WT/DS505/R/Add.1  
 
5 July 2018 
(18-4175) Page: 1/86 
  Original: English  
 
  
UNITE D STATES – COUNTERVAILING MEASU RES ON  
SUPERCALENDERED PAPE R FROM CANADA  
REPORT OF THE PANEL  
Addendum  
This addendum  contains Annexes A to D to the Report of the Panel to be found in document  
WT/DS505/R . 
 
 
_______________  
 
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  LIST OF ANNEXES  
ANNEX  A 
PANEL  DOCUMENTS  
Contents  Page  
Annex  A-1 Working Procedures of the Panel   A-2 
Annex  A-2 Additional Working Procedures of the Panel Concerning  
Business Confidential Information  A-7 
Annex  A-3 Additional Working Procedures for the Panel: Open Meetings  A-9 
Annex -A-4 Interim review  A-10 
ANNEX B  
ARGUMENTS OF CANADA  
Contents  Page  
Annex  B-1 First i ntegrated executive summary of the arguments of Canada  B-2 
Annex  B-2 Second integrated executive summary of the arguments of Canada  B-13 
ANNEX  C 
ARGUMENTS OF THE UNI TED STATES  
Contents  Page  
Annex C -1 First i ntegrated executive summary of the arguments of the United States  C-2 
Annex C -2 Second i ntegrated executive summary of the arguments of the United States  C-14 
ANNEX  D 
ARGUMENTS OF THE THI RD PARTIES  
Contents  Page  
Annex D -1 Integrated executive summary of the arguments of Brazil  D-2 
Annex D -2 Integrated executive summary of the arguments of China  D-5 
Annex D -3 Integrated executive summary of the arguments of the European Union  D-7 
Annex D -4 Integrated executive summary of the arguments of India  D-10 
Annex D -5 Integrated executive summary of the arguments of Japan D-12 
Annex D -6 Answers of Turkey to questions of the Panel D-17 
 
 
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  ANNEX  A 
PANEL DOCUMENTS  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  A-2 
Annex  A-2 Additional Working Procedures of the Panel Concerning  
Business Confidential Information  A-7 
Annex  A-3 Additional Working Procedures for the Panel: Open Meetings  A-9 
Annex -A-4 Interim r eview  A-10 
 
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  ANNEX  A-1 
WORKING PROCEDURES O F THE PANEL  
Adopted on 8 December 2016  
1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on 
Rules and Procedures Governing the Settlement of Disputes (DSU). In addition, the following 
Working Procedures shall apply.  
General  
 
2. The deliberations of the Panel and the documents submitted to it shall be kept confidential. 
Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute (hereafter 
"party") from disclosing statements of its own positions to the public. Members shall treat as 
confidential information submitted to the Panel by another Member which the submitting Member 
has designated as confidential. Where a party submits a confidential version of its written 
submissions to the Panel, it shall also, upon request of a Member, provide a non -confidential 
summary of the informati on contained in its submissions that could be disclosed to the public.  
3. The parties and third parties shall treat business confidential information in accordance with 
the procedures set forth in the Additional Working Procedures of the Panel Concerning Busi ness 
Confidential Information.  
4. The Panel shall conduct its internal deliberations in closed session. The parties, and Members 
having notified their interest in the dispute to the Dispute Settlement Body in accordance with 
Article 10 of the DSU (hereafter " third parties"), shall be present at the meetings only when invited 
by the Panel to appear before it. The Panel may open its meetings with the parties to the public, 
subject to appropriate procedures to be adopted by the Panel after consulting the parties.  
5. Each party and third party has the right to determine the composition of its own delegation 
when meeting with the Panel. Each party and third party shall have the responsibility for all 
members of its own delegation and shall ensure that each member of su ch delegation acts in 
accordance with the DSU and these Working Procedures, particularly with regard to the 
confidentiality of the proceedings.  
Submissions  
 
6. Before the first substantive meeting of the Panel with the parties, each party shall submit a 
written submission in which it presents the facts of the case and its arguments, in accordance with 
the timetable adopted by the Panel. Each party shall also submit to the Panel, prior to the second 
substantive meeting of the Panel, a written rebuttal, in accordance with the timetable adopted by 
the Panel.  
7. A party shall submit any request for a preliminary ruling at the earliest possible opportunity 
and in any event no later than in its first written submission to the Panel. If Canada  requests such 
a ruling , the United  States  shall submit its response to the request in its first written submission. If 
the United  States  requests such a ruling, Canada  shall submit its response to the request prior to 
the first substantive meeting of the Panel, at a time to be determined by the Panel in light of the 
request. Exceptions to this procedure shall be granted upon a showing of good cause.  
8. Each party shall submit all factual evidence to the Panel no later than during the first 
substantive meeting, except with respect t o evidence necessary for purposes of rebuttal, answers 
to questions or comments on answers provided by the other party. Exceptions to this procedure 
shall be granted upon a showing of good cause. Where such exception has been granted, the Panel 
shall accor d the other party a period of time for comment, as appropriate, on any new factual 
evidence submitted after the first substantive meeting.  WT/DS505 /R/Add.1  
 
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  9. Where the original language of exhibits is not a WTO working language, the submitting party 
or third party shall subm it a translation into the WTO working language of the submission at the 
same time. The Panel may grant reasonable extensions of time for the translation of such exhibits 
upon a showing of good cause. Any objection as to the accuracy of a translation should  be raised 
promptly in writing, no later than the next filing or meeting (whichever occurs earlier) following 
the submission which contains the translation in question. The Panel may grant exceptions to this 
procedure upon a showing of good cause, which ma y include where the issue concerning 
translation arises later in the dispute. Any objection shall be accompanied by a detailed 
explanation of the grounds of objection and an alternative translation. Should a party become 
aware of any inaccuracies in the tr anslations of the exhibits submitted by that party, it shall inform 
the Panel and the other party promptly, and provide a new translation.  
10. To facilitate the maintenance of the record of the dispute and maximize the clarity of 
submissions, each party and th ird party shall sequentially number its exhibits throughout the 
course of the dispute , indicating the submitting Member and the number of each exhibit on its 
cover page. For example, exhibits submitted by Canada  could be numbered CAN-1, CAN-2, etc. If 
the last exhibit in connection with the first submission was numbered CAN-5, the first exhibit of 
the next submission thus would be numbered CAN -6. 
Questions  
 
11. The Panel may at any time pose questions to the parties and third parties, orally or in 
writing, incl uding prior to each substantive meeting.  
Substantive meetings  
 
12. Each party shall provide to the Panel the list of members of its delegation in advance of each 
meeting with the Panel and no later than 12h00 (noon) the previous working day.  
13. The first substan tive meeting of the Panel with the parties shall be conducted as follows:  
a. The Panel shall invite Canada  to make an opening statement to present its case first. 
Subsequently, the Panel shall invite the United  States  to present its point of view. Before 
each party takes the floor, it shall provide the Panel and other participants at the 
meeting with a provisional written version of its statement. In the event that 
interpretation is needed, each party shall provide additional copies for the interpreters, 
throu gh the Panel Secretary. Each party shall make available to the Panel and the other 
party the final version of its opening statement as well as its closing statement, if 
available, preferably at the end of the meeting, and in any event no later than 17h00 o n 
the first working day following the meeting.  
b. After the conclusion of the statements, the Panel shall give each party the opportunity to 
ask each other questions or make comments, through the Panel. Each party shall then 
have an opportunity to answer thes e questions orally. Each party shall send in writing, 
within a timeframe to be determined by the Panel, any questions to the other party to 
which it wishes to receive a response in writing. Each party shall be invited to respond in 
writing to the other par ty's written questions within a deadline to be determined by the 
Panel.  
c. The Panel may subsequently pose questions to the parties. Each party shall then have an 
opportunity to answer these questions orally. The Panel shall send in writing, within a 
timefram e to be determined by it, any questions to the parties to which it wishes to 
receive a response in writing. Each party shall be invited to respond in writing to such 
questions in accordance with the timetable adopted by the Panel.  
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to 
present a brief closing statement, with Canada  presenting its statement first.  WT/DS505/R/Add.1  
 
