WT/DS437/AB/RW  
 
16 July 2019  
(19-4720) Page: 1/104 
    
 
UNITED STATES – COUN TERVAILING DUTY MEAS URES ON CERTAIN PROD UCTS 
FROM CHINA  
RECOURSE TO ARTICLE 21.5 OF THE DSU BY C HINA 
AB-2018-2 
Report of the Appellate  Body WT/DS437/AB/R W 
 
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  Table of Contents  
 
1   INTRODUCTION  ................................ ................................ ................................ ...........  8 
2   ARGUMENTS OF THE  PARTICIPANTS  ................................ ................................ ..........  12 
3   ARGUMENTS OF THE  THIRD PARTICIPANTS  ................................ ...............................  12 
4   ISSUES RAISED IN  THIS APPEAL  ................................ ................................ ...............  12 
5   ANALYSIS OF THE APPELLATE  BODY  ................................ ................................ ..........  14 
5.1   The Panel's terms of reference  ................................ ................................ .....................  14 
5.1.1    The Panel's findings  ................................ ................................ ................................ . 14 
5.1.2    Claims and arguments on appeal  ................................ ................................ ...............  16 
5.1.3    Whether the Panel erred in finding that the subsequent reviews at issue fell within  
its terms of reference  ................................ ................................ ................................ .........  18 
5.1.4    Conclusion  ................................ ................................ ................................ ..............  24 
5.2   Article  1.1(a)(1) of the SCM  Agreement  ................................ ................................ ........  24 
5.2.1    The measures at issue  ................................ ................................ ..............................  25 
5.2.2   The Panel's findings  ................................ ................................ ................................ . 28 
5.2.3    The legal standard for public body determinations under Article  1.1(a)(1) of the 
SCM Agreement  ................................ ................................ ................................ .................  33 
5.2.3.1    Claims and arguments on appeal  ................................ ................................ ............  33 
5.2.3.2    Whether the Panel erred in its interpretation of the legal standard for public body 
determinations under Article  1.1(a)(1) of the SCM  Agreement  ................................ .................  36 
5.2.4    The Public Bodies Memorandum  ................................ ................................ ................  42 
5.2.4.1    Whether the Public Bodies Memorandum falls, "as such", within the scope of these 
Article  21.5 proceedings  ................................ ................................ ................................ ..... 42 
5.2.4.2    Whether the Public Bodies Memorandum is, "as such", inconsistent with  
Article  1.1(a)(1) of the SCM  Agreement  ................................ ................................ ................  45 
5.3   Article  14(d) of the SCM  Agreement  ................................ ................................ ..............  46 
5.3.1    Interpretation of Articles  1.1(b) and  14(d) of the  SCM Agreement  ................................ . 48 
5.3.2    Whether the Panel erred in its interpretation of Articles  1.1(b) and  14(d) of the 
SCM Agreement in finding  that recourse to out -of-country prices is not limited to circumstances  
in which the government "effectively determines" the price of the goods in question  ..................  52 
5.3.2.1    Conclusion  ................................ ................................ ................................ ...........  54 
5.3.3    Whether the Panel erred in its interpretation and application of Articles  1.1(b)  
and 14(d) of the SCM  Agreement  ................................ ................................ .........................  54 
5.3.3.1    Whether the Panel erred in its interpretation of Articles  1.1(b) and  14(d) of the 
SCM Agreement  ................................ ................................ ................................ .................  56 
5.3.3.2    Whether the Panel erre d in its application of Articles  1.1(b) and  14(d) of the 
SCM Agreement  ................................ ................................ ................................ .................  59 
5.3.3.3    Conclusion  ................................ ................................ ................................ ...........  73 
5.4   Article  2.1(c) of the SCM  Agreement  ................................ ................................ .............  75 
5.4.1    Whether the Panel erred by assessing if the USDOC had sufficiently identified the  
relevant subsidy programmes  ................................ ................................ ..............................  76 
5.4.2    Whether the Panel erred in its interpretation and application of Article  2.1(c) of the  
SCM Agreement  ................................ ................................ ................................ .................  78 
5.4.2.1    The Panel's findings  ................................ ................................ ...............................  78 WT/DS437/AB/R W 
 
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  5.4.2.2    Claims and arguments on appeal  ................................ ................................ ............  80 
5.4.2.3    Analysis  ................................ ................................ ................................ ...............  81 
5.5   Separate  opinion of one Division member  ................................ ................................ ...... 87 
5.5.1    Public Body  ................................ ................................ ................................ .............  87 
5.5.2    Benefit  ................................ ................................ ................................ ...................  88 
5.5.3    Specificity  ................................ ................................ ................................ ...............  96 
5.5.4    Overal l summary  ................................ ................................ ................................ ... 100 
6   FINDINGS AND CON CLUSIONS  ................................ ................................ .................  100  
6.1   The Panel's terms of reference  ................................ ................................ ...................  100 
6.2   Article  1.1(a)(1) of the SCM  Agreement  ................................ ................................ ...... 100 
6.3   Articles  1.1(b) and 14(d) of the SCM  Agreement  ................................ ..........................  101 
6.4   Article  2.1(c) of the SCM  Agreement  ................................ ................................ ...........  103 
 
 
  WT/DS437/AB/R W 
 
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  ABBREVIATIONS USED I N THIS REPORT  
Abbreviation  Description  
Anti-Dumping Agreement  Agreement on Implementation of Article  VI of the General Agreement on 
Tariffs and Trade 1994 
CCP Chinese Communist Party  
CVD countervailing duty  
DSB Dispute Settlement Body  
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes  
GATT  1994 General Agreement on Tariffs and Trade 1994  
GOC Government of the People's Republic of China  
ILC Articles  International Law Commission's Articles  on the Responsibility of States for 
Internationally Wrongful Acts  
OCTG  oil country tubular goods  
OECD  Organization for Economic Cooperation and Development  
Original Panel Report  Panel Report, United  States  – Countervailing Duty Measures on Certain 
Products from China , WT/DS437/R  
PRC People's Republic of China  
SCM Agreement  Agreement on Subsidies and Countervailing Measures  
Section 129  Section 129 of the Uruguay Round Agreements Act  
SIE state-invested enterprise  
SOCB  state-owned commercial bank  
SOE state-owned enterprise  
USDOC  United  States Department of Commerce  
WTO World Trade Organization  
 
PANEL EXHIBITS CITED  IN THIS REPORT 
Exhibit 
Number  Short Title  
(if applicable)  Description  
CHN-1 Public Bodies Memorandum  USDOC Memorand um dated 18  May 2012 for Section 129 
Determination of the Countervailing Duty Investigation of 
Circular Welded Carbon Quality Steel Pipe; Light -Walled 
Rectangular Pipe and Tube; Laminated Woven Sacks; and 
Off-the-Road Tires from the People's Republic of China : An 
Analysis of Public Bodies in the People's Republic of China in 
Accordance with the WTO Appellate  Body's Findings in WTO 
DS379; and USDOC Memorandum dated 18 May 2012 on the 
relevance of the Chinese Com munist Party for the limited 
purpose of determining whether particular enterprises should 
be considered to be "public bodies" within the context of a 
countervailing duty investigation  
CHN-4 Preliminary Determination 
on Public Bodies and Input 
Specificity  USDOC Memorandum dated 25  February  2016 on Preliminary 
Determination of Public Bodies and Input Specificity, and the 
attached Memorandum on Input Producers and Input 
Purchases During the Investigations  
                                                
 In this Report, exhibits submitted by the parties to the Panel are referred to using the 3 -digit ISO code 
found in document ISO 3166 -1. Thus, exhibits submitted by China are referred to as CHN -# and exhibits 
submitted by the United States are referred to as USA -#. WT/DS437/AB/R W 
 
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  Exhibit 
Number  Short Title  
(if applicable)  Description  
CHN-5 Final Section 129 
Determination  USDOC Final Determination for Lawn Groomers, Kitchen 
Shelving, Wire Strand, Print Graphics, Aluminum Extrusions, 
and Steel Cylinders  dated 31 March 2016;  Seamless Pipe  dated 
25 April 2016;  Pressure Pipe, Line Pipe, OCTG, and Solar 
Panels  dated 19 May 2016  
CHN-19 Ordover Report  Exhibit GOC -D-25 to GOC Questionnaire response 
(6 July 2015)  
CHN-20 Benchmark Memorandum  Memorandum dated 7  March 2016 on USDOC Benefit (Market 
Distortion)  
CHN-21 Final Benchmark 
Determination  USDOC Final Determination for Pressure Pipe, Line Pipe, OCTG, 
Wire Strand, and Solar Panels dated 19 May 2016 
CHN-23 Input Specificity 
Memorandum  USDOC Memorandum dated 31  December  2015, "Input 
Specificity: Preliminary Analysis of the Diversification of 
Economic Activities and Length of Time"  
CHN-28 USDOC Final Determination 
in the original Solar Panels 
investigation  USDOC Issues and Decision Memorandum dated 9  October 
2012 on Final Results of the Countervailing Duty Investigation 
of Crystalline Silicon Photovoltaic Cells, Whether or Not 
Assembled Into Modules, from the People's Republic of China  
CHN-43 USDOC Second 
Administrative Review in 
Solar Panels  USDOC Issues and Decisi on Memorandum dated 12 July 2016 
on Final Results of the Countervailing Duty Administrative 
Review (2013) of Crystalline Silicon Photovoltaic Cells, Whether 
or Not Assembled into Modules from the People's Republic of 
China  
CHN-53 USDOC Sunset Review in 
Aluminum Extrusions  USDOC Issues and Decision Memorandum dated 
1 August  2016 on Final Results of the First Expedited Sunset 
Review of the Countervailing Duty Order on Aluminum 
Extrusions from the People's Republic of China  
CHN-67  United States' opening statement before the Appellate  Body in 
US – Carbon Steel (India)  
USA-21 Benchmark Questionnaire  USDOC Questionnaire dated 5 June 2015 concerning the 
Benchmark Used to Measure Whether Certain Inputs Were Sold 
for Less than Adequate Remuneration  
USA-83 Public Bodies Questionnaire  USDOC Questionnaire dated 1 May 2015 c oncerning "Public 
Bodies"  
USA-84 Supporting Benchmark 
Memorandum  USDOC Supporting Memorandum dated 7  March 2016 to 
Preliminary Benefit (Market Distortion)  Memorandum  
USA-130 Public Bodies Record 
Memorandum  Memorandum dated 2  November  2015 on Placement of Factual 
Information on the Record with Respect to Public Bodies  
CASES CITED IN THIS REPORT  
Short Title  Full Case Title and Citation  
Australia – Automotive 
Leather II (Article 21.5 – US)
  Panel Report, Australia – Subsidies Provided to Producers and Exporters of 
Automotive Leather – Recourse to Article 21.5 of the DSU by the 
United  States , WT/DS126/RW and Corr.1, adopted 11 February 2000, DSR 
2000:III, p. 1189  
Australia – Salmon 
(Article  21.5 – Canada)  Panel Report, Australia – Measures Affecting Importation of Salmon – 
Recourse to Article  21.5 of the DSU by Canada , WT/DS18/RW , adopted 
20 March 2000, DSR 2000:IV, p. 2031 
Brazil – Aircraft  Appellate  Body Report, Brazil – Export Financing Programme for Aircraft , 
WT/DS46/AB/R , adopted 20 August 1999, DSR 1999:III, p. 1161 
Canada – Aircraft  Appellate  Body Report, Canada – Measure s Affecting the Export of Civilian 
Aircraft , WT/DS70/AB/R , adopted 20  August  1999, DSR 1999:III, p. 1377 WT/DS437/AB/R W 
 
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  Short Title  Full Case Title and Citation  
Canada – Aircraft 
(Article  21.5 – Brazil)  Appellate  Body Report, Canada – Measures Affecting the Export of Civilian 
Aircraft – Recourse by Brazil to Article 21.5 of the DSU , WT/DS70/AB/RW , 
adopted 4 August 2000, DSR 2000:IX, p. 4299 
EC – Bed Linen  
(Article  21.5 – India)  Appellate  Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton -Type Bed Linen from India – Recours e to Article  21.5 of the 
DSU by India , WT/DS141/AB/RW, adopted 24 April 2003, DSR 2003:III, 
p. 965 
EC – Fasteners (China) 
(Article 21.5 – China)  Appellate  Body Report, European Communities – Definitive Anti -Dumping 
Measures on Certain Iron or Steel Fasteners from China – Recourse to Article 
21.5 of the DSU by China , WT/DS397/AB/RW and Add.1 , adopted 12 February 
2016, DSR 2016:I, p. 7 
EC and certain member 
States – Large Civil Aircraft  Appellate  Body Report, European Communities and Certain Member States – 
Measures Affecting Trade in Large Civil Aircraft , WT/DS316/AB/R , adopted 
1 June 2011, DSR 2011:I, p. 7 
Japan – DRAMs (Korea)  Appellate  Body Report, Japan – Countervailing Duties on Dynamic Random 
Access Memories from Korea , WT/DS336/AB/R a nd Corr.1, adopted 
17 December 2007, DSR 2007:VII, p. 2703 
Mexico – Anti-Dumping 
Measures on Rice  Appellate  Body Report, Mexico – Definitive Anti -Dumping Measures on Beef 
and Rice, Complaint with Respect to Rice , WT/DS295/AB/R, adopted 
20 December 2005, D SR 2005:XXII, p. 10853  
Peru – Agricultural Products  Appellate  Body Report, Peru – Additional Duty on Imports of Certain 
Agricultural Products , WT/DS457/AB/R and Add.1, adopted 31 July 2015, 
DSR 2015:VI, p. 3403 
US – Anti-Dumping and 
Countervailing Duties (China)  Appellate  Body Report, United  States – Definitive Anti -Dumping and 
Countervailing Duties on Certain Products from China , WT/DS379/AB/R , 
adopted 25  March  2011, DSR 2011:V, p. 2869 
US – Anti-Dumping and 
Countervailing Duties (C hina) Panel Report, United States – Definitive Anti -Dumping and Countervailing 
Duties on Certain Products from China , WT/DS379/R, adopted 25  March 2011, 
as modified by Appellate Body Report WT/DS379/AB/R, DSR 2011:VI, p. 3143  
US – Anti-Dumping 
Methodologies (China)  Appellate  Body Report, United States – Certain Methodologies and Their 
Application to Anti -Dumping Proceedings Involving China , WT/DS471/AB/R 
and Add.1, adopted 22 May 2017, DSR 2017:III, p.  1423 
US – Carbon Steel (India)  Appellate  Body Report, United  States – Countervailing Measures on Certain 
Hot-rolled Carbon Steel Flat Products from India , WT/DS436/AB/R , adopted 
19 December  2014, DSR 2014:V, p.  1727 
US – Carbon Steel (India)  Panel Report, United States – Countervailing Measures on Certain Hot -Rolled 
Carbon Steel Flat Products from India , WT/DS436/R and Add.1, adopted 
19 December 2014, as modified by Appellate Body Report WT/DS436/AB/R, 
DSR 2014:VI, p. 2189  
US – Continued Zeroing  Appellate  Body Report, United States – Continued Existence and Application of 
Zeroing Methodology , WT/DS350/AB/R, adopted 19 February 2009, DSR 
2009:III, p.  1291 
US – Corrosion -Resistant 
Steel Sunset Review  Appellate  Body Report, United  States – Sunset Review of Anti-Dumping Duties 
on Corrosion -Resistant Carbon Steel Flat Products from Japan , 
WT/DS244/AB/R , adopted 9  January  2004, DSR 2004:I, p.  3 
US – Countervailing Duty 
Investigation on DRAMS  Appellate  Body Report, United  States – Countervailing Duty Investigation on 
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/AB/R , adopted 20  July 2005, DSR 2005:XVI, p.  8131 
US – Countervailing 
Measures (China)  Appellate  Body Report, United  States – Countervailing Duty Measures on 
Certain  Products from China , WT/DS437/AB/R , adopted 16  January  2015 
US – Countervailing 
Measures (China)  Panel Report, United  States – Countervailing Duty Measures on Certain 
Products from China , WT/DS437/R  and Add.1, adopted 16  January  2015, as 
modified by Appe llate Body Report WT/DS437/AB/R  
US – Countervailing 
Measures (China) 
(Article  21.5 – China)  Panel Report, United States – Countervailing Duty Measures on Certain 
Products from China – Recourse to Article 21.5 of the DSU by China , 
WT/DS437/RW and Add.1, ci rculated to WTO Members 21 March 2018  WT/DS437/AB/R W 
 
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  Short Title  Full Case Title and Citation  
US – Export Restraints  Panel Report, United States – Measures Treating Exports Restraints as 
Subsidies , WT/DS194/R and Corr.2, adopted 23 August 2001, DSR 2001:XI, 
p. 5767 
US – FSC (Article 21.5 – 
EC II) Appellate  Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations" – Second Recourse to Article 21.5 of the DSU by the European 
Communities , WT/DS108/AB/RW2, adopted 14 March 2006, DSR 2006:XI, 
p. 4721 
US – Lamb  Appellate  Body Report, United States – Safeguard Measures on Imports of 
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia , 
WT/DS177/AB/R, WT/DS178/AB/R, adopted 16 May 2001, DSR 2001:IX, 
p. 4051 
US – Oil Country Tubular 
Goods Sunset Reviews  Appellate  Body Report,  United  States – Sunset Reviews of Anti -Dumping 
Measures on Oil Country Tubular Goods from Argentina , WT/DS268/AB/R , 
adopted 17  December  2004, DSR 2004:VII, p.  3257 
US – Softwood Lumber IV  Appellate  Body Report, United  States – Final Countervailing Duty 
Determination with Respect to Certain Softwood Lumber from Canada , 
WT/DS257/AB/R , adopted 17  February  2004, DSR 2004:II, p.  571 
US – Softwood Lumber IV  Panel Report, United States – Final Countervailing Duty Determination with 
Respect to Certain Softwood Lumber from Canada , WT/DS257/R and Corr.1, 
adopted 17 February 2004, as modified by Appellate Body Report 
WT/DS257/AB/R, DSR 2004:II, p. 641  
US – Softwood Lumber IV 
(Article  21.5 – Canada)  Appellate  Body Report, United  States – Final Countervailing Duty 
Determination with Respect to Certain Softwood Lumber from Canada – 
Recourse by Canada to Article  21.5 of the DSU , WT/DS257/AB/RW , adopted 
20 December  2005, DSR 2005:XXIII, p.  11357  
US – Softwood Lumber VI 
(Article  21.5 – Canada)  Appellate  Body Report, United  States – Investigation of the International Trade 
Commission in Softwood Lumber from Canada – Recourse to Article  21.5 of 
the DSU by Canada , WT/DS277/AB/RW , adopted 9  May 2006, and Corr. 1, 
DSR 2006:XI, p.  4865 
US – Tuna II (Mexico) 
(Article 21.5 – Mexico)  Appellate  Body Report, United States – Measures Concerning the Importation, 
Marketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of 
the DSU by Mexico , WT/DS381/AB/RW and Add.1, adopted 3 December 2015, 
DSR 2015:X, p.  5133 
US – Tyres (China)  Appellate  Body Report, United  States – Measures Affecting Imports of Certain 
Passenger Vehicle and Light Truck Tyres from China , WT/DS399/AB/R , 
adopted 5  October  2011, DSR 2011:IX, p.  4811 
US – Upland Cotton 
(Article  21.5 – Brazil)  Appellate  Body Report, United  States – Subsidies on Upland Cotton – Recourse 
to Article  21.5 of the DSU by Brazil , WT/DS267/AB/RW , adopted 
20 June 2008, DSR 2008:III, p.  809 
US – Wheat Gluten  Appellate  Body Report, United States – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R, 
adopted 19 January 2001, DSR 2001:II, p.  717 
US – Zeroing (EC) 
(Article  21.5 – EC) Appellate  Body Report, United  States – Laws, Regulations and Methodology for 
Calculating Dumping Margins ("Zeroing") – Recourse to Article  21.5 of the DSU 
by the European Communities , WT/DS294/AB/RW  and Corr.1, adopted 
11 June 2009, DSR 2009:VII, p.  2911 
US – Zeroing (Japan) 
(Article 21.5 – Japan)  Appellate  Body Report, United  States – Measures Relating to Zeroing and 
Sunset Reviews – Recourse to Article  21.5 of the DSU by Japan , 
WT/DS322/AB/RW , adopted 31  August  2009, DSR 2009:VIII, p.  3441 
 WT/DS437/AB/R W 
 
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  WORLD TRADE ORGANIZATION  
APPELLATE  BODY 
 
 
United  States  – Countervailing Duty 
Measures on Certain Products from China  
 
Recourse to Article  21.5 of the DSU by China  
 
United  States , Appellant/ Appellee  
China , Other Appellant /Appellee  
 
Australia , Third Participant  
Canada , Third Participant  
European  Union , Third Participant  
Japan, Third Participant  
Korea, Third Participant  
India, Third Participant  
Russia , Third Participant  
Viet Nam, Third Participant  AB-2018-2 
 
Appellate  Body Division :  
 
Graham , Presiding Member  
Bhatia , Member  
Servansing , Member  
 
 
 
1  INTRODUCTION  
1.1.  The United  States  and China each appeal certain issues of law and legal interpretations 
developed in the Panel Report,  United  States  – Countervailing Duty Measures on Certain Products 
from China – Recourse to Article  21.5 of the DSU by China1 (Panel Report). The Panel was 
established pursuant to Article  21.5 of the Understanding on Rules and Procedures Governing the 
Settlement of Dispu tes (DSU) to consider a complaint by China2 regarding the consistency with the 
Agreement on Subsidies and Countervailing Measures (SCM  Agreement)  of measures taken by the 
United  States  to comply with the recommendations and rulings of the Dispute Settlemen t Body 
(DSB) in the original proceedings in US – Countervailing Measures (China).3 
1.2.  The dispute from which the present Article  21.5 compliance proceedings arise concern s the 
imposition by the United  States of countervailing duties on a range of products from China4, as well 
as the underlying investigations leading to the imposition of such duties. Before the original panel, 
China challenged  several aspects of the investig ations conducted by the United  States  Department 
of Commerce (USDOC) , including the application of an alleged "rebuttable presumption" used to 
determine whether Chinese state -owned enterprises (SOEs) qualify as public bodies within the 
meaning of the SCM  Agreement. China further challenged several aspects of the USDOC's 
determinations stemming from such investigations.  
1.3.  In its report , circulated to Members of the World Trade Organization (WTO) on 14  July 2014, 
the original panel found , among other things,  that in 12 of the investigations at issue : 
(i) the USDOC 's determinations that SOEs are public bodies  were inconsistent with the United  States ' 
obligations under Article  1.1(a)(1) of the SCM  Agreement; and (ii) the USDOC 's specificity 
determinations were inconsistent with the United  States ' obligations under Article  2.1(c) of the 
SCM Agreement  because they failed  to take into account the duration of the subsidy programme 
and economic diversification . The original panel fu rther found that: (iii) the USDOC's application of 
a "rebuttable presumption" that a majority government -owned entity is a public body was, "as such ", 
inconsistent with Article  1.1(a)(1) of the SCM  Agreement;  and (i v) in two investigations at issue, 
                                                
1 WT/DS437/RW , 21 March  2018.  
2 Request for the Establishment of a Panel by China, WT/DS437/21.  
3 The recommendations and rulings of the DSB resulted from the adoption on 16 January 2015, by the 
DSB, of the Appellate  Body Report, WT/DS437/ AB/R, and the Panel Report, WT/DS437/ R, in  
US – Countervailing Measures (China) . In this Report, we refer to the panel that considered the original 
complaint brought by China as the "original panel" and to its report as the "original panel report".  
4 The products at issue were solar panels, wind towers , thermal paper, coated paper, lawn groomers, 
kitchen shelving, steel sinks, citric acid, magnesia carbon bricks, pressure pipe, line pipe, seamless pipe, steel 
cylinders, drill pipe, oil country tubular goods (OCTG), wire strand, and aluminum extrusions. (See Original 
Panel Report, paras.  7.1-7.5) WT/DS437/AB/R W 
 
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  the US DOC acted inconsistently with the United  States ' obligations under Article  11.3 of the 
SCM Agreement  by initiating investigations with respect to export restraints. At the same time, the 
original panel rejected a number of claims brought by China . In parti cular, the original panel found 
that: (v) the USDOC  did not act inconsistent ly with the United  States ' obligations under Article  14(d) 
or Article  1.1(b) of the SCM  Agreement by rejecting in -country private prices in China  in its 
benchmark determinations ; (vi) the USDOC  did not act inconsistently with the United  States' 
obligations under  Article  2.1(c) of the SCM  Agreement by failing to identify the underlying subsidy 
programmes ; and (vii) the USDOC did not act inconsistently with the United  States ' obligat ions under 
Article  12.7 of the SCM  Agreement  by not relying on facts available on the record.5 
1.4.  Each of the participants appealed certain aspects of the original panel's findings. Neither 
participant appealed the panel's findings of inconsistency with respe ct to the issue of public bodies 
under Article  1.1(a)(1) of the SCM  Agreement. Among other things, t he Appellate  Body: 
(i) reversed  the original panel's finding that the USDOC did not act inconsistently with the 
United  States ' obligations under Article  14(d) or Article  1.1(b) of the SCM  Agreement  by rejecting 
in-country private prices in China, and found that the USDOC's benchmark determinations were 
inconsistent with such provisions; (ii) reversed the original panel's finding that the USDOC did not 
act inconsistently with the United  States ' obligations under Article  2.1 of the SCM  Agreement  by 
failing to identify a "subsidy programme", found that the original panel failed to provide any 
case-specific discussion or references to the USDOC's determ inations of specificity challenged by 
China, but found itself unable to complete the legal analysis in this regard; and (iii) reversed the 
original panel's finding that the USDOC did not act inconsistently with the United  States ' obligations 
under Article  12.7 of the SCM  Agreement  by not relying on facts available on the record, but found 
itself unable to complete the legal analysis in this regard.6 
1.5.  Following the original dispute, the USDOC revised 12 of the countervailing duty determinations 
at issue and m aintained the related duties in place. The compliance dispute, which is the subject of 
this appeal, concerns China's claims against measures taken by the United  States to comply with 
the DSB's recommendations and rulings in the original dispute . The measures at issue in these 
compliance proceedings are the following: (i) preliminary and final determinations made by the 
USDOC under Section  129 of the Uruguay Round Agreements Act (Section  129) to comply with the 
recommendations and rulings of the DSB made in the original proceedings; (ii) the Public Bodies 
Memorandum7, both as a measure of general and prospective application and a measure relating to 
the Section  129 proceedings at issue; (iii) the original USDOC final countervailing duty determinat ion 
in the Solar Panels investigation; (iv) subsequent periodic and sunset reviews of the countervailing 
duty orders identified in Annexes 3 and 4 to China's request for the establishment of a compliance 
panel8, as well as periodic and sunset review determ inations subsequent to those set forth in 
Annexes 3 and 4 to China's panel request; and (v) all "instructions and notices" by which the 
United  States imposes, assesses, and/or collects cash deposits and countervailing duties in the 
proceedings at issue, an d its ongoing conduct in doing so.9 
1.6.  In the Panel Report, circulated to Members of the WTO  on 21 March  2018, the Panel found 
that: 
a. with respect to China's "as applied" claim under Article  1.1(a)(1) of the SCM  Agreement, 
China has not demonstrated that the United  States acted inconsistently with 
Article  1.1(a)(1) of the SCM  Agreement in the Pressure Pipe, Line Pipe, Lawn Groomers, 
Kitchen Shelving, Oil Country Tubular Goods ( OCTG ), Wire Strand, Seamless Pipe, Print 
                                                
5 See Original Panel Report, para.  8.1. 
6 See Appellate  Body Report, US – Countervailing  Measures (China) , para.  5.1. 
7 USDOC Memorandum dated 18  May 2012 for Section 129 Determination of the Countervailing Duty 
Investigation of Circular Welded Carbon Quality Steel Pipe; Light -Walled Rectangular Pipe and Tube; Laminated 
Woven Sacks; and Off -the-Road Tires from the People's Republic of China: An Analysis of Public Bodies in the 
People's Republic of China in Accorda nce with the WTO Appellate  Body's Findings in WTO DS379; and USDOC 
Memorandum dated 18 May 2012 on the relevance of the Chinese Communist Party for the limited purpose of 
determining whether particular enterprises should be considered to be "public bodies"  within the context of a 
countervailing duty investigation  (Panel Exhibit CHN -1) (Public Bodies Memorandum).  
8 Request for the Establishment of a Panel by China pursuant to Article  21.5 of the DSU, WT/DS437/21 
(China's panel request).  
9 See Panel Report, p ara. 2.1. WT/DS437/AB/R W 
 
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  Graphics, Aluminum Ex trusions, Steel Cylinders, and Solar Panels Section  129 
proceedings;  
b. with respect to China's "as such" claim under Article  1.1(a)(1) of the SCM  Agreement, 
China has not demonstrated that the Public Bodies Memorandum is inconsistent "as such" 
with Article  1.1(a)(1) of the SCM  Agreement;  
c. with respect to China's claim under Articles  1.1(b) and 14(d) of the SCM  Agreement, China 
has demonstrated that the United  States acted inconsistently with Articles  1.1(b) 
and 14(d) of the SCM  Agreement in the OCTG, Solar Pan els, Pressure Pipe, and Line Pipe 
Section  129 proceedings;  
d. with respect to China's claim under Article  32.1 of the SCM  Agreement, China has not 
demonstrated that the United  States acted inconsistently with Article  32.1 of the 
SCM Agreement in the OCTG, Lin e Pipe, Pressure Pipe, and Solar Panels Section  129 
proceedings;  
e. with respect to China's claim under Article  2.1(c) of the SCM  Agreement, China has 
demonstrated that the United  States acted inconsistently with Article  2.1(c) of the 
SCM Agreement in the Pressure Pipe, Line Pipe, Lawn Groomers, Kitchen Shelving, OCTG, 
Wire Strand, Seamless Pipe, Print Graphics, Aluminum Extrusions, Steel Cylinders, and 
Solar Panels Section  129 proceedings;  
f. with respect to China's claim u nder Article  2.2 of the SCM  Agreement , China has not 
demonstrated that the United  States  acted inconsistently with Article  2.2 of the 
SCM Agreement  in the Thermal Paper Section 129 proceeding;  
g. with respect to China's claim concerning the final determinatio n of the USDOC in the 
original Solar Panels investigation, China has demonstrated that the United  States acted 
inconsistently with Articles  1.1(a)(1), 1.1(b), 2.1(c), and  14(d) of the SCM  Agreement in 
the final determination of the original Solar Panels in vestigation;   
h. with respect to China's claims concerning the Kitchen Shelving, OCTG, Aluminum 
Extrusions, Solar Panels, and Magnesia Bricks administrative reviews:  
i. China has demonstrated that the United  States acted inconsistently with 
Articles  1.1(a)(1) a nd 2.1(c) of the SCM  Agreement in the three Kitchen Shelving 
administrative reviews;  
ii. China has demonstrated that the United  States acted inconsistently with 
Articles  1.1(a)(1) and 2.1(c) of the SCM  Agreement in the first OCTG administrative 
review, and tha t the United  States acted inconsistently with Article  2.1(c) of the 
SCM Agreement in the second OCTG administrative review;  
iii. China has not demonstrated that the United  States acted inconsistently with 
Articles  1.1(b) and 14(d) of the SCM  Agreement in the fi rst OCTG administrative 
review, nor that the United  States acted inconsistently with Articles  1.1(a)(1), 
1.1(b), and 14(d) of the SCM  Agreement in the second OCTG administrative review;  
iv. China has demonstrated that the United  States acted inconsistently wit h 
Articles  1.1(a)(1) and 2.1(c) of the SCM  Agreement in the first Aluminum Extrusions 
administrative review, and that the United  States acted inconsistently with 
Article  2.1(c) of the SCM  Agreement in the second and third Aluminum Extrusions 
administrative  reviews;  
v. China has not demonstrated that the United  States acted inconsistently with 
Article  1.1(a)(1) of the SCM  Agreement in the second and third Aluminum Extrusions 
administrative reviews;  
vi. China has demonstrated that the United  States acted inconsisten tly with 
Article  2.1(c) of the SCM  Agreement in the first Solar Panels administrative review;  WT/DS437/AB/R W 
 
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  vii. China has not demonstrated that the United  States acted inconsistently with 
Articles  1.1(a)(1), 1.1(b), and 14(d) of the SCM  Agreement in the two Solar Panels 
administrative reviews, nor that the United  States acted inconsistently with 
Article  2.1(c) of the SCM  Agreement in the second Solar Panels administrative 
review; and 
viii. China has not demonstrated that the United  States acted inconsistently with 
Articles  11.3 an d 12.7 of the SCM  Agreement in the two Magnesia Bricks 
administrative reviews;  
i. China has not demonstrated that the United  States acted inconsistently with Article  21.3 
of the SCM  Agreement in the Thermal Paper, Pressure Pipe, Line Pipe, Kitchen Shelving, 
OCTG, Wire Strand, Magnesia Bricks, Seamless Pipe, Print Graphics , and Aluminum 
Extrusions sunset reviews; and  
j. with respect to the ongoing conduct of imposing, assessing, and collecting countervailing 
duty and cash deposits under the countervailing duty ord ers at issue, China has not 
demonstrated the existence of "ongoing conduct" inconsistent with Articles  1.1(a)(1), 
1.1(b), 2.1(c), 2.2, 11.3, and 14(d) of the SCM  Agreement and with Articles  19.1, 19.3, 
and 19.4 of the SCM  Agreement.10 
1.7.  On 27 April 2018, the United  States  notified the DSB, pursuant to Articles  16.4 and  17 of the 
DSU, of its intention to appeal certain issues of law covered in the Panel Report and certain legal 
interpretations developed by the Panel and filed a Notice of Appeal11 and an appe llant's submission 
pursuant to Rule  20 and Rule 21, respectively, of the Working Procedures for Appellate Review12 
(Working Procedures). On  2 May 2018, China  notified the DSB, pursuant to Articles  16.4 and 17 of 
the DSU, of its intention to appeal certain i ssues of law covered in the Panel Report and certain legal 
interpretations developed by the Panel and filed a Notice of Other Appeal and other appellant's 
submission13 pursuant to Rule 23 of the Working Procedures . On 15 May 2018, China and  the 
United  State s each filed an appellee's submission .14 On 18 May 2018, Canada, the European  Union, 
and Japan each filed a third participant's submission .15 On the same day,  Australia and India each 
notified its intention to appear at the oral hearing as a third  participant .16 On 1 February  2019, Korea 
and Russia submitted their delegation list s for the oral hearing to the Appellate  Body Secretariat  and 
the participants and third  participants in this dispute.17  
1.8.  By letter dated 26 June 2018, the Chair of the Appellate  Body notified the Chair of the DSB 
that the Appellate  Body would not be able to circulate its Report in this appeal within the 
60-day period pursuant to Article 17.5 of the DSU, or within the 90 -day period pursuant to the same 
provision , for the reasons contained therein.18 For the reasons explained in the letter, work on this 
appeal could gather pace only in October 2018. On 2 July 2019, the Chair of the Appellate  Body 
notified the Chair of the DSB that the Appellate  Body Report in these proceedin gs would be circulated 
to WTO  Members on 16 July 2019 .  
1.9.  On 28 September 2018, the participants and third participants were informed that, in 
accordance with Rule 15 of the Working Procedures, the Chair of the Appellate  Body had notified the 
Chair of the DS B of the Appellate  Body's decision to authorize Appellate  Body Member 
Mr Shree  Baboo Chekitan Servansing to complete the disposition of this appeal, to which he had 
been assigned before the completion of  his term of office as Appellate  Body Member on 
30 September  2018.  
                                                
10 Panel Report, para.  8.1. 
11 WT/DS437/24 (contained in Annex A -1 of the Addendum to this Report, WT/DS437/AB/RW/Add.1).  
12 WT/AB/WP/6 , 16 August  2010.  
13 WT/DS437/25 (contained in Annex A -2 of the Addendum to this Report, WT/DS437/AB/RW/Add.1).  
14 Pursuant to Rules 22 and 23(4) of the Working Procedures.  
15 Pursuant to Rule 24(1) of the Working Procedures.  
16 Pursuant to Rule 24(2) of the Working Procedures.  
17 For purposes of this appeal, we have understood Korea's and Russia's actions as notifications 
expressing the intention to attend the oral hearing pursuant to Rule 24(4) of the Working Procedures.  
18 WT/DS437/26. The Chair of the Appellate  Body explained that this was due to a number of factors, 
including the backlog of appeals pending with the Appellate  Body at present and the overlap in the composition 
of all divisions resulting in part from the reduced number of Appellate  Body Members.  WT/DS437/AB/R W 
 
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  1.10.   On 14  November  2018, the Appellate  Body Division hearing this appeal informed the 
participants and third participants that the oral hearing was scheduled to take place on 
4 and 5 February 2019. By letter dated 20  November, China informed the Division that these dates 
would coincide with the  Chinese New Year holiday, and requested the Division to reschedule the 
hearing to the week of 21  January  2019. On 21  November, the Division invited the United  States  
and the third participants to provide comments on China's request, if they so wished. The Div ision 
also indicated that, were it to accept China's request to reschedule the oral hearing, it may consider 
dates other than those suggested by China. On 23  November, the United  States  responded that it 
did not, in principle, object to China's request. Re ferring to a panel meeting to be held in another 
dispute settlement proceeding, the United  States  observed that it would not be able to participate 
in an oral hearing in this appeal if it were scheduled during the week of 25  February  2019. The 
United  State s also noted that 21 January and 18  February  2019 are US federal holidays, and 
US federal government offices are closed on those days. The Division also received responses from 
Canada, the European  Union , and Korea. The European  Union did not oppose China' s request; 
however, the European  Union  noted that the representatives of the European  Union  in this dispute 
would be attending a meeting in DSU Article  22.6 proceedings scheduled for 11 -13 February  2019. 
Canada and Korea had no objection to China's request . By letter dated 3  December  2018, the 
Division informed the participants and third participants of its decision to change the dates of the 
oral hearing to 14 and 15  February  2019.  
1.11.   The oral hearing in this appeal was held on  14 and 15 February  2019. The participants and 
four of the third participants (Australia, Canada, the European  Union , and Japan)  made oral 
statements.  The participants and third participants responded to questions posed by the Members 
of the Appellate  Body Division hearing the ap peal. 
2  ARGUMENTS OF THE PAR TICIPANTS  
2.1.  The claims and arguments of the participants are reflected in the executive summaries of their 
written submissions provided to the Appellate  Body.19 The Notice s of Appeal and the executive 
summaries of the participants' claims and arguments are contained in  Annexes A and B of the 
Addendum to this Report, WT/DS437/AB/RW/Add.1.  
3  ARGUMENTS OF THE THI RD PARTICIPANTS  
3.1.  The arguments of the third participants that filed a written submission ( Canada, the 
European  Union, and Japan ) are reflected in the executive summar ies of their written submissions 
provided to the Appellate  Body20 and are contained in Annex C of the Addendum to this Report, 
WT/DS437/AB/RW/Add.1 . 
4  ISSUES RAISED IN THI S APPEAL  
4.1.  The following issues are raised in this appeal:  
a. whether the Panel erred in finding that certain administrative and sunset reviews 
identified by China were within its terms of reference (raised by the United  States);  
b. whether the Panel erred in finding that China has not demonstrated that the 
United  States acted inconsistently with  Article  1.1(a)(1) of the SCM Agreement in the 
Pressure Pipe, Line Pipe, Lawn Groomers, Kitchen Shelving, OCTG, Wire Strand, 
Seamless Pipe, Print Graphics, Aluminum Extrusions, Steel Cylinders, and Solar Panels 
Section 129 proceedings. In particular:  
i. wheth er the Panel erred in finding that the legal standard for public body 
determinations under Article  1.1(a)(1) does not "require a particular degree or 
                                                
19 Pursuant to the  Appellate  Body's communication on "Executive Summaries of Written Submissions in 
Appellate Proceedings" and "Guidelines in Respect of Executive  Summaries of Written Submissions in 
Appellate  Proceedings" (WT/AB/23, 11  March 2015).  
20 Pursuant to the Appella te Body's communication on "Executive Summaries of Written Submissions in 
Appellate Proceedings" and "Guidelines in Respect of Executive  Summaries of Written Submissions in 
Appellate  Proceedings" (WT/AB/23, 11  March 2015).  WT/DS437/AB/R W 
 
- 13 - 
 
  nature of connection in all cases between an identified government function and 
the particular financial c ontribution at issue" (raised by China); and  
ii. whether the Panel erred in rejecting China's claims that: (i) the USDOC 
misconstrued the concept and relevance of "meaningful control" and based its 
determinations on "mere ownership or control over an entity by  a government, 
without more"; and (ii) the USDOC failed to consider relevant evidence in the 
five investigations in which the Government of the People's Republic of China 
(GOC) participated (raised by China);  
c. whether the Panel erred in finding that China h as not demonstrated that the Public 
Bodies Memorandum is inconsistent "as such" with Article  1.1(a)(1) of the 
SCM Agreement. In particular:  
i. whether the Panel erred in finding that the Public Bodies Memorandum falls 
"as such" within the scope of these Artic le 21.5 proceedings (raised by the 
United  States);  
ii. whether the Panel erred in finding that the Public Bodies Memorandum can be 
challenged "as such" as a rule or norm of general or prospective application 
(raised by the United  States); and  
iii. whether the Panel  erred in finding that the Public Bodies Memorandum does not 
restrict, in a material way, the USDOC's discretion to act consistently with 
Article  1.1(a)(1) (raised by China);  
d. whether the Panel erred in finding that the United States acted inconsistently wi th 
Articles  1.1(b) and 14(d) of the SCM  Agreement in the OCTG, Solar Panels, Pressure 
Pipe, and Line Pipe Section 129 Proceedings. In particular:  
i. whether the Panel erred in its interpretation of Articles  1.1(b) and 14(d) i n finding 
that an investigating au thority may reject available in -country prices if there is 
evidence of price distortion, and not only if there is evidence that a government 
"effectively determines" the price at which the good is sold within the country of 
provision (raised by China); and  
ii. whether the Panel erred in its interpretation and application of Articles  1.1(b) 
and 14(d) in finding that the United States "failed to explain … how government 
intervention in the market resulted  in domestic prices for the inputs at issue 
deviating from a market -determined price" and by failing "to provide a reasoned 
and adequate explanation for its rejection of in -country prices in its benchmark 
determinations"  (raised  by the United  States);  
e. whether the Panel erred in finding that the United States acted  inconsistently with 
Article  2.1(c) of the SCM  Agreement in the Pressure Pipe, Line Pipe, Lawn Groomers, 
Kitchen Shelving, OCTG, Wire Strand, Seamless Pipe, Print Graphics, Aluminum 
Extrusions, Steel Cylinders, and Solar Panels Section 129 proceedings. In particular:  
i. whether the Panel erred in faulting the USDOC for not having sufficiently 
explained its conclusions regarding the "existence" of the relevant subsidy 
programmes in circumstances where this issue was not covered by the DSB's 
recommendations and rulings in the original dispute , and thus could not serve as 
an appropriate basis upon which to assess the consistency of the measures with 
that provision (raised by the United  States); and  
ii. whether the Panel erred in its interpretation and application of A rticle 2.1(c), 
including in finding that the United States did not comply with the requirement to 
"take account of the length of time during which the subsidy programme has been 
in operation" because it failed to adequately explain its conclusions regardin g the 
existence of the relevant subsidy programme  (raised  by the United  States).  WT/DS437/AB/R W 
 
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  5  ANALYSIS OF THE APPELLATE  BODY  
5.1  The Panel's terms of reference  
5.1.  The United  States requests us to reverse the Panel's findings21 that certain administrative 
reviews22 and sunset reviews23 issued under the countervailing duty orders listed in Annex 3 and 
Annex 4 to China's panel request (subsequent reviews) fell within the scope of the Panel's terms of 
reference.24 The United  States co ntends that the Panel erred in finding that the subsequent reviews 
have a sufficiently close nexus, in terms of nature, timing, and effects, to the declared measures 
taken to comply and to the DSB's  recommendations and rulings in the original dispute.25 For its part, 
China requests us to uphold the Panel's finding that the subsequent reviews fell within the s cope of 
these Article  21.5 proceedings.26 China submits that the pervasive links in the subject matter of 
these successive determinations issued under th e countervailing duty orders at issue in the original 
dispute weigh strongly in favour of the subsequent reviews falling within the Panel's terms of 
reference under Article  21.5 of the DSU.27 
5.1.1   The Panel's findings  
5.2.  Before the Panel, China claimed that the Uni ted States had failed to achieve compliance with 
respect to the subsequent reviews. China argued before the Panel that the subsequent reviews had 
been issued under the same countervailing duty orders as the measures challenged in the original 
proceedings a nd that they replaced the effects of the original countervailing  duty determinations in 
a manner that reflected the USDOC's  continued application of an erroneous legal standard in relation 
to the provisions of the SCM  Agreement that had been the subject of  the original proceedings.28 
China further argued that measures enacted before the adoption of DSB recommendations and 
rulings in the original case may fall within the scope of Article  21.5 proceedings, provided it is shown 
that they have a sufficiently clo se nexus to the DSB's recommendations and rulings and to the 
declared measures taken to comply.29  
5.3.  The United  States responded that nearly all of the subsequent reviews identified by China had 
been concluded prior to the end of the reasonable period of time  on 1 April 2016, and that they 
could therefore not be found to be "closely connected" to the measures taken to comply in this 
dispute.30 The United  States further argued that the subsequent reviews had been issued during the 
course of these compliance proc eedings; they thus did not exist at the time of the Panel's 
establishment and could therefore not fall within the Panel's terms of reference.31  
                                                
21 Panel Report, para.  7.347; Unit ed States' appellant's submission, para.  230 (referring to Panel 
Report, paras.  8.1.g and 8.1.h.i -ii, iv, and vi).  
22 Panel Report, para.  2.1.d. The specific administrative reviews are listed in Annex 3 to China's panel 
request. In addition to the administr ative reviews listed there, China identified USDOC Second Administrative 
Review in Solar Panels (Panel Exhibit CHN -43). China explained that this review was issued by the USDOC after 
China filed its panel request and that it is encompassed by paragraph 32 of the panel request, which refers to 
periodic review determinations in the proceedings at issue subsequent to those set forth in Annex  3. (Ibid., 
fn 518 to para.  7.328)  
23 Panel Report, para.  2.1.d. The specific sunset reviews are listed in Annex 4 to Chin a's panel request . 
In addition to the sunset reviews listed there, China identified USDOC Sunset Review in Aluminum Extrusions  
(Panel Exhibit CHN -53). China explained that this review was issued by the USDOC after China filed its panel 
request and that it is encompassed by paragraph 32 of the panel request, which refers to periodic review 
determinations in the proceedings at issue subsequent to those set forth in Annex  4. (Ibid., fn  518 to 
para. 7.328)  
24 The United  States' request for reversal includes the Panel's finding in paras.  7.320 and  8.1.g that the 
USDOC Final Determination in the original Solar Panels investigation (Panel Exhibit CHN -28) fell within its 
terms of reference ( United  States' appellant's submission, fn  8 to para.  9 and para.  230(e)). The  United  States 
does not provide separate arguments in this respect. The Panel's reasoning with respect to this finding is 
based, inter alia, on the same considerations as its reasoning relating to the subsequent reviews (see Panel 
Report, fn  511 to para.  7.320) and the analysis below thus also concerns these findings.  
25 United  States' appellant's submission, para.  206. 
26 China's appellee's submission, para.  220 (referring to Panel Report, para.  7.347).  
27 China's appellee's submission, para.  211. 
28 Panel Rep ort, para.  7.332 (referring to China's first written submission to the Panel , para.  386).  
29 Panel Report, para.  7.333 (referring to China's second written submission to the Panel , para.  230).  
30 Panel Report, para.  7.334 (quoting United  States' first written submission to the Panel , para.  321).  
31 Panel Report, para.  7.334 (quoting United  States' first written submission to the Panel , para.  322).  WT/DS437/AB/R W 
 
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  5.4.  At the outset of its analysis, the Panel noted that its mandate under Article  21.5 of the DSU is 
not limited to an examination of measures declared  to be taken to comply by the implementing 
Member. Rather, measures with a sufficiently close relationship to the declared measures taken to 
comply, and to the recommendations and rulings of the DSB, may also fall within the terms of 
reference of a panel acting under Article  21.5.32 The Panel explained that, therefore, it needed to 
assess the relationship of the subsequent reviews and the declared measures taken to comply, 
focusing in particular on the nature, timing, and e ffects of the various measures, as well as the 
factual and legal background against which the measures had been adopted.33 
5.5.  With respect to the subsequent reviews, the Panel noted that they were "in existence" at the 
time that the Panel was established.34 While some of these reviews had been completed prior to the 
DSB's adoption of recommendations and rulings in the original dispute on 16 January 2015, others 
had been completed thereafter, yet before the end of the reasonable period of time on 1  April 2016.35 
The Panel stated that the timing of a measure alone was not a decisive factor for determining 
whether it had a sufficiently close nexus with a declared measure taken to comply.36 Further, the 
Panel held that, even if "measures taken to comply with recommenda tions and rulings of the DSB 
ordinarily  post-date the adoption of the recommendations and rulings", this did not necessarily have 
to be the case, and in any event there was no requirement that measures taken to comply post -date 
the adoption of the recommen dations and rulings in the original dispute.37 Where m easures that 
come into being after the establishment of a compliance panel have a "particularly close relationship 
to the declared 'measure taken to comply', and to the recommendations and rulings of the  DSB", 
they may also fall within the compliance panel's terms of reference.38 
5.6.  The Panel then proceeded to consider the nature and effects of the subsequent reviews at issue 
to determine whether they had a sufficiently close nexus with the DSB's recommendati ons and 
rulings in the original dispute  and the United  States' implementation of those recommendations and 
rulings.39 With respect to the "nature" of the subsequent reviews, the Panel considered that an 
overlap of the covered products and the substantive is sue in question could indicate a close nexus 
in subject matter.40 In the Panel's view, other relevant considerations were whether the particular 
substantive issue raised with respect to a review was itself the subject of the recommendations and 
rulings of t he DSB41, and whether subsequent reviews and determinations were issued under the 
same "order" as measures challenged in original proceedings, thus constituting "connected 
stages  … involving the imposition, assessment and collection of duties".42 The Panel concluded that 
such relevant similarities in the nature of various measures could indicate a sufficiently close nexus 
notwithstanding formal differences, such that, for example, "differences between original 
investigations and administrative rev iews in countervailing duty cases do not prevent the latter from 
falling within the scope of compliance proceedings."43 
5.7.  At the same time, the Panel recognized certain limits to finding a close nexus in nature between 
subsequent reviews and declared measures  taken to comply. The Panel explained that identity in 
                                                
32 Panel Report, para.  7.329.  
33 Panel Report, para.  7.329 (referring to Appellate  Body Report,  US – Softwood Lumber IV  
(Article  21.5 – Canada) , para.  77). 
34 Panel Report, para.  7.336.  
35 Panel Report, para.  7.336 (referring to China's panel request, Annexes 3-4). 
36 Panel Report, para.  7.337 (referring to Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 224).  
37 Panel Report, para.  7.337 (quoting Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 222). (emphasis original)  
38 Panel Report, para.  7.339 (quoting Appellate  Body Report,  US – Softwood Lumber IV  
(Article  21.5 – Canada) , para.  77; referring to Panel Report, Australia – Salmon (Article  21.5 – Canada) , 
para. 22 (finding that a measure introduced after the establishment of a compliance panel could be considered 
a measure taken to comply in the sense of Article  21.5 due to being "so clearly connected to the panel and 
Appellate  Body reports concerned, both in time and in respect of the subject -matter")).  
39 Panel Report, par a. 7.339.  
40 Panel Report, para.  7.340 (referring to Appellate  Body Report, US – Softwood Lumber IV  
(Article  21.5 – Canada) , para.  83). 
41 Panel Report, para.  7.340 (referring to Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 230, in tu rn referring to Appellate  Body Report, US – Continued Zeroing , para.  181).  
42 Panel Report, para.  7.340 (quoting Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 230).  
43 Panel Report, para.  7.340 (quoting Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 244; referring to Appellate  Body Report, US – Softwood Lumber IV (Article  21.5 – Canada) , para.  82). WT/DS437/AB/R W 
 
