WT/DS437/AB/RW/Add.1  
 
16 July 201 9 
(19-4701) Page: 1/26 
  Original: English  
 
  
UNITED STATES – COUN TERVAILING DUTY MEAS URES ON  
CERTAIN PRODUCTS FRO M CHINA  
RECOURSE TO ARTICLE 21.5 OF THE DSU BY C HINA  
AB-2018-2 
Report of the Appellate Body  
Addendum  
This Addendum  contains Annexes A to C to the Report of the Appellate Body  circulated as  document  
WT/DS437/AB/RW . 
 
The Notice s of Appeal and Other Appeal  and the executive summaries of written submissions 
contained in this Addendum are attached as they were received fro m the participants and 
third participants. The content has not been revised or edited by the Appellate Body, except that 
paragraph and footnote numbers that did not start at one in the original may have been re -numbered 
to do so, and the text may have been formatted in order to a dhere to WTO style. The executive 
summaries do not serve as substitutes for the submissions of the participants and third participants 
in the Appellate Body's examination of the appeal.  
 
 
_______________  
 
 
 
 WT/DS437/AB/RW/Add.1  
 
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LIST OF ANNEXES  
ANNEX  A 
NOTIC ES OF APPEAL  AND OTHER APPEAL  
Contents  Page  
Annex  A-1 United States ' Notice of Appeal  4 
Annex  A-2 China 's Notice of Other Appeal  6 
ANNEX B  
ARGUMENTS OF THE PARTICIPANTS  
Contents  Page  
Annex  B-1 Executive summary of the United States'  appellant's submission  9 
Annex  B-2 Executive summary of China 's other appellant's submission  12 
Annex  B-3 Executive summary of China 's appellee's submission  15 
Annex  B-4 Executive summary of the United States ' appellee's submission  18 
ANNEX  C 
ARGUMENTS OF THE THI RD PA RTICIPANTS  
Contents  Page  
Annex  C-1 Executive summary of Canada 's third participant's submission  23 
Annex  C-2 Executive summary of the European Union 's third participant's submission  24 
Annex  C-3 Executive summary of Japan 's third participant's submission  26 
 
 
 WT/DS437/AB/RW/Add.1  
 
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  ANNEX  A 
NOTICE S OF APPEAL  AND OTHER APPEAL  
Contents  Page  
Annex  A-1 United States ' Notice of Appeal  4 
Annex  A-2 China 's Notice of Other Appeal  6 
 
 WT/DS437/AB/RW/Add.1  
 
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ANNEX  A-1 
UNITED STATES ' NOTICE OF APPEAL * 
1. Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the Settlement 
of Disputes ("DSU ") and Rule 20 of the Working Procedures for Appellate Review, the United States 
hereby notifies its decision to appeal to the Appellate Body certain issues of law covered in the report 
of the compliance Panel in United States – Countervailing Duty Measure s on Certain Products from 
China: Recourse to Article 21.5 of the DSU by China  (WT/DS437/RW and WT/DS437/RW /Add.1) and 
certain legal interpretations developed by the compliance Panel.  
2. The United States seeks review by the Appellate Body of the compliance Panel 's finding that 
the Public Bodies Memorandum1 is a measure within the scope of the compliance Panel 's terms of 
reference under Article 21.5 of the DSU.2 This finding is in error and is based on erroneous findings 
on issues of law and legal interpretations. The Public Bodies Memorandum is not a measure taken 
to comply with the DSB 's recommendations in this dispute. Furthermore, China could have 
attempted to challenge the Public Bodies Memorandum "as such" in the original panel proceeding, 
but China opted not to do so. Accordingly, China 's "as such" claim against the Public Bodies 
Memorandum is outside the sc ope of the compliance Panel 's jurisdiction under Article 21.5 of the 
DSU. The United States respectfully requests that the Appellate Body reverse the compliance Panel 's 
findings.  
3. The United States seeks review by the Appellate Body of the compliance Panel 's finding that 
"the Public Bodies Memorandum can be challenged 'as such ' as a rule or norm of general or 
prospective application."3 This finding is in error and is based on erroneous findings on issues of law 
and legal interpretations. The compliance Panel  erred in its interpretation and application of 
Articles  3.3, 4.4, and 6.2 of the DSU in considering that the Public Bodies Memorandum is a 
"measure" that can be challenged. Contrary to the compliance Panel 's finding, the Public Bodies 
Memorandum does not have normative value, does not have general application, and does not have 
prospective application. The United States respectfully requests that the Appellate Body reverse the 
compliance Panel 's findings.  
4. The United States seeks review of the compliance Pa nel's findings that the U.S. Department 
of Commerce 's benchmark determinations in the OCTG , Solar Panels , Pressure Pipe , and Line Pipe  
Section 129 proceedings4 are inconsistent with Articles 1.1(b) and 14(d) of the Agreement on 
Subsidies and Countervailing Measures  ("SCM Agreement").5 These findings are in error and are 
based on erroneous findings on issues of law and legal interpretations. 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 "failed to provide a 
reasoned and adequate explanation for its rejection of in -country prices in its benchmark 
determinations,"6 the compliance Panel erred in its interpretation and application of Articles 1.1(b) 
and 14(d) of the SCM Agreement.7 The United States respectfully requests that the Appellate Body 
reverse the compliance Pan el's findings.  
5. The United States seeks review of the compliance Panel 's finding that the United States failed 
to appropriately find specificity under Article 2.1(c) of the SCM Agreement in the Pressure Pipe , Line 
                                                
* This notification , dated 27 April 2018, was circulated to Members as document WT/DS437/24.  
 
1 See Panel Report, para. 2.1.b.  
2 See, e.g., Panel Report, para. 7.120; see also id. , paras. 7.114 -7.120.  
3 See, e.g., Panel Report, para. 7.133; see also id. , paras. 7.124 -7.133.  
4 See Panel Report, para. 7.152.  
5 See, e.g., Panel Report, paras. 7.199 -200, 7.205 -206, 7.209 -211, 7.218 -220, 7.223 -224, and 8.1(c).  
6 Panel Report, para. 7.223.  
7 The United States considers these errors to be issues of law, based on the compliance Panel's 
erroneous findings on issues of law and legal interpretations.  If the Appellate Body were to consider instead 
that the issues set out in this paragraph are issue s of fact, then the United States requests the Appellate Body 
find that the compliance Panel failed to make an objective assessment of the matter before it as called for by 
Article 11 of the DSU by reaching a conclusion based on factual findings that were without a sufficient 
evidentiary basis, without assessing the totality of the evidence, and without adequate explanation.  WT/DS437/AB/RW/Add.1  
 
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  Pipe, Lawn Groomers , Kitchen Shelving , OCTG , Wire Strand , Seamless Pipe , Print Graphics , 
Aluminum Extrusions , Steel Cylinders , and Solar Panels  Section 129 proceedings.8 This finding is in 
error and is based on erroneous findings on issues of law and legal interpretations.9 The compli ance 
Panel erred in its interpretation and application of Article 2.1(c) in finding that " the United States 
did not comply with the requirement contained in Article 2.1 (c) 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 regarding the existence of the relevant subsidy programme."10 The 
United  States respectfully requests that the Appellate Body reverse the compliance Panel 's findings.  
6. The United States se eks review of the compliance Panel 's finding that the final determination 
in the original Solar Panels  investigation11 and certain12 subsequent administrative reviews and 
sunset reviews were within the scope of this proceeding under Article 21.5 of the DSU .13 These 
findings are in error and are based on erroneous findings on issues of law and legal interpretations.14 
The compliance Panel  erred in its interpretation and application of Article 21.5 of the DSU in finding 
that these proceedings "fall within [the] terms of reference under Article 21.5 of the DSU by virtue 
of their close relationship to the recommendations and rulings of t he DS B and the relevant 
Section  129 determinations. "15 The United States respectfully requests that the Appellate Body 
reverse the compliance Panel 's findings.  
 
