RESTRICTED  
  
G/SCM/M/115  
 
20 August 2021  
(21-6314) Page: 1/26 
Committee on Subsidies and Countervailing Measures    
 
MINUTES OF THE REGULAR MEETING  
HELD ON 27 APRIL 2021 
CHAIR: MR ERIK PHILIP GREGER SOLBERG (NORWAY)  
1. The Committee on Subsidies and Countervailing Measures ("Committee") held a regular 
meeting on 27 April 2021, convened in WTO/AIR/SCM/37 dated 16 April 2021.  
2. The Committee adopted the following agenda:  
1   NATIONAL LEGISLATION ................................ ................................ ............................  2 
1.1   Review of notifications of new or amended legislation or regulations not  
previously reviewed by the Committee (including Supplemental Notifications of  
existing provisions not previously reviewed)  ................................ ................................ ..........  2 
1.1.1    Argentina (G/ADP/N/1/ARG/1/Suppl.11 - G/SCM/N/1/ARG/1/Suppl.10)  .........................  2 
1.1.2    Brazil (G/ADP/N/1/BRA/3/Suppl.12 – G/SCM/N/1/BRA/2/Suppl.15 – 
G/SG/N/1/BRA/3/Suppl.6) and (G/ADP/N/1/BRA/3/Suppl.13 – G/SCM/N/1/BRA/2/Suppl.16 – 
G/SG/N/1/BRA/3/Suppl.7)  ................................ ................................ ................................ .. 2 
1.1.3    Canada (G/ADP/N/1/CAN/4/Suppl.4 – G/SCM/N/1/CAN/4/Suppl.3)  ................................  2 
1.1.4    India (G/SCM/N/1/IND/2/Suppl.11)  ................................ ................................ ...........  3 
1.1.5    Peru (G/ADP/N/1/PER/2/Suppl.2 - G/SCM/N/1/PER/2/Suppl.2) and 
(G/ADP/N/1/PER/2/Suppl.3 - G/SCM/N/1/PER/2/Suppl.3)  ................................ .......................  3 
1.1.6    Saint Kitts and Nevis (G/ADP/N/1/KNA/1 – G/SCM/N/1/KNA/1)  ................................ ..... 3 
1.1.7    Turkey (G/ADP/N/1/TUR/3/Suppl.4 – G/SCM/N/1/TUR/3/Suppl.4)  ................................ . 3 
1.1.8    United States (G/SCM/N/1/USA/1/Suppl.30) and (G/SCM/N/1/USA/1/Suppl.31) ..............  3 
1.2   Review of notifications of new or amended legislation or regulations with  
outstanding written questions  ................................ ................................ ..............................  6 
1.2.1    Plurinational State of Bolivia (G/ADP/N/1/BOL/3 - G/SCM/N/1/BOL/3 -  
G/SG/N/1/BOL/2)  ................................ ................................ ................................ ..............  6 
1.2.2    Cameroon (G/ADP/N/1/CMR/1/Suppl.1 – G/SCM/N/1/CMR/1/Suppl.1 – 
G/SG/N/1/CMR/1/Suppl.1)  ................................ ................................ ................................ .. 6 
1.2.3    United Kingdom (G/ADP/N/1/GBR/1 - G/SCM/N/1/GBR/1 - G/SG/N/1/GBR/1, 
G/ADP/N/1/GBR/1/Suppl.2 - G/SCM/N/1/GBR/1/Suppl.2 – and G/ADP/N/1/GBR/1/Suppl.4 - 
G/SCM/N/1/GBR/1/Suppl.4 - G/SG/N/1/GBR/1/Suppl.4)  ................................ .........................  7 
2   NATIONAL LEGISLATION – CONTINUING REVIEW OF LEGISLATIVE  
NOTIFICATIONS PREVIOUSLY REVIEWED BY THE COMMITTEE  ................................ ....... 7 
2.1   Costa Rica ( G/ADP/N/1/CRI/3/Suppl.1 - G/SCM/N/1/CRI/4/Suppl.1 - 
G/SG/N/1/CRI/4/Suppl.1)  ................................ ................................ ................................ ... 7 
2.2   Ghana (G/ADP/N/1/GHA/2 - G/SCM/N/1/GHA/2 - G/SG/N/1/GHA/2)  ................................  7 
2.3   Kenya (G/ADP/N/1/KEN/3 - G/SCM/N/1/KEN/3 - G/SG/N/1/KEN/2)  ................................ .. 8 
2.4   Liberia (G/ADP/N/1/LBR/1)  ................................ ................................ ..........................  8 G/SCM/M/115  
 
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  3   SEMI -ANNUAL REPORTS OF COUNTERVAILING DUTY ACTIONS  
(ARTICLE  25.11) – G/SCM/N/371 AND G/SCM/N/371/SUPPL.1  ................................ .... 9 
4   PRELIMINARY AND FINAL COUNTERVAILING DUTY ACTIONS:  
NOTIFICATIONS (ARTICLE 25.11)  ................................ ................................ ................  14 
5   PROCEDURES FOR REVIEW OF 2021 NEW AND FULL SUBSIDY NOTIFICATIONS  ...... 14 
6   ARTICLE 27.4 EXTENSIONS OF THE TRANSITION PERIOD FOR THE  
ELIMINATION OF EXPORT SUBSIDIES  ................................ ................................ ..........  14 
7   IMPROVING THE TIMELINESS AND COMPLETENESS OF NOTIFICATIONS AND  
OTHER INFORMATION FLOWS ON TRADE MEASURES UNDER THE SCM AGREEMENT  ..... 15 
8   CONSTANT DOLLAR METHODOLOGY FOR GRADUATION FROM SCM ANNEX VII(B)  ... 19 
9   PERMANENT GROUP OF EXPERTS  ................................ ................................ .............  19 
10   ARTICLE 25.8 QUESTIONS TO CHINA ON POTENTIAL STEEL SUBSIDIES –  
ITEM REQUESTED BY THE EUROPEAN UNION AND THE UNITED STATES  .......................  19 
11   SUBSIDY TRANSPARENCY AND CHINA'S PUBLICATION AND INQUIRY POINT 
OBLIGATIONS UNDER CHINA'S PROTOCOL OF ACCESSION – ITEM REQUESTED  BY 
THE EUROPEAN UNION AND THE UNITED STATES  ................................ .........................  21 
12   SUBSIDIES AND OVERCAPACITY – ITEM REQUESTED BY CANADA,  
THE EUROPEAN UNION, JAPAN, AND THE UNITED STATES  ................................ ...........  22 
13   OTHER BUSINESS  ................................ ................................ ................................ ... 25 
14   DATE OF NEXT REGULAR MEETING  ................................ ................................ .........  25 
15   ELECTION OF OFFICERS  ................................ ................................ .........................  25 
 
1  NATIONAL LEGISLATION  
1.1  Review of notifications of new or amended legislation or regulations not previously 
reviewed by the Committee (including Supplemental Notifications of existing provisions 
not previously reviewed)  
1.1.1   Argentina (G/ADP/N/1/ARG/1/Suppl.11 - G/SCM/N/1/ARG/1/Suppl.10)  
3. No written or oral questions were posed with respect to this notifica tion. 
1.1.2   Brazil (G/ADP/N/1/BRA/3/Suppl.12 – G/SCM/N/1/BRA/2/Suppl.15 – 
G/SG/N/1/BRA/3/Suppl.6) and (G/ADP/N/1/BRA/3/Suppl.13 – 
G/SCM/N/1/BRA/2/Suppl.16 – G/SG/N/1/BRA/3/Suppl.7)  
4. No written or oral questions were posed with respect to these notifications.  
5. With respect to the legislative notification contained in document G/SCM/N/1/BRA/3/Suppl .15, 
Brazil  made a statement explaining that this notification refers to a normative instruction issued in 
August 2020 which provides for the necessary adaptation of trade remedies investigations to the 
COVID -19 pandemic, by specifically suspending the execution of on -the-spot verifications.  
6. Concerning the legislative notification contained in document G/ADP/N/1/BRA/3/Suppl .16, 
Brazil explained that this notification refers to an Ordinance issued in March 2020 which provides for 
the use of electronic means for notifications and communication to interested parties in trade 
remedies investigations in line with the COVID -19 pandemic.  
1.1.3   Canada (G/ADP/N/1/CAN/4/Suppl.4 – G/SCM/N/1/C AN/4/Suppl.3)  
7. No written or oral questions were posed with respect to this notification.  G/SCM/M/115  
 
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  1.1.4   India (G/SCM/N/1/IND/2/Suppl.11)  
8. No written or oral questions were posed with respect to this notification.  
9. India stated that the amendment to its rules had been notif ied to the WTO on 4 January 2021. 
The notification pertained to the amendments to its countervailing duty rules, namely, 
"Customs  Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidized 
Articles and for Determination of Injur y) Amendment Rules, 1995" to change the anti -circumvention 
provision and make other miscellaneous changes. The amendment was made effective from 
2 February  2020. Previously there were no provisions with respect to anti -circumvention of 
countervailing dutie s. A provision had been incorporated to enable investigations in the case of anti -
circumvention of a countervailing duty for enabling the imposition of such a duty. Certain other 
changes were made to bring clarity to the rules. The amendment proposes to br ing the subsidy law 
at par with the dumping law and to align it to the provisions of the SCM Agreement.  
 
1.1.5   Peru (G/ADP/N/1/PER/2/Suppl.2 - G/SCM/N/1/PER/2/Suppl.2) and 
(G/ADP/N/1/PER/2/Suppl.3 - G/SCM/N/1/PER/2/Suppl.3)  
10. Written questions regarding the two notifications were posed and can be found in documents:  
• G/ADP/Q1/PERU/30 - G/SCM/Q1/PER/30 - Submitted by the United States and were posed 
with respect to the notification contained in document G/ADP/N/1/PER/2/SUPPL.2 - 
G/SCM/N/1/PER/2/SUPPL.2  
• G/ADP/Q1/PER /31 - G/SCM/Q1/PER/31 – Submitted by the United States and were posed 
with respect to the notification contained in document G/ADP/N/1/PER/2/Suppl.3 - 
G/SCM/N/1/PER/2/Suppl.3  
11. Peru indicated that oral responses would be provided at the regular meeting of th e Committee 
on Anti -Dumping Practices.  
12. The United States  looked forward to receiving Peru's responses at the Committee on 
Anti-Dumping Practices.  
13. Written answers to the United States' written questions were subsequently provided and can 
now be found in doc uments:  
• G/ADP/Q1/PERU/32 - G/SCM/Q1/PER/32 - Replies to the United States  
• G/ADP/Q1/PERU/33 - G/SCM/Q1/PER/33 - Replies to the United States  
1.1.6   Saint Kitts and Nevis (G/ADP/N/1/KNA/1 – G/SCM/N/1/KNA/1)  
14. Written questions regarding this notification were posed a nd can be found in document:  
• G/ADP/Q1/KNA/1 – G/SCM/Q1/KNA/1 – Submitted by the United States  
15. Saint Kitts and Nevis was not present at the time.  Oral answers were not provided at 
the meeting, nor had written answers been received to date.  
1.1.7   Turkey (G/ADP/N/1/TUR/3/Suppl.4 – G/SCM/N/1/TUR/3/Suppl.4)  
16. No written or oral questions were posed regarding this notification.  
1.1.8   United States (G/SCM/N/1/USA/1/Suppl.30) and (G/SCM/N/1/USA/1/Suppl.31)  
17. No written questions were posed with respect to these notifications.  
18. The United States  stated that its law directed the United States Trade Representative (USTR) 
to designate which Members were eligible for special and differential treatment (SDT) because of 
being developing or least developed. That responsib ility took the form of publishing a list of 
developing and least -developed designations in the Federal Register and updating the list as G/SCM/M/115  
 