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  terms of product and country coverage alone would be an insufficient basis for determining that 
subsequent reviews have a close nexus, in terms of nature, with the recommendations and rulings 
of the DS B with respect to the original investigations.44 However, the Panel considered that, in the 
present case, the overlap of subject matter extended beyond merely an identity of product and 
country coverage. In  particular, the Panel noted that the subsequent re views at issue had been 
conducted under the same countervailing duty orders as were the subject of the 
DSB's  recommendations and rulings  in the original dispute .45 
5.8.  With respect to the close nexus in terms of effects between the subsequent reviews at issue 
and the United  States' implementation acts, the Panel noted that the Appellate  Body had previously 
considered relevant whether a challenged measure perpetuated the WTO -inconsistency originally 
found, thus undermining a Member's compliance with DSB recommend ations and rulings.46 The 
Panel also addressed the United  States' argument that the more fact -intensive and case -specific 
nature of the determinations made under the countervailing orders at issue distinguished this case 
from past cases involving subsequent  measures applying the zeroing methodology. In this respect, 
the Panel considered relevant that the subsequent reviews at issue in the present case involve 
"successive determinations" under the same countervailing duty order. The Panel considered them 
to "form part of a continuum of events"47 bearing a close relationship to the United  States' 
implementation of the relevant DSB recommendations and rulings. In particular, the Panel took into 
account that the administrative reviews affected the countervailing d uty and cash deposit rates 
established in the original determinations that were the subject of the DSB's recommendations and 
rulings, and that the USDOC's Section  129 determinations – the United  States' declared measures 
taken to comply – had the effect of  superseding previously completed administrative reviews, or 
were superseded by the subsequent administrative review identified by China. Moreover, regarding 
sunset reviews, the Panel held that the USDOC's determinations of whether injurious subsidization 
was likely to continue or recur were not made in isolation from determinations made either in the 
investigations at issue in the original dispute or in subsequent administrative reviews.48 
5.9.  Ultimately, the Panel was not convinced that differences in the timi ng and in the factual record 
of various subsequent reviews interrupted this continuum or negated the close nexus of effects 
stemming from the common elements of the various measures. Furthermore, the Panel was not 
persuaded that differences between adminis trative and sunset reviews under US domestic law 
undermine the existence of a close nexus where, notwithstanding certain distinctions between these 
types of review, each review takes as its basis, and thereby reflects, and to some extent 
incorporates, the USDOC's earlier determinations with respect to countervailable subsidies. On that 
basis, the Panel found that the "interrelated effects"49 of the USDOC's original determinations, 
Section 129 determinations, and administrative and sunset review determination s reflect a 
particularly close relationship for the purposes of Article  21.5 of the DSU and that, therefore, the 
subsequent reviews at issue fell within the Panel's terms of reference by virtue of their close 
relationship to the recommendations and rulings  of the DSB and the relevant Section  129 
determinations of the USDOC.50 
5.1.2   Claims and arguments on appeal  
5.10.   The United  States requests us to reverse the Panel's finding that the subsequent reviews at 
issue fell within its terms of reference.51 The United  States c ontends that the Panel erred in finding 
that these reviews had a sufficiently close nexus, in terms of nature, timing, and effects, to the 
declared measures taken to comply.52 The United  States alleges that the Panel's "superficial 
examination" does not ref lect a proper application of the approach articulated by the Appellate  Body 
                                                
44 Panel Report, para.  7.341 (quoting Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 239).  
45 Panel R eport, para.  7.341.  
46 Panel Report, para.  7.342 (referring to Appellate  Body Reports, US – Zeroing (EC) (Article  21.5 – EC), 
para. 250; US – Softwood Lumber IV (Article  21.5 – Canada) , para.  85). 
47 Panel Report, para.  7.344 (quoting Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 251).  
48 Panel Report, para.  7.344 (referring to China's response to Panel question No. 61, para.  236).  
49 Panel Report, para.  7.345.  
50 Panel Report, para . 7.347.  
51 Panel Report, para.  7.347; United  States' appellant's submission, para.  230 (referring to Panel 
Report, paras.  8.1.g and 8.1.h.i -ii, iv, and vi).  
52 United  States' appellant's submission, para.  206. WT/DS437/AB/R W 
 
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  in past disputes.53 For the United  States, the Panel failed to scrutinize properly the relationship of 
the measures and instead "presumed" the existence of a close nexus of the subs equent reviews with 
the measure taken to comply.54  
5.11.   With respect to the nexus between the subsequent reviews and the declared measures taken 
to comply in terms of their "nature", the United  States takes issue with the Panel relying on the 
observation that e ach review takes as its basis the USDOC's earlier determinations with respect to 
countervailable subsidies.55 The United  States alleges that the Panel ignored that each review is 
based on a different factual record.56  
5.12.   Regarding the nexus between the subsequ ent reviews and the declared measures taken to 
comply in terms of their "timing", the United  States notes that the majority of the subsequent 
reviews were concluded prior to the expiration of the reasonable period of time  and prior to the 
adoption of the D SB's recommendations and rulings  in the original dispute . For the United  States, 
this demonstrates that, in terms of "timing", the subsequent reviews were not closely connected to 
the measures taken to comply.57  
5.13.   With respect to the nexus between the subsequent reviews and the declared measures taken 
to comply in terms of "effects", the United  States takes issue with the Panel's reasoning that both 
the subsequent reviews and the declared measures taken to comply had the effect of superseding 
previously  completed administrative reviews, or were superseded by the subsequent administrative 
review identified by China.58 The United  States argues that, when findings of an administrative 
review supersede determinations made in a previous administrative review, this does not, in itself, 
establish the existence of a close nexus in terms of effect.  
5.14.   For its part, China requests us to uphold the Panel's finding that the subsequent reviews fell 
within its terms of reference under Article  21.5 of the DSU.59 China submi ts that the Panel correctly 
held that the subsequent reviews had a substantial overlap in nature with the DSB recommendations 
and rulings and the declared measures taken to comply. China refers to a finding by the 
Appellate  Body, in US – Zeroing (EC) (Arti cle 21.5 – EC), that the use of zeroing in subsequent 
reviews provides the necessary link, in terms of nature or subject matter, between such measures, 
the declared measures taken to comply, and the DSB's recommendations and rulings.60 For China, 
the Panel adhered to this analytical framework in assessing the links, in terms of nature, between 
the subsequent reviews, the DSB's recommendations and rulings, and the Section 129 
determinations in this dispute. In this respect, China notes the Panel's findings th at the subsequent 
reviews were issued under the same countervailing duty orders that were the subject of the DSB's 
recommendations and rulings, that they embodied the identical legal standards for public body, 
benchmark, and specificity that were the subje ct of those recommendations, and that they had been 
applied in the Section  129 determinations that constitute the declared measures taken to comply by 
the United  States.61 
5.15.   China further argues that the Panel correctly found that the effects of the subsequen t reviews 
weigh in favour of a sufficiently close nexus. China disagrees with the United  States' contention that 
the Panel "presumed" that the same or similar results would occur in each subsequent review.62 
China asserts that the Panel expressly rejected t he United  States' arguments relating to the 
fact-specific nature of each determination, finding instead that the interrelated effects of the 
USDOC's original determinations, Section 129 determinations, and sunset review determinations 
reflect a particularl y close relationship, because administrative reviews affected the countervailing 
                                                
53 United  States' appellant's submission, para.  217. 
54 United  States' appellant's submission, para.  221. 
55 United  States' appellant's submission, para.  224 (quoting Panel Report, para.  7.345).  
56 United  States' appellant's submission, para.  224. 
57 United  States' appellant's submission, para.  228. 
58 United  States' appellant's submission, para.  229 (quoting Panel Report, para.  7.344).  
59 China's appellee's submission, para.  220 (referring to Panel Report, para.  7.347).  
60 China's appellee's submission, para.  209 (quoting Appellate  Body Report, US – Zeroing (EC) 
(Article  21.5 – EC), para. 230).  
61 China's appellee's submission, para.  211. 
62 China's appellee's submission, para.  213 (referring to United  States' appellant's submission, 
para. 229).  WT/DS437/AB/R W 
 
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  duty and cash deposit rates established in the original determinations that were the subject of the 
DSB's  recommendations and rulings.63 
5.16.   Finally, China contends that the Panel correctly held that the timing of the subsequent reviews 
established a sufficiently close nexus. China explains that, in US – Zeroing (EC) (Article  21.5 – EC), 
the Appellate  Body had criticized that panel for its "formalistic" reliance on the date of issua nce of 
the subsequent reviews, and had reversed its finding that determinations issued prior to the adoption 
of the DSB's  recommendations and rulings could not be deemed measures "taken to comply" within 
the meaning of Article  21.5 of the DSU.64 Instead, th e Appellate  Body reasoned that the timing of 
the measures was not determinative, and it saw no reason to exclude from a compliance panel's 
terms of reference events that pre -dated the recommendations and rulings of the DSB, particularly 
because those event s may have a bearing on a Member's implementation of those 
recommendations.65 China contends that, accordingly, the Panel did not err in finding that measures 
pre-dating DSB adoption may fall within the scope of Article  21.5 proceedings provided that there is 
a sufficiently close nexus in terms of their nature and effects.  
5.1.3   Whether the Panel erred in finding that the subsequent reviews at issue fell within 
its terms of reference  
5.17.   We now turn to address the scope of measures falling within the terms of referenc e of 
compliance proceedings pursuant to Article  21.5 of the DSU. Thereafter, we turn to the question of 
whether , in the present case, the Panel erred in finding that the subsequent reviews at issue fell 
within its terms of reference.  
5.18.   At the outset, we reca ll that the first sentence of Article  21.5 of the DSU  stipulates:  
Where there is disagreement as to the existence or consistency with a covered 
agreement of measures taken to comply with the recommendations and rulings such 
dispute shall be decided through recourse to these dispute settlement procedures, 
including wherever possible resort to the original panel.   
5.19.   Article  21.5 provides the basis for disputes concerning Members' compliance with 
recommendations and rulings of the DSB. The "matter" in com pliance proceedings consists of 
two elements: (i)  the specific measures  at issue ; and (ii)  the legal basis of the complaint (that is, 
the claims ).66 In determining the scope of compliance proceedings, the Appellate  Body has 
distinguished between these two e lements, and it has found certain limitations regarding both the 
measures that can be challenged in compliance proceedings and the claims that can be raised  in 
such proceedings.  
5.20.   The present case concerns limitations regarding the measures  falling within th e compliance 
panel's terms of reference. We note that the text of Article  21.5 expressly links the "measures taken 
to comply" with the recommendations and rulings of the DSB. The Appellate  Body understood this 
to suggest that the "specific measures at issu e" to be identified in Article  21.5 proceedings are 
measures that have a bearing on compliance with such recommendations and rulings67, and , 
accordingly, that determining the scope of "measures taken to comply" in any given case also 
involves consideration of the recommendations and rulings contained in the original report adopted 
by the DSB.68 
                                                
63 China refers to the Appellate  Body's finding that "administr ative reviews [which] generated 
assessment rates and cash deposit rates calculated with zeroing that replaced those found to be 
WTO-inconsistent in the original proceedings" have a sufficient link, in terms of effects, with the 
recommendations and rulings of the DSB to argue that the same is true for the sunset review determinations in 
this dispute, which provided the legal basis for the continued imposition of assessment rates and cash deposits. 
(China's appellee's submission, para.  215 (quoting Appellate  Body Report, US – Zeroing (EC) 
(Article  21.5 – EC), para. 231))  
64 China's appellee's submission, para.  218 (quoting Appellate  Body Report, US – Zeroing (EC)  
(Article 21.5 – EC), para.  226).  
65 China's appellee's submission, para.  218 (referring to Appellat e Body Report, US – Zeroing (EC) 
(Article  21.5 – EC), para. 224).  
66 Appellate  Body Report, EC – Bed Linen (Article  21.5 – India) , para.  78. 
67 Appellate  Body Report, US – FSC (Article  21.5 – EC II) , para.  61. 
68 Appellate  Body Report, US – Softwood Lumber IV  (Article  21.5 – Canada) , para.  68. WT/DS437/AB/R W 
 
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  5.21.   In particular, the present appeal concerns the question of whether, in addition to a 
determination under Section 129 as the principal  measure taken to comply, subsequent 
administrative and sunset review measures that were issued under the same countervaili ng duty 
orders as the measures challenged in the original dispute  may also fall within the ambit of these 
Article  21.5 proceedings, regardless of whether they have been declared to be measures taken to 
comply by the implementing Member. In previous dispute s, the Appellate  Body has addressed the 
question of whether subsequent administrative or sunset review measures may fall within the scope 
of Article  21.5 proceedings with respect to both countervailing duty69 and anti -dumping measures.70 
With respect to the former, the Appellate  Body held:  
Some measures with a particularly close relationship to the declared "measure taken to 
comply", and to the recommendations and rulings of the DSB, may also be susceptible 
to review by a panel acting under Article  21.5. Det ermining whether this is the case 
requires a panel to scrutinize these relationships, which may, depending on the 
particular facts, call for an examination of the timing, nature, and effects of the various 
measures. This also requires an Article  21.5 panel  to examine the factual and legal 
background against which a declared "measure taken to comply" is adopted. Only then 
is a panel in a position to take a view as to whether there are sufficiently close links for 
it to characterize such an other measure as o ne "taken to comply" and, consequently, 
to assess its consistency with the covered agreements in an Article  21.5 proceeding.71 
5.22.   Similarly, addressing the terms of reference in compliance proceedings under the Agreement 
on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 
(Anti-Dumping  Agreement ), the Appellate  Body has focused on the nexus, in terms of nature, 
timing, and effects, between subsequent reviews and the declared measure taken to comply.72 In 
US – Zeroing (EC) (Arti cle 21.5 – EC), the Appellate  Body addressed the question of whether the 
panel in that case was correct in excluding certain subsequent reviews from the scope of compliance 
proceedings on the basis that they pre -dated the adoption of the recommendations an d rulings of 
the DSB73, and whether it was correct of the panel to include within its terms of reference certain 
administrative reviews issued after the reasonable period of time had expired.74  
5.23.   Moreover, in  US – Zeroing (Japan) (Article  21.5 – Japan) , the Appellate  Body addressed the 
question of whether an administrative review measure that had not yet existed at the time of the 
panel request could nonetheless fall within the panel's terms of reference.75 The Appellate  Body 
agreed with the panel that this rev iew measure fell within that panel's terms of reference, because 
it was part of a chain of measures in which each new review superseded the previous one.76 This 
was based on the observation that subsequent periodic reviews had been issued under the same 
respective anti -dumping order as the measures in the original proceedings, and thus constituted 
"connected stages" involving the imposition, assessment, and collection of duties under the same 
anti-dumping order.77 Furthermore, the Appellate  Body found that an a priori  exclusion of measures 
completed during Article  21.5 proceedings could frustrate the objectives of "prompt settlement of 
situations in which a Member considers that any benefits accruing to it directly or indirectly under 
the covered agreements ar e being impaired", as reflected in Article  3.3 of the DSU , and of securing 
"a positive solution to a dispute", as contemplated in Article  3.7.78  
5.24.   Finally, the Appellate  Body has previously rejected the proposition that a measure taken 
before  the adoption of  the DSB's recommendations and rulings can rarely, if ever, be a measure 
taken "to comply", and that consequently only measures enacted after the adoption of the related 
panel and/or Appellate  Body report can be considered by a compliance panel.79 While the  timing of 
                                                
69 Appellate  Body Report, US – Softwood Lumber IV (Article  21.5 – Canada) . 
70 See Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC). 
71 Appellate  Body Report, US – Softwood Lumber IV (Article  21.5 – Canada) , para.  77. 
72 Appellate  Body Reports, US – Zeroing (EC) (Article  21.5 – EC), paras.  208-270; US – Zeroing (Japan) 
(Article  21.5 – Japan) , paras.  106–130. 
73 Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), para.  217. 
74 Appellate  Body Rep ort, US – Zeroing (EC) (Article  21.5 – EC), para.  236. 
75 Appellate  Body Report, US – Zeroing (Japan) (Article  21.5 – Japan) , para.  120. 
76 Appellate  Body Report, US – Zeroing (Japan) (Article  21.5 – Japan) , para.  130. 
77 Appellate  Body Report, US – Zeroing ( Japan) (Article  21.5 – Japan) , para.  116. 
78 Appellate  Body Report, US – Zeroing (Japan) (Article  21.5 – Japan) , para.  122. 
79 Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), paras.  223 and 227.  WT/DS437/AB/R W 
 
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  a measure's adoption is a relevant factor80, it cannot be determinative of whether a measure bears 
a sufficiently close nexus with a Member's implementation of the DSB's recommendations and 
rulings. The inquiry must focus on whether the subsequen t reviews bear a sufficiently close nexus, 
in terms of nature, effects, and timing, with the recommendations and rulings, and with the declared 
measures "taken to comply".81 
5.25.   With these considerations in mind, we now turn to review the Panel's analysis of wh ether the 
subsequent reviews at issue fell within the Panel's terms of reference.  
5.26.   We note that the Panel began by recalling previous jurisprudence and then assessed the nexus 
between: (i) the subsequent reviews and the Section  129 determinations that constitute the declared 
measures taken to comply by the United  States; and (ii) the recommendations and rulings of the 
DSB in terms of the "nature"82, the "timing"83, and the "effects".84 Based on considerations relating 
to all three facto rs, the Panel found that the "interrelated effects of the USDOC's original 
determinations, Section 129 determinations, and administrative and sunset review determinations" 
reflect a particularly close relationship for the purposes of Article  21.5 of the DS U85, and thus 
concluded that the subsequent reviews at issue fell within the Panel's terms of reference.86 
5.27.   While not contesting the analytical framework articulated by the Panel, the United  States 
takes issue with the Panel's application  of the legal standar d, alleging that the Panel based its 
findings on a "superficial examination"87 of the relationship between the subsequent reviews at issue 
and the declared measures taken to comply, on the one hand, and the recommendations and rulings 
of the DSB, on the oth er hand.  
5.28.   In particular, regarding the nature  of the relationship between the subsequent reviews at 
issue and the DSB's recommendations and rulings, the United  States argues that the Panel erred by 
equating the "nature of the measures in question" with "th eir subject matter".88 We note that the 
Panel observed that "an overlap of the covered products and the substantive issue in question may 
indicate a close nexus in subject matter."89 The Panel found that it "may also be relevant to consider 
whether the parti cular substantive issue was itself the subject of the recommendations and rulings 
of the DSB".90 The Panel added that "[a]nother relevant consideration may be that subsequent 
reviews and determinations are issued under the same 'order' as measures challenge d in original 
proceedings, constituting 'connected stages … involving the imposition, assessment and collection 
of duties'."91 The Panel does not appear to have treated any one of these considerations as 
determinative, rather it referred to them as "relevan t consideration[s]". Thus, contrary to what the 
United  States alleges, the Panel did not equate the "nature of the measures in question" with "their 
subject matter" or limit its analysis to considering the "subject matter" of the measures without 
consideri ng the reasoning and evidence relied upon by the USDOC in the subsequent reviews.  
5.29.   The United  States further alleges that, under the compliance Panel 's rationale, " any reviews 
under the same order are considered  fair game for the purposes of an Article  21.5 compliance 
proceeding" and alleges that the Panel  noted, but did not heed, the Appellate  Body's emphasis in 
                                                
80 Appellate  Body Report, US – Zeroing (EC) (Artic le 21.5 – EC), para.  225 (referring to Appellate  Body 
Report, US – Softwood Lumber IV (Article  21.5 – Canada) , para.  84; Panel Reports, Australia – Salmon 
(Article  21.5 – Canada) , para.  7.10(22); Australia – Automotive Leather II (Article  21.5 – US), para.  6.5). 
81 Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), para.  226. 
82 Panel Report, paras.  7.339 -7.341.  
83 Panel Report, paras.  7.335 -7.338.  
84 Panel Report, paras.  7.342 -7.344.  
85 Panel Report, para.  7.345.  
86 Panel Report, para.  7.347.  
87 United  States' appellant's submission, para.  217. 
88 United  States' appellant's submission, para.  218 (quoting Panel Report, para.  7.340, in turn referring 
to Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), para. 230).  
89 Panel Report, para.  7.340 (referring to Appellate  Body Report,  US – Softwood Lumber IV  
(Article  21.5 – Canada) , para.  83). 
90 Panel Report, para.  7.340 (referring to Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 230).  
91 Panel Report,  para. 7.340 (referring to Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 230).  WT/DS437/AB/R W 
 
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  US – Softwood Lumber IV (Article  21.5 – Canada)  that " its findings 'should not be read to mean that 
every assessment review will necessarily fall within the jurisdiction of an Article  21.5 panel'."92  
5.30.   We note that, contrary to what the United  States alleges, t he Panel in fact acknowledged the 
existence of "limits to the situations in which subsequent reviews may be found to have a su fficiently 
close nexus in nature so as to fall within the scope of an Article  21.5 proceeding".93 As one such 
limit, the Panel described that "identity in terms of product and country coverage alone would be an 
insufficient basis for determining that [subse quent administrative reviews] have a sufficiently close 
nexus, in terms of nature, with the recommendations and rulings of the DSB with respect to the 
original investigations."94 Specifically with regard to the present case, the Panel found that "the 
overla p of subject matter extends beyond merely an identity of product and country coverage ", and 
that "the alleged application of the same legal standard that was found to be WTO -inconsistent in 
the original dispute, or that was applied in the declared measures  taken to comply (in this case the 
Section 129 determinations)[,] may be a particularly relevant aspect in determining whether the 
requisite 'close nexus' exists."95 This indicates that the Panel took into consideration these specific 
reasons as a basis for  its conclusion, rather than assuming that every assessment review necessarily 
falls within the jurisdiction of an Article  21.5 panel. Moreover, the Panel's reasoning demonstrates 
that, contrary to what the United  States alleges, its nexus analysis did not  turn on whether the same 
legal standard was applied in the relevant determinations. Rather, the Panel's analysis focused on 
the fact that it had been alleged that a legal standard that had been found to be WTO -inconsistent 
in the original dispute had also  been applied in the measures taken to comply.  
5.31.   In addition, the United  States alleges that the Panel erred in finding that, because subsequent 
reviews are measures issued under the same countervailing duty order, they are "successive 
determinations" that bear a close relationship in terms of their "nature" to the 
United  States'  implementation of the relevant DSB recommendations and rulings. In particular, the 
United  States takes issue with the Panel's reliance on its observation that "each review takes as its 
basis, and thereby reflects, and to some extent incorporates, the USDOC's earlier determinations 
with respect to countervailable subsidies."96 The United  States submits that the mere fact that 
measures have been issued under the same countervailing duty  order is insufficient to establish the 
existence of a close relationship in terms of their "nature".97 Rather, the Panel should have 
scrutinized the relationship of the measures at issue based on the particular facts of each proceeding.  
5.32.   We note that, indee d, the Panel did not scrutinize the particular facts of the various reviews 
and related earlier determinations. Rather, in its analysis, the Panel relied on the fact that 
"subsequent reviews and determinations [had been ] issued under the same 'order' as me asures 
challenged in original proceedings" and found that therefore they constituted "connected 
stages  … involving the imposition, assessment and collection of duties".98 As we see it, the extent 
to which a Panel should scrutinize the particular facts of ea ch review and related earlier 
determination is informed by the purpose of this analysis, namely, to determine whether certain 
subsequent reviews bear a close relationship, in terms of nature, timing, and effects, to the 
United  States' implementation. This does not require a detailed examination by a panel of the 
particular facts of the various reviews and related earlier determinations. In this respect, we note 
that the Appellate  Body has not understood the nexus test to entail an analysis of the particular  
facts of the related measures, for instance, in its application of this test in US – Softwood Lumber  IV 
(Article  21.5 – Canada) and in  US – Zeroing (EC) (Article  21.5 – EC). 
5.33.   Furthermore, the United  States argues that China did not adduce sufficient evidence and 
arguments to show that the USDOC's findings in each of the administrative reviews and sunset 
                                                
92 United  States' appellant's submission, para.  218 (quoting Panel Report, fn 544 to para.  7.341, in turn 
quoting Appellate  Body Report, US – Softwood Lumbe r IV (Article 21.5 – Canada) , para.  93). (emphasis 
original)  
93 Panel Report, para.  7.341 (referring to Appellate  Body Report, US – Softwood Lumber IV  
(Article  21.5 – Canada) , para.  93). 
94 Panel Report, para.  7.341 (quoting Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 239).  
95 Panel Report, para.  7.341.  
96 Panel Report, paras.  7.344 -7.345. (fn omitted)  
97 United  States' appellant's submission, para.  223. 
98 Panel Report, para.  7.340 (quoting Appellate  Body Report, US – Zeroing (EC) (Artic le 21.5 – EC), 
para. 230, in turn referring to Appellate  Body Report, US – Continued Zeroing , para.  181).  WT/DS437/AB/R W 
 
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  reviews at issue are WTO -inconsistent99, and that this also resulted in an i nsufficient basis for the 
compliance panel to conduct a close nexus analysis.100  
5.34.   Whether China had made a prima facie  case of WTO -inconsistency with respect to the reviews 
at issue has no bearing on whether these measures fell within the scope of these Arti cle 21.5 
proceedings. A measure may well fall within the Panel's terms of reference even if, ultimately, the 
complainant fails to make a prima facie  case of inconsistency in that respect. Conversely, a measure 
may fall outside the scope of the proceedings,  even if, in principle, the complainant might have been 
able to make a prima  facie case of inconsistency regarding the measure. Accordingly, it was correct 
of the Panel to distinguish two distinct questions, namely, the question concerning the scope of the  
Article  21.5 proceedings and the question of whether the subsequent administrative and sunset 
reviews are themselves inconsistent with the provisions of the SCM  Agreement, as claimed by 
China.101 
5.35.   Next, regarding the timing  of the relevant measures, the Unit ed States alleges that, rather 
than assessing whether the challenged measures  had a sufficiently close nexus in terms of timing, 
the Panel merely found that whether measures taken before the expiration of the reasonable period 
of time were within the scope  of the Article  21.5 proceedings depended on other aspects of the close 
nexus test.102  
5.36.   In this respect, we note the Panel's observation that  the administrative and sunset reviews 
identified in China's panel request were in existence at the time the Panel wa s established, and that 
while some of these reviews were completed prior to the DSB's  adoption of recommendations and 
rulings in the original dispute on 16  January 2015, others had been completed thereafter, yet before 
the end of the reasonable period of t ime on 1 April 2016.103 In addition, we note that two  subsequent 
reviews were completed after Panel establishment.104 The Panel noted that the purpose of the 
reasonable period of time is to provide a period of time in which an implementing Member may take 
meas ures in order to bring itself into compliance with DSB  recommendations and rulings. The Panel 
followed from this that, in principle, it would be expected that compliance measures would be taken 
before  the end of the reasonable period of time. Based on this  reasoning, the Panel disagreed with 
the United  States that measures adopted prior to the end of the reasonable period of time did not 
fall within the Panel's terms of reference.105 In addition, the Panel considered the 
United  States'  position incompatible w ith the proposition that the timing of a measure alone could 
not be a decisive factor in establishing whether it had a sufficiently close nexus with a Member's 
implementation of the recommendations and rulings of the DSB.106 Moreover, the Panel considered 
the subsequent reviews identified by China had not occurred so long before  the recommendations 
and rulings of the DSB as to sever the connection between those measures and the 
United  States'  implementation obligations.107 
5.37.   It is clear from the Panel Report that , rather than failing to engage with the "timing" of the 
measures at issue, the Panel engaged with the United  States' argument that measures adopted prior 
to the end of the reasonable period of time did not fall within the Panel's terms of reference. The 
Panel found that, in principle, the opposite was true, namely, that such measures fall within a panel's 
terms of reference. The Panel also found the United  States' position incompatible with the principle 
that the timing of a measure alone cannot be a decis ive factor in establishing whether it has a 
sufficiently close nexus with a Member's implementation of the recommendations and rulings of the 
DSB. Thus, contrary to what the United  States alleges, the Panel in fact undertook an assessment 
of the nexus of t he measures at issue in terms of their timing.  
5.38.    In addition, we consider the Panel's assessment of the nexus in terms of timing to be 
consistent with the approach outline d above. We recall that, in US – Zeroing (EC) (Article  21.5 – 
EC), the Appellate  Body held that the timing  of a measure alone  cannot be determinative of whether 
it bears a sufficiently close nexus with a Member's implementation of the recommendations and 
                                                
99 United  States' appellant's submission, paras.  225-226. 
100 United  States' appellant's submission, para.  227. 
101 Panel Report, para.  7.346.  
102 United  States' appellant's submission, para.  228. 
103 Panel Report, para.  7.336 (referring to China's panel request, Annexes 3 -4). 
104 See para.  5.5 above.  
105 Panel Report, para.  7.337.  
106 Panel Report, para.  7.337.  
107 Panel Report, fn  532 to para.  7.337.  WT/DS437/AB/R W 
 
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  rulings of the DSB so as to fall within the scope of Article  21.5 procee dings.108 Rather, as set out 
above, this nexus is to be established on the basis of the nature, timing, and effects. Accordingly, 
the mere fact that a measure was adopted before or after the expiration of the reasonable period of 
time for implementation is i nsufficient to determine whether that measure falls within the Panel's 
terms of reference. Based on our analysis of the scope of Article  21.5 set out above, we consider 
that the Panel was correct to assess the temporal relationship along with the nexus in terms of 
nature and effects, rather than excluding, a priori , certain measures based on timing.  
5.39.   Specifically, with respect to measures adopted before  the expiration of the reasonable period 
of time, panels and the Appellate  Body have consistently found su ch measures to fall within the 
scope of Article  21.5 proceedings. The Panel in the present case took the same approach. We agree 
with the Panel that a reasonable period of time serves the purpose of p roviding a period of time in 
which an implementing Membe r may take measures in order to bring itself into compliance with 
DSB recommendations and rulings  and that it would run contrary to this purpose to exclude 
measures adopted within that period of time from the scope of Article  21.5 proceedings .109 
5.40.   With regard  to measures coming into effect after the expiration of the reasonable period of 
time, we recall that, in the context of the Anti -Dumping Agreement, the Appellate  Body upheld a 
panel finding that a periodic review measure that had not yet been in existence  at the time of the 
panel request fell within that panel's terms of reference as part of a chain of measures in which each 
new review superseded the previous one.110 Similarly, we consider that the Panel in the present case 
was correct to find that "an a priori exclusion of measures completed during Article  21.5 proceeding s 
could frustrate the function of compliance proceedings ."111 
5.41.   Finally, with respect to the nexus in terms of the effects  of the relevant measures, the 
United  States alleges that the Panel erre d in attributing significance to the fact that the 
"administrative reviews affected the countervailing duty and cash deposit rates established in the 
original determinations" and "the USDOC's Section 129 determinations  – the United  States' declared 
measures taken to comply  – had the effect of superseding previously completed administrative 
reviews, or were superseded by the subsequent administrative review identified by China."112 For 
the United  States, simply because the findings made in the context o f a subsequent administrative 
review may supersede determinations made in a previous review does not necessarily result in a 
change to the finding of benefit, for example, and therefore does not mean that there is a close 
nexus in terms of effect between t he two determinations.  
5.42.   We note that, with respect to the "effects" of the challenged measure, the Panel referred to 
the "potential perpetuation  of the WTO -inconsistency originally found", which may undermine a 
Member's compliance with DSB recommendations and rulings.113 The Panel also addressed and 
disagreed with the United  States' argument that the issue of potential perpetuation of an 
inconsistency was limited to anti -dumping disputes and was not relevant in the context of 
countervailing duty cases.114 Thus,  contrary to what the United  States contends on appeal, the 
Panel's finding of a close nexus in terms of effect was not based exclusively  on the observation that 
findings of an administrative review may supersede determinations made in a previous 
administr ative review. Nor did the Panel base its finding of a close nexus in terms of effect on 
whether or not cash deposit rates had changed in subsequent reviews. Rather, the Panel found that 
a close relationship existed due to the "interrelated effects" of the USDOC's original determinations, 
Section  129 determinations, and administrative and sunset review determinations.115  
                                                
108 Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), para.  224. 
109 Panel Report, para.  7.337.  
110 Appellate  Body Report, US – Zeroing (Japan) (Article  21.5 – Japan) , para.  130. 
111 Panel Report, para.  7.338 (quoting Appellate  Body Report, US – Zeroing (Japan)  
(Article 21.5 – Japan) , para. 122).  
112 Panel Report, para.  7.344. (fn omitted)  
113 Panel Report, para.  7.342 (referring to Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 250).  
114 Panel Report, para.  7.344 (quoting Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), 
para. 251).  
115 Panel Report, para.  7.345.  WT/DS437/AB/R W 
 
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  5.1.4   Conclusion  
5.43.   In sum, we consider that t he Panel correctly assessed the scope of the measures falling within 
its terms of reference in these Ar ticle 21.5 proceedings based on the criteria of their relationship in 
terms of nature, timing, and effects. We therefore uphold  the Panel's findings, in paragraphs 7.320, 
7.347, 8.1.g, and 8.1.h.i -ii, iv, and vi  of its Report, that the subsequent reviews a t issue and the 
Final Determination in the original Solar Panels investigation fell within the Panel's terms of reference 
under Article  21.5 of the DSU.  
5.2  Article  1.1(a)(1) of the SCM  Agreement  
5.44.   The United  States and China each appeal the Panel's findings under Article  1.1(a)(1) of the 
SCM Agreement. Specifically, the participants' claims on appeal are directed at the Panel's findings 
concerning: (i) the USDOC's public body determinations in the relevant Section 129 investigations; 
and (ii) the Pub lic Bodies Memorandum "as  such".  
5.45.   First, with respect to the Panel's findings concerning the USDOC's public body determinations 
in the relevant Section 129 investigations, China requests us to reverse the Panel's finding, in 
paragraph 7.36 of its Report, th at "China has failed to demonstrate that the USDOC's public body 
determinations in the relevant Section 129 proceedings are inconsistent with 
Article  1.1(a)(1)  … because they are based on an improper legal standard."116 For China, the Panel 
erred in finding that the legal standard for public body determinations under Article  1.1(a)(1) does 
not "require a particular degree or nature of connection in all cases between an identified 
government function and the particular financial contribution at issue".117  
5.46.   Shoul d we find error in the Panel's interpretation of the legal standard for public body 
determinations under Article  1.1(a)(1), China requests us also to reverse certain "additional 
findings" by the Panel, which China considers to be "tainted" by the Panel's erroneous 
interpretation.118 In particular, China claims that the Panel erred: (i) in finding, in paragraph 7.72 
of its Report, that China "failed to demonstrate that the USDOC misconstrued the concept of 
'meaningful control' and its relevance to the  substantive legal standard for a public body inquiry", 
and in concluding, in paragraph 7.105 of its Report, that it did "not consider that the USDOC's 
determinations were based on 'mere ownership or control over an entity by a government, without 
more'"119; and (ii) in finding, in paragraphs 7.103 and  7.106 of its Report, that China did not 
demonstrate that the USDOC failed to consider relevant evidence in the five investigations in which 
the GOC participated.120  
5.47.   In addition, China requests us to reverse the Panel's conclusion, in paragraphs  7.107 
and 8.1.a of its Report, that the USDOC's public body determinations in the relevant Section 129 
investigations are not inconsistent with Article  1.1(a)(1)121, to complete the legal analysis, and to 
find that the USDOC 's public body determinations are, indeed, inconsistent with Article  1.1(a)(1) 
because they are based on an improper legal standard.122  
5.48.   Second, with respect to the Panel's findings concerning the Public Bodies Memorandum 
"as such", the United  States request s us to reverse the Panel's finding, in paragraph 7.120 of its 
Report, that the Public Bodies Memorandum is a measure falling within the scope of these 
Article  21.5 proceedings.123 Further, the United  States seeks reversal of the Panel's finding, in 
paragrap h 7.133 of its Report, that the Public Bodies Memorandum can be challenged "as  such" as 
a rule or norm of general or prospective application.124  
5.49.   China, for its part, requests us to reverse the Panel's finding, in paragraph 7.136 of its Report, 
that "China d id not demonstrate that the Public Bodies Memorandum is inconsistent 'as such' with 
                                                
116 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  4. 
117 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  4. 
118 China's other appellant's submission, heading II.D.  
119 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  5. 
120 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  6. 
121 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  7. 
122 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  8. 
123 United  States' appellant's submission, para.  230. See also United  States' Notice of Appeal, para.  2. 
124 United States' appellant's submission, para.  230. See also United  States' Notice of Appeal, para.  3. WT/DS437/AB/R W 
 
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  Article  1.1(a)(1) … because [it] is based on an improper legal standard ."125 China further seeks 
reversal of the Panel's finding, in paragraph 7.142 of its Report, that "the Public Bodies Memorandum 
does not restrict in a material way the USDOC's discretion to act consistently with 
Article  1.1(a)(1)."126 Should we reverse the Panel's finding that the Public Bodies Memorandum is 
not inconsistent "as such" with Article  1.1(a)(1), China requests us to complete the legal analysis  
and find that the Public Bodies Memorandum is inconsistent "as such" with Article  1.1(a)(1) because 
it is premised on an erroneous legal standard and restricts in a material way the USDOC's discretion 
to mak e a determination consistent with Article  1.1(a)(1).127 
5.50.   Each participant requests us to reject the other participant's claims on appeal in their 
entirety.128 
5.51.   Our analysis of the participants' claims on appeal proceeds in the following order. First, we 
provide a brief description of the measures at issue – namely, the Public Bodies Memorandum and 
the USDOC's public body determinations in the relevant Section 129 investigations – followed by an 
overview of the relevant Panel findings. Next, we address China's cla im concerning the Panel's 
interpretation of the legal standard for public body determinations under Article  1.1(a)(1) of the 
SCM Agreement. In particular, we assess whether the Panel erred in finding, in paragraph 7.36 of 
its Report, that Article  1.1(a)(1)  does not "require a particular degree or nature of connection in all 
cases between an identified government function and the particular financial contribution at 
issue".129 To the extent that we find error in the Panel's interpretive finding, we then turn t o China's 
claims concerning the Panel's additional findings, in paragraphs 7.72, 7.103, 7.105, and 7.106 of its 
Report, regarding the USDOC's public body determinations in the relevant Section 129 
investigations.130 Finally, we turn to the participants' clai ms concerning the Panel's findings with 
respect to the Public Bodies Memorandum "as such".  
5.2.1   The measures at issue  
5.52.   The original panel found that the USDOC acted inconsistently with the United  States' 
obligations under Article  1.1(a)(1) of the SCM  Agreement in 12 countervailing duty investigations 
because it had determined that certain Chinese SOEs were public bodies based solely on the fact 
that they were (majority -) owned, or otherwise controlled, by the GOC.131 In order to comply with 
the recommendations and  rulings of the DSB in the original proceedings, the USDOC issued new 
preliminary and final public body determinations in the relevant Section 129 investigations. The 
investigation record providing the basis for those new determinations consists of two mai n sets of 
materials.  
5.53.   First, the USDOC issued a questionnaire to the GOC regarding public bodies for 
the 12 investigations at issue (Public Bodies Questionnaire). The Public Bodies Questionnaire asked 
a number of general questions regarding China's industri al policies and objectives, the categorization 
of industries and enterprises under Chinese industrial plans, and the role of the GOC as it relates to 
input producers and industries addressed in an Input Producer Appendix.132 In turn, the Input 
Producer Appen dix to the questionnaire posed specific questions regarding the producers of the 
inputs purchased by respondent companies in the 12  investigations at issue, and sought information 
on the corporate organization, ownership, and decision -making procedures of those input 
                                                
125 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  9. 
126 China's other appellant's submission, para.  196. See als o China's Notice of Other Appeal, para.  9. 
127 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  10. 
128 See China's appellee's submission, paras.  24, 41, and 221; United  States' appellee's submission, 
paras.  155, 158, 176 -177, 197, 220 -221, and 286.  
129 Panel Report, para.  7.36. 
130 China's claims on appeal concerning these additional findings by the Panel are conditioned upon our 
reversal of the Panel's interpretation of the legal standard for public body determinatio ns under 
Article  1.1(a)(1).  
131 Original Panel Report, para.  7.75. This finding by the original panel was not appealed.  
132 Public Bodies Questionnaire (Panel Exhibit USA -83), section II, pp.  2-3. See also Panel Report, 
para. 7.39. WT/DS437/AB/R W 
 
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  producers.133 The GOC responded to the Public Bodies Questionnaire in five of the 12  investigations 
at issue.134 The GOC did not respond to the Questionnaire in the other seven  investigations.135 
5.54.   Second, the USDOC placed the Public Bodies Memorandum , including  the 
CCP Memorandum136, on the record of all 12 investigations at issue.137 These documents were also 
part of the record of earlier Section  129 proceedings with respect to a different WTO  dispute  
(US – Anti-Dumping and Countervailing Duties (China) (DS379)).138  
5.55.   The Public Bodies Memorandum examines "the system of governance and s tate functions" in 
China139, with a view to assessing the role of the GOC in what the USDOC calls state -invested 
enterprises (SIEs) – i.e. enterprises in which the GOC has an ownership stake of any size.140 In 
setting out its analysis, the Memorandum reviews t he Appellate  Body's discussion of the types of 
evidence that may assist in determining whether an entity is a public body under Article  1.1(a)(1) 
of the SCM  Agreement. Among other things, the Memorandum mentions the Appellate  Body's 
reference to "meaningfu l control" by a government over an entity. According to the Memorandum, 
"meaningful control" means "control related to the possession or exercise of governmental authority 
and governmental functions". Further, the Memorandum states that "government ownersh ip remains 
an important element of the analysis."141 
5.56.   The Public Bodies Memorandum identifies the "governmental function" relevant to the 
USDOC's inquiry as China's constitutional mandate to "maintain and uphold the socialist market 
economy", which includes m aintaining a leading role for the state sector in the economy.142 
According to the Memorandum, the actions taken by the GOC to fulfil this mandate are ordinarily 
classified as "governmental" in the legal order of China.143 Having identified the relevant 
govern mental function, the Public Bodies Memorandum notes that the GOC exercises "meaningful 
control" over "certain categories of SIEs in China", and uses these SIEs as "instrumentalities to 
effectuate the governmental purpose of maintaining the predominant role  of the state sector in the 
economy and upholding the socialist market economy".144 The USDOC grounded these findings on 
"manifold indicia of control indicating that SIEs possess, exercise, or are vested with governmental 
                                                
133 Public Bodies Questionnair e (Panel Exhibit USA -83), section II, pp.  4-8. See also Panel Report, 
para. 7.39. 
134 The five investigations for which the GOC provided responses were: Pressure Pipe, Line Pipe, Kitchen 
Shelving, OCTG, and Steel Cylinders. (See Panel Report, fn  80 to para.  7.40) In those investigations, the GOC 
provided clarifications, inter alia , on the following topics: the domestic industries considered as "pillar" or 
"basic" in the Chinese economic system, and in which the GOC "wishes to maintain a major presence" includ ing 
"majority ownership" of SOEs; the objective of the GOC in holding shares in enterprises, which the GOC 
described as "maintain[ing] a socialist market economy" and "generat[ing] an economic return on 
publicly -owned resources"; the policies or plans appl icable to the industries to which the input producers in the 
five investigations at issue belong, which the GOC described as not self -executing and aimed to "provide a 
framework for economic and social development"; and the extent of governmental approval of mergers or 
restructurings in those industries, which the GOC described as limited to "important projects and restricted 
projects". (Ibid., para.  7.41) The GOC also responded to the Input Producer Appendix by providing specific 
information on the input p roducers in the five  investigations at issue, including: corporate names and 
addresses; business registrations, Articles  of association, and capital verification reports; and ownership 
structure and corporate governance diagrams. The GOC explained that nei ther the Government nor the CCP 
imposes "explicit or implicit obligations or targets" regarding production quantities or prices, and that the CCP 
"plays no role in the selection and monitoring of senior management". (Ibid., para.  7.42)  
135 Panel Report, para . 7.54. 
136 USDOC Memorandum dated 18 May 2012 on the relevance of the Chinese Communist Party for the 
limited purpose of determining whether particular enterprises should be considered to be "public bodies" within 
the context of a countervailing duty invest igation (CCP Memorandum).  
137 For purposes of this Report, we refer to both documents collectively as the "Public Bodies 
Memorandum" or simply "the Memorandum".  
138 Panel Report, para.  7.44 (referring to Preliminary Determination on Public Bodies and Input 
Specificity (Panel Exhibit CHN -4), p.  8). 
139 Public Bodies Memorandum (Panel Exhibit CHN -1), p.  2. See also Panel Report, para.  7.46. 
140 Panel Report, fn  100 to para.  7.46 (referring to Public Bodies Memorandum (Panel Exhibit CHN -1), 
fn 5). 
141 Panel Report, para.  7.45 (quoting Public Bodies Memorandum (Panel Exhibit CHN -1), p.  3). 
142 Panel Report, para.  7.46 (quoting Public Bodies Memorandum (Panel Exhibit CHN -1), p.  11). 
143 Panel Report, para.  7.46 (quoting Public Bodies Memorandum (Panel Exhibi t CHN -1), p.  11). The 
USDOC found support for these observations in China's constitution and in various domestic measures and 
regulations, including industrial policies and national and local five -year plans.  (Panel Report, para.  7.47 
(quoting Public Bodie s Memorandum (Panel Exhibit CHN -1), pp.  6-11)) 
144 Panel Report, para.  7.46 (quoting Public Bodies Memorandum (Panel Exhibit CHN -1), p.  37). WT/DS437/AB/R W 
 
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  authority".145 Such indicia include: ( i) the provision of direct and indirect benefits to SIEs; 
(ii) governmental incentives and demands for certain firm behaviour in furtherance of certain policy 
goals; (iii) the GOC's maintenance of ownership levels as a means to maintain control over the st ate 
sector; (iv) the GOC's management of market competition and market outcomes through the 
instrumentality of enterprises in the state sector; (v)  the supervision of the State -Owned Assets 
Supervision and Administration Commission over SIEs; (vi) the GOC' s control over all company 
appointments in the state sector; and (vii) the presence of CCP groups and committees within 
enterprises.146 
5.57.   The Public Bodies Memorandum summarizes the USDOC's findings with respect to 
three  categories of enterprises in China:  
a. "[A]ny enterprise in China in which the government has a full or controlling ownership 
interest is found to be a public body." This conclusion "rests upon the [USDOC's] finding 
that, in the institutional and SIE -focused policy setting of China, the [GOC] is exercising 
meaningful control over all such enterprises, such that these enterprises possess, exercise, 
or are vested with governmental authority". Further, this conclusion "reflects the 
numerous indicia of control" showing that the GOC "uses SIEs to fulfi l its mandate to 
uphold the socialist market economy".147 
b. "[E]nterprises in which the [GOC] has significant ownership that are also subject to certain 
government industrial plans may be found to be public bodies", on a case -by-case basis, 
if indicia show tha t these enterprises "are used as instruments by the [GOC] to uphold the 
socialist market economy".148 
c. Certain enterprises that "have little or no formal government ownership " may be found to 
be public bodies if the GOC "exercises meaningful control over such  enterprises ". Such a 
determination would be made "on a case -by-case basis " in light of relevant indicia.149 
5.58.   The CCP Memorandum, for its part, addresses "the de jure and de facto role that the CCP 
plays in China's economy and system of governance".150 Based on  its examination of the relevant 
evidence, the USDOC observes in the CCP Memorandum that: (i) while the CCP and the GOC "are 
organizationally separate", their structures "generally mirror each other"; (ii)  the CCP "exercises 
authority over the formal insti tutions of government at the national and local levels"; (iii) the CCP 
"makes policies the state then implements and the CCP directs and supervises that implementation 
through a number of formal and informal tools"; and (iv) the CCP is "particularly concer ned with 
authority over the economy because of the importance of economic growth to advancing the cause 
of socialism".151 On these bases, the CCP Memorandum concludes that "the CCP and China's state 
apparatus are essential components that together form China 's 'government' [as defined in that 
memorandum] solely for purposes of the [countervailing duty] law."152 
5.59.   On 25 February 2016, the USDOC issued its preliminary public body determinations in 
the 12 investigations at issue. The USDOC referred to the Public Bod ies Memorandum and the 
accompanying CCP Memorandum, and observed that "[e]nterprises that satisfy the criteria and 
analysis described in the Public Bodies Memorandum, which the Department placed on the record of 
these Section 129 proceedings, are considere d to be public bodies."153 The USDOC made separate 
preliminary determinations for: (i) the seven  cases for which the GOC did not respond to the Public 
Bodies Questionnaire; and (ii)  the five  cases for which the GOC did respond. In particular:  
a. In the seven investigations in which th e GOC did not provide a response, the USDOC found 
that "the GOC withheld information that was requested and failed to provide information 
within the deadlines established", thereby warranting "an adverse inference in selecting 
                                                
145 Panel Report, para.  7.48 (quoting Public Bodies Memorandum (Panel Exhibit CHN -1), p.  11). 
146 Panel Report, para.  7.48 (referring to Public Bodies Memorandum (Panel Exhibit CHN -1), pp.  11-37). 
147 Public Bodies Memorandum (Panel Exhibit CHN -1), p.  37. See als o Panel Report, para.  7.49.a.  
148 Public Bodies Memorandum (Panel Exhibit CHN -1), pp.  37-38. See also Panel Report, para.  7.49.b.  
149 Public Bodies Memorandum (Panel Exhibit CHN -1), p.  38. See also Panel Report, para.  7.49.c.  
150 Panel Report, para.  7.50. 
151 Panel Report, para.  7.52. 
152 Panel Report, para.  7.50. 
153 Preliminary Determination on Public Bodies and Input Specificity (Panel Exhibit CHN -4), p.  8. WT/DS437/AB/R W 
 
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  from among the facts otherwis e available".154 The USDOC observed that the Public Body 
Memorandum contained factual information about the role played by the GOC in 
enterprises such as the input producers in the seven Section  129 investigations, and 
considered that information sufficient to warrant a determination, based on facts available, 
that the input producers at issue are public bodies.155  
b. In the five investigations in which the GOC provided responses, the USDOC separately 
examined: (i) enterprises in which the GOC had full or control ling ownership; and 
(ii) enterprises in which the GOC had less than controlling ownershi p.  
i. Based on the GOC's response that most of the input producers at issue were 
majority -owned by the government, the USDOC determined that "the GOC 
meaningfully control led those input producers" during the relevant periods of 
investigation "such that they possess, exercise or are vested with government 
authority".156 
ii. As for the input producers of which the GOC had minority ownership, the USDOC 
determined that the GOC had f ailed to respond to certain questions and provide the 
necessary information about the "ownership, management, and control" of those input 
producers.157 Therefore, the USDOC resorted to facts otherwise available and relied on 
the information contained in the Public Bodies Memorandum regarding the GOC and 
the CCP's control or influence over enterprises subject to governmental industrial 
plans. According to the USDOC, this information on the record was sufficient to warrant 
a determination that the input produce rs at issue are public bodies.158 
5.60.   In light of the foregoing, the USDOC preliminarily determined that all the input producers at 
issue in the relevant Section  129 investigations were public bodies within the meaning of 
Article  1.1(a)(1) of the SCM  Agreement. The USDOC later reaffirmed these findings in its final public 
body determinations.159 
5.2.2   The Panel's findings  
5.61.   Before the Panel, China claimed that the United  States failed to comply with the 
recommendations and rulings of the DSB under Article  1.1(a)(1) of the SCM  Agreement. China 
argued, first, that, in its public body determinations in the relevant Section  129 investigations, the 
USDOC applied an improper legal standard, in that it failed to demonstrate a relationship between 
the ident ified "government function" – namely, to uphold and maintain the socialist market economy 
in China – and the sale of the relevant inputs by the investigated entities.160 Second, China submitted 
that the USDOC failed to properly construe and apply the notion of "meaningful control" in its 
determinations. In particular, argued China, the USDOC failed to engage in a case -by-case analysis 
of the input producers at issue in each investigation161, and disregarded substantial evidence that 
was inconsistent with a find ing that such input producers were performing a "government function" 
when they sold inputs to downstream purchasers.162  
5.62.   The United  States disagreed with the legal standard advanced by China, which it saw as overly 
narrow. According to the United  States, th e USDOC carried out the appropriate type of analysis by 
examining the functions or conduct ordinarily classified as governmental in the legal order of China, 
and the manifold indicia of control indicating that relevant input providers possess, exercise, or  are 
                                                
154 Panel Report, para.  7.55 (quoting Preliminary Determination on Public Bodies and Input Specificity 
(Panel Ex hibit CHN -4), p.  13). 
155 Panel Report, para.  7.56 (quoting Preliminary Determination on Public Bodies and Input Specificity 
(Panel Exhibit CHN -4), p.  13). 
156 Panel Report, para.  7.59 (quoting Preliminary Determination on Public Bodies and Input Specificity 
(Panel Exhibit CHN -4), p.  14). 
157 Panel Report, para.  7.60 (quoting Preliminary Determination on Public Bodies and Input Specificity 
(Panel Exhibit CHN -4), p.  16). 
158 Panel Report, para.  7.61 (referring to Preliminary Determination on Public Bodies and Input 
Specificity (Panel Exhibit CHN -4), pp.  15-18). 
159 Panel Report, para.  7.63 (referring to Final Section  129 Determination (Panel Exhibit CHN -5)). 
160 Panel Report, para.  7.7 (referring to China's first written submission to the Panel, paras.  100-107).  
161 Panel Report, para.  7.64. 
162 Panel Report, para.  7.9 (referring to China's first written submission to the Panel, paras.  108-156).  WT/DS437/AB/R W 
 
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  vested with governmental authority. The United  States considered the explanations provided by the 
USDOC to be reasoned and adequate, based on the totality of the evidence on the record, and 
supported by ample record evidence of the core features of th e entities at issue.163 
5.63.   The Panel began by addressing the legal standard for public body determinations under 
Article  1.1(a)(1). The Panel noted that a public body within the meaning of that provision is "an 
entity that possesses, exercises or is vested with  governmental authority", or, in other words, "an 
entity … vested with authority to exercise governmental functions".164 The Panel also observed that 
an inquiry into whether the conduct of an entity is that of a public body must have "due regard … to 
the cor e characteristics and functions of the relevant entity, its relationship with the government, 
and the legal and economic environment prevailing in the country in which the investigated entity 
operates".165 Further, the Panel noted that "evidence that a gover nment exercises meaningful 
control over an entity and its conduct" may serve, in certain circumstances, as proof that such entity 
possesses governmental authority and exercises it in the performance of governmental functions166, 
and that the presence of mani fold indicia of meaningful control may warrant an "inference that the 
entity concerned is exercising governmental authority".167 Finally, the Panel recalled that a public 
body inquiry may entail consideration of whether the conduct or functions of an entity "are of a kind 
that are ordinarily classified as governmental in the legal order of the relevant Member".168 
5.64.   The Panel then turned to the question of whether the finding that an entity is a public body 
pursuant to Article  1.1(a)(1) requires an investigating authority to establish that the entity is 
performing a governmental function when providing a particular financial contribution.169 The Panel 
recalled that the USDOC identified the relevant governmental function as "maintaining and upholding 
the socialist ma rket economy".170 The Panel took the view that it was not its task to "judge this 
government function in the abstract, or in isolation from the rest of the USDOC's determinations".171 
Furthermore, the Panel noted that the text of Article  1.1(a)(1) does not pre scribe a "connection" of 
a particular degree or nature that must necessarily be established between an identified government 
function and a financial contribution.172 Rather, public body determinations "may rest on a variety 
of considerations, with due regar d for the particular circumstances of each case".173 Indeed, 
reasoned the Panel, the ways in which a government could vest an entity with governmental 
authority, as well as the functions that may be "governmental" in nature, vary among Members, 
such that no "a priori  limitation" exists in these respects.174 Instead, an investigating authority must 
provide a "reasoned and adequate explanation", based on a "holistic assessment" of the evidence 
on the investigation record, to support a determination that an invest igated entity is a public body.175 
The Panel considered that the broad variety of situations in which an entity may exercise, possess, 
or be vested with governmental authority "reinforces … the importance of a case by case 
approach".176 In the Panel's view, th e factual circumstances and the specific determinations in prior 
disputes did not reflect "rigid legal requirements that must be applied in other circumstances".177  
5.65.   The Panel thus disagreed with China that the legal standard for public body determinations 
"require[s] a particular degree or nature of connection in all cases between an identified government 
                                                
