WT/DS505/12  
 
22 April 2020  
(20-3178) Page: 1/5 
  Original: English  
 
UNITED STATES – COUN TERVAILING MEASURES ON 
SUPERCALENDERED PAPE R FROM CANADA  
COMMUNICATION FROM THE UNITED STATES  
The following communication, dated 17 April 2020 , was received from the delegation of the 
United  States  with the request that it be circulated to the Dispute Settlement Body (DSB).  
 
_______________  
 
 
The United States is in receipt of Canada 's April 16, 2020, letter, concerning its intention in the 
dispute United States – Countervailing Measures on Supercalendered Paper from Canada to request 
authorization from the Dispute Settlement Body (DSB) at the next DSB meeting to suspend the 
application of concessions to the United States.  My authorities have requested me to provide the 
following comments.   
 
The United States objects to the prem ise of Canada 's communication, which is that the DSB adopted 
recommendations in this dispute on March 5, 2020.  The position of the United States is clear that 
no recommendation was or could be adopted by the DSB because the appellate and panel reports 
were not adopted by DSB consensus.  At the meeting of the DSB on March 5, 2020, the United  States 
explained:1  
 
 [First Intervention – excerpt ] 
 
• The United States has serious concerns with the documents being considered by 
Members under this agenda item.  
• In par ticular, the document circulated as WT/DS505/AB/R heightens the concerns that 
the United States has been raising about the Appellate Body and its effect on the WTO 
dispute settlement system.  
• As the United States will explain in this statement, the document  is not a valid Appellate 
Body report and represents the latest example of the Appellate Body 's failure to respect 
WTO rules.  
• The document circulated by the Appellate Body is not a valid Appellate Body report under 
Article 17 of the DSU.    
• The document was not provided and circulated on behalf of three valid Appellate Body 
members as required by Article 17.1.   Extraordinarily, none of the individuals serving on 
this appeal – Mr. Ujal Bhatia (presiding member), Mr. Thomas Graham, or 
Ms. Hong Zhao – was a valid member of the Appellate Body when the document was 
issued to WTO Members.  
• With respect to the first two, this dispute presents the familiar issue of individuals 
 
1 The full U.S. statement, including supporting citations, is available at 
https://geneva.usmission.gov/2020/03/05/statement -by-the-united -states -at-the-february -28-dsb-meeting -
reconvened -on-march -5-2020  WT/DS505/12  
 
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  continuing to serve and decide appeals after their term of appointment has expir ed. The 
U.S. position that this is illegitimate is well known.  
• But we will first discuss service on this appeal by Ms. Zhao.  This is an unprecedented 
situation.  This individual cannot be, and is not, a member of the Appellate Body because 
she is not eligib le under the DSU.  
• On January 31, 2020, the United States informed the WTO Director -General and the 
DSB Chairperson that it had become aware of information that indicates this individual 
is not "unaffiliated with any government " as required by Article 17.3 of the DSU and, 
therefore, is not a valid member of the Appellate Body.  
• Article 17.3 of the DSU provides that persons comprising the Appellate Body "shall be 
unaffiliated with any government. " To "affiliate " is to "attach to or connect with an 
organization ," and an affiliation is a "connection, association. " 
• Ms. Zhao is affiliated with the Government of the People 's Republic of China and 
therefore cannot serve as a member of the Appellate Body.   
• According to official Chinese government documents, Ms. Zhao currently serves as Vice 
President and a "leader " of China 's "Ministry of Commerce Academy of International 
Trade and Economic Cooperation " (MOFCOM -AITEC).   
• When Ms. Zhao was nominated as a candi date for the Appellate Body, her curriculum 
vitae (CV) indicated that she was at that time serving as the "Vice President of the 
Chinese  Academy of International Trade and Economic Cooperation. " Ms. Zhao 's CV did 
not reflect the official title for this ent ity: the "Ministry of Commerce  Academy of 
International Trade and Economic Cooperation. " Although there are different potential 
translations for the name of this entity, the official title in Chinese includes "Ministry of 
Commerce. "  
• Ms. Zhao continues to serve as Vice President of the Ministry of Commerce Academy of 
International Trade and Ec onomic Cooperation.  The "leadership " page on the 
MOFCOM -AITEC website also identifies Ms. Zhao among its six current leaders.  
• This entity is a "public institution " under Chinese law that is affiliated with and 
subordinate to China 's Ministry of Commerce.  In the "Notice of the Ministry of Commerce 
on the Establishment of Institutions, " China explicitly identifies MOFCOM -AITEC 's status 
as a "public institution. " Under Chinese law, a "public institution " refers to "public service 
organizations that are establi shed by the state organs or other organizations by using 
the state -owned assets for the purpose of engaging in activities of education, science 
and technology, culture and hygiene. "  
• MOFCOM -AITEC is also an "affiliated " entity "subordinate " to China 's Mini stry of 
Commerce.  The "Notice of the Ministry of Commerce on the Establishment of 
Institutions " sets out that MOFCOM -AITEC is a "Public Institution[] Directly under the 
Ministry of Commerce. " MOFCOM 's website similarly lists MOFCOM -AITEC as a "public 
institution under the Ministry of Commerce. " Further, Article 3 of the "Regulations on 
the Personnel Management of Public Institutions " indicates that the "competent 
departments of public institutions [e.g., MOFCOM] shall be specifically responsible for  
the personnel management of their affiliated  public institutions [e.g., MOFCOM -AITEC]. " 
And MOFCOM 's 2019 annual budget states that "[w]ork units under the Ministry of 
Commerce budget include … subordinate  public institutions, " of which MOFCOM -AITEC 
is one.  
• MOFCOM -AITEC 's budget is also part of MOFCOM 's budget, such that the salary for 
Ms. Zhao's Vice President position at MOFCOM -AITEC is funded by the Government of WT/DS505/12  
 