                                                
8 See Panel Report, paras. 7.275 -276, 7.281, and 7.292 -293. 
9 See, e.g., Panel Report, paras. 7.287 -293 and 8.1(e).  
10 Panel Report, pa ras. 7.292 -293 and 8.1(e).  
11 See Panel Report, para. 2.1.c; see also id. , paras 7.319 -325 and 8.1(g).  
12 See Panel Report, para. 2.1.d.  
13 See Panel Report, paras. 7.347, 7.357, 7.361, 7.362, 7.367, 7.378, 7.379, 7.384, 7.391, 7.392, 
7.401, 7.404, 7.432, 7.4 39, 7.443, 7.447, 7.451, 7.455, 7.458, 7.462, 7.466, 7.470, 7.471, 8.1(h)(i), 
8.1(h)(ii), 8.1(h)(iv), and 8.1(h)(vi).  
14 See, e.g., Panel Report, paras. 7.335 -347. 
15 Panel Report, para. 7.347.  WT/DS437/AB/RW/Add.1  
 
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ANNEX A -2 
CHINA 'S NOTICE OF OTHER APPE AL1*
1. Pursuant to Article 16.4 and Article 17.1 of the Understanding on Rules and Procedures 
Governing the Settlement of Disputes (DSU ) and Rule 23 of the Working Procedures for 
Appellate  Review (WT/AB/WP/6) ("Working Procedures"), China hereby notifies its decision to appeal 
certain issues of law and legal interpretation contained in the Report of the Panel in United  States – 
Countervai ling Duty Measures on Certain Products from China (Article 21.5 – China) 
(WT/DS437/RW) ("Panel Report").  
2. Pursuant to Rule 23(1) of the Working Procedures, China files this Notice of Other Appeal with 
the Appellate Body Secretariat, along with a written su bmission prepared in accordance with 
Rule 21(2) of the Working Procedures as required by Rule 23(3).  
3. Pursuant to Rule 23(2)(c)(ii)(C) of the Working Procedures, this Notice of Other Appeal 
provides an indicative list of paragraphs of the Panel Report conta ining the errors of law and legal 
interpretation alleged herein, without prejudice to China's ability to refer to other paragraphs of the 
Panel Report in the context of its appeal.  
Review of the Panel's Findings under Article 1.1(a)(1) of the SCM Agreement  
4. China seeks review by the Appellate Body of the Panel's interpretation and application of 
Article 1.1(a)(1) of the SCM Agreement. In particular, China seeks review of the Panel's finding that 
the legal standard for "public body" determinations under Artic le 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".  China respectfully requests that the Appellate  Body 
reverse  this finding,  articulated in paragraphs 7.36 and 7.106, as well as the Panel's conclusion that  
"China 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. China requests that the Appellate Body  reverse  the Panel's finding in paragraph 7.72 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", as well as the Panel's 
conclusion in paragraph 7.105 that it did "not consider that the USDOC's determinations were based 
on 'mere ownership or control over an entity by a government, without mo re'", because the Panel's 
conclusions were premised on its disagreement with China concerning the proper legal standard.   
6. China requests that the Appellate Body reverse  the Panel's conclusion in paragraphs 7.103 
and 7.106 that China did not demonstrate tha t the USDOC acted inconsistently with Article  1.1(a)(1) 
of the SCM Agreement for having failed to consider relevant evi dence on the record in the 
five investigations in which China participated, because this conclusion was also premised on the 
Panel's disa greement with China concerning the proper legal standard.  
7. China requests that the Appellate Body reverse  the Panel's ultimate conclusion in 
paragraphs  7.107 and 8.1(a) that China did not demonstrate 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, Alum inum 
Extrusions, Steel Cylinders, and Solar Panels Section 129 proceedings.  
8. China further requests that the Appellate Body complete the analysis  and find 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.  
 
                                                
1 * This notification , dated 2  May 2018, was circulated to Membe rs as document WT/DS437/2 5. 
 WT/DS437/AB/RW/Add.1  
 
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  9. In relation to the Panel's finding that China failed to demonstrate that the Public Bodies 
Memorandum is inconsistent "as such" with Article 1.1(a)(1) of the  SCM Agreement, China requests 
that the Appellate Body reverse  the Panel's conclusion in paragraph 7.136 that China did  not 
demonstrate that the Public Bodies Memorandum is inconsistent "as such" with Article  1.1(a)(1) of 
the SCM Agreement because the Publ ic Bodies Memorandum is based on an improper legal standard. 
China requests that the Appellate Body reverse  the Panel's conclusion in paragraph 7.142 that the 
Public Bodies Memorandum does not restrict in a material way the USDOC's discretion to act 
consis tently with Article 1.1(a)(1), as well as the Panel's ultimate conclusion to that effect in 
paragraph 8.1(b).  
10. China further requests that the Appellate Body complete the analysis  and find that the Public 
Bodies Memorandum is inconsistent "as such" with Ar ticle 1.1(a)(1) of the SCM Agreement because 
it is premised on an erroneous legal standard and restricts in a material way the USDOC's discretion 
to make a determination consistent with Article 1.1(a)(1) of the SCM Agreement.  
Review of the Panel's Finding s under Articles 1.1(b) and 14(d) of the SCM Agreement  
11. China seeks review by the Appellate Body of the Panel's interpretat ion and application of 
Articles  1.1(b) and 14(d) of the SCM Agreement. In particular, China seeks review of the Panel's 
finding that " an investigating authority may reject 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."1 The Panel found that an investigating authorit y may reject available in -country 
benchmark prices if the investigating authority provides a sufficient explanation of "how government 
intervention in the market resulted in domestic prices for the inputs at issue deviating from a 
market -determined price".2 In reaching these conclusions, the Panel failed to interpret and give 
effect to the term "market" in Article 14(d) of the SCM Agreement, including as that term appears 
within the context of the phrase "prevailing market conditions … in the country of pro vision".  
12. China respectfully requests that the Appellate Body correct the Panel's errors of legal 
interpretation and application, and accordingly modify  the basis for the Panel's conclusion that the 
United States acted inconsistently with Articles 1.1(b) a nd 14(d) of the SCM Agreement in the OCTG, 
Solar Panels, Pressure Pipe, and Line Pipe Section 129 proceedings.3 
 
_______________  
 
 
  
                                                
1 Panel Report, para. 7.168.  
2 Panel Report, paras. 7.206. See also Panel Report, paras. 7.158, 7.205, 7.223.  
3 Panel Report, para. 8.1(c).  WT/DS437/AB/RW/Add.1  
 
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ANNEX  B 
ARGUMENTS OF THE PAR TICIPANTS  
Contents  Page  
Annex  B-1 Executive summary of the United States ' appellant's submission  9 
Annex  B-2 Executive summary of China 's other appellant's submission  12 
Annex  B-3 Executive summary of China 's appellee's submission  15 
Annex  B-4 Executive summary of the United States ' appellee's submission  18 
 
 WT/DS437/AB/RW/Add.1  
 
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ANNEX  B-1 
EXECUTIVE SUMMARY OF  THE UNITED STATES ' APPELLANT'S SUBMISSI ON1 
1. The United States appeals certain of the compliance Panel 's legal findings and conclusions that 
certain measures or items challenged by China in this compliance proceeding are inconsistent with 
various provisions of the Agreement on Subsidies and Countervailing Measures  ("SCM Agreement") 
and erroneous interpretations or applications of the SCM Agreement and the Understanding on Rules 
and Procedures Governing the Settlement of Disputes  ("DSU").  
2. Specifically, section II of this submission demonstrates that the compliance Panel  erred in 
finding that the Public Bodies Memorandum2 is a measure within the scope of the compliance Panel 's 
terms of reference under Article 21.5 of the DSU. Separately, we demonstrate that the compliance 
Panel erred in finding that the Public Bodies Memo randum can be challenged "as such" as a rule or 
norm of general or prospective application. These findings are in error and are based on erroneous 
findings on issues of law and legal interpretations.  
3. As discussed in section II.A of this submission, the Pub lic Bodies Memorandum is not a 
measure taken to comply with the recommendations of the Dispute Settlement Body ("DSB") in this 
dispute. Furthermore, China could have attempted to challenge the Public Bodies Memorandum 
"as such" in the original panel procee ding, but China opted not to do so. The Appellate Body has 
found previously under Article 21.5 that a complaining Member ordinarily may not raise claims in an 
Article 21.5 compliance proceeding that it could have pursued in the original proceedings, but di d 
not. Accordingly, China 's "as such" claim against the Public Bodies Memorandum is outside the scope 
of the compliance Panel 's terms of reference under Article 21.5 of the DSU. The compliance Panel, 
in concluding otherwise, erred in its interpretation and  application of Article 21.5 of the DSU.  
4. As elaborated in section II.B of this submission, the compliance Panel erred in its interpretation 
and application of Articles 3.3, 4.4, and 6.2 of the  DSU in finding that the Public  Bodies Memorandum 
can be challen ged "as such" as a rule or norm of general or prospective application. The compliance 
Panel 's finding also does not accord with prior Appellate  Body findings concerning when a measure 
can be challenged "as such" as a rule or norm of general or prospective application. The compliance 
Panel erred by failing to apply properly the correct legal analysis for determining whether a measure 
can be challenged "as such" as a rule or norm of general or prospective application, as well as by 
misreading the Public Bodie s Memorandum and engaging in circular reasoning. Contrary to the 
compliance Panel 's finding, the evidence establishes that the Public Bodies Memorandum does not 
have normative value, does not have general application, and does not have prospective applicat ion. 
5. Ultimately, the compliance Panel based its conclusions regarding normative value, general 
application, and prospective application on just two pieces of textual evidence drawn from the Public 
Bodies Memorandum, namely the phrases "for the purposes of the CVD law" and "systemic 
analysis."3 As the United States demonstrates in this submission, these two pieces of textual 
evidence offer no support at all for the compliance Panel 's findings. The compliance Panel engaged 
in circular reasoning, r esulting in it misunderstanding the phrase "for the purposes of the CVD law," 
which, when read in context, serves on its face as a limitation  on the analysis. A correct 
understanding of the phrase "systemic analysis" likewise confirms a limitation, referring only to the 
contents of the Public Bodies Memorandum itself. Read in full, the sentence quoted by the compliance 
                                                