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  necessary. The notified update satisfied USTR's statutory obligation to maintain an up -to-date list of 
developing and l east developed Members. Given the accession of 32 Members since the last update 
in 1998 and developments such as in per capita GNI in pre -existing Members, it was no surprise to 
have such an update. The United States recalled the S&DT provisions with respe ct to the de minimis  
and negligibility thresholds under the SCM Agreement and noted that in order to update the list as 
required by the law, USTR included least -developed Members as identified by the UN and those in 
Annex VII(b) to the SCM Agreement whose per capita GNIs were below USD  1000 in constant 1990 
US dollars. In addition, USTR identified developing countries based on appropriate economic, trade, 
and other factors. To compile the list of developing countries, USTR considered per capita GNI above 
the World Bank high income threshold; share of world trade more than 0.5 %; European Union 
membership; OECD and G20 membership; and whether the Member considers itself a developing 
country or has not declared itself a developing country in its accession to th e WTO.  
19. The Federal Register notice identified each factor considered by USTR and listed each Member 
that had qualified as least developed or developing for the purposes of the United States' 
countervailing duty law. The United States reiterated that the up date was limited to two aspects of 
its countervailing duty law, namely, the de minimis  and negligibility thresholds and the 
Federal  Register notice affirmed the designation had "no effect on how that Member may be 
classified with respect to any other law".  
20. Brazil  expressed its concerns over the updated legislation of the United States which was 
notified in document G/SCM/N/1/USA/1/Suppl.30 noting that Brazil and other developing Members 
were no longer entitled to the provisions of the SCM Agreement regardin g de minimis  subsidization 
and negligible volume of subsidized imports. Brazil encouraged the United States to review this 
legislation and stated that WTO's well -established practice of self -determination of developing 
country status should be observed.  
21. Brazil recalled that it had started to forgo SDT for future negotiations. According to Brazil, 
however, the SDT to which it had the right in the existing Agreements was a result of mutual 
concessions and should not be unilaterally overruled.  
22. Brazil also expr essed its concerns over the notification in document 
G/SCM/N/1/USA/1/Suppl.31 regarding the determination of benefit and specificity in the 
countervailing duty proceedings involving currency undervaluation actions. According to Brazil, 
currency undervaluat ion could not be considered a subsidy under Article 1 of the SCM Agreement as 
it neither corresponded to any of the types of financial contribution listed nor conferred a benefit. In 
addition, Brazil was of the view that it did not fulfil the requirements with respect to the specificity 
as exchange rates were horizontal factors in an economy that were used as price references by all 
actors. Brazil encouraged the United States to review its measure to align it with the relevant 
provisions of the SCM Agreemen t. 
23. The United States  stated that on 4 February 2020, the Department of Commerce (Commerce) 
had published new regulations titled Modification of Regulations Regarding Benefit and Specificity in 
Countervailing Duty Proceedings to further clarify and provide guidance with respect to the 
determinations of specificity, undervaluation, and benefit when examining potential subsidies 
resulting from the exchange of undervalued currency.  The proposed rule had been published on 
28 May 2019, to provide a period for pub lic comment and all received comments had been evaluated 
and considered and then addressed in the final published regulations on 4 February 2020. The 
effective date of those regulations was 6 April 2020.  
24. One modification clarified that enterprises that buy  or sell goods internationally or enterprises 
in the traded goods sector of an economy could comprise a "group " of enterprises for specificity 
purposes. Further, the new regulations provided guidance for Commerce 's determinations of 
undervaluation and bene fit which would include three primary parts and prerequisites before 
calculating a potential benefit: (i) multilateral undervaluation; (ii) government action on the 
exchange rate; and (iii) bilateral undervaluation.  
25. In determining whether there was underva luation, Commerce would normally consider the 
gap between the country 's real effective exchange rate (REER), on the one hand, and the REER that 
achieved an external balance over the medium term that reflected appropriate policies, or the 
"equilibrium REER ", on the other hand.  G/SCM/M/115  
 
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  26. Commerce would normally make an affirmative finding of currency undervaluation only if there 
had been government action on the exchange rate that contributed to an undervaluation of the 
currency. Once it had made an affirmative finding  of currency undervaluation, Commerce would 
normally determine the existence of a benefit after examining the difference between (i) the nominal, 
bilateral USD rate consistent with the equilibrium REER, and (ii) the actual nominal, bilateral 
USD rate durin g the relevant period.  
27. In case there was a bilateral gap, Commerce would determine the amount of benefit by 
comparing the amount of the domestic currency that the recipient had received during the period of  
investigation to the amount it would have received absent the undervaluation. As with other subsidy 
programmes investigated, for the benefit calculations, Commerce would incorporate firm -specific 
information to arrive at a subsidy program rate for the companies under investigation.  
28. Under the regul ations, Commerce would request the United States Department of Treasury to 
provide its evaluation and conclusion with respect to whether the currency was undervalued and 
would normally defer to Treasury 's expertise on currency undervaluation.  
29. China  reitera ted its concerns regarding the United States' new countervailing duty legislation 
which allowed Commerce to initiate countervailing duty investigations on so -called currency 
undervaluation programme against economies with single exchange rate system. The n ew regulation 
empowered Commerce and the United States Department of Treasury to determine the equilibrium 
REER of other currencies. Once the exchange rate of any Member's currency was lower than the 
theoretical exchange rate calculated unilaterally by the  United States, the currency might be deemed 
as undervalued and that Member would face the risk of countervailing duty investigations by the 
United States. The new regulation authorized Commerce to act beyond the scope of the 
WTO Agreements.  
30. China recalled  that Article XV of the GATT provided that the Contracting Parties shall consult 
fully with the International Monetary Fund (IMF) with respect to the problems concerning the 
exchange rate arrangements and the IMF would make the determination. Section 2 of Article IV of 
the Articles of Agreement of the IMF (IMF Agreement) authorized its members to select an exchange 
rate system of their own choice. Accordingly, the members could adopt any exchange rate 
arrangement other than gold including a floating, pegged  or any other exchange rate system. The 
IMF Agreement obliged its members to avoid manipulating exchange rates or the international 
monetary system in order to prevent effective balance of payments adjustment or to gain an unfair 
competitive advantage over  other members. Therefore, the exchange rate issue was beyond the 
jurisdiction of the WTO and the SCM Agreement did not authorize a Member to conduct 
countervailing duty investigations on other Members' exchange rate arrangements. China also 
recalled an IM F statement dated 17 July 2020 which had indicated that the relevant action of the 
United States would pose a major risk to the multilateral trade and international monetary systems.  
31. China also indicated that since the SCM Agreement did not contemplate tre ating an 
undervalued currency as a countervailable subsidy, initiation of an investigation against the so -called 
currency undervaluation programme did not conform to its provisions. A subsidy programme of the 
so-called currency undervaluation would not mee t the standard stipulated under the SCM Agreement 
with respect to financial contribution, benefit, and specificity.  
32. With respect to the issue of specificity, China noted that the new regulation allowed Commerce 
to consider enterprises that buy or sell good s internationally as comprising a group for the specificity 
purposes which would violate the specificity requirement in the SCM Agreement. China asked the 
United States to elaborate how its new regulation could reconcile with the SCM Agreement.  
33. The United States  stated that it took China's intervention seriously. With respect to the issue 
of whether its new regulation went beyond the jurisdiction of the SCM Agreement, the United States 
noted that there was nothing in the SCM Agreement or the IMF Agreement p reventing a sovereign 
member of the WTO or IMF from analysing whether an exchange involving an undervalued currency 
would constitute a countervailable subsidy under a national countervailing duty law. Commerce's 
new regulation strictly pertained to a domes tic trade remedy. It neither restricted nor infringed upon 
the IMF's authority as a multinational organization to engage in exchange rate surveillance or other 
currency related actions. The United States recalled that the SCM Agreement explicitly included 
certain currency related practices in item (b) of the Illustrative List of Export Subsidies in Annex I. G/SCM/M/115  
 
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  Therefore, it was not correct to suggest that the issue was beyond the bounds of the WTO or the 
SCM Agreement.  
34. With respect to the issue of specificity,  the United States stated that the new regulation did 
not disturb the relevant rules but clarified that companies that primarily buy or sell goods 
internationally could constitute a group as contemplated in Article 2 of the SCM Agreement. A subsidy 
would b e specific to a group if it was expressly limited to that group or if there was evidence that it 
was limited to that group as a matter of fact. The United States did not expect that Commerce would 
automatically find specificity in countervailing duty inves tigations under the new regulation.  
35. Finally, with respect to the Brazil's comments on financial contribution, the United States noted 
that the form of financial contribution would be considered as a transfer of funds in accordance with 
Article 1 of the SCM  Agreement.  
36. China  thanked the United States for its elaboration and noted that it would follow the 
United  States' practices in future cases.  
37. The Committee took note  of the notifications, statements, questions, and answers.  
1.2  Review of notifications of new or  amended legislation or regulations with outstanding 
written questions  
1.2.1   Plurinational State of Bolivia (G/ADP/N/1/BOL/3 - G/SCM/N/1/BOL/3 - 
G/SG/N/1/BOL/2)  
38. Written questions were posed regarding this notification and can be found in document:  
• G/ADP/Q1/BOL/4 - G/SCM/Q1/BOL/4 - G/SG/Q1/BOL/1 – Submitted by the United States  
39. The Chair  noted that these questions have been pending since the Committee meeting of 
October 2020.  
40. Written answers to the United States' written questions were provided and c an be found in 
document:  
• G/ADP/Q1/BOL/5 – G/SCM/Q1/BOL/5 – G/SG/Q1/BOL/2 – Replies to the United States  
41. A written follow -up question was posed regarding this notification and can be found in 
document:  
• G/ADP/Q1/BOL/6 – G/SCM/Q1/BOL/6 – G/SG/Q1/BOL/3  
42. The Chair indicated that the follow -up question by the United States would be taken up in the 
Committee on Anti -Dumping Practices.  
43. Written answer to the United States' written follow -up question was subsequently provided 
and can now be found in document:  
• G/ADP/Q1 /BOL/7 - G/SCM/Q1/BOL/7 - G/SG/Q1/BOL/4 - Reply to the United States  
1.2.2   Cameroon (G/ADP/N/1/CMR/1/Suppl.1 – G/SCM/N/1/CMR/1/Suppl.1 – 
G/SG/N/1/CMR/1/Suppl.1)  
44. Written questions with respect to this notification can be found in:  
• G/ADP/Q1/CMR/3 – G/SCM/Q1/CMR/3 – G/SG/Q1/CMR/3 – questions from the 
United  States  
45. The Chair  noted that these questions have been pending since the Committee meeting of 
October 2014.  G/SCM/M/115  
 