163 Panel Report, para.  7.10 (referring to United  States' first written submission to the Panel, 
paras.  19-56, 63 -102, and 116).  
164 Panel Report, para.  7.16 (quoting Appellate  Body Report, US – Anti-Dumping and Countervailing 
Duties (China) , paras.  317-318).  
165 Panel Report, para.  7.16 (quoting Appellate  Body Report, US – Carbon Steel (India) , para.  4.29; 
referring to Appellate  Body Report , US – Anti-Dumping and Countervailing Duties (China) , para.  317). 
166 Panel Report, para.  7.18 (quoting Appellate  Body Reports, US – Anti-Dumping and Countervailing 
Duties (China) , para.  318; US – Carbon Steel (India) , para.  4.10).  
167 Panel Report, para.  7.18 (quoting Appellate  Body Report, US – Anti-Dumping and Countervailing 
Duties (China) , para.  318).  
168 Panel Report, para.  7.19 (quoting Appellate  Body Report, US – Anti-Dumping and Countervailing 
Duties (China) , para.  297; referring to Appellate  Body Report, US – Carbon Steel (India) , para.  4.9). 
169 Panel Report, para.  7.24. 
170 Panel Report, para.  7.25. (fn omitted)  
171 Panel Report, para.  7.26. 
172 Panel Report, para.  7.28. 
173 Panel Report, para.  7.28. (fn omitted)  
174 Panel Report, para.  7.28 (referring to Appellate  Body Reports, US – Carbon Steel (India) , para.  4.10; 
US – Anti-Dumping and Countervailing Duties (China) , paras.  297 and 318).  
175 Panel Report, paras.  7.28-7.30. 
176 Panel Report, para.  7.32. 
177 Panel Report, p ara. 7.32. WT/DS437/AB/R W 
 
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  function and the particular financial contribution at issue".178 The Panel concluded that China had 
failed to demonstrate that the USDOC's public body determ inations in the relevant Section 129 
investigations are based on an improper legal standard and thus inconsistent with Article  1.1(a)(1) 
of the SCM  Agreement.179 
5.66.   Applying its reading of Article  1.1(a)(1) to the USDOC's public body determinations in the 
relevant Section 129 investigations, the Panel addressed China's claim that the USDOC misconstrued 
and misapplied the notion of "meaningful control". For the Panel, the existence of "meaningful 
control" is inherently specific to particular factual circumstances  and can be established through a 
variety of potentially relevant considerations that may be cumulatively assessed by an investigating 
authority.180 Such considerations may include "the particular government function identified by an 
investigating authority and the evidence in its investigation".181 The Panel found that, in the present 
case, the USDOC's assessment of whether the GOC exercised "meaningful control" over Chinese 
SIEs was consonant with the obligation to consider "the core characteristics and functions of the 
relevant entity, its relatio nship with the government, and the legal and economic environment 
prevailing in the country in which the investigated entity operates".182 Thus, the Panel rejected 
China's claim that the USDOC misconstrued and misapplied the notion of "meaningful control" in  its 
public body determinations.  
5.67.   Next, the Panel addressed China's claim that the USDOC disregarded material evidence 
purportedly undermining a finding that the input producers in the investigations at issue were public 
bodies. The Panel recalled that the evidence on the investigation record consisted of the Public Bodies 
Memorandum and, in five of the 12  investigations, the GOC's responses to the Public Bodies 
Questionnaire. The Panel observed that the Public Bodies Memorandum focuses on the GOC's 
interven tions in firm behaviour and market outcomes, with particular emphasis on governmental 
influence over SIEs through commercial incentives and benefits, industrial policies, and supervisory 
control.183 Further, the Panel considered that the information solicite d through the Public Bodies 
Questionnaire "would complement a general factual framework addressed in the Public Bodies 
Memorandum with information specific to relevant entities or industries in the Section  129 
proceedings at issue".184 On this basis, the Pan el found that the evidence solicited and relied upon 
by the USDOC was "relevant to establish ing that an entity possesses, exercises, or is vested with 
governmental authority".185 The Panel further noted that China's claim hinged on the legal standard 
adopted  by the USDOC under Article  1.1(a)(1) concerning the connection between the identified 
government function and the provision of input by the investigated entities.186 The Panel recalled 
that it had already rejected China's position on the legal standard unde r Article  1.1(a)(1). The Panel 
found that, to the extent that China's allegations that the USDOC ignored evidence related to 
elements of the legal standard advocated by China and rejected by the Panel, those allegations did 
not demonstrate that the USDOC's  determinations were inconsistent with Article  1.1(a)(1).187 
5.68.   Accordingly, the Panel concluded that China had not demonstrated that the USDOC acted 
inconsistently with Article  1.1(a)(1) of the SCM  Agreement in its public body determinations in the 
12 Section  129 investigations at issue.  
5.69.   Next, the Panel addressed China's claim that the Public Bodies Memorandum is, "as  such", 
inconsistent with Article  1.1(a)(1). China maintained that the Memorandum lays out an analytical 
framework that the USDOC will apply prosp ectively when there is an allegation that an entity in 
China is a public body.188 This framework, China argued, does not require the USDOC to examine 
whether the entity in question performs a governmental function when engaging in the conduct that 
is the sub ject of the financial contribution inquiry. According to China, this necessarily leads to 
determinations that are inconsistent with Article  1.1(a)(1) every time the Public Body Memorandum 
                                                
178 Panel Report, para.  7.36. 
179 Panel Report, para.  7.36. 
180 Panel Report, para.  7.70. 
181 Panel Report, para.  7.70. 
182 Panel Report, para.  7.71 (quoting Appellate  Body Report, US – Carbon Steel (India) , para.  4.29).  
183 Panel Report, para.  7.76. 
184 Panel Report, para.  7.84. 
185 Panel Report, para.  7.89. See also ibid., para.  7.79. 
186 Panel Report, para.  7.101.  
187 Panel Report, para.  7.101.  
188 Panel Report, para.  7.109 (referring to China's first written submission to the Panel, para.  178).  WT/DS437/AB/R W 
 
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  is applied in a given case.189 In response, the United  States contende d that the Public Bodies 
Memorandum is n ot a measure within the scope of the current Article  21.5 proceedings, is not  a 
"rule or norm of general or prospective application" , and does not necessarily result in an 
inconsistency with Article 1.1(a)(1) .190 
5.70.   The P anel began its analysis by recalling the "broad" scope of measures challengeable in 
WTO dispute settlement – encompassing, in principle, "any act or omission attributable to a 
WTO Member".191 It found that the Public Bodies Memorandum is an "act" of the USDO C that is 
attributable to the United  States and is, therefore, challengeable in WTO dispute settlement.192  
5.71.   The Panel then examined whether the Memorandum is within the scope of these Article  21.5 
proceedings. It recalled that the jurisdiction of Article  21.5 panels extends to measures having "a 
particularly close relationship" and "sufficiently close links" to the declared measure taken to comply 
and with the recommendations and rulings of the DSB, depending on "the timing, nature, and effects 
of the various  measures" and "the factual and legal background against which [the] declared 
'measure taken to comply' is adopted".193 The Panel noted the United  States' recognition that the 
Memorandum is not "separable" from the USDOC's public body determinations194, as wel l as the 
"close relationship" of the Memorandum with the "analytical framework" and the "evidentiary 
analysis" conducted by the USDOC.195 The Panel also rejected the United  States' argument that 
China could have challenged the Memorandum in the original proc eedings, but did not.196 According 
to the Panel, the USDOC's original public body determinations "rested on a different basis"197, and 
the Memorandum only became relevant when it was later incorporated into the determinations made 
by the USDOC to comply with t he recommendations and rulings of the DSB.198 Hence, the Panel 
found that the Public Bodies Memorandum was properly within the scope of these Article  21.5 
proceedings.199  
5.72.   Further, the Panel assessed whether the Public Bodies Memorandum is a rule or norm of 
general or prospective application. For the Panel, a key question concerning general or prospective 
application was whether the Memorandum would be applied in investigations taking place after its 
issuance.200 The Panel examined the language contained in the M emorandum and found that it "could 
support a finding of normative character as well as general or prospective application".201 The Panel 
also noted the USDOC's conclusion contained in the Memorandum that "the systemic analysis in [the 
Memorandum] is appropri ate for understanding the institutional and SIE -focused policy setting in 
China".202 To the Panel, this indicated that the Public Bodies Memorandum sets out an analysis that 
is susceptible to "general and prospective" application in countervailing duty  investigations on 
Chinese enterprises.203 Finally, the Panel observed that the Memorandum "has served as the basis 
                                                
189 Panel Report, par a. 7.109 (referring to China's first written submission to the Panel, para.  182; 
China's second written submission to the Panel, paras.  120-121).  
190 Panel Report, para.  7.110 (referring to United  States' first written submission to the Panel, 
paras.  156-162 and 182 -197).  
191 Panel Report, para.  7.111 (quoting Appellate  Body Report, EC and certain member States  – Large 
Civil Aircraft , para.  794, in turn quoting Appellate  Body Report, US – Corrosion -Resistant Steel Sunset Review , 
para. 81). 
192 Panel Report, para.  7.113.  
193 Panel Report, para.  7.114 (quoting Appellate  Body Report,  US – Softwood Lumber IV  
(Article  21.5 – Canada) , para.  77). 
194 Panel Report, para.  7.115 (quoting United  States' response to Panel question No. 19, para.  139).  
195 Panel Report, para.  7.116.  
196 Panel Report, para.  7.118 (referring to United  States' response to Panel question No. 17, para.  132). 
197 Panel Report, para.  7.118.  
198 Panel Report, para.  7.119.  
199 Panel Report, para.  7.116 (quoting United  States' response to Panel question No. 19, para.  139).  
200 Panel Report, para.  7.125 (referring to Panel Report, US – Countervailing Measures (China) , 
paras.  7.113 -7.114; Appellate  Body Report, US – Oil Country Tubu lar Goods Sunset Reviews , para.  187).  
201 Panel Report, para.  7.126. In particular, the Panel focused on the USDOC's findings that: (i) "for the 
purposes of the [countervailing duty] law", China has "a constitutional mandate … to maintain and uphold the 
'socialist market economy', which includes maintaining a leading role for the state sector in the economy"; and 
(ii) "certain categories of SIEs in China properly are considered to be public bodies for the purposes of the 
[countervailing duty] law". (Ibid., pa ras. 7.126 -7.127 (quoting Public Bodies Memorandum (Panel Exhibit  
CHN-1), pp.  2 and 37))  
202 Panel Report, para.  7.128 (quoting Public Bodies Memorandum (Panel Exhibit  CHN-1), fn  48). 
(emphasis omitted)  
203 Panel Report, para.  7.129.  WT/DS437/AB/R W 
 
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  for numerous determinations following its adoption"204, including in the Section 129 investigations 
at issue in these proceedings.205 On these bases, th e Panel found that the Public Bodies 
Memorandum sets out an analytical framework that is both "general, because it affects an 
unidentified number of Chinese economic operators", and "prospective, because it applies to future 
public body determinations".206  
5.73.   Finally, the Panel assessed whether the Public Body Memorandum, as a rule or norm of 
general and prospective application, is "as  such" inconsistent with Article  1.1(a)(1). The Panel noted 
that China's claim of inconsistency with respect to the Memorandum " as such" was "largely based 
on the same grounds" as China's claim of inconsistency with respect to the USDOC's public body 
determinations in the relevant Section 129 investigations.207 In particular, the Panel observed, both 
claims related to the fact that t he USDOC may determine an entity to be a public body without 
inquiring into "whether the entity in question is performing a government function when it engages 
in the conduct that is the subject of the financial contribution inquiry".208 The Panel referred t o its 
prior finding that, pursuant to Article  1.1(a)(1), a finding that an entity is a public body does not 
require "a particular degree or nature of connection between an identified government function and 
the financial contribution in question".209 Thus, t he Panel found that China had failed to establish 
that the Public Bodies Memorandum is inconsistent "as  such" with Article  1.1(a)(1).210 
5.74.   The Panel further noted that the Public Bodies Memorandum "is not mandatory in the sense 
that the USDOC is required or bo und in all cases to apply its framework or findings in countervailing 
duty investigations".211 Indeed, reasoned the Panel, the Memorandum requires a case -by-case 
analysis, based on additional information pertaining to indicia of governmental control, to reac h a 
public body determination with respect to: (i)  "enterprises in China in which the government has 
significant ownership that are also subject to certain government industrial plans"; and 
(ii) "enterprises that have little or no formal government ownersh ip".212 The Panel added that the 
Public Bodies Memorandum "has no operational force" in itself213 and "does not, on its face, impinge 
upon the authority of the USDOC to disregard or supplement its content in any given 
investigation".214 Rather, the Memorandum is  a resource " available  to the USDOC" to be "considered 
and potentially relied upon to the extent that the USDOC, in its discretion, finds it pertinent in any 
given investigation".215 In addition, the Panel observed that the USDOC retains "discretion to 
consider other evidence in a given investigation for all categories of enterprises, even where the 
Public Bodies Memorandum is on the record"216, and provides respondents with an opportunity 
"to rebut, clarify, or correct the factual information" that is placed on the record.217 
5.75.   In ligh t of the foregoing, the Panel found that, although it may be a rule or norm of general 
or prospective application, the Public Bodies Memorandum does not restrict, in a material way, the 
USDOC's discretion to act consistently with Article  1.1(a)(1). Hence, the Panel concluded that China 
had not demonstrated that the Public Bodies Memorandum is inconsistent "as  such" with 
Article  1.1(a)(1) of the SCM  Agreement.218 
                                                
204 Panel Report, para. 7.130.  
205 Panel Report, para.  7.127.  
206 Panel Report, para.  7.132 (referring to Appellate  Body Report, US – Anti-Dumping Methodologies 
(China) , para.  6.8). 
207 Panel Report, para.  7.135.  
208 Panel Report, para.  7.135 (quoting China's second written submiss ion to the Panel, para.  120).  
209 Panel Report, para.  7.136.  
210 Panel Report, para.  7.136.  
211 Panel Report, para.  7.134 (referring to United  States' first written submission to the Panel , 
para. 177; China's comments on United  States' response to Panel question  No. 14, para.  34). 
212 Panel Report, para.  7.138 (quoting Public Bodies Memorandum (Panel Exhibit CHN -1), pp.  37-38). 
213 Panel Report, para.  7.140 (quoting United States' response to Panel question No. 23, para.  147).  
214 Panel Report, para.  7.140.  
215 Panel Re port, para.  7.140. (emphasis original)  
216 Panel Report, para.  7.141.  
217 Panel Report, para.  7.141 (quoting Public Bodies Record Memorandum (Panel Exhibit  USA-130); 
United  States' responses to Panel questions No. 16, para.  105; No. 23(b), para.  150).  
218 Panel Report, para.  7.142.  WT/DS437/AB/R W 
 
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  5.2.3   The legal standard for public body determinations under Article  1.1(a)(1) of the 
SCM Agreement  
5.76.   We begin by addressing what China has described as "the basis" of its appeal under 
Article  1.1(a)(1) of the SCM  Agreement: namely, the Panel's interpretive finding that the legal 
standard for public body determinations under Article  1.1(a)(1) "does not prescr ibe a 'connection' 
of a particular degree or nature that must necessarily be established between an identified 
government function and a financial contribution".219 Below, we outline the participants' and 
third participants' arguments on appeal, before turni ng to our assessment of the Panel's 
interpretation of the legal standard for public body determinations under Article  1.1(a)(1).  
5.2.3.1   Claims and arguments on appeal  
5.77.   China argues that a proper interpretation of Article  1.1(a)(1) of the SCM  Agreement requires 
a "clear logical connection" between the "government function" identified by an investigating 
authority and the conduct alleged to constitute a financial contribution.220 For China, the Panel's 
approach, which does not require such a connection, cannot be recon ciled with the Appellate  Body's 
interpretation of the term "public body". In particular, China argues that  the Appellate  Body's 
statement that an investigating authority must examine the "core features" of an entity and "its 
relationship with the governmen t in the narrow sense" is necessarily framed by the relevant inquiry 
of "whether conduct falling within the scope of Article  1.1(a)(1) is that of a public body ".221 In China's 
view, it would confound the entire purpose of that inquiry to attribute conduct to  a WTO Member 
even when that conduct is unrelated to any government authority with which an entity has been 
vested.222  
5.78.   According to China, the Panel's interpretive error is reflected in its review of the USDOC's 
approach to the public body inquiry. Instead of examining whether " the function or conduct" of 
providing steel inputs was of a kind  that is ordinarily classified as governmental in China, the USDOC 
instead engaged in an abstract review of China's system of governance and state functions to 
determine "'what' functions generally are considered governmental in China".223 For China, this 
approach is irreconcilable with the Appellate  Body's statements that a public body "connotes an 
entity vested with certain governmental responsibilities, or exercising certain governmental 
authority" .224 Moreover, argues China, the Appellate  Body has stated that "whether the functions or 
conduct are  of a kind  that are ordinarily classified as governmental in the legal order of the relevant 
Member may be a relevant consideratio n for determining whether or not a specific entity  is a public 
body".225 To China, these statements indicate that " the functions or conduct" that must reflect 
governmental authority are "the functions or conduct of a specific entity under Article  1.1(a)(1) ".226 
5.79.   China further contends that the Panel's interpretation of the term "public body" is 
irreconcilable with Article  1.1(a)(1)(iv), pursuant to which a government or public body may "entrust 
or direct" a private body to "carry out" a functi on listed in Article  1.1(a)(1)(i) -(iii).227 China maintains 
that, if the governmental authority possessed by public bodies who "entrust or direct" private bodies 
must necessarily relate to the functions listed in Article  1.1(a)(1)(i) -(iii), then the governme ntal 
authority possessed by other  public bodies cannot logically be completely unrelated to such 
functions.228 Moreover, China alleges that the Panel erred by failing to address Article  5 of the 
                                                
219 China's other appellant's submission, para.  18 (quoting Panel Report, para.  7.28). See also Panel 
Report, paras.  7.36 and 7.106.  
220 China's other appellant's submission, para.  17. While, according to China, the relevant "government 
function" need not perfectly coincide with one of the types of conduct listed in the subparagraphs of 
Article  1.1(a)(1), a direct relationship must nonetheless be established between the two. (China's response to 
questioning at the oral hearing)  
221 China's ot her appellant's submission, para.  63 (quoting Appellate  Body Report, US – Anti-Dumping 
and Countervailing Duties (China) , para.  317). (emphasis original)  
222 China's other appellant's submission, para.  63. See also ibid., para.  71. 
223 China's other appellant' s submission, para.  69 (quoting Public Bodies Memorandum (Panel Exhibit 
CHN-1), p.  2). (emphasis original)  
224 China's other appellant's submission, para.  66 (quoting Appellate  Body Report, US – Anti-Dumping 
and Countervailing Duties (China) , para.  296). (emphasis original)  
225 China's other appellant's submission, para.  67 (quoting Appellate  Body Report, US – Anti-Dumping 
and Countervailing Duties (China) , para.  297). (emphasis original)  
226 China's other appellant's submission, para.  68. (emphasis original)  
227 China's other appellant's submission, para.  73. 
228 China's other appellant's submission, para.  73. WT/DS437/AB/R W 
 
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  International Law Commission's Articles  on the Responsibility o f States for Internationally Wrongful 
Acts (ILC Articles), despite the Appellate  Body's recognition of the "similarities" between that 
provision and Article  1.1(a)(1) of the SCM  Agreement.229  
5.80.   China also submits that the Panel's approach is incompatible with  the Appellate  Body's 
application of the public body standard in US – Anti-Dumping and Countervailing Duties (China) . In 
that dispute, notes China, the Appellate  Body grounded its conclusion that certain Chinese 
state-owned commercial banks (SOCBs) were pu blic bodies on evidence that SOCBs are 
"meaningfully controlled by the government in the exercise of their functions "230 – i.e. "in making 
loans ", the conduct that was subject to the financial contribution inquiry.231 Thus, China submits 
that the Panel's failu re to examine a government's exercise of control over the conduct that is the 
subject of the financial contribution inquiry is irreconcilable with the Appellate  Body's analysis of 
SOCBs.232 
5.81.   Finally, China argues that , in the appeal in US – Carbon Steel (Indi a), the United  States 
advocated for the very interpretation of the term "public body" that China is advocating before the 
Appellate  Body in the present case. In particular, China refers to the United  States' argument, in 
US – Carbon Steel (India) , that "th e key governmental functions at issue are those functions 
described in the subparagraphs" of Article  1.1(a)(1), and that "the authority required of a public 
body is the authority to exercise these  functions on behalf of the government ."233  
5.82.   The United  States, for its part, requests us to uphold the Panel's interpretation of 
Article  1.1(a)(1).234 The United  States disagrees with China's reading of the term "public body", and 
in particular with China's position that Article  1.1(a)(1) requires a "clea r logical connection" between 
the "government function" identified by an investigating authority and the conduct alleged to 
constitute a financial contribution.235 For the United  States, China's position conflates the relevant 
"government function" exercised  by an entity with the particular conduct or activities described in 
Article  1.1(a)(1)(i) -(iii).236 The United  States maintains that the relevant question is not "whether 
the conduct  under Article  1.1(a)(1) is governmental", but rather "whether the entity  engaging in the 
conduct is governmental".237 In the United  States' view, China's position entails that a public body 
determination must be based on evidence that the entity's specific activity "is itself a government 
function, and that engaging in that activit y is consistent with the government's objectives".238 Such 
an interpretation, argues the United  States, would shield conduct from scrutiny under the 
SCM Agreement whenever an entity engaging in that conduct is acting outside its normal, 
established functions .239  
5.83.   According to the United  States, China's interpretation runs counter to the Appellate  Body's 
reading of the term "public body". The United  States notes the Appellate  Body's past statements 
that a public body is "an entity that possesses, exercises or is  vested with governmental authority" 
and that, therefore, the substantive legal question to be answered is "whether one or more  of these 
characteristics exist in a particular case".240 The United  States argues that, under this framework 
elaborated by the Appellate  Body, an entity might be deemed a public body when there is evidence 
that the entity possesses or is vested with governmental authority, even if there is no evidence that 
the entity is exercising that authority at the time of the particular transact ion at issue.241 The 
United  States also recalls the Appellate  Body's statement that " [e]vidence that an entity is, in fact, 
                                                
229 China's o ther appellant's submission, para.  77 (quoting Appellate  Body Report, US – Anti-Dumping 
and Countervailing Duties (China) , para.  311).  
230 China's other appellant's submission, para.  87 (quoting Appellate  Body Report, US – Anti-Dumping 
and Countervailing Dut ies (China) , para.  355). (emphasis original)  
231 China's other appellant's submission, para.  87. (emphasis original)  
232 China's other appellant's submission, para.  94. 
233 China's other appellant's submission, para.  24 (quoting United  States' opening statement before the 
Appellate  Body in US – Carbon Steel (India)  (Panel Exhibit CHN -67), para.  11 (emphasis original)).  
234 United  States' appellee's submission, para.  286. 
235 United States' appellee's submission, para.  186. 
236 United  States' appellee's submission, paras.  92 and 95.  
237 United  States' appellee's submission, para.  84. (emphasis original) See also ibid., paras.  101 
and 107. 
238 United  States' appellee's submission, para.  100. 
239 United  States' appellee's submission, para.  112. 
240 United  States' appellee's submission, para.  102 (quoting Appellate  Body Report, US – Carbon Steel 
(India) , para.  4.37). (emphasis original)  
241 United  States' appellee's submission, para.  102. WT/DS437/AB/R W 
 
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  exercising governmental functions" is relevant to a public body inquiry to the extent that it "points 
to a sustained and systematic pr actice", thereby shedding light on the core features of the entity 
concerned.242  
5.84.   Further, the United  States contends that China's interpretation cannot be sustained in light of 
the context provided by Article  1.1(a)(1)(iv). The United  States points to the Appellate  Body's 
statement that a focus on the conduct of an entity is relevant w hen examining the entrustment or 
direction of a private  body.243 In contrast, the proper focus of a public  body inquiry is on what is 
"ordinarily" considered a governmental function in the legal order of the Member, the "core features 
of the entity" concerne d, and its "relationship to the government in the narrow sense".244 Thus, the 
United  States maintains that a public body need not necessarily have "authority" or "responsibility" 
that "relates to the performance" of the functions described in Article  1.1(a)( 1)(i)-(iii).245 The 
United  States posits that China's interpretation conflates the "entrustment or direction" inquiry with 
a public body inquiry and makes the latter redundant, contrary to the principle of effective treaty 
interpretation.246  
5.85.   Moreover, the Uni ted States asserts that the Panel did not err by not addressing the relevance 
of ILC Article  5 in its analysis of Article  1.1(a)(1) of the SCM  Agreement. Given the important 
differences between the two provisions247, the United  States contends that it was ne ither appropriate 
nor necessary for the Panel to take ILC Article  5 into account in its interpretation of 
Article  1.1(a)(1).248 The United  States also disagrees with China that the Appellate  Body's public 
body analysis in relation to SOCBs in US – Anti-Dumpi ng and Countervailing Duties (China)  supports 
China's proposed interpretation of the term "public body". The United  States argues that, contrary 
to China's argument, the Appellate  Body did not focus narrowly on evidence relating to the conduct 
of SOCBs in making particular loans, but also considered evidence relating to the broader 
"relationship between the SOCBs and the [GOC]".249 For the United  States, the Appellate  Body's 
conclusions i n that dispute were grounded on all such evidence "taken together".250 
5.86.   Finally, the United  States objects to China's contention that, in US – Carbon Steel (India) , the 
United  States advocated for the same interpretation of the term "public body" that China i s 
advocating before us in the present case. The United  States also contends that, in US – Carbon Steel 
(India) , it sought a clarification that "in certain circumstances, government control over an 
entity  … may be sufficient to establish that an entity is a  'public body'", especially when "the 
government may use that entity's resources as its own."251 The United  States adds that, while the 
Appellate  Body did not evaluate its argument, it nonetheless recognized that whether a government 
can use an "entity's res ources as its own  … may certainly be relevant evidence" for purposes of a 
public body inquiry.252 At the oral hearing, the United  States requested that we confirm that a public 
body under Article  1.1(a)(1) is "any entity that a government meaningfully contro ls, such that when 
the entity is conveying economic resources, it is transferring the public's resources".253 
5.87.   As a third participant, Australia contends that it is not necessary for an investigating authority 
to assess, in all cases, whether the specific con duct or transaction at issue involves the exercise of 
                                                
242 United States' appellee's submission, para.  106 (quoting Appellate  Body Report, US – Anti-Dumping 
and Countervailing Duties (China) , para.  318).  
243 United  States' appellee's submission, para.  125 (referring to Appellate  Body Report,  
US – Anti-Dumping and Counte rvailing Duties (China) , para.  284).  
244 United  States' appellee's submission, paras.  128-129 (quoting Appellate  Body Report,  
US – Anti-Dumping and Countervailing Duties (China) , paras.  297 and 317).  
245 United  States' appellee's submission, para.  133 (referr ing to China's other appellant's submission, 
para. 73). 
246 United  States' appellee's submission, para.  130. 
247 United  States' appellee's submission, para.  141 (quoting Appellate  Body Report, US – Anti-Dumping 
and Countervailing Duties (China) , paras.  309 and  311).  
248 United  States' appellee's submission, para.  141. 
249 United  States' appellee's submission, para.  143 (quoting Appellate  Body Report, US – Anti-Dumping 
and Countervailing Duties (China) , para.  355).  
250 United  States' appellee's submission, para.  144 ( quoting Appellate  Body Report, US – Anti-Dumping 
and Countervailing Duties (China) , para.  355). (emphasis omitted)  
251 United  States' appellee's submission, para.  148 (quoting United  States' opening statement before the 
Appellate  Body in US – Carbon Steel (I ndia) (Panel Exhibit CHN -67), para.  10). 
252 United  States' appellee's submission, para.  152 (quoting Appellate  Body Report, US – Carbon Steel 
(India) , para.  4.20). (emphasis omitted)  
253 United  States' opening statement at the oral hearing, para.  18. WT/DS437/AB/R W 
 
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  a government function.254 For Australia, China's position conflates a public body inquiry with the 
question of whether a financial contribution exists.255 Moreover, China's interpretation blurs the 
distinct ion between the attribution rule pertaining to public bodies, which focuses on the 
governmental character of an entity, and that pertaining to private bodies, which requires an 
additional showing that the specific conduct of an entity results from governme ntal entrustment or 
direction.256 For Australia, China's approach would impose an impractical evidentiary burden on 
investigating authorities by requiring them to establish a connection between each transaction or 
series of transactions and the performance o f a governmental function.257 
5.88.   The European  Union maintains that the attribution to a Member of the conduct of a public 
body requires a showing that an entity is vested with, possesses, or exercises "governmental 
authority".258 For the European  Union, there is no a priori  limitation on what can be considered as a 
governmental function for a particular WTO Member, nor is there a requirement to define the 
governmental function as the provision of particular kinds of financial contributions.259 In the 
European  Union' s view, the "exceptional" scenario260 may arise where an entity engages in two 
distinct areas of activity, which are clearly separated and independent from each other. According 
to the European  Union, such an entity may be seen as acting as a public body whe n engaged in one 
of those areas, but not in the other.261 That being said, the European  Union sees no error in the 
Panel's interpretative approach. Indeed, the Panel merely disagreed with China that an investigating 
authority must, "in all cases ", establish a connection of a particular nature or degree between the 
governmental function and the particular financial contribution at issue.262  
5.89.   Japan disagrees with China that a public body determination requires that governmental 
control over an entity be  exercised in relation to the conduct at issue under Article  1.1(a)(1).  
According to Japan, an important element in the evaluation of the core features of an entity is 
whether such entity is "structured in a manner so that it can act not solely in accordan ce with 
commercial considerations".263 Where an entity is structured in a way that enables it to engage in 
activities that private market actors would be unable to reasonably sustain, this would constitute a 
strong indication that the entity is vested with g overnmental authority.264 For Japan, China's position 
conflates the requirement that the entity be a public body with the requirement that there be a 
financial contribution, and disregards the distinction between the public body and private body 
inquiries un der Article  1.1(a)(1).265  
5.2.3.2   Whether the Panel erred in its interpretation of the legal standard for public body 
determinations under Article  1.1(a)(1) of the SCM  Agreement  
5.90.   China claims that past Appellate  Body reports stand for the proposition that, in determ ining 
that an entity is a "public body" within the meaning of Article  1.1(a)(1) of the SCM  Agreement, an 
investigating authority must, in all cases, establish a "clear logical connection" between an identified 
"government function" and the conduct alleged to constitute a financial contribution.266 In response, 
the United  States disagrees with China that, in its past reports, the Appellate  Body has required such 
a connection to be established in all cases.267 
5.91.   The issue before us is therefore whether, in the cont ext of a public body inquiry, 
Article  1.1(a)(1) requires an investigating authority to establish, in all cases, a clear logical 
                                                
254 Australia's opening statement at the oral hearing, para.  14. 
255 Australia's opening statement at the oral hearing, paras.  8-10. 
256 Australia's opening statement at the oral hearing, paras.  11-13. 
257 Australia's opening statement at the oral hearing, para.  16. 
258 European  Union's third participant's submission, para.  17. 
259 European  Union's third participant's submission, para.  18. 
260 European  Union's third participant's submission, para.  23. 
261 European  Union's third participant's submission, para.  23. 
262 European  Union's third participant's submission, para.  24. (emphasis original)  
263 Japan's third participant's submission, para.  8. 
264 Japan's third participant's submission, paras.  8 and 10.  
265 Japan's third participant's submission, para.  5. 
266 China's other appellant's submission, para.  17. While, according to China, the relevant "government 
function" need not perfectly coincide with one of the types of conduct listed in the subparagraphs of 
Article 1.1(a)(1), a direct relationship must nonetheless be established between the two. (China's response to 
questioning at the oral hearing)  
267 United  States' appellee's submission, paras.  94-124 and 142 -145. WT/DS437/AB/R W 
 
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  connection between an identified "government function" and the specific conduct alleged to give rise 
to a financial contribution .  
5.92.   We begin by considering the text of Article  1.1, which stipulates, in relevant part:  
1.1  For the purpose of this Agreement, a subsidy shall be deemed to exist if:  
(a)(1)  there is a financial contribution by a government or any public body within the 
territory of a Member (referred to in this  Agreement as "government"), 
i.e. where:  
(i)  a government practice involves a direct transfer of funds (e.g. grants, loans, 
and equity infusion), potential direct transfers of funds or liabilities (e.g.  loan 
guarantees);  
(ii)  government revenue that is otherwise due is foregone or not collected 
(e.g. fiscal incentives such as tax credits);  
(iii)  a government provides goods or services other than general infrastructure, 
or purchases goods;  
(iv)  a government m akes payments to a funding mechanism, or entrusts or 
directs a private body to carry out one or more of the type of functions 
illustrated in (i) to (iii) above which would normally be vested in the 
government and the practice, in no real sense, differs fro m practices 
normally followed by governments; …  
and 
(b) a benefit is thereby conferred.268 
5.93.   Article  1.1(a)(1) is concerned with the different forms that a "financial contribution" may take. 
Subparagraphs (i) -(iii) and the first clause of subparagraph (iv) lis t the types of conduct involving a 
financial contribution. In addition, the second clause of subparagraph (iv) provides that a financial 
contribution exists when a government entrusts or directs a private body to carry out one or more 
of the type of functi ons illustrated in subparagraphs  (i) to (iii) above, which would normally be vested 
in the government, and the practice, in no real sense, differs from practices normally followed by 
governments.  
5.94.   Article  1.1(a)(1) also governs the attribution to a WTO  Member of the types of conduct listed 
in subparagraphs (i) -(iii) and the first clause of subparagraph (iv).269 The provision contemplates 
"two principal categories of entities" whose conduct may be attributed to a Member.270 First, conduct 
may be attributable to a Member if it is performed by "a government or any public body" – i.e. entities 
that are "governmental" in nature.271 Second, the conduct of a "private body" – i.e. an entity that is 
"neither a government in the narrow sense nor a public body" – can be attri buted to a Member if 
that Member's government has "entrusted or directed" that private body to carry out the conduct 
concerned.272  
5.95.   In prior disputes, the Appellate  Body has addressed the meaning of the term "public body" 
under Article  1.1(a)(1). It has obse rved, among other things, that the text of Article  1.1(a)(1) 
collectively refers to "a government or any public body" as "government", thereby suggesting a 
                                                
268 Fn omitted. Articles  1.1(a)(2) and 1.1(b) of the SCM Agreement stipulate that a subsidy shall also be 
deemed to exist if there is any form of income or price support in the sense of Article  XVI of the General 
Agreement on Tariffs and Trade 1994 (GATT  1994) and a benefit is thereby conferred. This dispute  does not 
raise the issue of subsidies granted in the form of income or price support.  
269 See Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  309. 
270 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  284. 
271 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  284. 
272 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  291 (referring to 
Panel Report, US – Export Restraints , para.  8.49).  WT/DS437/AB/R W 
 
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  certain "degree of commonality or overlap in their essential characteristics".273 The Appellate  Body 
has found that a public body is an entity that "possesses, exercises or is vested with governmental 
authority"274, and has stated that a public body determination hinges on whether " one or more of 
these characteristics exist in a particular case" .275 The Appellate  Body has also explained that the 
question of what constitutes a public body is informed by which functions or conduct "are of a kind 
that are ordinarily classified as governmental in the legal order of the relevant Member", as well as 
"the classi fication and functions of entities within WTO Members generally".276  
5.96.   As explained by the Appellate  Body, a public body inquiry must be conducted on a 
case-by-case basis, having due regard to "the core characteristics and functions of the relevant 
entity", that entity's "relationship with the government", and "the legal and economic environment 
prevailing in the country in which the investigated entity operates".277 Just as no two governments 
are exactly alike, the precise contours and characteristics  of a public body are bound to differ from 
entity to entity, State to State, and case to case.278 The absence of an express statutory delegation 
of governmental authority does not necessarily preclude a finding that an entity is a public body.279 
Instead, a pu blic body determination may be based on different types of evidence.280 Depending on 
the specific circumstances of each case, relevant evidence may include: (i) evidence that "an entity 
is, in fact, exercising governmental functions", especially where such e vidence "points to a sustained 
and systematic practice"281; (ii) evidence regarding "the scope and content of government policies 
relating to the sector in which the investigated entity operates"282; and (iii) evidence that a 
government exercises "meaningful c ontrol over an entity and its conduct".283 When conducting a 
public body inquiry, an investigating authority must "evaluate and give due consideration to all 
relevant characteristics of the entity"284 and examine all types of evidence that may be pertinent to 
that evaluation; in doing so, it should avoid "focusing exclusively or unduly on any single 
characteristic without affording due consideration to others that may be relevant".285  
5.97.   In US – Carbon Steel (India) , the Appellate  Body was unpersuaded by the United  States' 
understanding of a public body as "an entity controlled by the government  … such that the 
government may use the entity's resources as its own".286 The Appellate  Body considered that such 
understanding was "difficult to reconcile" with its prior sta tement that a public body "must be an 
entity that possesses, exercises or is vested with governmental authority".287 According to the 
Appellate  Body, "a government's exercise of 'meaningful control' over an entity and its conduct, 
including control such that  the government can use the entity's resources as its own, may certainly 
be relevant evidence for purposes of determining whether a particular entity constitutes a public 
body."288 Similarly, "government ownership of an entity, while not a decisive criterion , may serve, 
in conjunction with other elements, as evidence ."289 However, the Appellate  Body reiterated that, in 
its consideration of evidence, an investigating authority must "avoid focusing exclusively or unduly 
                                                
273 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  288. See also 
Appellate  Body Report, US – Carbon Steel (India) , para.  4.22. 
274 Appellate  Body Report,  US – Carbon Steel (India) , para.  4.37 (quoting Appellate  Body Report,  
US – Anti-Dumping and Countervailing Duties (China) , para.  317).  
275 Appellate  Body Report,  US – Carbon Steel (India) , para.  4.37. 
276 Appellate  Body Report, US – Carbon Steel (India) , para.  4.9 (quoting Appellate  Body Report,  
US – Anti-Dumping and Countervail ing Duties (China) , para.  297). 
277 Appellate  Body Report, US – Carbon Steel (India) , para.  4.29. See also Appellate  Body Report,  
US – Anti-Dumping and Countervailing Duties (China) , para.  317. 
278 Appellate  Body Report, US – Carbon Steel (India) , para.  4.9 (quoting Appellate  Body Report,  
US – Anti-Dumping and Countervailing Duties (China) , para.  317). 
279 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  318. See also 
Appellate  Body Report,  US – Carbon Steel (India) , para.  4.10. 
280 Appellate  Body Report, US – Carbon Steel (India) , para.  4.10. 
281 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  318. 
282 Appellate  Body Report, US – Carbon Steel (India) , para.  4.29. 
283 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  318. See also 
Appellate  Body Report,  US – Carbon Steel (India) , para.  4.10. 
284 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  319. 
285 Appellate  Body Report,  US – Anti-Dumping and Countervailing Duties (China) , para.  319. See also 
Appellate  Body Report, US – Carbon Steel (India) , para.  4.20. 
286 Appellate  Body Report,  US – Carbon Steel (India) , para.  4.19 (referring to United States' other 
appellant's submission in US – Carbon Steel (India) , para.  52). 
287 Appellate  Body Report,  US – Carbon Steel (India) , para.  4.19. 
288 Appellate  Body Report, US – Carbon Steel (India) , para.  4.20. 
289 Appellate  Body Report, US – Carbon Steel (India) , para.  4.20. WT/DS437/AB/R W 
 
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  on any single characteristic without afford ing due consideration to others that may be relevant".290 
For these reasons, we disagree with the United  States' contention in this dispute that a public body 
is "any entity that a government meaningfully controls, such that when the entity is conveying 
economic resources, it is transferring the public's resources".291 This would conflate the relevant 
evidentiary  elements for a public body determination and the definition  of a public body, as set out 
in paragraph 5.95 above . 
5.98.   With these considerations in mind, we now turn to review the Panel's interpretation of the 
legal standard for public body determinations under Article  1.1(a)(1) in light of the participants' 
claims and arguments. To recall, the Panel rejected China's contention that the USDOC articulated 
and applied an incorrect legal standard under Article  1.1(a)(1)292, and found that this provision "does 
not prescribe a 'connection' of a particular degree or nature that must necessarily be established 
between an identified government function and a financial contribution".293  
5.99.   On appeal, China contends that the ultimate goal of a public body inquiry is establishing 
whether the specific " conduct falling within the scope of Article  1.1(a)(1)" is that of a public body.294 
The thrust of China' s position is that it is not sufficient for an investigating authority to establish that 
a certain entity, overall, has a sufficiently close relationship with government to constitute a public 
body. Rather, for China, that investigating authority must also establish that the entity concerned is 
exercising a governmental function when engaging in the specific investigated conduct under 
subparagraphs (i) -(iii) or the first clause of subparagraph (iv) of Article  1.1(a)(1) . By contrast, the 
United  States mainta ins that the relevant question for a public body inquiry is not "whether the 
conduct  under Article  1.1(a)(1) is governmental" but rather "whether the entity  engaging in the 
conduct is governmental".295 Thus, according to the United  States, it is sufficient f or an investigating 
authority to determine that, overall , the entity concerned has a sufficiently close relationship with 
government to find that entity to constitute a public body.  
5.100.   Our summary of relevant jurisprudence in paragraphs 5.95-5.96 above indica tes that the 
central focus of a public body inquiry under Article  1.1(a)(1) is not, as China contends, whether the 
conduct  that is alleged to give rise to a financial contribution under subparagraphs (i) -(iii) or the 
first clause of subparagraph (iv) – i.e. the particular transaction at issue – is logically connected to 
an identified "government function".296 Rather, the relevant inquiry hinges on the entity engaging in 
that conduct, its core characteristics, and its relationship with government.297 This focus  on the 
entity, as opposed to the conduct alleged to give rise to a financial contribution, comports with the 
fact that a "government" (in the narrow sense) and a "public body" share a "degree of commonality 
or overlap in their essential characteristics"298 – i.e. they are both "governmental" in nature.299 Just 
as any "act or omission" by a government in the narrow sense can be deemed to constitute a 
measure attributable to a Member300, so any act or omission by a public body is directly attributable 
to a Member irrespective of the nature of the act or omission itself. Indeed, once it has been 
established that an entity is a public body, then " all conduct" of that entity shall be attributable to 
the Member concerned for purposes of Article  1.1(a)(1).301 When that en tity's conduct "falls within 
subparagraphs  (i)-(iii) and the first clause of subparagraph (iv)", then it will be deemed to give rise 
to a financial contribution for purposes of Article  1.1(a)(1).302  
                                                
290 Appellate  Body Report, US – Carbon Steel (India) , para.  4.20 (referring to Appellate  Body Report,  
US – Anti-Dumping and Countervailing Duties (China) , para.  319).  
291 United  States' opening statement at the oral hearing, para.  18. 
292 Panel Report, para.  7.36. 
293 Panel Report, para.  7.28. 
294 China's other appellant's submission, para.  63 (quoting Appellate  Body Report, US – Anti-Dumping 
and Countervailing Duties (China) , para. 317). (emphasis original)  
295 United  States' appellee's submission, para.  84. (emphasis original) See also ibid., paras.  101 
and 107. 
296 China's other appellant's submission, para.  17. 
297 Appellate  Body Report, US – Carbon Steel (India) , para.  4.29. See a lso Appellate  Body Report,  
US – Anti-Dumping and Countervailing Duties (China) , para.  317. 
298 See Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  288. See 
also Appellate  Body Report, US – Carbon Steel (India) , para.  4.22. 
299 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  284. 
300 Appellate  Body Report, US – Corrosion -Resistant Steel Sunset Review , para.  81. 
301 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  284. (emphasis 
added)  
302 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  284. WT/DS437/AB/R W 
 
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  5.101.   In our view, the nature of an entity's conduct or practice  may certainly constitute evidence 
relevant to a public body inquiry.303 However, the assessment of such evidence is aimed at answering 
the central question of whether the entity  itself possesses the core characteristics and functions that 
would qualify it a s a public body.304 In other words, we do not consider that a public body inquiry 
must necessarily focus on every instance of conduct in which the relevant entity may engage, or on 
whether each such instance of conduct is connected to a "government function" . Instead, the conduct 
of an entity – particularly when it points to a "sustained and systematic practice"305 – is one of the 
various types of evidence that, depending on the circumstances of each investigation, may shed 
light on the core characteristics of an entity and its relationship with government in the narrow 
sense.  
5.102.   In this connection, we note China's argument concerning the notion of "meaningful 
control"  – which, as the Panel noted, was a "key evidentiary element relied upon by the  USDOC" in 
determining whether the relevant entities are public bodies.306 China submits that "the concept of 
'meaningful control' only makes sense in the context of a public body inquiry if the control is being 
exercised in relation to the conduct at issue under Article  1.1(a)(1) ."307 In other words, states China, 
"a government must exercise control over the conduct that is the subject of the inquiry in order for 
that control to be 'meaningful'."308 In support of its argument, China points to the Appellate  Body's 
application of the notion of "meaningful control" to SOCBs in US – Anti-Dumping and Countervailing 
Duties (China) .309 The United  States takes issue with China's definition of "meaningful control" and 
considers that the Appellate  Body's analysis in US – Anti-Dumping and Countervailing Duties (China)  
does not support that definition.310 
5.103.   We disagree with China to the extent it suggests that an entity must necessarily be found to 
have been "meaningfully controlled" by the government in the specific conduct at iss ue under 
subparagraphs (i) -(iii) or the first clause of subparagraph (iv) . The type of inquiry that China 
describes appears to be more akin to the inquiry an investigating authority would undertake to 
assess, pursuant to the second clause of Article  1.1(a) (1)(iv), whether a government or public body 
has "entrusted or directed" a private  body to carry out one of the types of conduct listed in 
subparagraphs (i) -(iii). The Appellate  Body has explained that, when it is alleged that the conduct 
of a private body  gives rise to a financial contribution, an investigating authority must establish an 
additional  "link between the government and that conduct " in the form of "entrustment or 
direction".311 In other words, unless an investigating authority can show that a pr ivate body is 
carrying out a function that has been "entrusted" to it or "directed" by the government when 
engaging in one of the conducts  under subparagraphs (i) -(iii), that investigating authority will not 
be able to properly attribute the conduct in que stion to a Member. By contrast, if it is established 
that an entity is a public body within the domestic system of a Member, then the conduct of that 
entity is directly  attributable to the Member concerned.312 As we see it, to accept China's position 
would u nduly blur the distinction between, on the one hand, a public body inquiry and, on the other 
hand, an "entrustment or direction" inquiry.  
5.104.   Finally, we are unpersuaded by China's argument concerning the Appellate  Body's 
application of Article  1.1(a)(1) to S OCBs in US – Anti-Dumping and Countervailing Duties (China) . 
                                                
303 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  318. See also 
Appellate  Body Report,  US – Carbon Steel (India) , para. 4.10. 
304 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  318. See also 
Appellate  Body Report,  US – Carbon Steel (India) , para.  4.10. 
305 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  318. See also 
Appellate  Body Report,  US – Carbon Steel (India) , para.  4.10. 
306 Panel Report, para.  7.66. See also Preliminary Determination on Public Bodies and Input Specificity 
(Panel Exhibit CHN -4), p.  9. 
307 China's other appellant's submission, para.  84. 
308 China's other appellant's submission, para.  8. (emphasis original)  
309 See China's other appellant's submission, paras.  87-88. 
310 See United  States' appellee's submission, paras.  142-145. 
311 Appellate  Body Report, US – Anti-Dumping and Countervailing Dutie s (China) , para.  284. (emphasis 
original)  As the Appellate  Body has explained, "direction" refers to the situation where a government or public 
body exercises its authority in order to compel or command a private body or govern a private body's actions, 
whereas "entrustment" describes the situation where a government or public body gives responsibility for 
certain tasks to a private body. (Ibid., para.  294) In turn, the authority that constitutes the object of 
entrustment or direction pursuant to  Article  1.1(a)(1)(iv) is one that "would normally be vested in the 
government". (Ibid., para.  295) 
312 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  284. WT/DS437/AB/R W 
 
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  According to China, the Appellate  Body's conclusion that those SOCBs were public bodies was based 
on the consideration that the GOC "meaningfully controlled" them  "in making loans " – i.e. a specific 
conduct falling under subparagraph (i) of Article  1.1(a)(1).313 However, this was not the sole basis 
for the Appellate  Body's conclusion. Instead, as noted above, the Appellate  Body addressed other 
"extensive evidence" relied on by the USDOC314, inclu ding information showing that: (i)  "[t]he chief 
executives of the head offices of the SOCBs are government appointed and the [CCP] retains 
significant influence in their choice"; and (ii) SOCBs "still lack adequate risk management and 
analytical skills".315 This evidence was not limited to SOCBs' lending activity per se , but rather spoke 
to their organizational features, chains of decision -making authority, and overall relationship with 
the GOC. Thus, while the USDOC did take into account evidence relating to  the conduct of SOCBs, 
it did so within the framework of its inquiry into the core characteristics of those entities  and their 
relationship with the GOC.316  
5.105.   In light of the foregoing, we consider that the Panel was correct in rejecting China's reading 
of Article 1.1(a)(1) as requiring that an investigating authority inquire into whether an entity is 
exercising a government function when engaging in one of the specific conducts listed in 
subparagraphs  (i)-(iii) and the first clause of subparagraph (iv). We, t herefore, uphold  the Panel's 
finding, in paragraphs 7.36 and 7.106 of its Report, that the legal standard for public body 
determinations under Article  1.1(a)(1) of the SCM  Agreement does not prescribe a connection of a 
particular degree or nature that must  necessarily be established between an identified government 
function and the particular financial contribution at issue. We also uphold  the Panel's conclusion, in 
paragraph 7.36 of its Report, that "China has failed to demonstrate that the USDOC's public body 
determinations in the relevant Section 129 proceedings are inconsistent with Article  1.1(a)(1) of the 
SCM Agreement because they are based on an improper legal standard."  
5.106.   Having so found, we recall that China raised a number of additional claims with respect to 
the Panel's subsequent findings, in paragraphs 7.72, 7.103, and 7.105 -7.106 of its Report, 
concerning the USDOC's public body determinations in the relevant Section  129 investigations. In 
particular, China challenges the Panel's findings that: ( i) the USDOC did not misconstrue the concept 
of "meaningful control" and its relevance to the substantive legal standard for a public body 
inquiry317; (ii) the USDOC's determinations were not based on "mere ownership or control over an 
entity by a government , without more"318; and (iii)  the USDOC did not fail to consider relevant 
evidence in the five  investigations in which the GOC participated.319  
5.107.   China has framed these additional claims as conditional  upon our reversal of the Panel's 
interpretive finding that Article  1.1(a)(1) does not prescribe a connection of a particular degree or 
nature that must necessarily be established between an identified government function and a 
financial contribution. For instance, in its other appellant's submission, China states:  
If the Appellate  Body agrees with China that the Panel erred in concluding that the legal 
standard for public body determinations does not "require a particular degree or nature 
of connection in all cases between an identified government function and the particular 
financial contribution at issue", China requests that the Appellate  Body reverse the 
Panel's subsequent findings in relation to China's "as applied" claims under 
                                                
313 China's other appellant's submission, para.  87. (emphasis origina l) 
314 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  355. 
315 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  350. 
316 We further recall that, in that dispute, the Appellate  Body also reviewed  the USDOC's public body 
determinations in respect to other  SOEs, namely, "producers of steel, rubber and petrochemical inputs" that 
sold such inputs to downstream producers. ( Appellate  Body Report, US – Anti-Dumping and Countervailing 
Duties (China) , para . 343) Although the Appellate  Body ultimately found those determinations to be 
WTO-inconsistent, it did so because it found that the USDOC had relied "principally" on government 
ownership.  (Appellate  Body Report, US – Anti-Dumping and Countervailing Duties  (China) , para.  346) Contrary 
to what China suggests, the Appellate  Body did not find that, in order to be considered public bodies, the SOEs 
at issue would necessarily have to be controlled by the GOC when engaging in every sale of input to 
downstream pro ducers.  
317 China's Notice of Other Appeal, para.  5. 
318 China's Notice of Other Appeal, para.  5. 
319 China's Notice of Other Appeal, para.  6. WT/DS437/AB/R W 
 
