of 
the challenged measure to Company A to continue in a subsequent administrative review of that 
company.  In an administrative review, Commerce will issue questionnair es to the individually -
examined respondents and ask questions concerning all previously countervailed subsidies.  This 
includes specific questions concerning the "discovered subsidies " that were "discovered " during the 
prior segment of the CVD proceeding.  As such, an administrative review of Company A would 
remove the prior application of the challenged measure because Commerce 's determination in the 
administrative review with respect to the countervailability of what were previously "discovered 
subsidies " would no longer be the result of the "other forms of assistance " question, that is, part 
one of the challenged measure.  
57. There is also a very low likelihood for the measure to be applied anew to Company A because 
verifications do not occur in every adminis trative review.  As such, part two of the challenged 
measure, Commerce 's "discovery " of unreported information at verification, also would be unlikely 
to occur, precluding a new application to Company A 's CVD rate.  
58. Lastly, the United States observes that t he scenario highlighted in this question further 
supports the U.S. position that Canada may only impose countermeasures after duty assessment 
occurs.  As demonstrated above, an administrative review of Company A would obviate the need for 
countermeasures a pplied in response to Company A 's CVD rate from the investigation because the 
duties assessed to Company A would not be based on the challenged measure.  
U.S. Response to Question 130  
 
59. The United States considers it appropriate for Canada to notify the DSB of the level of 
suspension it calculates and of any adjustment to the level of suspension for each year during the 
first quarter of the following year.  
U.S. Response to Question 173  
 
60. Canada attempts to justify its request for Customs data in the most d isaggregated form by 
contending that such disaggregated data are necessary for the purposes of verification.  However, WT/DS505/ARB/Add.1  
 
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  Canada proposes to verify disaggregated Customs data with aggregated data.  That is, if Canada 
obtains "all" export data directly from af fected exporters as it suggests, this data would presumably 
be on an aggregate basis.  Further, Canada also proposes to use data from Statistics Canada, but 
Canada acknowledges that Statistics Canada data is in an aggregate form.  
U.S. Response to Question 178 
 
61. The United States considers it appropriate only to use the primary set of 10 -digit HTS codes 
identified in the CVD order .  A CVD order may list two sets of 10 -digit HTS codes.  One portion lists 
the HTS codes that the product "is" or the products "are" currently classified under, and there may 
also be an additional description of the HTS codes that the product "may" or "might " be classified 
under.  The second category of HTS codes are generally broader than the merchandise subject to 
the CVD order.  To avoid overinclusion, only the HTS codes that the CVD order states the product 
"is" or the products "are" currently classified u nder should be used.  
EXECUTIVE SUMMARY OF U.S. OPENING STATEMENT AT VIRTUAL SESSION  
 
62. Much of the parties ' argument on these issues has been in the abstract because Canada 's 
request to suspend concessions rests on pure speculation concerning some future, un known level of 
nullification or impairment.  Indeed, throughout this arbitration, Canada has dismissed the U.S. 
arguments by alleging that Canada 's "simplifying " assumptions will not have much impact on the 
calculation of nullification or impairment.  Howe ver, concrete numbers show that this is false.  
Canada 's methodology cannot generate a reasoned estimate of nullification or impairment.  
63. The United States has prepared an accompanying exhibit, Exhibit USA -48.  The exhibit uses 
actual data values associated  with the product and market from the CVD order on Softwood Lumber 
from Canada .  The hypothetical assumes that the challenged measure is applied to a company during 
an administrative review.  Therefore, the duty rates from the CVD order are used as the ref erence 
year duty rates.  
64. The exhibit walks through several scenarios illustrating the methodological points of disputes 
between the parties.  Specifically, the exhibit demonstrates the difference between parameter values 
of aggregated sectors versus product - and market -specific; same or different values for domestic 
and import supply elasticity; log linear formula versus non -linear model; explicit inclusion or 
exclusion of the non -subject Canadian variety; and the inclusion or omission of AD duties and 
ordinary tariffs.  As is evident from the exhibit, the scenarios collectively demonstrate how each of 
Canada 's "simplifying " assumptions tend to build upon one another.  In the example of the CVD 
order on Softwood Lumber , these assumptions  produce a substantial ly inflated estimate of the level 
of nullification or impairment actually experienced by Canada.  But these assumptions could also 
produce a deflated estimate.  Therefore, as the scenarios in the exhibit illustrate, contrary to 
Canada 's representations, Ca nada's purportedly "simple " approach greatly impacts the calculation 
of nullification or impairment.  Accordingly, Canada 's approach cannot generate an estimate that is 
"equivalent " to nullification or impairment.  And on that basis, Canada 's suspension re quest should 
be rejected.  
EXECUTIVE SUMMARY OF U.S. CLOSING STATEMENT AT VIRTUAL SESSION  
65. Canada seeks for a methodology that, ultimately, will only benefit Canada.  Specifically, 
Canada is determined to "fix" the elasticity estimates and market share in advance of knowing the 
product and market at issue.  In doing so, Canada asks the Arbitrato r to sacrifice accuracy for 
purported practicability.  However, the need for an accurate and reasoned estimate should not be 
prejudiced by Canada 's decision to prematurely pursue this arbitration.  
66. Canada also says that it wants to reduce the number of deci sions and disputes.  Yet, for the 
remaining inputs – duty rates and value of imports – Canada advocates to wait to find out the 
product and market at issue, and then requests sole "discretion " to select the parameter values that 
most benefit Canada.  Nothi ng in the DSU provides that Canada 's role as the complaining Member 
means that Canada can simply have wide (or possibly unbounded) discretion to do as it wants when 
suspending concessions.  Rather, the DSU provides that the purpose of this proceeding is to  ensure 
that the level of suspension requested by Canada is equivalent  to the level of nullification or 
impairment.  That decision on equivalence does not rest with Canada.  Rather, that decision rests WT/DS505/ARB/Add.1  
 
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  with the Arbitrator.  The Arbitrator should not acquie sce to Canada 's impermissible attempt to 
arrogate to itself authority that the DSU assigns to the Arbitrator.  
EXECUTIVE SUMMARY OF U.S. RESPONSES TO THIRD SET OF QUESTIONS  
U.S. Response to Question 181  
 
67. Only if Canada is unable to obtain the necessary authorization to access the confidential U.S. 
sales data does the United States consider it appropriate to use the publicly ranged sales data on 
the record of Commerce 's proceeding to calculate a weighted average for the counterfactual All 
Others  rate.  In the rare event this information is not available on the record, then the simple average 
of the firms ' CVD rates should be used.  
U.S. Response to Question 198  
 