1 Pursuant to the Guidelines in Respect of Executive Summaries of Written Submissions , WT/AB/23 
(March 11, 2015), the United States indicates that this executive summary contains a total of 1,724 words 
(including footnotes), and this U.S. appellant submission (not including the text of the executive summary) 
contains 38,412 words (includin g footnotes).  
2 See US – Countervailing Measures (Article 21.5 – China) (Panel) , para. 2.1.b; Memorandum for Paul 
Piquado from Shauna Biby, Christopher Cassel, and Timothy Hruby Re: 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 , May 18, 2012 ("Public Bodies Memorandum") (Exhibit CHI -1). 
3 See US – Countervailing Measures (Article 21.5 – China) (Panel) , paras. 7.127 -7.129.  WT/DS437/AB/RW/Add.1  
 
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  Panel refers to "the syst emic analysis in this memorandum"4 and not any systemic application of 
that analysis. The compliance Panel misconstrued this as announcing an approach the 
U.S. Department of Commerce ("USDOC") intended to apply in every countervailing duty 
proceeding. Thes e phrases, when correctly read in their proper context, simply provide confirmation 
that the Public Bodies Memorandum does not have normative value, does not have general 
application, and does not have prospective application. Accordingly, there is no lega l basis for the 
compliance Panel 's finding to the contrary.  
6. In light of these shortcomings in the compliance Panel 's analysis, as well as other errors 
elaborated in this submission, the compliance Panel erred in finding that the Public Bodies 
Memorandum i s a measure challengeable "as such" within the scope of its terms of reference under 
Article 21.5 of the DSU, and the compliance Panel erred in finding that the Public Bodies 
Memorandum can be challenged "as such" as a rule or norm of general or prospectiv e application. 
Accordingly, these findings should be reversed.  
7. Section III of this submission demonstrates that the compliance Panel erred in its 
interpretation and application of Articles 1.1(b) and 14(d) of the SCM Agreement to the 
USDOC 's benchmark dete rminations in OCTG , Solar Panels , Pressure Pipe , and Line Pipe ,5 pursuant 
to section 129 of the Uruguay Round Agreements Act  ("section 129 determinations")  using an 
approach that does not comport with the text of the SCM Agreement. The compliance Panel 's findings 
are in error and are based on erroneous findings on issues of law and legal interpretations.6 Under 
Article 14(d), properly interpreted, an objective and unbiased investigating authority could have 
found that prices in China are distorted and there fore not suitable to measure the adequacy of 
remuneration. In section III.A, we set out the app ropriate standard under Article  14(d) and explain 
how Appellate Body findings confirm that an investigating authority may consider whether 
benchmark prices are m arket determined. In section III.B, we provide an overview of the findings 
underlying this dispute and describe where the compliance Panel erred in applying an improper 
approach to the determinations at issue. We then demonstrate, in section  III.C, exactly  why the 
compliance Panel 's interpretation is in error and that it cannot be reconciled with the text of 
Article  14. Section III.D concludes that an objective and unbiased investigating authority could have 
found that prices in China are distorted and ther efore not suitable to measure the adequacy of 
remuneration under Article 14(d).  
8. Section IV of this submission demonstrates that the compliance Panel erred in its 
interpretation and application of the third sentence in Article 2.1(c) of the SCM Agreement to  the 
USDOC 's determinations of de facto  specificity 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.7 The compliance Panel further erred to the 
extent it made findings on a provision within Article 2.1(c) that was not covered by the DSB 's 
recommendations and rulings, nor could serve as an appropriate basis upon which to assess th e 
consistency of the measures with Article 2.1(c), third sentence. The compliance Panel also erred in 
its assessment of the "existence of a subsidy programme" by interpreting "programme" in a manner 
that is not consistent with the ordinary meaning of the t erm in Article 2.1 or the object and purpose 
of the SCM Agreement. As a result of applying that improper approach to the USDOC 's 
determinations, the compliance Panel reached a conclusion that is not consistent with a proper 
interpretation of Article 2.1(c) . 
9. Finally, section V of this submission demonstrates that the compliance Panel erred in  finding 
that subsequent administrative reviews and sunset reviews (collectively, "reviews") were within the 
scope of this proceeding under Article 21.5 of the DSU.8 The compliance Panel erred in its 
                                                
4 Public Bodies Memorandum, footnote 48 (p. 13 of the  PDF version of Exhibit CHI -1) (emphasis added).  
5 See US – Countervailing Measures (Article 21.5 – China) (Panel) , para. 7.152.  
6 The United States considers these errors to be issues of law, based on the compliance Panel's 
erroneous findings on issues of  law and legal interpretations.  If the Appellate Body were to consider instead 
that the issues set out in this paragraph are issues of fact, then the United States requests the Appellate Body 
find that the compliance Panel failed to make an objective asses sment of the matter before it as called for by 
Article 11 of the DSU by reaching a conclusion based on factual findings that were without a sufficient 
evidentiary basis, without assessing the totality of the evidence, and without adequate explanation.  
7 See US – Countervailing Measures (Article 21.5 – China) (Panel) , paras. 7.275 -276, 7.281, and 
7.292 -293. 
8 See US – Countervailing Measures (Article 21.5 – China) (Panel) , para. 2.1.d; see also id. , 
paras.  7.347, 7.357, 7.361, 7.362, 7.367, 7.378, 7.379, 7.3 84, 7.391, 7.392, 7.401, 7.404, 7.432, 7.439, WT/DS437/AB/RW/Add.1  
 
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  interpretation and application of Article 21.5 of the DSU in finding that these proceedings "fall within 
[the] terms of reference under Article 21.5 of the DSU by virtue of their close relationship to the 
recommendations and rulings of the DSB and the relevant Section 129 determinations."9 These 
findings are in error and are based on erroneous findings on issues of law and legal interpretations. 
The subsequent reviews were not measures taken to comply, nor did the compliance P anel 
demonstrate that they were sufficiently connected to the measures taken to comply to be considered 
within the compliance Panel 's terms of reference. Accordingly, those subsequent reviews were not 
properly within the compliance Panel 's terms of referen ce. 
 
                                                
7.443, 7.447, 7.451, 7.455, 7.458, 7.462, 7.466, 7.470, 7.471, 8.1(h)(i), 8.1(h)(ii), 8.1(h)(iv), and 8.1(h)(vi). 
In this context, the  United States also seeks review of the compliance Panel's findings with res pect to the final 
determination in the original Solar Panels  investigation, which was completed after the original Panel was 
established. See US – Countervailing Measures (Article 21.5 – China) (Panel) , para. 2.1.c; see also id. , 
paras.  7.319 -325 and 8.1(g ). 
9 US – Countervailing Measures (Article 21.5 – China) (Panel) , para. 7.347.  WT/DS437/AB/RW/Add.1  
 
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ANNEX B -2 
EXECUTIVE SUMMARY OF  CHINA 'S OTHER APPELLANT'S SU BMISSION  
1. China initiated this dispute nearly six years ago in order to address certain persistent abuses 
of the countervailing duty mechanism by the United States Departm ent of Commerce ("USDOC"). 
In particular, China brought this dispute because the USDOC has developed a pattern and practice 
of imposing countervailing duties in respect of alleged "input subsidies", i.e. the alleged provision of 
various types of industrial  inputs for less than adequate remuneration. These "input subsidies" are 
completely fictitious. The USDOC conjures these alleged "subsidies" into existence through a series 
of unlawful presumptions and methodologies affecting all three elements of a counte rvailable 
subsidy: financial contribution, benefit, and specificity. Through these unlawful presumptions and 
methodologies, the USDOC converts ordinary commercial transactions between unrelated parties 
into alleged "subsidies" that are attributable to the Government of China ("GOC").  
2. The compliance Panel found that the USDOC's benefit determinations in four of the principal 
investigations at issue remain inconsistent with Article  14(d) of the SCM Agreement.1 In addition, 
the compliance Panel found that the USDOC's specificity determinations remain inconsistent with 
Article  2.1(c) of the SCM Agreement in eleven of the investigations at issue.2 While China agrees 
with these ultimate findings of the Panel, China's disagreements with other aspects of the Panel 
Report are substantial. China's other appeal concerns two interpretations adopted by the Panel which 
China considers to be in error, and wh ich China believes should be of concern to all Members.  
3. The first of these errors, discussed in Section  II of this submission, concerns the Panel's 
interpretation of the term "public body" under Article  1.1(a)(1) of the SCM Agreement. In  
US – Anti-Dumping  and Countervailing Duties (China)  ("DS379"), the Appellate Body concluded that 
a "public body" is an entity "vested with authority to exercise governmental functions".3 The issue 
before the compliance Panel in this dispute concerned the nature  of the "gov ernmental function" 
that an entity must be vested with authority to perform in order to be deemed a public body.  
4. China argued that it cannot be the case that an entity vested with authority to perform any 
"government function" is properly deemed a public body under Article  1.1(a)(1), even if that 
"governmental function" is unrelated to the alleged financial contribution at issue. The Panel 
disagreed, and concluded that "the text of 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."4  
5. In this submission, China demonstrates that the Panel's finding cannot be reconciled with the 
Appellate Body's prior interpretation an d application of Article 1.1(a)(1). In DS379, the Appellate 
Body explained that the context of Article  1.1(a)(1)(i) -(iii) "lends support to the proposition that a 
'public body' in the sense of Article  1.1(a)(1) connotes an entity vested with certain govern mental 
responsibilities, or exercising certain  governmental authority."5 The Appellate Body found that "too 
broad an interpretation of the term 'public body'" could "risk upsetting the delicate balance embodied 
in the SCM Agreement because it could serve a s a license for investigating authorities to dispense 
with an analysis of entrustment and direction and instead find entities with any connection to 
government to be public bodies."6 The Appellate Body also found that its interpretation "coincide[d] 
with t he essence of Article  5" of the International Law Commission's Articles on Responsibility of 
States for Internationally Wrongful Acts ("ILC Articles"), which attributes to the State conduct of a 
person or entity that is not an organ of the State if "empowe red by the law of the State to exercise 
                                                