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  Article  1.1(a)(1), because each of these findings is irreparably tainted by the Pan el's 
improper legal interpretive finding .320 
5.108.   At the oral hearing, China confirmed that its claims concerning the Panel's "subsequent 
findings" are, indeed, conditional on our reversal of the Panel's interpretive finding. Since we have 
upheld  the Panel's inte rpretive finding, the condition triggering China's additional claims is not met, 
and China's additional claims with respect to the Panel's findings, in paragraphs 7.72, 7.103, 
and 7.105 -7.106 of its Report, are thus not before us.  
5.2.4   The Public Bodies Memoran dum 
5.109.   We now turn to the participants' claims concerning the Panel's findings with respect to the 
Public Bodies Memorandum "as such". To recall, the United  States challenges: (i)  the Panel's finding, 
in paragraph 7.120 of its Report, that the Public Bodies M emorandum is a measure falling, "as such", 
within the scope of these Article  21.5 proceedings321; and (ii) the Panel's finding, in paragraph 7.133 
of its Report, that the Public Bodies Memorandum can be challenged "as  such" as a rule or norm of 
general or prospective application.322  
5.110.   China, for its part, seeks reversal of: (i) the Panel's finding, in paragraph 7.136 of its Report, 
that China has not demonstrated that the Public Bodies Memorandum is inconsistent "as such" with 
Article  1.1(a)(1) of t he SCM  Agreement "because [it] is based on an improper legal standard"323; 
(ii) the Panel's finding, in paragraph 7.142 of its Report, that the Public Bodies Memorandum "does 
not restrict in a material way the USDOC's discretion to act consistently with Arti cle 1.1(a)(1)"324; 
and (iii) the Panel's "ultimate conclusion", in paragraph 8.1(b) of its Report, that China has not 
demonstrated that the Public Bodies Memorandum is inconsistent "as such" with Article  1.1(a)(1).325  
5.111.   We begin our analysis with the threshold question of whether the Public Bodies Memorandum 
falls, "as such", within the scope of these Article  21.5 proceedings. To the extent it does, we then 
proceed to examine the participants' claims regarding the "as such" consistency of the Public Bodies 
Memor andum with Article  1.1(a)(1) of the SCM  Agreement, including issues relating to the 
possibility to challenge of the Public Bodies Memorandum as a rule or norm of general or prospective 
application.  
5.2.4.1   Whether the Public Bodies Memorandum falls, "as such", wit hin the scope of 
these Article  21.5 proceedings  
5.112.   The Panel found, in paragraph 7.120 of its Report, that the Public Bodies Memorandum is, 
"as such", a measure "within the scope of [its] jurisdiction under Article  21.5 of the DSU". In 
particular, reasoned th e Panel, the jurisdiction of compliance panels extends to measures having "a 
particularly close relationship" and "sufficiently close links" to the declared "measure taken to 
comply", depending on "the timing, nature, and effects of the various measures" a nd "the factual 
and legal background against which [the] declared 'measure taken to comply' is adopted".326 The 
Panel noted the United  States'  recognition that the Memorandum is not "separable" from the 
USDOC's public body determinations327, as well as the "cl ose relationship" of the Memorandum with 
the "analytical framework" and the "evidentiary analysis" conducted by the USDOC in reaching those 
determinations.328 The Panel also rejected the United  States' argument that China could have 
challenged the Memorandum  in the original proceedings, but did not.329 According to the Panel, the 
USDOC's original public body determinations "rested on a different basis"330, and the Memorandum 
only became relevant when it was later incorporated into the determinations made by the U SDOC 
                                                
320 China's other appellant's submission, para.  102. (emphasis added)  
321 United  States' appellant's submission, para.  230. See also United  States' Notice of Appeal, para.  2. 
322 United  States' appellant's submission, para.  230. See also United  States' Notice of Appeal, para.  3. 
323 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  9. 
324 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  9. 
325 China's other appellant's submissio n, para.  196. See also China's Notice of Other Appeal, para.  9. 
326 Panel Report, para.  7.114 (quoting Appellate  Body Report,  US – Softwood Lumber IV  
(Article  21.5 – Canada) , para.  77). 
327 Panel Report, para.  7.115 (quoting United  States' response to Panel q uestion No. 19, para.  139).  
328 Panel Report, para.  7.116.  
329 Panel Report, para.  7.118 (referring to United  States' response to Panel question No. 17, para.  132). 
330 Panel Report, para.  7.118.  WT/DS437/AB/R W 
 
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  to comply with the recommendations and rulings of the DSB.331 On these bases, the Panel concluded 
that the Public Bodies Memorandum is properly within the scope of these compliance proceedings.332 
5.113.   On appeal, the United  States takes issue with the Panel's conclusion. The United  States 
submits, first, that the Memorandum was adopted in connection with measures taken to comply with 
the recommendations and rulings of the DSB in US – Anti-Dumping and Countervailing Duties 
(China)  – i.e. an "entirely different, earlier dispute".333 According to the United  States, the Public 
Bodies Memorandum is not, in itself, "a measure taken to comply in this dispute".334 More 
specifically, the United  States contends that, if the Memorandum is an "integral part " of "the declared 
measures taken to comply" in this dispute, then "it is not separable from those measures and is not, 
in itself, an independent measure taken to comply in this dispute ".335 If, on the other hand, the 
Memorandum is an "independent 'measure'", then that measure w as "taken to comply with the 
DSB's  recommendations in US – Anti-Dumping and Countervailing Duties (China) ", and not with the 
DSB's recommendations " in this dispute ".336 In addition, the United  States argues that China could 
have challenged it in the original  proceedings, but opted not to do so.337 Indeed, observes the 
United  States, China filed its request for consultations in the original proceedings after the adoption 
by the DSB of the reports in US – Anti-Dumping and Countervailing Duties (China)  and after t he 
USDOC's adoption of the Memorandum.338 Hence, China could have included claims concerning the 
Public Bodies Memorandum in its request for consultations, but did not.339  
5.114.   China, for its part, supports the Panel's conclusion. In China's view, the United  State s' 
acknowledgement that the Public Bodies Memorandum is an "integral part" of the declared measure 
taken to comply relieved the Panel of an assessment of whether the Memorandum bears sufficient 
"links" with the USDOC's public body determinations at issue i n terms of "nature, timing, and 
effects".340 Such acknowledgement, coupled with the USDOC's consistent application of the Public 
Bodies Memorandum in its investigations on Chinese products, suffices, according to China, to 
demonstrate that the Memorandum is an "independent measure" that falls within the scope of these 
compliance proceedings.341 Moreover, China disagrees with the United  States that the Public Bodies 
Memorandum could have been challenged in the original proceedings, but was not. China stresses 
that the Memorandum only became relevant to this dispute by becoming the basis for the USDOC's 
public body determinations in the Section 129 investigations at issue.342  
5.115.   As a third participant, the European  Union considers that, while the Panel's analysis was 
"rather truncated"343, its conclusions are correct given the existence of a "close nexus" between the 
Memorandum and the USDOC's determinations.344 According to the European  Union, "one and the 
same measure" may be considered as a "measure taken to comply" in two or more different 
disputes.345 The European  Union also cautions against a formalistic exclusion of measures from the 
scope of compliance proceedings "for the sole reason that they pre -date the original panel 
request".346  
5.116.   We begin by recalling that the obj ect of Article  21.5 proceedings is the WTO -consistency of 
measures declared to be "measures taken to comply" with the recommendations and rulings of the 
DSB.347 In addition, "measures with a particularly close relationship to the declared 'measure taken 
to comply', and to the recommendations and rulings of the DSB, may also be susceptible to review 
                                                
331 Panel Report, para.  7.119.  
332 Panel Report, para.  7.116 (quoting United  States' response to Panel question No. 19, para.  139).  
333 United  States' appellant's submission, para.  23. (emphasis omitted)  
334 United  States' appellant's submission, para.  24. (emphasis original)  
335 United  States' appellant's submission, para.  27. (emphasis original)  
336 United  States' appellant's submission, para.  27. (emphasis original)  
337 United  States' appellant's submission, para.  29. 
338 United  States' appellant's submission, paras.  22 and 30.  
339 United  States' appe llant's submission, para.  30. 
340 China's appellee's submission, para.  18 (referring to Panel Report, paras.  7.115 -7.116).  
341 China's appellee's submission, para.  20. 
342 China's appellee's submission, para.  22. 
343 European  Union's third participant's submission , para.  32. 
344 European  Union's third participant's submission, para.  32. See also ibid., para.  30. 
345 European  Union's third participant's submission, para.  33. 
346 European  Union's third participant's submission, para.  35. 
347 See e.g. Appellate  Body Reports, Canada – Aircraft (Article  21.5 – Brazil) , para.  36; US – Upland 
Cotton (Article  21.5 – Brazil) , para.  202. WT/DS437/AB/R W 
 
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  by a panel acting under Article  21.5."348 Determining whether such a close relationship exists calls 
for "an examination of the timing, nature, and effects of the various measures", as well as the 
"factual and legal background against which a declared 'measure taken to comply' is adopted".349  
5.117.   We u nderstand the thrust of the Panel's reasoning to hinge on: (i) the United  States' 
recognition that the Public Bodies Memorandum is an "integral part" of the USDOC's public body 
determinations at issue (i.e. the declared measures taken to comply); and (ii) the "close relationship" 
between those measures in terms of "subject matter" and "effects".350 Albeit succinct, the Panel's 
analysis comports with the "close relationship" test outlined above. Indeed, the USDOC placed the 
Public Bodies Memorandum on the reco rd of all the Section 129 determinations  at issue in these 
compliance proceedings. Moreover, the analysis, assessment of the evidence, and explanation 
contained in the Memorandum were highly relevant to the USDOC's conclusion that the relevant 
input produc ers are public bodies within the meaning of Article  1.1(a)(1) of the SCM  Agreement. 
Finally, before the Panel, the United  States confirmed that the Public Bodies Memorandum is an 
"integral part" of the USDOC's public body determinations at issue.351 These el ements indicate to us 
that a "particularly close relationship" exists between the Public Bodies Memorandum, the declared 
"measure taken to comply", and "the recommendations and rulings of the DSB".352 
5.118.   Turning to the United  States' argument that China could h ave challenged the Public Bodies 
Memorandum, but chose not to do so, we recall that, in principle, a complaining Member is 
"not … allowed to raise claims in an Article  21.5 proceeding that it could have pursued in the original 
proceedings, but did not".353 This is because compliance proceedings cannot be used to "re -open 
issues decided on substance in the original proceedings".354 At the same time, the situation may 
arise where a complainant puts forward "new claims against a measure taken to comply", and such 
a measure "incorporates components of the original measure that are unchanged, but are not 
separable from other aspects of the measure taken to comply".355 In that case, the possibility to 
challenge an element of the measure at issue for the first time in co mpliance proceedings, even if 
that element may not have changed, hinges on the "critical question" of whether such an element 
forms "an integral part of the measure taken to comply".356 Indeed, even when certain elements of 
a compliance measure remain unchan ged from an original measure, the legal import and significance 
of such elements may be altered as a result of the modifications introduced in other parts of the 
compliance measure.357 
5.119.   It is undisputed that the Public Bodies Memorandum was adopted before China filed its 
consultations request in the present dispute and has remained unchanged since. However, we note 
that the Memorandum was not part of the record of the USDOC's public body determinations that 
were subject to the recommendations and rul ings of the DSB in the original proceedings.358 Indeed, 
as the United  States recognized before the Panel, the analysis and explanation in the Memorandum, 
and the evidence underlying it, "was not 'relevant' to the determinations challenged in the original 
proceedings in this dispute, because the Public Bodies Memorandum did not form part of the basis 
of those determinations".359 In other words, as the Panel noted, the Public Bodies Memorandum 
existed at the time of adoption of the original measures, but " did not  comprise part  of those 
measures".360 Under these circumstances, we fail to see on what basis China could have challenged 
the Public Bodies Memorandum in the context of its complaint in the original proceedings. Although 
                                                
348 Appellate  Body Report, US – Softwood Lumber IV (Article  21.5 – Canada) , para.  77. See also 
e.g. Appellate  Body Report, US – Upland Cotton (Article  21.5 – Brazil) , para.  205. 
349 Appellate  Body Report, US – Softwood Lumber IV (Article  21.5 – Canada) , para.  77. 
350 Panel Report, para.  7.116.  
351 Panel Report, para.  7.116.  
352 Appellat e Body Report, US – Softwood Lumber IV (Article  21.5 – Canada) , para.  77. 
353 Appellate  Body Report, US – Upland Cotton (Article  21.5 – Brazil) , para.  211. See also 
e.g. Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), para.  427. 
354 Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), para.  427. See also Appellate  Body 
Reports, EC – Bed Linen (Article  21.5 – India) , paras.  96-98; US – Zeroing (Japan) (Article  21.5 – Japan) , 
para. 212. 
355 See also Appellate  Body Report, EC – Fasteners (China) (Article  21.5 – China) , para.  5.78 (quoting 
Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), para.  432). 
356 Appellate  Body Report, US – Zeroing (EC) (Article  21.5 – EC), para.  434. 
357 See Appellate  Body Reports, EC – Bed Linen (A rticle 21.5 – India) , fn 101 to para.  86; US – Tuna II 
(Mexico) (Article  21.5 – Mexico) , para.  5.7. 
358 Panel Report, para.  7.118.  
359 United  States' response to Panel question No. 18, para.  137. 
360 Panel Report, para.  7.119. (emphasis added)  WT/DS437/AB/R W 
 
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  it would have been technically possib le for China to include the Memorandum among the measures 
at issue in the original proceedings, China would not have had a reason to do so at that stage, given 
the lack of a connection between the Memorandum and the USDOC's original public body 
determinati ons. It is only later – namely, at the compliance stage – that the USDOC placed the Public 
Bodies Memorandum on the record of its Section 129 investigations and relied on the analysis, 
evidence, and explanation contained therein in reaching its public body  determinations. Hence, it is 
only at the compliance stage that the Memorandum became an "integral part" of the measures taken 
to comply and that, therefore, a reason arose for China to challenge it.  
5.120.   In sum, we agree with the Panel that the Public Bodies Memorandum bears a "close 
relationship" to the declared "measure taken to comply", namely, the USDOC's public body 
determinations in the relevant Section 129 proceedings, and with the recommendations and rulings 
of the DSB in the original proceedings.361 We also agree with the Panel that China could not have 
challenged the Public Bodies Memorandum as part of its complaint in the original proceedings.362 
We, therefore, uphold  the Panel's finding, in paragraph  7.120 of its Report, that the Public Bodies 
Memorandu m falls, "as such", within the scope of these Article  21.5 proceedings.  
5.2.4.2   Whether the Public Bodies Memorandum is, "as such", inconsistent with 
Article  1.1(a)(1) of the SCM  Agreement  
5.121.   We now turn to the participants' claims concerning the "as such" consistenc y of the Public 
Bodies Memorandum with Article  1.1(a)(1) of the SCM  Agreement. The participants challenge 
different aspects of the Panel's analysis and findings. China takes issue with the Panel's conclusion 
that China has not demonstrated that the Public Bodies Memorandum is inconsistent "as such" with 
Article  1.1(a)(1).363 China also seeks reversal of the Panel's intermediate findings that: (i) the Public 
Bodies Memorandum is not "based on an improper legal standard"364; and (ii) the Public Bodies 
Memorandum "does not restrict in a material way the USDOC's discretion to act consistently with 
Article  1.1(a)(1)".365 The United  States, for its part, challenges the Panel's intermediate finding that 
the Public Bodies Memorandum can be challenged "as  such" as a rule o r norm of general or 
prospective application.366  
5.122.   To recall, the Panel concluded, in paragraphs 7.142 and 8.1(b) of its Report, that the 
Memorandum is not, "as  such", inconsistent with Article  1.1(a)(1). The Panel's conclusion rests, in 
part, on similar cons iderations as the Panel's interpretive finding that Article  1.1(a)(1) does not 
prescribe a connection of a particular degree or nature that must necessarily be established between 
an identified government function and a financial contribution. In particula r, the Panel observed that 
China's claim with respect to the Public Bodies Memorandum "as  such" was "largely based on the 
same grounds" as China's claim with respect to the USDOC's public body determinations in the 
relevant Section 129 investigations.367 Indeed, both claims related to the fact that the USDOC may 
determine an entity to be a public body without inquiring into "whether the entity in question is 
performing a government function when it engages in the conduct that is the subject of the financial 
contribution inquiry".368 In addressing China's "as such" claim, the Panel referred to its prior finding 
that the public body standard under Article  1.1(a)(1) does not require "a particular degree or nature 
of connection between an identified government funct ion and the financial contribution in 
question".369 On this basis, the Panel found, in paragraph 7.136 of its Report, that China had failed 
to establish that the Public Bodies Memorandum is, "as  such", inconsistent with Article  1.1(a)(1).  
5.123.   Having made this f inding, the Panel went on to examine , as "an additional point of 
consideration", whether "the USDOC is materially restricted in its discretion to complement the 
analysis of the Public Bodies Memorandum with additional factual findings in a given investigation in 
relation to investigated entities ."370 The Panel found that the Public Bodies Memorandum "does not, 
on its face, impinge upon the authority of the USDOC to disregard or supplement its content in any 
                                                
361 Panel Report, pa ra. 7.116.  
362 Panel Report, para.  7.118.  
363 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  9. 
364 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  9. 
365 China's other appellant's submission, para.  196. See also China's Notice of Other Appeal, para.  9. 
366 United  States' appellant's submission, para.  230. See  also United  States' Notice of Appeal, para.  3. 
367 Panel Report, para.  7.135.  
368 Panel Report, para.  7.135 (quoting China's second written submission to the Panel, para.  120).  
369 Panel Report, para.  7.136.  
370 Panel Report, para.  7.137.  WT/DS437/AB/R W 
 
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  given investigation".371 Rather, the Memoran dum is a resource " available  to the USDOC to be 
considered and potentially relied upon to the extent that the USDOC, in its discretion, finds it 
pertinent in any given investigation".372 On this basis, the Panel concluded that "the Public Bodies 
Memorandum d oes not restrict in a material way the USDOC's discretion to act consistently with 
Article  1.1(a)(1)."373 
5.124.   The participants do not dispute that the Public Bodies Memorandum allows the USDOC to 
determine that an entity is a public body without inquiring into w hether that entity is performing a 
governmental function when engaging in one of the conducts listed in subparagraphs (i) -(iii) and 
the first clause of subparagraph (iv) of Article  1.1(a)(1). Rather, as noted in section 5.2.3 above , 
the participants disagr ee as to whether such an inquiry is required  under Article  1.1(a)(1). As it did 
before the Panel, China maintains on appeal that an investigating authority may not determine an 
entity to be a public body without establishing a "clear logical connection" be tween an identified 
government function and the specific conduct alleged to constitute a financial contribution.374 In its 
other appellant's submission, China described the core "question" underlying its "as such" claim as 
being "whether, when the USDOC does rely on the Public Bodies Memorandum, it will restrict, in a 
material way, its ability to make determinations that are consistent with Article  1.1(a)(1)".375 China 
argues that " [i]f the Appellate  Body were to agree with China that the Public Bodies Memorand um 
is premised on a fundamentally flawed legal standard , then the answer to this question should be 
yes."376 This is because, China explains, the Public Bodies Memorandum allows the USDOC to find 
certain Chinese companies to be public bodies despite the fact  that "these entities are performing a 
'government function' that has no discernible connection to the conduct at issue under 
Article  1.1(a)(1) ."377 Hence, concludes China, "[a]ny resulting public body determination based on 
a conclusion that these entities are performing an irrelevant government function would be 
inconsistent with Article  1.1(a)(1) of the SCM  Agreement ."378 On appeal, China has not identified 
any other specific reasons for which it considers the Public Bodies Memorandum to be "as such" 
inconsi stent with Article  1.1(a)(1).  
5.125.   In light of the above, we understand China's challenge of the Panel's conclusion on the 
Public  Bodies Memorandum "as such" to be predicated on China's view that Article  1.1(a)(1) 
requires, in each case, the establishment of a  "clear logical connection" between a "government 
function" identified by the investigating authority and the conduct alleged to give rise to a financial 
contribution. We have disagreed with that view in paragraph 5.105  above . We have also upheld the 
Panel 's finding that China has failed to demonstrate that the USDOC's public body determinations in 
the relevant Section 129 proceedings are inconsistent with Article  1.1(a)(1) because they are based 
on an improper legal standard.  
5.126.   Given our prior findings and the way in which China has framed its appeal, we do not find it 
necessary  to engage further with China's claim concerning the Panel's conclusion, in 
paragraph  8.1(b) of its Report, that China has not demonstrated that the Publi c Bodies Memorandum 
is inconsistent "as such" with Article  1.1(a)(1). We also do not find it necessary  to engage with the 
participants' claims concerning the Panel's intermediate findings leading to that conclusion, namely: 
(i) the Panel's finding, in para graph 7.133 of its Report, that the Public Bodies Memorandum "can 
be challenged 'as  such' as a rule or norm of general or prospective application"; and (ii) the Panel's 
finding, in paragraph 7.142 of its Report, that "the Public Bodies Memorandum does not restrict in 
a material way the USDOC's discretion to act consistently with Article  1.1(a)(1)."  The Panel's 
conclusion that China has not demonstrated that the Public Bodies Memorandum is inconsistent 
"as such" with Article  1.1(a)(1), therefore, stands.  
5.3  Article 14(d) of the SCM  Agreement  
5.127.   The United  States and China appeal different Panel findings under Articles  1.1(b) and  14(d) 
of the SCM  Agreement. The United  States seeks reversal of the Panel's findings that the USDOC 
benchmark determinations in the OCTG, Solar Panels, Pressure Pipe, and Line Pipe Section  129 
                                                
371 Panel Report, para.  7.140.  
372 Panel Report, para.  7.140. (emphasis original)  
373 Panel Report, para.  7.142.  
374 China's other appellant's submission, para. 17.  
375 China's other appellant's submission, para.  120. (emphasis original)  
376 China's other appellant's submission, para.  121. (emphasis added)  
377 China's other appellant's submission, para.  121. 
378 China's other appellant's submission, para.  121. WT/DS437/AB/R W 
 
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  proceedings are inconsistent with Articles  1.1(b) and 14(d).379 In particular, the United  States 
contends that the Panel erred in finding that the United  States "failed to explain … how government 
interv ention in the market resulted in domestic prices for the inputs at issue deviating from a 
market -determined price" and "failed to provide a reasoned and adequate explanation for its 
rejection of in -country prices in its benchmark determinations".380 The Unit ed States submits that 
the Panel's rationale lacks any indication that it considered evidence before the USDOC indicating 
that steel prices in China are not market -determined or the USDOC's explanation and analysis of 
that evidence, and that the failure of  the Panel to do so amounts to an erroneous  interpretation and 
application of Article  14(d) .381 Specifically, in the United  States' view, the Panel failed to recognize 
that examining prices is not the only way to demonstrate price distortion, that the examin ation of 
"prevailing market conditions" assumes the existence of a "functioning market", and that, absent a 
functioning market, an internal price cannot serve as a benchmark for measuring the adequacy of 
remuneration.382 Furthermore, the United  States argues that the Panel made a number of erroneous 
observations in examining whether the USDOC considered in -country and government -related 
prices, analysed specific input markets on a standalone basis, and conducted a diligen t investigation 
and solicited relevant facts.383 
5.128.   In response, China submits that the United  States' position poses at least two  interpretative 
problems, namely: (i) "whether any type of government policy or action ('intervention') that affects 
market conditi ons can be characterized as a potential 'distortion'"; and (ii)  "whether the effect of 
government 'interventions' on market conditions must go beyond some de minimis level to qualify 
as a 'distortion' and, if so, how this 'degree' of distortion would be ca lculated and identified."384 With 
respect to the evidentiary showing required to establish that in -country prices are "distorted", China 
contends that "[w]hatever the opposite of a 'market' price is, the proper interpretation and 
application of Article  14(d)  requires an investigating authority to demonstrate with evidence that 
one or more 'government interventions' actually resulted in a 'distortion' of in -country prices in this 
sense."385 China specifically argues that the USDOC's Section  129 determinations co ntain no 
reference to the Mysteel pricing data, which demonstrated that in -country prices for the steel inputs 
at issue were market -determined.386 Moreover, China submits that "[n]either the USDOC in its 
determinations, nor the United  States in its submissio ns to the Panel, had a meaningful response to 
the evidence of private investment in the Chinese steel industry", which grew rapidly during the 
periods of investigation.387 Equally, China considers that the USDOC identified no evidence in its 
Section  129 dete rminations that government -related suppliers of those inputs priced their products 
other than in accordance with commercial considerations.388 
5.129.   In its other appeal, China seeks review of the Panel's finding that "an investigating authority 
may reject in -count ry prices if there is evidence of price distortion, and not only if there is evidence 
that a government 'effectively determines' the price of the goods at issue."389 While China agrees 
with the Panel's ultimate conclusion, China requests the Appellate  Body to modify its basis and find 
that Article  14(d) limits recourse to an out -of-country benchmark to situations where prices for the 
inputs in question were effectively determined by the government.390 In China's view, the mere fact 
that a particular government policy or action is shown to have affected market prices is not a 
sufficient basis for rejecting those prices as benchmarks under Article  14(d).391 Instead, China 
contends that prior jurisprudence stands for the proposition that the "very limited" circumstan ce in 
which an investigating authority may resort to out -of-country benchmarks is when the government 
                                                
379 United  States' Notice of Appeal, para.  4 (referring to Panel Report, paras.  7.199 -7.200, 7.205 -7.206, 
7.209 -7.211, 7.218 -7.220, 7.223 -7.224, and 8.1.c).  
380 United  States' Notice of Appeal, para.  4 (quoting Panel Report, para.  7.223). (emphasis original) 
While the United  States considers these errors to be issues of law and legal interpretations, the United  States 
argues that, if the Appellate  Body were to consider instead that the issues are issues of fact, then the 
Appellate  Body should find that the Panel  failed to make an objective assessment of the matter before it under 
Article  11 of the DSU. (Ibid., fn 7 to para.  4) 
381 United  States' appellant's submission, para.  119. 
382 United  States' appellant's submission, paras.  121-141. 
383 United  States' appellant's submission, paras.  146-170. 
384 China's appellee's submission, para.  78. (emphasis original)  
385 China's appellee's submission, para.  95. 
386 China's appellee's submission, paras.  114-115. 
387 China's appellee's submission, para.  133. See also ibid., paras.  131-132. 
388 China's appellee's submission, para.  135. 
389 China's Notice of Other Appeal, para.  11 (quoting Panel Report, para.  7.168).  
390 China's other appellant's submission, para.  158. 
391 China's other appellant's submission, para.  133. WT/DS437/AB/R W 
 
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  effectively determines the price at which the good is sold, thereby rendering circular the comparison 
required by Article  14(d).392 China considers that the  Panel failed "to establish as a matter of law" 
what constitutes a "market price", or a "market -determined price"393, and "whether such prices exist 
within the country of provision".394 For China, the Panel therefore had no basis to determine whether 
"governme nt intervention in the market resulted in domestic prices for the inputs at issue deviating 
from a market -determined price".395 
5.130.   In response, the United  States highlights that Appellate  Body findings have recognized 
various forms of price distortion that woul d support the use of out -of-country benchmarks396, and 
points out that "the common tenet among these findings is the 'economic logic' reflected in a proper 
interpretation of the text of Article  14(d)"397, and that it is "important to emphasize the market 
orientation of the inquiry".398 The United  States is of the view that the Panel was correct in its 
rejection of China's overly narrow legal interpretation of the circumstances allowing resort to 
out-of-country benchmarks.399 In particular, the United  States agrees with the Panel's conclusion 
that "[t]hese circumstances, even if very limited, … go beyond the sole circumstance in which prices 
are determined, de jure or de facto , by the government"400, and considers that this is consistent 
with the "economic logic" refle cted in Article  14(d).401 The United  States further contends that 
nothing in prior Appellate  Body reports suggests "that there should be an arbitrary line between 
prices that are ' effectively determined ' by a government and prices that are distorted by the 
government's extensive interference in a sector (both as a supplier and otherwise)."402 According to 
the United  States, "it would be contrary to the principles of treaty interpretation to construe 'market' 
in a way that would deprive that term of its mea ning", and "a proper interpretation of the term 
'market' must give meaning to that term, and in particular, what the term 'market' means in the 
context of the search for an appropriate benchmark against which to evaluate the level of benefit 
resulting from  a government subsidy."403 
5.131.   Our analysis below begins by setting out the interpretation of Article  14(d) of the 
SCM Agreement. We then turn to China's  claim that the Panel erred in finding that recourse to 
out-of-country prices is not limited to circumstances  in which the government "effectively 
determines" the price of the goods in question. Thereafter, we examine the United  States' claim that 
the Panel erred in finding that the USDOC failed to provide a reasoned and adequate explanation for 
its rejection of in-country prices in its benchmark determinations.  
5.3.1   Interpretation of Articles  1.1(b) and  14(d) of the SCM  Agreement  
5.132.   In order for there to be a subsidy, a financial contribution by a government must confer a 
benefit within the meaning of Article  1.1(b) of t he SCM  Agreement. The existence of a benefit is 
therefore one of the constituent elements of a subsidy under the SCM  Agreement.404 The 
SCM Agreement does not provide a definition of the term "benefit". Nor does it prescribe a particular 
methodology for deter mining its existence405 or quantum.406 The Appellate  Body has found that the 
term "benefit" encompasses some form of advantage407, and implies a comparison, since there can 
                                                
392 China's other appellant's  submission, paras.  136 and 165.  
393 China's other appellant's submission, para.  157. 
394 China's other appellant's submission, para.  150. 
395 China's other appellant's submission, para.  157 (referring to Panel Report, 7.206).  
396 United  States' appellee's submiss ion, para.  240 (referring to Appellate  Body Report, US – Carbon 
Steel (India) , para.  4.186 ). 
397 United  States' appellee's submission, para.  243 (referring to Appellate  Body Reports, US – Carbon 
Steel (India) , para.  4.169; US – Softwood Lumber IV , para. 94 and fn 118 thereto, in turn referring to Panel 
Report, US – Softwood Lumber IV ). (fn omitted)  
398 United  States' appellee's submission, para.  243 (quoting Appellate  Body Report, US – Carbon Steel 
(India) , para.  4.151).  
399 United  States' appellee's submission, para.  245 (referring to Panel Report, US – Countervailing 
Measures (China) (Article  21.5 – China), para.  7.162).  
400 United  States' appellee's submission, para.  247 (quoting Panel Report, para.  7.164).  
401 United  States' appellee's submission, para.  247. 
402 United  States' appellee's submission, para.  257 (referring to China's other appellant's submission , 
para. 136). (emphasis original; fn omitted)  
403 United  States' appellee's submission, para.  277. 
404 Appellate  Body Report, Brazil – Aircraft , para.  157. 
405 Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  833. 
406 Appellate  Body Report, US – Softwood Lumber IV , paras.  91-92. 
407 Appellate  Body Report, Canada – Aircraft , para.  153. WT/DS437/AB/R W 
 
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  be no "benefit" to the recipient unless the financial contribution makes the recipient "b etter off" than 
it would otherwise have been, absent that contribution.408 The marketplace provides the appropriate 
basis for such comparison, because the trade -distorting potential of a "financial contribution" can be 
identified only by determining whether the recipient has received that "financial contribution" on 
terms more favourable than those available in the market.409  
5.133.   In this respect, we recall that Article  14(d) of the SCM  Agreement provides, in relevant part:  
Article  14 
Calculation of the Amount of a  Subsidy in Terms of the Benefit to the Recipient  
For the purpose of Part V, any method used by the investigating authority to calculate 
the benefit to the recipient conferred pursuant to paragraph 1 of Article1 shall be 
provided for in the national legisl ation or implementing regulations of the Member 
concerned and its application to each particular case shall be transparent and 
adequately explained. Furthermore, any such method shall be consistent with the 
following guidelines:  
… 
(d) the provision of good s or services or purchase of goods by a government shall 
not be considered as conferring a benefit unless the provision is made for less than 
adequate remuneration, or the purchase is made for more than adequate remuneration. 
The adequacy of remuneration s hall be determined in relation to prevailing market 
conditions for the good or service in question in the country of provision or purchase 
(including price, quality, availability, marketability, transportation and other conditions 
of purchase or sale).  
5.134.   Article 14(d) relates to, inter alia , the calculation of benefit when goods are provided by the 
government. In particular, Article  14(d) establishes that the provision of goods by a government 
shall not be considered as conferring a benefit unless such provis ion is made for less than adequate 
remuneration. Thus, a benefit is conferred when a government provides goods to a recipient and, in 
return, receives insufficient payment or compensation for those goods.410 With regard to the 
question of how to determine wh ether adequate remuneration was paid for the goods provided by 
the government, the second sentence of Article  14(d) provides that benefit "shall be determined in 
relation to prevailing market conditions for the good or service in question in the country of  provision 
or purchase". Article  14(d) also indicates that prevailing market conditions in the country of provision 
include "price, quality, availability, marketability, transportation and other conditions of purchase or 
sale".  
5.135.   A determination of whether the remuneration paid for a government -provided good is "less 
than adequate" under Article  14(d) requires the selection of a benchmark against which the price 
for the government -provided good must be compared.411 In US – Softwood Lum ber IV , the 
Appellate  Body stated that the market from which a benchmark is selected for the purpose of a 
benefit analysis need not be completely undistorted or free of any government intervention. In this 
respect , the Appellate  Body noted that "the text [ of Article  14(d)] does not explicitly refer to a 'pure' 
market, to a market 'undistorted by government intervention', or to a 'fair market value'" and that 
the provision therefore "does not qualify in any way the 'market' conditions which are to be used as  
the benchmark" .412 The Appellate  Body remarked that the phrase "in relation to" in Article  14(d) was 
used in the broader sense of "relation, connection, reference", and therefore did not exclude the 
possibility of using as a benchmark something other than p rivate prices in the market of the country 
of provision.413 This suggests that an investigating authority must determine whether, based on the 
facts of the case, "the benchmark chosen relates or refers to, or is connected with, the conditions 
                                                
408 Appellate  Body Report, Canada – Aircraft , para.  157. 
409 Appellate  Body Report, Canada – Aircraft , para.  157. 
410 Appellate  Body Report, US – Softwood Lumber  IV, para.  84. 
411 Appellate  Body Report, US – Carbon Steel (India) , para.  4.151.  
412 Appellate  Body Report, US – Softwood Lumber IV , para.  87 (referring to Panel Report,  
US – Softwood Lumber IV , paras.  7.50-7.51).  
413 Appellate  Body Report, US – Softwood Lumber IV , para.  89. WT/DS437/AB/R W 
 
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  prevailing in the market of the country of provision ."414 Furthermore, the reference to "any" method 
in the chapeau  of Article  14 has been understood to imply that more than one method consistent 
with Article  14 is available to investigating authorities for purposes of calculating the benefit to the 
recipient.415 
5.136.   Although Article  14(d) does not dictate that in -country prices "are to be used as the exclusive  
benchmark in all situations , it does emphasize by its terms that prices of similar goods sold by 
private suppliers in the country of provision are the primary benchmark that investigating authorities 
must use when determining whether goods have been provided by a government for less than 
adequate remuneration ."416 The Appellate  Body concluded  that the guideline  in Article  14(d) "does 
not require the use of private prices in the market of the country of provision in every situation" but 
rather requires that "the method selected for calculating the benefit must relate or refer to, or be 
connected with, the prevail ing market conditions in the country of provision, and must reflect price, 
quality, availability, marketability, transportation and other conditions of purchase or sale ."417 
5.137.   Having answered the question of " [w]hether  Article  14(d) of the SCM  Agreement permit s 
investigating authorities to use a benchmark other than private prices in the country of provision "418, 
the Appellate  Body separately addressed the issue of " [w]hen " investigating authorities may " use a 
benchmark other than private prices in the country of  provision ".419 In this regard, the 
Appellate  Body observed that the situation of government predominance in the market, as a provider 
of certain goods, was the only one raised on appeal420, and found that "[w]hen private prices are 
distorted because the gover nment's participation in the market as a provider of the same or similar 
goods is so predominant that private suppliers will align their prices with those of the 
government -provided goods, it will not be possible to calculate benefit having regard exclusiv ely to 
such prices."421 The Appellate  Body did not exclude that there may be other situations in which 
recourse to out -of-country prices may be warranted.422 The Appellate  Body, however, highlighted 
that the possibility under Article  14(d) for investigating au thorities to consider a benchmark other 
than in -country private prices is  "very limited" and "an allegation that a government is a significant 
supplier would not, on its own, prove distortion and allow an investigating authority to choose a 
benchmark other  than private prices in the country of provision ."423  
5.138.   Subsequently, the Appellate  Body clarified that the concept of "price distortion" is central to 
the analysis of whether recourse to out -of-country prices is warranted under Article  14(d). In 
                                                
414 Appellate  Body Report, US – Softwood Lumber  IV, para.  89. 
415 Appellate  Body Report, US – Softwood Lumber IV , para.  91. Thus, the  context provided by the 
chapeau  of Article  14 does not suggest tha t in-country prices, whenever available, have to be used exclusively 
as a benchmark for the purposes of Article  14(d). (Ibid.)  
416 Appellate  Body Report, US – Softwood Lumber  IV, para.  90. (emphasis original) However, always 
requiring the use of in -country p rivate prices may frustrate the object and purpose of the SCM  Agreement, 
which includes disciplining the use of subsidies and countervailing measures while, at the same time, enabling 
WTO Members whose domestic industries are harmed by subsidized imports t o use such remedies. (Ibid., 
para. 95) 
417 Appellate  Body Report, US – Softwood Lumber IV , para.  96. 
418 Appellate  Body Report, US – Softwood Lumber IV , subheading V.B. (italics original; underlining 
added)  
419 Appellate  Body Report, US – Softwood Lumber IV , subheading V.C. (italics original; underlining 
added)  
420 Appellate  Body Report, US – Softwood Lumber IV , para.  99. 
421 Appellate  Body Report, US – Softwood Lumber IV , para.  101. The Appellate  Body reasoned that 
"[w]henever the government is the predominant provi der of certain goods, even if not the sole provider, it is 
likely that it can affect through its own pricing strategy the prices of private providers for those goods, inducing 
the latter to align their prices to the point where there may be little differen ce, if any, between the government 
price and the private prices." (Ibid., para.  100) Because this would lead to an artificially low or even 
non-existent determination of benefit, the Appellate  Body reasoned that subsidy disciplines and the right of 
Members  to countervail subsidies could be undermined or circumvented when the government is a 
predominant provider of certain goods. The Appellate  Body considered that Article  14(d) "ensures that the 
provision's purposes are not frustrated in such situations" by permitting investigating authorities "to use a 
benchmark other than private prices in that market". (Ibid., para.  101) 
422 See also Appellate  Body Report, US – Carbon Steel (India) , para.  4.184.  
423 Appellate  Body Report, US – Softwood Lumber  IV, para.  102. WT/DS437/AB/R W 
 
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  US – Anti-Dumping and Countervailing Duties (China)424, the Appellate  Body highlighted that what 
would allow an investigating authority to reject in -country private prices is price distortion , not the 
fact that the government is the predominant supplier per se .425 Importantly, "the decision to reject 
in-country prices as the benchmark due to the role of t he government in the market for the good in 
question can only be made on a case -by-case basis, in accordance with the relevant evidence in the 
particular investigation, rather than in the abstract."426 Thus, while the government's predominant 
role as the pro vider of goods may make distortion of in -country prices likely, it is a finding of "price 
distortion" that allows an investigating authority to reject those prices.427 
5.139.   In US – Carbon Steel (India) , the Appellate  Body further emphasized the market orientation  
of the enquiry under Article  14(d), and noted that, while in -country private prices may serve as the 
starting point  of the analysis under Article  14(d), this does not mean that, having identified such 
prices, the analysis must necessarily end there. Rathe r, "[p]rices of goods provided by 
government -related entities other than the entity providing the financial contribution at issue must 
also be examined to determine whether they are market determined and can therefore form part of 
a proper benchmark."428 At the same time, "[p]roposed in -country prices will not be reflective of 
prevailing market conditions in the country of provision when they deviate from a 
market -determined price as a result of governmental intervention in the market."429 The required 
examinat ion may, on the basis of information supplied by petitioners and respondents, or collected 
by the authority in a countervailing duty investigation, involve an assessment of the structure of the 
relevant market, including the type of entities operating in t hat market, their respective market 
share, as well as any entry barriers. It could also require assessing the behaviour of the entities 
operating in that market in order to determine whether the government itself, or acting through 
government -related entit ies, exerts market power resulting in distortion of in -country prices.430 In 
addition, the Appellate  Body observed that its previous findings had not indicated that it was 
"foreclosing the possibility that there could be situations other than price distortion due to 
government predominance as a provider in the market, in which Article  14(d) permits the use of  
out-of-country prices for the purpose of determining a benchmark."431 The findings in US – Carbon 
Steel (India) therefore make clear that the central inquiry in determining a proper benefit benchmark 
under Article  14(d) is whether in -country prices are mark et-determined or distorted by government 
intervention.  
5.140.   Moreover, in the original proceedings of the present dispute, the Appellate  Body again 
emphasized the importance of establishing the existence of price distortion by clarifying that "in 
US – Anti-Dumpi ng and Countervailing Duties (China)  … the findings by the Appellate  Body did not 
hinge on whether  or not the entities that provided hot-rolled  steel constituted 'public bodies' within 
                                                
424 In that case, the Appellate  Body examined a claim by China relating to the USDOC's rejection of 
in-country private prices in China as benchmarks for calculating the adequacy of remuneration for hot -rolled 
steel (HRS) provided by certain SOEs to investigate d companies. The USDOC had determined that, because 
China's SOEs accounted for the "overwhelming" majority of the production and sale of HRS (96.1%), private 
prices of HRS in China were not suitable as price benchmarks. (Appellate  Body Report, US – Anti-Dumping and 
Countervailing Duties (China) , para.  429) 
425 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , paras.  443 and 446. 
Similarly, where the government is only a "significant" supplier, "evidence pertaining to factors other than 
government market share will be needed, as the government's role as a significant supplier cannot, on its own, 
prove distorti on of private prices." (Ibid., para.  443) The Appellate  Body pointed out that, although there is no 
specific threshold for reaching a finding of price distortion based on the government's predominance in the 
market, it is clear that the more predominant a government's role in the market is, the more likely this role will 
result in the distortion of private prices and other evidence carries only limited weight. (Ibid., paras.  444 
and 446) 
426 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties ( China) , para.  445 (referring to 
Panel Report, US – Anti-Dumping and Countervailing Duties (China) , para.  10.47, in turn referring to 
Appellate  Body Report, US – Softwood Lumber  IV, para.  102).  
427 See Appellate  Body Report, US – Anti-Dumping and Countervaili ng Duties (China) , para.  446. The 
Appellate  Body "has therefore cautioned against equating the concepts of price distortion and government 
predominance, and has highlighted that the link between the two concepts is an evidentiary one." 
(Appellate  Body Repo rt, US – Carbon Steel (India) , para.  4.156 ) 
428 Appellate  Body Report, US – Countervailing Measures (China) , para.  4.49. 
429 Appellate  Body Report, US – Carbon Steel (India) , para.  4.155.  
430 Appellate  Body Report, US – Carbon Steel (India) , fn 754 to para.  4.157. Investigating authorities 
may also be "called upon to examine the conditions of competition in the relevant market in order to assess 
whether the government is influencing the pricing conduct of any government -related or private entities" . 
(Appellate  Body Report, US – Countervailing Measures (China) , para.  4.62)  
431 Appellate  Body Report, US – Carbon Steel (India) , para.  4.185.  WT/DS437/AB/R W 
 
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  the meaning of Article  1.1(a)(1) of the SCM  Agreement but, rather, on w hether the USDOC had 
correctly reached the conclusion that price distortion in the market, due to governmental 
intervention, warranted recourse to an alternative benchmark."432 
5.141.   As we see it, the central inquiry under Article  14(d) in choosing an appropriate benefit 
benchmark is whether government intervention results in price distortion  such that recourse to 
out-of-country prices is warranted, or whether instead in -country prices of private enterprises and/or 
government -related entities are market -determined  and can therefore serve as a basis for 
determining the existence of benefit. Thus, what would allow an investigating authority to reject 
in-country prices is a finding of price distortion resulting from government intervention in the market, 
not the presen ce of government intervention in the market itself. Indeed, various types of 
government interventions may lead to price distortion, such that recourse to out -of-country prices 
is warranted, beyond the situation in which the government is so predominant tha t it effectively 
determines the prices of the goods in question. Therefore, the decision to reject in -country prices as 
a benchmark should be made case by case and based on the relevant evidence on  the record in the 
particular investigation. What an invest igating authority must do in conducting the necessary 
analysis therefore will vary depending upon the circumstances of the case, the characteristics of the 
market being examined, and the nature, quantity, and quality of the information supplied by 
petition ers and respondents, including such additional information an investigating authority seeks 
so that it may base its determination on positive evidence on the record.433 In all cases, the 
investigating authority must provide a reasoned and adequate explanatio n of the basis for its 
conclusions in its determination , and only o nce it has properly established and explained why 
in-country  prices are distorted, is it warranted to have recourse to an alternative benchmark for the 
benefit analysis under Article  14(d).434 
5.3.2   Whether the Panel erred in its interpretation of Articles  1.1(b) and  14(d) of the 
SCM Agreement in finding that recourse to out -of-country prices is not limited to 
circumstances in which the government "effectively determines" the price of the goods in 
question  
5.142.   China requests us to modify the basis for the Panel's conclusion that the United  States acted 
inconsistently with Articles  1.1(b) and 14(d) of the SCM  Agreement, and affirm the Panel's finding 
of inconsistency on the ground that the USDOC did not determine that domestic Chinese prices for 
the relevant inputs were effectively determined by the government.435 China argues that, while the 
Panel correctly found that "an investigating authority must demonstrate causation  [between 
government intervention and price distortion] in order to reject available in -country benchmarks 
under Article  14(d)", the Panel "was required to address the logically prior issue of what constitutes 
a 'market' price".436 In China's view, "[u]nder a proper interpretati on of Article  14(d), an 
investigating authority may reject available in -country prices only in the 'very limited' circumstance 
in which government policies or actions effectively determine the price at which the good is sold 
within the country of provision , either de jure  or de facto ."437 
5.143.   In response, the United  States highlights that Appellate  Body findings have recognized 
various forms of price distortion that would support the use of out -of-country benchmarks438, and 
points out that "the common tenet among t hese findings is the 'economic logic' reflected in a proper 
interpretation of the text of Article  14(d)"439, and that it is "important to emphasize the market 
orientation of the inquiry".440 The United  States is of the view that the Panel was correct in its 
                                                
432 Appellate  Body Report, US – Countervailing Measures (China) , para.  4.54. Therefore, China's 
argument that there is a single standard for defining the term "government" did not answer the question of 
"whether a proposed in -country price is a market -determined price for the same or similar goods in the country 
of provision, and thus whether it may serve as a benchmark for determining benefit." (Ibid.)  
433 Appellate  Body Report, US – Carbon Steel (India) , para.  4.157.  
434 Appellate  Body Report, US – Countervailing Measures (China) , para.  4.62. 
435 China's other appellant's submission, para.  138. 
436 China's other appellant's submission, para.  130. 
437 China's other appellant's submission, para.  191. 
438 United  States' appellee's submission, para.  240 (referring to Appellate  Body Report, US – Carbon 
Steel (India) , para.  4.186 ). 
439 United  States' appellee's submission, para.  243 (referring to Appellate  Body Reports, US – Softwood 
Lumber IV , in turn referring to Panel Report, US – Softwood Lumber IV ; US – Carbon Steel (India) , 
para. 4.169). (fn omitted)  
440 United States' appellee's submission, para.  243 (quoting Appellate  Body Report, US – Carbon Steel 
(India) , para.  4.151).  WT/DS437/AB/R W 
 
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  rejection of China's overly narrow legal interpretation of the circumstances allowing resort to 
out-of-country benchmarks.441 The United  States further contends that nothing in the 
Appellate  Body's prior reports suggests "that there should be an arbitrary line  between prices that 
are 'effectively determined ' by a government and prices that are distorted by the government's 
extensive interference in a sector (both as a supplier and otherwise)."442  
5.144.   We note the Panel's finding that "an investigating authority may r eject in -country prices if 
there is evidence of price distortion, and not only if there is evidence that a government 'effectively 
determines' the price of the goods at issue."443 The Panel took the view that "the existence of price 
distortion may … preclude  a proper comparison of the terms of the financial contribution with market 
terms. This may be the case when the government is the sole or predominant provider of a good, 
but it may also be the case in other circumstances that render the comparison equally  impossible or 
irrelevant."444 Therefore, the Panel considered that "the outcome of the inquiry necessary to identify 
an appropriate benchmark, including the decision whether the circumstances in a particular 
investigation justify use of an out -of-country be nchmark, will depend on the facts of each case."445 
We agree. As explained above, central to the inquiry under Article  14(d) in identifying an appropriate 
benefit benchmark is the question of whether in -country prices are distorted  as a result of 
government intervention in the market. Moreover, different types of government interventions may 
result in price distortion, such that recourse to out -of-country prices is warranted, beyond the 
scenario in which the government's role is so predominant that it effecti vely determines the price of 
the goods in question.  
5.145.   We further agree with the Panel that the existence of price distortion "may well … preclude 
a proper comparison of the terms of the financial contribution with market terms" not only when the 
government is the sole or predominant provider of a good, but also "in other circumstances that 
render the comparison equally impossible or irrelevant".446 As we discuss below, the Panel also 
recognized that, in the absence of evidence of a direct impact on the price o f the good in question, 
"an adequate explanation of how the price of the good in question is distorted as a result" could 
justify recourse to out -of-country prices.447 We return to this issue in the next section  of this report. 
Indeed, we do not exclude that  types of government intervention that do not directly or effectively 
determine in -country prices may have similar distortive impact on those prices, such that they no 
longer represent a proper benchmark for adequate remuneration. In our view, recourse to 
out-of-country prices in such situations may be warranted, insofar as the investigating authority has 
established the existence of price distortion resulting from government intervention. We therefore 
disagree with China that the "three circumstances that panels and the Appellate  Body have identified 
as potentially justifying the use of out -of-country benchmarks" are limited to those "in which the 
government effectively determines the price at which the good is sold, either de jure  or 
de facto" – namely , where the government : (i) sets prices administratively; (ii) is the sole supplier 
of the good; and (iii) possesses and exercises market power as a provider of the good so as to cause 
the prices of private suppliers to align with a government -determ ined price.448 
5.146.   At the same time, we recall the Appellate  Body's finding that "[b]ecause Article  14(d) 
requires that the assessment of the adequacy of remuneration for a government -provided good 
must be made in relation to prevailing market conditions  in the country of provision , … [the] 
benchmark for conducting such an assessment must consist of market -determined prices for the 
same or similar goods that relate or refer to, or are connected with, the prevailing market conditions 
for the good in question in th e country of provision."449 As observed above, central to this inquiry is 
the question of whether in -country prices of private enterprises and government -related entities are 
distorted. However, the concept of "price distortion" is not equivalent to any impact on prices as a 
result of any government intervention. We therefore disagree with China's suggestion that the 
                                                
441 United  States appellee's submission, para.  245 (referring to Panel Report, US – Countervailing 
Measures (China) (Article  21.5 – China) , para.  7.162).  
442 United  States' appellee's submission, para.  257 (referring to China's other appellant's submission, 
para. 136). (emphasis original; fn omitted)  
443 Panel Report, para.  7.168.  
444 Panel Report, para.  7.168.  
445 Panel Report, para.  7.172.  
446 Panel Report, para.  7.168.  
447 Panel Report, para.  7.205.  
448 China's other appellant's submission, para.  189. 
449 Appellate  Body Report, US – Carbon Steel (India) , para.  4.151 (referring to Appellate  Body Report, 
US – Softwood Lumber IV , para.  89).  WT/DS437/AB/R W 
 
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  Panel's interpretative approach in the present dispute is based on the premise "that any government 
policy or action is a potential  'distortion'  under Article  14(d) and that the only fact that an 
investigating authority must establish" is that the policy or action had what the Panel called a "direct 
impact" upon in -country prices for the good in question.450 Instead, the determination of whether 
in-country prices are distorted must be made on a case -by-case basis, taking into account the 
characteristics of the market being examined, and the nature, quantity, and quality of the 
information on the record.451 Only once the investigating authority has prop erly complied with its 
obligation to investigate whether there are in -country prices that reflect prevailing market conditions 
in the country of provision and has made a finding of price distortion, may it consistently with 
Article  14(d) have recourse to o ut-of-country prices.  
5.3.2.1   Conclusion  
5.147.   Central to the inquiry under Article  14(d) of the SCM  Agreement in identifying an appropriate 
benefit benchmark is the question of whether in -country prices are distorted  as a result of 
government intervention. What would allow an investigating authority to reject in -country prices is 
a finding of price distortion resulting from government intervention in the market, not the presence 
of government intervention in the market itself. Different types of government intervention s could 
lead to price distortion, such that recourse to out -of-country prices is warranted, beyond the 
situation in which the government's role is so predominant that it effectively determines the price of 
the goods in question. Instead, the determination of whether in -country prices are distorted must 
be made case by case, based on the relevant evidence in the particular investigation , and taking 
into account the characteristics of the market being examined, and the nature, quantity, and quality 
of the inf ormation on the record. We thus disagree with China's proposition that the circumstances 
potentially justifying recourse to out -of-country prices are limited to those in which the government 
effectively determines the price at which the good is sold, inclu ding more specifically, where the 
government sets prices administratively, is the sole supplier of the good, or possesses and exercises 
market power as a provider of the good so as to cause the prices of private suppliers to align with a 
government -determi ned price.452 
5.148.   We therefore find that the Panel did not err, in paragraph 7.174 of its Report, in rejecting 
China's claim that the United  States acted inconsistently with Articles  1.1(b) and  14(d) of the 
SCM Agreement by rejecting in -country prices without ha ving first found that prices for the inputs 
in question were effectively determined by the Government of the People's Republic of China.453 
5.3.3   Whether the Panel erred in its interpretation and application of Articles  1.1(b) 
and 14(d) of the SCM  Agreement  
5.149.   The U nited States requests us to reverse the Panel's findings that the USDOC benchmark 
determinations in the OCTG, Solar Panels, Pressure Pipe, and Line Pipe Section  129 proceedings are 
inconsistent with Articles  1.1(b) and 14(d) of the SCM Agreement.454 The United  States argues that 
the Panel erred in finding that evidence of " governmental  involvement in the relevant markets"455 
was insufficient to support the USDOC's decision to use out -of-country benchmarks, and in 
examining the USDOC's determinations  by looking only for a single kind of price analysis, specifically, 
onе that would demonstrate the "deviat[ion]" between "in -country prices" and 
"a market -determined price".456 The United  States submits that the Appellate  Body's approach 
under Ar ticle 14(d) is not limited to a specific kind of price analysis and the common tenet among 
                                                