68. The United States proposes the use of a tiered approach to ensure that Canada will alw ays be 
able to apply the model, ideally using product -specific information where such information is 
available.  
69. For the values of substitution, demand, and domestic supply elasticities , the United 
States has explained the need for the elasticities to corre spond to the specific product and time 
period at issue.  As a first option , the United States considers that it would be most appropriate for 
the elasticity estimates to be based on data reported from a single source, that is the relevant 
Commission report  from the future CVD proceeding at issue.  If the elasticity estimates are not 
available in the Commission report, then the second option  would be for the parties to consult and 
use some future source, including considering updated academic literature.  If  the parties are unable 
to come to an agreement after consultations, the parties should proceed to the third option  and use 
a method predetermined by the Arbitrator.  Specifically, for the third option for substitution elasticity , 
the Arbitrator has propos ed Fontagne et al. (2020), while Canada has proposed Caliendo and Parro 
(2015).  The United States highlighted Soderbery (2015) and Ahmad and Riker (2019) as two other 
recent contributions that employ methodologies and levels of aggregation distinct from o ne another 
and from Fontagne et al (2020).  Therefore, for the third option, the United States suggests the 
Arbitrator use the median value of the CVD order -specific elasticities from the three academic studies 
with a level of disaggregation at the 6 -digit level HTS or higher.  The United States maintains that 
the Caliendo and Parro values are highly aggregated, and are therefore not suitable as a third option.   
For the third option for demand elasticity , the United States agrees with the Arbitrator 's proposal to 
use the most recently available GTAP consumer final demand elasticities.  For the third option for 
domestic supply elasticity , the United States considers it appropriate to use a value of 1.55, the 
median value over manufacturing i ndustries from Riker (November 2020).  
70. For the value of U.S. import supply elasticity , both parties have proposed a value of 10.  
Further, estimates of this parameter are scarce in literature.  Therefore, a value of 10 should be 
utilized.  
71. For the value of s hipments from domestic sources,  as the first option , it would be most 
appropriate for the value to be based on data reported in the relevant Commission report from the 
future CVD proceeding at issue.  In the event such information is not public, for the second option , 
Canada and the United States could obtain industry estimates through the most relevant trade 
association or private sector suppliers and consult on the use of the best information available.  If 
the parties cannot reach agreement or in the eve nt that there is no data from a relevant trade 
association or private sector supplier, then Canada as the final and third option , U.S. domestic 
market share could be obtained from the underlying data inputs of the BEA I -O table associated with 
the referenc e year at the most disaggregated level available.  
72. For the value of shipments from the rest of the world , as the first option , the values 
from the relevant Commission report should be used because the values will correspond closer to 
the products under the scope of the CVD order.  If the values are not publicly available, then the 
second option  would be to apply the share of imports from Canada under the primary HTS reference 
codes, calculated using data from Census, to the value of imports from Canada, obta ined from 
Customs, using the equation provided in the U.S. alternative instructions.  In the very unlikely event WT/DS505/ARB/Add.1  
 
- 27 - 
 
  that the data from the reference year are not available from Census, Canada should obtain the 
Census data from the most recent year published c losest to the reference year.  
73. Any reasonable set of instructions would provide for a tiered approach, as described above, 
to accommodate all future scenarios.  Such a set of instructions would ensure that, in the best -case 
scenario, Canada would apply the model using product -specific information.  The instructions would 
also ensure that if such information were not available, then Canada would also be assured of being 
able to run the model by having a final option.  
74. Importantly, if the challenged measure wer e to occur under the CVD orders pertaining to Wind 
Towers or Softwood Lumber , for the relevant parameter values, it would be appropriate to use the 
Commission report for the product at issue that is most recent to the reference period.  If the value 
is not  available in the most recent Commission report relative to the reference period, then the 
alternative would be to use the most recent Commission report containing such a value.  
U.S. Response to Question 207  
 
75. In the U.S. model, all Canadian companies in th e market will always be included in each run 
of the model.  The subject Canadian variety will consist of companies that were affected by the 
challenged measure in that specific segment of the CVD proceeding.  The non -subject Canadian 
variety will consist o f companies that were not affected by the challenged measure in that specific 
segment of the CVD proceeding.  This would include companies that have legacy affected CVD rates 
from prior segments of the CVD proceeding.  The reference year will always be the  year prior to the 
most recent application of the challenged measure.  Canada may also continue to suspend 
concessions for the maintenance of a prior application of the challenged measure (a legacy 
application).  However, the prior suspension of concession s must be modified when a prior 
application of the challenged measure is removed and companies are no longer assessed an affected 
CVD rate.  
76. Therefore, a "triggering event" occurs in two ways.  First, there is a "triggering event" if there 
is a new applicat ion of the challenged measure.  Second, there is a "triggering event" if the 
challenged measure is removed and a company's CVD rate is no longer affected by the challenged 
measure.  
 
 
_______________  
 
 
 WT/DS505/ARB/Add.1  
 
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  ANNEX B-2 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF CANADA  
I. INTRODUCTION  
 
1. On June 18, 2020, Canada requested that the DSB authorize the suspension of concessions 
at an annual level commensurate with the trade effects attributable to the Other Forms of 
Assistance -Adverse Facts Available measure ("OFA -AFA measure") of any future countervailing 
duties on all Canadian imports of any given good.1  The United States objected to the level of 
suspension proposed by Canada and the Dispute Settlement Body ("DSB") referred the matter to 
arbitration.2  The Arbitrator was constituted on August 6, 2020.3 
2. The method that Canada proposes in its Methodol ogy Paper is appropriate to determine a level 
of suspension of concessions that is equivalent to the level of nullification or impairment, in 
accordance with Article 22.7 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes  ("DSU").  
3. The OFA -AFA measure continues to exist and could be applied against Canadian imports in 
the future.  Accordingly, the OFA -AFA measure nullifies or impairs benefits accruing to Canada.  
Canada's methodology proposes to suspend concessions if and wh en the United States applies the 
OFA-AFA measure to Canadian imports in the future.  Canada proposes a reasonable and plausible 
counterfactual which eliminates the duties resulting from the OFA -AFA measure from the CVD rate 
of the respondent companies that  had been subjected to the application of the OFA -AFA measure, 
as well as from the counterfactual All Others rate.  Canada's method calculates the level of 
nullification or impairment by estimating the trade effect of the OFA -AFA measure.  
4.  In accordance  with the guidance provided by the arbitrator in US – Washing Machines 
(Article  22.6 – US), Canada uses a linearized Armington -based partial equilibrium model to estimate 
the difference in the value of U.S. imports from Canada with and without the OFA -AFA measure in 
place.  Canada's method results in a "'predictable' level of suspension", is practical to implement 
and limits the risk of potential controversies between the parties.  The data proposed is verifiable 
and available to both parties, and is suffic iently generic to capture any variation in the types of 
product and markets, as required by the circumstances of this case, where the United States may 
apply the OFA -AFA measure against any good.  Canada's approach has clear advantages over that 
proposed b y the United States.  Canada proposes to use U.S. Customs data as the primary source 
for the value of imports, provided that the shipment - and company -specific data is provided to 
Canada by the United States.  
II. NULLIFICATION  OR IMPAIRMENT  
 
A. Article 22.6 Arbitrations Do Not Re -Evaluate the Existence of the 
WTO -Inconsistent Measure or the Existence of Nullification or Impairment  
 
5. An Article 22.6 arbitrator does not have jurisdiction under the DSU to re -evaluate the existence 
of nullification or impa irment.  Instead, Article 22.6 arbitrations have the mandate of assessing 
whether the "level" of suspension of concessions or other obligations is equivalent to the "level" of 
nullification or impairment of benefits resulting from the WTO -inconsistent meas ure. 
6. An Article 22.6 arbitration is not an appellate mechanism.  By the time a dispute reaches an 
Article 22.6 arbitration, the DSB has already adopted a finding that the measure at issue nullifies or 
impairs benefits under Article 3.8 of the DSU.  Thes e findings cannot be re -litigated.  If a responding 
party considers that the relevant measure has changed such that it no longer nullifies or impairs 
 
1 Communication from the delegation of Canada to the Chairperson of the Dispute Settlement Body, 
dated 18 June 2020, WT/DS505/13.  
2 Communication from the delegation of the United States to the Chairperson of the Dispute Settlement 
Body, dated 26 June 2020, WT/DS505/14.  
3 Note by the Secretariat, "Constitution of the Arbitrator", WT/DS505/15.  WT/DS505/ARB/Add.1  
 
- 29 - 
 
  benefits to the complaining party, it has the opportunity to make this case before a compliance panel 
in an Article 21.5 proceeding.  
B. The United States Is Not Entitled to Re -Litigate the Existence of the 
WTO -Inconsistent OFA -AFA Measure and the Resulting Nullification or 
Impairment in an Article 22.6 Arbitration  
 