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  the People 's Republic of China.  For example, MOFCOM 's 2019 annual budget states that 
"[w]ork units under the Ministry of Commerce budget include … subordinate public 
institutions. " The 2019 budget lists 33 constituent "work units " that fall under it, 
including both MOFCOM itself as well as MOFCOM -AITEC.  MOFCOM 's 2019 budget 
indicates aggregate expenses for salaries, which would reflect the amount for all 
33 constituent "work units ", including MOFCOM -AITEC.  China 's National Audit Office 
carried out in 2016 an audit of MOFCOM 's 2015 budget, and this audit indicates specific 
amounts from MOFCOM 's budget allocated to and expended by MOFCOM -AITEC for 
salary expenses.  
• None of this information was disclosed to WTO Members when this individual was 
nominated as a candidate for the Appellate Body.  
• In sum, Ms. Zhao is Vice -President of MOFCOM -AITEC, a "public institution " that is 
"affiliated, " "directly under, " and "subordinate " to MOFCOM.  Salary expenses of 
MOFCOM -AITEC form part of MOFCOM 's budget, which means the government funds 
Ms. Zhao's MOFCOM -AITEC salary.  Thus, Ms. Zhao is affiliated with the Government of 
the People 's Republic of China.  
• Because Ms. Zhao is not "unaffiliated with any government, " contrary to the requirement 
of Article 17.3 of the DSU, Ms. Zhao is not a valid member of the Appellate Body.   
• This alone renders the document circula ted as WT/DS505/AB/R invalid and incapable of 
being an Appellate Body report because the appellate "report " has not been provided 
and circulated on behalf of three Appellate Body members, as required under DSU 
Article  17.1.  
• There are, in addition, two fur ther reasons the document is not an Appellate Body report 
within the meaning of Article 17.  
• With respect to Mr. Bhatia and Mr. Graham, the terms for these individuals expired on 
December 10, 2019.  The document was circulated to WTO Members on 
February  6, 2020, nearly two months after their terms had expired.  
• The DSB had taken no action to permit either individual to continue to serve as an 
Appellate Body member.  Therefore, neither individual was an Appellate Body member 
on the date of circulation of this do cument.  
• The document is also not a valid Appellate Body report because it was not issued within 
90 days, consistent with Article 17 of the DSU.  The mandatory language in Article 17.5 
of the DSU states: "In no case shall the proceedings exceed 90 days. " And that provision 
specifically states that "the proceedings " encompass "the date the Appellate Body 
circulates its report. " 
• In fact, 528 days passed between the date of the Notice of Appeal in this dispute 
(August  27, 2018) and circulation of the document as  a purported Appellate Body report 
(February 6, 2020).  
• Any one of these three reasons would suffice to prevent this document from serving as 
an Appellate Body report.  But the concerns raised by the service of Ms. Zhao are 
compounded when Members consider t he substance of this appeal.  
• Members may recall that one appeal in this dispute involved an alleged unwritten 
measure that was considered "ongoing conduct ". The evidence that allegedly 
demonstrated the existence of that "ongoing conduct " measure consisted of actions by 
the U.S. Department of Commerce in 9 investigations.  One of those involved Canada, 
and the countervailing duty was terminated in the course of this proceeding.  Another WT/DS505/12  
 