450 China's other appellant's submission, para.  134. (emphasis original)  
451 Appellate  Body Report, US – Carbon Steel (India) , para.  4.157. This examination may involve an 
assessment of the structure of the relevant market, including the type of entities operating in th at market, 
their respective market share, as well as any entry barriers. ( Appellate  Body Report, US – Carbon Steel 
(India) , fn 754 to para.  4.157 ) It would also require assessing "the behaviour of the entities operating in that 
market in order to determine  whether the government itself, or acting through government -related entities, 
exerts market power so as to distort in -country prices". (Appellate  Body Report, US – Countervailing Measures 
(China) , para.  4.52 (quoting Appellate  Body Report, US – Carbon Ste el (India) , fn 754 to para.  4.157))  
452 China's other appellant's submission, para.  189. 
453 Panel Report, para.  7.174.  
454 United  States' Notice of Appeal, para.  4 (referring to Panel Report, paras.  7.199 -7.200, 7.205 -7.206, 
7.209 -7.211, 7.218 -7.220, 7.223 -7.224, and 8.1.c).  
455 United  States' appellant's submission, paras.  80 and 116 (quoting Panel Report, para.  7.206).  
456 United  States' appellant's submission, para.  113. WT/DS437/AB/R W 
 
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  its findings is the fundamental role of market -determined prices.457 Specifically, in the 
United  States'  view, using Chinese prices as a benchmark in the present case would not serve as a 
meaningful basis of comparison because the same government behaviour that gave rise to the 
subsidies at issue is also the behaviour that characterizes and pervades the entire steel sector in 
China. For the United  States, what the Panel  dismissed as merely "[e]vidence of widespread 
government intervention in the economy" should instead have been considered as providing 
compelling support for the USDOC's finding that prices for the relevant inputs in China are not 
market -determined and ca nnot therefore function as a proper benchmark under Article  14(d).458 The 
United  States further considers that, as a result of employing the wrong approach, the Panel erred 
in assessing the adequacy of the USDOC's explanation and evidence of price distortion , including its 
basis for rejecting in -country SIE and private prices in China, that it considered the specific input 
markets but found that information was not available on the record, and that it had no obligation to 
request evidence on actual prices bey ond what it had already done.459  
5.150.   China argues that the United  States' position poses at least two interpretative problems, 
namely: (i) "whether any type of government policy or action ('intervention') that affects market 
conditions can be characterized as a  potential 'distortion'"; and (ii)  "whether the effect of 
government 'interventions' on market conditions must go beyond some de minimis level to qualify 
as a 'distortion' and, if so, how this 'degree' of distortion would be calculated and identified."460 With 
respect to the evidentiary showing required to establish that in -country prices are "distorted", China 
contends that "[w]hatever the opposite of a 'market' price is, the proper interpretation and 
application of Article  14(d) requires an investigating au thority to demonstrate with evidence that 
one or more 'government interventions' actually resulted in a 'distortion' of in -country prices in this 
sense."461 China specifically argues that the USDOC's Section  129 determinations contain no 
reference to the Mys teel pricing data, which demonstrated that in -country prices for the steel inputs 
at issue were market -determined.462 Moreover, China submits that "[n]either the USDOC in its 
determinations, nor the United  States in its submissions to the Panel, had a meanin gful response to 
the evidence of private investment in the Chinese steel industry", which grew rapidly during the 
periods of investigation.463 Equally, China considers that the USDOC identified no evidence in its 
Section  129 determinations that government -related suppliers of those inputs priced their products 
other than in accordance with commercial considerations.464 
5.151.   The Panel first examined whether the USDOC's factual findings support the conclusion that 
in-country prices in China are not "market -determined" .465 In this regard, the Panel stated that the 
USDOC "did not even attempt to provide a reasoned and adequate explanation for its determinations 
that in -country prices for [the four inputs at issue] were distorted as a result of pervasive 
government interven tion in the Chinese domestic markets for these inputs, and therefore were not 
market -determined".466 The Panel concluded that "the USDOC failed to explain how government 
intervention in the market resulted  in domestic prices for the inputs at issue deviating  from a 
market -determined price."467 Separately, the Panel assessed whether the USDOC disregarded 
evidence regarding prices for the inputs at issue468 and found that, with regard to the Line Pipe, 
Pressure Pipe , and OCTG Section  129 proceedings, "the USDOC failed to adequately explain its 
rejection of in -country prices in light of the evidence before it ."469 With regard to the Solar Panels 
Section  129 pro ceeding, however, the Panel found that China had not demonstrated that the USDOC 
had failed to consider in -country prices that were available on the record.470 
                                                
457 United  States' appellant's submission, paras.  122 and 128.   
458 United  States' appellant's su bmission, para.  141 (quoting Panel Report, para.  7.205).  
459 United  States' appellant's submission, paras.  146-170. 
460 China's appellee's submission, para.  78. (emphasis original)  
461 China's appellee's submission, para.  95. 
462 China's appellee's submission, par as. 114-115. 
463 China's appellee's submission, para.  133. See also ibid., paras.  131-132. 
464 China's appellee's submission, para.  135. 
465 Panel Report, section  7.3.3.3.2.  
466 Panel Report, para.  7.206.  
467 Panel Report, para.  7.206. (emphasis original)  
468 Panel Report, section  7.3.3.3.3.  
469 Panel Report, para.  7.220.  
470 Panel Report, para.  7.222.  WT/DS437/AB/R W 
 
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  5.3.3.1   Whether the Panel erred in its interpretation of Articles  1.1(b) and  14(d) of the 
SCM Agreement  
5.152.   The United  States argues that the Panel "examined the USDOC's determinations by looking 
only for a single kind of price analysis, specifically, one that would demonstrate the 'deviat[ion]' 
between 'in -country prices' and 'a market -determined price' ."471 In the  United  States' view, the Panel 
drew this approach from a misreading of prior Appellate  Body reports, in particular , the 
Appellate  Body's statement in US – Carbon Steel (India) that "[p]roposed in -country prices will not 
be reflective of prevailing market conditions in the country of provision when they deviate from a 
market -determined price as a result of  governmental intervention in the market."472 The 
United  States considers that, when read together with the sentence that immediately precedes it, 
"it is ev ident that the first sentence is the one more appropriately described as the applicable 
approach, while the second sentence"473 provides an example, as follows:  
Although the benchmark analysis begins with a consideration of in -country prices for 
the good in  question, it would not be appropriate to rely on such prices when they are 
not market determined. [For example,]  Proposed in -country prices will not be reflective 
of prevailing market conditions in the country of provision when they deviate from a 
market -determined price as a result of governmental intervention in the market.474 
5.153.   The United  States argues that, in relying on the notion of "deviation from a market 
determined price" as the legal standard for recourse to out -of-country prices, the Panel erroneously 
considered that " distortion of internal prices, justifying resort to out -of-country benchmarks, is only 
evident in the difference between the price of the good being assessed and a market -determined 
price in the same country ."475 The United  State s considers that , in this way, the Panel misconstrued 
the legal standard under Article  14(d) as requiring a price comparison analysis or quantification of 
the price distortion, such that an explanation of why in -country prices are distorted requires, in ea ch 
case, a showing of the extent of deviation, or the quantification of the difference, between 
two different price points.476 The United  States points out that, under this approach, " [w]here no 
in-country prices are market determined, price distortion canno t be demonstrated ."477 Thus, in the 
United  States' view, the requirements articulated by the Panel "would effectively preclude an 
investigating authority from relying on other types of evidence of government interventions in the 
market ( e.g., participation i n the market by SIEs that do not behave as commercial/market actors, 
national level industry plans, circulars identifying industrial policy goals, evidence of 
government -imposed mergers and acquisitions, industrial policy measures, appointment of board 
members and senior executives in SIEs, the propping up of the least efficient producers) unless it 
could identify the effect of such interventions ( i.e., determine the impact on in -country prices)."478 
5.154.   As noted above, a finding that in -country prices are not ma rket-determined requires a 
showing that they are distorted by government intervention, such that recourse to out -of-country 
prices is warranted. Central to this analysis is the finding of price distortion , which must be reached 
"on a case -by-case basis, ac cording to the particular facts underlying each countervailing duty 
investigation".479 As we see it, the specific type of analysis that an investigating authority must 
conduct for purposes of arriving at a proper benchmark, as well as the types and amount of  evidence 
that would be considered sufficient in this regard, will necessarily vary depending upon a number of 
factors, including the circumstances of the case and the characteristics of the market.480 However, 
in all cases, the existence of price distortion  resulting from government intervention has to be 
established and adequately explained by the investigating authority in its report. There may be 
                                                
471 United  States' appellant's submission, para.  113 (quoting Panel Report, para.  7.204).  
472 United  States' appellant' s submission, para.  114 (quoting Panel Report, para.  7.204, in turn quoting 
Appellate  Body Report, US – Carbon Steel (India) , para. 4.155 (emphasis added by the Panel)).  
473 United  States' appellant's submission, para.  114. 
474 United  States' appellant's submi ssion, para.  114 (quoting Appellate  Body Report, US – Carbon Steel 
(India) , para. 4.155). (emphasis added)  
475 United  States' appellant's submission, para.  83. 
476 United  States' response to questioning at the oral hearing.  
477 United  States' appellant's submiss ion, para.  84. 
478 United  States' appellant's submission , para. 140 (referring to Final Benchmark Determination  (Panel 
Exhibit CHN-21), pp. 7-20 and 24 -27). (fn omitted)  
479 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  453 (quoting 
Appellate  Body Report, US – Softwood Lumber IV , para. 102).  
480 Appellate  Body Report, US – Carbon Steel (India) , para. 4.153.  WT/DS437/AB/R W 
 
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  different ways to demonstrate that prices are actually distorted, such as a quantitative assessment, 
price com parison methodology, or a counterfactual analysis. Depending on the circumstances, a 
qualitative analysis may also appropriately establish how government intervention actually results 
in price distortion, provided that it is adequately explained. We recogn ize, in this regard, that 
governmental involvement in the market can take many forms, which may have distortive price 
effects, irrespective of whether the government directly regulates prices or indirectly affects them 
such that they are found to be distor ted as a result. In US – Anti-Dumping  and Countervailing Duties 
(China) , the Appellate  Body clarified that, in US – Softwood Lumber IV , it had not found "a specific 
requirement that, to reject in -country prices, investigating authorities must show that gov ernment 
prices are artificially low" .481 The Appellate  Body found instead that, in the context of Article  14(b), 
it would be sufficient for the USDOC to establish that all the factors it had analysed – i.e. the 
government's predominant role as a lender, gove rnment regulation of interest rates, evidence of 
undifferentiated interest rates, and government influence over SOCB -lending decisions – taken 
together resulted in a distortion such that comparing the interest rates of the investigated loans with 
observed interest rates in the same market would not be meaningful for the purpose of 
Article  14(b).482 Therefore, evidence of direct impact of the government intervention on prices, such 
as administrative price -fixing or predominance of the government as a supplier in the market, may 
be probative and make the finding of price distortion very likely such that other evidence may be of 
lesser importance.483 While evidence of indirect impact of the government intervention on prices 
may also be relevant in determining the e xistence of price distortion, establishing the nexus between 
such government intervention and price distortion may require more detailed analysis and 
explanation of how prices have been distorted as a result of such indirect impact of the government 
interv ention.  
5.155.   Furthermore, while the investigating authority's analysis of whether and how price distortion 
resulted from government intervention will vary depending upon the circumstances of the case, it 
has to adequately take into account the arguments and evidence supplied by the petitioners and 
respondents, together with all other information in the record, so that its determination of how prices 
in the specific markets at issue are actually distorted as a result of government intervention wo uld 
be based on positive evidence.484 Thus, independently of the method chosen by the investigating 
authority, it has to engage with and analyse the methods, data, explanations, and supporting 
evidence put forward by interested parties, or collected by the i nvestigating authority, in order to 
ensure that its finding of price distortion is supported , and not diminished or contradicted , by 
evidence and explanations on the record. In turn, it is the role of panels to assess whether the 
investigating authority's explanation for its determination is reasoned and adequate by critically 
reviewing that explanation, in depth, and in light of the facts and explanations presented by the 
interested parties.485 Specifically, panels have to review whether the comp etent authority's 
explanation of how government intervention actually results in price distortion in the markets in 
question fully addresses the nature and complexities of the data in the record, and whether it 
appears adequate in light of alternative meth ods, data, and explanations of that data presented by 
the parties.486 In any event, the investigating authority needs to provide a reasoned and adequate 
explanation of how the government intervention actually results in distortion of in -country prices.  
5.156.   In the first sentence of paragraph  4.155 of US – Carbon Steel (India) , the Appellate  Body 
observed that, "[a]lthough the benchmark analysis begins with a consideration of in -country prices 
for the good in question, it would not be appropriate to rely on such pr ices when they are not market 
determined ."487 The United  States disagrees with the Panel's reading of the Appellate  Body's 
statement in the following sentence of the same paragraph, namely , that "[p]roposed in -country 
prices will not be reflective of prevail ing market conditions in the country of provision when they 
deviate from a market -determined price as a result of governmental intervention in the market ."488 
The United  States considers the first sentence as the "one more appropriately [describing] the 
                                                
481 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  506. 
482 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , paras.  506 and 508.  
483 See Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  446. 
484 See Appellate  Body Report, US – Carbon Steel (India) , para.  4.157 . 
485 Appellate  Body Report, US – Lamb , para.  106. 
486 See Appellate  Body Report, US – Lamb , para.  106. 
487 Appellate  Body Report, US – Carbon Steel (India) , para. 4.155.  
488 Appellate  Body Report, US – Carbon Steel (India) , para. 4.155.  WT/DS437/AB/R W 
 
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  applicable [legal] approach", while the second sentence merely provides an "example" of the kind 
of situation in which an investigating authority might find that prices are not market -determined.489  
5.157.   We note that these statements were made in the context of the discussion of the sources of 
in-country prices that can be relied upon in arriving at a proper benchmark.490 Thus, the 
Appellate  Body concluded in the preceding paragraph 4.154 that "Article  14(d) establishes no legal 
presumption that in -country prices from any particular source can be discarded in a benchmark 
analysis", but rather "requires an analysis of the market in the country of provision to determine 
whether particular in -country prices can be relied upon in arriving at a proper benchmark" .491 Like 
the P anel, we consider that the Appellate  Body's statements in the first and second sentences of 
paragraph 4.155 quoted above together form part of the Appellate  Body's interpretation of 
Article  14(d). They reflect the understanding that different methods may b e chosen by the 
investigating authority in demonstrating the direct or indirect impact of government intervention on 
in-country prices. However, the investigating authority needs to provide a reasoned and adequate 
explanation whether prices are market -determined or how they are distorted as a result of 
government intervention. Therefore, we do not consider that the statement "[p]roposed in -country 
prices will not be reflective of prevailing market conditions in the country of provision when they 
deviate fro m a market -determined price as a result of governmental intervention in the market"492 
constitutes merely an example of a situation when prices might not be market -determined, as the 
United  States seems to suggest. Nor do we understand the Panel to have read  this statement as 
requiring the use of a single type of analysis in determining the existence of price distortion, in each 
case. 
5.158.   Turning to the Panel's interpretation in the present case, we note that the Panel elaborated 
on the requirements for recourse to out -of-country prices by pointing out that "an analysis of the 
market in the country of provision is necessary to determine whether particular in -country prices 
can be relied upon as a proper benchmark"493, and that "an investigating authority may carry o ut 
such a market analysis at different levels of detail with respect to the products in question, depending 
on the circumstances of the case ."494 The Panel also considered that nothing precludes investigating 
authorities "from taking a broader approach to th e question of whether in -country prices in the 
country of provision can serve as the basis of a proper benchmark" .495 At the same time, the Panel 
observed that "a determination that the price of certain inputs is not market -determined must be 
based on positi ve evidence and supported by a reasoned and adequate explanation ."496 In addition, 
the Panel recalled the Appellate  Body's statement in US – Carbon Steel (India)  that "[p]roposed 
in-country prices will not be reflective of prevailing market conditions in the country of provision 
when they deviate from a market -determined price as a result of governmental intervention in the 
market."497 
5.159.   The Panel then observed that "in view of the fact that government intervention may, in 
principle, affect suppl y or demand for a certain good in any market and in view of the fact that 'the 
possibility under Article  14(d) for investigating authorities to consider a benchmark other than 
private prices in the country of provision is very limited', it is important tha t a decision to reject 
in-country prices as a benchmark be supported by a reasoned and adequate explanation as to how 
government intervention distorts the price of the inputs at issue ."498 According to the Panel, 
"[e]vidence of widespread government interven tion in the economy, without evidence of a direct 
impact on the price of the good in question or an adequate explanation  of how the price of the good 
in question is distorted as a result, will not suffice to justify a determination that there are no 
'marke t-determined' prices for the good in question which can be used for purposes of determining 
the adequacy of remuneration for government -provided goods ."499 We consider this statement to be 
                                                
489 United  States' appellant 's submission, para.  114. 
490 See Appellate  Body Report, US – Carbon Steel (India) , paras.  4.151 -4.157.  
491 Appellate  Body Report, US – Carbon Steel (India) , para.  4.154.  
492 Appellate  Body Report, US – Carbon Steel (India) , para.  4.155.  
493 Panel Report, para.  7.202 (referring to Appellate  Body Report, US – Carbon Steel (India) , 
para. 4.154).  
494 Panel Report, para.  7.202.  
495 Panel Report, para.  7.202.  
496 Panel Report, para.  7.203.  
497 Panel Report, para.  7.204 (quoting Appellate  Body Report, US – Carbon Steel (India) , para.  4.155).  
498 Panel Report, para.  7.205 (quoting Appellate  Body Report, US – Softwood Lumber IV , para.  102). 
(emphasis added)  
499 Panel Report, para.  7.205. (emphasis adde d) WT/DS437/AB/R W 
 
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  consistent with our interpretation of the standard for recourse to ou t-of-country prices under 
Article  14(d). In particular, by requiring in the alternative either "evidence of a direct impact on the 
price of the good in question" or "an adequate explanation of how the price of the good in question 
is distorted as a result"500, the Panel's statement is in line with our conclusion that , while there may 
be different ways to demonstrate the existence of price distortion, the investigating authority must 
choose a method capable of establishing how in -country prices are actually di storted as a result of 
government intervention. As recognized by the Panel, in the absence of evidence of a direct impact 
of the government intervention on prices, which may in itself inform the existence of price distortion, 
a more detailed analysis and e xplanation may be required by the investigating authority. We 
nevertheless highlight that investigating authorities should provide a reasoned and adequate 
explanation of the basis for their price distortion findings in each case, independently of whether 
their finding is based on evidence of direct or indirect impact of the government intervention on 
in-country prices.  
5.160.   We further agree with the Panel's conclusion that "[a]n investigating authority must explain 
how government intervention in the market results in in-country prices for the inputs at issue 
deviating from a market -determined price"501, insofar as it clarifies that the investigating authority 
has to make a finding of price distortion resulting from government intervention. In light of our 
understan ding of the statement from US – Carbon Steel (India) , the Panel's reasoning is consonant 
with our above interpretation that the existence of price distortion by reason of government 
intervention can be established by recourse to different methods in differ ent cases, as long as  the 
investigating authorit y has undertaken the necessary analysis in order to establish in its report that 
price distortion actually results from government intervention in the market. As we see it, the Panel's 
statement referring to "direct impact"502 as well as other forms of more indirect impact on 
prices  – provided that the investigating authority explains how the prices of the goods in question 
are distorted as a result – acknowledges that various forms of government intervention co uld lead 
to price distortion, while recognizing that, in each case, an explanation would be required as to 
whether and how the government intervention has actually resulted in price distortion, before a 
finding that certain in -country prices cannot be relied upon is reached.  This reasoning  comports with 
our interpretation of Article  14(d). Nor does the Panel require one single type of quantitative or price 
comparison analysis in all cases.  
5.161.   In sum, investigating authorities have discretion to choose the  specific method or type of 
analysis for purposes of determining the existence of price distortion. However, while there may be 
different ways to make this demonstration, and while impact of government intervention on prices 
need not necessarily be direct,  whatever method is chosen, and whatever the evidence relied upon, 
investigating authorit ies must establish, by providing an adequate explanation based on evidence, 
how price distortion actually results from government intervention in the market.  
5.162.   With the se considerations in mind, we turn to review the Panel's application of the articulated 
legal standard to the present dispute.  
5.3.3.2   Whether the Panel erred in its application of Articles  1.1(b) and  14(d) of the 
SCM Agreement  
5.163.   The United  States contends that the Panel "fixated on a particular kind of price analysis and 
excluded from its consideration the explanation and evidence the USDOC provided demonstrating 
how prices in the relevant sectors are not market determined", and " [h]aving already adopted the 
incorre ct approach for its analysis … further erred in characterizing the USDOC's explanation as 
unresponsive to the question of whether prices were or were not market determined."503 Specifically, 
in the United  States' view, the Panel failed to recognize that exam ining prices is not the only way to 
demonstrate price distortion, that the emphasis on market -determined prices highlights that an 
examination of "prevailing market conditions" assume the existence of a "functioning market", and 
that, absent such a market,  an internal price cannot serve as a benchmark for measuring the 
adequacy of remuneration.504 Furthermore, the United  States argues that the Panel made a number 
of erroneous observations in examining whether the USDOC considered in -country and 
                                                
500 Panel Report, para.  7.205.  
501 Panel Report, para.  7.205. (emphasis added)  
502 Panel Report, para.  7.205.  
503 United  States' appellant's submission, para.  116. 
504 United  States' appellant's submission, paras.  121-141. WT/DS437/AB/R W 
 
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  government -related prices, analysed specific input markets on a standalone basis, and conducted a 
diligent investigation and solicited relevant facts.505  
5.164.   At the outset, we recall that a panel assessing the WTO -consistency of a determination by 
an investigating authority is not an initial trier of the facts. Nor is it for the panel, or for the parties, 
to provide an explanation of the basis for the investigating authority's conclusions. Rather, it is the 
investigating authority that reviews the submissions and evidence pre sented by the interested 
parties , collects evidence , and draws factual conclusions from that evidence in the first instance. 
A panel must not conduct a de novo  review of the evidence before an agency whose determination 
is subject to a WTO dispute.506 Rather , the panel conducts an "objective assessment" of whether the 
investigating authority provided a reasoned and adequate explanation of (i)  how the evidence on 
the record supported its factual findings; and (ii) how those factual findings supported the overa ll 
subsidy determination.507 Such explanation must be "given by the authority in its published 
report"508 and must be "discernible from the published determination itself".509 The parties in a 
WTO dispute settlement proceeding reviewing an investigating authorit y's determination are 
precluded from offering a new rationale or explanation ex post  to justify that determination.510 At 
the same time, a panel can assess whether the competent authorit y's explanation for its 
determination is reasoned and adequate only  if the panel critically examines that explanation, in 
depth, and in light of the evidence before the panel. Panels must, therefore, review whether the 
competent authorities' explanation fully  addresses the nature, and, especially, the complexities, of 
the data, and responds to other plausible interpretations of that data.511 A panel must find, in 
particular, that an explanation is not reasoned, or is not adequate, if some alternative explanation  of 
the facts is plausible, and if the competent authorities' explanation does not seem adequate in light 
of that alternative explanation.512 Thus, in making an "objective assessment" of a claim before them, 
panels must be open to the possibility "that the e xplanation given by the competent authorities is 
not reasoned or adequate" .513  
5.165.   In sum, the task of a panel is to examine whether the investigating authority has adequately 
performed its investigative function and has adequately explained how the evidence su pports its 
conclusions. It follows from the requirement that the investigating authority provide a "reasoned 
and adequate" explanation for its conclusions, and that the rationale for the investigating authority's 
decision must be set out in or is at least discernible from its published determination.514 This is not 
to say, however, that the meaning of a determination cannot be clarified by referring to evidence on 
the record. Yet, in all instances, it is the evidence and reasoning provided in the written repo rt of 
the investigating authority that a panel has to scrutinize in order to assess whether the determination 
was sufficiently explained and reasoned.515 
5.166.   The United  States' appeal of the Panel's analysis of the USDOC's determination that 
in-country prices in  China could not be used to determine the adequacy of remuneration  in 
section  7.3.3.3 of its Report, focuses principally on the Panel's conclusions in paragraph  7.206. For 
instance, the United  States contends that "[o] nly the compliance Panel' s misundersta nding of the 
appropriate approach can explain its characterization of thousands of pages of evidence and analysis 
as having merely 'outlined government involvement' or its conclusion that the USDOC 'did not even 
attempt to provide a reasoned and adequate e xplanation for its determinations that in -country 
prices  … were not market -determined."516 We begin our analysis by considering the background 
against which these statements were made by the Panel, which , in our view , sheds light on the 
Panel's ultimate conc lusion, in paragraph 7.206 of its Report, that "the USDOC failed to explain how 
                                                
505 United  States' appellant's submission,  paras.  146-170. 
506 See e.g. Appellate  Body Reports, US – Softwood Lumber VI (Article 21.5 – Canada) , para.  93;  
US – Countervailing Duty Investigation on DRAMS , paras.  183 and 186 -188; US – Lamb , para.  106. 
507 Appellate  Body Report, US – Countervailing Duty  Investigation on DRAMS , para.  186. 
508 Appellate  Body Report, US – Softwood Lumber VI (Article  21.5 – Canada) , para.  93. 
509 Appellate  Body Report, US – Countervailing Duty Investigation on DRAMS , para.  186. 
510 Appellate  Body Reports, Japan – DRAMs (Korea) , para.  159; US – Tyres (China) , para.  329. 
511 Appellate  Body Report, US – Lamb , para.  106. 
512 Appellate  Body Report, US – Lamb , para.  106. 
513 Appellate  Body Report, US – Lamb , para.  106. 
514 Appellate  Body Reports, US – Countervailing Duty Investigation  on DRAMS , para.  186. 
515 See Appellate  Body Report, US – Countervailing Duty Investigation on DRAMS , para.  186. 
516 United  States' appellant's submission, para.  116 (quoting Panel Report, para. 7.206).  WT/DS437/AB/R W 
 
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  government intervention in the market resulted  in domestic prices for the inputs at issue deviating 
from a market -determined price."517 
5.167.   In section  7.3.3.3.1 of the Panel Report, the Panel outlined the content of the USDOC's 
Benchmark Questionnaire518, Benchmark Memorandum519, and Supporting Benchmark 
Memorandum.520 As is evident from the Panel's description of the USDOC's analysis, the USDOC 
assessed a number of factors relating to the GOC's intervention with SIEs in China, and in China's 
steel sector generally.521 From this analysis , the USDOC inferred that "the prices in the domestic 
market of steel inputs produced by China's SIEs cannot be considered to be 'market -determined' for 
purpos es of a benchmark analysis ."522 In turn, the question before the Panel was whether the USDOC 
had provided, in its written determinations, a reasoned and adequate explanation of how the 
evidence on the record actually established the existence of price distortion in the markets of the 
inputs at issue as a result of government intervention and how this explanation supported its decision 
to have recourse to out -of-country prices.  
5.168.   Indeed, the Panel emphasized the importance of ensuring "that a decision to reject 
in-country prices as a benchmark be supported by a reasoned and adequate explanation as to how 
government intervention distorts the price of the inputs at issue", as opposed to merely relying on 
"[e]vidence of widespread government intervention in t he economy".523 In reaching its conclusion, 
the Panel relied on the Appellate  Body's statement that "[p]roposed in -country prices will not be 
reflective of prevailing market conditions in the country of provision when they deviate from a 
market -determined pr ice as a result  of governmental intervention in the market."524 We thus 
understand the Panel's preoccupation to have been with the requirement to establish how the 
existence of price distortion actually resulted from the government interventions in the marke t. To 
this end, the Panel reviewed the USDOC's determinations and referred to various statements made 
in the Benchmark Memorandum and the United  States' submissions.525 For instance, the Panel took 
note that "the specific mode of analysis used by USDOC in th e determinations at issue was to 
examine whether prices within the steel sector were reflective of 'market conditions '", using the 
standard of the Appellate  Body in EC and certain member States – Large Civil Aircraft .526 The Panel 
also noted that the "Suppor ting Benchmark Memorandum only refers to the specific input markets 
at issue in discussing export restraints  on the three products during the relevant periods of 
investigation", which "also confirms that the USDOC did not consider that it was necessary to proceed 
with a detailed analysis of the specific markets for the inputs  at issue."527 In addition, the Panel took 
note of the USDOC's conclusion in the Supporting Benchmark Memorandum that , "[i]n light of the 
foregoing, a detailed analysis of the specific ma rkets for hot-rolled  steel, steel rounds and stainless 
steel coils is not integral to our finding of market distortion."528  
5.169.   Therefore, the Panel rejected as insufficient and problematic the USDOC's  determination that 
prices in the entire steel and solar gra de polysilicon sectors in China cannot be used as benefit 
benchmarks in the absence of a specific and focused assessment of how government intervention 
had resulted in price distortion in the four  input markets at issue. In our view, critical for the Panel 's 
conclusion was the United  States' position that "the USDOC was 'not required to analyze specific 
prices  for the relevant inputs to determine that SIE and private prices in China's steel and polysilicon 
sectors are not market -determined'."529 The Panel als o emphasized that "the information collected 
and summarized in the Benchmark Memorandum focuses on government intervention  in the Chinese 
                                                
517 Panel Report, para.  7.206. (emphasis original)  
518 Panel Report, paras.  7.179 -7.183.  
519 Panel Report, paras.  7.186 -7.191.  
520 Panel Report, paras.  7.192 -7.196.  
521 Panel Report, paras.  7.186 -7.188.  
522 Panel Report, para.  7.189 (quoting Benchmark Memorandum (Panel Exhibit CHN -20), p.  26). 
523 Panel Report, para.  7.205.  
524 Panel Report, para.  7.204 (quoting Appellate  Body Report, US – Carbon Steel (India) , para.  4.155). 
(emphasis original)  
525 Panel Report, section  7.3.3.3.2.  
526 Panel Report, para.  7.199 (quoting United  States' response to Panel question No. 35, para.  180, in 
turn quoting Appellate  Body Report, EC and certain member States – Large Civil Aircraft , para.  981)). 
527 Panel Report, para.  7.200 (referr ing to Supporting Benchmark Memorandum (Panel Exhibit USA -84), 
p. 4). (emphasis added)  
528 Panel Report, para.  7.200 (quoting Supporting Benchmark Memorandum (Panel Exhibit  USA-84), 
p. 4). (emphasis added)  
529 Panel Report, para.  7.199 (referring to United  States' response to Panel question No.  35, para.  179). 
(emphasis added)  WT/DS437/AB/R W 
 
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  economy as a whole and the steel sector generally, rather than on the specific input markets  at 
issue."530 Our understan ding is in line with the Panel's conclusion that "[t]he USDOC did not even 
attempt to provide a reasoned and adequate explanation for its determinations that in-country prices 
for steel rounds and billets (OCTG), stainless steel coil (Pressure Pipe), hot-rolled steel (Line Pipe), 
and polysilicon (Solar Panels) were distorted  as a result of pervasive government intervention in the 
Chinese domestic markets for these inputs, and therefore were not market -determined."531 The 
Panel acknowledged that "an investigat ing authority may carry out such a market analysis at 
different levels of detail with respect to the products in question", and that it is not precluded  from 
"taking a broader approach".532 However, the Panel emphasized that a determination that "the price 
of certain inputs  is not market -determined" must be based on "positive evidence" and supported by 
a "reasoned and adequate explanation", and noted that investigating authorities must undertake "a 
case-specific analysis" , which encompasses a requirement "to conduct a sufficiently diligent 
investigation into, and solicitation of, relevant facts".533  
5.170.   China submits that "[i]n the absence of any evidence that all government -related suppliers 
of the inputs at issue sold these pr oducts on a non -commercial basis, and in the absence of any 
evidence that the prices charged by government -related suppliers affected the prices charged by 
privately -owned suppliers, the USDOC had no evidentiary basis to reject available in -country prices 
that included prices charged by both government -related and privately -owned suppliers."534 In the 
Supporting Benchmark Memorandum, the USDOC noted that its finding that there are no potential 
benchmarks within China's steel industry "is based on evidence of pervasive government 
intervention in the steel sector as a whole, which necessarily includes all types of steel inputs sold 
in the PRC  [People's Republic of China] ."535 On that basis, the USDOC concluded that "[t]he record 
evidence does not indicate that thi s finding applies with any less force to the three specific inputs in 
question in these proceedings, hot-rolled  steel, steel rounds and stainless steel coils, or that the 
market for the three  products has been insulated from these sectoral -wide distortions ."536 In other 
words, the USDOC considered that its rationale of "pervasive government intervention" in 
China's  economy in general and its steel industry as a whole equally applies to the specific input 
markets at issue because the steel sector "necessarily includes all types of steel inputs", without 
further analysis or explanation of how various forms of government intervention actually resulted in 
distortion of the prices of the specific input markets under investigation.537 Beyond its reference to 
the fact that "the records in these three cases demonstrate the existence of export restraints for 
these three products during the relevant periods of investigation"538, the USDOC did not engage in 
any specific assessment of the four input markets in question. Thus, from its conclusions that the 
decision -making process of SIEs in China in general and in the steel sector as a whole was distorted 
by government intervention, the USDOC appears to have drawn a general inference that prices in 
the specific markets at issue were equally distorted.  
5.171.   Furthermore, the Panel quoted the USDOC's references to "widespread sectoral intervention 
[which] meant that SIEs were constrained in their ability to pursue commercial outcomes", 
"broad -based governmental intervention in favour of  the state share of the economy [which] distorts 
market signals for all participants in the sectors", "forced mergers and acquisitions and the presence 
of export taxes [which] artificially depressed prices for the relevant steel inputs", and the fact that 
"GOC exercises various levers of control over commercial actors in China's steel sector … mean[ing] 
that these commercial actors in China are not responding to supply and demand in the market in a 
manner which permits an equilibrium price to be established .'"539 In this context, the Panel rejected 
the notion that "a presumption that government intervention in the market necessarily results in 
price distortions  for the goods in question [would] suffice to support the conclusion that in -country 
prices for the i nput at issue may be rejected as a benchmark ."540 The Panel then concluded that 
                                                
530 Panel Report, para.  7.200 (referring to Benchmark Memorandum (Panel Exhibit CHN -20), 
sections  III-IV). (emphasis added; fn omitted)  
531 Panel Report, para.  7.206. (emphasis added)  
532 Panel Report, para.  7.202.  
533 Panel Report, para.  7.203. (referring to Appellate  Body Report, US – Carbon Steel (India) , 
para. 4.190). (emphasis added)  
534 China's appellee's submission, para.  141. 
535 Supporting Benchmark Memorandum (Panel Exhibit USA -84), p.  4. 
536 Supporting Benchmark Memorandum (Panel Exhibit USA -84), p.  4. 
537 Supporting Benchmark Memorandum (Panel Exhibit USA -84), p.  4. 
538 Supporting Benchmark Memorandum (Panel Exhibit USA -84), p.  5. 
539 Panel Report, para.  7.201. See Benchmark Memorandum (Panel  Exhibit CHN -20), pp.  28-30. 
540 Panel Report, para.  7.205. (emphasis added)  WT/DS437/AB/R W 
 
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  "[t]he record of the four Section  129 proceedings at issue and the arguments of the United  States 
clearly show that the USDOC did not find it necessary to demonstrate how the act ions of the GOC 
influenced the in -country price of the inputs at issue."541 We thus understand the Panel to have been 
concerned with the focus of the USDOC's analysis in the Benchmark Memorandum on the 
pervasiveness of government involvement in China's SIEs'  decision -making in general and in the 
steel sector as a whole, rather than on how specifically this involvement influenced pricing decisions 
regarding the inputs at issue, and resulted in price distortion with respect to the determinations at 
hand. Absent  from this analysis was a sufficient assessment of how the various forms of government 
intervention, taken individually or together, impacted upon the prices in China's steel market, and 
specifically the input markets at issue, and how they actually result ed in the distortion of all the SIE 
and private prices  of those inputs in those markets, as opposed to more generally distorting the 
market .542 Rather, the USDOC's finding remains general in that it finds that, because of the extensive 
and varied government involvement in the sector, none of the steel prices in China can be 
"considered to be 'market -determined' for purposes of a benchmark analysis".543 It is against this 
background that we read the Panel's conclusion that "the USDOC outlined governmental involv ement 
in the relevant markets and, on that basis alone, determined that it could not use in -country prices 
of the relevant inputs to assess the adequacy of remuneration."544 
5.172.   We therefore do not see that, as the United  States argues, the Panel "fixated on a p articular 
kind of price analysis and excluded from its consideration the explanation and evidence the USDOC 
provided demonstrating how prices in the relevant sectors are not market determined", and " erred 
in characterizing the USDOC's explanation as unresp onsive to the question of whether prices were 
or were not market determined" .545 Instead, we understand the Panel to have found that the USDOC 
did not sufficiently analyse or explain how the widespread government interventions described in 
the Benchmark Memo randum actually resulted in the distortion of in -country prices in the specific 
input markets with regard  to the specific products subject to each of the challenged USDOC 
determinations at issue. In this light, we understand the Panel's statement in paragraph  7.206 of its 
Report regarding the United  States' position that it was "not required to analy ze specific prices" as 
indicating the Panel's concern that the USDOC did not consider itself obliged to conduct an analysis 
of whether all in -country prices in the four specific input markets at issue were actually distorted as 
a result of government intervention.546 We see in the same vein the Panel's statement "[n]or will a 
presumption that government intervention in the market necessarily results in price distortions for 
the goods in question suffice to support the conclusion that in -country prices for the input at is sue 
may be rejected as a benchmark ."547 The Panel also noted the country -wide and sector -wide focus 
of the Benchmark Memorandum and the absence of an analysis of the "specific input markets" at 
issue. As observed, this reflects the Panel's concern with the f ocus of the USDOC's analysis in the 
Benchmark Memorandum on the pervasiveness of government involvement in China's SIEs' 
decision -making in general and in the steel sector as a whole, which , according to the USDOC's 
approach , meant that, as a consequence, all in-country prices were necessarily distorted. Rather, 
what the USDOC's determinations did not contain were explanations of how this government 
                                                
541 Panel Report, para.  7.206.  
542 In this regard, China argues that the USDOC cited no evidence that the government's involvement 
had any impact upon Chinese steel prices.  (See e.g. Ch ina's appellee's submission, para.  122) 
543 Benchmark Memorandum (Panel Exhibit CHN -20), p.  26. 
544 Panel Report, para.  7.206.  
545 United  States' appellant's submission, para.  116. 
546 See also Panel Report, para.  7.199 (referring to United  States' response to Pan el question No 35, 
para. 179: "[T]he USDOC was not required to analyse specific prices for the relevant inputs to determine that 
SIE and private prices in China's steel and polysilicon sectors are not market -determined.") In the Final 
Benchmark Determinati on, the USDOC also recalled that it had "found the prices of all Chinese steel input 
producers to be distorted as a result [of] the significant government interventions" mentioned earlier "such 
that there are no potential in -country benchmarks that can be considered market -based – rather than due to 
price alignment resulting from the presence of market power by the providers of the good." Thus, the USDOC 
found that "it is not necessary to conduct an analysis of whether prices of government and private provi ders 
align due to the market power of government providers". Nonetheless, the USDOC reviewed the available 
record information with a view towards whether it might be possible to analyse whether SIE market dominance 
has caused price alignment in the context  of a countervailing duty proceeding. However, the USDOC concluded 
that "neither the available record evidence on prices in these three proceedings nor the evidence on prices 
likely to be available to an investigating authority is likely to provide additio nal probative insight on the 
question of whether private suppliers have aligned their prices with the prices charged by predominant 
government input providers." ( Final Benchmark Determination (Panel Exhibit CHN -21), p.  19) We address the 
United  States' arg uments in this regard below.  
547 Panel Report, para.  7.205.  WT/DS437/AB/R W 
 
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  involvement influenced pricing decisions regarding the inputs at issue and actually resulted in price 
distort ion with respect to the determinations at hand.  
5.173.   Contrary to the USDOC's allegations548, it is evident from the Panel's survey of the USDOC's 
analysis in the Benchmark Memorandum and the Supporting Benchmark Memorandum, as well as 
the Panel's reference to th e United  States' submissions in this regard, that the Panel did explore the 
rationale underlying the USDOC's determinations. However, given the USDOC's focus on the 
pervasiveness of government interventions in China and its steel market in general, and in the 
absence of an analysis of specific input markets and of how these interventions actually resulted in 
distortion of in -country prices for the inputs subject to the determinations at issue, the Panel found 
that the USDOC's benchmark  determinations were d eficient in that they provided an insufficient 
explanation for establishing that prices were actually distorted as a result of those government 
interventions. As the Panel stated, the investigating authority's report must contain reasoning and 
findings of how government intervention actually results in price distortion supported by an adequate 
explanation with respect to the specific input markets that the determinations at issue are concerned 
with.549 The Panel's analysis of the determinations at issue led i t to conclude that the USDOC  did not 
provide a reasoned and adequate explanation in reaching its conclusion that government 
interventions in China's steel market, taken together, actually resulted in the distortion of all 
in-country prices in China's steel  market, and more particularly in the specific input markets at issue, 
such that the ir prices could not be used to determine adequacy of remuneration.550 Thus, the Panel 
understood the USDOC's analysis as one of widespread government intervention and "market  
distortion" more generally, and not of "price distortion" in the input markets at issue resulting 
specifically from those government interventions.  
5.174.   The Panel's analysis of whether the USDOC disregarded evidence regarding prices for the 
inputs at issue in  section  7.3.3.3.3 of its Report supports its conclusion that "the USDOC failed to 
explain how government intervention in the market resulted in domestic prices for the inputs at 
issue deviating from a market -determined price."551 In this regard, the United  States argues that 
the "Panel concluded, without justification, that the USDOC automatically rejected government 
prices"552, whereas "[t]he USDOC provided an extensive explanation as to why it rejected 
'government -related' prices" and "did not reject these p rices because of their source, but rather 
because of their nature ".553 Furthermore, the United  States contends that "[t]he Mysteel prices are 
precisely the subject of the USDOC's analysis in the benchmark memoranda – that is, they are 
among the Chinese price s the USDOC described as being distorted by the numerous government 
interventions identified on the record."554 
5.175.   With respect to the Pressure Pipe, Line Pipe , and OCTG Section  129 proceedings, the Panel 
observed that the record contains price information for the inputs at issue from three  sources: (i)  the 
Mysteel Report555, which set out monthly domestic steel prices during the period  2006-2008, with a 
breakdown per category of input (stainless steel coil, hot-rolled  steel, and steel billet); (ii)  the 
purchase data of the respondent companies for the inputs at issue; and (iii) a data series of monthly 
                                                
548 The United  States contends that "[o]nly the compliance Panel's misunderstanding of the appropriate 
approach can explain its characterization of thousands of pages of evidence and analysis as havin g merely 
'outlined government involvement' or its conclusion that the USDOC 'did not even attempt to provide a 
reasoned and adequate explanation for its determinations that in -country prices … were not 
market -determined'". (United  States' appellant's submi ssion, para.  117 (quoting Panel Report, para.  7.206))  
By contrast, China argues that the USDOC cited no evidence that the government's involvement had any 
impact upon Chinese steel prices.  (See e.g. China's appellee's submission, para.  122) 
549 Panel Report,  para. 7.205. As noted above, a number of appropriate ways and methods exist to 
demonstrate that price distortion resulted from government intervention, depending on the specific 
circumstances of the case, including a quantitative or counterfactual analysi s, price comparison, or a 
qualitative analysis of how the government interventions result in price distortion.  
550 In the Panel's view, a presumption that government intervention in the market necessarily results in 
price distortions for the goods in questio n will not suffice to support the conclusion that in country prices for 
the input at issue can be rejected. (Panel Report, 7.205)  
551 Panel Report, para.  7.206.  
552 United  States' appellant's submission, para.  153. 
553 United  States' appellant's submission, para.  157. (emphasis original)  
554 United  States' appellant's submission, para.  151. 
555 The Mysteel Report is a document provided by the GOC, entitled "China's steel market and price 
research report". (Panel Report, para.  7.214 (referring to Ordov er Report (Panel Exhibit CHN -19))) WT/DS437/AB/R W 
 
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  average domestic Chinese prices compiled by the Steel Benchmarker and Mysteel, and submitted 
for the record in the OCTG and Line Pipe investigations by th e petitioners.556  
5.176.   Although that price information provided by the petitioners and the GOC did not distinguish 
between SIE and private sources, the Panel considered that such price information could 
nevertheless be relevant to an analysis of adequate remuner ation.557 The Panel concluded that 
"[t]here is nothing on the record of the investigations to suggest that the USDOC considered" the 
relevancy of SIE suppliers' price information, "and certainly no explanation of why the information 
submitted was not relevan t in this case, if that was its conclusion" .558 Similarly, with respect to price 
data in the Mysteel Report, the Panel found that it was "largely ignored by the investigating 
authority", and "there is no explanation by the USDOC of why, in its view, the pric e data on the 
record did not relate to prevailing market conditions in the country of provision ."559  
5.177.   In line with the applicable standard of review, whereas the investigating authority has 
discretion in choosing the method for establishing price distortion,  it also needs to analyse alternative 
methods, arguments, and evidence presented by the parties, in order to assess whether its approach 
properly determines the existence of price distortion resulting directly or indirectly from government 
intervention.560 Ultimately, the investigating authority's conclusion has to be sufficiently reasoned 
and adequately explained, also in light of these alternative arguments, explanations , and evidence. 
In turn, "[a]  panel must find, in particular, that an explanation is not  reasoned, or is not adequate, 
if some alternative explanation  of the facts is plausible, and if the competent authorities' explanation 
does not seem adequate in the light of that alternative explanation."561 Thus, the Panel's task in the 
present case was to  review whether, in light of the evidence and arguments submitted by the parties, 
and the rationale underlying plausible alternative explanations, the approach ultimately adopted by 
the USDOC in its determinations, and the conclusions drawn from the eviden ce it relied upon, remain 
adequate and sufficiently substantiated also in the light of those alternative explanations. In 
particular, the question before the Panel was whether the USDOC's determinations sufficiently 
discussed why those alternative explanat ions – of why in -country prices are not distorted – do not 
detract from the approach the USDOC adopted in finding that all in -country steel prices are distorted. 
As the Panel observed, while "a panel reviewing an investigating authority's determination may  not 
undertake a de novo  review of the evidence or substitute its judgement for that of the investigating 
authority ", it also "must not simply defer to the conclusions of the investigating authority".562 The 
Panel therefore turned to "consider the USDOC's  determinations to decide whether, in light of the 
evidence and arguments, and the explanations given, its conclusions rejecting the price evidence on 
the record and concluding that the record contained no domestic price information suitable for use 
as a benc hmark to assess the adequacy of remuneration for steel inputs, were such as could be 
reached by a reasonable and objective investigating authority."563 
5.178.   With respect to the Panel's finding that "the Mysteel Report was largely ignored by the 
investigating auth ority"564, the United  States submits that "[t]he Mysteel prices are precisely the 
subject of the USDOC's analysis in the benchmark memoranda – that is, they are among the Chinese 
prices the USDOC described as being distorted by the numerous government interv entions identified 
                                                
556 Panel Report, para.  7.214. With respect to the purchase data of the respondent companies, the Panel 
considered that "it was not unreasonable for the USDOC to conclude that the limited data set, in relation to the 
size of domestic production, meant the pri ce information could not be relied upon as representative." (Ibid., 
para. 7.216) The Panel further noted that China did not contest the USDOC's statement that it did not have an 
enforceable manner to request additional data on arm's length transactions for  the goods in question in China 
from firms not selected to be respondents in the countervailing duty proceedings. (Ibid., para.  7.217)  
557 Panel Report, para.  7.218 (quoting Appellate  Body Report, US – Carbon Steel (India) , para.  4.151 ). 
558 Panel Report, para . 7.218.  
559 Panel Report, para.  7.219. (fns omitted; emphasis added)  
560 The Appellate  Body observed that panels must "review whether the competent authorities' 
explanation fully addresses the nature, and, especially, the complexities, of the data, and respon ds to other 
plausible interpretations of that data"; in particular, panels must find that "an explanation is not reasoned, or is 
not adequate, if some alternative explanation  of the facts is plausible, and if the competent authorities' 
explanation does not  seem adequate in the light of that alternative explanation." (Appellate  Body Report,  
US – Lamb , para. 106 (emphasis original))  
561 Appellate  Body Report, US – Lamb , para. 106. (emphasis original)  
562 Panel Report, para.  7.215.  
563 Panel Report, para.  7.215.  
564 Panel Report, para.  7.219.  WT/DS437/AB/R W 
 
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  on the record."565 We recall that the USDOC's rationale in the Benchmark Memorandum was focused 
on establishing price distortion based on the pervasiveness of government intervention in China's 
steel sector, rather than on the exercise of market power by the GOC and therefore on the question 
of whether the government could effectively determine prices in the input markets in question. 
Above, we understood the Panel's concern to have been with the focus of the USDOC's analysis on 
the pervasi veness of government involvement in China's SIEs' decision -making in general and in the 
steel sector as a whole, and with the absence of an explanation of how this involvement influenced 
actual pricing decisions regarding the inputs at issue and resulted i n price distortion for purposes of 
the determinations at hand, such that recourse to out -of-country prices was warranted. We therefore 
disagree with the United  States, to the extent it suggests that the Panel "ignored the central question 
of market -determi ned pricing".566 Instead, we understand the Panel to have found that the USDOC's 
rejection of in -country prices (including Mysteel prices) was based on, and merely consequential to, 
its findings of pervasive government intervention and market distortion in t he steel sector generally, 
which did not provide a reasoned and adequate explanation of how the widespread government 
intervention and "market distortion" led to "price distortion" in the specific input markets at issue.567  
5.179.   We further note that the USDOC di d not question the plausibility of Professor  Ordover's 
analytical framework of price alignment but rejected its relevance and the Mysteel pric ing data 
mainly because it had adopted a different approach in these compliance proceedings.568 The USDOC 
observed , in particular , that "the GOC's intervention in the steel sector as a whole in the Benchmark 
Memorandum establishes that the market signals – throughout the sector as a whole – are distorted 
by the effects of longstanding and continued pervasive government intervention", and that "[i]n 
these circumstances, the presence or absence of Professor Ordover's antitrust based 'indicia' are not 
particularly telling indicia of market distortion ."569 The USDOC also noted that Professor Ordover's 
approach was not "the only framework under which to determine whether the government can affect 
the market". We observe, however, that the fact that the alternative framework was not the only 
one does not respond to the question whether, in light of that alternative framework and price data, 
the framework adopted by the USDOC in these Section  129 proceedings and its conclusions still 
hold. Rather, we agree with the Panel that "when information which appears on its face relevant to 
that analysis under Article  14(d) is before the inv estigating authority, it must consider this 
information and, if it concludes it is not probative or relevant to its analysis, explain that 
conclusion."570  
5.180.   In this regard, China argues that pricing data in the Mysteel Report reflected the proposition 
that ma rket factors – as opposed to government intervention – were responsible for the fluctuations 
of Chinese steel prices.571 Furthermore, the Ordover Report572 highlighted that "the Chinese steel 
industry as a whole is 'highly fragmented', as are the specific stee l markets at issue in the relevant 
investigations", "which makes the domestic market highly competitive and difficult to control" .573 
The same report also documented some of the major instances in which "private investment in the 
Chinese steel industry grew rapidly during the periods of investigation", in the form of "private 
investment in major capacity expansions as well as private investments in existing Chinese steel 
                                                
565 United  States' appellant's submission, para.  151 (referring to Final Benchmark Determination (Panel 
Exhibit CHN -21), pp.  12-22). 
566 United  States' appellant's submission, para.  151. 
567 See Panel Report, para.  7.206.  
568 The USDOC n oted that "although the Department does not take issue with whether 
Professor  Ordover's analytical framework concerning 'market power' is useful in the context of antitrust 
analysis, we disagree that it is the only framework under which to assess whether a nd, to what extent, a 
government can affect the market and thus determine if prices by private entities are distorted" and that a 
"singular focus on an antitrust paradigm is not required by Article  14(d)". Final Benchmark Determination 
(Panel Exhibit CHN -21), p.  13. (emphasis original) Referring to the Appellate  Body's statement in  
US – Countervailing Measures (China) , that "the government may distort in -country prices through other 
entities or channels than the provider of the good itself", the USDOC note d that "there is no single analytical 
framework under which a market distortion analysis must be conducted". (Final Benchmark Determination 
(Panel Exhibit CHN -21), p.  14) 
569 Final Benchmark Determination (Panel Exhibit CHN -21), p.  17. 
570 Panel Report, para.  7.220.  
571 See China's appellee's submission, paras.  114-116. 
572 Panel Exhibit CHN -19. 
573 China's appellee's submission, paras.  125-126 (referring to Ordover Report (Panel Exhibit CHN -19)). WT/DS437/AB/R W 
 