7. The United States' proposition that Canada  suffers no nullification or impairment rests on the 
false premise that the OFA -AFA measure does not continue to exist.  However, if the United States 
considered that the OFA -AFA measure has been withdrawn and no longer nullifies or impairs 
Canada's benefi ts, it was incumbent on the United States to inform the DSB that it has implemented 
the recommendations and rulings in the US – Supercalendered Paper  dispute, in accordance with its 
obligation pursuant to Article 21.3 of the DSU.  The issue of whether the OFA-AFA measure exists 
and could be applied against Canada in the future cannot be examined in the absence of a factual 
record concerning the U.S. implementation of the recommendations and rulings of the DSB.  
8. The United States clarified in its responses  to the Arbitrator's questions that it is not 
challenging the continued existence of the OFA -AFA measure or arguing that it has withdrawn the 
measure.  Instead, the United States argues that because the measure is not currently being applied 
against Canada , Canada should not have the opportunity to retaliate, should the measure be 
re-applied against Canada in the future.  This position should be summarily rejected.  
9. In evaluating this position, it is important to recall that Canada only has this one oppor tunity 
to request suspension of concessions.  As a result, the U.S. position is essentially that, despite a 
finding that the OFA -AFA measure is WTO -inconsistent, the United States is open to apply the 
measure in the future without retaliation from Canada.  The U.S. position would take the "teeth" out 
of the retaliation remedies available in the WTO system, by allowing a Member to suspend a measure 
during the Article 22.6 arbitration, only to re -impose it later and escape retaliation.  This is 
untenable.  
10. The U.S. position is also inconsistent with previous Article 22.6 arbitrations.  In US – 1916 Act 
(EC) (Article 22.6 – US), the arbitrator allowed for the suspension of concessions in the future, 
despite the fact that the WTO -inconsistent measure was not being applied against EC products at 
the time of the Article 22.6 proceedings.  Similarly, the arbitrator in US – Washing Machines 
(Article  22.6 – US) authorized a level of suspension of concessions based on the equivalent trade 
effect of future imposition s of an inconsistent anti -dumping measure by the United States.  
C. The United States Has Not, In Any Case, Rebutted the Presumption of 
Nullification or Impairment  
 
11. Even if an Article 22.6 arbitration could re -evaluate whether the OFA -AFA measure continues 
to nullify or impair benefits, which it cannot, the United States has not rebutted the presumption of 
nullification or impairment under Article 3.8 of the DSU.  
12. The United States suggests that because the OFA -AFA measure is not currently being  applied 
against Canada, the maintenance of the OFA -AFA measure does not nullify or impair benefits 
accruing to Canada.  The United States ignores the fact that Canada's challenge against the 
OFA-AFA measure was broader than the application of that measure  against Resolute in the 
Supercalendered Paper countervailing duty investigation.  The withdrawal of one order in which the 
OFA-AFA measure was applied does not demonstrate that this measure no longer exists or no longer 
nullifies or impairs benefits accru ing to Canada.  
13. The United States has presented no evidence to show that its maintenance of the 
OFA-AFA measure does not nullify or impair benefits to Canada.  Under Article 3.8 of the DSU any 
"adverse impact" constitutes nullification or impairment.  I n determining whether a responding party 
has rebutted the presumption of nullification or impairment under Article 3.8, the Appellate Body 
has found that "any potential export interest" must be taken into account.4  There is a continuous 
risk that the OFA -AFA measure will be applied against Canadian products in ongoing U.S. 
countervailing duty proceedings or in countervailing duty proceedings initiated in the future.  The 
maintenance of the OFA -AFA measure means tha t the government of Canada, the provincial 
 
4 Appellate Body Report, EC – Bananas III ( Article 21.5 – US), para. 469.   WT/DS505/ARB/Add.1  
 
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  governments, and Canadian producers suffer trade uncertainty and cannot be assured that their 
duty rates will be calculated in a manner that is WTO -consistent.  This is an adverse impact to 
Canada.  
D. An Arbitrato r under  Article 22.7 of the DSU is Mandated to Determine a 
Methodology  for Calculating Future Nullification or Impairment  
 
14. The Arbitrator's mandate requires it to determine a methodology for calculating the level of 
suspension of concessions equivalent  to the level of nullification or impairment arising from the 
future application of the WTO -inconsistent OFA -AFA measure.  Where a challenged measure is 
broader than the application of that measure in a particular case, the "level" of nullification or 
impairment of benefits resulting from the application of the WTO -inconsistent measure against the 
complaining Member in the future must be calculated by means of a model.  An Article 22.6 
arbitration must provide a prospective, variable methodology that allows  for the calculation of a level 
of suspension of concessions equivalent to the level of nullification or impairment.  
15. The level of nullification or impairment from any future application of the OFA -AFA measure 
against Canada cannot simply be presumed to  be zero.  Allowing for suspension of concessions 
where the measure is applied against a complaining Member in the future is consistent with the 
principle that the definition of a "measure" that may be challenged under the DSU is broad.  The 
GATT and WTO d isciplines, as well as the dispute settlement system, are intended to protect existing 
trade and provide the security and predictability needed to conduct future trade.  This security and 
predictability only exists when there is an effective enforcement me chanism when a Member fails to 
bring its WTO -inconsistent measures into compliance.  As previous arbitrators have found, "[a] key 
objective of the suspension of concessions or obligations […] is to seek to induce compliance by the 
other WTO Member with its  WTO obligations".5 
III. OVERALL METHODOLOGY  
 
16. The events that trigger Canada's right to suspend concessions or other obligations are not 
limited to investigations and administrative reviews.  Investigations and administrative reviews, 
including those conducted by the U.S. Department of Commerce ("Commerce") in an aggregate 
form, new shipper reviews, expedited reviews or changed circumstances reviews all qualify as 
triggering events for the suspension of concessions by Canada.  Canada used investigation s and 
administrative reviews as evidence before the Panel to prove the constituent elements of the 
OFA-AFA measure (an unwritten measure).  However, the precise content of the OFA -AFA measure 
that was identified by the Panel and the Appellate Body could cl early arise in other segments of a 
countervailing duty proceeding.  Commerce does, or may, ask the OFA question to the investigated 
company and/or the government and carry out verifications in new shipper reviews, expedited 
reviews or changed circumstances  reviews or where Commerce conducts a proceeding in aggregate 
form.  
17. Regarding the start of suspension of concessions, if a triggering event occurs, Canada should 
be entitled to suspend concessions as soon as the calculation of nullification or impairme nt is 
completed and Canada is ready to suspend concessions.  There should be no delay to the start of 
suspension of concessions, e.g. until the beginning of the next calendar year, as the U.S. suggests; 
nor should there be an artificial temporal structure requiring Canada to start suspending concessions 
by a certain time.  Imposing such a temporal structure would not be necessary or within the 
jurisdiction of the Arbitrator.  
IV. THE COUNTERFACTUAL  
 
18. A counterfactual in an Article 22.6 arbitration is a hy pothetical compliance scenario that 
presents the trade flows that would have occurred had the responding Member implemented the 
DSB recommendations and rulings.  Where the arbitrator must make assumptions regarding 
compliance, these assumptions should be p lausible and reasonable, "taking into account the 
circumstances of the dispute".6  In order to calculate the level of nullification or impairment where 
 
5 See Decision by the Arbitrator, US – 1916 Act (EC) (Article 22.6 – US), paras. 5.5 -5.7. See also 
Decisions of the Arbitrator, EC – Bananas III (US) (Article 22.6 – EC), para. 6.3; and EC – Hormones (US) 
(Article 22.6 – EC), para. 40.  
6 Decision by the Arbitrator, US – Gambling (Article 22.6 – US), para. 3.30.  WT/DS505/ARB/Add.1  
 
- 31 - 
 
  the United States applies the OFA -AFA measure in the future, Canada proposes a counterfactual 
scenario in which the OFA -AFA measure is eliminated as a practice against Canadian exporters.  This 
reasonable and plausible counterfactual eliminates the adverse facts available that result from the 
application of the measure from the company -specific countervaili ng duty rate as well as  the 
All Others rate.  
A. A Reasonable and Plausible Counterfactual Must Rely on Information That Will 
Be Available  to Canada in Future Countervailing Duty Proceedings  
 