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  46. Cameroon was not present at the time.  Oral answers were not provided at the meeting, 
nor had written answers been received to date.  
1.2.3   United Kingdom (G/ADP/N/1/GBR/1 - G/SCM/N/1/GBR/1 - G/SG/N/1/GBR/1, 
G/ADP/N/1/GBR/1/Suppl.2 - G/SCM/N/1/GBR/1/Suppl.2 – and 
G/ADP/N/1/GBR/1/Suppl.4 - G/SCM/N/1/G BR/1/Suppl.4 - 
G/SG/N/1/GBR/1/Suppl.4)  
47. Written questions regarding these three legislative notifications were posed and can be found 
in documents:  
• G/ADP/Q1/GBR/1 - G/SCM/Q1/GBR/1 – G/SG/Q1/GBR - Submitted by the United States 
and were posed with respect to  the notification contained in document 
G/ADP/N/1/GBR/1  - G/SCM/N/1/GBR/1 – G/SG/N/1/GBR/1  
• G/ADP/Q1/GBR/2 - G/SCM/Q1/GBR/2 – Submitted by the United States and were posed 
with respect to the notification contained in document G/ADP/N/1/GBR/1/Suppl.2 - 
G/SCM/N/1/GBR/1/Suppl.2  
• G/ADP/Q1/GBR/3 - G/SCM/Q1/GBR/3 – G/SG/Q1/GBR/3 – Submitted by the 
United  States and were posed with respect to the notification contained in document 
G/ADP/N/1/GBR/1/Suppl.4 - G/SCM/N/1/GBR/1/Suppl.4 – G/SG/N/1/GBR/1/SUPPL.4  
48. Written answers to the United States' written questions were provided and can be found in 
documents:  
• G/ADP/Q1/GBR/4 - G/SCM/Q1/GBR/4 – G/SG/Q1/GBR/4 – Replies to the United States  
• G/ADP/Q1/GBR/5 - G/SCM/Q1/GBR/5 – Replies to the Unit ed States  
• G/ADP/Q1/GBR/6 - G/SCM/Q1/GBR/6 – G/SG/Q1/GBR/6 – Replies to the United States  
49. The Committee took note  of the notifications, statements, questions, and answers.  
2  NATIONAL LEGISLATION – CONTINUING REVIEW OF LEGISLATIVE NOTIFICATIONS 
PREVIOUSLY REVI EWED BY THE COMMITTEE  
2.1  Costa Rica ( G/ADP/N/1/CRI/3/Suppl.1 - G/SCM/N/1/CRI/4/Suppl.1 - 
G/SG/N/1/CRI/4/Suppl.1)  
50. Written follow -up questions were posed regarding this notification and can be found in 
document:  
• G/ADP/Q1/CRI/17 - G/SCM/Q1/CRI/17 - G/SG/Q1/CRI/1 1 – Submitted by the United States  
51. Written answers to the United States' follow -up questions were provided and can be found in 
document:  
• G/ADP/Q1/CRI/18 - G/SCM/Q1/CRI/18 - G/SG/Q1/CRI/12 – Replies to the United States  
2.2  Ghana (G/ADP/N/1/GHA/2 - G/SCM/N/1/GHA/2 - G/SG/N/1/GHA/2)  
52. Written follow -up questions were posed regarding this notification and can be found in 
document:  
• G/ADP/Q1/GHA/3 - G/SCM/Q1/GHA/3 - G/SG/Q1/GHA/3 – Submitted by the United States  
53. The Chair noted that th e notification and the questions would be taken up in the Committee 
on Anti -Dumping Practices.  
54. Ghana was not present at the time . Oral answers were not provided at the meeting, nor 
had written answers been received to date.  G/SCM/M/115  
 
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  2.3  Kenya (G/ADP/N/1/KEN/3 - G/SCM/N /1/KEN/3 - G/SG/N/1/KEN/2)  
55. Written follow -up questions were posed regarding this notification and can be found in 
document:  
• G/ADP/Q1/KEN/6 - G/SCM/Q1/KEN/6 - G/SG/Q1/KEN/5 AND G/ADP/Q1/KEN/6/Corr.1 – 
G/SCM/Q1/KEN/6/Corr.1 – G/SG/Q1/KEN/5/Corr.1 – Submitt ed by the United States  
56. The Chair  noted that these questions have been pending since the Committee meeting of 
October 2020. The Chair  also noted that the notification and the questions would be taken up in the 
Committee on Anti -Dumping Practices.  
57. Kenya was  not present at the time . Oral answers were not provided at the meeting, nor 
had written answers been received to date.  
2.4  Liberia (G/ADP/N/1/LBR/1)  
58. Written follow -up questions were posed regarding this notification and can be found in 
document:  
• G/ADP/Q1/LB R/3 - G/SCM/Q1/LBR/3 – Submitted by the United States  
59. The Chair  noted that this notification was on the agenda as the questions had been circulated 
double -symbolled also as an SCM document. He also noted that the notification and the questions 
would be tak en up in the Committee on Anti -Dumping Practices.  
60. No written answers have been received to date . 
61. The Chair, recalling the Committee's agreed procedures, informed Members that for new 
legislative notifications to be placed on the agenda of the fall 2021 meeting, they should be circulated 
in all three languages by 13 September 2021. Shortly after that date, the Secretariat would circulate 
a document informing Members of all legislative notifications to be reviewed at the next autumn 
meeting. Pursuant to pa ragraph 8 of document G/SCM/W/293/Rev.1, all unanswered written 
questions pertaining to new legislative notifications reviewed at the meeting, as well as the subject 
notifications, shall automatically be retained on the agenda of the next Committee meeting  and on 
the agendas of subsequent Committee meetings until written answers are submitted.  
62. In order to place previously -reviewed legislation on the agenda of the autumn meeting for 
further review, written questions must be submitted to the Member concerned and the Secretariat, 
not later than 13 September 2021; and written answers to such questions must be submitted to the 
Member concerned and the Secretariat, not later than 11 October 2021. The Secretariat would 
circulate the usual triple -symbolled document containing these and the other deadlines shortly after 
the meeting.1 
63. The Chair expressed concern that some Members had yet to submit any notification concerning 
legislations. He underlined the importance of these notifications in terms of transparency and  
recalled that for many Members all that would be required was a single nil notification. For any 
Members that conducted countervailing duty investigations but had not yet notified their legislation, 
it was all the more important for the Committee to have the opportunity to review and ask questions 
about that legislation. Therefore, the Chair encouraged all Members that had not yet made a 
legislative notification to do so as promptly as possible.  
64. The Chair referred to the document G/SCM/N/18/Add.54 which co ntained the latest revision 
of the list of authorities competent to initiate and conduct investigations within the meaning of 
Article  25.12 of the SCM Agreement and invited all Members with such an authority to submit the 
required notification pursuant to Article 25.12 of the SCM Agreement, or to review and update as 
necessary their previously -submitted notifications.  
 
1 G/ADP/W/50 7 – G/SCM/W/ 582 – G/SG/W/ 252. G/SCM/M/115  
 
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  65. The Committee took note  of the notifications, statements, questions, and answers.  
3  SEMI -ANNUAL REPORTS OF COUNTERVAILING DUTY ACTIONS (ARTICLE  25.11) – 
G/SCM/N/371 AND G/SCM/N/371/SUPPL.1  
66. The Chair  recalled that document G/SCM/N/371 and G/SCM/N/371/Suppl.1 had invited all 
Members to submit their semi -annual reports under Article 25.11 of the SCM  Agreement of 
countervailing duty actions taken dur ing the period 1 July through 31 December  2020. Document 
G/SCM/N/371/Add.1 provided the current status of Members' reporting for that period. Paragraph 1 
of the document listed those Members reporting countervailing duty actions during the period. 
Paragrap h 2 listed Members that had notified having taken no countervailing duty action during the 
period. Paragraph 5 of the document listed the 45  Members that had submitted a one -time 
notification that they had no investigating authority, had taken no counterva iling actions to date, 
and did not anticipate taking any such actions in the foreseeable future.  
67. One-time notifications served a useful transparency function, as they assisted non -active 
Members to meet their notification requirements in a streamlined way.  Any eligible Member that had 
not already done so thus was urged to submit a one -time notification. The Secretariat was ready to 
assist any Member in this regard.  
68. Unfortunately, as listed in paragraphs 3 and 4 of the document, a number of Members had 
not submitted their semi -annual reports. The Chair urged those Members to submit their reports as 
soon as possible.  
69. No comments or questions were raised concerning the semi -annual reports of Australia, Brazil, 
Canada, European Union, India, Mexico, Peru, Turkey , and Viet Nam.  
70. On the semi -annual report of China , Australia  raised concerns over China's countervailing 
duty investigation on imports of wine from Australia. Australia thanked the Chinese delegation for 
the opportunity to hold further constructive bilateral discussion in the week of 19 April 2021. It 
explained tha t China initiated the investigation on 31 August 2020 and issued a preliminary 
affirmative determination on 10 December 2020 with provisional measures set in the range of 6.3% 
to 6.4%. China issued its final determination on 26 March 2021 and upheld the co nclusions of the 
preliminary determination but decided not to impose countervailing duties to avoid double remedies 
given its parallel anti -dumping investigation where it had imposed final measures in the range of 
116.2% to 218.4%. These duties have effect ively ceased Australian exports to the Chinese market. 
Notwithstanding that China ultimately did not impose countervailing duties, Australia had concerns 
about a number of procedural and substantive aspects of this investigation.  
71. Australia indicated that i t was still examining the final determination but highlighted some 
specific areas of concern. Australia respected China's right to investigate alleged subsidization 
consistent with WTO rules but did not believe that the investigation was justified or prope rly initiated. 
In particular, there was a lack of proper identification of the domestic industry and the legal standing 
of the applicant. It also added that the product under investigation was not properly identified. This 
had flow -on implications for iden tifying domestic production and consumption as part of the injury 
analysis.  
72. The Australian Government and the four sampled Australian exporters fully cooperated in the 
investigation and provided complete replies in Chinese to the respective questionnaires including 
supplemental questionnaires issued on 1 February 2021. China used facts available which was both 
unwarranted and disregarded in part or in total the information supplied.  
73. Australia also raised concerns that its ability to respond to the disclosur e report was 
significantly constrained by China's Ministry of Commerce (MOFCOM) not having provided Australia 
with complete disclosure of all the essential facts under consideration. Rather, it received in 
piecemeal fashion distributed extracts from what A ustralia surmised at the time must have been a 
fuller disclosure report. In Australia's view, this undermined its procedural fairness entitlements.  
74. According to Australia, China also erroneously claimed that countervailable subsidies exist. It 
was also con cerned over the inclusion of a substantial number of unrelated subsidy programmes in 
the course of the investigation. Assessments were made in relation to six of the 37 programmes G/SCM/M/115  
 