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  14. The second substantive meeting of the Panel with the parties shall be conducted as follows:  
a. The Panel shall ask the United  States  if it wishes to avail itself of the right to present its 
case first. If so, the Panel shall invite the United  States  to present its opening statement, 
followed by Canada . If the United  States  chooses not to avail itself of that right, the 
Panel shall invite Canada  to present its opening statement first. Before each party takes 
the floor, it shall provide the Panel and other participants at the meeting with a 
provisional written version of its statement. In the event that interpretation is n eeded, 
each party shall provide additional copies for the interpreters, through the Panel 
Secretary. Each party shall make available to the Panel and the other party the final 
version of its opening statement as well as its closing statement, if available,  preferably 
at the end of the meeting, and in any event no later than 17h00 of the first working day 
following the meeting.  
b. After the conclusion of the statements, the Panel shall give each party the opportunity to 
ask each other questions or make comments , through the Panel. Each party shall then 
have an opportunity to answer these questions orally. Each party shall send in writing, 
within a timeframe to be determined by the Panel, any questions to the other party to 
which it wishes to receive a response i n writing. Each party shall be invited to respond in 
writing to the other party's written questions within a deadline to be determined by the 
Panel.  
c. The Panel may subsequently pose questions to the parties. Each party shall then have an 
opportunity to answ er these questions orally. The Panel shall send in writing, within a 
timeframe to be determined by it, any questions to the parties to which it wishes to 
receive a response in writing. Each party shall be invited to respond in writing to such 
questions in accordance with the timetable adopted by the Panel.  
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to 
present a brief closing statement, with the party that presented its opening statement 
first, presenting its closing  statement first.  
Third parties  
 
15. The Panel shall invite each third party to transmit to the Panel a written submission prior to 
the first substantive meeting of the Panel with the parties, in accordance with the timetable 
adopted by the Panel.  
16. Each third party shall also be invited to present its views orally during a session of this first 
substantive meeting, set aside for that purpose. Each third party shall provide to the Panel the list 
of members of its delegation in advance of this session and no late r than 12h00 (noon) the 
previous working day.  
17. The third -party session shall be conducted as follows:  
a. All third parties may be present during the entirety of this session.  
b. The Panel shall first hear the arguments of the third parties in alphabetical order. Third 
parties present at the third -party session and intending to present their views orally at 
that session, shall provide the Panel, the parties and other third -parties with provisional 
written versions of their statements before they take the floor. Thi rd parties shall make 
available to the Panel, the parties and other third parties the final versions of their 
statements, preferably at the end of the session, and in any event no later than 17h00 
of the first working day following the session.  
c. After the t hird parties have made their statements, the parties may be given the 
opportunity, through the Panel, to ask the third parties questions for clarification on any 
matter raised in the third parties' submissions or statements. Each party shall send in 
writin g, within a timeframe to be determined by the Panel, any questions to a third party 
to which it wishes to receive a response in writing.  WT/DS505 /R/Add.1  
 
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  d. The Panel may subsequently pose questions to the third parties. Each third party shall 
then have an opportunity to answ er these questions orally. The Panel shall send in 
writing, within a timeframe to be determined by it, any questions to the third parties to 
which it wishes to receive a response in writing. Each third party shall be invited to 
respond in writing to such q uestions within a deadline to be determined by the Panel.  
Descriptive section  
 
18. The description of the arguments of the parties and third parties in the descriptive section  of 
the Panel report shall consist of executive summaries provided by the parties and  third parties, 
which shall be annexed as addenda to the report. These executive summaries shall not in any way 
serve as a substitute for the submissions of the parties and third parties in the Panel's examination 
of the case.  
19. Each party shall submit an in tegrated executive summar y of the facts and arguments as 
presented to the Panel in its first written submissions, first oral statements and responses to 
questions where possible, following the first substantive meeting, and a separate integrated 
executive summary of its written rebuttal, second oral statements and responses to questions 
where possible, following the second substantive meeting, in accordance with the timetable 
adopted by the Panel. Each integrated executive summary shall be limited to no mor e than 15 
pages. The Panel will not summarize in a separate part of its report, or annex to its report, the 
parties' responses to questions.  
20. Each third party shall submit an integrated executive summary of its arguments as 
presented in its written submissi on and statement in accordance with the timetable adopted by the 
Panel. This integrated executive  summary may also include a summary of responses to questions, 
if relevant. The executive summary to be provided by each third party shall not exceed six pages . 
21. The Panel reserves the right to request the parties and third parties to provide executive 
summaries of facts and arguments presented by a party or a third party in any other submissions 
to the Panel for which  a deadline may not be specified in the timet able. 
Interim review  
 
22. Following issuance of the interim report, each party may submit a written request to review 
precise aspects of the interim report and request a further meeting with the Panel, in accordance 
with the timetable adopted by the Panel. The  right to request such a meeting shall be exercised no 
later than at the time the written request for review is submitted.  
23. In the event that no further meeting with the Panel is requested, each party may submit 
written comments on the other party's written  request for review, in accordance with the timetable 
adopted by the Panel. Such comments shall be limited to commenting on the other party's written 
request for review.  
24. The interim report, as well as the final report prior to its official circulation, sha ll be kept 
strictly confidential and shall not be disclosed.  
Service of documents  
 
25. The following procedures regarding service of documents shall apply:  
a. Each party and third party shall submit all documents to the Panel by filing them with 
the DS  Registry (office No. xxx).  
b. Each party and third party shall file three  paper copies of all documents it submits to the 
Panel. Exhibits may be filed in four copies on CD -ROM or DVD and two paper copies. 
The DS Registrar shall stamp the documents with the date and ti me of the filing.  
c. Each party and third party shall also provide an electronic copy of all documents it 
submits to the Panel at the same time as the paper versions, preferably in Microsoft 
Word format, either on a CD -ROM, a DVD or as an e -mail attachment. I f the electronic WT/DS505/R/Add.1  
 
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  copy is provided by e -mail, it should be addressed to DSRegistry@wto.org, with a copy 
to xxxx@wto.org. If a CD -ROM or DVD is provided, it shall be filed with the DS Registry. 
The paper version of documents shall constitute the official ver sion for the purposes of 
the record of the dispute.  
d. Each party shall serve any document submitted to the Panel directly on the other party. 
Each party shall, in addition, serve on all third parties its written submissions in advance 
of the first substantiv e meeting with the Panel. Each third party shall serve any 
document submitted to the Panel directly on the parties and all other third parties. Each 
party and third party shall confirm, in writing, that copies have been served as required 
at the time it pr ovides each document to the Panel.  
e. Each party and third party shall file its documents with the DS Registry and serve copies 
on the other party (and third parties where appropriate) by 17h00 (Geneva time) on the 
due dates established by the Panel. A party or third party may submit its documents to 
another party or third party in electronic format only, subject to the recipient party or 
third party's prior written approval and provided that the Panel Secretary is notified.  
f. The Panel shall provide the parties  with an electronic version of the descriptive section, 
the interim report and the final report, as well as of other documents as appropriate. 
When the Panel transmits to the parties or third parties both paper and electronic 
versions of a document, the pa per version shall constitute the official version for the 
purposes of the record of the dispute.  
26. The Panel reserves the right to modify these procedures as necessary, after consultation 
with the parties.  
 