19. The information necessary to establish the appropriate counterfactual duty rates must be 
available to a complaining party.  The report of the arbitrator in US – Washing Machines (Article  22.6 
– US) stands for the proposition that the information required t o calculate a counterfactual duty rate 
must "always be available" to calculate the level of suspension.7  Where information is not currently 
available on Commerce's public record, it cannot be presumed to be available in future proceedings.  
This holds pa rticularly true regarding the lack of information necessary to determine the 
counterfactual All Others rate.  Where it must be anticipated that necessary information will be 
unavailable to Canada, or where such information may be unclear, the Arbitrator sh ould favour the 
use of alternative information.  This information should not understate the level of nullification or 
impairment.  
B. The Counterfactual for an Investigated Company Subject to  the OFA-AFA 
Measure Should  Deduct the Amount of the Duty Resultin g from the Application 
of the AFA  
 
20. The counterfactual duty rate for investigated companies should be obtained by deducting the 
amount of the rate attributable to the application of adverse facts available resulting from the 
OFA-AFA measure.  The counterfactual should not require the calculation of a "new" hypothetical 
company -specific counterfactual duty rate, as the United States proposes.  Such a counterfactual 
would not be plausible or reasonable.  Information to calculate a new duty rate will not be available 
on the record of Commerce's proceedings, given that Commerce refuses to accept any new 
information or evidence onto the record when it discovers alleged assistance during verifications.  
Even if information were inadvertently placed on the  record in some proceedings, it is unreasonable 
to assume that Commerce would make, and Canada accept, such a new finding of subsidization in 
a situation where Commerce has applied the OFA -AFA measure again in a proceeding against 
Canada.  
C. The Counterfac tual Must  Take into Account  That Information May Not Be 
Publicly  Available to Calculate the  All Others  Rate in All Circumstances  
 
21. Information  to calculate the counterfactual All Others rate will not be available to Canada in 
all countervailing duty pro ceedings.  This applies in proceedings where the counterfactual All Others 
rate is calculated with confidential sales information from three or more investigated companies.8  It 
also applies in proceedings with three investigated companies where the counterfactual duty rate of 
one company drops below the de minimis  threshold and therefore has to be removed from the 
calculation of the counterfactual All Others rate in accordance with 19 U.S.C. § 1671d(c)(5)(A )(i).9  
Although Canada should not have to rely on information from private companies —specifically, 
companies that are not subject to the OFA -AFA measure and are not likely to cooperate with 
Canada —it is not unreasonable that Canada request the relevant c ompanies to provide authorization 
to Commerce to share their confidential sales values with Canada, and use it to calculate the 
counterfactual All Others rate where companies make the information available.  
22. Where Canada does not receive this informatio n, Canada should calculate, first, the simple 
average CVD rate and, second, the weighted average CVD rate based on publicly ranged sales 
values.  Between these two rates, Canada should select the lower one as the counterfactual All 
Others rate.  This appro ach is reasonable because it allows the use of publicly available information, 
and selecting the lower countervailing duty rate is less likely to understate the level of nullification 
or impairment.  Both a simple average and a weighted average have the po tential to understate 
nullification or impairment where one or the other is closer to the actual CVD rate.  In this situation, 
 
7 Decision by the Arbitrator, US – Washing Machines (Article 22.6 - US), para. 4.18 . 
8 As determined by the Arbitrator in Scenario 5 of Question No. 181.  
9 As determined by the Arbitrator in Scenario 4 of Question No. 181.  WT/DS505/ARB/Add.1  
 
- 32 - 
 
  where necessary information is not available, Canada should not have to select a duty rate as the 
counterfactual All Others rate that may result in a lower level of nullification or impairment than 
what is reasonably due to Canada if Commerce applies the OFA -AFA measure again.  This would 
contravene the objective of inducing compliance by the United States, which is one of the objec tives 
of this proceeding.  
23. Where a countervailing duty proceeding involves two investigated companies,10 Canada would 
be able to follow Commerce's methodology by simply using the averaging methodology that 
Commerce selected in its original calculation to calculate the counterfactual All Others rate.  
24. In a CVD investigation where the only investigated company has a de minimis  rate,11 the U.S. 
Department of Commerce will not reach an affirmative final determination and will therefore not be 
required t o calculate an All Others rate.  Commerce would also not impose a countervailing duty 
order, and therefore, no exporter would be subject to countervailing duties.  In this scenario, where 
the CVD order never should have been imposed, Canada would suspend c oncessions regarding all 
future segments of the CVD proceeding.  
V. THE REFERENCE PERIOD  
 
25. If Commerce applies the OFA -AFA measure in countervailing duty proceedings, the reference 
period to determine the value of imports is the calendar year prior to th e imposition by Commerce 
of duties resulting from the application of the OFA -AFA measure in a U.S. countervailing duty 
proceeding.  In case Commerce were to apply the OFA -AFA measure in two consecutive segments 
of its countervailing duties proceedings, the  relevant reference period should be a period where U.S. 
imports from Canada have not been affected by the OFA -AFA measure.  
VI. THE MODEL  
 
26. The model used to determine the level of nullification or impairment of any future applications 
of the OFA-AFA measure should follow the guiding principles established in prior Article 22.6 
arbitrations.  The model should: (1) result in a predictable level of suspension; (2) be practical to 
implement; (3) limit the risk of controversies between the parties;  (4) rely on credible, factual and 
verifiable information available to both parties; and (5) be sufficiently generic to capture the 
variation in the types of products and markets in which the WTO -inconsistent measure may be 
applied.  To achieve this, the m odel should fix those parts of the formula that can be fixed, and 
reduce the number of decisions that must be taken by the parties in its future application.  
A. Canada's Model is Practical to Implement, Results in Predictable and 
Reasonable Outcomes, and L imits Future Controversies  
 
27. Canada has proposed a model that aligns with these principles.  Canada has constructed a 
practical and versatile linearized Armington -based partial equilibrium model that determines the 
change in the value of the affected U. S. imports from Canada with and without the OFA -AFA measure 
in place.  The Armington model is a widely -used model that provides an approximation for how trade 
volumes from different countries respond to changes in prices and tariffs.  
28. In its simplest fo rm, Canada's model can be expressed using the following formula:  
Change in Imports = Value of Imports x ΔDuty x Scaling Factor  
The value of imports and the change between the factual and counterfactual duty rates ( ΔDuty ) can 
only be determined in the futur e at a time when the United States applies the OFA -AFA measure.  
The scaling factor captures the trade response to the WTO -inconsistent duty for a given product, 
and can reasonably be determined in this proceeding.  At a more detailed level, the formula pr ovides 
as follows:  
NI = Value of Imports x 𝑡
1+𝑡∗𝑡̂ x Scaling Factor  
 
10 As determined by the Arbitrator in Scenario 3 of Question No. 181.  
11 As determined by the Arbitrator in Scenario 1 of Question No. 181.  WT/DS505/ARB/Add.1  
 
- 33 - 
 
  where NI is the nullification or impairment, 𝑡 refers to the factual duty rate expressed as a decimal 
(i.e. 5% rate = 0.05), and 𝑡̂ is a percentage change in the duty.  
29. Similar to the formula adopted by the arbitrator in US – Washing Machines (Article 22.6 – 
US), Canada's model defines two sources of supply (or "varieties") of the affected products in the 
U.S. market.  The first variety is for Canadian imports of the prod uct, some or all of which may be 
subject to the WTO -inconsistent duty.  The second is a variety for non -Canadian sources of the 
product.  
30. For each variety, there are three equations: one for supply, one for demand, and one that 
balances supply to demand .  Each supply equation is characterized by a supply elasticity.  Each 
demand equation is characterized by an elasticity of demand by U.S. purchasers, the elasticity of 
substitution between varieties, and the Canadian share of the U.S. market.  
31. The equa tions for Canada's model are linearized around the market's equilibrium.  This 
approach offers several advantages.  For one, the model's variables —the duties, prices, and 
quantities —can be expressed as percentage changes from their equilibrium level.  It a lso allows for 
the expression of market behaviours in the form of multiplicative scaling factors.  The scaling factors 
depend on parameters that can be reasonably determined using credible and verifiable third -party 
information available today.  This inclu des the elasticities of supply, demand, and substitution 
between the varieties, as well as the market shares.  Canada's approach thus permits the Arbitrator 
to fix those parts of the model that can be fixed, and reduce the number of decisions that must be 
taken by the parties at the time of its application.  
32. With the scaling factors in hand, the model can be executed using simple arithmetic, as it only 
requires the reference period values of imports of Canadian exporters affected by the OFA -AFA 
measure, and the factual and counterfactual duty rates associated with these limited number of 
exporters.  The result is a straightforward, yet robust, formula that is generic enough to 
accommodate any potential products or markets; is practical to implement; resul ts in predictable 
and reasonable outcomes; and which limits the potential of future controversies between the parties.  
B. The United States' Model Does Not Satisfy the Principles Established in Prior 
Arbitrations  
 