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  enterprises".574 In China's view, "[t]he lack of any evidence that SIEs possessed and exercised 
market power, combined with the evidence of extensive private investment in the Chinese steel 
industry, strongly undercut the mere presumption  by the USDOC that the various 'go vernment 
interventions' that it identified affected the prices charged by private and government -related 
suppliers of the inputs at issue."575 Therefore, even though the USDOC's analysis was not based 
primarily on the SIEs' market share in China's steel mark et or on a price alignment rationale, it 
appears that the alternative explanations and pricing data on the record may have nevertheless 
been relevant for examining whether price distortion actually existed in the input markets at issue. 
Yet, the USDOC dete rminations do not explain why, in light of the price data and alternative 
explanations, the conclusion it had reached for the entire steel sector necessarily applies to all 
specific inputs. Rather, when addressing the Ordover Report and the Mysteel data, t he USDOC 
referred to its earlier conclusion that all prices in China's steel market were distorted based on a 
different approach.  Under the applicable standard of review576, the fact that the USDOC's approach 
to price distortion was different from that sugge sted by China does not appear to be sufficient reason 
for justifying the USDOC's cursory engagement with these additional pricing data, evidence , and 
alternative explanations on the record.  
5.181.   We therefore do not see that the Panel's analysis reflects an insistence that a particular 
method of analysis of prices is the only way to establish price distortion, or that, as the United  States 
puts it, the Panel "overlooked the context within which the USDOC addressed the Mysteel 
evidence".577 Indeed, t he Panel recognized that "the SCM  Agreement does not prescribe a specific 
mode of analysis for the determination of an appropriate benchmark for purposes of determining 
whether goods are provided for less than adequate remuneration within the meaning of 
Article 14(d)."578 At the same time, the Panel considered the price data on the record to have been 
relevant to the question whether the existence of price distortion had been adequately established 
and explained under the USDOC's own approach. As the Panel ob served, however, " [n]either the 
Benchmark Memorandum nor the Supporting Benchmark Memorandum to that memorandum, nor 
the Final Benchmark Determination in the Pressure Pipe, Line Pipe, OCTG, Wire Strand, and Solar 
Panels refer to the prices for the inputs a t issue set out in the Mysteel Report."579 In this regard, the 
Panel referred to China's contention that " [t]he United  States has not contested the accuracy of 
either the prices contained in the Mysteel report or Mysteel's summary of the supply and demand 
conditions that those prices reflect."580  
5.182.   We also note that the USDOC's analysis in the Benchmark Memorandum was conducted at 
the level of the GOC's intervention in the economy overall, including the steel sector in general. On 
that basis, the USDOC extended its finding to the three specific inputs at issue, concluding that "it 
was not reasonable to expect that conditions in the sector's subset could operate under different 
conditions given the nature of the products."581 The United  States thus takes issue with the Panel's 
observation that "the USDOC did not consider that it was necessary to proceed with a detailed 
analysis of the specific markets for the inputs at issue ."582 Above, we found that, in its analysis in 
the Benchmark Memorandum, the USDOC did not engag e in a specific assessment of the four input 
markets in question. The USDOC drew an overall inference that prices in all specific input markets 
are distorted from its conclusions that the decision -making process of SIEs in China in general and 
in the steel  sector as a whole was distorted by government intervention. However, the Mysteel prices 
placed by the GOC on the record were specific to the three steel inputs at issue and, in China's view, 
"[t]here was no evidence on the record that any plans or policie s adopted by the GOC directed either 
privately -owned or government -related suppliers to sell these inputs to particular entities or at a 
particular price."583 Thus, as observed by the Panel, it would have been relevant for the USDOC to 
                                                
574 China's appellee's submission, para.  131 (referring to Ordover Report (Panel Exhibit CHN -19)). In 
this regard, China argues that "[t] he evidence of private investment is obviously probative: rational, 
profit -seeking companies do not invest billions of doll ars in an industry if they do not believe that it is a 
'functioning market'. " (Ibid., para.  133) 
575 China's appellee's submission, para.  134. (emphasis original)  
576 Appellate  Body Report, US – Lamb , para.  106. 
577 United  States' appellant's submission, para.  151. 
578 Panel Report, para.  7.220.  
579 Panel Report, para.  7.219. (fns omitted)  
580 Panel Report, para.  7.219 (quoting China's second written submission to the Panel, para.  133).  
581 United  States' appellant's submission, para.  158 (referring to Supporting Benchmark Memorandum 
(Panel Exhibit USA -84), pp.  5-6). 
582 United  States' appellant's submission, para.  159 (quoting Panel Report, para. 7.200).  
583 China's appellee's submission, para.  114. WT/DS437/AB/R W 
 
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  take into account this  data in its analysis and examine the extent to which it affected its conclusions 
that price distortion existed in China's steel sector and , in particular , in the three specific input 
markets.584  
5.183.   The United  States also points to the USDOC's conclusion that,  "[a]lthough the Department 
requested information from the GOC to ascertain the structure of the hot-rolled  steel, steel rounds, 
and stainless steel coils markets, including the identities and state ownership levels of the producers 
operating therein, the GOC's response was incomplete and therefore unreliable for purposes of such 
an analysis."585 The USDOC thus found that "information necessary to an input -specific market 
analysis is not available on the record [and] in addition to, and in the alternative to,  [its] 
determination about the Chinese steel sector as a whole", the USDOC also relied upon "the facts 
otherwise available … with regard to the particular steel inputs at issue".586  
5.184.   We recall that recourse to facts available "is not a licence to rely on onl y part of the evidence 
provided" .587 Specifically, "[t]o the extent possible, an investigating authority using the 'facts 
available' in a countervailing duty investigation must take into account all the substantiated facts 
provided by an interested party, ev en if those facts may not constitute the complete information 
requested of that party."588 In relying upon facts available, however, the USDOC did not consider 
the Mysteel prices for the three specific inputs provided by China. We therefore do not consider t hat 
the fact that China's responses to the USDOC's request for information were incomplete could justify 
the absence of an assessment of those price data that were submitted and thus available on the 
record. In this light, China's responses with respect to  the USDOC's request for information "to 
ascertain the structure of the hot-rolled  steel, steel rounds and stainless steel coils markets, 
including the identities and state ownership levels of the producers operating therein"589, albeit 
incomplete, do not discount the relevance of the price information that was otherwise available on 
the record. The USDOC did not provide an explanation of whether and why, in light of such pricing 
information, its conclusions that pervasive govern ment intervention and market distortion in the 
Chinese economy and in the steel sector generally applied to each of the input markets at issue w ere 
still valid. Rather, as noted above, in rejecting such in -country pricing data, the USDOC noted that 
it had already found earlier that all in -country prices were distorted and could not be used as a 
benefit benchmark.590 
5.185.   Therefore, although the USDOC had discretion to choose its approach in establishing whether 
in-country prices were distorted, it would have been necessary to explain in its determinations why 
the approach it had adopted and the conclusions it had reached were still valid, in light of the Mysteel 
pricing data and the alternative narrative of the Ordover Report.591 We further note China's argument 
that, "[i]n the absence of any evidence that all government -related suppliers of the inputs at issue 
sold these products on a non -commercial basis, and in the absence of any evidence that the prices 
charged by government -related suppliers affected the prices c harged by privately -owned suppliers, 
the USDOC had no evidentiary basis to reject available in -country prices that included prices charged 
by both government -related and privately -owned suppliers."592 It is in this light that we understand 
the Panel's conclu sion that "there is no explanation by the USDOC of why, in its view, the price data 
on the record did not relate to prevailing market conditions in the country of provision in the sense 
                                                
584 See Panel Report, para.  7.220.  
585 United  States' appellant's submission, para.  160 (quoting Supporting Benchmark Memorandum 
(Panel Exhibit USA -84), p.  5). 
586 United  States' appellant's submission, para.  162 (quoting Supporting Benchmark Memorandum 
(Panel Exhibit USA -84), p.  6). 
587 Appellate  Body Report, Mexico – Anti-Dumping Measures on Rice , para.  294. The Appellate  Body has 
explained that an investigating  authority must use those facts available that reasonably replace the necessary 
information that an interested party failed to provide with a view to arriving at an accurate determination. 
(Appellate  Body Reports, Mexico – Anti-Dumping Measures on Rice , paras. 293-294; US ‒ Carbon Steel 
(India) , paras.  4.416 and  4.419)  
588 Appellate  Body Report, Mexico – Anti-Dumping Measures on Rice , para.  294. 
589 United  States' appellant's submission, para.  162. 
590 Final Benchmark Determination (Panel Exhibit CHN -21), p.  19 (referring to Benchmark Memorandum 
(Panel Exhibit CHN -20), pp.  27-30). 
591 Although the Mysteel pricing data, indicia, and rationale underlying in the Ordover Report were 
different from the approach adopted by the USDOC in the Benchmark Memorandum, these indi cia related to 
the steel sector and the relevant input markets. As such, they constituted pertinent information which could 
potentially call into question the USDOC's finding that all in -country prices including private prices were 
distorted.  
592 China's app ellee's submission, para.  141. WT/DS437/AB/R W 
 
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  of Article  14(d)."593 It appears that, for the Panel, the USDOC did not sufficiently consider the 
rationale in the Ordover Report and the Mysteel pricing data in its analysis of prices in China's steel 
sector, and assess whether prices in the specific input markets were actually distorted by 
government intervention. This concl usion is in line with the Panel's earlier findings that the USDOC 
did not consider that it was necessary "to analyze specific prices for the relevant inputs to determine 
that SIE and private prices in China's steel and polysilicon sectors are not market -determined", or 
"to proceed with a detailed analysis of the specific markets for the inputs at issue".594  
5.186.   Additionally, with respect to in -country private prices, the United  States contends that "after 
considering import pricing data that China submitted on t he record of the original investigations, the 
USDOC concluded that it could not be used"595, and that the USDOC actually used Chinese prices 
where appropriate, such as in the Pressure Pipe investigation.596 As we see it, the use or rejection 
by the USDOC of ce rtain import pricing data provided by China in the original proceedings did not 
obviate the need for the USDOC to examine the evidence and explanations on the record of the 
Section  129 proceedings at issue. These United  States' arguments therefore are neither pertinent to 
nor affect the Panel's conclusion that the USDOC failed adequately to explain its rejection of 
in-country prices on the record of the Pressure Pipe, Line Pipe, and OCTG investigations in the course 
of the present Section  129 proceedings.597 
5.187.   The United  States further challenges the basis for the Panel's finding that nothing on the 
record suggests that the USDOC considered the possibility that "price information which does not 
distinguish between SIE suppliers and private suppliers may nonethel ess be relevant to an analysis 
of the adequate remuneration for the inputs at issue ."598 The United  States submits that the USDOC 
did not reject government -related prices "because of their source, but rather because of their 
nature ".599 In the section  on "Eval uation of Additional Issues" in the Final Benchmark 
Determination600, the USDOC noted the possibility of alignment of private and SIE prices, but found 
that "it is neither necessary nor feasible to conduct such a price analysis in these section  129 
proceedin gs."601 The USDOC relied on the conclusion it had already reached in the Benchmark 
Memorandum that "the GOC's intervention in the steel sector as a whole … establishes that the 
market signals – throughout the sector as a whole – are distorted by the effects of longstanding and 
continued pervasive government intervention."602  
5.188.   While the USDOC may not have rejected these data because of their source, it nevertheless 
rejected them because , at the point of addressing the question of whether a price alignment analys is 
would be possible in the Final Benchmark Determination, the USDOC had already reached its 
conclusion in the Benchmark Memorandum that longstanding and continued pervasive government 
intervention distorted market signals throughout the steel sector, such  that there were no potential 
benchmarks from the domestic industry that could be considered "market -based" for any of the 
inputs at issue. This latter conclusion was reached separately from, and before addressing , the 
Mysteel prices in the USDOC's additio nal discussion of whether an analysis of price alignment is 
                                                
593 Panel Report, para.  7.219.  
594 Panel Report, paras.  7.199 -7.200.  
595 United  States' appellant's submission, para.  149. 
596 The United  States observes that "the USDOC considered whether a respondent's import purchases 
were market determined and, concluding that the prices were indeed market determined, the USDOC used 
those prices as part of its benchmark". ( United  States' appel lant's submission, para.  150 (emphasis original) ) 
597 Having said that, we do not exclude that the investigating authority may, in a Section  129 
re-determination for purposes of Article 21.5 proceedings, refer to or incorporate into its reasoning data from 
the original investigation or findings that were not found to be inconsistent in the original WTO proceedings.  
598 United  States' appellant's submission, para.  153 (referring to Panel Report, para.  7.218).  
599 United  States' appellant's submission, para.  157. ( emphasis original)  
600 Final Benchmark Determination (Panel Exhibit CHN -21), pp.  12-18. See also Benchmark 
Memorandum (Panel Exhibit CHN -20), pp.  26-27 (analysing SIE producer prices); p.  30 (analysing private 
producer prices). The USDOC found, based on its analysis in the Benchmark Memorandum, that "'{t}his 
government intervention … so distorts and diminishes the impact of market signals that, based on the record in 
these proceedings, all domestic private {steel} prices', as well as SIE prices, are distorted ." (Final Benchmark 
Determination (Panel Exhibit CHN -21), p.  15 (quoting Benchmark Memorandum (Panel Exhibit CHN -20), 
p. 30)) 
601 Final Benchmark Determination (Panel Exhibit CHN -21), p.  18. 
602 Final Benchmark Determination (Panel Exhibit CHN -21), pp.  15 and 17. WT/DS437/AB/R W 
 
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  possible.603 The USDOC relied on these findings in the Final Benchmark Determination in stating, 
inter alia , that arguments regarding the market share of SIEs , "although important to our overall 
market distortion analysis, [are] no longer central to our finding" .604 It then recalled its earlier finding 
that prices of all Chinese steel producers were distorted and, therefore, found it not necessary to 
carry out an analysis of whether the prices of private and government providers align.605 However, 
above we agreed with the Panel that the USDOC did not provide a reasoned and adequate 
explanation of how pervasive government intervention distorted prices in the input markets subject 
to its determinations and in its analysis and determinations did not engage sufficiently wit h the price 
data on the record , which appeared on its face relevant to the analysis of price distortion and was 
specific to the three inputs at issue. Therefore, the USDOC's prior conclusion as to the existence of 
price distortion in the entire steel secto r based on pervasive government intervention in the 
Benchmark Memorandum could not , in itself , constitute a sufficient basis for rejecting the relevance 
of the Mysteel data.  
5.189.   In addition, the USDOC considered that "neither the available record evidence" "no r the 
evidence on prices likely to be available … is likely to provide additional probative insight  on the 
question of whether private suppliers have aligned their prices with the prices charged by 
predominant government input providers."606 It was in this c ontext that the USDOC referred to the 
price evidence before it and indicated that it was only limited, in particular because most data, 
including the Mysteel prices, did not distinguish between SIEs and private suppliers.607 The USDOC 
thus considered that it  would not be possible to conduct an analysis of whether private prices aligned 
with SIE prices in the absence of sufficient data distinguishing between these two sets of prices. We 
have noted that an investigating authority is not required to adopt any pa rticular methodology in 
assessing whether prices are actually distorted so as to justify recourse to out -of-country prices.608 
However, as noted above, although the rationale of the Ordover Report and the associated Mysteel 
pricing data were different from t he approach adopted by the USDOC in the Benchmark 
Memorandum, these indicia related to the steel sector and the relevant input markets.609 As such, 
they constituted pertinent information that could potentially call into question the USDOC's finding 
that all in-country prices, including private prices of the inputs at issue, were distorted. Therefore, 
we see no reason to disagree with the Panel that "[g]iven that 'proper benchmark prices may be 
drawn from a variety of potential sources, including private or go vernment -related entities', price 
information which does not distinguish between SIE suppliers and private suppliers may nonetheless 
be relevant to an analysis of the adequate remuneration for the inputs at issue. " Nevertheless, as 
the Panel observed, "[t] here is nothing on the record of the investigations to suggest that the USDOC 
                                                
603 See Benchmark Memorandum (Panel Exhibit CHN -20), pp.  26-27 (analysing SIE producer prices); 
p. 30 (analysing private producer prices); Final Benchmark Determination (Panel Exhibit CHN -21), p.  11 
et seq. 
604 Final Benchmark Determination (Panel Exhibit CHN-21), p.  18. The USDOC acknowledged that its 
"analytical framework differed from that in the original determination", and observed that its original approach 
was "not the only framework for gauging whether prices are market -determined". As we noted earl ier, stating 
that a framework is not the only one is not a sufficient explanation for not assessing the reasoning adopted by 
the investigating authority in light of that alternative framework.  
605 Final Benchmark Determination (Panel Exhibit CHN -21), p.  19. 
606 Final Benchmark Determination (Panel Exhibit CHN -21), p.  19. The USDOC also noted why it 
considered it unlikely that it would obtain sufficient probative information and stated that it did "not expect that 
in most cases it would be able to gather pricing  data for a market as a whole that distinguishes between the 
prices of SIE providers and private entities" or that samples would be representative. (Ibid., p.  20) 
607 Final Benchmark Determination (Panel Exhibit CHN -21), p.  20. 
608 The USDOC stated that "based  on the totality of circumstances present in the Chinese steel sector, 
we find it is not necessary to conduct an analysis of whether the prices of government and private providers 
align due to the market power of the government providers." The USDOC then a dded that "[n]onetheless, for 
the purposes of these Section  129 proceedings we have reviewed the available record information with a view 
towards whether it might be possible to analyze whether SIE market dominance has caused price alignment in 
the context  of a CVD proceeding." However, the USDOC concluded that "neither the available record evidence 
on prices in these three proceedings nor the evidence on prices likely to be available to an investigating 
authority is likely to provide additional probative i nsight on the question of whether private suppliers have 
aligned their prices with the prices charged by predominant government input providers." ( Final Benchmark 
Determination (Panel Exhibit CHN -21), p.  19) 
609 As argued by China, the Mysteel pricing data reflected the proposition that market factors were 
responsible for the fluctuations of Chinese steel prices, and the Ordover Report pointed to the fragmented 
nature of China's steel industry and the existence o f private investment and profitability. (China's appellee's 
submission, paras.  125-131) Albeit put on the record for purposes of demonstrating the absence of price 
alignment in China's steel sector, this evidence was also relevant in the context of the USD OC's own framework 
for assessing the existence of price distortion.  WT/DS437/AB/R W 
 
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  considered this possibility, and certainly no explanation of why the information submitted was not 
relevant in this case, if that was its conclusion."610  
5.190.   As we see it, in addressi ng the question of whether it would be possible to analyse price 
alignment, the USDOC dismissed, in the Final Benchmark Determination, the price data on the record 
largely on the basis of its prior conclusion in the Benchmark Memorandum that all in -country  steel 
prices in China were distorted by government intervention.611 The United  States itself points out that 
the USDOC considered that "the price survey data from China was not usable because it was already 
established that the government's prices are not m arket-determined prices and that, in fact, the 
government prevents private prices from being determined by market conditions as well."612 
However, the Panel found that , in reaching this prior conclusion , the USDOC failed to explain how 
government interventio n in the market resulted in domestic prices for the inputs at issue deviating 
from a market -determined price.613 Even though the USDOC might not have "exclude[d] 
government -related prices automatically"614 or because of their source, it did not engage in an 
analysis of whether this pricing data was distorted, or consider whether the data and supporting 
explanations could have affected its conclusions in the Benchmark Memorandum that both 
government -related and private prices in China's steel sector are distorte d, as they applied to the 
specific inputs at issue. In this regard, as the Panel observed, the United  States "dismisse[d] the 
'heavy emphasis' placed by China on the Mysteel Report by stating that these 'data ultimately say 
nothing about whether those pric es also reflect the effects of sustained state intervention in the 
sector'."615 It appears that the Panel considered that the USDOC insufficiently explained "why, in its 
view, the price data on the record did not relate to prevailing market conditions in the  country of 
provision in the sense of Article  14(d)"616, and rejected the relevance of this information mainly 
because the rationale underlying the Ordover Report and the Mysteel pricing data were different 
from the rationale that the USDOC had adopted in th e determinations at issue. Thus, for the Panel, 
the USDOC did not sufficiently engage with record -pricing data and alternative explanations before 
reaching the conclusion that no in -country prices can be relied upon as benefit benchmarks and that, 
therefore, the USDOC would continue using the alternative benchmarks from the original 
investigations.617 
5.191.   The Panel's conclusion is consistent with its earlier finding in paragraph 7.206 of its Report 
that the USDOC failed to explain how government intervent ion in the market resulted in price 
distortion for the inputs at issue. Above, we understood the Panel to have found that the USDOC did 
not explain how the widespread government interventions described in the Benchmark Memorandum 
resulted in the distortion  of in-country prices in the specific input markets subject to each of the 
challenged USDOC determinations at issue. Thereafter, in analysing the USDOC's assessment of 
price evidence on the record, the Panel reviewed whether the USDOC had engaged with the methods, 
data, explanations , and supporting evidence put forward by interested parties, in order to ensure 
that its finding of price distortion is supported , and not undermined , by evidence and explanations 
on the record. The Panel properly assessed whethe r the USDOC's explanation for its determination 
is reasoned by critically reviewing whether it provided an adequate explanation of whether and how 
prices are distorted by government intervention in the relevant markets, and whether it sufficiently 
addresse d the nature and complexities of the evidence on the record, including alternative methods, 
data, and explanations of that data presented by the interested parties. The Panel considered that 
the pricing data on the record was "on its face relevant" to the USDOC's analysis and that the USDOC 
was therefore required to address the pertinence of such information and provide an explanation as 
                                                
610 Panel Report, para.  7.218.  
611 Thus, the USDOC concluded that it "has not conducted a price alignment analysis in this proceeding 
because [it did] not consider it necessary in light of the  Department's finding that the Chinese domestic market 
for steel is distorted by virtue of the GOC's policy interventions in the sector and other factors". The USDOC 
further observed that, in any event, it was "unable to reliably undertake such an analysis  on the limited records 
of these investigations", and "it would be very difficult for the Department and interested parties to identify 
and obtain sufficient evidence to analyze whether SIEs were exercising market power in such a way that they 
were causing  private supplier prices to align with the SIE prices." (Final Benchmark Determination (Panel 
Exhibit CHN -21), p.  21) 
612 United  States' appellant's submission, para.  156. 
613 Panel Report, para.  7.206.  
614 United  States' appellant's submission, para.  154. 
615 Panel Report, fn 379 to para.  7.219 (quoting United  States' second written submission to the Panel, 
para. 185; response to Panel question No. 36).  
616 Panel Report, para.  7.219.  
617 Final Benchmark Determination (Panel Exhibit CHN -21), p.  21. See Benchmark Memora ndum (Panel 
Exhibit CHN -20), pp.  26-27 (analysing SIE producer prices); p.  30 (analysing private producer prices).  WT/DS437/AB/R W 
 
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  to why it does not alter its conclusions. We see no reason to disagree with the Panel that the evidence 
in the Ordover Re port, as well as the Mysteel data, would have been relevant to the USDOC's analysis 
of whether in -country prices are distorted. In this regard, the United  States contends that "[o]n its 
own terms, the analysis in the Mysteel report, even if credited as val id, does not disturb the 
conclusions the USDOC reached in its market analysis", because e.g. "nothing in the report 
contradicts the USDOC's findings that market entry and exit are prevented or that firm behavior is 
not consistent with profit -seeking enterp rises".618 However, the USDOC's ben chmark  determinations 
in the context of the present proceedings do not provide an explanation as to why its conclusion 
remains valid in light of this price data. As noted above, it rather appears that the USDOC rejected 
its relevance mainly because the rationale underlying the Ordover Report and the Mysteel pricing 
data were different from the rationale that the USDOC had adopted in the determinations at issue. 
We are therefore not persuaded that the Panel erred in its appli cation of Article  14(d) in finding that 
it could not conclude that the USDOC's determination was one that could be reached by a reasonable 
and objective investigating authority.619 
5.192.   In light of the above, we consider that the Panel did not fail properly to ap ply Article  14(d) 
of the SCM  Agreement when finding, in paragraphs 7.206 and 7.220 of its Report, that the USDOC 
"failed to explain how government intervention in the market resulted  in domestic prices for the 
inputs at issue deviating from a market -determ ined price", and "failed to adequately explain its 
rejection of in -country prices in light of the evidence before it".  
5.193.   In a footnote to its Notice of Appeal, the United  States notes that it considers the Panel's 
errors in the context of benefit to be issu es of law and legal interpretations. At the same time, the 
United  States observes that, if the Appellate  Body were to consider instead that these errors involve 
issues of fact, then the Appellate  Body should find that the Panel failed to make an objective 
assessment of the matter before it under Article  11 of the DSU.620 In our analysis above, we have 
treated the United  States' claim on appeal as properly relating to the Panel's interpretation of 
Article  14(d), as well as its application of this provision to the facts of the present dispute. Leaving 
aside the question whether the claim under Article  11 was properly made and substantiated, we in 
any event do not find it necessary to address the United  States' arguments relating to Article  11 of 
the DSU.  
5.194.   Finally , the United  States claims that the Panel's finding of inconsistency with regard to the 
Solar Panels investigation is incoherent and unsupported by any rationale.621 The United  States takes 
issue with the Panel's conclusion that "there was no relevant inform ation on arm's -length in -country 
prices of polysilicon in China before the USDOC on the basis of which it could have considered a 
proper benchmark for purposes of determining whether goods are provided for less than adequate 
remuneration within the meaning  of Article  14(d)."622 The Panel therefore found that "China has not 
demonstrated that the USDOC acted inconsistently with Articles  1.1(b) and 14(d) of the 
SCM Agreement for failing to consider in -country prices that were available on the record in this 
Section 129 proceeding."623 In its overall conclusion under Articles  1.1(b) and 14(d), however, the 
Panel found that:  
[T]he USDOC failed to explain, in the OCTG, Solar Panels , Pressure Pipe, and Line Pipe 
Section  129 proceedings, how government intervention in t he market resulted  in 
domestic prices for the inputs at issue deviating from a market -determined price. In 
addition, in the Section  129 proceedings on Pressure Pipe, Line Pipe, and OCTG, the 
USDOC failed to consider price data on the record.624 
5.195.   We observe th at the Panel's finding in the second sentence of the quote regarding the 
USDOC's failure to consider price data on the record refers only to the Section  129 proceedings in 
                                                
618 United  States' appellant's submission, para.  152. 
619 Panel Report, para.  7.220.  
620 United  States' Notice of Appeal, fn 7 to para.  4. In respo nse, China contends that "[d]ropping a 
footnote at the beginning of an appellant submission asking the Appellate  Body to recast an entire set of legal 
arguments as a claim under Article  11 of the DSU, should it be so inclined, is a textbook example of an 
Article 11 claim that does not 'stand by itself'." (China's appellee's submission, para.  166 (quoting 
Appellate  Body Report, Peru – Agricultural Products , para.  5.66) (emphasis original))  
621 United  States' appellant's submission, para.  145. 
622 Panel Report, p ara. 7.222.  
623 Panel Report, para.  7.222.  
624 Panel Report, para.  7.223. (italics original; underlining added)  WT/DS437/AB/R W 
 
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  the Pressure Pipe, Line Pipe, and OCTG investigations. By contrast, the Panel finding in the 
first sentence regarding the USDOC's failure to explain how government intervention resulted in 
price distortion covers all four proceedings, including the Solar Panels investigation. Therefore, the 
Panel's finding of inconsistency with resp ect to the Solar Panels investigation was based on its earlier 
finding that "the USDOC failed to explain how government intervention in the market resulted in 
domestic prices for the inputs at issue deviating from a market -determined price."625 In other word s, 
the Panel's conclusion follows from its separate analyses of whether : (i) the USDOC's factual findings 
support the conclusion that in -country prices in China are not "market -determined"; and (ii) the 
USDOC disregarded evidence regarding prices for the i nputs at issue.626 As noted above, the Panel 
considered that absent from the USDOC's analysis was an assessment of how the various 
government interventions, taken together, actually resulted in distortion of in -country prices in 
China's steel market, and spe cifically the input markets at issue, such that these prices could not be 
used to determine adequacy of remuneration. We observed that the Panel's analysis of the 
determinations led it to conclude that the USDOC  did not provide a reasoned and adequate 
explanation in reaching its conclusion that government interventions in China's steel market have 
resulted in price distortion in the specific input markets.627  
5.196.   In this light, we understand that , in its subsequent analysis of whether the USDOC 
disregarded evide nce regarding prices for the inputs at issue , the Panel found that there was no 
relevant price information on the record of the Solar Panels investigation and, thus, the USDOC 
could not have erred in disregarding price evidence on the record submitted by t he GOC. This , 
however , did not undermine the Panel's earlier conclusions that the USDOC did not provide 
"a reasoned and adequate explanation for its determinations that in -country prices for … polysilicon 
(Solar Panels) were distorted as a result of pervas ive government intervention in the Chinese 
domestic markets for these inputs", and that it "outlined governmental involvement in the relevant 
markets and, on that basis alone, determined that it could not use in -country prices of the relevant 
inputs to ass ess the adequacy of remuneration".628 Specifically, even though there was no price 
evidence on the record of the Solar Panels investigation that should have been taken into account 
by the USDOC, the Panel found that, in its earlier analysis, the USDOC failed  to explain how 
government intervention in the market resulted in price distortion also with respect to this 
investigation.  
5.3.3.3   Conclusion  
5.197.   The specific type of analysis that an investigating authority must conduct for purposes of 
arriving at a proper benchmark  under Article  14(d) of the SCM  Agreement, as well as the types and 
amount of evidence that would be considered sufficient in this regard, will necessarily vary depending 
upon a number of factors in the circumstances of the particular case. However, in all  cases, it has 
to be established that price distortion actually results from government intervention and it has to be 
adequately explained by the investigating authority in its report. There may be different ways to 
demonstrate that prices are actually dis torted, such as a quantitative assessment, price comparison 
methodology, or a counterfactual analysis. Depending on the circumstances, a qualitative analysis 
may also appropriately establish how government intervention actually results in price distortion,  
provided that it is adequately explained. While evidence of direct impact of the government 
intervention on prices may be probative and make the finding of price distortion likely, evidence of 
indirect impact may also be relevant. At the same time, establ ishing the nexus between such indirect 
impact of government intervention and price distortion may require more detailed analysis and 
explanation of how prices have been distorted as a result of such indirect impact of the government 
intervention. Independe ntly of the method chosen by the investigating authority, it has to adequately 
take into account the arguments and evidence supplied by the petitioners and respondents, together 
with all other information on the record, so that its determination of how pri ces in the specific 
markets at issue are in fact distorted as a result of government intervention would be based on 
positive evidence. In turn, it is the role of panels to assess whether the investigating authority's 
explanation for its determination is re asoned and adequate by critically reviewing that explanation, 
in depth, and in light of the facts and explanations presented by the interested parties.  
                                                
625 Panel Report, para.  7.206. (emphasis original)  
626 See Panel Report, sections 7.3.3.3.2 -7.3.3.3.3.  
627 Panel Report, para.  7.206.  
628 See Panel Report, para. 7.206.  WT/DS437/AB/R W 
 
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  5.198.   We do not consider that the statement "[p]roposed in -country prices will not be reflective of 
prevailin g market conditions in the country of provision when they deviate from a 
market -determined price as a result of governmental intervention in the market" in paragraph 4.155 
of US – Carbon Steel (India) constitutes merely an example of a situation when price s might not be 
market -determined, as the United  States seems to suggest. Instead, it forms part of the 
Appellate  Body's interpretation of Article  14(d) in that dispute and reflects the understanding that 
the investigating authority needs to provide a reaso ned and adequate explanation as to whether 
prices are market -determined or how they are distorted as a result of government intervention. We 
further agree with the Panel's conclusion that "[a]n investigating authority must explain how 
government interventi on in the market results  in in-country prices for the inputs at issue deviating 
from a market -determined price", insofar as it clarifies that the investigating authority has to make 
a finding of price distortion resulting from government intervention. In s um, we do not see that the 
Panel required one single type of quantitative or price comparison analysis in all cases. We therefore 
find that the Panel did not err in its interpretation of Article  14(d).  
5.199.   Under the applicable standard of review, the Panel re viewed whether the USDOC had 
provided, in its written determinations, a reasoned and adequate explanation of how the evidence 
on the record actually established the existence of price distortion in the market of the inputs at 
issue as a result of governmen t intervention and how this explanation supported its decision to have 
recourse to out -of-country prices. Specifically, the Panel's task was to review whether, in light of the 
evidence and arguments submitted by the parties, and the rationale underlying pl ausible alternative 
explanations, the approach ultimately adopted by the USDOC in its determinations, and the 
conclusions drawn from the evidence it relied upon, remain adequate and sufficiently substantiated 
also in light of those alternative data and exp lanations.  
5.200.   With respect to the Panel's finding, in paragraph  7.206 of its Report, that "the USDOC failed 
to explain how government intervention in the market resulted  in domestic prices for the inputs at 
issue deviating from a market -determined price", we understand the Panel to have rejected as 
insufficient and problematic the USDOC's  determination that prices in the entire steel and solar grade 
polysilicon sectors in China cannot be used as benefit benchmarks in the absence of a specific 
assessment of how  government intervention had resulted in price distortion in the four input markets 
at issue. Furthermore, we understand the Panel to have been concerned with the focus of the 
USDOC's analysis in the Benchmark Memorandum on the pervasiveness of government involvement 
in China's SIEs' decision -making in general and in the steel sector as a whole, rather than on how 
specifically this involvement influenced pricing decisions regarding the inputs at issue and resulted 
in price distortion with respect to the det erminations at hand. Therefore, as we see it, the Panel's 
analysis of the determinations at issue led it to conclude that the USDOC did not provide a reasoned 
and adequate explanation of how the widespread government interventions described in the 
Benchmar k Memorandum resulted in the distortion of in -country prices in the specific input markets 
and regarding the specific products subject to each of the challenged USDOC determinations at 
issue.  
5.201.   With respect to the Panel's finding, in paragraph  7.220 of its Report, that "the USDOC failed 
to adequately explain its rejection of in -country prices in light of the evidence before it", we 
understand the Panel to have considered that the USDOC's rejection of in -country prices was merely 
consequential to its findings  of market distortion in the steel sector generally, which the Panel 
considered not to provide a reasoned and adequate explanation of how government intervention 
resulted in price distortion. Furthermore, al though  the focus of the USDOC's analysis in the 
Benchmark Memorandum was different from the one underlying the Ordover Report, the alternative 
explanations and pricing data on the record may have nevertheless been relevant for examining 
whether price distortion actually existed in the input markets at is sue. Yet, the USDOC 
determinations do not explain why, in light of the price data and alternative explanations, the 
conclusion it reached for the entire steel sector necessarily applies to all specific input markets. In 
addition, the USDOC drew an overall inference of price distortion with respect to all input markets 
from its conclusions that the decision -making process of SIEs in China in general and in the steel 
sector as a whole was distorted by government intervention. However, it would have been relev ant 
for the USDOC to take into account in its analysis the input -specific Mysteel pric ing data on the 
record and examine the extent to which it affected its conclusions of price distortion. Finally, in 
assessing whether it would be possible to conduct an a nalysis of price alignment in the Final 
Benchmark Determination, the USDOC dismissed the price data on the record largely on the basis 
of its prior conclusion that all in -country steel prices in China were distorted by government 
intervention. However, the  USDOC's prior conclusion as to the existence of price distortion in the WT/DS437/AB/R W 
 
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  entire steel sector based on pervasive government intervention in the Benchmark Memorandum 
could not , in itself , constitute a sufficient basis for rejecting the relevance of the Myste el data.  
5.202.   With respect to the Solar Panels investigation, we understand that , in its analysis of whether 
the USDOC disregarded evidence regarding prices for the inputs at issue , the Panel found that there 
was no relevant price information on the record of the Solar Panels investigation and, thus, the 
USDOC could not have erred in disregarding price evidence on the record submitted by the GOC. 
This, however , did not undermine the Panel's earlier conclusions that the USDOC did not provide a 
reasoned and adequate explanation for its determinations that in -country prices for polysilicon were 
distorted as a result of pervasive government intervention in the Chinese domestic market for this 
input.  
5.203.   We therefore find that the United  States has not established that the Panel erred in its 
interpretation and application of Article  14(d) of the SCM  Agreement in finding that the USDOC failed 
to explain, in the OCTG, Solar Panels, Pressure Pipe , and Line Pipe Section  129 proceedings, how 
government intervention in the market resulted  in domestic prices for the inputs at issue deviating 
from a market -determined price. In addition, we find that the United  States has not established that 
the Panel erred in finding that , in the Section  129 proceedings on Pressure Pipe, Line Pipe, and 
OCTG, the USDOC failed to consider price data on the record. We consequently uphold  the Panel's 
findings , in paragraphs 7.223 -7.224 and 8.1(c) of its Report, that the Un ited States acted 
inconsistently with Articles  1.1(b) and 14(d) of the SCM  Agreement in the OCTG, Solar Panels, 
Pressure Pipe, and Line Pipe Section  129 proceedings.  
5.4  Article  2.1(c) of the SCM  Agreement  
5.204.   Based on its reading of Article  2.1(c) of the SCM Agreement, and its review of the USDOC's 
reasoning and analysis, the Panel found "that the United  States did not comply with the requirement 
in Article  2.1(c) to 'take account of the length of time during which the subsidy programme has been 
in operati on' because it failed to adequately explain its conclusions regarding the existence of the 
relevant subsidy programme."629 Accordingly, the Panel concluded that China had demonstrated that 
the United  States had acted inconsistently with Article  2.1(c) in the  Pressure Pipe, Line Pipe, Lawn 
Groomers, Kitchen Shelving, OCTG, Wire Strand, Seamless Pipe, Print Graphics, Aluminum 
Extrusions, Steel Cylinders, and Solar Panels Section 129 proceedings.630  
5.205.   The United  States appeals the Panel's finding on two main ground s. First, the United  States 
takes issue with the fact that the Panel based its finding on its view that the USDOC  failed to 
"adequately explain" its conclusions regarding the existence of the subsidy programmes that were 
subject to its investigations.  The United  States submits in essence that there were no findings by 
the original panel or the Appellate  Body on this matter, and consequently no recommendations and 
rulings by the DSB requiring the United  States to take implementation action in this regard.631  
5.206.   Second, the United  States contends that the Panel improperly interpreted Article  2.1(c) to 
require the USDOC to identify a "systematic subsidy programme" consisting "entirely of acts of 
subsidization", where each provision of an input by the government con fers a benefit to the 
recipient.632 Referring to statements made by the Appellate  Body in the original proceedings, the 
United  States maintains there is no requirement to demonstrate that subsidization is "systematic" 
in nature.633 The United  States further submits that the Panel's erroneous reading of Article  2.1(c) 
led it to disregard reasoning and analysis provided by the USDOC that was "directly responsive" to 
the compliance Panel's concerns regarding the existence of the relevant "s ubsidy programmes".634 
                                                
629 Panel Report, para.  7.292.  
630 Panel Report, paras.  7.293 and 8.1(e). Having found that the USDOC did not "adequately explain its 
conclusions" regarding the existence of the relevant subsidy programmes, the Panel found it unnecessary, for 
the resolution of this dispute, to "further consider whether the USDOC took into account the length of time 
during which the subsidy programme had been in operation". (Ibid., paras.  7.291 -7.292)  
631 United  States' appellant's submission, para.  173. The United  States submits, in its appellant's 
submission, that "the compliance Panel's examination improperly considered the consistency of the measures 
taken to comply with a provision of Article  2.1(c) of the SCM  Agreement that was not included among the 
recommendati ons and rulings of the DSB." (United  States' appellant's submission, subtitle of section IV.B)  
632 United  States' appellant's submission, para.  193. 
633 United  States' appellant's submission, paras.  174 and 193 -194 (quoting Appellate  Body Report,  
US – Countervailing Measures (China) , para.  4.143).  
634 United  States' appellant's submission, paras.  201-202. WT/DS437/AB/R W 
 
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  We address these issues in turn, beginning with the United  States' appeal insofar as it concerns the 
scope of recommendations and rulings by the DSB and the basis for the compliance Panel's findings.  
5.207.   For its part, China argues that fo r the USDOC to properly take into account the "duration" 
of the subsidy programme, as required by the third sentence of Article  2.1(c), it had first to identify 
and substantiate the relevant subsidy programme.635 According to China, a proper analysis under 
both the second and the third sentences of Article  2.1(c) requires identification of "the existence, 
content and scope of the subsidy programme".636 China further submits that the Panel rightly found 
that an investigating authority is required to establish (i ) "a subsidy" and (ii) "a programme" and 
that (iii) the subsidy is granted "pursuant to" a programme, in order to prove the existence of a 
subsidy programme.637 China further maintains  that "throughout this dispute, the United  States has 
never  demonstrated t hat the inputs at issue are produced and provided to industrial users at 
subsidized prices under the instruction, guidance or intervention of the Chinese government. "638 
5.4.1   Whether the Panel erred by assessing if the USDOC had sufficiently identified the 
releva nt subsidy programmes  
5.208.   Referring to the recommendations and rulings of the DSB in the original proceedings, the 
United  States argues that neither the panel nor the Appellate  Body made findings of inconsistency 
regarding the "existence of a subsidy programme " when presented with that issue in this dispute. 
Consequently, according to the United  States, "that issue was not among those covered by the DSB's 
recommendations and rulings" and it was not "an appropriate basis upon which to assess the 
consistency of t he measures with Article  2.1(c), third sentence  – the only aspect of Article  2.1(c) 
that is found in the recommendations and rulings of the DSB".639 The United  States adds that the 
obligation to take into account the length of time during which the relevant subsidy programmes 
had been in operation is distinct from the obligation to identify the underlying subsidy programmes, 
and that the Panel erred by conflating the two.640 
5.209.   China counters that for the USDOC to properly take into account the "duration" of the s ubsidy 
programme, as required pursuant to the recommendations and rulings of the DSB, it was first 
required to identify and substantiate the relevant subsidy programmes.641 China therefore agrees 
with the Panel that "having failed to properly determine the e xistence of a subsidy programme, the 
USDOC could not properly take account of the length of time during which a subsidy programme 
had been in operation."642 China further submits that Article  2.1(c) contemplates a "single, holistic 
de facto specificity inqui ry" rather than "a three -step analysis, with each sentence serving its own 
distinct, separable 'function'"643, and that a proper analysis under both the second and the 
third sentences of Article  2.1(c) requires identification of "the existence, content and s cope of the 
subsidy programme".644 
5.210.   As this aspect of the United  States' appeal relates to the basis for the compliance Panel's 
findings under Article  2.1(c), we consider it useful to begin by recalling the relevant findings made 
by the original panel and the  Appellate  Body. Indeed, the original panel determined that "the USDOC 
acted inconsistently with the obligations of the United  States under the last sentence of Article  2.1(c) 
of the SCM  Agreement by failing to take account of the two factors listed therei n [that is, duration 
and economic diversification] when making the relevant specificity determinations."645 This finding 
was not appealed, and, consequently, was not reviewed by the Appellate  Body. The original panel 
also made another finding under Article  2.1(c), which was appealed – not by the United  States, but 
by China. It concerned the USDOC's identification of the relevant subsidy programme. The original 
panel found that the "consistent provision" by the relevant SIEs of inputs for less than ad equate 
remuneration provided a sufficient basis for the USDOC's identification of the relevant "subsidy 
                                                
635 China's appellee's submission, para.  171. 
636 China' s appellee's submission, para.  180. 
637 China's appellee's submission, para.  189. 
638 China's appellee's submission, para.  201. (emphasis original)  
639 United  States' appellant's submission, para.  173. 
640 See United  States' appellant's submission, paras.  187-190. 
641 China's appellee's submission, para.  171. 
642 China's appellee's submission, para.  169 (quoting Panel Report, para.  7.291).  
643 China's appellee's submission, para.  179. 
644 China's appellee's submission, para.  180. 
645 Panel Report, US – Counter vailing Measures (China) , para.  7.257.  WT/DS437/AB/R W 
 
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  programmes" for the purpose of carrying out a specificity analysis under Article  2.1(c).646 The 
Appellate  Body agreed that, in the absence of any written instrument or explicit pronouncement, 
evidence of a "systematic activity or series of activities" may provide a sufficient basis to establish 
the existence of a subsidy programme.647 However, the Appellate  Body found it "troubling" that the 
panel did not pro vide any "case -specific discussion or references to the USDOC's determinations of 
specificity challenged by China", and reversed the original panel's findings on those grounds.648 The 
Appellate  Body declined to complete the analysis regarding whether the "US DOC sufficiently 
identified and substantiated the existence of a 'subsidy programme' in each of the determinations 
at issue"649 given that the panel had, in any event, found the USDOC's determinations to be 
inconsistent with Article  2.1(c) on other grounds, as described above.  
5.211.   It is apparent, therefore, that the issue of whether the USDOC had properly identified the 
relevant subsidy programmes was left unresolved in the original proceedings. As there was no ruling 
on the merits of the claim raised by China r egarding the USDOC's identification of the underlying 
subsidy programmes, we see no reason why China would have been precluded from reasserting it 
here in these compliance proceedings, as a basis for its contention that the United  States was in 
breach of i ts obligations under Article  2.1(c). Indeed, in  Canada – Aircraft (Article  21.5 – Brazil) , the 
Appellate  Body found that Article  21.5 panels are not merely called upon to assess whether the 
Member concerned has implemented the specific recommendations and rulings adopted by the DSB 
in the original dispute.650 Rather, a complainant in Article  21.5 proceedings might well even raise 
new claims, arguments, and factual circumstances different from those raised in the original 
proceedings, insofar as it considers t hat a "measure taken to comply" is inconsistent with 
WTO obligations in ways different from the original measure.651 Here, in fact, the arguments that 
China raised to support its claim under Article  2.1(c) are largely the same as the arguments it raised 
in the original proceedings, where it also alleged that the USDOC had failed to sufficiently identify 
and substantiate the relevant subsidy programmes for purposes of its de facto  specificity analysis.  
5.212.   We further note that, in its panel request in these compl iance proceedings, China claimed 
that the USDOC did not properly identify the existence of the relevant "subsidy programmes" and 
thus had no basis to evaluate the length of time during which they had been in operation.652 For 
China, the question before the P anel was " not limited to determining whether the USDOC properly 
took into account the length of time during which a 'subsidy programme' has been in operation", but 
also concerned "whether the USDOC identified and substantiated the relevant 'subsidy program mes' 
under the correct legal standard".653 The United  States did not invoke procedural grounds to object 
to the Panel's examination of these arguments. Instead, it engaged with their merits, asserting that 
the USDOC had sufficiently identified the relevant s ubsidy programmes.654 We find it difficult to 
agree with the United  States when it now faults the Panel for having engaged with China's arguments 
regarding the USDOC's alleged failure to identify the underlying subsidy programmes as a basis for 
its analysis of China's claims under Article  2.1(c).  
5.213.   This brings us to the question of whether an investigating authority can be found to have 
complied  with the requirement under Article  2.1(c) to consider the length of time during which a 
subsidy programme has been in  operation if it has failed to properly determine the existence of the 
                                                
646 Panel Report, US – Countervailing Measures (China) , para.  7.243.  
647 Appellate  Body Report, US – Countervailing Measures (China) , para.  4.149.  
648 Appellate  Body Report, US – Countervailing Measures (China) , para.  4.151 . 
649 See Appellate  Body Report, US – Countervailing Measures (China) , paras.  4.156 -4.157.  
650 See Appellate  Body Report, Canada – Aircraft (Article  21.5 – Brazil) , para.  40. 
651 See Appellate  Body Report, Canada – Aircraft (Article  21.5 – Brazil) , para.  41. 
652 See China's panel request, para.  21. 
653 China's response to Panel question No. 39, para.  181. (emphasis original)  
654 Before the Panel, the United  States argued, for example, that "in conducting its redet ermination for 
each of the inputs at issue, the USDOC identified a series of systematic activities that demonstrate the 
existence of a subsidy program." (United  States' first written submission to the Panel, para.  286) The 
United  States further noted, in i ts second written submission to the Panel, China's claim that "the USDOC 
(1) did not identify a 'subsidy programme' pursuant to which the subsidized inputs were provided and (2) did 
not adequately take account of the length of time the relevant subsidy pro grams have been in operation" and 
then proceeded to "address each claim in turn". (United  States' second written submission to the Panel, 
para. 225) WT/DS437/AB/R W 
 
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  underlying subsidy programme in the first place.655 The United  States argues in this regard that the 
obligation to identify a subsidy programme "arises under the second sentence of Articl e 2.1(c)" and 
is distinct from the obligation to consider the duration of a subsidy programme, which already 
assumes that the relevant subsidy programme has been properly identified.656  
5.214.   We agree with the United  States that the requirement under the third se ntence of 
Article  2.1(c) to consider "the length of time during which the subsidy programme has been in 
operation" contemplates that the relevant subsidy programme is known.657 Contrary to what the 
United  States suggests, this does not mean, however, that an  investigating authority can be found 
to have complied  with the requirement under Article  2.1(c) to consider the length of time during 
which a subsidy programme has been in operation regardless  of whether it has properly identified a 
subsidy programme in t he first place. Indeed, consideration of the duration of a subsidy programme 
would seem to presuppose that the relevant programme has been properly identified. Thus, where 
an investigating authority makes a finding of de facto  specificity based on an analy sis of whether 
there has been "use of a subsidy programme by a limited number of certain enterprises", the 
requirement to establish the existence of a subsidy programme is part and parcel of the obligation, 
arising  under the third sentence of Article  2.1(c), to take into account the time during which the 
subsidy programme has been in operation.  
5.215.   For all of these reasons, we disagree with the United  States that the Panel was required to 
limit its review to the USDOC's examination of the "duration" of the relevant subsidy programmes, 
without considering whether the USDOC had properly identified relevant subsidy programmes either 
in the context of the original investigations or in the context of  the Section 129 proceedings where 
the USDOC made findings concerning the duration of the underlying subsidy programmes and 
economic diversification.  
5.216.   We turn next to assess whether the Panel erred in finding that the USDOC had not identified, 
for purposes  of its specificity analysis, the "subsidy programmes" that were the subject of its 
investigations in the underlying countervailing duty proceedings.  
5.4.2   Whether the Panel erred in its interpretation and application of Article  2.1(c)  of the 
SCM Agreement  
5.4.2.1   The Panel's findings  
5.217.   Before the Panel, China claimed that the USDOC's de facto specificity determinations in 11  of 
the contested Section 129 determinations were inconsistent with Article  2.1(c) of the 
SCM Agreement because the USDOC "failed to identify a 'plan or scheme' pursuant to which the 
subsidies at issue had been provided".658 The United  States countered that "the USDOC sought 
information on each of the relevant subsidy programmes, reviewed record evidence confirming the 
existence of a programme in each cas e, and reasonably and adequately explained why it found the 
systematic provision of inputs to constitute a subsidy programme in the challenged 
determinations."659  
5.218.   In light of the disagreement between the parties as to what must be demonstrated 
"to establish  the existence of an unwritten subsidy programme", the Panel saw as its task to address 
whether an investigating authority is required to show that subsidies (i.e.  financial contributions 
conferring a benefit) are systematically granted as part of a subsid y programme, or whether the 
systematic granting of a financial contribution will suffice to identify a subsidy programme.660 
Referring to Appellate  Body findings made in the original proceedings, the Panel understood the 
                                                
655 The first sentence of Article  2.1(c) states that "if, notwithstanding any appearance of non -specificity 
resulting from the application of the principles laid down in subparagraphs (a) and  (b), there are reasons to 
believe that the subsidy may in fact be specific, other factors may be considered." In turn, the second sentence 
of Article  2.1(c) identifies four such factors, including "use of a subsidy programme by a limited number of 
certain enterprises", which is the factor on which the USDOC based its specificity findings in the present case.  
656 United  States' appellant's submission, para.  187. 
657 United  States'  appellant's submission, para.  185. 
658 Panel Report, para.  7.251 (referring to China's first written submission to the Panel, paras.  320-322; 
second written submission to the Panel, paras.  199-201).  
659 Panel Report, para.  7.252 (referring to United  States' s econd written submission to the Panel , 
para. 233).  
660 Panel Report, para.  7.263.  WT/DS437/AB/R W 
 
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  Appellate  Body to have distinguished "the 'systematic series of actions' demonstrating a programme 
from the mere grant of financial contributions to the recipients".661 As noted by the Panel, the "mere 
grant of financial contributions is not enough"; those "grants must be in the context of a pr ogramme 
pursuant to which subsidies are granted."662 Consequently, "in order to identify a subsidy 
programme, an investigating authority must have 'adequate evidence' that the financial 
contributions identified as conferring a benefit and therefore to be sub sidies were made as part of a 
plan or scheme."663 The Panel found , in this regard , that "an investigating authority may 
demonstrate the existence of a subsidy programme based on evidence of: (a) the existence of a 
subsidy within the meaning of Article  1.1; a nd (b) a 'plan or scheme' pursuant to which this subsidy 
has been provided to certain enterprises."664  
5.219.   Turning to the USDOC's analysis, the Panel noted that, as part of its Section 129 proceedings, 
the USDOC had "revisited" its specificity determinations, a nd had explained its "preliminary analysis 
of the diversification of economic activities and length of time".665 The Panel identified as the 
"key question" in this case "whether the information relied upon by the USDOC supports its finding 
of a systematic se ries of actions evidencing the existence of a plan or scheme pursuant to which 
subsidies have been provided".666 However, the Panel did "not find any explanation on the USDOC 
record as to how the information on the record demonstrated or otherwise reflected the systematic 
nature  of actions that would evidence the existence of a plan or scheme pursuant to which subsidies 
were provided".667 In particular, the Panel considered that , while the USDOC's Input Specificity 
Memorandum, prepared in the context of the rel evant Section 129 proceedings, "designate[d] 
certain information as an 'example of systematic activity' (or 'series of activities')", there was 
"no explanation as to how such information (dealing with the number of transactions between input 
producers and respondents) inform[ed] the existence or nature of the relevant subsidy 
programme".668 The Panel added that "while the information before the USDOC clearly indicate[d] 
repeated  transactions, it [was] unclear on what basis the USDOC [had] concluded that these  
transactions were conducted pursuant to a plan or scheme of some kind."669 The Panel further noted 
that the USDOC had, in the course of its investigation, requested information on "the number of 
programme  recipients for a four -year period", and "three years  of data regarding the industry 
providing the relevant input" for "the provision of inputs for [less than adequate remuneration] 
programmes ".670 However, the Panel considered that the USDOC's findings with respect to the 
existence of the relevant subsidy pro grammes "as part of its de facto  specificity analysis" did not 
appear to rely on such evidence, or on "information regarding how long the relevant inputs have 
been produced and sold in China".671 The Panel further noted that the United  States had referred, in 
the panel proceedings, to the "systematic provision of inputs for nearly 50 years" and "a regularized 
and well -planned series of actions"672, "a program of action" according to which those inpu ts were 
provided673, and the potential relevance of the operation of "policy mandates" or "actions by which 
China provided the inputs in question".674 However, the Panel said it did "not find any such 
explanations in the investigating authority's determination s", and recalled that "an investigating 
authority's determinations may not be justified by an ex post  rationale."675 The Panel found therefore 
that the United  States had not complied with the requirement in Article  2.1(c) to "take account of 
the length of ti me during which the subsidy programme has been in operation" because the USDOC 
                                                