 
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  ANNEX A -2 
ADDITIONAL WORKING P ROCEDURES OF THE PAN EL CONCERNING  
BUSINESS CONFIDENTIA L INFORMATION  
Revised on 20 January 2017  
1. The following procedures apply to business confidential information (BCI) submitted in the 
course of the present Panel proceedings.  
2. For the purposes of these proceedings, BCI is defined as any information that has been 
designated as such by a party or a third party submitting the information to the Panel. The parties 
or third pa rties shall only designate as BCI information that is not available in the public domain, 
the release of which would cause serious harm to the interests of the originator(s) of the 
information. BCI may include information that was previously treated by the  US Department of 
Commerce as confidential or proprietary information protected by Administrative Protective Order 
in the course of the countervailing proceeding at issue in this dispute, entitled Supercalendered 
Paper from Canada (C -122-854). In addition,  these procedures do not apply to any BCI if the 
entity  which  provided the information in the course of the aforementioned investigation  has agreed  
in writing to make the information publicly available.  
3. If a party considers it necessary to submit to the Pa nel BCI as defined above from an entity 
that submitted that information in the investigation  at issue, the party shall, at the earliest 
possible date, obtain an authori zing letter from the entity and provide such authori zing letter to 
the Panel, with a cop y to the other party. The authori zing letter from the entity shall authori ze 
both Canada and the United States  to submit in this dispute, in accordance with these procedures, 
any confidential information submitted by that entity in the course of the invest igation . Each party 
shall, at the request of the other party, facilitate the communication to an entity in its territory of 
any request to provide an authori zing letter referred to above. Each party shall encourage any 
entity in its territory that is reque sted to grant the authori zation referred to in this paragraph  to 
grant such authori zation.  
4. No person may have access to BCI except a member of the Secretariat or the Panel, an 
employee of a party or third party, or an outside advisor to a party or third pa rty for the purposes 
of this dispute. However, an outside advisor to a party or third party is not permitted access to BCI 
if that advisor is an officer or employee of an enterprise engaged in the production, sale, export, or 
import of the products that we re the subject of the investigation at issue in this dispute, or an 
officer or employee of an association of such enterprises.  
5. A person having access to BCI shall treat it as confidential, i.e. shall not disclose that 
information other than to persons auth orized to have access to it pursuant to these procedures. 
Each party and third party is responsible for ensuring that its employees and/or outside advisors 
comply with these procedures. BCI obtained under these procedures may be used only for the 
purpose o f providing information and argumentation in this dispute and for no other purpose. All 
documents and electronic storage media containing BCI shall be stored in such a manner as to 
prevent unauthorized access to such information.  
6. Third parties' access to B CI shall be subject to the terms of these procedures. A party 
objecting to a third party having access to BCI it is submitting shall inform the Panel of its 
objection and the reasons therefor prior to filing the document containing such BCI. The Panel 
may, if it finds the objection justified, request the objecting party to provide a non -confidential 
version of the BCI in question to the third party.  
7. A party submitting BCI shall mark the cover and/or first page of the document containing 
BCI, and each page o f the document, to indicate the presence of such information. The specific 
information in question shall be placed between double brackets, as follows: [[xx,xxx.xx]]. The 
first page or cov er of the document shall state " Contains Business Confident ial Infor mation on 
pages xxxxxx" , and each page of the doc ument shall contain the notice " Contains Bu siness WT/DS505/R/Add.1  
 
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  Confidential Information"  at the top of the page.  Documents previously submitted to the United 
States Department of Commerce containing information designate d as BCI for purposes of these 
proceedings pursuant to paragraph 2, and marked as "Contains Business Proprietary Information ", 
shall be deemed to comply with this requirement . A party submitting BCI in the form of, or as part 
of, an Exhibit shall, in addit ion to the above, so indicate by putting "BCI" next to the exhibit 
number (e.g. Exhibit CAN -1 (BCI)).  
8. Where BCI is submitted in electronic format, the file name shall include the terms "Business 
Confidential Information" or "BCI". In addition, where applic able, the label of the storage medium 
shall be clearly marked with the statement "Business Confidential Information" or "BCI".  
9. Where a party submits a document containing BCI to the Panel, the other party  or third 
party  referring to that BCI in its documen ts, including written submissions and oral statements, 
shall clearly identify all such information in those documents. All such documents shall be ma rked 
and treated as described in paragraph 7. In the case of an oral statement containing BCI, the 
party or  third party making such a statement shall inform the Panel before making it that the 
statement will contain BCI, and the Panel will ensure that only persons authorized to have access 
to BCI pursuant to these procedures are present or observing the session  at that time. The written 
versions of such oral statements submitted to the Panel shall be marked as provided for in 
paragraph 7.  
10. If a party or third party considers that information submitted by the other party or a third 
party should have been designate d as BCI and objects to its submission without such designation, 
it shall forthwith bring this objection to the attention of the Panel and the other party, and, where 
relevant, the third parties, together with the reasons for the objection. Similarly, if a  party or third 
party considers that the other party or a third party designated as BCI information which should 
not be so designated, it shall forthwith bring this objection to the attention of the Panel and the 
other party, and, where relevant, the third  parties, together with the reasons for the objection. 
The Panel shall decide whether information subject to an objection will be treated as BCI for the 
purposes of these proceedings on the basis of the criteria set out in paragraph 2.  
11. The Panel will not d isclose BCI, in its report or in any other way, to persons not authorized 
under these procedures to have access to BCI. The Panel may, however, make statements of 
conclusion drawn from such information. Before the Panel circulates its final report to the 
Members, the Panel will give each party and, where BCI was submitted by a third party, that third 
party an opportunity to review the report to ensure that it does not contain any information that 
the party or third party has designated as BCI.  
12. Submissions, exhibits, and other documents or recordings containing BCI will be included in 
the record forwarded to the Appellate Body in the event of an appeal of the Report of the Panel.  
 