33. In contrast, the United States' propos ed methodology does not satisfy the principles 
established by previous arbitrators.  The U.S. model is impractical to implement.  Its outcomes are 
inherently uncertain and unpredictable.  It also preordains future controversies between the parties, 
as it s eeks to rely on unverifiable and potentially unavailable sources from the U.S. own agencies.  
34. The United States has proposed an Armington -based partial equilibrium model applied directly 
in its non -linear form, with multiple Canadian varieties arbitrari ly defined based on differentiated 
and ever -changing duty treatments.  The U.S. model provides no closed -form solution for the 
calculation of nullification or impairment.  It leaves the determination of key parameter in the hands 
of its own International T rade Commission ("USITC" or "Commission") in future investigations, 
unverifiable by the Arbitrator or the parties.  Even if elasticity parameters were fixed today, the 
model would still require future calibration based on the exact market shares of an unkn own number 
of Canadian varieties —information that can only be obtained through disaggregated 
company -specific customs data compiled by the United States' own agencies, and which would likely 
change at each subsequent stage of its retrospective duty assessm ent process.  Absent the 
necessary data, the U.S. model would be rendered unworkable, frustrating Canada's ability to 
suspend concessions.  
1. The U.S. Model is Economically Unsound and Cannot Claim to be More 
Accurate  
 
35. The U.S. model treats "varieties" not based on countries —as would be consistent with the 
underlying Armington assumption —but based on differentiated duty treatments.   Defining Armington 
varieties in this manner is arbitrary and not supported by economic principles.  In the Armi ngton 
model, the most discrete level of a variety is generally for a given country.  This is because 
substitution elasticity estimates are primarily based on country -level bilateral trade flows, which 
treat individual countries as a single "variety".  WT/DS505/ARB/Add.1  
 
- 34 - 
 
  36. Arbitrarily defining Canadian import "varieties" based on their duty treatment also means that 
the final form of the U.S. model cannot be specified until some point in the future when each category 
of affected and unaffected Canadian exporters are known.  T his is because a non -linear model 
requires that the implied scaling factor be based on the various factual and counterfactual duty rates, 
and market shares, associated with each "variety" of Canadian imports, which cannot be known 
ahead of time.  This also  means that under the United States' retrospective duty system, the number 
of Canadian varieties, and thus the final form of the U.S. model, will likely change at each subsequent 
stage of its duty assessment process.  
37. The United States failed to show th at its complex approach is more accurate than Canada's 
model in reasonably determining the level of nullification or impairment.  
38. First, the United States erroneously claims that Canada's linearized approach "introduces 
approximation error".  Armington -style models are mathematical approximations that cannot 
capture all economic factors that influence trade or replicate actual trade outcomes.  Both the 
Canadian and U.S. models incorporate simplifying assumptions with associated but different 
limitations;  neither can fully capture the range of economic outcomes that can and do occur.  The 
United States' claim of an "approximation error" amounts to no more than the difference in outcomes 
between two competing models with different underlying assumptions, us ing different parameters.  
39. The U.S. model would only be free of "approximation errors" if the real world corresponds 
exactly to the functional forms of supply and demand in a non -linearized Armington model, with 
demand preferences across different produ cts that correspond precisely to Canadian products 
subject to different duty rates.  However, the limitations and approximation errors of the non -linear 
Armington model and its constant -elasticity assumption are well known.  In particular, there is no 
price, regardless of how high, at which demand for a product falls to zero.  The U.S. model thus 
precludes the possibility of a prohibitive tariff.  Under such a model, imposition of large duties on a 
single Canadian exporter (or a small group of Canadian expo rters) could never cause that exporter 
(or exporters) to stop exporting to the United States.  It is also widely understood that the 
constant -elasticity assumption, although an algebraically useful simplification, is inconsistent with 
actual trade patterns .  In contrast, sub -convex demand forms, such as a linear demand, are more 
consistent with observed trade behaviour.  
40. Second, the United States wrongly asserts that Canada's model fails to account for the 
offsetting increases in the value of imports exp erienced by Canadian exporters that are unaffected 
by the OFA -AFA measure.  Like the United States', Canada's approach fully recognizes that a duty 
applied to a subset of Canadian exporters may increase the value of imports experienced by other 
Canadian ex porters unaffected by the WTO -inconsistent duty.  Canada's mathematical proofs show 
how its exact formula and approach can also be derived from a more complex, linearized Armington 
model that accounts for multiple Canadian varieties simultaneously.  This m ore complex model 
explicitly accounts for any offsetting increases in the values of imports experienced by unaffected 
Canadian exporters and yields an equivalent level of nullification or impairment as Canada's simpler 
proposed model.  The United States' c laims are simply incorrect.  
41. Despite the United States' insistence that the appropriate model must "simultaneously" modify 
all duty rates affected by the OFA -AFA measure to account for such offsetting effects, the 
United  States readily abandons this pri nciple where it stands to benefit.  The United States criticizes 
Canada's approach of aggregating the results of multiple executions of the formula as "effectively 
[basing] the level of nullification or impairment on the sum of the approximate trade effect s of duty 
rate changes in multiple, independent markets".  Yet it advocates for an extreme version of this 
process when applying its own model where there are subsequent applications of the 
OFA-AFA measure.  By summing calculations of nullification or impa irment across different runs of 
its model calibrated across different sets of market data, and with false counterfactuals, the U.S. 
model invariably results in unreliable estimates of nullification or impairment.  The United States' 
approach is thus incapa ble of calculating a level of suspension that is equivalent to the level of 
nullification or impairment.  
2. The U.S. Sources of Parameters Are Unverifiable and Potentially 
Unavailable  
 
42. To minimize the risk of future controversies between the parties, i t is an imperative that key 
inputs to the model be based on verifiable, third -party sources that have not been created by either WT/DS505/ARB/Add.1  
 
- 35 - 
 
  party in the context of an investigation or dispute.  However, t he United States objects to the use 
of pre -determined parameter s.  Instead, it has insisted that the Arbitrator leave the determination 
of these required parameters to the USITC to some point in the future.  The United States' proposal 
to use USITC reports as the primary source for parameter inputs fails on several gr ounds.  
43. First, the USITC's methodology results in estimates that are inconsistent and which cannot be 
independently verified.  Its elasticity estimates are not econometric estimates.  Rather, the 
Commission qualitatively determines a range of possible e lasticities based on an examination of 
information from various interested parties.  The Commission has stated publically that it is under 
no obligation to analyze elasticities in any particular manner or even to use its own 
staff-recommended estimates.  W hen elasticity estimates change for a product, it is impossible to 
verify whether the changes are due to actual changes in market conditions, or rather, a result of the 
Commission's variable qualitative analysis of the evidence before it.  This is not a st able or verifiable 
methodology capable of producing consistent results.  
44. Second, USITC estimates have themselves been the subject of dispute before bi -national 
arbitral panels or domestic appeal processes.  They are therefore not without controversy.  T he 
prospect that USITC determinations may be contested and subsequently amended presents a real 
practical challenge for the parties if directed to rely on future USITC reports.  In the event that a 
Commission's determination of a relevant parameter is appe aled and subsequently remanded for 
redetermination, Canada may well be prejudiced in its ability to suspend concessions in a timely 
manner simply for the fact that settlement of that dispute may be not occur until years later.  
45. Lastly, there is no guara ntee that future USITC reports will contain the inputs required.  There 
are no legal or practical requirements for the USITC's staff to generate quantitative elasticity 
estimates.  There is simply no guarantee that the USITC will publish them.  It is also evident that 
key market share inputs in USITC reports, including the values of domestic shipments and values of 
U.S. consumption, are more often than not proprietary information that is unavailable to Canada.  If 
the Arbitrator were to pre -determine USITC reports as the source for parameters and future reports 
fail to include them, then there will be a future dispute regarding the appropriate source of the 
missing parameters, and the parties will not be able to resort to an arbitrator to resolve that disput e. 
46. The United States' proposed tiered -approach fails to address these problems.  For the reasons 
stated above, the use of USITC reports as a first -tier option is untenable.  The United States' 
proposed second -tier option of consulting between the parti es on the use of "some future source" is 
also impractical and unnecessary.  As evident from the parties' disagreements over the source of 
key inputs, the prospect is low that the parties will agree in the future on the appropriateness of 
some unspecified f uture academic literature, or industry source, to provide estimates for such inputs.  
It is also unnecessary, given that reliable and verifiable third -party sources currently exist to 
determine the necessary inputs.  
C. Appropriate Sources for the Necessary Inputs  
 