1 See 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) (circulated to WTO M embers 21 March 2018) 
("Panel Report").  
2 Panel Report, para. 8.1(e).  
3 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 318.  
4 Panel Report, para. 7.28.  
5 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 296 (emphasis 
added).  
6 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 303.  WT/DS437/AB/RW/Add.1  
 
- 13 - 
 
  elements of the governmental authority … provided the person or entity is acting in that capacity in 
the particular instance ".7  
6. The Panel's conclusion that there does not need to be a "connection" between the "gover nment 
function" identified by an investigating authority and the alleged financial contribution cannot be 
reconciled with any of these prior Appellate Body findings. Nor can it be reconciled with the Appellate 
Body's prior application of its interpretive f ramework in relation to the USDOC's determinations that 
certain state -owned commercial banks ("SOCBs") examined in the Certain New Pneumatic Off -the-
Road Tires ("OTR") investigation were public bodies.8 
7. In relation to the SOCBs at issue in the OTR investig ation, the Appellate Body found that the 
USDOC's public body determination in respect of SOCBs "was supported by evidence on the record 
that these SOCBs exercise governmental functions on behalf of the Chinese Government".9 The 
evidence on which the USDOC had relied pertained to the government's exercise of control over 
SOCBs in making loans, the conduct that was the subject matter of the financial contribution inquiry. 
Accordingly, when the Appellate Body found that the USDOC's public body determinations i n respect 
of SOCBs were supported by evidence that SOCBs "effectively exercise certain governmental 
functions", the Appellate Body was not referring to "government functions" in the abstract. Rather, 
the Appellate Body was referring to the "governmental fu nction" of providing loans to certain 
favoured industries.  
8. In China's view, the Panel's interpretive conclusion cannot be reconciled with the 
Appellate  Body's analysis, or with the fact that the Appellate Body understood that in the context of 
an inquiry that is about the attribution of an entity's conduct under Article  1.1(a)(1) to the 
government, a government must exercise control over the conduct that is the subject of the inquiry 
in order for that control to be "meaningful".  
9. China believes that the imp lications of the Panel's sweeping interpretation should be of great 
concern to all Members. If an entity vested with authority to perform any "government function" 
may properly be considered a public body under Article  1.1(a)(1), regardless of whether the 
authority vested in the entity is at all relevant  to the conduct that is potentially being attributed to 
the government, China cannot conceive of many entities that would not be considered public bodies. 
In this respect, China believes that the Panel's int erpretation "upset[s] the delicate balance 
embodied in the SCM Agreement " in exactly the manner that was of concern to the Appellate Body 
in DS379.  
10. The second error that China identifies in Section  III of this  submission concerns the Panel's 
interpretation  of Article  14(d) of the SCM Agreement. Article  14(d) plainly specifies that the 
adequacy of remuneration is to be evaluated "in relation to prevailing market conditions … in the 
country of provision". The Appellate Body held in US – Softwood Lumber IV  that it is only in "very 
limited" circumstances that an investigating authority may reject domestic benchmark prices in 
favour of an out -of-country benchmark.  
11. The compliance Panel in the present dispute found, correctly, that the USDOC did not have a 
valid b asis under Article  14(d) for rejecting domestic Chinese prices as the benchmark for evaluating 
the adequacy of remuneration. The Panel's decision focuses on the failure of the USDOC to 
demonstrate that the alleged "government interventions" identified by t he USDOC in its compliance 
determinations resulted in a "direct impact" on domestic Chinese prices for the inputs at issue. The 
Panel emphasized that the mere fact of government intervention in the domestic economy, in 
whatever form, is insufficient to con clude that domestic benchmark prices are not market 
determined. Nor may such an effect be presumed. China agrees with these findings of the Panel 
insofar as they go: an investigating authority's rejection of available domestic benchmark prices 
                                                
7 Draft Articles on Responsibility of States for Internationally Wrongful Acts, with Commentaries, 
adopted by the International Law Commission at its Fifty -third Session (2001) (United Nations International 
Law Commission, Report on the Work of its Fifty -third Session (23 April –1 June and 2 July –10 August 2001), 
General Assembly, Official Records, Fifty -fifth S ession, Supplement No. 10 (A/56/10), chapter IV.E.1) ("ILC 
Articles"), Article 5 (emphasis added) (CHI -8).  
8 See Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China ), paras. 338 -359, 
discussing U.S. Department of Commerce Issues and Decision Memorandum: Final Results of the 
Countervailing Duty Investigation of Certain OTR Tires From the People's Republic of China (7 July 2008) ("OTR 
Final I&D Memorandum"), pp. 13 -14 (CHI -7). 
9 Appellate Body Report, US – Anti-Dumping and Countervailin g Duties (China ), para. 355.  WT/DS437/AB/RW/Add.1  
 
- 14 - 
 
  must be base d on hard evidence, and presumptions should play no role in the investigating 
authority's analysis.  
12. While China agrees with the Panel's ultimate findings of inconsistency under Article  14(d), 
China believes that the Panel nevertheless erred in its interpretation of that provision. The Panel 
interpreted Article  14(d) and past Appellate Body reports to mea n, in essence, that a "market" price 
under Article  14(d) is a price that does not deviate from a "market" price. This interpretation of 
Article  14(d) is self -evidently circular in nature: one cannot know whether a price "deviates" from a 
"market" price wit hout knowing what a "market" price is. The Panel did not answer this question. As 
a result, the Panel failed to interpret and give effect to the term "market" in Article  14(d), properly 
interpreted within the context of the phrase "prevailing market conditions … in the country of 
provision".  
13. In China's view, a "market" price within the meaning of Article  14(d) is a price that is 
determined by the interplay of supply and demand, as opposed to a price that is effectively 
determined by the government. Th is conclusion follows the ordinary meaning of Article  14(d), as 
well as from prior Appellate Body reports interpreting Article  14(d), all of which have equated the 
issue of "distortion" under Article  14(d) with the circumstance in which an investigating au thority 
would otherwise be required to compare the price of the government -provided good to another 
government -determined price (i.e. to engage in a "circular" price comparison). Moreover, this 
interpretation is the only way to reconcile the Appellate Body 's recognition that Article  14(d) does 
not require a market "undistorted by government intervention" with its simultaneous finding that 
there are "very limited" circumstances in which Article  14(d) allows an investigating authority to 
resort to out -of-country benchmarks. The term "market" in Article  14(d) refers to a price determined 
by the interplay of supply and demand, including as the forces of supply and demand may be affected 
by various government policies and actions, but it does not refer to a price  that is effectively 
determined by the government.  
14. The Panel appears to have rejected China's understanding of the term "market" in 
Article  14(d), but offered no alternative interpretation of the term "market" in its place. As best as 
China can discern fr om the Panel Report, the Panel considered that an investigating authority can 
reject available domestic price benchmarks whenever the investigating authority can demonstrate 
that government policies or actions had a "direct impact" on those prices. The Pan el offered no 
interpretative support for this conclusion. Nor did the Panel reconcile this conclusion with the 
Appellate Body's prior finding that the term "market" in Article  14(d) does not refer to a market 
"undistorted by government intervention". The P anel's apparent understanding of Article  14(d) is 
devoid of any genuine substance and, unless corrected by the Appellate Body, is likely to engender 
further litigation over the question of "benchmark distortion" under Article  14(d).  
15. China respectfully subm its that the Appellate Body should take this opportunity to ensure that 
the circumstances in which an investigating authority may lawfully reject available in -country price 
benchmarks are indeed "very limited", which is what the Appellate Body originally c ontemplated in 
its decision in US – Softwood Lumber IV.  In the fourteen years since the Appellate Body issued that 
report, the USDOC has disregarded the meaning and the spirit of that decision, and has, instead, 
adopted a regular practice of rejecting in -country prices as "distorted". The opposition of other 
Members to this practice is evidenced by the fact that there are no fewer than four other disputes 
currently pending in which Members are challenging the USDOC's practice.10 It is time for the 
United  States to return its practice to the plain text of Article  14(d): "prevailing market conditions 
… in the country of provision".11 
                                                