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  ANNEX A -3 
ADDITIONAL WORKING P ROCEDURES FOR TH E PANEL: OPEN MEETIN GS 
Adopted on 27 January 2017  
1. Subject to the availability of suitable WTO meeting rooms, the Panel will start its first and 
second substantive meetings with the parties , on 21-22 March 2017 and 13 -14 June 2017 , with a 
session open to the public at which no confidential information shall be referred to or disclosed 
("non -confidential session").  
2. At such sessions, each party will be asked to make opening and closing statements which 
shall not include confidential information. After both p arties have made their opening statements, 
each party will be given the opportunity to pose questions or make comments on the other party's 
statement, as described in paragraphs 13 and 14 of the Working Procedures adopted by the Panel. 
The Panel may pose a ny questions or make any comments during such session. Such questions 
shall not include confidential information.  
3. To the extent that the Panel or either of the parties considers it necessary, the Panel shall 
proceed to a closed session ("confidential sess ion"), during which the parties will be allowed to 
make additional statements or comments and pose questions that involve confidential information. 
The Panel may also pose questions during the confidential session.  
4. The Panel will start the third party ses sion of its first substantive meeting with the parties by 
opening a portion of this session to the public ("non -confidential third party session"). At this 
portion of the third party session, no confidential information shall be referred to or disclosed. 
Each third party wishing to make its statement in the non -confidential third party session shall do 
so, but shall ensure that its statement does not include confidential information. After such third 
parties have made their statements, questions or comments  from the parties or the Panel may be 
presented concerning these statements, as foreseen in paragraph 17 of the Working Procedures 
adopted by the Panel. Such questions or comments shall not include confidential information. 
To the extent that the Panel or any of the other third parties considers it necessary, the Panel shall 
then conclude this portion of the third party session and proceed to a third party closed session 
("confidential third party session") during which other third parties shall make their statements.  
5. During the confidential sessions referred to above, the following persons shall be admitted 
into the meeting room:  
 Members of the Panel;  
 Members of the delegations of the parties;  
 Members of the delegations of the third parties throughout the t hird party session;  
 WTO Secretariat staff assisting the Panel.  
6. As set out below in paragraph 7, a live closed -circuit television broadcast of the Panel 
meeting to a separate viewing room in the WTO shall be used to allow other WTO Members, 
Observers, staff  members, and registered members of the public to observe the non -confidential 
sessions.  
7. The viewings will be open to officials of WTO Members, Observers and staff members of the 
WTO Secretariat upon presentation of their official badges. Accredited jo urnalists and 
representatives of relevant non -governmental organizations (NGOs) may indicate to the 
Secretariat (Information and External Relations Division) their interest in attending the viewings. 
No later than  four weeks before the substantive meetings , the WTO Secretariat will place a notice 
on the WTO website informing the public of the non -confidential sessions. The notice shall include 
a link through which members of the public can register directly with the WTO. The deadline for 
public registration  shall be close of business on 10 March 2017 for the first substantive meeting, 
and 2 June 2017 for the second substantive meeting.  
 
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  ANNEX A -4 
INTERIM REVIEW  
1  INTRODUCTION  
1.1.  On 10 November 2017, the Panel submitted its Interim Report to th e parties. 
On 24 November 2017, Canada and the United States each submitted written requests for the 
review of precise aspects of the Interim Report. On 1 December 2017, both parties submitted 
comments on each other's requests for review. Neither party req uested an interim review meeting.  
1.2.  In accordance with Article 15.3 of the DSU, this section of the Panel Report sets out the 
Panel's response to the parties' requests made at the interim review stage. The Panel modified 
aspects of its Report in the light of  the parties' comments where it considered it appropriate, as 
explained below. Due to changes as a result of our review, certain numbering of the footnotes in 
the Final Report has changed from the Interim Report. The text below refers to the footnote 
numbe rs in the Interim Report, with the footnote numbers in the Final Report in parentheses for 
ease of reference. The paragraph numbering did not change from the Interim Report to the Final 
Report.  
1.3.  In addition to the modifications specified below, the Panel al so corrected a number of 
typographical and other non -substantive errors throughout the Report, including those identified 
by the parties. The Panel is grateful for the assistance of the parties in this regard.  
2  SPECIFIC REQUESTS FO R REVIEW  
2.1  Canada's specifi c requests for review  
2.1.1   Paragraph 7.8  
2.1.  Canada suggests that the Panel revise letter (b) of paragraph 7.8, in order to add the phrase 
"the interested parties".  
2.2.  The United States made no comment on this request.  
2.3.  We have decided to accommodate Canada's request a fter reviewing Canada's relevant claim.  
2.1.2   Paragraph 7.12  
2.4.  Canada requests that the Panel revise the third sentence of paragraph 7.12, in order to 
remove the suggestion that all below -the-line rates are made possible through the LRT. Canada 
argues that, as it has observed in this proceeding, there are also several other types of 
below -the-line rates that were not adopted through the LRT.  
2.5.  The United States made no comment on this request.  
2.6.  We have decided to accommodate Canada's request after reviewing Canada's r elevant 
arguments.  
2.1.3   Paragraph 7.31  
2.7.  Canada suggests that the Panel revise the last sentence of paragraph 7.31, in order to reflect 
more clearly its argument that the benchmark was not appropriate because the cost elements of 
the benchmark were speculative an d because it double -counted ROE.  
2.8.  The United States made no comment on this request.  WT/DS505 /R/Add.1  
 
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  2.9.  We have decided to accommodate Canada's request after reviewing Canada's relevant 
arguments.  
2.1.4   Paragraph 7.77  
2.10.   Canada suggests that the Panel revise footnote 153 (162 of the F inal Report) of 
paragraph  7.77. Canada argues that the relevant references regarding this paragraph are 
found  in paragraphs 153 -159 of Canada's first written submission and paragraphs 49 -54 of 
Canada's  second written submission.  
2.11.   The United States made no c omment on this request.  
2.12.   We have corrected the inaccuracy identified by Canada in footnote 153 (162 of the 
Final Report).  
2.1.5   Paragraph 7.138  
2.13.   Canada suggests that the Panel revise the second sentence of paragraph 7.138, as well as 
footnote 235 (245 of the Final  Report), in order to reflect the fact that Canada did not suggest that 
a price comparator would have been the only possible method of demonstrating sufficient evidence 
of benefit for the purposes of initiation in this case.  
2.14.   The United States made no comme nt on this request.  
2.15.   We have decided to accommodate Canada's request after reviewing Canada's relevant 
arguments.  
2.1.6   Paragraph 7.173  
2.16.   Canada requests that the Panel revise footnote 285 (295 of the Final Report) of 
paragraph  7.173. Canada argues that a more accu rate citation from the USDOC Issues and 
Decision Memorandum would be from pages 12 -13, where the USDOC provides the legal basis for 
its conclusion by noting that Resolute "withheld information that has been requested".  
2.17.   The United States indicates that it has no objection if the citation to page 13 is expanded to 
include pages 12 -13. The United States notes, however, that the existing reference to page 10 is 
correct, and should also be retained because it correctly cites to USDOC's determination that 
Resolute failed to accurately respond to the questionnaires concerning other subsidies.  
2.18.   We have decided to reject Canada's request. The citation in footnote 285 (295 of the 
Final Report) refers to specific language used by the  USDOC throughout its Issues and Decisions 
Memorandum, and this specific language is not used in page 12 of that document.  
2.1.7   Paragraph 7.235  
2.19.   Canada suggests that the Panel revise the third sentence of paragraph 7.2 35. Canada 
argues that, because the Panel is  writing generally, the words "on SC Paper" should instead be "on 
the imported product."  
2.20.   The United States made no comment on this request.  
2.21.   We have corrected paragraph 7.2 35, in order to reflect the fact that the Panel is writing in a 
general sense on the third sentence.  
2.1.8   Paragraph 7.278  
2.22.   Canada suggests that the Panel revise the fourth and sixth sentences of paragraph 7.278, in 
order to reflect that the USDOC recommended proceeding with an investigation into six of eight 
new subsidy allegations in the 18 Apr il 2016 document and one of two amended new subsidy 
allegations in the 12 July 2016 document.  WT/DS505/R/Add.1  
 