47. The United States provides no compelling reasons for rejecting the following credible, factual 
and verifiable third -party sources:  
48. Substitution Elasticity : Canada has proposed substitution elasticities from Caliendo and Parro 
(2015).  Canada's proposed elasticity of substitution values have the advantage of being derived 
from differences in trade costs, and have been shown to successfully model trade behaviour 
specifically among NAFTA countries (i.e. between Canada and the United S tates) in response to 
changing tariff treatments.  The Caliendo and Parro sectors and the corresponding elasticities of 
substitution provide near universal coverage concerning any relevant U.S. imports from Canada.  
49. However, Canada also considers substi tution elasticities derived by Fontagné et al. 
("Fontagné") to be suitable for use.  Both Caliendo and Parro, and Fontagné, determine trade 
elasticities through differences in trade policies, and are both founded on the structural gravity 
model.  Substitut ion elasticities determined using a structural gravity model, with identification 
determined by differences in tariff rates, is the most reliable and relevant approach for determining 
elasticities relevant to this proceeding.  Despite differences in data s ources, timing, and estimation 
methodology, Fontagné's substitution elasticities are broadly consistent with Caliendo and Parro's 
estimates.  WT/DS505/ARB/Add.1  
 
- 36 - 
 
  50. Demand Elasticity : The values for the elasticity of demand proposed by Canada are derived 
from the most recent and up to date Global Trade Analysis Project ("GTAP") 11 Data Base.  These 
elasticities are based on analysis of the U.S. economy and account for the use of products as 
intermediate goods in production activities.  GTAP demand elasticities are widely used by the United 
States, Canada, the WTO, and other national and international entities for the purposes of modelling 
trade effects.  Previous iterations of the database have also been used as a reasonable basis for 
modelling counterfactual trade outcomes in the context of Article 22.6 proceedings.  
51. Supply Elasticity : Canada considers it appropriate to use a supply elasticity of 10 for all sources 
of supply.  Without prejudice to Canada's position that it is not necessary to distinguish among non -
Canadian s ources of supply, should the Arbitrator determine a need to separate non -Canadian supply 
into distinct varieties, Canada considers that it would be most reasonable to use a value of 15 for 
import (i.e. non -U.S.) supply elasticity, and a value of 6 for dome stic (i.e. U.S.) supply.  
52. Market Shares : Canada considers it appropriate to pre -determine market share values using 
the most recently available U.S. Bureau of Economic Analysis ("BEA") Input -Output ("I -O") supply 
and use table to calculate market shares .  First, the import share of the total U.S. market is 
calculated from the BEA's I -O tables. Second, the Canadian share of total U.S. imports is calculated 
from the U.S. Census Bureau's import data.  Multiplying these shares determines the Canadian share 
of the U.S. market.  The average import share in domestic absorption should be calculated using 
U.S. imports from Canada among products covered by the measure as weights.  
VII. IMPORT VALUES  
 
53. Canada could accept the use of U.S. Customs data to calculate the value of imports.  However, 
Canada's acceptance of U.S. Customs data has several conditions and  Canada considers that it is 
important for the Arbitrator to establish binding procedures for the sear ch and exchange of U.S. 
Customs information. While the procedures should allow the parties to consult concerning import 
values, consultations should be limited to the small number of issues where there is potential for 
disagreement.  The consultations must  be designed in a manner that encourages both parties to 
meaningfully participate and resolve disagreements, rather than stall the process.  
A. Scope of Data Provided by the United States  
 
54. Following a final determination or countervailing duty order whe re Commerce applies the 
OFA-AFA measure, Canada would notify the United States of its intention to suspend concessions by 
applying the model, along with specific information required to run the search of U.S. Customs data.  
The United States would then hav e a period of 45 days, from the date of notification, to provide the 
data to Canada.  
55. If Canada determines that the OFA -AFA measure has been applied in an initial investigation 
(i.e. where a countervailing duty order is not in place during the reference  period), U.S. Customs 
would perform a minimum search prescribed by the Arbitrator for all shipments from Canada to the 
United States, under the HTS Codes listed in the countervailing duty order, where the "Entry Date" 
field is within the reference period.   All HTS Codes listed in the countervailing duty order should be 
included in the value of imports.  The Arbitrator should reject the U.S. proposal to exclude HTS 
Codes listed in the countervailing duty order as HTS Codes that "may" or "might" contain subj ect 
merchandise.  Excluding these HTS Codes will almost always undercount the value of imports.  
56. If Canada determines that the OFA -AFA measure has been applied in a subsequent proceeding 
to an initial investigation (e.g. an administrative review) and th e "CVD Case Number" is available 
for the reference period, U.S. Customs would perform a minimum search for all shipments from 
Canada to the United States, under the relevant CVD Case Number, where the "Entry Date" field is 
within the reference period.  
57. Canada has detailed the fields that are necessary to run the model and to verify the U.S. 
Customs data.12  Canada has also proposed a spreadsheet in machine -readable format that contains 
the requested fields.  The United States would provide Canada data c oncerning shipments by all 
 
12 These fields include: Manufacturer Name, Manufacturer ID, Country of Origin, HTS Code Number, 
Entered Value, CVD Rate, HTS Rate, Entry Type, Importer of Record Name, and Address, Importer Number, 
Description of Merchandise, Net Quantity in HTSUS Units, CHGS, Port Code, and Export Date.  WT/DS505/ARB/Add.1  
 
- 37 - 
 
  exporters.  However, the United States could provide a preliminary identification of the shipments 
by respondent(s) affected by the OFA -AFA measure, unaffected respondent(s), and affected 
exporters subject to the All Others rate.   Canada agrees with the Arbitrator's proposal to identify 
affected and unaffected exporters with reference to the "Manufacturer Name", "Manufacturer ID", 
"CVD Case Number", and "CVD Rate" fields.  However, Canada highlights that the existence of minor 
typos in these fields should not allow a party to claim that the "Manufacturer Name" or "Manufacturer 
ID" fields do not match those of an affected exporter.  
58. The parties have agreed on the Understanding between Canada and the United States 
Concerning Proce dures to Apply to Business Confidential Information to the Extent Necessary to 
Apply a DSB Authorization Consistent with the Arbitrator's Decision , which covers information that 
was treated by U.S. Customs as confidential.  
B. Verification Procedures  
 