10 These are: US – Supercalendered Paper (DS505), US – Carbon Steel (India) (Article  21.5 – India)  
(DS436), US – Countervailing Measures on Lumber (DS533), and US – Countervailing Measures on Pipe and 
Tube (DS523).  
11 Pursuant t o the Guidelines in Respect of Executive Summaries of Written Submissions , WT/AB/23 
(March 11, 2015), China indicates that this executive summary contains 2,117 words (including footnotes), 
and this other appellant submission (not including the text of the  executive summary) contains 26,254 words 
(including footnotes).  WT/DS437/AB/RW/Add.1  
 
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  ANNEX B -3 
EXECUTIVE SUMMARY OF  CHINA 'S APPELLEE'S SUBMISSIO N 
1. If there is a theme to the United States' appeal of the compliance Panel report in this dispute, 
it is this: the United States believes that the United States Department of Commerce ("USDOC") is 
entitled to assume the conclusion of its so -called "investigations" of alleged Chinese input subsidies. 
Becaus e the United States is convinced that the Government of China ("GOC") provides inputs for 
less than adequate remuneration to downstream producers of manufactured products, it believes 
that the USDOC should be allowed to work backwards from that assumption to identify the 
"subsidies" that it assumes to exist. The United States is unhappy with the compliance Panel report 
because, with regard to benefit and specificity, the Panel held that the USDOC was actually required 
to demonstrate the existence of these a lleged subsidies in accordance with the requirements of the 
Agreement on Subsidies and Countervailing Measures ("SCM Agreement"), based on positive 
evidence in the record.  
2. The United States further appears to believe that the USDOC should be allowed to ide ntify 
these alleged input subsidies on a "cookie -cutter" basis from one investigation or review to the next, 
without the need to undertake a meaningful investigation in each instance. At the same time, the 
United States wants to force China to re -litigate the same issues of financial contribution, benefit, 
and specificity over and over again, tying up the dispute settlement system with new challenges 
each time the USDOC issues an administrative review determination in a countervailing duty 
proceeding that i s already the subject of recommendat ions and rulings by the Dispute  Settlement 
Body ("DSB"). The United States is unhappy with the compliance Panel report because the Panel 
applied settled jurisprudence to find that the Public Bodies Memorandum is a measur e taken to 
comply that China could challenge "as such",1 and because the Panel found that subsequent, 
closely -connected administrative review and sunset review determinations were measures taken to 
comply and therefore within the Panel's terms of reference . 
3. China will demonstrate in this appellee's submission that the Appellate Body should reject 
these efforts by the United States to evade compliance with the recommendations and rulings of the 
DSB.  
4. Part II of this appellee's submission demonstrates that, c ontrary to the United States' claim 
on appeal, the Panel did not err in finding: (i) that the Public Bodies Memorandum is a measure 
taken to comply with the recommendations and rulings of the DSB in these proceedings; and (ii)  that 
this measure taken to co mply constitutes a rule or norm of general and prospective application that 
can be challenged "as such".  
5. The United States' appeal in respect of the first finding depends upon a false dichotomy 
between measures that form an "integral part" of a declared m easure taken to comply and measures 
that can be challenged on an independent basis. The United States is simply mistaken in suggesting 
that these two characterizations of a measure are mutually exclusive. The United  States likewise 
errs in arguing that Chi na was required to challenge the Public Bodies Memorandum before the 
original panel, even though the Public Bodies Memorandum was not even relevant to the measures 
originally challenged.  
6. As for the Panel's finding that the Public Bodies Memorandum constitu tes a rule or norm of 
general and prospective application, the United States merely reprises the same arguments that it 
presented to the Panel, which the Panel correctly rejected. The fact that the Public Bodies 
Memorandum is a rule or norm of general and prospective application is evident from the text, as 
well as from the USDOC's consistent use of the Memorandum as the basis for its "public body" 
                                                
1 U.S. Department of Commerce Memorandum regarding "Section 129 Determination of the 
Countervailing Duty Investigation of Circular Welded Carbon Quality Steel Pipe; Light -Walled Rectangular P ipe 
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" (18 May 2012) ("Public Bodies  Memorandum") (CHI -1). WT/DS437/AB/RW/Add.1  
 
- 16 - 
 
  findings in countervailing duty investigations of Chinese products since the USDOC first issued the 
Memorandum  in 2012.  
7. Part III of this appellee's submission rebuts the U.S. claim that the Panel erred in its 
interpretation and application of Article  14(d) of the SCM Agreement. As China will demonstrate, the 
United States' appeal of the Panel's findings is the lat est and perhaps the most brazen move by the 
United States in its long -running campaign to legitimize the USDOC's regular practice of resorting 
to out -of-country benchmarks under Article  14(d).  
8. The United States' claim that the Panel erred in its interpreta tion and application of 
Article  14(d) is premised upon an interpretation of the phrase "prevailing market conditions ... in 
the country of provision" that the Appellate Body expressly rejected in US – Softwood Lumber IV , 
namely that this phrase refers to a market "undistorted by govern ment intervention". The 
United  States has not presented cogent reasons for the Appellate Body to reverse its prior 
interpretation, and the Appellate Body must reject the U.S. claim of error for that reason alone. 
China further demonstrates in Part  III that if the United States is not seeking to overturn the 
Appellate Body's holding in US – Softwood Lumber IV , the United States must be advocating an 
interpretation of Article  14(d) under which the phrase "prevailing ma rket conditions" is consistent 
with certain types of government influence over the conditions of supply and demand, but not others. 
The United States provides no basis for this interpretation, and, in particular, provides no basis to 
distinguish among all of the different ways in which government policies and actions affect market 
conditions, either in terms of their nature or their degree.  
9. The United States also claims that the Panel erred in finding that Article  14(d) required the 
USDOC to demonstrate tha t one or more "government interventions" actually resulted  in the 
"distortion" of in -country prices. Here, too, it is the United States that errs. Whatever the legal 
standard for finding that in -country prices were not "market -determined" – an issue implic ated both 
by the U.S. appeal and by China's other appeal – Article  14(d) plainly requires an investigating 
authority to demonstrate on the basis of positive evidence that in -country prices were not 
market -determined as a result  of "government intervention" . As China will demonstrate, the 
Appellate Body has repeatedly held that an investigating authority must demonstrate a causal 
connection between a "government intervention", such as the possession and exercise of market 
power by government -related supplier s, and the actual pricing behaviour of market actors. The 
United States, by contrast, believes that an investigating authority should be able to reject in -country 
prices on the basis of mere assertion. The United States' proposed interpretation of Article  14(d) is 
unfounded and, if accepted, would mean that the circumstances in which investigating authorities 
can reject in -country prices would not be "very limited" at all. That may be what the United States 
wants, but it is not what Article  14(d) requires.  
10. In Part IV of this appellee's submission, China demonstrates that the Appellate Body must 
reject the U.S. claim that the compliance Panel erred in its interpretation and application of 
Article  2.1(c) of the SCM Agreement.  
11. The U.S. appeal on this issue beg ins with a ridiculous argument that the Panel was somehow 
barred from evaluating whether the USDOC properly identified the existence of one or more "subsidy 
programmes", even though the USDOC was required by the recommendations and rulings of the 
DSB to co nsider "the length of time during which the subsidy programme  has been in operation". 
The Appellate Body addressed the meaning of the term "subsidy programme" in its original report 
in this dispute, and expressly recognized that the USDOC would be required  to identify one or more 
"subsidy programmes" as part of its consideration of "the length of time during which the subsidy 
programme has been in operation". Even the USDOC appears to have recognized this fact in the 
compliance determinations at issue – the United States has invented this objection for the first time 
on appeal.  
12. As for the Panel's interpretation and application of the term "subsidy programme", the 
United  States continues with its failed attempt to persuade the Appellate Body that this term ca n 
refer merely to a series of financial contributions – which, of course, are not "subsidies" on their 
own. The Appellate Body should continue to reject this interpretation. The United States then proffers 
a set of entirely post hoc  rationalizations for th e USDOC's single -sentence "consideration" of "the 
length of time during which the subsidy programme has been in operation". The United  States did 
not even present these rationalizations to the Panel, let alone set them forth in the published 
determinations  of the USDOC as required. Rather surprisingly, the post hoc  rationalizations that the WT/DS437/AB/RW/Add.1  
 
- 17 - 
 
  United States presents for the first time on appeal turn on its assertion that the GOC instructs input 
producers to whom they should sell their products and at what pric e – an assertion that the 
United  States made before the compliance Panel and was forced to retract when China pointed out 
that there was no evidence to support it.  
13. Finally, Part V of this appellee's submission rebuts the U.S. claim that the compliance Pane l 
erred in concluding that certain administrative review and sunset review determinations issued 
subsequent to the original determinations found to be inconsistent were within the Panel's terms of 
reference under Article  21.5 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes  ("DSU").2 This claim of error need not detain the Appellate Body for long. 
The United States is merely seeking to re -litigate issues that the Appellate Body resolved in 
US ‒ Zeroing (EC) (Art. 21.5 – EC). The compliance Panel applied settled jurisprudence to conclu de, 
correctly, that the subsequent measures had a sufficiently close nexus, in terms of nature, effects 
and timing, with the declared measures taken to comply and the recommendations and rulings of 
the DSB, so as to fall within the Panel's terms of referen ce under Article  21.5 of the DSU.3 
 