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  2.23.   The United States made no comment on this request.  
2.24.   We have decided to accommodate Canada's request after reviewing the relevant evidence.  
2.1.9   Paragraph 7.295  
2.25.   Canada s uggests that the Panel add a reference at the end of paragraph 7.295 to the fact 
that Canada also introduced an additional US countervailing duty determination as evidence of the 
ongoing conduct at the second substantive meeting.  
2.26.   The United States made no comment on this request.  
2.27.   We have decided to accommodate Canada's request after reviewing the additional evidence 
submitted by Canada.  
2.2  The United States' specific requests for review  
2.2.1   Paragraph 7.22  
2.28.   The United States requests that the Panel modify the fourth  sentence of paragraph 7.22, 
in order to add, to the description of the evidence set out by the USDOC with respect to the 
Government of Nova Scotia's alleged involvement in the process of negotiating PHP's LRR, as well 
as the NSUARB's role in creating and amending the LRT, the agreement between Nova Scotia and 
PWCC, whereby if the Port Hawkesbury's mill load resulted in increased incremental costs, 
Nova Scotia would guarantee that neither Port Hawkesbury nor other ratepayers would be required 
to pay the cos ts. 
2.29.   Canada is of the view that the request should be rejected as misleading and inaccurate. 
Canada argues that the USDOC did not find that the Government of Nova Scotia negotiated a 
commitment with PWCC in its final determination, but rather found that "[N ova Scotia] also made 
a commitment to the [NSUARB] that if the mill load of Port Hawkesbury triggered an additional 
Renewable Energy Standard (RES) obligation during the term of the proposed LRR mechanism", 
Nova Scotia would absorb these additional increme ntal costs.  
2.30.   We have decided to accommodate the request by the United States. However, in light of 
Canada's comment, we have included the specific language used by the USDOC in its Issues and 
Decisions Memorandum.  
2.2.2   Paragraph 7.30  
2.31.   The United States requests t hat the Panel modify footnote 69 (69 of the Final Report) to 
paragraph 7.30, in order to reflect its position that Canada's argument described in this paragraph 
was not within the panel's terms of reference and was without merit.  
2.32.   Canada argues that the add ition of these arguments is unnecessary, as they are already set 
out in Annex C, page C -24 at paragraphs 60 -61. Canada adds, however, that if the Panel is 
inclined to reflect this argument by the United States, Canada suggests language which would 
reflect the positions of both parties.  
2.33.   We have decided to accommodate the request by the United States, as well as 
Canada's  counter -request, after reviewing the relevant arguments of both parties.  
2.2.3   Paragraph 7.32  
2.34.   The United States requests that the Panel modify par agraph 7.32, in order to reflect its 
argument that the USDOC's financial contribution determination relied upon evidence of specific 
actions taken by the Government of Nova Scotia to ensure that Port Hawkesbury would receive 
electricity.  WT/DS505 /R/Add.1  
 
- A-13 - 
 
  2.35.   Canada contends th at the addition of these arguments is unnecessary, as they are already 
set out in Annex C, pages C -14-15 at paragraph 4. Canada adds, however, that if the Panel would 
like to reflect these arguments, Canada suggests that it modify footnote 75 to include re ference to 
Annex C.  
2.36.   We have decided to accommodate the request by the United States after reviewing the 
relevant arguments. We have also decided to reject Canada's counter -request to include a 
reference to the executive summary of the United States because  the Report already contains 
references to the actual submissions of the parties.  
2.2.4   Paragraph 7.33  
2.37.   The United States requests that the Panel modify paragraph 7.33, in order to reflect its 
argument that the USDOC's benefit determination relied on a benchmark based on the prevailing 
market conditions for NSPI's extra -large industrial customers of electricity in Nova Scotia and the 
basis for the USDOC's determination that below -the-line rates are not consistent with the 
prevailing market conditions for electrici ty in Nova Scotia.  
2.38.   Canada requests that, if the Panel includes the United States' suggested revisions, it also 
revise the Interim Report to reflect Canada's submissions on these points.  
2.39.   We have decided to accommodate the request by the United States, as we ll as 
Canada's  counter -request, after reviewing the relevant arguments of both parties.  
2.2.5   Paragraph 7.58  
2.40.   The United States requests that the Panel modify the second sentence of paragraph 7.58. 
The United States argues that this sentence does not accurately reflect the 
United  States'  argument that the USDOC's analysis relied on the Public Utilities Act and the  
Government of Nova Scotia's involvement in the establishment of Port Hawkesbury's electricity 
rate. The United States requests the Panel to clarify that the paragraph reflects the 
Panel's  interpretation of USDOC's determination, and not the United States'  interpretation.  
2.41.   Canada made no comment on this request.  
2.42.   We have made adjustments to paragraph 7.58, in order to address the concern expressed 
by the United States. However, we continue to refer to arguments actually made by the 
United  States in its first written submission concerning the specific issue of the USDOC's analysis 
of the Public Utilities Act.  
2.2.6   Paragraph 7.100  
2.43.   The United States requests that the Panel modify paragraph 7.100, in order to reflect its 
argument that the level of the subsidy was also relevant to the issue of extinguishment.  
2.44.   Canada made no comment on this request.  
2.45.   We have decided to accommodate the request by the United States after reviewing the 
relevant arguments.  
2.2.7   Paragraph 7.200  
2.46.   The United States requests that the Panel modify paragr aph 7.200, in order to reflect the 
focus of its argument on the timing of Fibrek's disclosure.  
2.47.   Canada argues that this request is unnecessary, as the argument is already well reflected in 
the Panel's Interim Report, including at paragraphs 7.200 and 7.190.  
2.48.   We have decided to accommodate the request by the United States after reviewing the 
relevant arguments.  WT/DS505/R/Add.1  
 
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  2.2.8   Paragraph 7.224  
2.49.   The United States requests that the Panel modify paragraph 7.224, in order to reflect the 
United States' interpretive arguments and to recognize the apparent agreement between the 
United States and Canada on the appropriate analysis.  
2.50.   Canada argues that the additional sentences suggested by the United States do not 
correctly reflect the United States' arguments and requests the Panel to re ject the United 
States'  request or, in the alternative, to make clear that there is a difference in the parties' views.  
2.51.   We have decided to accommodate the request by the United States after reviewing the 
relevant arguments. However, in light of Canada's co mment, we have not included any suggestion 
that there is agreement between the parties on the appropriate analysis.  
2.2.9   Paragraphs 7.298 -7.300  
2.52.   The United States requests that the Panel modify paragraphs 7.298 -7.300, in order to 
reflect the United States' argum ents that Canada's claims are inconsistent with the actions of its 
own investigating authority.  
2.53.   Canada argues that the request should be rejected, as Canada's practice and actions are not 
before this Panel. Canada requests, however, that if the Panel choos es to include a reference to 
that argument, it also adds that Canada produced evidence demonstrating that the United States 
had mischaracterized Canada's practice in such circumstances.  
2.54.   We have decided to reject the request by the United States because Can ada's actions and 
practices are irrelevant to our analysis in this dispute.  
2.2.10   Paragraph 7.315  
2.55.   The United States suggests that the Panel reproduce paragraphs 133 -141 of its second 
written submission in their entirety, which provides case -by-case responses to Canada's claims, in 
order to accurately reflect the entirety of the United States' arguments concerning 
Canada's  ongoing conduct challenge. Additionally, the United States requests the Panel to include 
reference to the relevant paragraphs in footnote 565 ( 578 of the Final Report).  
2.56.   Canada made no comment on this request.  
2.57.   We have decided to reject the request by the United States because reproducing its 
arguments at such level of detail is not necessary for our analysis. Furthermore, the tables that 
have been  included in this section reproduce the language used by the USDOC in the 
determinations identified by Canada.  
2.2.11   Paragraph 7.323  
2.58.   The United States suggests that the Panel reproduce paragraphs 133 -141 of its second 
written submission in their entirety, which provides case -by-case responses to Canada's claims, in 
order to accurately reflect the entirety of the United States' arguments concerning 
Canada's  ongoing conduct challenge. Additionally, the United States requests the Panel to include 
reference to the re levant paragraphs in footnote 589 (602 of the Final Report).  
2.59.   Canada made no comment on this request.  
2.60.   We have decided to reject the request by the United States because reproducing its 
arguments at such level of detail is not necessary for our analysis. Fur thermore, the tables that 
have been included in this section reproduce the language used by the USDOC in the 
determinations identified by Canada.  WT/DS505 /R/Add.1  
 
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  2.3  Typographical and other non -substantive errors  
2.61.   The Panel has corrected typographical and non -substantive error s in paragraphs 7.33, 7.63, 
7.131, 7.170, 7.186, 7.227, 7.257, and 7.293 and footnotes 104 (111 of the Final Report), 
106 (113 of the Final Report), 225 (235 of the Final Report), and 319 (329 of the Final Report).  
2.4  BCI 
The Panel has made adjustments concer ning the designation of BCI in paragraphs 7.221 
and 7.236, as indicated by Canada.  
 