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  alleged to have benefitted the Australian wine industry. Similar to the barl ey investigation, which 
was raised at the previous meetings of the Committee, there appeared to be a practice of seeking 
information about a range of programmes, including programmes clearly unrelated to the product 
under investigation, which were not exam ined during the investigation. Australia did not know the 
purpose of this information gathering and how such information was used by China and further 
questioned how this was considered to afford due process in an investigation.  
75. Australia was also concerne d over the apparent misapplication of sampling, specifically as far 
as purpose, rationale and application are concerned. Australia explained that China apparently drew 
adverse inferences that registered but non -sampled companies were non -cooperative and us ed facts 
available on the basis that not all the non -sampled companies submitted questionnaire replies. 
Australia continued to remain open to further discussions with China on this case to find a mutually 
beneficial solution.  
76. The United States  expressed it s concerns regarding China's final findings in the countervailing 
duty investigation on its exports of N -propanol. The United States recalled that at the previous 
meeting of the Committee it had noted that China had made numerous methodological errors whic h 
appeared to be inconsistent with its obligations under the SCM Agreement. Despite that, China made 
no changes in its preliminary findings and continued to make the same erroneous decisions in its 
final determinations published on 27 November 2020. China found that dozens of subsidy 
programmes alleged to confer countervailable subsidies to the oil and natural gas industries in the 
United States passed through in their entirety to producers of N -propanol, resulting in subsidy rates 
exceeding 30 percent. Chi na's findings failed to consider that N -propanol was a chemical product 
that was two stages downstream from oil and natural gas and to conduct a proper pass -through 
analysis. In addition, China determined that the mere existence of subsidization in a secto r was 
sufficient to deem the entire sector distorted and domestic prices unsuitable for benchmark 
purposes. China's conclusions lacked evidentiary support and contradicted other record evidence 
concerning the relative insignificance of any upstream subsidi zation on the downstream products. 
China did not address the comments from the United States or respondent companies in a 
meaningful way. The United States continued to be concerned by China's findings in this case and 
its future decisions in other ongoing  countervailing cases on petrochemical products from the 
United  States and urged China not to make the same methodological errors.  
77. In response to Australia, China  explained that it had initiated the countervailing duty 
investigation on imported wine from Australia on 21 August 2020 at the request of its domestic 
industry. China had issued its final determination on 26 March 2021 and determined subsidy rates 
of 6.3%  and 6.4%. However, to avoid double remedies, China had decided not to impose 
countervailing duties. China stated that its investigating authority had provided opportunities for all 
interested parties to present their comments including the Australian Gove rnment and exporters 
during the investigation and that the investigation procedure was fully in line with Chinese and 
WTO rules.  
78. Regarding the technical issue raised by Australia concerning MOFCOM's disclosure, China 
stated that its investigating authority  had disclosed the essential facts to Australia and other relevant 
parties in March 2021 before making its final decision. China noted that, in line with the Chinese 
laws and the SCM Agreement, its investigating authority had given all parties reasonable t ime to 
comment and that it had taken into consideration their comments.  
79. Regarding the issue of sampling, China stated that the investigating authority gave all 
interested parties the opportunity to register and sent them sampling questionnaire. Based on th at, 
the investigating authority chose four companies for the sampling purposes and sent them the full 
questionnaires. Companies which did not register or answer the sampling questionnaire were 
referred to as uncooperative and in accordance with the Chinese  law, the authority determined the 
countervailing duty rates based on the best information available. The investigating authority 
provided detailed explanation regarding the use of facts available in the final disclosure.  
80. China stated that many of the comm ents in the Australian Government's responses were lack 
of Chinese translation and in accordance with the Chinese law, the investigating authority could only 
accept responses provided in Chinese. China also noted that the Australian Government had provided  
the relevant information in its responses to the anti -dumping investigation which had been initiated 
on 18 August 2020. The anti -dumping and countervailing duty investigations were independent and G/SCM/M/115  
 
- 11 - 
 
  separate investigations therefore the investigation author ity did not use the information submitted 
for the anti -dumping investigation.  
81. Regarding the issue of gathering information on 37 subsidy programmes, China explained that 
those programmes had been referred by the Chinese domestic industry but during the inv estigation 
only six of them had been investigated and subject to determination.  
82. In response to the United States, China stated that the investigation on N -propanol had been 
conducted in accordance with its domestic laws and regulations. Accordingly, the ri ghts of interested 
parties were properly ensured. The investigating authority obtained information from interested 
parties by questionnaires, comments, and on -the-spot verifications. The investigating authority 
reminded all interested parties of the import ance of cooperation as well as the consequences of non -
cooperation. The authority also gave reasonable consideration on the facts made by the exporters 
and the United States Government. Despite the time extension granted, however, some necessary 
informatio n, including the subsidy conferred to the oil and natural gas industry, and the details of 
some subsidy programmes were not submitted by the interested parties. In order to complete the 
investigation within the time limits, the authority had to make its de terminations on the basis of 
facts available. In terms of benchmark prices, the authority obtained the relevant information from 
open channels and disclosed it so that the interested parties could make comments. The essential 
facts were shared with the int erested parties and comments received were considered carefully by 
the investigating authority before the final determination. Therefore, the final determination was 
objective, fair, impartial and consistent with the Chinese laws and WTO rules.  
83. Regarding t he semi -annual report of the United Kingdom , China  expressed its concern over 
the continued application of the European Union trade remedy measures and the transition reviews 
conducted by the United Kingdom after Brexit. China believed that the United King dom's practice 
was inconsistent with the WTO provisions and infringed the legitimate interests of relevant Members. 
In a notice by the European Union regarding the application of trade remedy measures in force 
following the withdrawal of the United Kingdom , it was clearly stated that all trade remedy measures 
were applicable in 27 European Union member states as of 1 January 2021. Therefore, the 
United  Kingdom could no longer be part of the authority to apply those measures. China requested 
that the United Kingdom terminate all those measures originally taken by the European Union as 
well as the transition reviews. China was of the view that the United Kingdom's investigating 
authority could decide whether to impose trade remedy measures after properly initi ating an 
investigation upon the request of its domestic industry.  
84. The Russian Federation  expressed its systemic view on the United Kingdom's transitional 
reviews noting that in order to make a measure specific for the United Kingdom, the United Kingdom 
should make an analysis similar to the one made in the original investigation. The Russian Federation 
hoped that the United Kingdom would carry out an objective analysis within these transitional 
reviews.  
85. In response, the United Kingdom stated that it had ret ained certain definitive trade remedy 
measures applied before the end of the United Kingdom -European Union transition period and in 
respect of which the United Kingdom held an interest. These measures had been established based 
on an investigation covering  the entire territory of the European Union, including the 
United  Kingdom. Therefore, they have been maintained in respect of the United Kingdom territory 
as of the end of the transition period. The United Kingdom explained that it determined which 
measure s should be retained based on evidence presented by the United Kingdom's industries and 
all interested parties. The relevant assessment was based on objective evidence relating to specific 
criteria, including a market share threshold for the United  Kingdom -based producers of the product 
in question of more than 1%. The United Kingdom underlined that it was committed to maintain a 
fair and transparent approach. Its investigating body would conduct objective and evidence -based 
transition reviews of the retain ed measures. These reviews would determine whether the measures 
remained necessary to offset subsidization and whether injury of the United Kingdom's domestic 
industries would recur in case the measures were lifted. This could result in the measures being 
terminated, amended, or maintained. Until the conclusion of the reviews, the measures would be 
maintained. Its investigating body had initiated three transition reviews on countervailing duties two 
of which were captured in its semi -annual report. The Unit ed Kingdom stated that all reviews could 
be tracked fully digitally and encouraged all interested parties to engage as appropriate.  G/SCM/M/115  
 
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  86. Regarding the semi -annual report of the United States , the Russian Federation  expressed its 
concerns over two countervailing  duty investigations on fertilizers and seamless pipes initiated in 
summer 2020 by Commerce. Despite the voluminous evidence provided by the Russian Government 
and the respondent companies which had proved that the Russian exporting industry had not 
receiv ed any countervailable subsidies, Commerce introduced definitive countervailing duties against 
Russian producers of fertilizers in April 2021. The final determination regarding seamless pipes was 
scheduled to be announced in July 2021. According to the Rus sian Federation, Commerce's analysis 
in those investigations fell short of the legal requirements established by the SCM Agreement, with 
respect to the existence and amount of subsidies, determination of public bodies and specificity, in 
particular. Commer ce adopted overly extended readings of those concepts which were not in line 
with the standards established and developed by the SCM Agreement and WTO jurisprudence.  
87. With respect to the identification of public bodies, Commerce concluded that the entities 
allegedly administering subsidy programmes were public bodies simply on the basis of the 
Russian  Federation's ownership of a share in those entities. This approach was against the settled 
WTO jurisprudence which stated that "the mere ownership or control o ver an entity by a government 
without more is not sufficient to establish that the entity is a public body."  
88. With respect to the identification of de facto  specificity, the Russian Federation stated that 
Commerce took into account only the number of actual  recipients of the alleged government stipend 
disregarding the commercial realities in the economy in question or the corresponding level of the 
economic activities. This overly superficial approach was not in line with Article 2.1(c) of the 
SCM Agreement as also elaborated by the WTO jurisprudence. In United States – Countervailing 
Measures (China), the Appellate Body held that the mere fact that the financial contribution has 
been provided to certain enterprises would not be sufficient to demonstrate that  such contributions 
have been granted pursuant to a plan or scheme. According to the current approach of Commerce, 
any programme would be destined to be found specific due to the limited number of the recipients 
which was not the envisaged outcome by the S CM Agreement. The Russian Federation urged the 
United States to abide by its obligations under the SCM Agreement and to end and revise those 
approaches.  
89. China  expressed its concern over the practice of the United States in countervailing duty 
investigation s with respect to the so -called provision of inputs for less than adequate renumeration 
(LTAR) programme noting that there was no such a programme in China. In order to find any 
unwritten subsidy programme the investigating authority had to demonstrate a s ystemic series of 
actions proving the existence of a plan or a scheme pursuant to which subsidies had been provided.  
90. In addition, China expressed its firm opposition to the use of external benchmarks in 
countervailing duty investigations without reviewing and analysing the prevailing conditions in China 
for the goods and services in question. In many of the investigations Commerce chose to ignore the 
Government of China's responses and applied adverse facts available concluding that the input 
market in Chin a was distorted. In many of its determinations, Commerce simply said that the 
Government of China had failed to provide replies to the questionnaires in which it asked questions 
such as the total number of producers; the total volume and value of Chinese d omestic consumption 
and production of the input material; the percentage of the domestic consumption accounted for by 
the domestic production; the volume and value of imports; the percentage of the total volume and 
value of domestic production that was acc ounted for by companies in which the government 
maintained a majority ownership or controlling interest either directly or through other government 
entities. China stated that it was not easy for any market economies to answer all of the questions. 
While t he central government might provide some of the answers, in most of the cases concerning 
inputs that were not so common it would not be easy. In such cases, Commerce applies adverse 
facts available on the ground that the Government of China has not provide d answers to all questions 
leading to a result that is extremely unfair to responding companies.  
91. For example, in the first administrative review of the measures on aluminium foil, Commerce 
chose to use alloy aluminium products' price under the whole HS cod e sub -heading of 7606.12 which 
contains all kinds of alloy aluminium including those used for aircrafts and cars. While the price of 
aluminium foil stock used by the producers in question was around USD 360 per tonne, the 
processing cost of aluminium sheet s to produce aircrafts was as high as USD 7,000 per tonne. As a 
result, the Chinese company was subject to rates of 33.36% and 31.41% for 2017 and 2018, 
respectively regarding the LTAR programme. China urged the United States to comply with its G/SCM/M/115  
 