661 Panel Report, para.  7.266.  
662 Panel Report, para.  7.266.  
663 Panel Report, para.  7.266.  
664 Panel Report, para.  7.267.  
665 Panel Report, para.  7.275 (quoting Input Specificity Memor andum (Panel Exhibit CHN -23)). 
666 Panel Report, para.  7.286.  
667 Panel Report, para.  7.287. (emphasis original)  
668 Panel Report, para.  7.287.  
669 Panel Report, para.  7.288. (emphasis original)  
670 Panel Report, para.  7.289 (quoting Input Specificity Memorandum (Panel Exhibit CHN -23), p.  6). 
(emphasis original)  
671 Panel Report, para.  7.289.  
672 Panel Report, para.  7.290 (quoting United  States' opening statement at the Panel meeting, 
para. 39). 
673 Panel Report, para.  7.290 (quoting United  States' response to Panel question No. 45, para.  216).  
674 Panel Report, para.  7.290 (quoting United  States' comments on China's response to Panel question 
No. 43, para.  146).  
675 Panel Report, para.  7.290 (referring to Appe llate Body Reports, US – Tyres (China) , para.  329;  
US – Countervailing Duty Investigation on DRAMS , para.  186; US – Softwood Lumber  VI  
(Article  21.5 – Canada) , para.  93). WT/DS437/AB/R W 
 
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  had "failed to adequately explain its conclusions regarding the existence of the relevant subsidy 
programme".676 
5.4.2.2   Claims and a rguments on appeal  
5.220.   Referring to the Appellate  Body's findings in the original dispute, the United  States submits 
that the term "subsidy programme" in Article  2.1(c) refers to a systematic series of actions pursuant 
to which subsidies are provided to certain enterprises.677 For the United  States, it is this "sys tematic" 
series of actions that constitutes  the relevant "subsidy programme", and the compliance Panel erred 
"to the extent it interpreted the obligation in Article  2.1(c) as a requirement to demonstrate 
'systematic' subsidization".678 The United  States furt her argues that , insofar as "subsidies are 
provided by means of inputs for less than adequate remuneration", the manufacture and provision 
of the inputs to the recipient by a public body are "precisely the 'systematic series of actions' that 
constitutes th is variety of subsidy program".679 According to the United  States, the Panel should 
therefore have considered evidence regarding "the systematic series of actions demonstrated by the 
manner in which the subsidies were provided"680, including the USDOC's findin g that the input 
producers at issue are public bodies, and that those inputs were "covered by an industrial plan to 
carry out sector -specific goals".681 The United  States adds that "the nature of the USDOC's findings 
was plain: the USDOC identified a 'system atic activity or series of actions' in the repeated provision 
of the inputs at issue by public bodies."682  
5.221.   For its part, China agrees with the Panel that , in order to establish the existence of a "subsidy 
programme" for purposes of Article  2.1(c), an invest igating authority is required to establish 
(i) "a subsidy", (ii)  "a programme", and that (iii) the subsidy is granted "pursuant to" a 
programme.683 In China's view, the Panel rightly found that the USDOC failed to demonstrate how 
the evidence before the USDOC supported "its factual findings of systematic activity", and how those 
findings in turn supported the USDOC's "determination regarding the existenc e of an unwritten 
subsidy programme and the de facto specificity of the relevant subsidies".684 China adds that, in any 
event, the USDOC did not rely on the same facts in the context of its specificity analysis as in the 
context of its public body and benefi t analyses. Instead, it treated these issues as separate685 and 
relied only on "input purchase information" to support its specificity determinations.686 China further 
underscores that , insofar as the United  States considers that the Panel erred by failing to "consider 
evidence that was relevant on its face"687, it should have brought a claim under Article  11 of the 
DSU – which is not the case here.  
5.222.   In its third participant's submission, the European  Union submits that the term "subsidy 
programme" in Article  2.1(c) should be read in a way that "gives due recognition to the reality that 
'subsidies can take many forms and can be provided through many different kinds of mechanisms, 
some more and some less explicit'".688 For the European  Union, the Panel should have as sessed 
whether "financial contributions" that confer a benefit are "sufficiently systematic on their own so as 
to constitute adequate evidence of a plan or scheme", and thus a "subsidy programme".689 Under 
                                                
676 Panel Report, para.  7.292.  
677 See United  States' appellant's submission, para.  193 (quoting Appellate  Body Report,  
US – Countervailing Measures (China) , para.  4.143).  
678 United  States' appellant's submission, para.  204. 
679 United  States' appellant's submission, para.  195. 
680 United  States' appellant's subm ission, para.  195. 
681 United  States' appellant's submission, para.  198 (referring to  Preliminary Determination on Public 
Bodies and Input Specificity (Panel Exhibit CHN -4), pp.  16-17). (emphasis omitted)  
682 United  States' appellant's submission, para.  203 (r eferring to Preliminary Determination on Public 
Bodies and Input Specificity (Panel Exhibit CHN -4), p.  19). (emphasis omitted)  
683 China's appellee's submission, para.  189. 
684 China's appellee's submission, para.  195 ( quoting Panel Report, para.  7.288).  
685 China's appellee's submission, para.  198. 
686 China's appellee's submission, para.  199. 
687 China's appellee's submission, para.  190 (quoting United  States' appellant's submission, 
section  IV.C.2).  
688 European  Union's third participant's submission, para.  65 (quot ing Panel Report, US – Countervailing 
Measures (China) , para.  7.240).  
689 European  Union's third participant's submission, para.  69. WT/DS437/AB/R W 
 
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  such an approach, "the fact that there are also othe r financial contributions that do not confer a 
benefit would not necessarily prevent the existence of a plan or scheme."690  
5.223.   With these considerations in mind, we turn to address the participants' arguments on appeal, 
beginning with the Panel's reading of th e term "subsidy programme" in Article  2.1(c)  of the 
SCM Agreement . 
5.4.2.3   Analysis  
5.224.   We consider it helpful to begin by surveying the main features of the specificity inquiry 
contemplated under Article  2.1 of the SCM  Agreement, before providing a more detailed assessment 
of discrete requirements of Article  2.1(c), including the significance of the reference to the term 
"subsidy programme" in that provision.  
5.225.   The chapeau  of Article  2.1 of the SCM  Agreement establishes that the analysis of specificity 
is directed at "a subsidy, as defined in paragraph 1 of Article  1". This suggests that an analysis of 
specificity must be preceded by an assessment of whether a measure involves a financial 
contribution of the kind listed in Article  1.1(a)(1) or income or pric e support as referred to in 
Article  1.1(a)(2), and a benefit is thereby conferred. In turn, the specificity analysis under Article  2 
focuses on whether there is a de jure  or de facto  limitation on access to the use of the relevant 
subsidy. The reference to  Article  1.1 in Article  1.2, as well as the overall architecture of Articles  1 
and 2, suggests a logical order of analysis pursuant to which a finding of specificity can be reached 
only after the existence of a financial contribution that confers a benefit  has been determined. In 
particular , with respect to de facto  specificity, the Appellate  Body also stated that "the relevant 
'subsidy programme', under which the subsidy at issue is granted, often may already have been 
identified and determined to exist in the process of ascertaining the existence of the subsidy at issue 
under Article  1.1."691  
5.226.   Subparagraphs (a) and (b) of Article  2.1 set forth the principles applicable to, respectively, 
a determination of de jure specificity and non -specificity. Article  2.1(a) provides that a subsidy is 
"specific" if the granting authority, or the legislation pursua nt to which the granting authority 
operates, explicitly limits access to that subsidy to eligible enterprises or industries. In turn, 
Article  2.1(b) stipulates that specificity "shall not exist" if the granting authority, or the legislation 
pursuant to whi ch the granting authority operates, establishes objective criteria or conditions 
governing the eligibility for, and the amount of, the subsidy, provided that eligibility is automatic, 
that such criteria or conditions are strictly adhered to, and that they are clearly spelled out in an 
official document so as to be capable of verification.692 Article  2.1(a) thus covers explicit limitations 
on eligibility that favour certain enterprises, whereas Article  2.1(b) describes objective criteria or 
conditions (which c ould form part of a subsidy programme, for example) that guard against selective 
eligibility.693  
5.227.   Article  2.1(c) provides that "if, notwithstanding any appearance of non -specificity resulting 
from the application of the principles laid down in subparagraphs (a) and (b), there are reasons to 
believe that the subsidy may in fact be specific, other factors may be considered."694 The focus of 
Article  2.1(c), the provision at issue here, is on de facto limitations of access to the use of a subsidy, 
even though there  is no explicit limitation of access to that subsidy expressed in law.695  
                                                
690 European  Union's third participant's submission, para.  69. 
691 Appellate  Body Report, US – Countervailing Measures (China) , para. 4.144.  
692 Footnote 2 further states that these criteria or conditions must be neutral, do not favour certain 
enterprises over others, and are economic in nature and horizontal in application, such as the number of 
employees or size of enterprise.  
693 Appellate  Body Report, US – Countervailing Measures (China) , para.  4.145. See also Appellate  Body 
Report, US – Anti-Dumping and Countervailing Duties (China) , para.  367. 
694 The second sentence of Article  2.1(c) identifies four such factors: (i) use of a subsid y programme by 
a limited number of certain enterprises; (ii)  predominant use by certain enterprises; (iii)  the granting of 
disproportionately large amounts of subsidy to certain enterprises; and (iv)  the manner in which discretion has 
been exercised by the  granting authority in the decision to grant a subsidy. The third sentence adds that, in 
examining these factors, diversification of the relevant economy and the "duration" of the relevant "subsidy 
programme" shall be considered.  
695 See Appellate  Body Report, US – Countervailing Measures (China) , para.  4.145.  WT/DS437/AB/R W 
 
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  5.228.   In sum, the specificity inquiry under Article  2 therefore involves a consideration of whether 
there is a limitation on access to the relevant subsidy . Once an investigating authority has 
established the existence of a subsidy, it may consider whether, despite the appearance of 
non-specificity under Article  2.1(a) and  (b), the subsidy is de facto  specific, for instance, because a 
subsidy programme has been used "by a limited number of c ertain enterprises".696 In doing so, it 
must take into account, inter alia , the "length of time during which the relevant subsidy programme 
has been in operation" as contemplated under the third sentence of Article  2.1(c).  
5.229.   In this appeal, there is no disagr eement between the participants that a de facto  specificity 
analysis requires the identification of a "subsidy programme". Indeed, both China and the 
United  States referred to the Appellate  Body's statement in the original proceedings in this dispute 
regar ding the notion of "subsidy programme" in Article  2.1(c):   
The ordinary meaning of the word "programme" refers to "a plan or scheme of any 
intended proceedings (whether in writing or not); an outline or abstract of something 
to be done". The reference to " use of a subsidy programme" suggests that it is relevant 
to consider whether subsidies have been provided to recipients pursuant to a plan or 
scheme of some kind. Evidence regarding the nature and scope of a subsidy programme 
may be found in a wide variety  of forms, for instance, in the form of a law, regulation, 
or other official document or act setting out criteria or conditions governing the eligibility 
for a subsidy. A subsidy scheme or plan may also be evidenced by a systematic series 
of actions pursua nt to which financial contributions that confer a benefit have been 
provided to certain enterprises. This is so particularly in the context of Article  2.1(c), 
where the inquiry focuses on whether there are reasons to believe that a subsidy is, in 
fact, spe cific, even though there is no explicit limitation of access to the subsidy set out 
in, for example, a law, regulation, or other official document.  
… 
The mere fact that financial contributions have been provided to certain enterprises is 
not sufficient, ho wever, to demonstrate that such contributions have been granted 
pursuant to a plan or scheme for purposes of Article  2.1(c) of the SCM  Agreement. In 
order to establish that the provision of financial contributions constitutes a plan or 
scheme under Article  2.1(c), an investigating authority must have adequate evidence 
of the existence of a systematic  series of actions pursuant to which financial 
contributions that confer a benefit are provided to certain enterprises.697 
5.230.   Referring to this language from the Appellate  Body report in the original proceedings, the 
Panel understood the Appellate  Body to have distinguished "the 'systematic series of actions' 
demonstrating a programme from the mere grant of financial contributions to the recipients."698 The 
Panel found this to be "consistent with the ordinary meaning of the term 'programme', which refers 
to 'a plan or scheme of any intended proceedings (whether in writing or not); an outline or abstract 
of something to be done'."699 The Panel further reasoned that the "mer e grant of financial 
contributions is not enough", and that instead those "grants must be in the context of a programme 
pursuant to which subsidies are granted."700 On this basis, the Panel found that "in order to identify 
a subsidy programme, an investigati ng authority must have 'adequate evidence' that the financial 
contributions identified as conferring a benefit and therefore to be subsidies were made as part of a 
plan or scheme."701  
                                                
696 This sequence of analysis is important especially in the context of a de facto  specificity analysis 
involving the provision of goods within the meaning of Article  1.1(a)(1)(iii) for less than adequate 
remuneration. If the series of inputs provided by upstream producers of the product under investigation to 
their downstream customers  is defined as the unwritten subsidy programme, then the recipients are by 
definition a limited number, and de facto  specificity results almost automatically.  
697 Appellate  Body Report, US – Countervailing Measures (China) , paras.  4.141 and 4.143. 
(emphasis  original; fn  omitted)  
698 Panel Report, para.  7.266.  
699 Panel Report, para.  7.266 (quoting Appellate  Body Report, US – Countervailing Measures (China) , 
fn 674 to para.  4.141).  
700 Panel Report, para.  7.266.  
701 Panel Report, para.  7.266.  WT/DS437/AB/R W 
 
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  5.231.   As we see it, the Panel's understanding of the term "subsidy programme" i n Article  2.1(c) 
comports with our own. The Panel correctly observed that , "although evidence of 'a systematic series 
of actions' may be particularly relevant in the context of an unwritten programme , the mere fact 
that financial contributions have been provided to certain enterprises is not sufficient to demonstrate 
that such financial contributions have been granted pursuant to a plan or scheme for purposes of 
Article  2.1(c)."702 The Panel's subsequent analysis properly focused on the "key question",  that is, 
"whether the information relied upon by the USDOC supports its finding of a systematic series of 
actions evidencing the existence of a plan or scheme pursuant to which subsidies have been 
provided".703 Finally, in its findings, the Panel contrasted  the USDOC's failure to explain " systematic  
activity … regarding the existence of an unwritten subsidy programme" with information before the 
USDOC merely indicating " repeated  transactions".704 
5.232.   In light of the above, we disagree with the United  States insofa r as it argues that the Panel 
erred in its articulation of the standard to be applied under Article  2.1(c) in identifying the existence 
of a subsidy programme. In faulting the Panel for having done so, the United  States refers to certain 
statements by the Panel, for example , in paragraphs  7.265 -7.267 of its Report, that quote or rely 
on statements of the Appellate  Body from the original proceedings where the Appellate  Body 
interprets Article  2.1(c) and explains how the existence of an unwritten subsidy prog ramme can be 
established.705 We disagree with the United  States that any of these Panel statements required a 
demonstration of "systematic subsidization" or a "systematic subsidy programme", nor is it clear to 
us what the United  States meant in imputing such  an articulation to the Panel.706 We note that, 
referring to the same paragraphs of the Appellate  Body report as the Panel did707, the United  States 
itself states that "the subsidy in question must be provided 'pursuant to' a series of actions that 
qualifies a s a 'program'"708 and that the "identification of a plan or scheme pursuant to which the 
subsidies in question are provided serves a particular purpose" in an analysis of de facto 
specificity.709  
5.233.   Nor do we agree with the United  States that the Panel erred in its interpretation of the term 
"subsidy programme" by reading it to mean a "systematic subsidy programme" consisting "entirely 
of acts of subsidization" where each provision of an input by the government confers a benefit to 
the recipient.710 In our view, th e United  States draws inferences from the Panel's statement it 
references that the Panel did not make.711 In this statement , the Panel merely summarizes its 
understanding of the gist of the parties' positions and disagreements – with which, however, the 
United States disagrees – before the Panel begins to discuss past Appellate  Body pronouncements 
regarding an unwritten subsidy programme and how its existence can be established. That said, in 
establishing an unwritten subsidy programme , adequate evidence is r equired of a systematic  series 
of actions pursuant to which financial contributions that confer a benefit  are provided to certain 
enterprises.712 In our view, the Panel correctly assessed whether the USDOC had identified a 
systematic series of actions eviden cing the existence of an unwritten subsidy programme, plan, or 
scheme "of some kind".713 This accords with the Appellate  Body's statements that, while a "subsidy 
scheme or plan may also be evidenced by a systematic series of actions pursuant to which financi al 
contributions that confer a benefit have been provided to certain enterprises", the reference to "use 
of a subsidy programme" in Article  2.1(c) suggests that it is relevant to consider "whether subsidies 
have been provided to recipients pursuant to a pl an or scheme of some kind".714 Particularly where 
the existence of an unwritten "subsidy programme" is established on the basis of a "series of 
actions", it is important that the investigating authority properly explain why it considers that series 
                                                
702 Panel Report, para.  7.283 (quoting Appellate  Body Report, US – Countervailing Measures (China) , 
para. 4.141). (emphasis original; fn  omitted)  
703 Panel Report, para.  7.286.  
704 Panel Report, para.  7.288. (emphasis original)  
705 Appellate  Body Report, US – Countervailing Measures (Chin a), paras.  4.141 and 4.143.  
706 United  States' appellant's submission, para.  196. 
707 Appellate  Body Report, US – Countervailing Measures (China) , paras.  4.141 and 4.143.  
708 United  States' appellant's submission, para.  193. 
709 United  States' appellant's submissi on, para.  194. (emphasis omitted)  
710 See United  States' appellant's submission, paras.  192-195 (quoting Panel Report, para.  7.263).  
711 Panel Report, para.  7.263.  
712 Appellate  Body Report, US – Countervailing Measures (China) , para. 4.143.  
713 Panel Report, para . 7.288.  
714 Appellate  Body Report, US – Countervailing Measures (China) , para.  4.141.  WT/DS437/AB/R W 
 
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  of action s to be "systematic", so as to evidence the existence of a de facto scheme or plan.715 This 
avoids that mere repeat action of upstream producers providing inputs to downstream recipients 
invariably leads to a finding of de facto specificity, which would circumvent the legal disciplines of 
Article  2.1(c). Moreover, the recognition that a systematic series of actions may evidence the 
existence of an unwritten  subsidy programme avoids that Members that fail to disclose their subsidy 
programmes or practices, or otherwise adopt less transparent approaches to the provision of 
subsidies, would be u nfairly advantaged compared to Members with more transparent systems that 
formally publish their programmes.  
5.234.   That said, we note that the United  States further claims that the Panel erred by not 
considering evidence before the USDOC regarding "the systemat ic series of actions demonstrated 
by the manner in which the subsidies were provided"716, including the USDOC's finding that the input 
producers at issue are public bodies, and that those inputs were "covered by an industrial plan to 
carry out sector -specifi c goals".717 According to the United  States, this evidence was "directly 
relevant" to the USDOC's determination of the relevant "subsidy programme", and it should 
therefore have been considered by the Panel.718 For its part, China argues that the Panel rightly  
found that the USDOC failed to show how the evidence supported "its factual findings of systematic 
activity", and how those findings supported the USDOC's "determination regarding the existence of 
an unwritten subsidy programme and the de facto specificit y of the relevant subsidies".719 China 
adds that, in any event, the USDOC did not provide any explanation of how that information 
"demonstrated or otherwise reflected the systematic nature  of actions that would evidence the 
existence of a plan or scheme purs uant to which subsidies were provided." Nor did the USDOC rely, 
in its specificity analyses, on the same facts it had relied on in its public body determination s.720 
5.235.   As an initial matter, we note that the United  States has not raised a claim under Article  11 
of the DSU challenging the objectivity of the Panel's analysis or its failure to consider the totality of 
the USDOC's reasoning and analysis. In any event, we disagree with the United  States to the extent 
it claims that the Panel's finding under Article  2.1(c) was based on an isolated reading of the 
USDOC's specificity analysis. Rather, we understand the Panel's concern to have been that the 
USDOC's reasoning and references to "subsidy programmes" were general in nature and did not 
sufficiently discuss the  steel sector or the provision of the inputs in the context of the specific 
determinations at issue.  
5.236.   The Panel found, for example, that the USDOC had failed "to explain how the evidence on 
the record support[ed] its factual findings of systematic  activity, and how those factual findings 
support [ed] its determination regarding the existence of an unwritten subsidy programme and the 
de facto  specificity of the relevant subsidies".721 The Panel added that, "while the information before 
the USDOC clearl y indicate[d] repeated  transactions, it [was] unclear on what basis the USDOC 
[had] concluded that these transactions were conducted pursuant to a plan or scheme of some 
kind."722  
5.237.   In keeping with the applicable standard of review, in the absence of a narrat ive linking the 
text of the Section 129 determinations to the original determinations, the Panel did not discuss the 
USDOC's original determinations or underlying data in detail. While the USDOC had requested 
information on "the number of programme  recipie nts for a four -year period", and "three years of 
data regarding the industry providing the relevant input" for "the provision of inputs for [less than 
adequate remuneration] programmes ", the Panel observed that the USDOC's findings with respect 
                                                
715 The Appellate  Body noted in the original proceedings: "A subsidy scheme or plan may also be 
evidenced by a systematic series of actions pursuant to which financial contributions that confer a benefit have 
been provided to certain enterprises." ( Appellate  Body Report, US – Countervailing Measures (China) , 
para. 4.141)  
716 United  States' appellant's submission, para.  195. 
717 United  States' appellant's submission, para.  198 (referring to  Preliminary Determination on Public 
Bodies and Input Specificity (Panel Exh ibit CHN -4), pp.  16-17). (emphasis omitted)  
718 United  States' appellant's submission, para.  201. 
719 China's appellee's submission, para.  195 (quoting  Panel Report, para.  7.288).  
720 China's appellee's submission, para.  198. 
721 Panel Report, para.  7.288 (referri ng to Appellate  Body Report, US – Countervailing Duty 
Investigation on DRAMS , para.  186). (emphasis original)  
722 Panel Report, para.  7.288. (emphasis original)  WT/DS437/AB/R W 
 
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  to the exis tence of the relevant subsidy programmes did not appear to rely on the evidence .723 The 
Panel also concluded that the  "information regarding how long the relevant inputs have been 
produced and sold in China  does not appear to have been relied upon by  the USD OC."724 More 
specifically, the Panel considered that the USDOC had failed "to explain how the evidence on the 
record support [ed] its factual findings of systematic  activity, and how those factual findings 
support [ed] its determination regarding the existence  of an unwritten subsidy programme and the 
de facto specificity of the relevant subsidies".725  
5.238.   As we see it, the Panel rightly focused on the issue of "whether the information relied upon 
by the USDOC support[ed] its finding of a systematic series of action s evidencing the existence of a 
plan or scheme pursuant to which subsidies have been provided."726 Moreover, in its findings, the 
Panel correctly contrasted the USDOC's failure to explain " systematic  activity … regarding the 
existence of an unwritten subsidy  programme" with information before the USDOC merely indicating 
"repeated  transactions".727 It was not for the Panel in this regard "to conduct a de novo  review of 
the evidence", or "to substitute  [its] own conclusions for those of the competent authorities" .728 
Rather, it is the investigating authority  that reviews the submissions and evidence presented by the 
interested parties, poses questions and collects additional evidence, and draws factual conclusions 
from that evidence and submissions. It is for the pa nel to review whether the investigating authority 
provided a reasoned and adequate explanation of: (i) how the evidence on the record supported its 
factual findings; and (ii)  how those factual findings supported the overall subsidy determination.729 
Importan tly, the relevant explanation must be "given by the authority in its published report" and 
must be "discernible from the published determination itself".730  
5.239.   We note the United  States' contention that the Panel should have had regard to the totality 
of the U SDOC's reasoning and analysis in other parts of its determinations and supporting 
memoranda and should have taken into account the information that was on the record before the 
USDOC in the Section 129 proceedings.731 However, it was not for the Panel to rectify the absence 
of the case -specific analysis and explanations regarding the existence of an unwritten subsidy 
programme in the challenged determinations by drawing its own inferences regarding specificity 
from the sections of the USDOC determinations that contain findings on public bodies and benefit 
benchmarks, or from submissions or evidence on the record relatin g to the latter issues. The Panel 
found , in this regard , that "[w]hile the Inputs Memorandum designate[d] certain information as an 
'example of systematic activity' (or 'series of activities'), [it found] no explanation as to how such 
information (dealing with the number of transactions between input producers and respondents) 
inform[ed] the existence or nature of the relevant subsidy programme."732 The Panel added that 
"the USDOC [had] cite[d] such information as evidence that 'public bodies systematically p rovided' 
inputs for less than adequate remuneration, without further elaboration."733 The Panel rightly 
therefore did "not consider the USDOC to have provided a reasoned and adequate explanation with 
regard to its identification of the relevant subsidy progr amme for the purposes of its determination 
of de facto  specificity in this case".734 Had the Panel itself engaged in an analysis of other parts of 
the USDOC's determinations, including the original determinations, and information on the USDOC 
record, for pur poses of assessing whether an unwritten subsidy programme exists, it would have 
substituted its own judg ement for that of the investigating authority instead of limiting itself to 
reviewing the determinations made by that authority.  
                                                
723 Panel Report, para.  7.289 (referring to Input Specificity Memorandum (Panel Exhibit CHN -23), p.  6). 
(emphasis original) The Panel also summarized, in paras.  7.278 through 7.281, the questions the USDOC had 
posed and answers it had received in these proceedings.  
724 Panel Report, para.  7.289.  
725 Panel Report, para.  7.288 (referring to Appellate  Body Report, US – Countervailing Duty 
Investigation on DRAMS , para.  186). (emphasis original)  
726 Panel Report, para.  7.286.  
727 Panel Report, para.  7.288. (emphasis original)  
728 Appellate  Body Report, US – Lamb, para.  106. (emphasis original)  
729 Appellate  Body Report, US – Countervailing Duty Investigation on DRAMS , para.  186. 
730 Appellate  Body Reports, US – Countervailing Duty Investigation on DRAMS , para.  186; US – Tyres 
(China) , para.  329 (quoting Appellate  Body Report, US – Softwood Lumber VI (Article  21.5 – Canada) , 
para. 93); US – Wheat Gluten , para.  160. 
731 United  States' appellant's submission, paras.  195, 197 -198, and 201 (referring to  Preliminary 
Determination on Public Bodies and Input Specificity (Panel Exhibit CHN -4), pp.  16-17). 
732 Panel Report, para.  7.287.  
733 Panel Report, para.  7.287.  
734 Panel Report, para.  7.287.  WT/DS437/AB/R W 
 
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  5.240.   We further note that i t was only during these Article  21.5 Panel proceedings that the 
United  States referred to a "systematic provision of inputs for nearly 50 years" and "a regularized 
and well -planned series of actions"735, "a program of action" according to which those inputs were 
provided736, and the potential relevance of the operation of "policy mandates" or "actions by which 
China provided the inputs in question".737 However, the Panel did "not find any such explanations in 
the investigating authority's determinations", and rec alled that "an investigating authority's 
determinations may not be justified by an ex post  rationale."738 Nor do these general programmes 
or practices, or the USDOC's determination, explain how they relate to the specific products under 
investigation and det ermination at issue. In any event, we do not see how generic references to 
"programs of action" or "policy mandates" could, in themselves, suffice to provide a reasoned and 
adequate explanation as to the identification of an unwritten subsidy programme.739 
5.241.   We see no error in the Panel's decision to decline considering these arguments by the 
United  States on the basis that they were "not reflected, even implicitly, in the USDOC's explanations 
with respect to the identification of the relevant subsidy programme ".740 Indeed, "it follows from the 
requirement that the investigating authority provide a reasoned and adequate explanation for its 
conclusions, that the underlying rationale behind those conclusions be set out in the investigating 
authority's determination. "741 Moreover, "[j]ust as a panel must focus in its review on the rationale 
or explanation provided by the investigating authority in its report, so, too, is the respondent Member 
precluded during the panel proceedings from offering a new rationale or explan ation ex post  to 
justify the investigating authority's determination."742 In the same vein, because a panel's review 
must focus on the rationale or explanation provided by the investigating authority in its report, it 
would not have been appropriate for the Panel to have considered whether missing explanations in 
the redetermination could be complemented with reasoning or evidence743 contained in the original 
determinations.744 For all these reasons, we uphold  the Panel's finding, in paragraph 7.293 of its 
Report , that China has demonstrated that the United  States acted inconsistently with Article  2.1(c) 
of the SCM  Agreement in the Pressure Pipe, Line Pipe, Lawn Groomers, Kitchen Shelving, OCTG, 
Wire Strand, Seamless Pipe, Print Graphics, Aluminum Extrusions, Stee l Cylinders, and Solar Panels 
Section 129 proceedings.  
                                                
735 Panel Report, para.  7.290 (quoting United  States' opening statemen t at the Panel meeting, 
para. 39). 
736 Panel Report, para.  7.290 (quoting United  States' response to Panel question No. 45, para.  216).  
737 Panel Report, para.  7.290 (quoting United  States' comments on China's response to Panel question 
No. 43, para.  146).  
738 Panel Report, para.  7.290 (referring to Appellate  Body Reports, US – Tyres (China) , para.  329;  
US – Countervailing Duty Investigation on DRAMS , para.  186; US – Softwood Lumber  VI  
(Article  21.5 – Canada) , para.  93). 
739 We note that in paragraph 7.290 of its  Report, the Panel stated that "[i]n keeping with the applicable 
standard of review, we therefore decline to consider such arguments to the extent they are not reflected, even 
implicitly, in the USDOC's explanations with respect to the identification of th e relevant subsidy programme."  
740 Panel Report, para.  7.290.  
741 Appellate  Body Report, Japan – DRAMs (Korea) , para.  159. 
742 Appellate  Body Report, Japan – DRAMs (Korea) , para.  159 (referring to Appellate  Body Report,  
US – Countervailing Duty Investigation on  DRAMS , para.  159 and fn 293 thereto).  
743 We note in this respect that China challenged in the original proceedings the USDOC's specificity 
analysis including the "subsidy programme" findings. The Appellate  Body reversed the panel findings, but this 
claim w as left unresolved since the Appellate  Body could not complete the analysis. The original USDOC and 
panel findings therefore cannot be considered as undisputed for purposes of these Article  21.5 proceedings.  
744 The Panel was "mindful of the requirement to l imit [its] examination to the evidence that was before 
the USDOC during the course of the investigation." It further noted that "the USDOC requested information on 
'the number of programme  recipients for a four -year period', and 'three years of data regard ing the industry 
providing the relevant input' for 'the provision of inputs for [less than adequate remuneration] programmes '." 
(Panel Report, para.  7.289 (referring to Input Specificity Memorandum (Panel Exhibit CHN -23), p.  6) 
(emphasis original)) However , the Panel stated that "explanations supporting the USDOC's findings or 
determinations – with respect to the existence of the relevant subsidy programme as part of its de facto  
specificity analysis – do not appear to have been based on such evidence. Simi larly, information regarding how 
long the relevant inputs have been produced and sold in China does not appear to have been relied upon by 
the USDOC in identifying the relevant subsidy programme." (Ibid.) The Panel also noted that the "underlying 
documents  from the original investigation, for the OCTG and other investigations, [had] not been submitted on 
the record of these compliance proceedings." (Ibid., fn  449 to para.  7.276 (referring to Input Specificity 
Memorandum (Panel Exhibit CHN -23), pp.  2-3)) That said, we do not exclude that the investigating authority 
may, in a Section  129 redetermination for purposes of Article  21.5 proceedings, refer to or incorporate into its 
reasoning data from the original investigation or findings that were not found t o be inconsistent in the original 
WTO proceedings.  WT/DS437/AB/R W 
 
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  5.5  Separate opinion of one Division  member  
5.5.1   Public Body  
5.242.   I concur with the majority in: (i) rejecting China's interpretation of the term "public body" 
under Article  1.1.(a)(1) of the SCM  Agreement745; (ii) upholding the Panel's conclusion that China 
failed to demonstrate that the USDOC's public body determination s in the relevant Section 129 
proceedings are inconsistent with Article  1.1(a)(1)746; and (iii)  leaving intact the Panel's conclusion 
that China has not demonstrated that the Public Bodies Memorandum is inconsistent "as such" with 
Article  1.1(a)(1).747 
5.243.   But I believe the majority  has repeated an unclear and inaccurate statement of the criteria 
for determining whether an entity is a public body, and I disagree with the majority's implication 
that a clearer articulation of the criteria is neither warranted nor necessary.  
5.244.   I believe the continuing lack of clarity as to what is a "public body" represents an instance 
of undue emphasis on  "precedent ", which has locked in a flawed interpretation that has grown more 
confusing with each iteration748, as litigants and Appellate  Body Divisions repeated  the original flaw 
while trying t o navigate around it. That is what I believe the majority has done here.749 
5.245.   The original mistake was the attempt, in US – Anti-Dumping  and Countervailing Duties 
(China) , to define the term "public body" as an entity that "possesses, exercises or is vested wi th 
governmental authority".750 Certainly that is one way to identify a public body. But it is not the only 
way to give meaning to a concept that must be flexible because it depends for its meaning on specific 
circumstances. In each subsequent appeal where th e issue has been presented, the Appellate  Body 
has treated the phrase "possesses, exercises or is vested with governmental authority" as a 
necessary element for determining whether an entity is a public body – albeit while adding criteria 
that seemed to undermine the role of that element .751 That has sown confusion as participants and 
the Appellate  Body have struggled to show how situational criteria fit with a rigid and limiting phrase . 
5.246.   This case is the latest example. The participants and third participan ts all dutifully claimed 
that their positions fit the "possesses, exercises or is vested with governmental authority" criterion, 
while differing – sharply in the case of the two participants – in their understanding of what that 
criterion means. One partic ipant, the United  States, expressly asked us to clarify the meaning  of the 
term "public body".752 For this reason, and for the other reasons given above, I believe a clarification 
of the criteria for determining whether an entity is a public body is both nec essary and warranted.  
                                                
745 Para. 5.105  above.  
746 Para. 5.105  above.  
747 Para. 5.126  above.  
748 While past Appellate  Body reports may assist in clarifying the meaning of a provision in the context 
of a given dispute, they are not a substitute for the text that was negotiated and agreed by WTO Members.  
749 Among other things, the majority has restated the following: (i) a public body is an entity that 
"possesses, exercises or is vested with governmental authority" (para.  5.95 above (quoting Appellate  Body 
Report, US – Anti-Dumping and Countervailing Duties (China) , para.  317)), or has the authority to e xercise 
"governmental functions" (para.  5.96 above (quoting Appellate  Body Report, US – Anti-Dumping and 
Countervailing Duties (China) , para.  318)); (ii) the question of whether an entity is a public body is informed 
by what conduct or functions "are of a kind that are ordinarily classified as governmental in the legal order of 
the relevant Member", as well as "the classification and functions of entities within WTO Members generally" 
(para.  5.95 above (quoting Appellate  Body Report, US – Anti-Dumping and C ountervailing Duties (China) , 
para. 297)); (iii)  governmental exercise of "meaningful control over an entity and its conduct" may serve, in 
certain circumstances, as evidence that the relevant entity possesses governmental authority and exercises 
such auth ority in the performance of governmental functions (para.  5.96 above (quoting Appellate  Body 
Report, US – Anti-Dumping and Countervailing Duties (China) , para.  318)); and (iv)  the "relevant evidentiary 
elements" for a public body determination should not b e conflated with "the definition of a public body" 
(para.  5.97 above (referring to Appellate  Body Report,  US – Carbon Steel (India) , para.  4.37) (emphasis 
original)).  
750 Appellate  Body Report, US – Anti-Dumping and Countervailing Duties (China) , para.  317. 
751 See e.g. Appellate  Body Report, US – Carbon Steel (India) , para.  4.29. 
752 The United  States specifically asked us to "clarify … the interpretation of the term 'public body'" and 
to "confirm that a public body is any entity that a government meaningfully c ontrols, such that when the entity 
conveys economic resources, it is transferring the public's resources." (United  States' opening statement at the 
oral hearing, para.  18) WT/DS437/AB/R W 
 
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  5.247.   The text of Article  1.1(a)(1) does not elaborate on the meaning of the term "public  body". 
The only textual indication is the collective reference to "a government or any public body" as 
comprising the entity "government", which is t he subject of the disciplines of the SCM  Agreement. 
This text does not call for a single , abstract definition or basic criterion for the term "public body". 
Instead, Article  1.1(a)(1) calls for an examination of whether a transfer of financial value is 
"by a … public body" and can therefore be attributed to a government. As I see it, that examination 
involves an assessment of the relationship between the relevant entity and the government.753 When 
that relationship is sufficiently close, the entity in questio n may be found to be a public body and all 
of its conduct may be attributed to the relevant Member for purposes of Article  1.1(a)(1). The 
relationship  between an entity and a government may take different forms, depending on the legal 
and economic environm ent prevailing in the relevant Member. Certainly, as noted above, an entity 
may be found to be a public body when it "possesses, exercises or is vested with governmental 
authority". But that is not, and should not be treated as, the essential  criterion in every case. In my 
view, if a government has the ability to control the entity in question and/or its conduct, then the 
entity could be found to be a public body within the meaning of Article  1.1(a)(1). I do not believe 
the Appellate  Body should elaborate o n the meaning of the term "public body" in greater detail. 
Rather, it should leave space for domestic authorities to apply the criteria described above, and set 
forth in the paragraph immediately below, provided their decisions meet the requirements of 
objectivity, reasoned and adequate explanation, and sufficient evidence.  
5.248.   In the hope of providing clearer guidance to future litigants and panels, and of encouraging 
them not to feel unduly constrained by past statements on this subject , I offer the following  
restatement, which incorporates many of the concepts developed by the Appellate  Body, while, I 
believe, clarifying the criteria properly:  
Whether an entity is a public body must be determined on a case -by-case basis with 
due regard being had for the chara cteristics of the relevant entity, its relationship with 
the government, and the legal and economic environment prevailing in the country in 
which the entity operates. Just as no two  governments are exactly alike, the precise 
contours and characteristics o f a public body are bound to differ from entity to entity, 
State to State, and case to case. An entity may be found to be a public body when the 
government has the ability to control that entity and/or its conduct to convey financial 
value. There is no req uirement for an investigating authority to determine in each case 
whether the investigated entity "possesses, exercises or is vested with governmental 
authority".  
5.5.2   Benefit  
5.249.   I concur with the majority in rejecting China's interpretation of Article  14(d)  of the 
SCM Agreement , including China's claim that circumstances justifying recourse to out -of-country 
prices are limited to those in which the government "effectively determines" the price at which a 
good is sold. But I disagree with the majority's decision to uphold the Panel's finding that China 
demonstrated that the United  States acted inconsist ently with Articles  1.1(b) and  14(d) of the 
SCM Agreement in the OCTG, Solar Panels, Pressure Pipe, and Line Pipe Section 129 proceedings.  
5.250.   The relevant part of Article  14(d) provides that "[t]he adequacy of remuneration shall be 
determined in relation to p revailing market conditions for the good or service in question in the 
country of provision". It is well settled that this does not require a domestic authority to rely on 
in-country prices in all circumstances.754 The Panel and the majority accept this inte rpretation but 
fault the USDOC for not providing an "explanation of how government intervention actually  results 
in price distortion"755, thereby , in my view,  effectively reading Article  14(d) as imposing an obligation 
on investigating authorities to always justify recourse to out -of-country prices through a quantitative 
                                                
753 See Appellate  Body Reports, US – Carbon Steel (India) , para.  4.29; US – Anti-Dumpi ng and 
Countervailing Duties (China) , para.  317. 
754 "[A] proper market benchmark is derived from an examination of the conditions pursuant to which 
the goods or services at issue would,  under market conditions , be exchanged",  so that "any benchmark for 
conducting such an assessment must consist of market -determined prices  for the same or similar goods" that 
relate to the prevailing market conditions in the country of provision. (Appellate  Body Report, US – Carbon 
Steel (India) , para.  4.151 (italics original; underlining added))  
755 Para. 5.155  above.  WT/DS437/AB/R W 
 
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  analysis of in -country prices themselves, regardless of whether those prices have already been found 
to be distorted, including in cases where they have not even been placed on the record.756 
5.251.   The Panel rejected the USDOC's benchmark analysis in each of the four underlying 
Section  129 proceedings in a single paragraph of the Panel Report, dismissively saying that "the 
USDOC did not find it necessary  to demonstrate how the actions of the GOC influ enced the in -country 
price of the inputs at issue"; that "[t]he USDOC did not even attempt  to provide a reasoned and 
adequate explanation for its determinations that in -country prices … were distorted as a result of 
pervasive government intervention"; and that "the USDOC outlined governmental involvement in 
the relevant markets and, on that basis alone , determined that it could not use in -country prices of 
the relevant inputs to assess the adequacy of remuneration ."757 The majority said it accepted that 
different methods – including a qualitative analysis – may serve as a basis for a domestic authority 
to explain how government intervention results in distortion of in -country prices, but in fact , the 
majority  rejected the USDOC's extensive qualitative analysis  and wrote an opinion that , in my view,  
can only be read as requiring a quantitative analysis in all cases involving resort to out -of-country 
prices.  
5.252.   Here is what the USDOC did, which the Panel dismissed in three sentences and without any 
objection from t he majority. In its Benchmark Memorandum, the USDOC assessed a number of 
factors relating to the G overnment of the People's Republic of China's (G OC's) intervention with 
state-invested enterprises ( SIEs) in general, and in China's steel sector specifically.758 In particular, 
the USDOC examined: (i)  the involvement of the GOC in the functioning of China's SIEs; (ii) detailed 
industrial plans directing ministries to reduce the number of firms, and to increase  the scale of 
production; (iii)  government control exerted over appointments to the board of directors and 
corporate positions; (iv)  evidence regarding controlled mergers and acquisitions; and (v) bankruptcy 
prevention and other indicia of government inter vention with the functioning of the market. In 
assessing the functioning of SIEs in the steel sector in particular, the USDOC pointed to the sector's 
place as a "pillar" industry in which the state retains "somewhat strong influence"; evidence of 
increasin g excess capacity; export restraints; "five -year plans" detailing favoured and unfavoured 
production scales, investments, technologies, products, and production locations; strict control over 
investments; control over SIEs' appointment processes; hindered bankruptcy of large SIEs; and 
preferential access to capital, land, and energy.759 With respect to the prices of private steel 
producers in China, the USDOC examined a number of factors, including the SIEs' significant market 
share, the presence of many SIE steel producers shielded from competitive market forces, export 
restraints on steel input products, restrictions on foreign investment, and other factors.760 
In addition, in the Supporting Benchmark Memorandum, the USDOC referred to the inadequacy of 
questio nnaire responses leading to an absence of representative price data, and a need to rely, in 
part, on facts available with respect to the input -specific market analysis of the three steel inputs.761 
In the Final Benchmark Determination, the USDOC additionally  explained why it could not carry out 
a price alignment analysis to further support its explanation that private steel input prices in the 
underlying proceedings were distorted.762 Finally, with respect to the Solar Panels investigation and 
in light of the G OC's failure to respond to the USDOC's request for information, the USDOC relied 
                                                
756 In the Solar Panels Section 129 proceeding, the Panel found that there was no relevant information 
on arm's -length in -country prices of polysilicon in China before the USDOC. (Panel Report, para.  7.222)  
757 Panel Report, para.  7.206. (e mphasis added)  
758 See e.g. Panel Report, paras.  7.186 -7.188.  
759 Panel Report, paras.  7.186 -7.189. See Benchmark Memorandum (Panel Exhibit CHN -20), pp.  6-26. 
760 Panel Report, para.  7.190 (referring to Benchmark Memorandum (Panel Exhibit CHN -20), p.  28). On 
this basis, the USDOC found that "the evidence on the record demonstrates that these input prices are not 
based on market conditions within the meaning of Article  14(d) of the SCM  Agreement and, as a result, these 
input prices are inappropriate to use as benc hmarks to determine the adequacy of remuneration." (Final 
Benchmark Determination (Panel Exhibit CHN -21), p.  21) 
761 The USDOC found that "information necessary to an input -specific market analysis is not available on 
the record, within the meaning of sectio n 776(a)(1) of the Act", given that "the GOC unequivocally responded 
that it did not possess the information requested by the Department, and because the information supplied is 
too incomplete to serve as a reliable basis upon which to evaluate the respect ive input markets as a whole." 
Therefore, "in addition to, and in the alternative to, [its] determination about the Chinese steel sector as a 
whole", the USDOC also relied upon "the facts otherwise available, pursuant to section 776(a) of the Act, with 
regard to the particular steel inputs at issue." (Supporting Benchmark Memorandum (Panel Exhibit USA -84), 
p. 6) 
762 Final Benchmark Determination (Panel Exhibit CHN -21), pp.  20-21. WT/DS437/AB/R W 
 
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  entirely on facts available.763 The Benchmark Memorandum and Supporting Benchmark 
Memorandum, together with the underlying evidence in support of the USDOC's conclusions, ran to  
hundreds of pages.  
5.253.   The Panel professed to recognize that the type of benchmark analysis an investigating 
authority may conduct will vary depending on the circumstances of the case and the characteristics 
of the relevant market.764 Yet, somehow, the Panel d iscarded the entire reasoning and supporting 
evidence in the Benchmark Memorandum and Supporting Benchmark Memorandum in a single 
paragraph, characterizing the USDOC's determinations as "not even [an] attempt" to provide an 
explanation as to why in -country  steel prices are not market -determined.765 And the majority, 
writing more extensively , upheld the Panel.  
5.254.   In finding that the USDOC "failed to explain how government intervention in the market 
resulted in domestic prices for the inputs at issue deviating fro m a market -determined price"766 
without any assessment of the USDOC's arguments and evidence, the Panel in effect faulted the 
USDOC for not having further analysed in -country prices, even where it had already found those 
prices to have been distorted. Why th at should have been required in this case is not clear. Provided 
that it has sufficiently explained why it considers the respective government interventions to have 
distorted domestic prices, I do not see why the USDOC should have been required to rely on or 
further analyse such in -country prices in the context of a benchmarking analysis by, for example, 
comparing in -country prices with a hypothetical market -determined benchmark and finding the 
existence of a deviation.767 Indeed, such prices may reflect the very same government interventions 
that gave rise to the subsidy the USDOC sought to countervail. The Panel does not appear to have 
recognized this in its review of the USDOC's determinations. Nor, regrettably, have my colleagues. 
In any event, the result is that the Panel considered the USDOC's analysis and reasoning regarding 
various types of government interventions and policies affecting prices to be a priori  insufficient to 
establish price distortion.  
5.255.   I believe t he Panel and the majority were in error  in many ways. Let us look at them in some 
detail. First, the Panel characterized the USDOC's finding as a mere "outlin[ing of] governmental 
involvement in the relevant markets".768 However, the USDOC's analysis led it to conclude that " the 
prices  of steel p roduced by China's SIEs in the domestic market cannot be considered to be 
'market -determined' for purposes of a benchmark analysis under Article  14(d) of the 
SCM Agreement."769 Similarly, the USDOC found that " the entire structure of the steel market is 
distorted by longstanding, systemic and pervasive government intervention, which so diminishes 
the impact of market signals that, based on the records in these proceedings, private prices  cannot 
be considered market based or usable as potential benchmarks."770 The emphasis of the USDOC's 
                                                
763 Supporting Benchmark Memorandum (Panel Exhibit USA -84), pp.  7-9. See also Fina l Benchmark 
Determination (Panel Exhibit CHN -21), p.  21. 
764 Panel Report, para.  7.212.  
765 United  States' appellant's submission, para.  116 (quoting Panel Report, para.  7.206). The 
United  States considers that "only the … Panel's misunderstanding of the appro priate approach can explain its 
characterization of thousands of pages of evidence and analysis as having merely 'outlined government 
involvement' or its conclusion that the USDOC 'did not even attempt to provide a reasoned and adequate 
explanation for its  determinations'". (Ibid., para.  117 (quoting Panel Report, para.  7.206))  
766 Panel Report, para.  7.206. (emphasis original)  
767 In my view, the second sentence of paragraph 4.155 of the Appellate  Body report in US – Carbon 
Steel (India) – that "[p]roposed in -country prices will not be reflective of prevailing market conditions in the 
country of provision when they deviate from a market -determined price as a result of governmental 
intervention in the market" – is more accurately described as one circumstance th at merits a finding that prices 
are not market -determined. T he sentence that immediately precedes it more appropriately lays out the 
applicable standard, namely, that "[a] lthough the benchmark analysis begins with a consideration of in -country 
prices for t he good in question, it would not be appropriate to rely on such prices when they are not market 
determined. " The majority lightly dismissed the United  States' argument, noting that the first two  sentences of 
paragraph 4.155 of the Appellate  Body report in  US – Carbon Steel (India)  together form part of the 
interpretation of Article  14(d). However, it does not follow from isolated quotes taken from previous 
Appellate  Body reports that the Panel properly interpreted Article  14(d), rather than reading into th at provision 
a requirement to establish a "deviation" from a market benchmark as a condition for recourse to out -of-country 
prices.  
768 Panel Report, para.  7.206.  
769 Benchmark Memorandum (Panel Exhibit CHN -20), p.  26. (emphasis added) See also Panel Report, 
para. 7.189 (referring to Benchmark Memorandum (Panel Exhibit CHN -20), p.  26). 
770 United  States' appellant's submission, para.  108 (quoting Supporting Benchmark Memorandum 
(Panel Exhibit USA -84), p.  4). (emphasis added)  WT/DS437/AB/R W 
 
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  analysis in the Benchmark Memorandum was on the extent to which China's SIEs and private actors 
in the steel sector are insulated from market forces and not responsive to market pressures and 
disciplines, i.e. on a qualitative assessment of the nature and effects of the various government 
interventions in the steel market. These government interventions, taken together, are at the very 
least capable of significantly hampering competition in the market and thereby distorting firm s' 
decision -making process with regard to prices.771 This conclusion is in line with the understanding 
that government interventions that do not impact prices directly may distort market conditions to 
such an extent that prices can no longer be considered as  market -determined.772 Therefore, only a 
meaningful examination by the Panel of the USDOC's analysis, reasoning, and underlying evidence 
could allow for a conclusion as to whether or not the USDOC provided in this case a sufficient 
explanation for its decisi on to have recourse to out -of-country prices. Yet, the Panel did not carry 
out any such review of the USDOC's analysis. With respect to the Solar Panels investigation, there 
is no mention whatsoever of the USDOC's analysis based on adverse facts available or of its 
conclusion that "the prices  of polysilicon in China are not based on market conditions."773 
Nevertheless, the Panel's conclusion in paragraph 7.206 of its Report also applies to this 
determination.  
5.256.   Significantly, the majority faulted the USDOC for  an alleged failure to provide "a sufficient 
assessment of how the various forms of government interventions, taken individually or together, 
impacted upon the prices in China's steel market, and specifically the input markets at issue, and 
how they actual ly resulted in the distortion of all the SIE and private prices  of those inputs in those 
markets, as opposed to more generally distorting the market ."774 Where did the majority get this, 
considering that the Panel did not engage in any such assessment and in deed provided no 
substantive analysis of the USDOC's reasoning and underlying evidence? Rather than reviewing the 
Panel's findings to determine whether the Panel had erred in its interpretation and application of 
Article  14(d), it seems to me that the majo rity instead engaged in its own review of the USDOC's 
determinations and, based on that review, uph eld the Panel's findings that were based on the wrong 
legal standard and reflected virtually no engagement with the USDOC's determinations. In this way, 
the majority appears to have assumed the role of a panel in drawing conclusions from its own 
analysis of the record evidence, rather than through an analysis of reasoning provided by the Panel. 
In my view, t hat would appear to exceed the Appellate  Body's manda te to review " issues of law 
covered in the panel report and legal interpretations developed by the panel" .775  
5.257.   Second, the Panel recognized that "an investigating authority may carry out … a market 
analysis at different levels of detail with respect to the p roducts in question, depending on the 
circumstances of the case."776 Having said that, however, the Panel does not appear to have taken 
into account the USDOC's qualitative analysis, which led it to conclude that: (i) prices in the entire 
steel sector could not be considered market -determined and similar rationale applied to the markets 
                                                