 
_______________  
 WT/DS505/R/Add.1  
 
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  ANNEX  B 
ARGUMENTS OF CANADA  
Contents  Page  
Annex  B-1 First i ntegrated executive summary of the arguments of Canada  B-2 
Annex  B-2 Second integrated executive summary of the arguments of Canada  B-13 
 
 WT/DS505/R/Add.1  
 
- B-2 - 
 
  ANNEX  B-1 
FIRST INTEGRATED EXE CUTIVE SUMMARY OF TH E ARGUMENTS OF CANAD A 
I. INTRODUCTION  
1. This dispute concerns the U.S. Department of Commerce's (Commerce) final countervailing 
duty determination and subsequent expedited reviews against supercalendered paper (SC Paper) 
from Canada. It also concerns the Commerce's "Other Forms of Assistance –AFA" measure through 
which it applies Adverse Facts Available (AFA) to information discovered at verification that had 
not been disclosed in response to an overly broad question concerning "other forms of assistance".  
2. The Coalition for Fair Paper Imports (Petitioner) alleged and Commerce subsequently 
initiated an investigation into the provision of alleged subsidies to SC Paper from Canada. 
Commerce identified four Canadian SC Paper producers: Port Hawkesbury Paper LP (PHP); 
Resolute FP Canada Inc. (Resolu te); Catalyst Paper Corporation (Catalyst); and Irving Paper Ltd. 
(Irving). It then selected PHP and Resolute as company -specific respondents and refused 
Catalyst's and Irving's requests to be examined as voluntary respondents.  
3. Commerce found that PHP r eceived several countervailable subsidies , including: (1) the 
Government of Nova Scotia's (Nova Scotia) alleged direction of Nova Scotia Power Incorporated 
(NSPI) to provide electricity for less than adequate remuneration; (2) funds provided by Nova 
Scotia  to NewPage Port Hawkesbury Corporation (NewPage PH), to maintain the mill in hot idle 
status  pending its sale; and (3) Forestry Infrastructure Fund (FIF) contributions provided by Nova 
Scotia and held in trust  by NewPage PH  to pay third party contractors to conduct certain forestry 
activities  for the province .  
4. Commerce also found that Resolute received certain countervailable subsidies, including: 
(1) subsidies tied to the production of other products in Resolute's mills in Ontario that did not 
produce SC Paper during the period of investigation (POI); and (2) alleged subsidies discovered at 
the verification of Fibrek General Partnership (Fibrek) , one o f Resolute's affiliates. It also claimed 
that Resolute had failed to report certain assistance to Fibrek  and applied AFA to conclude that this 
discovered information constituted a subsidy so that it could inflate its countervailing duty rate.  
5. In the fi nal determination, Commerce found a countervailing duty rate of 20.19 percent for 
PHP and a rate of 17.87 percent for Resolute. Commerce also calculated a weighted -average 
"all others" rate of 18.85 percent.  
6. At the request of Catalyst and Irving, Comme rce commenced an  expedited review  of these 
companies. In the context of this expedited review, it also initiated on several new subsidy 
allegations  made by the Petitioner, which impermissibly expanded the scope of this review.  
7. Commerce's approach to de termining that PHP and Resolute received subsidies, and its 
ultimate finding to that effect, are inconsistent with the SCM Agreement. Moreover, Commerce's 
conduct violated the SCM Agreement through its application of an "all others" rate to Catalyst and 
Irving, and its improper initiation investigations into new subsidy allegations in the context of an 
expedited review. Finally, Commerce's "Other Forms of Assistance –AFA" measure, is also "ongoing 
conduct" or a "rule or norm" that is inconsistent with the SC M Agreement.  
II. PORT HAWKESBURY PAPE R 
A. Commerce Erred in Finding that Nova Scotia Directed NSPI to Provide 
Electricity to PHP  
8. Commerce erred when it found that Nova Scotia directed NSPI to provide electricity to PHP 
for less than adequate remunerati on in accordance with  Article 1.1(a)(1)(iv) of the 
SCM Agreement. It provided no analysis to support its finding of financial contribution. 
In particular, Commerce interpreted section 52 of the Nova Scotia Public Utilities Act  to direct NSPI WT/DS505/R/Add.1  
 
- B-3 - 
 
  to provide ele ctricity to any customer in Nova Scotia, including to PHP. In doing so, it also ignored 
that entrustment or direction cannot be inadvertent or a mere by -product of governmental 
regulation.  
9. Section 52 reflects NSPI's duty to serve —a high -level regulatory principle that is similar to 
general service obligations in other jurisdictions throughout North America. However, pursuant to 
the common law, while section 52 reflects the principle that NSP I and other public utilities are 
required to provide electrical service throughout their service area, it does not require NSPI to 
provide electricity in any circumstances, at any cost.  
10. NSPI and Pacific West Commercial Corporation (PWCC) privately neg otiated the specific Load 
Retention Rate (LRR) under which PWCC would pay for electricity, subject to a number of specific 
conditions. In EC – Countervailing Measures on DRAM Chips, the panel noted that when assessing 
whether a financial contribution provi des a benefit or is specific for the purpose of establishing a 
subsidy, an investigating authority must refer to the specifically identified financial contribution. 
Despite this Commerce assessed whether the LRR itself – not the general service obligation – was 
specific and provided a benefit to PHP. It never establishes a causal link between the alleged 
direction to provide electricity through the duty to serve and the LRR.  
11. In fact, the duty to serve does not direct NSPI to provide PHP with electricit y through 
an LRR. Rather, the provisions of Public Utilities Act  set out how NSPI establishes tariffs and rates 
for the provision of electricity to customers. The Load Retention Tariff is one such tariff. However, 
the Load Retention Tariff does not mandate  that NSPI provide an LRR: it only requires NSPI to 
negotiate with its customer. These negotiations can fail. Where negotiations succeed, the specific 
rate is established by NSPI and the customer. The NSUARB may adjudicate NSPI's failure to 
provide an LRR at the request of one of the parties but it is not obligated to side with the 
customer.  
12. NSPI chose to engage in LRR negotiations with PHP for its own business reasons. PHP was 
its largest customer, accounting for approximately 10 percent of its load. I f the mill had shut 
down, NSPI would have lost a significant contribution to its fixed costs. NSPI's customers would 
bear this loss through dramatically increased rates. As such, NSPI privately negotiated an LRR with 
PHP. The terms of the LRR were such tha t PHP would receive a lower rate, and NSPI would retain 
its largest customer, and obtain benefits, such as the ability to interrupt PHP's service on short 
notice, advanced payments for electricity, a minimum contribution to fixed costs, and the ability to 
operate the mill during off -peak hours. The NSUARB approved the requested LRR on the basis that 
it would recover all incremental costs and would make a significant contribution to fixed costs.  
13. Finally, Commerce acted inconsistently with Article 12.8 o f the SCM Agreement when it 
failed to disclose essential facts under consideration prior to finding that Nova Scotia had directed 
NSPI to provide electricity to PHP through the duty to serve. In fact, the duty to serve was not 
raised by any of the Canadian  parties or the Petitioner during the course of the investigation. 
Rather, Commerce made this finding in Final Determination on the basis of a passing reference to 
this principle, in a single paragraph, of a discussion paper. This discussion paper had been  filed 
amongst 36 other documents, which were 1,148 pages in length, by Commerce. However, 
Commerce refused to explain the reason for this filing even after Canada and PHP requested such 
an explanation.  
B. Commerce Erred in Finding that PHP Received a "Be nefit"  
1. Commerce Erred by Failing to Find that the LRR Represented a Market 
Price  
14. Commerce also acted inconsistently with Articles 1.1(b) and 14(d) of the SCM Agreement 
when it improperly determined that the provision of electricity through the LRR conferred a benefit 
to PHP.  
15. Commerce first failed to recognize that the LRR itself represented a market price and that, 
as such, NSPI's provision of electricity to PHP under the LRR was not for less than adequate 
remuneration. In such circumstances, th ere is no need to find a market -based benchmark to 
confirm that a market transaction is made for adequate remuneration. A benefit may only be WT/DS505/R/Add.1  
 