59. Following the receipt of U.S. Customs data, Canada will verify the U.S. Customs data.  The 
provision of shipment - and company -specific information is necessary for verification.  Providing the 
data at its most disaggregated level will allow Canada to confir m that the search by U.S. Customs 
has been performed consistently with the search criteria, to identify potential errors within the data, 
to verify the data against the records of affected exporters, and to confirm and correct the 
identification of affecte d exporters.  Moreover, requiring the provision of shipment - and 
company -specific information is transparent and serves as an additional incentive for the United 
States to cooperate and report the data as accurately as possible, given that the data can be 
scrutinized by Canada.  It will encourage cooperation, improve the accuracy of the import values, 
and give Canada confidence in the import values.  
60. If verification reveals any errors in the dataset, Canada would consult with the United States 
concerning  the errors during a two -week period, and correct the errors, if possible.  Should the 
parties fail to reach agreement following consultations, it would be inappropriate for the Arbitrator 
to permit the United States to undermine the calculation of the lev el of nullification or impairment 
by deferring to the United States on the calculation of import values.  The United States, as the 
non-compliant party, should not have unchecked authority to determine the import values, which 
will have a significant effect on the level of suspension of concessions applied against the 
United  States.  
61. If the verification reveals that U.S. Customs data provided on the basis of HTS Codes do not 
adequately reflect the export sales that fall within the scope of the countervailing duty order, Canada 
may supplement the U.S. Customs data with company -specific export data, obtained from the 
affected exporters, for products falling within the product description, but not covered by the 
reference HTS Codes.  Canada will provide this supplemental data to the United States within four 
weeks of the receipt by Canada of the U.S. Customs data.  After Canada provides the supplemental 
data to the United States, Canada will consult with the United States and consider its vie ws on the 
supplemental data for a two -week period.  If the parties disagree, Canada should nevertheless have 
permission to supplement the dataset.  To alleviate any U.S. concerns regarding the accuracy of this 
data, Canada will request affected exporters t o attest to the accuracy of the supplemented data, 
should it be necessary to use such data.  
C. Procedures to be Applied Should the United States Fail to Provide U.S. Customs 
Data  
 
62. In order to preserve Canada's ability to suspend concessions in the event that the United 
States does not provide the requested U.S. Customs data or does not provide the data within the 
specified time frame, it is critical for Canada to have recourse to an alternative data source to serve 
as a proxy for the value of import s. 
63. In that case, Canada will have discretion to select from three data sources: (a) import values 
directly from affected exporters; (b) estimated import values derived from publicly -ranged sales 
data from the respondents in the underlying countervailin g duty proceedings and aggregate trade 
data (from USA Trade Online or  USITC DataWeb); and (c) where available and in certain 
circumstances, import values from Statistics Canada.  Canada disagrees with the United States that 
the Arbitrator should impose a h ierarchy between the three reliable data sources Canada proposes.  
Canada must maintain the discretion to choose between the three reliable data sources where there WT/DS505/ARB/Add.1  
 
- 38 - 
 
  is no U.S. Customs data, as it is not possible to predict which of the data sources will be  the most 
accurate in advance.  
64. If Canada resorts to these alternative means of calculating the value of imports, Canada would 
nevertheless consult with the United States, provide the United States with the data forming the 
basis of the value of imports , and provide the United States an opportunity to comment on the data 
and identify errors prior to Canada's suspension of concessions during a period of two weeks.  
65. Canada has proposed additional instructions for identifying value of imports and referen ce 
period duty rates at the time of the triggering event in "Revised Table 1". 
VIII.  CONCLUSION  
 
66. For these reasons and the reasons set out in more detail in Canada's Methodology Paper, 
written submission, written responses to th e questions from the Arbitrator and oral statements 
during the virtual meeting with the Arbitrator, Canada respectfully requests that the Arbitrator find 
that the method proposed by Canada is appropriate to determine a level of suspension of concessions 
that is equivalent to the level of nullification or impairment.  
_______________  
 
  WT/DS505/ARB/Add.1  
 
- 39 - 
 
   
ANNEX  C 
DATA INPUTS AND CALCULATIONS OF THE ARBITRATOR  
Contents  Page  
Annex  C-1 STATA code of Arbitrator's Model  40 
Annex  C-2 Excel Input Sheet of Arbitrator's Model  44 
Annex C -3 Excel Spreadsheet Template for US Customs Data  45 
 
  WT/DS505/ARB/Add.1  
 
- 40 - 
 
  ANNEX C -1 
STATA CODE OF ARBITRATOR'S MODEL* 
********************************************************************************  
*****Code to run Arbitrator's Model*********************************************  
********************************************************************************  
 
clear all  
set more off  
capture program drop all  
 
global root /*"INSERT PATH HERE"*/  
cd "$root"  
global temp "`c(tmpdir)'"  
 
*****************************************  
*****Solution of the Armington Model*****  
*****************************************  
 
program nlArmington  
 syntax varlist(min=2 max=2) [if], at(name)  
 //Specify name  
 local RHS: word 1 of `varlist'  
 local exogneous: word 2 of `varlist'  
 
 //Specify the temporary variable names  
 tempname p_us p_aca p _nca p_row epsilon_us epsilon_aca ///  
  epsilon_nca epsilon_row m_us m_aca m_nca m_row Y theta ///  
  sigma t0_aca t_aca t0_nca t_nca LHS P Q a_us a_aca ///  
  a_nca a_row b_us b_aca b_nca b_row QS_us QS_aca ///  
  QS_nca QS_row QD_us QD_aca QD_nca QD_row  
 
 //Specify the endogenous parameters  
 scalar `p_us' = `at'[1, 1] //US shipments  
 scalar `p_aca' = `at'[1, 2] //US imports from affected Canadian firm subject to duty rate change  
 scalar `p_nca' = `at'[1, 3] //US imports from Canada not subject to a rate chan ge 
 scalar `p_row' = `at'[1, 4] //US imports from the rest of the world  
 
 //Specify exogenous parameters (elasticities, initial market shares, initial total expenditure and initial duties)  
 local i = 1  
 foreach param in epsilon_us epsilon_aca epsilon_nca ///  
   epsilon_row m_us m_aca m_nca m_row Y theta sigma ///  
   t0_aca t_aca t0_nca t_nca {  
  levelsof `exogneous' in `i'  
  generate double ``param'' = `r(levels)'  
  local i = `i' + 1  
 } 
  replace `t0_aca' = 0 if `t0_aca' ==.  
 
 //Specify initial  market clearance conditions  
 generate double `LHS' = 0  
  
 //Compute the index price  
 generate double `P' =  (`m_us'/100 * `p_us'^(1 - `sigma') + ///  
       `m_aca'/100 * `p_aca'^(1 - `sigma') + ///  
       `m_nca'/100 * `p_nca'^(1 - `sigma') + ///  
       `m_row'/100 * `p_row'^(1 - `sigma')) ///  
       ^(1/(1 -`sigma'))  
 
 //Compute the aggregate demand  
 generate double `Q' = `Y' * `P'^`theta'  
 
 local i = 1  
 foreach x in us aca nca row {  
 //Compute the shifting factors  
  if "`x'" == "us" | "`x'" == "row" gener ate double ///  
   `a_`x'' = `Y' * `m_`x'' / 100  
  if "`x'" == "aca" | "`x'" == "nca" generate double ///  
   `a_`x'' = `Y' * `m_`x''/100 * (1 + `t0_`x''/100)^(`epsilon_`x'')  
  generate double `b_`x'' = exp(ln(`m_`x''/100) / `sigma')  
  replace `b_`x'' = 0 if `m_`x'' == 0 | `m_`x'' == .  
 