771 Thus, for instance, government inter ventions with the purpose of significantly increasing production 
of a certain good in combination with a policy of restricting or creating disincentives for any exports of the said 
good, which may lead to artificially low prices even if that was not the di rect result of the objective of the 
intervention. (See European  Union's third participant's submission, para.  59 (referring to European  Union's 
third party submission to the Panel, para.  64)) 
772 See European  Union's third participant's submission, para.  59 (referring to European  Union's third 
party submission to the Panel, para.  64). As the European  Union points out, price distortion may be evidenced 
by government interventions that have a direct impact on the price of goods in a given market (for example, 
"the appointment of CEOs by the government with an instruction to pursue a specific pricing policy" and/or 
"the manipulation by the government of prices of public tenders"). But there may also be government 
interventions that do not necessarily impact price s directly, but nonetheless distort "market conditions". For 
example, government interventions or policies that increase production and restrict exports may, taken 
together, lead to artificially low in -country prices such that recourse to out -of-country pr ices may be 
warranted.  
773 Final Benchmark Determination (Panel Exhibit CHN -21), p.  21. (emphasis added)  
774 Para. 5.171  above.  
775 DSU, Article 17.6.  
776 Panel Report, para.  7.202.  WT/DS437/AB/R W 
 
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  of the specific steel inputs at issue777; (ii) information needed to conduct an input -specific market 
analysis was not provided by China in response to the USDOC's questionnaire s and, thus, was not 
on the record778; and (iii) the USDOC had data from the original investigations relating to the 
considerable market shares of SIEs in the three input markets at issue.779 This conclusion was based 
"on the totality of circumstances in the Chinese steel sector including, inter alia, the GOC's other 
policy interventions in the sector ( e.g., industrial policies affecting both the suppliers and purchasers 
of the steel inputs, f orced mergers and acquisitions, subsidies, investment restrictions, and export 
restrictions), all of which serve to distort firm -level decisions thereby preventing the existence of 
the market conditions which are necessary for a proper benchmark under Arti cle 14(d) of the 
SCM Agreement."780 In addition, the USDOC reviewed the available evidence on the record, including 
price evidence presented by the GOC781, but concluded that "this evidence does not demonstrate 
that prices in the steel input markets in questio n in China are appropriate for use as benchmarks to 
determine the adequacy of remuneration in the relevant investigations."782 As the Appellate  Body 
has said, where an investigating authority relies on the totality of circumstantial evidence, "this 
imposes u pon a panel the obligation to consider, in the context of the totality  of the evidence, how 
the interaction  of certain pieces of evidence may justify certain inferences that could not have been 
justified by a review of the individual pieces of evidence in isolation."783 While the USDOC did not 
base, and indeed was not required to base, its analysis on input-specific  prices , it appears, even 
from the Panel's description of the USDOC's analysis, that the USDOC did in fact make findings with 
regard to  the specif ic steel markets  at issue.784 The USDOC extended its finding that prices in 
                                                
777 The USDOC found that "[o]verall, the entire structure of the steel market is dis torted by 
longstanding, systemic and pervasive government intervention, which so diminishes the impact of market 
signals that, based on the records in these proceedings, private prices cannot be considered 'market based' or 
usable as potential benchmarks."  The USDOC then concluded that "[t]his finding is based on evidence of 
pervasive government intervention in the steel sector as a whole, which necessarily includes all types of steel 
inputs sold in the PRC. The record evidence does not indicate that this f inding applies with any less force to the 
three specific inputs in question in these proceedings, hot -rolled steel, steel rounds and stainless steel coils, or 
that the market for the three products has been insulated from these sectoral -wide distortions. R ather, the 
Government of the PRC (GOC) has placed on the record information regarding industrial policies that are cited 
in the Benchmark Memorandum and other measures that have served to further distort the market for the 
three inputs. For example, the re cords in these three cases demonstrate the existence of export restraints for 
these three products during the relevant periods of investigation." (Supporting Benchmark Memorandum 
(Panel Exhibit USA -84), pp.  4-5 (fns  omitted))  
778 The USDOC reasoned that, "[i ]n ligh t of the foregoing, a detailed analysis of the specific markets for 
hot-rolled steel, steel rounds and stainless steel coils is not integral to our finding of market distortion. 
However, we nonetheless considered whether to conduct such an analysis,  and we concluded that the 
information needed to conduct an input -specific market analysis is not on the record of these proceedings. 
Although the Department requested information from the GOC to ascertain the structure of the hot -rolled steel, 
steel round s, and stainless steel coils markets, including the identities and state ownership levels of the 
producers operating therein, the GOC's response was incomplete and therefore unreliable for purposes of such 
an analysis. " (Supporting Benchmark Memorandum (Pa nel Exhibit USA -84), p.  5) 
779 In its appellant's submission, the United  States refers to the USDOC's findings in the original 
investigations that , in Pressure Pipe , China reported that it produced 82% of the input; in Line Pipe , based on 
China's incomplete responses, the USDOC concluded that the government produced 100% of the input; in 
OCTG , the USDOC relied on the finding in Line Pipe  to conclude that China's production dominated the market 
for steel rounds, and, finally, China provided a declaration that "[t]aken collectively, SOEs, on an annual basis, 
accounted for roughly 74% to 79% of steel products sales revenues over the 2006 to 2008 period." 
(United  States' appellant's submission, para.  169 (quoting Ordover Report (Panel Exhibit CHN -19), p.  13)) 
Furthermore, in its Section 129 analysis of the private steel sector prices in China, the USDOC found that 
"[t]he interaction of these significant market shares and the GOC's various interventions in favor of maintaining 
the dominant position of the SIEs insulated from market pressures, including through industrial policies, forced 
mergers and acquisitions, subsidies, investment restrictions, and export restrictions, leads to a highly distorted 
market across all ownership types. " (Benchmark Memorandum (Pan el Exhibit CHN -20), p.  30 (emphasis 
added) ) 
780 Final Benchmark Determination (Panel Exhibit CHN -21), pp.  18-19. 
781 See Final Benchmark Determination (Panel Exhibit CHN -21), pp.  9-21. 
782 Final Benchmark Determination (Panel Exhibit CHN -21), p.  21. 
783 Appellate  Body Report, US – Countervailing Duty Investigation on DRAMS , para.  157. (emphasis 
original) See also Appellate  Body Report, Japan – DRAMs (Korea) , para.  131. 
784 See Panel Report, paras.  7.192 -7.195, explaining the USDOC's decision to resort to f acts available in 
the four Section 129 proceedings at issue, as well as the conclusions reached by the USDOC in its Supporting 
Benchmark Memorandum. For these reasons, I also disagree with the majority's view that the USDOC did not 
engage in any specific a ssessment of the four input markets in question, and that, from its conclusions that the 
decision -making process of SIEs in China in general and in the steel sector as a whole was distorted by 
government intervention, the USDOC drew a general inference tha t prices in the specific markets at issue were 
equally distorted.  (Para. 5.170  above ) WT/DS437/AB/R W 
 
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  China's  steel market were not market -determined to these specific markets, observing that, in 
addition to the evidence in the Benchmark Memorandum, "the records in these cases also 
demonstrate the existence of additional government -caused distortions in the markets for the three 
specific inputs" and concluding that "[t]hese facts support a determination that the markets for 
hot-rolled  steel, steel rounds and stainless steel coils are distorted and that domestic Chinese prices 
cannot be considered 'market based' such that they can be relied on to determine the adequacy of 
remuneration."785 
5.258.   Third, the Panel reached its conclusion that "the USDOC failed to explain how government 
interventio n in the market resulted in domestic prices for the inputs at issue deviating from a 
market -determined price"786 for all four benchmark determinations at issue, prior to  analysing 
whether the USDOC disregarded certain input -specific price evidence on the rec ord. Thus, the Panel's 
analysis of whether the USDOC provided a reasoned and adequate explanation for its conclusion 
that in -country prices are not market -determined was divorced from its discussion of the record 
evidence.787 As discussed above, the Panel's separate analysis of whether the USDOC disregarded 
price evidence for the inputs at issue suggests that, in the Panel's view, the USDOC's approach would 
never sufficiently justify recourse to out -of-country prices, independently of the evidence before it. 
This is particularly apparent from the Panel's review of the Section 129 proceedings concerning Solar 
Panels, where the Panel recognized that "there was no relevant information on arm's -length 
in-country prices of polysilicon in China before the USDOC", an d therefore concluded that "China has 
not demonstrated that the USDOC acted inconsistently with Articles  1.1(b) and 14(d) of the 
SCM Agreement" by failing to consider such prices.788 Nevertheless, the Panel ultimately found that 
the USDOC failed to explain "how government intervention in the market resulted  in domestic prices 
for the inputs at issue deviating from a market -determined price".789 This is perhaps the most 
obvious illustrati on of the Panel's approach. The Panel considered that, even in the absence of any 
relevant price data on the record, there was no need to further engage with the USDOC's analysis 
to determine whether it provided a sufficient basis for the USDOC's recourse to out -of-country prices, 
i.e. in a case where there were no in -country prices on the record at all. Indeed, in the Solar Panels 
proceedings, the GOC indicated that it would not be submitting a response to the USDOC's 
Benchmark Questionnaire, thereby faili ng to provide "information concerning the structure of the 
polysilicon market, the type of entities that operate in the polysilicon market, the role of any 
government intervention in the polysilicon market, and the impact of the GOC's role in SIEs and the 
polysilicon market on any private entities supplying the market".790 Even in this context, however, 
the Panel found that the USDOC failed to provide a reasoned and adequate explanation for its 
rejection of in -country polysilicon prices, without any analysis of the adverse facts available on which 
the USDOC relied.  
5.259.   Inexplicably, the majority upheld this finding on the basis that the absence of relevant price 
information on the record did not undermine the Panel's earlier finding that "the USDOC failed to 
explain how government intervention in the market resulted in price distortion also with respect to 
this investigation."791 I see no basis whatsoever in Article  14(d) for this approach, nor do I agree 
with the manner in which the majority reviewed the Panel's an alysis. The USDOC's explanation of 
"whether there are benchmarks within the polysilicon industry in the PRC that can reasonably be 
considered usable indicators of 'prevailing market conditions'" was based on record evidence 
available to the USDOC.792 Moreove r, China did not contest the USDOC's recourse to adverse facts 
available. Given that the Panel did not even begin to examine the substance of the evidence relied 
upon by the USDOC for purposes of establishing whether polysilicon prices are not 
market -determined, it is unclear on what basis the majority upheld the Panel's conclusion, or what 
the majority considered the USDOC was required to do in order to establish that government 
intervention resulted in price distortion.  
                                                
785 Supporting Benchmark Memorandum (Panel Exhibit USA -84), p.  6. 
786 Panel Report, para.  7.206. (emphasis original)  
787 See Panel Report, sections 7.3.3.3.2 -7.3.3.3.3. In addi tion to its finding in paragraph  7.206 of its 
Report, the Panel specifically concluded that, with respect to three of the investigations (Pressure Pipe, Line 
Pipe, and OCTG), the USDOC also failed to consider certain price data on the record. (Panel Report , 
paras.  7.220 and 7.223)  
788 Panel Report, para.  7.222.  
789 Panel Report, para.  7.223. (emphasis original)  
790 Supporting Benchmark Memorandum (Panel Exhibit USA -84), pp.  7-8. 
791 Para. 5.196  above.  
792 Supporting Benchmark Memorandum (Panel Exhibit USA -84), p.  8. WT/DS437/AB/R W 
 
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  5.260.   With respect to the Pressure Pipe,  Line Pipe, and OCTG Section 129 proceedings, the Panel 
expressed the view that, even though the price information provided by the petitioners and by the 
GOC did not distinguish between pricing data from private and government -related entities, such 
data m ay nonetheless be relevant and "[t]here is nothing on the record  of the investigations to 
suggest that the USDOC considered this possibility, and certainly no explanation  of why the 
information submitted was not relevant in this case, if that was its concl usion."793 The Panel similarly 
observed, with respect to the Mysteel Report, that it was "largely ignored" by the USDOC and there 
was no explanation "of why, in its view, the price data on the record did not relate to prevailing 
market conditions in the coun try of provision in the sense of Article  14(d)".794 
5.261.   While I agree that a panel should review whether the investigating authority has adequately 
taken into account alternative explanations presented by the parties to the investigation795, I observe 
that such ex planations must be "plausible" and that, to be rejected, the domestic authority's 
explanation must "not seem adequate in the light of [an] alternative explanation".796 The Panel, 
however, failed to explain how the price evidence could have been relevant to t he USDOC's own 
analysis, and it completely ignored the USDOC's own explanation as to its pertinence. Yet, t he stated 
purpose of the analysis in the Benchmark Memorandum was to address the Appellate  Body's finding 
in the original proceedings that "[p]rices of goods provided by government -related entities other 
than the entity providing the financial contribution at issue must also be examined to determine 
whether they are market determined ."797 As noted above, the Panel never properly engaged with 
the merits o f this analysis. It merely asserted that there is "nothing on the record" to suggest that 
the USDOC considered the possibility of using such price data, and "certainly no explanation" of why 
this data was not relevant. Yet, the USDOC appears to have done p recisely that when it examined 
both SIE and private in -country prices in China through its analysis of the impact of government 
intervention in the relevant markets. Rather than rejecting SIE prices simply because of their source, 
the USDOC found that they  "cannot be considered to be 'market -determined' for purposes of a 
benchmark analysis under Article  14(d)".798 The USDOC reasoned, in this regard, that "[t]he entire 
structure of the Chinese steel market is … distorted by longstanding and pervasive governmen t 
intervention [which], coupled with the Department's findings regarding the role of the GOC in SIEs, 
so distorts and diminishes the impact of market signals that, based on the record in these 
proceedings, all domestic private prices are distorted so that there are no potential benchmarks from 
the domestic industry that can be considered 'market based' in accordance with the SCM  Agreement, 
the [Appellate  Body]'s recent ruling, or the [ Appellate  Body]'s prior rulings on this issue."799 It stands 
to reason that  price information that does not distinguish between SIE and private prices – both of 
which the USDOC found to be distorted – could similarly not serve as such a benchmark.800  
5.262.   The USDOC also addressed the Mysteel Report submitted by China as an exhibit to t he 
Ordover Report, which provided "an economic framework for evaluating whether market prices were 
'distorted' by the government's predominant role as a supplier".801 While it did "not take issue with 
whether Professor Ordover's analytical framework concerni ng 'market power' is useful in the context 
of antitrust analysis", the USDOC observed that this was "not the only [analytical framework] 
permitted by the Appellate  Body for a market distortion analysis; nor … the most relevant or 
explanatory in the context  of the PRC's steel industry, given the multi -faceted nature of government 
intervention in that industry".802 Additionally, the USDOC referred to the indicia and supporting 
information in the Ordover Report but found it unnecessary to address each of them se parately.803 
The USDOC explained, in this regard, that it did not consider "the presence or absence of 
Professor  Ordover's antitrust -based 'indicia'" to be "particularly telling indicia of market distortion", 
                                                
793 Panel Report, para.  7.218. (emphasis added)  
794 Panel Report, para.  7.219.  
795 Para. 5.164  above.  
796 Appellate  Body Report, US – Lamb , para.  106. 
797 Benchmark Memorandum (Panel Exhibit CHN -20), p.  1 (quoting Appellate  Body Report,  
US – Countervailing Measures  (China) , para.  4.49).  
798 Benchmark Memorandum (Panel Exhibit CHN -20), p.  26. 
799 Benchmark Memorandum (Panel Exhibit CHN -20), p.  30. 
800 In this regard, the United  States submits that "the price survey data from China was not usable 
because it was already esta blished that the government's prices are not market -determined prices and that, in 
fact, the government prevents private prices from being determined by market conditions as well." 
(United  States' appellant's submission, para.  156) 
801 Final Benchmark Determination (Panel Exhibit CHN -21), p.  12 (quoting Ordover Report (Panel Exhibit 
CHN-19)). 
802 Final Benchmark Determination (Panel Exhibit CHN -21), p.  15. 
803 Final Benchmark Determination (Panel Exhibit CHN -21), p.  17. WT/DS437/AB/R W 
 
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  and that "[f]or example, the continued participat ion of private suppliers in the market is not 
particularly probative when market entry and exit decisions, and 'profitability' itself, are distorted by 
government intervention."804  
5.263.   Thus, instead of being "largely ignored"805, as the Panel asserted, and the ma jority appears 
to have implied, in -country prices and the Ordover Report were discussed by the USDOC, but their 
relevance was rejected. This was not only because their underlying rationale was different from that 
of the USDOC, but also because the evidence  therein was not particularly probative for, and did not 
cast doubt on, its own analysis in the Benchmark Memorandum. Furthermore, even though the 
USDOC rejected both SIE and private prices in the entire steel sector in China as suitable benefit 
benchmarks , it nevertheless sought to analyse relevant price data on the record but found that this 
data was insufficient to conduct any meaningful analysis of whether private prices align with 
SIE prices.806 In its analysis, however, the Panel simply took issue with the absence of reference by 
the USDOC to the prices in the Mysteel Report, thereby disregarding the entirety of the USDOC's 
analysis in the Benchmark Memorandum as to why these same prices are not market -determined.807 
5.264.   I fail to understand how the Mysteel prices would have been relevant in this regard. The 
Panel never explained why it considered the Mysteel price information to be "on its face relevant" to 
the USDOC's analysis under Article  14(d).808 The Panel also never d iscussed any arguments or 
evidence in the Ordover Report, other than the Mysteel pric ing data, such as the indicia related to 
the vibrancy of the private steel sector in China.809 Therefore, I do not believe the majority had any 
basis for upholding the Panel 's conclusion , based  on the Panel's assertion , that the USDOC did not 
sufficiently examine indicia such as fluctuation of steel prices over time, fragmentation of the 
industry, or the existence of private investment.810  
5.265.   For all of these reasons, I disagree with the majority's view that "although the USDOC had 
discretion to choose its approach in establishing whether in -country prices were distorted, it would 
have been necessary to explain in its determinations why the approach it had adopted and the 
conclusi ons it had reached were still valid, in light of the Mysteel pricing data and the alternative 
narrative of the Ordover Report ."811 That is precisely what the USDOC did. Fundamentally, it was for 
the Panel – not the Appellate  Body – to conduct an analysis of the evidence on the record and 
examine it against the USDOC's analysis.  
5.266.   I therefore read the Panel's conclusion that "there is no explanation by the USDOC of why, 
in its view, the price data on the record did not relate to prevailing market conditions in the country 
                                                
804 Final Benchmark De termination (Panel Exhibit CHN -21), p.  17. The USDOC also relied on additional 
evidence, such as the arguments and information in the Szamosszegi Report, which supported the analysis and 
conclusions in the Benchmark Memorandum. (Ibid.)  
805 Panel Report, para . 7.219.  
806 The USDOC stated that "based on the totality of circumstances present in the Chinese steel sector, 
we find it is not necessary to conduct an analysis of whether the prices of government and private providers 
align due to the market power of the government providers. Nonetheless, for the purposes of these 
Section  129 proceedings we have reviewed the available record information with a view towards whether it 
might be possible to analyze whether SIE market dominance has caused price alignment in th e context of a 
CVD proceeding. We conclude that neither the available record evidence on prices in these three proceedings 
nor the evidence on prices likely to be available to an investigating authority is likely to provide additional 
probative insight on the question of whether private suppliers have aligned their prices with the prices charged 
by predominant government input providers." (Final Benchmark Determination (Panel Exhibit CHN -21), p.  19 
(fn omitted))  
807 In this regard, the United  States argues th at "[t]he Mysteel prices are precisely the subject of the 
USDOC's analysis in the benchmark memoranda – that is, they are among the Chinese prices the USDOC 
described as being distorted by the numerous government interventions identified on the record." 
(United States' appellant's submission, para.  151 (referring to Final Benchmark Determination (Panel Exhibit 
CHN-21), pp.  12-22)) 
808 Panel Report, para.  7.220.  
809 See Panel Report, paras.  7.218 -7.220.  
810 Para. 5.180  above.  
811 Para. 5.185  above. The United  States  also points to the fact that the term "private supplier(s)" in the 
Ordover Report is used as shorthand to include both government -owned suppliers other than those that 
provided the financial contribution in question in these proceedings and privately owne d suppliers. 
(United  States' appellant's submission, para.  151) It is thus unclear to which producers the Ordover Report is 
referring when discussing "the indicia pertinent to the inquiry of whether private suppliers have been forced to 
price at artificial ly low levels as a result of the government's exercise of predatory market power." (Ordover 
Report (Panel Exhibit CHN -19), p.  16) WT/DS437/AB/R W 
 
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  of provision in the sense of Article  14(d)"812 as a reflection of the Panel's overly narrow application 
of the standard requiring the conduct of a price analysis as a condition for recourse to out -of-country 
prices. Despite the fact that the Pane l rejected China's assertion that the only situation that merits 
recourse to out -of-country prices is where the government is so predominant that it effectively 
determines the prices of the goods in question, it appears that the Panel was looking for a kin d of 
price alignment analysis that requires a quantification of the impact of government intervention on 
in-country prices by establishing the extent to which they deviate from a market -determined 
benchmark. In endorsing the Panel's standard, the majority appears also to have required an 
analysis of in -country prices as a condition for recourse to an alternative benchmark, even in cases 
where in -country prices are not available on the record. In this way, the result of the majority's 
analysis contradicts it s stated understanding of Article  14(d) as allowing for different types of 
analysis and evidence for purposes of arriving at a proper benchmark, depending on the 
circumstances of the case.  
5.267.   In sum, the task of the Panel in the present case was to examine wh ether the USDOC 
provided a reasoned and adequate explanation for its decision to have recourse to out -of-country 
prices under Article  14(d). Rather than properly engaging with that question, the Panel simply found 
that the USDOC "did not even attempt" to p rovide any explanation for its rejection of in -country 
prices and disregarded price evidence on the record, without any substantive assessment of the 
USDOC's analysis and the evidence relied upon by it, including World Bank reports, Organization for 
Econom ic Cooperation and Development ( OECD ) working papers, economic surveys, Articles  and 
expert opinions, and legislative and administrative documents.813 In response to the arguments in 
the Ordover Report, the USDOC also relied on evidence from certain other ex pert opinions that the 
Panel did not even mention in its Report.814 The Panel's findings with regard to the USDOC's 
benchmark determinations therefore reflect its understanding that the type of analysis conducted 
by the USDOC can never satisfy the standard f or recourse to out -of-country prices under 
Article  14(d). This, as I see it, constitutes an error in the application of this provision. Contrary to 
what the majority appears to have implied, the USDOC was not required to further engage with the 
in-country prices on the record when it had already found those prices to be distorted, and the Panel 
could not have properly made a finding that the United  States acted inconsistently with its 
obligations under Article  14(d) in the absence of any substantive engagem ent with the USDOC's 
analysis or with the evidence available on the record going directly to the question of price distortion.  
5.268.   In light of the obvious shortcomings in the Panel's analysis, I do not agree with the majority's 
decision to uphold the conclusions reached by the Panel.  
5.269.   This should have been a relatively simple issue for the Appellate  Body to decide on appeal, 
for the Panel did not do its job in reviewing th e USDOC record, and applied the wrong legal standard. 
However, I believe the work of the Division was made unduly complicated by the majority's 
engagement with the evidence , effectively acting as a panel in the first instance, and, having done 
that, articu lating an incoherent legal standard. I am aware that this dissent, also, does not make 
easy reading. But I thought it important  to explain at length the errors at both the Panel and majority 
levels on this issue so that  this dissent  may serve as guidance for future litigants and panels.  
5.5.3   Specificity  
5.270.   I believe the Panel and majority fundamentally misunderstand the role of Article  2.1 within 
the SCM  Agreement, give the term "subsidy programme" a meaning that is not supported by the 
text and that is unreasonable, and ignore reasoning and analysis by the USDOC that was part of the 
case and should have been considered. The Panel and majority decisions, would, I believe, if followed 
in the future, enable circumvention of the disciplines of t he SCM  Agreement and even discourage 
the transparent management of subsidies.815  
5.271.   A specificity inquiry under Article  2.1 of the SCM  Agreement is distinct from the financial 
contribution and benefit analyses contemplated under Articles  1 and 14. It is not co ncerned with 
redetermining the existence of a "subsidy". As the Appellate  Body has said, "Article  2.1 assumes the 
                                                
812 Panel Report, para.  7.219.  
813 See Benchmark Memorandum (Panel Exhibit CHN -20). 
814 Such as, for instance, the Grossman and Szamosszegi Reports. (See Final Benchmark Determination 
(Panel Exhibit CHN -21), pp.  15-17) 
815 See Panel Report, US – Countervailing Measures (China) , para. 7.240.  WT/DS437/AB/R W 
 
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  existence of a financial contribution that confers a benefit, and focuses on the question of whether 
that subsidy is specific. "816 Because "fina ncial contribution" and "benefit" are determined separately, 
the only question that remains for an analysis under Article  2.1 is whether a subsidy is "specific to 
an enterprise or industry or group of enterprises or industries (referred to in this Agreemen t as 
'certain enterprises')".817 
5.272.   Subparagraphs (a) and (b) of Article  2.1 set forth "principles" (rather than rules) for 
analysing the "specificity" of a subsidy on a case -by-case basis. Article  2.1(c) addresses de facto 
specificity by providing that, "notwi thstanding any appearance of non -specificity", "other factors" 
may be considered if there are "reasons to believe that the subsidy may in fact be specific". One 
factor identified in the text is "use of a subsidy programme by a limited number of certain 
enterprises".  
5.273.   The term "subsidy programme" appears only twice in the entire SCM  Agreement: in the 
second sentence of Article  2.1(c) (" use of a subsidy programme by a limited number of certain 
enterprises..."), and in the third sentence ("...the length of tim e during which the subsidy 
programme has been in operation").818 Its logical and linguistic purpose is simply to facilitate an 
inquiry into whether a financial contribution and benefit that have been identified pursuant to 
Article  1 have been granted to a li mited number of enterprises or industries or groups of enterprises 
or industries (i.e. "certain enterprises"), by providing a basis, or starting point, for that inquiry. 
To do that, it helps to give conceptual form to the financial contribution and benefit  by calling them 
a "subsidy programme". That, in my view, is the sole  purpose and only reasonable reading of the 
term "subsidy programme" in Article  2.1(c).  As the Appellate  Body has said, Article  2.1(c) focuses 
on "whether there are reasons to believe that a subsidy is, in fact, specific, even though there is no 
explicit limitation of access to the subsidy set out in, for example, a law, regulation, or other official 
document."819 Once a subsidy programme has been identified, then the question is whether there is 
"use of [that] subsidy programme by a limited number of certain enterprises". The requisite analysis 
should be rather straightforward where, as here, the subsidy takes the form of a government 
provision of goods that can be used  only by certain downstream purchasers (i.e. a circumscribed 
group of entities and/or industries).  Indeed, in such cases  "the nature of the transfer makes the 
class of recipients more likely to be ide ntified and circumscribed, [and] this … makes it more likely 
that an investigating authority or panel may reach a conclusion that the subsidy is specific."820  
5.274.   Significantly, a s the Appellate  Body has said,  "the relevant 'subsidy programme', under 
which the subsidy at issue is granted, often may already have been identified and determined to 
exist in the process of ascertaining  the existence of the subsidy at issue under Article  1.1."821 
Surprisingly, the Panel and the majority seem not to have recognized this.  Yet, there are several 
ways by which a "subsidy programme" may be implemented and, thus, evidenced. One way is "by 
a systematic series of actions pursuant to which financial contributions that confer a benefit have 
been provided to certain enterprises".822 Contrary to what the Panel and the majority appear to have 
found, it is this "systematic" series of actions that, in itself, constitutes  the relevant "subsidy 
                                                
816 Appellate  Body Report, US – Countervailing Measures  (China) , para.  4.144. (emphasis omitted)  
817 The chapeau  of Article 2.1 states: " In order to determine whether a subsidy, as defined in 
paragraph  1 of Article  1, is specific to an enterprise or industry or group of enterprises or industries (referred 
to in this Agreement as "certain enterprises") within the jurisdiction of the granting authority, the following 
principles shall apply". As i n US – Anti-Dumping and Countervailing Duties (China) , the Appellate  Body 
emphasized that the use of the term "principles ", in the chapeau  of Article  2, "instead of, for instance, 
'rules'  – suggests that subparagraphs (a) through (c) are to be considered within an analytical framework that 
recognizes and accords appropriate weight to each principle." (Appellate  Body Report, US – Anti-Dumping and 
Countervailing Duties (China) , para.  366) Article  2.1 should therefore not be read to set out rigid 
postulates  – instead, the principles set out are best understood as analytical tools that provide investigating 
authorities certain fl exibility in fulfilling their task.  
818 The original panel in this dispute noted that "[t]he fact that, in Article  2, the term 'programme' is 
used only in the context of de facto specificity, combined with the fact that the  Agreement provides no 
definition o f the term … suggests that 'subsidy programme' should be interpreted broadly" and that "[a] broad 
interpretation gives due recognition to the reality that 'subsidies can take many forms and can be provided 
through many different kinds of mechanisms, some m ore and some less explicit'." ( Panel Report,  
US – Countervailing Measures (China) , para.  7.240 (quoting Panel Report, US – Anti-Dumping and 
Countervailing Duties (China) , para.  9.32) ) 
819 Appellate  Body Report, US – Countervailing Measures (China) , para. 4.141.  
820 Appellate  Body Report, US – Carbon Steel (India) , para.  4.393.  
821 Appellate  Body Report, US – Countervailing Measures (China) , para.  4.144.  
822 Appellate  Body Report, US – Countervailing Measures (China) , para.  4.141.  WT/DS437/AB/R W 
 
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  programme", particularly where, as here, the alleged subsidy consists of the "provision of goods"  
within the meaning of Article  1.1(a)(1)(iii), for less than adequate remuneration.823 I see no basis 
in Article  2.1(c) to  require an investigating authority to demonstrate, first, "the existence of a 
subsidy within the meaning of Article  1.1", and, second , "a 'plan or scheme' pursuant to which this 
subsidy has been provided to certain enterprises".824 Instead,  "to establish that the provision of 
financial contributions constitutes  a plan or scheme under Article  2.1(c), an investigating authority 
must have adeq uate evidence of the existence of a systematic  series of actions pursuant to which 
financial contributions that confer a benefit are provided to a limited number of certain 
enterprises."825 The Appellate  Body, correctly, has not previously suggested that an investigating 
authority must examine the volum e and/or the frequency of transactions conferring a "benefit" to 
determine whether "subsidies" have been "systematically" granted pursuant to a "subsidy 
programme". Nor has it suggested that "systematicity" of this kind  must be shown to exist – contrary 
to what the Panel and the majority seem to have implied. In short, the Panel read into Article  2.1(c) 
a requirement that is not in that text and is contrary to previous Appellate  Body decisions, and the 
majority has endorsed the Panel's doing so.  
5.275.   China sugge sts that to establish the existence of a "subsidy programme", the USDOC was 
required to demonstrate that the "inputs at issue are produced and provided to industrial users at 
subsidized prices under the instruction, guidance or intervention of the Chines e government."826 The 
specificity analysis under Article  2.1(c) is not concerned with redetermining the existence of 
"subsidized prices", or whether the inputs at issue are produced and provided to downstream 
purchasers pursuant to "government instructions".827 While provision of inputs at subsidized prices 
by a government or public body is relevant to the enquiry under Article  1 of the SCM  Agreement, 
the question of whether a measure is consistent with Article  2.1(c) does not require a 
"redetermination" of the e xistence of a subsidy, or its constituent elements. To hold otherwise would, 
in effect, use Article  2.1(c) to supersede significant parts of Article  1, contrary to several principles 
of treaty interpretation.  
5.276.   Thus, I believe the Panel erred by interpreting  the obligation under Article  2.1(c) as a 
requirement to demonstrate that subsidies have been "systematically" provided pursuant to an 
overarching "subsidy programme". And I believe the majority erred to the extent it agreed with the 
Panel on this point. I f a finding of de facto  specificity required an investigating authority to 
demonstrate the existence of "systematic" subsidization pursuant to a formally implemented 
government plan or scheme by "way of a reasoned and adequate explanation", the disciplines  of the 
SCM Agreement could be circumvented by atomizing repeat subsidization into legally distinct acts, 
even though an analysis of subsidization over time would reveal de facto  "use of a subsidy 
programme by a limited number of certain enterprises".  
5.277.   Regarding the Panel's review of the USDOC's findings, I further note that, in assessing 
whether the USDOC had an objective basis to carry out a specificity analysis under Article  2.1(c), 
the Panel made no reference to the reasoning and analysis provided by the  USDOC in the context of 
the original  investigations, other than to note that the "underlying documents from the original 
investigation, for the OCTG and other investigations, [had] not been submitted on the record of 
these compliance proceedings."828 The Pa nel appears thereby to have precluded the possibility that 
the underlying "subsidy programmes" may have already been identified in the context of the 
USDOC's public body, financial contribution, and benefit analyses in each investigation.  Yet, as noted 
by the original panel, the application in each of the challenged investigations "alleges that a specific 
input is being provided by SOEs for less than adequate remuneration".829 The original panel further 
found that, "[i]n the absence of any written instrument or explicit pronouncement, the USDOC 
concluded that this type of systematic activity or series of activities – the consistent provision by the 
                                                
823 See Appellate  Body Repor t, US – Countervailing Measures (China) , para.  4.143.  
824 See Panel Report, para.  7.267.  The Panel suggested that, in order to demonstrate the existence of a 
"subsidy programme", an investigating authority must have "evidence of: (a) the existence of a subsi dy within 
the meaning of Article  1.1; and (b) a 'plan or scheme' pursuant to which this subsidy has been provided to 
certain enterprises". (Ibid. (emphasis added))  
825 Appellate  Body Report, US – Countervailing Measures (China) , para.  4.143. (italics origina l; 
underlining added)  
826 China's appellee's submission, para.  201. 
827 United  States' appellant's submission, para.  194 (quoting Appellate  Body Report,  US – Countervailing 
Measures (China) , para.  4.144).  
828 Panel Report, fn  449 to para.  7.276. (emphasis added)  
829 Panel Report, US – Countervailing Measures (China) , para.  7.242.  WT/DS437/AB/R W 
 
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  SOEs in question of inputs for less than adequate remuneration – constituted a subsidy 
programme."830 In faulting t he original panel for not providing "case -specific discussion or references 
to the USDOC's determinations of specificity challenged by China"831, the Appellate  Body referred 
specifically to the USDOC's determinations and materials from the original  investiga tions. It is 
therefore difficult to understand how the compliance Panel could find the USDOC to have failed to 
have identified the underlying subsidy programmes, as required under Article  2.1(c), without any 
analysis of those materials.  
5.278.   Leaving this aside,  while the focus of the USDOC's analysis in the Section 129 determinations 
was on establishing the "length of time during which the subsidy programme ha [d] been in 
operation"832, the USDOC also reviewed the Appellate  Body's findings in the original proceedin gs, 
quoted from them, and identified a "systematic series of actions" pursuant to which it considered 
the subsidies to have been provided. In doing so, the USDOC referred to the "case specific purchase 
information" it had compiled for each of the proceedin gs, broken down by the relevant: (i) input 
producer; (ii) respondent; (iii) input; and (iv) number of sales transactions.833 Moreover, the USDOC 
found, based on the GOC's responses to its questions in five of the Section 129 proceedings, and 
relying on " facts available " with respect to the remaining seven proceedings, for which the GOC had 
not provided adequate information, that "state -owned enterprises began producing and selling the 
inputs at some point during the period covered by the first Five -Year Plan (1953 -1957) and possibly 
earlier ."834  
5.279.   Rather than faulting the USDOC for not providing "a reasoned and adequate explanation for 
its conclusions regarding the existence of a subsidy programme", the Panel should, in my view, have 
carefully examined the USDOC's reasoning and analysis, including t he analysis provided by the 
USDOC in the context of its public body, financial contribution, and benefit findings in order to assess 
whether the USDOC had identified  the "subsidy programmes" that it was investigating, and thus had 
an objective basis to car ry out a de facto specificity analysis under Article  2.1(c). In this regard, 
I note that the USDOC itself referred to the provision of inputs for less than adequate remuneration 
as the relevant "programmes" in each case, and posed questions in relation to those "programmes" 
prior to making its preliminary findings "that there is adequate evidence in each of the 
12 [countervailing duty] investigations that public bodies systematically provided [the relevant 
inputs] for [less than adequate remuneration] to pr oducers in the PRC."835 It was these 
"programmes" that were the very subject of the countervailing duty investigations carried out by 
the USDOC, including in the context of its public body and benefit analyses. What is more, the Panel 
does not appear to have  considered the context in which the USDOC carried out its de facto  specificity 
analysis, including that the USDOC was required to "make its determination based upon facts on the 
administrative record" due to incomplete responses submitted by the GOC.836 Whether an 
explanation by an investigating authority is "adequate" cannot be decided in a vacuum – without 
regard to the evidence and arguments to which it seeks to respond. This is so particularly where, as 
here, the investigating authority has been required  to make its determination on the basis of facts 
available.  
5.280.   For all these reasons, I consider that the Panel erred in finding that China has demonstrated 
that the United  States acted inconsistently with Article  2.1(c) of the SCM  Agreement in the Pressure 
Pipe, Line Pipe, Lawn Groomers, Kitchen Shelving, OCTG, Wire Strand, Seamless Pipe, Print 
Graphics, Aluminum Extrusions, Steel Cylinders, and Solar Panels Section 129 proceedings. I also 
                                                
830 Panel Report, US – Countervailing Measures (China) , para.  7.242.  
831 Appellate  Body Report, US – Countervailing Measures (China) , paras.  4.151 and 4.171.  
832 This stands to reason given that  the recommendations and rulings of the DSB concerned the 
USDOC's failure to take into account the "duration" of the alleged subsidy programmes and did not include any 
findings of inconsistency with respect to the USDOC's identification of a "subsidy progr amme" as referred to in 
the second  sentence of Article  2.1(c).  
833 The USDOC found that "public bodies systematically provided stainless steel coil, hot -rolled steel, 
wire rod, steel rounds, caustic soda, green tubes, primary aluminum, seamless tubes, standard commodity 
steel billets and blooms, polysilicon, and coking coal for [less than adequate remuneration] to producers in 
[China]", and immediately thereafter referred to these as the relevant "subsidy programmes". (Preliminary 
Determination on Publi c Bodies and Input Specificity (Panel Exhibit CHN -4), p.  19) 
834 Final Section 129 Determination (Panel Exhibit CHN -5), pp.  5-6. (emphasis added)  
835 Panel Report, para.  7.277 (quoting Preliminary Determination on Public Bodies and Input Specificity 
(Panel Exh ibit CHN -4), p.  19). The relevant inputs cited by the USDOC were stainless steel coil, hot -rolled 
steel, wire rod, steel rounds, caustic soda, green tubes, primary aluminum, seamless tubes, standard 
commodity steel billets and blooms, polysilicon, and coki ng coal.  
836 Final Section 129 Determination (Panel Exhibit CHN -5), p.  6. WT/DS437/AB/R W 
 
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  consider that the majority's decision upholding the Panel's finding i s wrong in several important 
respects and would, if followed, enable circumvention of the disciplines of the SCM Agreement and 
even discourage the transparent management of subsidies . I believe such a result is not 
contemplated under the SCM  Agreement, was  not intended by the SCM  Agreement's drafters, and 
is not in accordance with customary principles of treaty interpretation.  
5.5.4   Overall summary  
5.281.   I respectfully suggest that  it would be beneficial for the dispute settlement system if future 
litigants , and panels  in adherence to their mandate under Article 11 of the DSU , would continue to 
take into account separate opinions such as this along with relevant past Appellate  Body reports, 
without regarding either as necessarily determinative.  
6  FINDINGS AND CONCLUSI ONS 
6.1.  For the reasons set out in this Report, the Appellate  Body makes the following findings and 
conclusions.837 
6.1  The Panel's terms of reference  
6.2.  The Panel correctly assessed the scope of the measures falling within its terms of reference in 
these Article  21.5 proceedings based on the criteria of their relationship in terms of nature, timing, 
and effects.  
a. We therefore uphold  the Panel's findings, in  paragraphs 7.320, 7.347, 8.1.g, 
and 8.1.h.i -ii, iv, and vi  of the Panel Report, that the subsequent reviews at issue and 
the Final Determination in the original Solar Panels investigation fell within the Panel's 
terms of reference under Article  21.5 of th e DSU.  
6.2  Article  1.1(a)(1) of the SCM  Agreement  
6.3.  The central focus of a public body inquiry under Article  1.1(a)(1) is not whether the conduct  
that is alleged to give rise to a financial contribution under subparagraphs (i) -(iii) or the first clause 
of subparagraph (iv) – i.e. the particular transaction at issue – is "logically connected" to an identified 
"government function". Rather, the rele vant inquiry hinges on the entity engaging in that conduct, 
its core characteristics, and its relationship with government, seen in light of the legal and economic 
environment prevailing in the relevant Member. This comports with the fact that a "governmen t" 
(in the narrow sense) and a "public body" share a degree of commonality or overlap in their essential 
characteristics – i.e. they both possess, exercise, or are vested with governmental authority. Once 
it has been established that an entity is a public body, then the conduct of that entity shall be directly 
attributable to the Member concerned for purposes of Article  1.1(a)(1). While the conduct of an 
entity may constitute relevant evidence to assess its core characteristics, an investigating authority 
need not necessarily focus on every instance of conduct in which that relevant entity may engage, 
or on whether each such instance of conduct is connected to a specific "government function". The 
Panel was thus correct in rejecting China's reading of Articl e 1.1(a)(1) as requiring that an 
investigating authority inquire into whether an entity is exercising a government function when 
engaging in one of the specific conducts listed in subparagraphs  (i)-(iii) and the first clause of 
subparagraph (iv).  
a. We there fore uphold  the Panel's finding, in paragraphs 7.36 and 7.106 of the 
Panel  Report, that the legal standard for public body determinations under 
Article  1.1(a)(1) of the SCM  Agreement does not prescribe a connection of a particular 
degree or nature that mus t necessarily be established between an identified 
government function and the particular financial contribution at issue.  
b. We also uphold  the Panel's conclusion, in paragraph 7.36 of the Panel  Report, that 
"China has failed to demonstrate that the USDOC's  public body determinations in the 
                                                
837 The separate opinion of one Division member regarding public body, benefit, and specificity is set 
forth in section 5.5 of this Report.  WT/DS437/AB/R W 
 
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  relevant Section 129 proceedings are inconsistent with Article  1.1(a)(1) of the 
SCM Agreement because they are based on an improper legal standard."  
c. Having upheld the Panel's interpretive findings, we do not further addre ss China's 
additional claims with respect to the Panel's findings in paragraphs  7.72, 7.103, 
and 7.105 -7.106 of the Panel  Report.  
6.4.  The Panel correctly found that the Public Bodies Memorandum bears a "close relationship" to 
the declared "measure taken to com ply", namely, the USDOC's public body determinations in the 
relevant Section 129 proceedings, and with the recommendations and rulings of the DSB in the 
original proceedings. The Panel was also correct that China could not have challenged the Public 
Bodies  Memorandum as part of its complaint in the original proceedings.  
a. We therefore uphold  the Panel's finding, in paragraph  7.120 of the Panel  Report, that 
the Public Bodies Memorandum falls, "as such", within the scope of these Article  21.5 
proceedings.  
6.5.  China's claim on appeal with respect to the WTO -consistency of the Public Bodies Memorandum 
"as such" is premised on China's reading of Article  1.1(a)(1) as requiring, in each case, the 
establishment of a "clear logical connection" between a "government functi on" identified by the 
investigating authority and the conduct alleged to give rise to a financial contribution.  
a. Having rejected this reading of Article  1.1(a)(1), we do not further address  China's claim 
concerning the Panel's conclusion, in paragraph 8.1.b  of the Panel  Report, that China 
has not demonstrated that the Public Bodies Memorandum is inconsistent "as such" with 
Article  1.1(a)(1).  
b. We also do not further address  the participants' claims concerning the Panel's 
intermediate findings leading to that conclusion, namely: (i) the Panel's finding, in 
paragraph 7.133 of the Panel  Report, that the Public Bodies Memorandum "can be 
challenged 'as  such' as a rule or norm of general or prospective application"; and (ii)  the 
Panel's finding, in paragraph 7.142 o f the Panel  Report, that "the Public Bodies 
Memorandum does not restrict in a material way the USDOC's discretion to act 
consistently with Article  1.1(a)(1)." The Panel's conclusion that China has not 
demonstrated that the Public Bodies Memorandum is incon sistent "as  such" with 
Article  1.1(a)(1), therefore, stands.  
6.3  Articles  1.1(b) and 14(d) of the SCM  Agreement  
6.6.  We disagree with China's proposition that the circumstances potentially justifying recourse to 
out-of-country prices under Article  14(d) of the SCM  Agreement are limited to those in which the 
government effectively determines the price at which the good is sold, including more specifically, 
where the government sets prices administratively, is the sole supplier of the good, or possesses 
and exercises market power as a provider of the good so as to cause the prices of private suppliers 
to align with a government -determined price. Central to the inquiry under Article  14(d) in identifying 
an appropriate benefit benchmark is the question of whether in -country prices are distorted  as a 
result of government intervention. What would allow an investigating authority to reject in -country 
prices is a finding of price distortion resulting from government intervention in the market, not the 
presence of government i ntervention itself. Different types of government interventions could result 
in price distortion, such that recourse to out -of-country prices is warranted, beyond the situation in 
which the government effectively determines the price at which the good is s old. The determination 
of whether in -country prices are distorted must be made case by case, based on the relevant 
evidence in the particular investigation and taking into account the characteristics of the market 
being examined, and the nature, quantity, and quality of the information on the record.  
a. We therefore uphold  the Panel's finding, in paragraph 7.174 of the Panel Report, that 
Article  14(d) does not limit the possibility of resorting to out -of-country prices to the 
situation in which the government  effectively determines the price at which the good is 
sold. WT/DS437/AB/R W 
 
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  6.7.  The specific type of analysis that an investigating authority must conduct for purposes of 
arriving at a proper benchmark under Article  14(d), as well as the types and amount of evidence 
that wou ld be considered sufficient in this regard, will necessarily vary depending on a number of 
factors in the circumstances of the particular case. However, in all cases, the investigating authority 
has to establish and adequately explain how price distortion actually results from government 
intervention. There may be different ways to demonstrate that prices are actually distorted, including 
a quantitative assessment, price comparison methodology, a counterfactual, or a qualitative 
analysis. While evidence of direct impact of the government intervention on prices may make the 
finding of price distortion likely, evidence of indirect impact may also be relevant. At the same time, 
establishing the nexus between such indirect impact of government intervention and p rice distortion 
may require more detailed analysis and explanation. Independently of the method chosen by the 
investigating authority, it has to adequately take into account the arguments and evidence supplied 
by the petitioners and respondents, together w ith all other information on the record, so that its 
determination of how prices in the specific markets at issue are in fact distorted as a result of 
government intervention would be based on positive evidence. The Panel's reasoning is consonant 
with our interpretation of Article  14(d). We further agree with the Panel's conclusion that 
"[a]n investigating authority must explain how government intervention in the market results  in 
in-country prices for the inputs at issue deviating from a market -determined price", insofar as it 
clarifies that the investigating authority has to make a finding of price distortion resulting from 
government intervention. In sum, we do not see that the Panel required one single type of 
quantitative or price comparison analysis in  all cases.  
6.8.  With respect to the Panel's finding, in paragraph  7.206 of the Panel  Report, that "the USDOC 
failed to explain how government intervention in the market resulted  in domestic prices for the 
inputs at issue deviating from a market -determined pri ce", we understand the Panel to have rejected 
as insufficient and problematic the USDOC's  determination that prices in the entire steel and 
solar-grade polysilicon sectors in China cannot be used as benefit benchmarks in the absence of a 
specific assessmen t of how government intervention had resulted in price distortion in the four input 
markets at issue. Furthermore, we understand the Panel to have been concerned with the focus of 
the USDOC's analysis in the Benchmark Memorandum on the pervasiveness of gov ernment 
involvement in China's SIEs' decision -making in general and in the steel sector as a whole, rather 
than on how specifically this involvement influenced pricing decisions regarding the inputs at issue 
and resulted in price distortion with respect to  the determinations at hand. Therefore, as we see it, 
the Panel's analysis of the determinations at issue led it to conclude that the USDOC did not provide 
a reasoned and adequate explanation of how the widespread government interventions described in 
the Benchmark Memorandum resulted in the distortion of in -country prices in the specific input 
markets and regarding the specific products subject to each of the challenged USDOC determinations 
at issue.  
6.9.  With respect to the Panel's finding, in paragraph  7.220  of the Panel  Report, that "the USDOC 
failed to adequately explain its rejection of in -country prices in light of the evidence before it", we 
understand the Panel to have considered that the USDOC's rejection of in -country prices was merely 
consequential t o its findings of market distortion in the steel sector generally, which the Panel 
considered not to provide a reasoned and adequate explanation of how government intervention 
resulted in price distortion. Furthermore, although the focus of the USDOC's ana lysis in the 
Benchmark Memorandum was different from the one underlying the Ordover Report, the alternative 
explanations and pricing data on the record may have nevertheless been relevant for examining 
whether price distortion actually existed in the input  markets at issue. Yet, the USDOC 
determinations do not explain why, in light of the price data and alternative explanations, the 
conclusion it reached for the entire steel sector necessarily applies to all specific input markets. In 
addition, it would hav e been relevant for the USDOC to take into account in its analysis the 
input-specific Mysteel pric ing data on the record and examine the extent to which it affected its 
conclusions of price distortion. Finally, in assessing whether it would be possible to conduct an 
analysis of price alignment in the Final Benchmark Determination, the USDOC dismissed the price 
data on the record largely on the basis of its prior conclusion that all in -country steel prices in China 
were distorted by government intervention, which could not in itself constitute a sufficient basis for 
rejecting the relevance of the Mysteel da ta. 
a. We therefore find that the United  States has not established that the Panel erred in its 
interpretation and application of Article  14(d) of the SCM  Agreement in finding that the 
USDOC failed to explain, in the OCTG, Solar Panels, Pressure Pipe, and Lin e Pipe WT/DS437/AB/R W 
 
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  Section  129 proceedings, how government intervention in the market resulted  in 
domestic prices for the inputs at issue deviating from a market -determined price.  
b. In addition, we find that the United  States has not established that the Panel erred in  
its finding that, in the Section  129 proceedings on Pressure Pipe, Line Pipe, and OCTG, 
the USDOC failed to consider price data on the record.  
c. Consequently, we uphold  the Panel's findings , in paragraphs 7.223 -7.224 and 8.1.c of 
the Panel Report, that the  United  States acted inconsistently with Articles  1.1(b) 
and 14(d) of the SCM  Agreement in the OCTG, Solar Panels, Pressure Pipe, and Line 
Pipe Section  129 proceedings.  
6.4  Article  2.1(c) of the SCM  Agreement  
6.10.   As we see it, where an investigating authority make s a finding of de facto  specificity based 
on an analysis of whether there has been "use of a subsidy programme by a limited number of 
certain enterprises", consideration of the length of time during which the subsidy programme has 
been in operation presupp oses that the relevant programme has been properly identified. We 
therefore disagree with the United  States to the extent it suggests that an investigating authority 
can be found to have complied  with the requirement under Article  2.1(c) to consider the "d uration" 
of a subsidy programme regardless  of whether it has properly identified that programme in the first 
place. Nor do we agree with the United  States that the Panel was required to limit its review to the 
USDOC's examination of the "duration" of the r elevant subsidy programmes, without considering 
whether the USDOC had properly identified those programmes either in the context of the original 
investigations or in the context of the relevant Section 129 proceedings.  
6.11.    With respect to the Panel's interpre tation and application of Article  2.1(c), we agree with the 
Panel that , while "evidence of 'a systematic series of actions' may be particularly relevant in the 
context of an unwritten programme , the mere fact that financial contributions have been provided  
to certain enterprises is not sufficient to demonstrate that such financial contributions have been 
granted pursuant to a plan or scheme for purposes of Article  2.1(c)." The Panel's subsequent review 
of the USDOC's analysis properly focused on "whether th e information relied upon by the USDOC 
supports its finding of a systematic series of actions evidencing the existence of a plan or scheme 
pursuant to which subsidies have been provided". Moreover, in its findings, the Panel rightly 
contrasted the USDOC's failure to explain " systematic  activity … regarding the existence of an 
unwritten subsidy programme" with information before the USDOC merely indicating " repeated  
transactions". We therefore disagree with the United  States insofar as it argues that the Pan el erred 
in its articulation of the standard to be applied under Article  2.1(c). Nor do we agree with the 
United  States that the Panel erred in its interpretation of the term "subsidy programme" by reading 
it to mean a "systematic subsidy programme" consis ting "entirely of acts of subsidization" where 
each provision of an input by the government confers a benefit to the recipient. We also disagree 
with the United  States to the extent it claims that the Panel's finding under Article  2.1(c) was based 
on an is olated reading of the USDOC's specificity analysis. Rather, we understand the Panel's concern 
to have been that the USDOC's reasoning and references to "subsidy programmes" were generic in 
nature and did not sufficiently discuss the steel sector or the pro vision of the inputs in the context 
of the specific determinations at issue. It was not for the Panel in this regard "to conduct a de novo  
review of the evidence" or "to substitute [its] own conclusions for those of the competent 
authorities".  
a. In light of the foregoing, we uphold  the Panel's finding, in paragraphs 7.293 and 8.1.e 
of the Panel Report, that China has demonstrated that the United  States acted 
inconsistently with Article  2.1(c) of the SCM  Agreement in the Pressure Pipe, Line Pipe, 
Lawn Groomers , Kitchen Shelving, OCTG, Wire Strand, Seamless Pipe, Print Graphics, 
Aluminum Extrusions, Steel Cylinders, and Solar Panels Section 129 proceedings.  
6.12.   The Appellate  Body recommends  that the DSB request the United States to bring its measures 
found in this R eport, and in the Panel Report as modified by this Report, to be inconsistent with its 
obligations under the SCM Agreement, into conformity with that Agreement.