- B-4 - 
 
  conferred where a recipient receives the financial contribution on more favourable terms than 
those available to t he recipient in the market.  
16. The LRR was the result of arm's -length negotiations between two private companies 
pursuing their own interests. NSPI obtained a significant contribution to its fixed costs through the 
LRR. It also obtained a customer that b rought greater stability to the whole system through both 
its load and flexibility. The value that these flexibilities had for NSPI and Nova Scotia electricity 
ratepayers is reflected, in part, through the fact that, NSPI was able to recover certain deferr ed 
costs without further rate increases by November 2014. The NSUARB, an independent, 
quasi -judicial tribunal, approved the LRR applicable to PHP as being just and reasonable. The LRR 
was a negotiated price and a market outcome, which reflected the prevail ing market conditions in 
Nova Scotia.  
17. Commerce stated that whether the terms are sufficiently affected by government action so 
as to make the provision actionable is a factual element relevant to the measurement of benefit, 
not financial contribution.  Yet, Commerce did not find that actions by Nova Scotia affected the 
establishment of the price agreed to by NSPI and PHP.  
18. In Canada – Renewable Energy / Canada – Feed-in Tariff Program , the Appellate Body noted 
that in understanding the relevant marke t in a case involving electricity there are a number of 
demand -side factors that need to be taken into account including: how rates are set for large 
customers; the size of customers; and the fact that different customers may be treated differently. 
By tre ating PHP, by far its largest customer, as indistinguishable from each of NSPI's other 
customers, Commerce failed to take these central factors into consideration.  
2. Commerce Erred in Finding that Nova Scotia Electricity Prices Were 
Distorted  
19. Commerce  also improperly found the Nova Scotia's electricity market was "distorted" by 
applying a per se  rule and not making a case specific determination. This erroneous finding was 
based solely on the fact that NSPI was the dominant supplier of electricity in th at market.  
20. First, privately -owned NSPI is not "government" and there is no "government" distortion in 
the Nova Scotia electricity market that could lead to the prices negotiated by NSPI being rejected.  
21. Second, assuming that Commerce properly found that the "government" was the dominant 
supplier in Nova Scotia, Commerce improperly found distortion solely on this basis. The Appellate 
Body has repeatedly found that a per se  finding of distortion is not permitted under the 
SCM Agreement. For example, in  US – Softwood Lumber IV ; US – Anti-Dumping and 
Countervailing Duties (China) ; and US – Countervailing Measures (China) , the Appellate Body 
emphasized that the fact of a predominant government supplier does not, in and of itself, establish 
price distortion .  
22. There needs to be a clear evidentiary link between a finding of government predominance 
and price distortion. An investigating authority must approach this issue on a case -by-case basis 
and can only reject in -country prices in very limited circumsta nces. Commerce failed to provide 
sufficient evidence that private prices do not reflect market prices.  
3. Commerce's Constructed Benchmark Was Not an Appropriate 
Benchmark  
23. Commerce then improperly constructed a benchmark to determine the benefit provid ed by 
the LRR in a manner that was inconsistent with Article 14(d) of the SCM Agreement.  
24. Commerce first improperly dismissed below -the-line rates when constructing a benchmark. 
It then determined that as a "below -the-line" rate, PHP's LRR was not set b y a market -determined 
method for a regulated monopoly. This ignored the fact that LRRs and other below -the-line rates 
are part of Nova Scotia's standard rate -making process and reflect prevailing market conditions in 
that province. The LRR fully recovers N SPI's marginal costs and provides a contribution to the 
utility's fixed costs, which includes a return on equity. The LRR was set by a different method than 
above -the-line rates but this does not make it any less market determined. It withstood the WT/DS505/R/Add.1  
 
- B-5 - 
 
  scrutin y of the NSUARB, which found it to be non -discriminatory and "just and reasonable". It was 
also developed using a methodology that is common throughout North America.  
25. Commerce made two fundamental errors in constructing a benchmark: (1) it combined the  
incremental costs of a below -the-line rate with a fixed cost contribution developed separately for a 
different customer in a different time period as part of an above -the-line rate; and (2) it double 
counted an amount for NSPI's return on equity. In doing  so, Commerce constructed a hypothetical 
benchmark that no customer in Nova Scotia ever would have paid.  
26. First, Commerce combined the LRR's variable costs from with fixed costs from the blended 
real-time pricing rate, an above -the-line rate. However, P HP's variable costs (the highest 
incremental hourly fuel charge) are not the same as the variable costs applied to above -the-line 
rates (which are the average fuel costs for the year). Despite this difference, Commerce made no 
adjustment to the fixed costs  it used. In a market situation, a company subject to conditions such 
as paying the highest incremental fuel cost in a given hour would expect to contribute a reduced 
amount to fixed costs.  
27. Second, Commerce's constructed benchmark double -counted the r eturn on equity. 
NSPI's  calculation of the fixed costs for the above -the-line rate which was used in to construct the 
benchmark already included an amount to provide a contribution to the return on equity. Despite 
this, Commerce added an additional amount for return on equity in constructing its benchmark. 
Commerce made this error despite being told by NSPI and Nova Scotia after the Preliminary 
Determination that it was double -counting. NSPI's General Rate Application clearly provides that 
under NSPI's Cost  of Service Study, used to calculate above -the-line rates, allocated costs include 
the return on equity.  
4. The Hot Idle Funds and FIF are not "Benefits" to PHP  
28. Commerce also acted inconsistently with Articles 1.1(b), 10, 14, 19.1, 19.3 and 19.4 of 
the SCM Agreement and Article VI:3 of the GATT 1994 when it erroneously found that PHP, rather 
than the previous owner, NewPage PH, was the recipient of certain financial contributions and that 
the benefit associated with these financial contributions was not extinguished by NewPage 
PH's arm's -length sale of the mill for fair market value.  
29. NewPage PH was responsible for paying to keep the mill in "hot idle" while it was in creditor 
protection. Being placed in "hot idle" simply ensured that the mill woul d function in the future and 
added no further value to the mill. When NewPage PH ran out of "hot idle" funds, Nova Scotia 
provided additional funds to maintain the mill in hot idle. Commerce found that these funds were a 
subsidy to PHP. However, PHP was no t the recipient of the hot idle funds.  
30. PWCC's bid for the paper mill was also conditional on the mill being maintained in hot idle. 
The price PWCC paid was a market price for a mill in hot idle. The fact that Nova Scotia paid to 
maintain the paper mil l hot idle is of no consequence as any benefit associated with the hot idle 
funds went to NewPage PH or its creditors, not to PWCC or PHP. In addition, if the payment by 
Nova Scotia had "benefited" PHP, one would have expected that that the Court appointed  monitor 
would have sought new bids that would reflect any added value —the monitor expressly did not 
do so.  
31. Similarly, neither PWCC nor PHP were the recipient of funds provided by Nova Scotia to 
the FIF. The recipient of a benefit must be a person, no t a thing. When NewPage PH ceased 
operating the mill, it no longer had an obligation to conduct forestry activities that Nova Scotia 
viewed as economically and environmentally beneficial, such as silviculture and road maintenance 
on Crown lands or private lands. Nevertheless, NewPage PH was well positioned to act as a 
conduit, as it was located near the affected area and had a history of dealing with the contractors 
who could provide these services. NewPage PH subsequently agreed to hold the FIF in trust an d to 
pay third party contractors to perform these activities on behalf of the province. Commerce found 
that the second FIF contribution, made after the December 16, 2011 deadline for final bids on the 
paper mill, constituted a subsidy to PHP. However, Comm erce did not explain how the FIF funds 
increased the value of the mill between the time the bids were placed and PWCC's bid was 
accepted. It was the third party contractors, not PWCC or PHP, who received the FIF funds. WT/DS505/R/Add.1  
 