 
                                                
2 Understanding on Rules and Procedures Governing the Settlement of Disputes, Marrakesh Agreement 
Establishing the World Trade Organization, Annex 2, 1869 U.N.T.S. 401, 33 I.L.M. 1226 (1994) ("DSU"), 
Article  21.5. 
3 Pursuant to the Guidelines in Respect of Executive Summaries of Written Submissions , WT/AB/23 
(11 March 2015), China indicates that this executive summary contains 1,694 words (including footnotes), and 
this appellee's submission (not including the text of the executive su mmary) contains 31,674 words (including 
footnotes).  WT/DS437/AB/RW/Add.1  
 
- 18 - 
 
   
 
ANNEX B -4 
EXECUTIVE SUMMARY OF  THE UNITED STATES ' APPELLEE'S SUBMISSIO N1 
1. China appeals certain of the compliance Panel's legal findings and conclusions related to the 
interpretation and application of the Agreement on Subsidies and Countervailing Measures 
("SCM  Agreement"), and certain of the compliance Panel's findings that as pects of the 
U.S. implementation measures challenged by China are not inconsistent with various provisions of 
the SCM Agreement. This submission demonstrates that China's appeals lack merit.  
2. Proceedings under Article 21.5 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes  ("DSU") are meant to address disagreements "as to the existence or 
consistency with a covered agreement of measures taken to comply with the recommendations and 
rulings [of the Dispute Settlement Body ("DSB") ]." In order to bring the United States into 
compliance with the DSB 's recommendations with respect to "as applied" findings made by the 
original Panel and the Appellate Body, the U.S. Department of Commerce ("USDOC") conducted 
proceedings pursuant to sect ion 129 of the Uruguay Round Agreements Act ("section 129 
proceedings"), in which the USDOC reconsidered its original determinations. In the section 129 
proceedings, the USDOC supplemented its administrative records with information compiled by the 
USDOC a s well as information that the USDOC solicited from interested parties. The USDOC also 
received and took into account arguments submitted by interested parties. On the basis of the new 
evidence and arguments on the records of the section 129 proceedings, a s well as information from 
the original proceedings, the USDOC made and published revised determinations at the conclusion 
of the section 129 proceedings.  
3. In order to bring the United States into compliance with the DSB 's recommendations with 
respect to " as such" findings made by the original Panel concerning the "so -called 'rebuttable 
presumption ' or 'Kitchen Shelving policy, '" which the USDOC applied when determining whether an 
entity is a public body within the meaning of Article 1.1(a)(1) of the SCM Ag reement, the USDOC 
stopped applying the "rebuttable presumption" or "Kitchen Shelving policy."  
4. China erroneously claims in this compliance proceeding that the United States has failed to 
comply with the recommendations adopted by the DSB in this dispute. I n its other appellant 
submission, China contends that the compliance Panel erred in its interpretation and application of 
Articles 1.1(a)(1) and 14(d) of the SCM Agreement. As demonstrated in this submission, 
China 's arguments lack merit.  
5. The United States has structured this appellee submission as follows. Section II demonstrates 
that the compliance Panel did not err in its interpreta tion and application of Article  1.1(a)(1) of the 
SCM Agreement. Section II.A responds to China 's arguments that the co mpliance Panel erred in 
finding that the USDOC 's public body determinations in the section 129 proceedings are not 
inconsistent with U.S. obligations under the SCM Agreement. As explained in section II.A.1, the 
USDOC 's public body determinations are reason ed and adequate and supported by ample record 
evidence relating to the core features of the entities in question and their relationship to the 
government. Indeed, the USDOC 's public body determinations are based on analysis and explanation 
that, altogether , spans more than 90 pages, and in turn that analysis and explanation is founded on 
more than 3,100 pages of evidence that the USDOC itself compiled and placed on the record, as well 
as the USDOC 's consideration of information and arguments submitted by th e GOC and other 
interested parties. As can be seen on the face of the USDOC 's preliminary and final determinations, 
                                                
1 Pursuant to the Guidelines in Respect of Executive Summaries of Written Submissions , WT/AB/23 
(March 11, 2015), the United States indicates that this executive summary contains a total of 2,965 words 
(including footnotes), and this U.S. appellee's  submission (not including the text of the executive summary) 
contains 46,000 words (includi ng footnotes).  WT/DS437/AB/RW/Add.1  
 
- 19 - 
 
  the Public Bodies Memorandum,2 and the CCP  Memorandum,3 China 's contention that the USDOC 
failed to provide a reasoned and adequate explanat ion is absurd. The compliance Panel appropriately 
denied China 's request that it ignore the record evidence, and thus correctly found that the USDOC 's 
determinations are not inconsistent with Article 1.1(a)(1) of the SCM Agreement.  
6. Section II.A.2 responds to China 's challenge of one aspect of the compliance Panel 's legal 
interpretation of Article 1.1(a)(1) of the SCM Agreement, namely the compliance Panel 's finding that 
"the text of Article 1.1(a)(1) does not prescribe a 'connection ' of a particula r degree or nature that 
must necessarily be established between an identified government function and a financial 
contribution." China proposes a novel, flawed interpretation of the term "public body," arguing that 
Article  1.1(a)(1) "imposes a 'legal requi rement ' that the 'government function ' identified by the 
investigating authority relate to the conduct alleged to constitute a financial contribution under 
Article  1.1(a)(1) – i.e. that there be a 'clear logical connection ' between the two – for an entity 
engaged in such conduct to be considered a public body."  
7. In effect, China argues that the only relevant "government function" for the purpose of a 
"public body" analysis is the particular conduct described in Article 1.1(a)(1)(i) -(iii) of the 
SCM Agreemen t. The implication of China 's position is that an entity may be deemed a public body 
only where there is specific evidence that the particular activity in which the entity is engaging, e.g., 
selling the relevant input to the investigated purchaser or provi ding loans, is itself a government 
function, and that engaging in that activity is consistent with the government 's objectives. China 
continues to misunderstand the meaning of the term "public body" and the concept of a "financial 
contribution." Once an en tity has been determined to be a public body – following the required 
examination of the core characteristics of the entity – then any time that entity engages in any of 
the conduct described in Article 1. 1(a)(1)(i) and (iii) of the SCM  Agreement, "there i s a financial 
contribution," per the definition set forth in Article 1.1(a)(1). As the Appellate Body explained in 
US – Anti-Dumping and Countervailing Duties (China) , "[i]f the entity is governmental  (in the sense 
referred to in Article 1.1(a)(1)), and it s conduct falls within the scope of subparagraphs (i) -(iii) or 
the first clause of subparagraph (iv), there is a financial contribution ."4 China proposes an 
interpretation that is legally and logically unsound, and which also is at odds with prior 
Appellat e Body findings. Accordingly, China 's proposed interpretation should be rejected.  
8. Section II.A.3 responds to China 's requests for the Appellate Body to make additional findings 
related to China 's "as applied" claims under Article 1.1(a)(1) of the SCM Agree ment. China 's 
arguments in favor of its requests lack merit; both because they are premised on China 's novel, 
flawed interpretation of the term "public body" and because they suffer from other flaws.  
9. Section II.A.4 responds to China 's request for the Appe llate Body to complete the legal 
analysis and find that the USDOC 's public body determination s are inconsistent with Article  1.1(a)(1) 
of the SCM Agreement. The Appellate Body should reject the new, flawed interpretation of the term 
"public body" proposed by China, and thus there is no basis for the Appellate Body to complete the 
legal analysis of China 's "as applied" claims. And even aside from China 's flawed challenge to the 
compliance Panel 's legal interpretation, China 's claim still would fail because the USDOC did establish 
a clear, logical connection between the "government function" identified by the USDOC and the 
particular conduct at issue under Article 1.1(a)(1) of the SCM Agreement. The USDOC 's 
determination is su pported by ample record evidence even under China 's proposed interpretation.  
10. Section II.B demonstrates that the compliance Panel did not err in finding that the Public 
Bodies Memorandum is not inconsistent, "as such," with Article 1.1(a)(1) of the SCM Agre ement. 
Section II.B.1 shows that China 's two arguments against the compliance Panel 's findings lack merit.  
                                                
2 See US – Countervailing Measures (Article 21.5 – China) (Panel) , para. 2.1.b; Memorandum for Paul 
Piquado from Shauna Biby, Christopher Cassel, and Timothy Hruby Re: Section 129 Determination of the 
Countervailing Duty Investigation of Cir cular 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 App ellate Body's Findings in 
WTO DS379 , May 18, 2012 ("Public Bodies Memorandum") (Exhibit CHI -1). 
3 See Memorandum for Paul Piquado from Shauna Biby, Christopher Cassel, and Tim Hruby Re: The 
Relevance of the Chinese Communist Party for the Limited Purpose o f Determining Whether Particular 
Enterprises Should Be Considered To Be "Public Bodies" within the Context of a Countervailing Duty 
Investigation , May 18, 2012 ("CCP Memorandum") (p. 41 of the PDF version of Exhibit CHI -1). 
4 US – Anti-Dumping and Counterv ailing Duties (China) (AB) , para. 284 (emphasis added).  WT/DS437/AB/RW/Add.1  
 