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  internation al obligations taking into account the prevailing market conditions and avoid using 
unreasonable and unfair benchmarks.  
92. Morocco  regretted that the United States had decided to impose countervailing measures on 
the imports of phosphate fertilizers. Despite all the difficulties caused by the COVID -19 pandemic, 
both the government and exporters fully cooperated during the investigation. The determinations 
by the investigating authority, however, were not consistent with the United States' obligations 
under the  SCM Agreement. First, Morocco did not agree with the United States regarding the 
provision of goods or services for less than adequate renumeration with respect to the mining rights. 
Second, the identification of the benchmark price for the good or servic e that was provided should 
reflect the factual situation in the country in question. In that case, the investigating authority has 
unduly used a benchmark which did not allow it to reach an appropriate amount for the alleged 
subsidy. As a result, the calcu lations applied went far beyond the amount of subsidies. Third, with 
respect to injury, the investigating authority stated that the exports from Morocco had been allegedly 
at a lower price causing injury to the domestic industry of the United States despit e all the evidence 
showing that the majority of exports had been at acceptable prices. Furthermore, the investigating 
authority did not properly identify the causality by analysing the trade effects of other factors 
identified. Based on these points, Moroc co was of the view that the measures imposed by the 
United  States were not acceptable and asked the United States to remove those unfair measures 
which have been causing injury to Moroccan exports.  
93. With respect to the comments from the Russian Federation r egarding the countervailing 
measures on phosphate fertilizers, the United States  stated that Commerce's identification of 
Gazprom as a public body was fully consistent with its WTO obligations and the standard for public 
body as interpreted by the Appellat e Body. Majority of the shares of Gazprom was owned by the 
Russian Government which had designated that company as a strategic enterprise because of its 
important role in carrying out the government's policy objectives. The company's board of directors, 
majority of which were appointed by the government, included former high -ranking officials such as 
a former prime minister. The government also set the prices for natural gas produced and supplied 
by Gazprom and its affiliates for all industrial consumers an d households. These and other factors 
had been explained in detail in Commerce's findings in the cold -rolled steel and the phosphate 
fertilizer investigations. Based on these facts and being fully in line with Article 1.1 of the 
SCM Agreement, Commerce con cluded that the government had meaningful control over Gazprom 
and it was a public body. According to the United States, whether and to what extent an entity 
engages in commercial profit -seeking activity was not dispositive of whether that entity was a pub lic 
body. Commerce's finding that RussNeft was a public body was also fully consistent with its law and 
the SCM Agreement as explained in the final determination regarding the phosphate fertilizers 
investigation. Commerce's application of facts available i n making this finding was based on the 
Russian Government's failure to answer questions contained in the input producer appendix.  
94. The United States noted that the finding of the provision of natural gas to producers of 
phosphate fertilizers as de facto  specific was supported by the recorded facts and consistent with 
Article 2 of the SCM Agreement. As explained in the final determination, the agro -chemistry sector 
which included producers of phosphate fertilizers was a predominant user of natural gas and one  of 
the top five consuming groups during the period of investigation.  
95. With respect to the comments from China, the United States noted that most of those 
comments were related to the dispute between the United States and China in DS437. The 
United  States h ad publicly explained the fundamental errors in the findings and analysis of the 
Appellate Body reports. The information requested in an investigation was necessary to conduct a 
full analysis of the programmes investigated and the United States would not r epeat all of its 
concerns regarding the Appellate Body reports in that dispute. According to the United States, it 
would be more appropriate to discuss subsidy -related issues in that dispute bilaterally. It also noted 
that an advance notice of the issues t o be raised would be helpful for an in -depth discussion.  
96. Regarding the comments from Morocco, the United States noted that the final determinations 
made by Commerce and International Trade Commission fully explained the decisions made with 
respect to subsi dy and injury related issues.  
97. The Committee took note  of all semi -annual reports submitted as well as the statements 
made.  G/SCM/M/115  
 
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  4  PRELIMINARY AND FINAL COUNTERVAILING DUTY ACTIONS: NOTIFICATIONS 
(ARTICLE 25.11)  
98. The Chair reported that since the Committee's October 2020 regular meeting, notifications 
under Article 25.11 of the SCM Agreement with respect to preliminary and final countervailing duty 
actions had been received from Australia, Canada, China, the European Union,  India, Mexico, the 
United Kingdom, the United States, and Viet Nam. Those notifications were listed in documents 
G/SCM/N/369, G/SCM/N/370, G/SCM/N/373, G/SCM/N/374, G/SCM/N/375, and G/SCM/N/376.  
99. No Member took the floor regarding those notifications.  
100.  The Committee took note  of the notifications.  
5  PROCEDURES FOR REVIEW OF 2021 NEW AND FULL SUBSIDY NOTIFICATIONS  
101.  The Chair recalled that the 2021 new and full notifications were due on 30 June, and thus would 
be subject to review in special meetings beginning wi th the one in fall 2021. The Committee thus 
needed to decide on procedures for reviewing those notifications. During the last six notification 
cycles, the new and full notifications had been reviewed on the basis of the procedures set forth in 
G/SCM/117, f irst adopted in 2005. The Chair proposed that the Committee agree to conduct the 
review of the 2021 new and full notifications on the basis of the same procedures.  
102.  The Committee so decided . 
6  ARTICLE 27.4 EXTENSIONS OF THE TRANSITION PERIOD FOR THE ELIMINATI ON OF 
EXPORT SUBSIDIES  
103.  The Chair  recalled that Members that had been granted extensions under Article 27.4 pursuant 
to the procedures in WT/L/691 were required, under paragraph 2(c) of the procedures, to submit 
transparency notifications in respect of each  year of the final two -year phase -out period, i.e. calendar 
years 2014 and 2015. The deadline for the notification pertaining to 2014 was 30  June 2015. A 
reminder to this effect had been circulated in document G/SCM/N/290/INF.  
104.  Antigua and Barbuda, Belize, Costa Rica, Dominica, Dominican Republic, El Salvador, 
Guatemala, Jamaica, Jordan, Mauritius, Papua New Guinea, Saint Kitts and Nevis, Saint Lucia, and 
Saint Vincent and the Grenadines had submitted these notifications, which had been circulated in 
the G/S CM/N/290 series.  
105.  Furthermore, given that 2015 was the final year of the two -year phase -out period pursuant 
to the previously mentioned procedures, the Members with extensions needed to have completed 
the elimination of their export subsidies by 31 December  2015. They also had to provide a final 
transparency notification in respect of calendar year 2015 not later than 30 June 2016. A reminder 
concerning that final round of Article 27.4 –related notifications had been circulated in document 
G/SCM/N/299. Previo usly the  Secretariat had prepared a room document indicating the current 
status of notifications and of actions reported by Members with extensions under Article  27.4.2 
106.  To date, fifteen of the beneficiary Members out of a total of nineteen had submitted t heir final 
transparency notifications which had been circulated in the G/SCM/N/299 series. The Chair reminded 
other four Members with extensions, namely, Barbados, Fiji, Panama, and Uruguay to submit their 
final transparency notifications as soon as possib le. The deadline for the elimination of the export 
subsidies had been more than five years earlier while for submitting the final notification had been 
almost five years earlier. He emphasized the importance for the system that both the Members 
benefit fro m extensions complete their compliance with the corresponding substantive and 
transparency obligations.  
107.  The United States  noted the success of the procedures under Article 27.4 which illustrated 
how developed and developing Members could work together to r esolve problems. The United States 
congratulated those Members which had met all the requirements of the extension mechanism and 
 
2 RD/SCM/36/Rev. 4. G/SCM/M/115  
 
- 15 - 
 
  urged the remaining four Members to terminate their programmes and provide their final 
transparency notification as required un der the extension mechanism.  
108.  New Zealand  noted that this agenda item had been before the Committee for a number of 
years and it strongly encouraged those Members to submit their outstanding notifications prior to 
the next meeting of the Committee. New Zeal and requested to keep this item on the agenda for the 
fall meeting.  
109.  Panama  indicated that it would provide its notification later.  
110.  The Chair  noted that the Committee would revert to that issue at the next meeting.  
111.  The Committee took note  of the statements made.  
7  IMPROVING THE TIMELINESS AND COMPLETENESS OF NOTIFICATIONS AND OTHER 
INFORMATION FLOWS ON TRADE MEASURES UNDER THE SCM AGREEMENT  
112.  The Chair  recalled that since the request of the Chairman of the Trade Policy Review Body in 
spring 2009, the Committee had been discussing, at formal and informal meetings, "ways to improve 
the timeliness and completeness of notifications and other information flo ws on trade measures". 
The substance of those discussions was reflected in the minutes of the previous meetings.  
113.  The Chair recalled that at Committee's October 2020 meeting a number of Members had 
indicated their willingness to continue discussions on ways  to improve timeliness and completeness 
of notification obligations under the SCM Agreement, with the notification of subsidies being the 
most fundamental. In this regard, there were two topics to cover under this agenda item, (i) the 
status of Members' no tifications of subsidies and (ii) the US proposal regarding a written process for 
questions and answers under Articles 25.8 and 25.9 of the SCM Agreement.  
114.  Regarding the status of subsidy notifications, the Chair noted that the Secretariat had 
prepared and updated a background note at the request of Members, providing a snapshot of the 
level of compliance with the various notification obligations under the SCM Agreement since 1995, 
the most recent of which had been circulated in document G/SCM/W/546/Rev.12.  
115.  The Chair noted that Members were required to submit their 2019 new and full notifications 
by 30 June 2019. The previous Chair had called for an open -ended informal meeting before that 
deadline to provide an update on the state of compliance with subsidy n otification obligations. At 
the same meeting the Secretariat had informed Members about the technical assistance offered on 
subsidy notifications. In addition, she sent individual reminder letters to the delegations of Members 
who had at least one pending new and full subsidy notification in June 2020. However, only three 
Members had submitted their 2019 new and full subsidy notification since the last meeting of the 
Committee in October 2020.  
116.  Despite all the efforts, unfortunately, the chronic low complia nce with this fundamental 
transparency obligation constitutes a serious problem in the proper functioning of the Agreement. 
The Chair recalled that at previous meetings Members had stressed the importance of the 
information provided through subsidy notific ations and the value of complying with the relevant 
provisions of the SCM Agreement. Members also had recommitted to implementing existing 
notification obligations under Article 25.3 of the SCM Agreement in the Ministerial Decision of 
13 December  2017.  
117.  Despite Ministers' recommitment to the notification obligation as well as various reminders 
from the previous Chairs of the Committee, the level of compliance with subsidy notification 
obligation remained low. Eighty Members had not made their 2019 new and fu ll subsidy notifications. 
Sixty-seven Members still had not made their 2017 new and full subsidy notification, although the 
deadline had been more than three years earlier. Further, fifty -seven Members still had not made 
their 2015 notifications, which had  been due more than five years earlier. Many of those Members 
either had never notified or had done so only in the distant past.  
118.  The Members that had not yet made their 2019 notifications were: Afghanistan; Angola; 
Antigua and Barbuda; Armenia; Kingdom of Bahrain; Bangladesh; Barbados; Belize; Benin; G/SCM/M/115  
 