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  investigation involved India.  And 7 of the 9 investigations involved subsi dies provided 
by China.  
• Thus, this individual, affiliated with the Government of China, participated in an appeal 
in which the conduct complained about related almost exclusively to China.   
• And so, besides the invalidity of this individual to serve on the Appellate Body, their 
participation in this particular appeal is impossible to see as impartial.  
• The United States has serious substantive concerns about the appellate document as 
well. But given the invalidity of this individual to serve on the Appellate  Body, it is not 
necessary to consider that document further.  There is no Appellate Body report before 
the DSB today, and the United States objects to the adoption of this document.  
• As discussed, the document has not been issued by three Appellate Body mem bers and 
was not issued within 90 days, consistent with the requirements of Article 17 of the DSU, 
it is not an "Appellate Body report " under Article 17, and therefore it is not subject to 
the adoption procedures reflected in Article 17.14.  
• Rather, the DSB  may consider its adoption subject to the positive consensus rule that 
governs DSB decisions, pursuant to DSU Article 2.4 and WTO Agreement Article IX:1, 
note 3.  
• In light of the significant procedural and substantive concerns with the document, as 
discusse d in this statement, the United States objects to its adoption.  
• The United States does not consider it appropriate to proceed with adoption of the 
appellate report in light of this extraordinary and unprecedented situation.  
[Second Intervention – excerpt ] 
 
• We have focused our statement on the document circulated as WT/DS505/AB/R because 
of the extraordinary situation that renders that document invalid.  To reiterate, the United 
States will not join a consensus to adopt that document.  
• This agenda item also concerns the report of the panel in this dispute.  
• The duties at issue in this dispute were terminated in July 2018.  Therefore, the United 
States did not appeal the many legal findings of the panel with which the United States 
strenuously d isagreed because reversal of those findings was not necessary to resolve 
the dispute.  
• As the United States appealed certain legal findings of the panel, and the appeal has not 
been completed with the issuance of a valid Appellate Body report, the panel re port 
cannot be considered for adoption by the DSB by negative consensus under Article 16.4 
of the DSU.  
[Third Intervention – excerpt ] 
 
• The United States has described serious procedural and substantive concerns with the 
document circulated as WT/DS505/AB/R . We have explained how the document cannot 
be an Appellate Body report because of ex -Appellate Body members ' continuation of 
service without authorization by the DSB, and the failure to adhere to the deadline in 
Article 17.5.   
• Most importantly, the United  States has explained in detail that an individual who served 
on this appeal is not a valid member of the Appellate Body given that they are affiliated 
with a government in breach of DSU Article 17.3.  And even beyond that, the appeal WT/DS505/12  
 
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  directly implicated th e interests of that Government.  
• Accordingly, the United States reiterates its view that the document before the DSB 
today is not a valid Appellate Body report, objects to adoption of the document, and 
does not join a consensus to adopt it.  Any assertion th at the WTO has today adopted an 
appellate report under these extraordinary and illegal circumstances would only damage 
the credibility of the WTO and its dispute settlement system.  
Therefore, as the United States made clear at the March 5 DSB meeting, beca use there was no valid 
Appellate Body report in this dispute, the appellate and panel reports could only be adopted by 
positive consensus.  As there was no consensus on adoption, the DSB did not adopt any reports in 
this dispute.  Accordingly, there is no re commendation for the United States to bring a measure into 
conformity with a covered agreement.   
 
At the same March 5 DSB meeting, Canada agreed that the allegations with regard to Ms. Zhao 's 
affiliation with the Government of China and participation in th e appeal are serious and stated that 
they deserve full and impartial consideration in a manner that provides due process for all parties.   
 
The United States therefore expects that Canada will join the United States in seeking to ensure that 
the integrity and impartiality of the WTO dispute settlement mechanism is maintained.  
 
The United States requests that you distribute this communication electronically to the Members of 
the DSB and circulate it when feasible to do so.  
 
 
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