- 20 - 
 
  11. First, China asserts that, "[i]f the Appellate Body reverses the Panel 's conclusion regarding 
the proper legal standard, the Appellate Body should a lso reverse this basis for the Panel 's rejection 
of China 's 'as such ' claim." However, the new interpretation of the term "public body" proposed by 
China is legally erroneous and should be rejected.  
12. Second, China argues that the compliance Panel erred in f inding that the Public Bodies 
Memorandum does not restrict in a material way the USDOC 's discretion to make a determination 
consistent with Article 1.1(a)(1) of the SCM Agreement. If this is China 's argument, it was China 's 
burden to put before the complia nce Panel evidence demonstrating that the Public Bodies 
Memorandum restricts, in a material way, the discretion of the USDOC to make public body 
determinations in a manner consistent with Article 1.1(a)(1). China did not even attempt to meet 
its burden. Th e compliance Panel did not err in rejecting China 's "as such" claim.  
13. Section II.B.2 responds to China 's request for the Appellate Body to complete the legal 
analysis and find that the Public Bodies Memorandum is inconsistent, "as such,"  with 
Article  1.1(a )(1) of the SCM Agreement. The Appellate Body should reject China 's request to reverse 
the compliance Panel 's finding that the Public Bodies Memorandum is not premised on an erroneous 
legal standard and the compliance Panel 's finding that the Public Bodies  Memorandum does not 
restrict, in a material way, the USDOC 's discretion to make a determination consistent with 
Article  1.1(a)(1) of the SCM Agreement. Thus, there is no basis for the Appellate Body to complete 
the legal analysis of China 's "as such" clai m. Even were the Appellate Body to reverse the compliance 
Panel 's findings, the Appellate Body nevertheless should reject China 's "as such" claim because, as 
demonstrated in the U.S. appellant submission, the Public Bodies Memorandum is not a measure 
that is challengeable "as such" within the scope of the compliance Panel 's terms of reference under 
Article 21.5 of the DSU, and the Public Bodies Memorandum is not a rule or norm of general or 
prospective application.  
14. Section  III addresses China 's claim regard ing Article 14(d) of the SCM Agreement. The basis 
for China 's appeal is an unsupportable assertion that Article 14(d) prescribes three and only 
three  scenarios in which out -of-country prices may serve as an appropriate benchmark for 
determining whether a subsidized good was provided for less than adequate remuneration. Nothing 
in the text of Article 14(d) suggests this interpretation. And, notwithstanding China 's selective 
quotations, the prior Appellate Body and panel reports that have addressed  Article 14(d) have all 
recognized – in express terms – that neither Article 14(d) nor the findings in those reports purports 
to cover the myriad circumstances in which domestic prices may not be the appropriate basis for 
comparison.  
15. Section III.A respond s to China 's argument that its overly narrow legal interpretation should 
be adopted by the Appellate Body. Section III.A.1 sets out the appropriate legal framework for 
interpreting and applying Article 14(d). We explain that, as the Appellate Body has prev iously 
recognized, an investigating authority may reject prices if they are not market determined. In 
section  III.A.2, we address the compliance Panel 's findings on this issue and demonstrate that the 
compliance Panel 's rationale for rejecting China 's argu ment is sound and consistent with a proper 
interpretation of Article 14(d). Because Article 14(d) permits the use of external benchmarks in a 
variety of circumstances, the compliance Panel did not err in finding it could "not accept that the 
narrow legal s tandard advocated by China is required by Article 14(d)."5 Finally, in section III.A.3, 
we address the five panel and Appellate Body reports that China argues support its contention that 
Article 14(d) should be interpreted as prescribing only three scenari os in which domestic prices may 
be considered unsuitable for benchmarking purposes. We demonstrate that the express terms of 
these findings contradict what China asserts.  
16. Section  III.B responds to China 's argument that the term "market" should be turned on  its 
head to include distortive government interventions, such that prices would not reflect the balance 
of supply and demand resulting from the interactions between market -oriented actors (as when 
independent buyers and sellers engage in arm 's-length tran sactions), and that price distortion should 
not be a relevant consideration in the analysis under Article 14(d) of the SCM Agreement. The 
discussion begins in section III.B.1 by addressing, in particular, China 's argument that the 
compliance Panel imposed a circular legal approach by requiring that distortion be examined by 
                                                
5 US – Countervailing Measures (Article 21.5 – China) (Panel) , para. 7.162.  WT/DS437/AB/RW/Add.1  
 
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  comparison to a market price without defining what constitutes a market price.6 As we explain below 
(and previously in the U.S. appellant submission), the United States agrees, albeit fo r different 
reasons, that the compliance Panel formulated an approach that does not appropriately reflect the 
terms of Article 14(d). In particular, as explained in the U.S. appellant submission, the compliance 
Panel erred by reaching a conclusion without addressing the real question at issue, that is, whether 
prices were or were not market determined.7 Under the compliance Panel 's approach, the only 
justification for resort to out -of-country benchmarks is evidence of the difference between the price 
of the  good being assessed and a market -determined price in the same country. Such a 
demonstration, of course, would require that there are market -determined prices for the good in 
that country against which to compare the distorted price. Where no in -country pr ices are market 
determined, a conclusion that a benefit is being conferred could be precluded, despite the 
remuneration being inadequate. The compliance Panel appears to have misconstrued what the 
Appellate Body has articulated about th e proper approach un der Article  14(d) and, in doing so, the 
compliance Panel also foreclosed consideration of appropriate benchmarks.  
17. We explain further in section III.B.2 of this submission that the remedy for the compliance 
Panel 's error is not found in China 's radical new  proposal to define "market" to include distortive 
government interventions. China 's definition is not consistent with the concept of interactions 
between independent buyers and sellers that is captured by t he term "market." The Appellate  Body 
has recogniz ed that private prices  are the starting point for determining a benchmark precisely for 
this reason.8 The fundamental concept of market prices as those  which would be charged between 
independent enterprises acting at arm 's length  is recognized throughout t he SCM  Agreement9 and 
in other provisions of the WTO Agreement.10 In contrast, China 's proposal turns the term "market" 
on its head, such that the market would not reflect the balance of supply and demand resulting from 
the interactions between market -oriented actors (as when independent buyers and sellers engage 
in arm 's-length transactions).  
18. Finally, in section III.B.3 we conclude the discussion by addressing the flaws in China 's final 
argument that price distortion should not be a relevant consideratio n in the analysis under 
Article  14(d). The text of Article 14(d) and the approach the Appellate Body has taken in applying 
that text do not provide support for China 's position.  The Appellate Body has recognized in prior 
disputes that, in light  of the purpose of measuring the benefit to a recipient, being able to ensure 
that potential benchmark prices are market -determined may be necessary  in order to achieve a 
meaningful comparison.  
 
_______________  
 
  
                                                
6 See China's Other Appellant Submission, para. 137 ("the Panel's circular standard . . . states, in effect, 
that 'a market price is a price that doesn't deviate from a market price'").  
7 See U.S. Appellant Submission, paras. 81 -84. 
8 US – Carbon Steel (India) , para. 4.154 (describing prices from "private suppliers in arm's length 
transactions" as "the starting point  of the analysis in determining a benchmark for the purposes of Article 14(d) 
of the SCM Agreement"); US – Softwood Lumber IV (Canada)  ("private pr ices in the market of provision will 
generally  represent an appropriate measure of the 'adequacy of remuneration' for the provision of goods.").  
9 See, e.g.,  SCM Agreement, Annex I Illustrative List, item (e), n. 59 (in establishing existence of export 
subsidies, "Members reaffirm the principle that prices . . . should for tax purposes be the prices which would be 
charged between independent enterprises acting at arm's length."); SCM Agreement, Art. 29.1 (referring to 
transformation from centrally -planned t o "market, free -enterprise economy").  
10 See, e.g. , Customs Valuation Agreement, Art. 1.1(d) ("The customs value of imported goods shall be 
the transaction value, that is the price actually paid or payable for the goods when sold for export to the 
country o f importation adjusted in accordance with the provisions of Article 8, provided: … (d) that the buyer 
and seller are not related, or where the buyer and seller are related, that the transaction value is acceptable 
for customs purposes under the provisions of paragraph 2"); Customs Valuation Agreement, Note 3 to 
Article  1, paragraph 2 ("Where it can be shown that the buyer and seller, although related under the provisions 
of Article 15, buy from and sell to each other as if they were not related, this would demonstrate that the price 
had not been influenced by the relationship. As an example of this, if the price had been settled in a manner 
consistent with the normal pricing practices of the industry in question or with the way the seller settles prices 
for sales to buyers who are not related to the seller, this would demonstrate that the price had not been 
influenced by the relationship.").  WT/DS437/AB/RW/Add.1  
 