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  Plurinational State of Bolivia; Botswana; Burundi; Cabo Verde; Cambodia; Cameroon; Central 
African Republic; Chad; Congo; Côte d'Ivoire; Democratic Republic  of Congo; Djibouti; Dominica; 
Egypt; Eswatini; Fiji; Gabon; the Gambia; Ghana; Grenada; Guinea; Guinea -Bissau; Guyana; Haiti; 
Jamaica; Kenya; the State of Kuwait; Kyrgyz Republic; Lesotho; Liberia; Lichtenstein; Madagascar; 
Malawi; Maldives; Mali; Mauritania; Mongolia; Mozambique; Myanmar; Nepal; Nicaragua; Niger; 
Nigeria; Oman; Pakistan; Panama; Papua  New Guinea; Peru;  Qatar; Rwanda; Saint Kitts and Nevis; 
Saint Vincent and the Grenadines; Samoa; Senegal; Seychelles; Sierra Leone; Solomon Islands; 
South Africa; Sri Lanka; Suriname; Tanzania; Tonga; Trinidad and Tobago; Tunisia; Uganda; 
United  Arab Emirates; Vanuatu; Bolivarian  Republic of Venezuela; Yemen; Zambia; and Zimbabwe.  
119.  The Chair invited the Members that had not yet submitted their 2019 notifications to provide 
an update to the Committee on their prog ress in preparing those notifications. No such delegation 
took the floor.  
120.  The Chair urged Members that had not yet submitted their notifications to do so, and recalled 
that the Secretariat continued to be available for enquiries about compliance with notif ication 
obligations. The Secretariat had assisted many Members in the past and Members finding themselves 
unable to comply with their obligations were encouraged to consult the Secretariat. There was a 
range of resources that delegations could draw upon in  working to rectify the situation, including the 
Secretariat Handbook on Notification Requirements for the SCM  Agreement.  
121.  The United Kingdom  noted that the notification of subsidies was an integral part of the work 
of the Committee and for the proper funct ioning of the SCM Agreement. It echoed the concerns 
raised previously regarding the increase in the number of Members not submitting notifications and 
stated that the upcoming round of subsidy notifications would be an opportunity for Members to 
address th ose concerns and reaffirm their commitment to transparency. The United Kingdom also 
encouraged all Members to take the necessary steps to complete their notifications and noted that 
it would submit its first subsidy notification since leaving the European Union. Thanking to the 
Secretariat for the assistance provided, it encouraged other Members to seek support from the 
Secretariat if needed.  
122.  Canada  remained concerned with the status of notifications and reiterated the importance of 
complying with notificat ion requirements of the SCM Agreement. It acknowledged that it was a 
resource -intensive undertaking that required coordination between multiple levels of government, 
but also fundamentally important transparency exercise for the effective functioning of th e 
Agreement. Canada encouraged Members to make their best efforts to fulfil their notification 
obligations, including by making nil notifications, and to seek assistance in their efforts.  
123.  Australia  indicated that it attached considerable importance to the transparency of subsidy 
programmes. It also noted that the low compliance with the notification obligation was of continuing 
concern and of great disappointment given the Ministerial Decision at the MC11. It found it most 
concerning that in the context of negotiations in another forum in the WTO, some Members had 
stated that their intention was not to notify their subsidies which Australia understood to be largely 
due to capacity constraints. Australia recalled the assistance provided by the Secretariat in that 
regard and acknowledged that completing a subsidy notification every two years was not a simple 
task. It, however, expressed its concern over the fact that many non -notifying Members had the 
capacity to provide subsidies. The more Members did not noti fy, the more the uncertainty for the 
exporters in being able to compete fairly in international markets which underpinned the 
SCM Agreement.  
124.  The United States  noted that the Secretariat Report showed that the compliance with 
notification obligation was at historic lows and urged all Members, who had not yet notified, to do 
so immediately. The United States offered any technical assistance that it could provide.  
125.  The European Union  thanked the Secretariat for updating the report which was a very useful 
overvi ew of the notification obligations. According to the European Union, there was an improvement 
in the situation since the last update of the report as the number of notified Members had increased 
by over ten per cent from 66 to 73 Members. This was the dire ction that Members had to go. 
Considering that 2021 was a new notification year, Members had an opportunity to improve that 
figure even further. The European Union also acknowledged that it was not only about putting the 
figures on the table but ensuring g reater transparency so that Members could see the type and level G/SCM/M/115  
 
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  of subsidies being granted by their trading partners and their effects on international trade. This was 
a resource intensive task, but Members had to find the resources and the time to do it as this was 
not a voluntary exercise but rather an obligation under the SCM Agreement.  
126.  Japan  echoed the concerns raised by the Chair and Members noting that transparency and 
notification obligations were fundamental to the WTO system. It also reiterated th at all Members 
were required to make their notifications properly within the deadlines in accordance with the 
Agreement.  
127.  New Zealand  welcomed the notifications that were made to date and underscored the 
importance of notifications including "nil" notifications. It, however, remained concerned regarding 
the overall status of notifications and encouraged Members to fulfil their notification requirements 
without further delay. Timely and complete notifications were fundamental for transparency and 
effective monitoring. New Zealand also encouraged Members facing difficulties to seek assistance 
from the Secretariat.  
128.  With respect to the second topic under this agenda item, the Chair recalled that at the 
Committee's October 2020 regular meeting, a number of Members had indicated their willingness to 
continue discussions on the proposal from the United States regarding procedures for questions and 
answers under Articles 25.8 and 25.9 of the SCM  Agreement.3 
129.  The United States  recalled that many years ago it had introduced in its formal proposal that 
written answers to initial questions under Article 25.8 be provided within sixty days and that 
follow -up questions be answered in thirty days. Although the United States was of the view that the 
mandatory deadline s were preferable, it recognized the concerns raised by some developing 
Members with respect to strict deadlines. Therefore, it proposed at the last meeting that Members 
simply agree to make their best efforts to submit written responses within sixty days and written 
responses to follow -up questions within thirty days.  
130.  The United States noted that the proposed approach had generally been well received together 
with some expressed concerns about the need to take into account time for consulting with 
sub-central governments which had been explicitly recognized in the last proposal. In order to 
address the concern raised with respect to the last paragraph, namely the question of 'who would 
decide that the questions were adequately answered', the United States h ad removed the word 
"adequately" from the proposal.  
131.  The United States would continue to work with Members regarding some remaining concerns 
and might submit a revised text in the near future. It reiterated that there was nothing extraordinary 
about the pro posal because it mirrored the existing practice of providing answers to questions on 
regular notifications and reflected the practice most Members had followed when answering 
Article  25.8 questions.  
132.  The European Union  referred to its previous statements in  support of the proposal which was 
a pragmatic response to address some of the shortcomings in the notifications without creating 
unreasonable burden for Members. That pragmatic approach could enhance transparency provisions 
in the SCM Agreement; therefore , the European Union fully supported the proposal and expected 
that it would move forward quickly.  
133.  The United Kingdom  welcomed the continued discussion on the proposal and echoed the 
support shown by other Members. It further noted that sharing of information was essential to the 
functioning of the SCM Agreement and the process under Articles 25.8 and 25.9 was a key 
comp onent for transparency. The United Kingdom encouraged other Members to support the 
proposal.  
134.  Australia  reiterated its support for the proposal noting that it was directly pertinent to the 
request from the Chair of the Trade Policy Review Body to discuss wa ys to improve the timeliness 
and completeness of notifications. According to Australia, greater clarity in the procedures would 
encourage the compliance with the notification obligations and improve the completeness and 
timeliness of notifications. It welc omed the latest revision of the proposal which responded flexibly 
 
3 G/SCM/W/557/Rev. 4. G/SCM/M/115  
 
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  to some of the concerns identified by some Members and found the addition of language to take into 
account situations where Members needed to consult sub -central governments particularly hel pful. 
135.  Canada  reiterated its support and welcomed the continuing discussions on the proposal. It 
hoped that an agreement could be reached among Members as soon as possible.  
136.  India noted that it had been in contact with the United States and recalled that it had raised 
concerns regarding the firm guidelines mentioned in the proposal and suggested to keep deadlines 
on the best endeavour basis. India believed that the United States was considering bringing some 
flexibility with respect to the timelines suggested  by the proposal because otherwise the existing 
timelines would cause difficulties for developing and least -developed Members facing capacity 
constraints. While having difficulties due to the pandemic conditions, India was examining the 
proposal and would provide its views in due course.  
137.  Brazil  reiterated its support for the proposal which could provide more predictability to the 
process established in Articles 25.8 and 25.9 while ensuring the necessary flexibility in terms of 
deadlines that might be needed  to submit written answers.  
138.  New Zealand  was supportive of the proposal which would enhance transparency and improve 
the timeliness and completeness of notifications. The proposal recognized Members' potential 
capacity constraints without creating unreasona ble burdens. New Zealand appreciated the 
United  States for responding to the concerns raised and encouraged all Members to engage in 
discussions constructively.  
139.  Japan  continued to support the proposal expecting Members to follow the proposal as a best 
effort basis.  
140.  The Russian Federation  noticed that the United States had added the phrase "(…) and taking 
into account the time necessary to consult sub -central governments (…)". The Russian Federation, 
however, reiterated that the time needed for the preparati on of the responses should take into 
account the difficulties of Members with large economies and complex state structures. The added 
phrase suggested that even if a Member had to consult sub -central governments it should still 
endeavour to meet the propos ed deadlines. According to the Russian Federation, the need for 
consultation should widen the timeframe instead of imposing additional burden to meet the 
deadlines. The Russian Federation also noticed that the revised proposal had preserved the non -
mandato ry deadlines of 60 and 30 days as originally proposed while 90 and 60 days were more 
doable. The language used in Article 25.9 of the SCM Agreement indicated that the intention of the 
drafters was not to constrain Members with time limits; rather, Members may take their time which 
would be enough to provide information in a comprehensive manner. Therefore, the appropriate 
time for the preparation of the responses differs on a case -by-case basis. The required time may 
depend on the complexity of the proposed  questions and the number of authorities engaged in 
preparation of responses and on whether those authorities are of central or sub -central level, as well 
as other factors. The Russian Federation was of the view that the task to establish universal deadlin es 
would be almost impossible. Any timeframe may work as milestones for Members to check their 
progress in preparing their replies rather than establishing a concrete date for finalization of the 
replies. Therefore, any timeframe for the preparation of the  replies may neither be binding nor 
mandatory.  
141.  China  recalled its position at the previous meetings noting that Article 25.9 neither stipulates 
that Members should submit written replies, nor specifies a deadline for submitting answers. The 
requirement for  making written answers would impose newly -added substantial obligations on 
Members. China recalled that many questions raised by Members pursuant to Article 25.8 had been 
incorporated into the normal questions upon subsidies notifications. Therefore, the proposal would 
not only cause difficulties to the LDC Members but would also pose challenges to many developing 
Members facing capacity constraints increasing their workload and distracting their focus on 
preparing the notifications. China reiterated the i mportance of transparency expecting that the 
relevant discussions could be conducted in a pragmatic manner and Members would do their best to 
fulfil their respective transparency obligations in accordance with the relevant provisions of the 
SCM Agreement.  
142.  Chinese Taipei  reiterated its support for the revised version of the proposal.  G/SCM/M/115  
 