 //Compute the supply functions  
  if "`x'" == "us" | "`x'" == "row" generate double ///  
 
* English only. WT/DS505/ARB/Add.1  
 
- 41 - 
 
     `QS_`x'' = `a_`x'' * (`p_`x'')^`epsilon_`x''  
  if "`x'" == "aca" | "`x'" == "nca" generate double ///  
   `QS_`x'' = `a_`x'' * ((`p_`x '')/(1 + `t_`x''/100)) ^`epsilon_`x''  
 
 //Compute the demand functions  
  generate double `QD_`x'' = `Q' * (`b_`x''^`sigma') * ///  
        (`p_`x''/`P')^( -`sigma')  
 
 //Compute the market clearance conditions  
  replace `LHS' = `QD_`x'' - `QS_`x'' in `i'  
  if `i' == 5 replace `LHS' = `QD_`x'' - `QS_`x'' +1 in `i'  
 
 local i = `i' + 1  
 } 
 
 //Ensure the market clearance conditions are met  
  replace `RHS' = `LHS'  
 
end 
 
 
*********************************************  
*****Corresponding Prices and Quantities*****  
*********************************************  
 
program define dPQ  
 //Specify the input variables:  
 * `1': varaible with prices  
 * `2': variable with exogenous parameters  
 
 //Specify the temporary variable names  
 tempname p_us p_aca p_nca p_ row epsilon_us epsilon_aca epsilon_nca ///  
  epsilon_row m_us m_aca m_nca m_row Y theta ///  
  sigma t0_aca t_aca t0_nca t_nca LHS P Q a_us a_aca ///  
  a_nca a_row  
 
 //Specify the parameters  
 local i = 1  
 foreach param in p_us p_aca p_nca p_row epsilon_us e psilon_aca ///  
   epsilon_nca epsilon_row m_us m_aca m_nca m_row Y theta ///  
   sigma t0_aca t_aca t0_nca t_nca {  
 
  if `i' <=4 scalar ``param'' = `1' in `i'  
  if `i' > 4 local j = `i' - 4 
  if `i' > 4 scalar ``param'' = `2' in `j'  
  local i = `i' + 1  
 } 
 // Compute the index prices  
 generate double `P' =  (`m_us'/100 * `p_us'^(1 -`sigma') + ///  
       `m_aca'/100 * `p_aca'^(1 - `sigma') + ///  
       `m_nca'/100 * `p_nca'^(1 - `sigma') + ///  
       `m_row'/100 * `p_row'^(1 - `sigma')) ///  
       ^(1/(1 -`sigma'))  
 
 //Compute the aggregate demand  
 generate double `Q' = `Y' * `P'^`theta'  
 
local i = 1  
foreach x in us aca nca row {  
//Compute the shifting factors  
  if "`x'" == "us" | "`x'" == "row" generate double ///  
   `a_`x'' = `Y' * `m_`x'' / 100  
  if "`x'" == "aca" | "`x'" == "nca" generate double ///  
   `a_`x'' = `Y' * `m_`x''/100 * (1 + `t0_`x''/100)^(`epsilon_`x'')  
 
//Compute the percent changes in prices  
 generate double dp_`x' = (p_`x' - 1) * 100 in 1  
 
//Compute the initial equilibrium quantit ies 
 if "`x'" == "us" | "`x'" == "row" generate double ///  
  iniq_`x' = `a_`x'' * 1^`epsilon_`x'' in 1  
 if "`x'" == "aca" | "`x'" == "nca" generate double ///  
  iniq_`x' = `a_`x'' * (1/(1 + `t0_`x''/100))^`epsilon_`x'' in 1  
  
//Compute the initial duties  
 if "`x'" == "us" | "`x'" == "row" generate double ///  
  inid_`x' = 0 in 1  
 if "`x'" == "aca" | "`x'" == "nca" generate double ///  
 inid_`x' = (`t0_`x''/100)/(1 + `t0_`x''/100)*(`a_`x'' * (1 / (1 + `t0_`x''/100)) ^`epsilon_`x'') in 1  
 WT/DS505/ARB/Add.1  
 
- 42 - 
 
  //Compute the new equilibrium quantities  
 if "`x'" == "us" | "`x'" == "row" generate double ///  
  newq_`x' = `a_`x'' * (p_`x')^`epsilon_`x'' in 1  
 if "`x'" == "aca" | "`x'" == "nca" generate double ///  
  newq_`x' = `a_`x'' * (p_`x'/(1 + `t_`x''/100))^`epsilon_`x'' in 1  
  
//Compute the percent changes in quantities  
 generate double dq_`x' = (newq_`x' - iniq_`x') / iniq_`x' * 100 in 1  
  if dq_`x' == . replace dq_`x' = 0 in 1  
 
   
//Compute the new expenditures  
 generate double newX_`x' = p_`x' * newq_`x' in 1  
 
//Compute the new  duties  
 if "`x'" == "us" | "`x'" == "row" generate double ///  
  newD_`x' = 0 in 1  
 if "`x'" == "aca" | "`x'" == "nca" generate double ///  
  newD_`x' = (`t_`x''/100/(1+`t_`x''/100)) * p_`x' * newq_`x' in 1  
 
   
//Compute the change in expenditures  
 generate  double dX_`x' = (newX_`x' - iniq_`x') in 1  
 
//Calculate the change in duties  
 generate double dD_`x' = (newD_`x' - inid_`x') in 1  
 
} 
  
end 
 
 
**************************************************  
*****Implementation of the five -variety model*****  
**************************************************  
 
**Import data inputs from Excel file "Excel Input Sheet of Arbitrator's Model.xlsx"  
* Canada will insert inputs in sheet "Parameter Input". Stata will use inputs from sheet "Stata Input"  
 
 cd "$root"  
 import excel "Excel Input Sheet of Arbitrator's Model.xlsx", firstrow clear sheet("Stata Input")  
 *Renaming to existing program notation to avoid programming error  
  rename epsilon theta  
  rename eta_us epsilon_us  
  rename eta_import epsilon_import  
  drop if Product == ""  
 
   
 *Create additional inputs  
 foreach var in aca nca {  
  generate double epsilon_`var' = epsilon_import  
  generate double t0_`var' = t_`var'  
 } 
 rename epsilon_import epsilon_row  
  
save "$temp \Inputs", replace  
 
*Solve the Armington model  
 use "$temp \Inputs", clear  
 levelsof Product, local(Product)  
 foreach product of local Product {  
  use "$temp \Inputs", clear  
   keep if Product == "`product'"  
   display " "  
   display "***** `product' *****"  
  quietly {  
  * Create constraints and exogenous  variables structure  
   set obs 19  
   generate double MrktEq = 0  
   replace MrktEq = 1 in 4  
  local i = 1  
  generate paramname = ""  
  generate double param = .  
  foreach param in epsilon_us epsilon_aca ///  
     epsilon_nca epsilon_row m_us m_aca ///  
     m_nca m_row Y theta sigma t0_aca t1_aca ///  
     t0_nca t1_nca {  
 
   levelsof `param' in 1, local(temp)  
   replace paramname = "`param'" in `i'  WT/DS505/ARB/Add.1  
 
- 43 - 
 
     capture replace param = `temp' in `i'  
   replace param = 0 if param == . in `i'  
   local i = `i' + 1  
  } 
 } 
 *Solve the Armington model with WTO -consistent duties  
 nl Armington @ MrktEq param, param(p_us p_aca p_nca p_row) ///  
  initial(p_us 1 p_aca 1 p_nca 1 p_row 1) eps(1e -12) 
 quietly {  
  matrix B = e(b)  
  svmat double B  
  local i = 1  
  foreach x in us aca nca row {  
   rename B`i' p_`x' // New price  
   local i = `i' + 1  
  } 
  
 *Compute the level nullification or impairment  
  matrix B = B'  
  svmat double B  
  dPQ B param  
  generate double NI = dX_aca -dD_aca + dX_nca -dD_nca  
 
 *Compute new market shares  
  egen double Y1 = rowtotal(newX_*)  
  foreach x in us aca nca row{  
   generate double m1_`x' = newX_`x' / Y1 *100  
    } 
  
  drop p_* dp_* iniq_* newq_* dq_* inid_* newD_* newX_* MrktEq param* B1  
  keep Product NI  
   
  keep in 1  
  
  } 
 scalar NI_`product' = N I 
 display NI_`product'  
 } 
 
scalar LevelOfNI = NI_FirstRun - NI_SecondRun  
display LevelOfNI  
  WT/DS505/ARB/Add.1  
 
- 44 - 
 
   
ANNEX C -2 
EXCEL INPUT SHEET OF ARBITRATOR'S MODEL  
Pages  offset (excel file  attached  in English only ). 
  WT/DS505/ARB/Add.1  
 
- 45 - 
 
  ANNEX C -3 
EXCEL SPREADSHEET TEMPLATE FOR US CUSTOMS DATA  
Pages offset (excel file attached  in English only ). 
 
 
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