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ANNEX  C 
ARGUMENTS OF  THE THIRD PARTICIPA NTS 
Contents  Page  
Annex  C-1 Executive summary of Canada 's third participant's submission  23 
Annex  C-2 Executive summary of the European Union 's third participant's submission  24 
Annex  C-3 Executive summary of Japan 's third participant's submission  26 
 
 WT/DS437/AB/RW/Add.1  
 
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ANNEX  C-1 
EXECUTIVE SUMMARY OF  CANADA 'S THIRD PARTICIPANT'S SUBMISSION1 
1. Canada's submission addresses three issues. First, Canada describes the proper legal standard 
for determining when an investigating authority may reject in -country prices as a benchmark for the 
purposes of determining whether a government's provision of goods is made for less than adequate 
remuneration.  
2. A market need not be a "pure market" or "undistorted by government intervention".2 
Government regulation of a market does not in and of itself justify the rejection on in -county 
benchmarks. An investigating authority must demonstrate a clear evidentiary link between 
government intervention in the market has resulted in the dist ortion of  in-country prices. An 
investigating authority's analysis must be based on positive evidence and provide an adequate 
explanation about how the authority reached the conclusion that in -country prices were distorted. 
Finally, there are instances where a gove rnment has an impact on in -country prices but they may 
still be market prices.  
3. Second, Canada addresses the proper legal standard for establishing a rule or norm of general 
and prospective application. The legal standard requires the complaining Member to demonstrate 
with evidence the attribution, precise content, and general and prospective application of the 
measure.  
4. Finally, Canada addresses the proper legal standard for determining when a measure has a 
sufficiently "close nexus" with the recommendations  and rulings of the DSB and a Member's declared 
measure taken to comply. The correct legal standard for determining whether a measure falls within 
a compliance panel's terms of reference is whether there is a "close nexus" in terms of the nature, 
effects a nd timing between these measures and the rulings and recommendations of the DSB and 
declared measures taken to comply. Consequently, measures such as administrative and sunset 
reviews fall within the jurisdiction of an Article  21.5 compliance panel when th e requisite "close 
nexus" exists.  
 
 
                                                
1 Canada's Third Participant Submission excluding this executive summary consists of 5704 words. This 
Executive Summary consists of 328 words.  
2 Appellate Body Report, US – Softwood Lumber IV , para.  87.  WT/DS437/AB/RW/Add.1  
 
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ANNEX C -2 
EXECUTIVE SUMMARY OF  THE EUROPEAN UNION 'S THIRD PARTICIPANT'S SUBMISSION1 
1. China's Appeal of the Panel's findings related to the USDOC's public body 
determinations  
1. The issue of public b ody is connected to the broader question of attribution. Unlike private 
entities that are "entrusted or directed", if a public body is found to be vested with governmental 
authority, any financial contribution it provides in principle falls within Article 1.1(a)(1).  
2. The European Union does not consider that each instance of the conduct of a public body must 
be assessed to determine its relationship with the governmental function the entity exercises.  
3. The Panel did not find that the connection between the go vernmental function and the 
particular financial contribution at issue is, in general terms, irrelevant to the public body 
assessment. Rather, it disagreed with China's argument that this connection must be assessed in all 
cases . 
2. United States' appeal o f the Compliance Panel's findings related to the Public Bodies 
Memorandum  
4. With respect to Article 21.5, the relevant question is whether the Public Bodies Memorandum 
satisfies the "close nexus" test.  
5. As a general matter, the European Union does not see why a measure could not be considered 
as a "measure taken to comply" in two different disputes.  
6. In a typical case, a measure that continued to exist unchanged from before the original dispute 
and throughout the compliance proceedings could be subject to preclusion. However, there may be 
reasons other than the timing of the publica tion of the text of a measure that would have prevented 
the complaining Member from raising a claim against it.  
7. Regarding the issue of whether the Public Bodies Memorandum is a so -called "rule or norm of 
general or prospective application", the burden of p roof lies on China because this is how it 
formulated its challenge. The text of the measure is relevant but not necessarily determinative. The 
same is true of the fact of repeated application of the measure in individual cases. The Panel's 
assessment of th ese factors should be reasoned, objective, and free of internal contradictions.  
3. United States' appeal and China's other appeal of the Compliance Panel's findings 
under Articles 1.1(b) and 14(d) of the SCM Agreement  
8. Both parties appeal the Panel's findin gs under Article 14(d). The central issue in the 
two appeals concerns the question under which conditions an investigating authority may use 
out-of-country benchmarks in case of government interventions which may distort prices, i.e. not in 
situations in w hich the government is the predominant supplier of the good in question which have 
been dealt with in previous disputes. The Panel found that the investigating authority must show a 
"direct impact" of the government intervention on the prices of the good i n question. The 
US considers that this legal standard is too narrow, China deems the Panel's standard to be too 
broad and argues that external benchmarks can only be used if the government effectively 
determines the price.  
9. The EU disagrees with the Panel t o the extent that the Panel took the position that an 
investigating authority must establish a "direct impact" between the government intervention and 
price distortion. The EU's position is that an investigating authority needs to establish a link in the 
form of an evidentiary path between the government interventions in question and the price 
                                                
1 Total length of the submission, excluding executive  summary: 9745 words. Length of the executive 
summary: 925 words.  WT/DS437/AB/RW/Add.1  
 
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  distortion. Whether such a link is based on a "direct" or "indirect" impact of the government 
intervention on the price should not matter. What is important is for th e investigating authority to 
adequately and plausibly explain why the respective government interventions result in prices that 
are no longer market determined and hence distorted. Under the Panel's approach, the use of 
external benchmarks under Article 14 (d) would be unduly restricted because government 
interventions with an indirect effect may be as distortive on prices as those with a direct impact. The 
Panel's approach therefore would not be able to capture the myriad forms of government 
interventions t hat exist. The assessment of an evidentiary link between government intervention 
and price distortion will require a case -by case analysis and must be based on the totality of the 
evidence.  
4. United States' appeal of the Compliance Panel's findings under  Article 2.1 of the 
SCM Agreement  
10. The US argues, inter alia , that the Panel erroneously interpreted Article 2.1(c) by requiring – 
for the assessment of whether a subsidy programme exists – that each financial contribution granted 
to a recipient under the programme (here: inputs provided for less than adequate value) must confer 
a benefit, a condition that is not grounded in Article 2.1(c). China considers that the US approach 
focusing on sy stematic financial contributions only runs counter to Appellate Body case law.  
11. The EU submits that unwritten subsidy measures like the present input transactions pose 
particular evidentiary challenges in terms of identifying a subsidy programme. Under the  
Appel late Body's case law, one possibility to evidence a subsidy programme is to show a systematic 
series of actions (demonstrating a plan or scheme) pursuant to which financial contributions that 
confer a benefit are provided to certain enterprises. The EU does not consider that this case law 
requires that, in case of input provision transactions, every such transaction must be both a financial 
contribution and confer a benefit. In the total number of transactions, there may well be input 
transactions tha t do not confer a benefit but as along as those transactions that do confer a benefit 
can be qualified as systematic, they may constitute proof of a plan or scheme (programme).  
 WT/DS437/AB/RW/Add.1  
 
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ANNEX C -3 
EXECUTIVE SUMMARY OF  JAPAN 'S THIRD PARTICIPANT'S SUBMISSION *1 
A. Public Bod y Inquiry  
1. Japan disagrees with China's argument that a public body determination requires that the 
control by the government over the entity be exercised in relation to the conduct of 
"financial  contribution ". Rather, the focus of the analysis  should be on the core characteristics and 
functions of the entity, its relationship with the government, and the legal and economic environment 
of the investigated country. An important element therein  is whether  an entity  is structured in a 
manner so that it can act not solely in accordance with commercial considerations . A public body 
can be differentiated from private bodies by its ability to continue its existence to achieve its policy 
goals even if it records  losses for a sustained period of time with certain financial capabilities provided 
by government.   
B. Price Distortion  
2. The Appellate Body's findings in US – Carbon Steel (India)  do not support an interpretation of 
Article 14(d) that would require that dev iation from market -determined prices must be quantified  or 
specific impact on in -country transaction prices must be identified.  On the contrary, the 
Appellate  Body indicated that the analysis of price distortion must be made on a case -by-case basis, 
examin ing a variety of factors. In Japan 's view, government intervention can be inferred to distort 
market prices if the evidence indicates that such intervention changes the conditions of competition 
in the market unjustifiably or arbitrarily .  
3. Japan also disagrees with China's argument that an investigating authority may only resort to 
out-of-country benchmarks where the government effectively determines the price within the 
country.  Rather, Japan believes that a possible approach to determine distortion is to evaluate 
whether the price in the market is formed through arm 's length transactions based on the respective 
market actors' commercial considerations.  
 
__________  
                                                
1 * Japan's Third Participant S ubmission 18,202 words, Executive Summary 1,618 words.