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  143.  The United States  would continue to work with Members to find a way forward. It recognized 
the tragic pandemic situation in India and would patiently wait for further discussion s. 
144.  The Chair stated that it appeared that Members wished to continue discussions on those issues 
at the next regular meeting of the Committee.  
145.  The Committee took note  of the statements made.  
8  CONSTANT DOLLAR METHODOLOGY FOR GRADUATION FROM SCM ANNEX VII(B)  
146.  The Chair  recalled that, pursuant to the Doha Ministerial Decision on Implementation -Related 
Issues and Concerns (document WT/MIN (01)/17, paragraph 10.1), Annex VII (b) to the 
SCM Agreement listed Members until their GNP per capita reached US$1,000 in con stant 1990 dollars 
for three consecutive years. As of 1 January 2003, the methodology set forth in G/SCM/38, 
Appendix  2 had applied for making those calculations. In accordance with that Decision, since then 
the Secretariat had circulated annual notes in d ocument series G/SCM/110 updating the GNP 
per capita figures for the Members listed in Annex VII (b) based on that methodology. The most 
recent version, Addendum 18, was circulated on 26 March 2021.  
147.  No Member took the floor and the Committee took note  of the Chair's statement.  
9  PERMANENT GROUP OF EXPERTS  
148.  The Chair recalled that the term of Mr Ichiro Araki expired in April 2020 as a member of the 
Permanent Group of Experts (PGE). The previous Vice Chair of the Committee held consultations 
with a view to fill this vacancy; however, since the nominees Mr Donald Cameron Orth from Canada 
and Ms Tomoko Ota from Japan had received the same amount of support from interested Members, 
the Committee could not finalize the process of filling this vacancy at its October 2 020 meeting. The 
Chair also noted that the term of office of Ms Luz Elena Reyes de la Torre as a member of the PGE 
was expiring and the Committee should also elect a new member to replace her.  
149.  In her communication in document G/SCM/158, dated 27 November 2 020, the previous Chair 
had announced the initiation of a new round of consultations to fill the vacancy created by the 
expiration of the term of Mr Ichiro Araki and also invited Members to nominate individuals to replace 
Ms Luz Elena Reyes de la Torre, no t later than 8 January 2021.  
150.  Following her consultations, in her email dated 6 January 2021, the previous Chair had 
informed Members that Ms Tomoko Ota had received the majority of support to replace Mr Ichiro 
Araki as the new member of the PGE and invited  Members to express their views whether they could 
agree to join a consensus for the election of Ms Ota to the PGE. In her communication dated 
8 January  2021, the previous Chair also had informed Members that Mr Donald Cameron Orth had 
been the only nomine e to replace Ms Luz Elena Reyes de la Torre and invited Members to express 
their views whether they could join a consensus to elect Mr Orth to the PGE.  
151.  Since no objection had been raised by the deadlines, the Chair proposed that the Committee  
elect Ms Tomo ko Ota and Mr Donald Orth to the PGE, for the terms of office to expire in Spring 2025 
and Spring 2026, respectively.  
152.  The Committee decided  to elect Ms Tomoko Ota and Mr Donald Orth to the PGE, for the terms 
of office to expire in Spring 2025 and Spring 2026, respectively.  
153.  Japan  expressed its appreciation for the support extended to Ms Tomoko Ota and thanked the 
Chair and the Secretariat for their efforts during the consultations. It also welcomed Mr Donald Orth 
who, according to Japan, was highly qualified as the new member of t he PGE.  
10  ARTICLE 25.8 QUESTIONS TO CHINA ON POTENTIAL STEEL SUBSIDIES – ITEM 
REQUESTED BY THE EUROPEAN UNION AND THE UNITED STATES  
154.  The United States  recalled that it had been concerned with the lack of transparency of China's 
industrial subsidy regime since  2001. Notwithstanding its claim to the contrary at prior meetings, G/SCM/M/115  
 
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  China had not notified the vast majority of its steel subsidy programmes over the last eighteen years 
of its WTO Membership.  
155.  The growth of the steel industry in China had been remarkable s ince China had become a 
WTO Member. Its steel capacity had grown over 400% since 2001 and it accounted for half of the 
global steel production. Over the last two decades, the growth of capacity in China had significantly 
outpaced the growth in demand.  
156.  According to China, the growth in capacity and exports – in both good and bad times  – had 
been accomplished with little or no government subsidy support, even for those companies owned 
by the government which dominated China's market. Despite the global econom ic slowdown resulted 
from COVID -19 pandemic, China's capacity continued to grow and a superficial examination of the 
annual reports of several of the largest steel companies in China indicated government support. In 
those reports, under the title of "gover nment subsidies" or "government grants", many of China's 
top steel companies listed dozens of government -funded projects through the provision of grants.  
157.  The Article 25.8 questions co -submitted by the European Union and the United States enquired 
about 160  government subsidies or government grants listed in the annual reports of six of the 
largest steel companies in China. More recent annual reports indicated the same general level of 
government subsidies. All of the listed government subsidies or governmen t grants might not be 
subject to the notification requirements of Article 25 of the SCM Agreement; however, there were 
certainly more than the three non -specific programmes China had claimed to be the exclusive 
instances of government intervention in the s teel industry or the few other programmes that China 
claimed it had notified under different names or had not been specific.  
158.  According to steel company annual reports, several of China's steel companies had received 
relatively large government equity inves tments which were not surprising given that most of the 
largest steel companies in China were government -owned. The United States and the 
European  Union had asked China to explain whether those government investments could be 
commercially justified; howeve r, no response had been provided by China, even orally at previous 
meetings.  
159.  The European Union  noted that it had not received satisfactory replies from China and the lack 
of clarity from China was frustrating.  
160.  Japan  stated that the full implementation of the notification obligations was essential for the 
proper functioning of the SCM Agreement and supported continuous discussions on this issue.  
161.  China  noted that the annual reports of the six steel enterprises had been sent to the competent 
local governments  for further verifications and the verified subsidies relating to steel had been 
included in China's 2017 -2018 local subsidy notification submitted on 30 June 2019. When preparing 
its 2019 -2020 subsidy notification at sub -central government China would inc lude relevant subsidies 
involving steel industry in accordance with its obligations under the SCM Agreement.  
162.  While the annual report was formulated upon supporting programmes, China's notification has 
been based on policies. In this case, different program mes sometimes might come from the same 
policy and there was no one -to-one correlation between these two. Even with the same program, 
there could be duplication of statistics among different subsidiaries. According to the Agreement, 
however, not every progr amme released in the annual report shall be notified and not every 
programme disclosed in the enterprises' annual reports corresponded to the ones in the notifications.  
163.  The United States  suggested China to link all of the projects or grants listed in the a nnual 
reports of those companies to specific notified subsidy programmes.  
164.  The Committee took note  of the statements made.  G/SCM/M/115  
 
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  11  SUBSIDY TRANSPARENCY AND CHINA'S PUBLICATION AND INQUIRY POINT 
OBLIGATIONS UNDER CHINA'S PROTOCOL OF ACCESSION – ITEM REQUESTED BY THE  
EUROPEAN UNION AND THE UNITED STATES  
165.  The United States  reiterated that together with other Members, it had numerous concerns 
with respect to the transparency of China's industrial subsidy regime. It took five years for China to 
submit its first subsidy no tification which only covered the central government level programmes. 
China's notifications were normally late and grossly incomplete according to the United States. It 
was 15 years after becoming a Member that China submitted its first subsidy notificati on covering 
sub-central governments – entities which played a significant role in China's industrial subsidy 
regime.  
166.  When researching a trade topic in China, it was not unusual to see references to legal 
measures, normally with a legal citation. While thos e measures usually could be found in one place 
or another, sometimes it was not possible although those "missing measures," were repeatedly cited 
elsewhere and appeared to be foundational to a particular subsidy programme.  
167.  The United States recalled that i n China's Protocol of Accession, China had agreed to publish 
all trade -related measures in a single journal, which China had designated as the MOFCOM Gazette. 
Often – if not normally – however, subsidy measures – especially normative measures and 
sub-central measures – were not published in the MOFCOM Gazette. In addition, sometimes those 
measures were nowhere to be found. The United States recently had come across references to five 
of such missing measures, two relating to fuel subsidies for fishermen, on e relating to the 
development of China's distant water fishing fleet, and two relating to the semiconductor industry. 
Since it could not find these measures in the MOFCOM Gazette, or anywhere else, the United States  
had submitted a request to China's WTO i nquiry point in April 2020.  
168.  Under China's Protocol of Accession, China had agreed that "replies to requests for information 
shall generally be provided within 30 days after receipt of a request. In exceptional cases, replies 
may be provided within 45 days after receipt of a request. Notice of the delay and the reasons 
therefore shall be provided in writing to the interested party." Although the United States had 
submitted its initial request in April re -submitting the same in May, no formal response ha d been 
provided. The United States therefore urged China to respond to its request by providing all the 
requested documents as soon as possible in accordance with its obligations under its Protocol of 
Accession.  
169.  China  noted that in March 2018 the Chinese G overnment issued a notice to make further 
arrangements with respect to the work on government gazette with a view to enhance transparency 
of government policies. China had always paid high attention to abiding by the WTO rules and 
fulfilling its obligation s. Regarding the transparency obligation of the inquiry point, as required by 
paragraph 2(C)3 of China's Protocol of Accession, China had established the Bureau of 
WTO Notification and Inquiry as the inquiry point to fulfil its transparency obligation unde r the 
WTO framework. China also noted that it had responded to the questions raised by the United States 
as promised.  
170.  The European Union  recalled that publication of measures in the MOFCOM Gazette and creation 
of the inquiry point were designed to enhance transparency by China. However, neither of those 
mechanisms could contribute to transparency if no measures were published or no replies were 
provided by the inquiry point. The European Union therefore urged China to ensure that those 
measures to be effect ive by publishing the legal measures and providing responses by the inquiry 
point pursuant to its Protocol of Accession.  
171.  The United Kingdom  noted that transparency was central to the functioning of the WTO and 
called all Members to fulfil their obligations  on a timely manner.  
172.  Canada  shared the concerns raised by the co -sponsors and called on China to adhere to its 
transparency commitments under the WTO requirements including those specifically negotiated as 
part of its Protocol of Accession. Promoting trans parency is a core objective of the WTO and the 
processes of notifications were critical to the functioning of the SCM Agreement and the organization 
as a whole.  G/SCM/M/115  
 
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  173.  Upon the request by the United States  with respect to the recent status of its request for 
information from the inquiry point, China  indicated that it had received the email from the 
Ambassador of the United States which it was carefully studying and would provide its answers later.  
174.  The Committee took note  of the statements made.  
12  SUBSIDIES AND OVERC APACITY – ITEM REQUESTED BY CANADA, THE EUROPEAN 
UNION, JAPAN, AND THE UNITED STATES  
175.  The United States  referred to a recent report by the OECD entitled Measuring Distortions in 
International Market: Below Market Financing which focuses on below -market fina ncing including 
below -market borrowings and below -market equity. The United States noted that below -market 
equity included both government equity infusions and below -market equity returns.  
176.  In order to understand how large and widespread such below -market f inance was, the OECD 
had used public sources to collect and analyse detailed information for 306 of the world 's largest 
manufacturing firms in 13 sectors over the period 2005 -19. Government -invested firms had made 
up a significant portion of the companies examined. In sectors such as aluminium, shipbuilding, and 
steel, governments were estimated to own more than 40% of all company assets covered by the 
sample.  
177.  With respect to below -market borrowings, the Report noted that such financing appeared to 
be conce ntrated both in terms of sectors and countries. Specifically, sectors that had suffered from 
excess capacity in recent years were among the largest beneficiaries, including aluminium, cement, 
glass, ceramics, and solar photovoltaic panels. In other sectors  such as steel and shipbuilding, more 
than half of all sampled firms had benefitted from some amount of below -market borrowings most 
of which were found to benefit industrial firms based in China.  
178.  The report did not conclude that government ownership of in dustrial firms by itself constituted 
support. However, it noted that government -invested firms benefitted when their government 
owners behaved differently from private shareholders or investors. Just as for below -market 
borrowings, this lowered companies ' cost of capital, enabling them to invest more or to tolerate 
greater losses.  
179.  Compared to private industry rates of return, returns on government investments were 
significantly lower, particularly in semiconductors and aerospace, both of which were R&D-intensive 
sectors that relied relatively more on equity finance.  
180.  The report found that below -market finance tend to correlate with increases in manufacturing 
capacity meaning that beneficiaries of this type of support were likely to use their lower cos t of 
capital to invest more in productive capacity than they would have otherwise.  
181.  The Report also noted the importance of greater transparency, not only with respect to 
government support but government ownership in manufacturing enterprises as well. This  was 
particularly true for below -market lending and below -market equity investments made by 
governments, which could be two of the more difficult forms of government support to analyse and 
quantify.  
182.  The United States stated that the report was an important  financial analysis of government 
support across a broad range of sectors in the world economy that would clarify whether the current 
rules needed to be strengthened. It therefore urged all Members to read the Report after it was 
declassified.  
183.  The European  Union  recalled the G20 Summit in Hangzhou in September 2016 where the 
leaders highlighted the role of subsidies and other types of government support in creating excess 
capacity. It noted that the key feature of the recent OECD report introduced by the Un ited States 
was its cross -sectoral nature. Instead of looking at individual value chains or sectors, the report 
zoomed in one type of subsidization in the form of below -market financing.  
184.  One reason to examine the below -market financing was its scale. The r eport estimated 
below -market borrowings between USD 21 billion and USD 66 billion over the five -year period of G/SCM/M/115  
 
- 23 - 
 
  2014 - 18. Support through below -market equity returns ranged from USD 94 billion to 
USD 260 billion which might cause distortions in the markets . Another point was the strong link 
between below -market financing and overcapacity. The European Union noted that below -market 
financing lowered the cost of capital and therefore encouraged investments that would not be made 
under market -based financial c onditions. SOEs were the main beneficiaries of below -market 
financing while at the same time they were the providers of it through state -owned banks and 
investment funds. Such indirect channelling of state support through SOEs contributed to the opacity 
of the funding.  
185.  The European Union also stated that the report showed that China had been providing more 
below -market borrowing compared to other jurisdictions and the findings of the report indicated the 
need to improve international subsidy rules. It was l ooking forward to the initiative on competitive 
neutrality at the next Ministerial Conference.  
186.  According to Japan the OECD reports on level -playing field issues, including on aluminium, 
semiconductor, and below -market financing had significant value and would contribute a lot to the 
international discussion for fostering a level playing field by analysing market distorting effects of 
government support measures.  
187.  The findings of the report highlighted the role that government -invested firms played as not 
only recipients of government support, but also providers themselves. The provision of below -market 
finance involved a corporation acting as the intermediary between the government and industrial 
producers, which would create a number of challenges for curr ent trade rules and indicated the need 
to strengthen further disciplines on government -invested firms.  
188.  Majority of the supports to respond to the COVID -19 pandemic had taken the form of below -
market finance, notably government -guaranteed loans for small bu sinesses and equity infusions into 
distressed companies which suggested that below -market finance should not necessarily be banned 
altogether from the policy toolkit, but rather be reserved for emergency situations and subject to 
disciplines to ensure that  the support introduced in a crisis did not result in distortions to trade and 
competition.  
189.  Japan reiterated its concerns over overcapacity in industries such as steel, aluminium, and 
shipbuilding where subsidies and other types of market distorting suppor ts by governments were 
among the major causes of overcapacity. It highlighted the importance of having further discussions 
on this issue in the Committee noting that ensuring a level playing field had become ever more 
important under current international circumstances.  
190.  Canada  remained concerned with the role of government interventions with respect to the 
global excess capacity found in certain sectors which resulted in trade and market distortions 
affecting all manufacturing economies. Canada was very sup portive of the report by the OECD which 
showed that below -market financing correlated with the increase in production capacities depressing 
global prices. According to the report, the use of below -market financing often correlated with lower 
domestic produ ctivity. It also showed the role that government -invested firms play in providing 
below -market borrowing.  
191.  The OECD report provided additional important evidence that subsidies in the form of below -
market borrowing and equity were contributors to excess cap acity in several important sectors 
including steel and aluminium. Subsidy rules could play a role in addressing excess capacity and 
Canada was supportive of having updates on the rules to better capture harmful subsidization 
practices. Canada also referred  to the summary of the report which identified several areas where 
the current rules and practices might fall short, such as with respect to transparency, subsidies 
through government -invested firms, and specificity.  
192.  Canada also reiterated its concerns ove r the persistent overcapacity in global steel production 
noting that the crude steel capacity had increased by 38.1 million metric tonnes in 2021 despite 
extremely weak market conditions which shows a capacity gap of 625 million metric tonnes. The 
magnitud e of the excess capacity in this sector was extremely unhealthy for both the industry and 
the global economy. Canada believed that it was important to take steps to address issues identified 
in the OECD report including by the development of new rules.  G/SCM/M/115  
 
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  193.  The Russian Federation  reiterated the importance of the issue of overcapacity noting that the 
impact of COVID -19 on global and regional steel markets was significant. According to the 
World  Steel Association ("WSA"), the consequences of COVID -19 for the globa l economy were less 
devastating than forecasted earlier. Its effects would differ from country to country with only China 
and Turkey showing a marginal economic growth. The WSA has estimated a decrease by 0.2% in 
the global steel demand in 2020 while expec ting a 5.8% increase in 2021. The impact of COVID -19 
has provided additional proof of the necessity for all Members to tackle the global overcapacity. In 
order to achieve tangible results, due consideration should be accorded not only to subsidies but 
also to other factors contributing to overcapacity such as trade protectionism, including large 
numbers of trade remedy measures which negatively affected trade flows and hampered 
competition. The Russian Federation also reiterated its support to the work of G lobal Forum on Steel 
Excess Capacity (GFSEC) which could make a valuable contribution to the solution of that global 
problem by delivering its findings directly to the leaders of global steel community. For example, as 
the Chair of the GFSEC in 2021, Italy  could make a statement at the General Assembly of the WSA 
in October 2021. The Russian Federation appreciated the GFSEC's stakeholder event in April 2021 
which highlighted the need for a thorough analysis of past mistakes made by developed countries 
to avoid new excess capacities and prevent exacerbation of the situation in the global market.  
194.  According to the Russian Federation, developing Members should take into account new 
challenges such as the global move towards zeroing emissions and technological tr ansformation of 
the world steel industry with development of new low -carbon technologies. Finally, the 
Russian  Federation reiterated that eliminating the effects of subsidization should not be the only 
avenue to address overcapacity; all other factors cont ributing to overcapacity should be also taken 
into consideration.  
195.  Brazil  supported the idea of reducing subsidies that lead to overcapacity, in both the industrial 
and the agricultural sectors. It was also supportive of the GFSEC which had an important rol e as a 
transparency and coordination mechanism to mitigate overcapacity in the steel sector. Brazil recalled 
the progress made under this mechanism with regard to the definition of guiding principles and 
recommendations to reduce excess capacity. The reduc tion in steel demand due to the pandemic 
had increased the chronic problem of the difference between capacity and demand in the sector, 
thus reinforcing the relevance of the Global Forum's work. Brazil also invited China India, and the 
Kingdom of Saudi Ara bia to reengage with the Global Forum.  
196.  Norway  noted that the recent OECD report on below -market financing was based on the work 
on the aluminium sector which had been presented to the Committee previously. The report 
concluded that below -market financing w as especially prevalent in the aluminium sector noting that 
there were problems also in other sectors. Below -market financing has been causing less productive 
firms to stay in business creating excess capacity and downward pressure on prices and their 
comp etitors' profits. Additional analysis was needed, and the OECD would continue its work on 
analysing trade effects of subsidies. The OECD report also discussed the rules which should be of 
interest to all Members. One of the key messages and preliminary fin dings was the lack of 
transparency in below -market financing with respect to benchmarks and government ownership. 
Since not all aspects of below -market financing were covered by the SCM Agreement more scrutiny 
was needed.  
197.  Australia  thanked the co -sponsors for bringing the OECD report to the Committee's attention 
which provided useful analysis on below -market financing - whether as debt financing or below -
market equity. The report identified that below -market financing has been more prevalent in 
industries e xperiencing excess capacity. Australia also appreciated the report's identification of the 
deficiencies in the existing rules relating to below -market financing and noted that there were a 
number of gaps in the rules which needed to be revisited, clarified  and improved. The report 
identified a number of possible ways to improve the rules through specific transparency provisions 
and improved clarity in definitional aspects of a subsidy. This also included the issue of specificity 
where there was broad -based systemic below -market financing through state banks or funds to 
enterprises. The report also examined the issue of establishing methodologies for an appropriate 
market benchmark as part of clarification and improvement of the rules.  
198.  Australia considered th is as an appropriate and valuable area of discussion by Members 
consistent with the competency and scope of responsibilities of the Committee. It agreed that current 
subsidy rules were insufficient and needed to be further clarified and updated. Finally, i t recalled G/SCM/M/115  
 
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  that below -market financing had been an issue identified as a crucial area during the Doha Rules 
negotiations as warranting further specific treatment within the SCM Agreement.  
199.  The United Kingdom  shared the concerns of other Members over the iss ue of overcapacity and 
noted that unjustifiable subsidies not only had the potential to distort markets and stifle competition 
but were also among the main contributors to overcapacity such is in aluminium and steel industries.  
200.  China  noted that it had phas ed out the outdated capacity by raising standards for 
environmental protection from 2016 to 2019 and a total of 64.7 million tonnes of steel production 
capacity had been dismantled. The aluminium industry has become profitable with a capacity 
utilization r ate of over 85%. The supply of aluminium in the domestic and foreign markets was 
sufficient and the price of aluminium has been determined by market through supply and demand. 
The competitiveness of aluminium processing enterprises, which had no cost advan tage for raw 
materials, had enhanced through technological progress and management optimization. In recent 
years, the Chinese Government had explicitly required the replacement of aluminium capacity and 
prohibited new capacity investment in any name or in any form that violated laws and regulations. 
In addition, the aluminium industry was an industry of high energy consumption, high pollution and 
resource products; therefore, it neither enjoyed subsidies nor preferential financing. Its financing 
has been su bject to certain restrictions.  
201.  With respect to the issue of below -market financing, China stated that there was no below -
market financing in China. According to Chinese Commercial Bank Law, the commercial banks 
operated under their own decisions based on r isk assessment of enterprises and were responsible 
for their own profits and losses. They operated under market -oriented conditions without any 
government interference.  
202.  As the last point, China indicated that the Government Financed Fund was a corporate eq uity 
investment fund owned by the Fund Company which was a joint stock enterprise established in 
accordance with the Company Law and was not affiliated with any government departments. The 
employees of the company were not government -administered public se rvants and had no 
administrative ranks. In the principle of separation between ownership and management, the fund 
entrusted a professional management company to be responsible for the management and 
independently conducted investment business based on mark et-oriented principles. The Fund's 
investment management and decision -making were completely market -oriented, and governmental 
departments did not intervene or participate in any investment decision -making programs of the 
Fund. As the Fund adopted the form  of equity investment, its shareholders had clear demands on 
financial returns of the Fund. Therefore, there was no subsidy in any form for the enterprises 
invested by it.  
203.  The Committee took note  of the statements.  
13  OTHER BUSINESS  
204.  No issues were raised under this agenda item.  
14  DATE OF NEXT REGULAR MEETING  
205.  The next regular meeting of the Committee would be held in the week of 25 October 2021 . 
15  ELECTION OF OFFICERS  
206.  The Chair recalled Rule 12 of the Committee's Rules of Procedure which provides that the 
election of the new Chair shall take place at the first regular meeting of the year and that the election 
shall take effect at the end of that meeting.  
207.  The Chair stated that consultation at the CTG level regarding the selection of the new Chair 
of this Committee as well as of other subsidiary bodies under the CTG is still under way, therefore a 
new Chair cannot be elected at this meeting.  In these circumstances, the Chair suggested that the 
Secretariat send a communication once the CTG had complete d its work, indicating the Chair 
identified by the CTG.  The new Chair would be deemed to be elected by the Committee absent any G/SCM/M/115  
 
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  objection.  This approach, which had been taken in previous years, would obviate the need for an 
additional meeting of the Commit tee. 
208.  On the Vice -Chair, the Chair proposed to postpone the election of the new Vice -Chair until the 
new Chair is appointed, until he or she holds the usual consultations and sends the usual 
communication nominating a new Vice -Chair who, absent any objectio n, would be deemed to be 
elected by the Committee.  
209.  The Committee so decided . 
 
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