- B-6 - 
 
  Finally,  again, the monitor did not s eek new bids after the FIF contribution but rather certified that 
PWCC's bid (which had not changed) reflected the best bid NewPage PH would receive.  
32. With respect to the issue of whether subsidies could be extinguished by virtue of the 
arm's -length sal e of a company that had received subsidies for fair market value, the Appellate 
Body's discussion of these issues in US – Lead and Bismuth II  and US – Countervailing Measures 
on Certain EC Products  establishes that there is a rebuttable presumption that a benefit is 
extinguished if there is a complete transfer of ownership, at arm's -length and for fair market 
value. If NewPage PH received any benefit from the hot idle funding or the FIF, it was extinguished 
by the sale of the company in an arm's -length tran saction at fair market value to PWCC. 
Commerce specifically found that "the private -to-private party transaction between NewPage PH 
and PWCC" to acquire the Port Hawkesbury paper mill was "at arm's -length for fair market value". 
PWCC purchased all of NewPa ge PH. The purchase for fair market value did not confer an 
advantage, as it reflected the value of any prior subsidies.  
33. Nor did the hot idle funding and the FIF change the asset value of the mill. The hot idle 
funds maintained the status quo of the mi ll's assets at the time the mill was marketed for sale, but 
did not change to the asset value of the mill and did not contribute to any continuing revenue 
stream or future earnings. Similarly, the FIF was provided to third party contractors and also did 
not change the value of NewPage PH or its continuing revenue stream or future earnings.  
5. Commerce Improperly Initiated Against Nova Scotia's Provision of 
Stumpage to  PHP 
34. Commerce acted inconsistently with Article 11 of the SCM Agreement when it imprope rly 
initiated into Nova Scotia's provision of stumpage and biomass without any evidence of a benefit. 
In particular, Commerce relied on three pieces of evidence to support its decision to initiate on 
Nova Scotia's provision of stumpage: (1) a version of th e Forest Utilization License Agreement 
between Nova Scotia and PHP; (2) previous Softwood Lumber from Canada  determinations; and 
(3) the CFS Paper from Indonesia  determination. The Forest Utilization License Agreement 
provided no pricing information and Commerce did not cite any evidence of a comparison in the 
marketplace. Moreover, Commerce's previous Softwood Lumber from Canada  decisions in fact 
indicate that st umpage in Nova Scotia is market -determined and not subsidized. Nor does the 
CFS Paper from Indonesia determination provide evidence that the pricing of stumpage conferred 
a subsidy in Nova Scotia.  
III. RESOLUTE  
A. Commerce Erroneously Applied AFA to Resol ute in Relation to Information 
Discovered at Verification  
35. Commerce acted inconsistently with Article 12.7 of the SCM Agreement by improperly 
finding that Canada and Resolute did not respond to questionnaires to the best of their ability and 
resorting t o AFA when neither Canada nor Resolute had impeded the investigation. Moreover, the 
information Commerce claimed to have discovered was not "necessary information" that related to 
the alleged subsidies set out in the notice of initiation.  
36. "Necessary in formation" is information specifically requested in detail, into which the 
investigating authority has initiated an investigation, and which relates to the production or export 
of the product under investigation. It cannot be the case that information is " necessary" simply by 
virtue of being requested.  
37. Commerce's questionnaire asked companies to identify all other forms of "assistance" that 
they received, "to [their] company", from the government. Commerce claimed to discover new 
government assistance d uring its verification of Resolute's cross -owned affiliate, Fibrek. Commerce 
determined that the use of AFA was warranted simply because the information discovered 
allegedly fell within the scope of the broad and ambiguous "other forms of assistance" quest ion 
and was not provided. No specific request was ever made by Commerce for further information, 
and nothing was ever refused or purposefully withheld by Canada or by Resolute.  WT/DS505/R/Add.1  
 
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  38. Commerce's request for information on "other forms of assistance" was for information that 
was not necessary to the investigation. The term "assistance" is not defined and may require 
reporting measures that are not financial contributions or are generally available. The question 
asks for assistance "to your company", which requ ires respondents to report assistance that has 
nothing to do with the product under investigation. The question is also overly burdensome as it 
requires respondents to report the assistance over the entire Average Useful Life associated with 
assets used to  produce the product under investigation —a period of 10 years in the SC Paper 
investigation.  
39. The proper application of "facts available" must result in the calculation of an amount of 
subsidy that reasonably replaces the missing information (see e.g., Appellate Body Report, US – 
Carbon Steel (India) , para. 4.468). Even if the discovered information was necessary to the 
investigation, the amounts received were available to Commerce during verification, and thus no 
information was missing from the investi gation. Instead, Commerce applied a rate that amounted 
to 153 percent of Fibrek's sales during the POI.  
B. Commerce Failed to Adhere to the Procedural Requirements of the 
SCM Agreement with Regards to Alleged Subsidies Discovered at Verification  
40. Commer ce also acted inconsistently with Articles 12.1 and 12.2 of the SCM Agreement when 
it failed to provide Canada and Resolute ample opportunity to present in writing and orally all 
evidence related to the information discovered during verification. In order to satisfy its procedural 
obligations under Articles 12.1 and 12.2, Commerce should have accepted additional information 
from Resolute concerning the "discovered" assistance during the course of verifications or shortly 
thereafter.  
41. Further, Commerce ac ted inconsistently with Articles 12.1 and 12.8 of the SCM Agreement 
as it did not provide Resolute with notice of the information it required or of essential facts under 
consideration before applying AFA. Commerce failed to inform Resolute and Canada of a number of 
essential facts that were necessary for ensuring the ability of Resolute to defend its interests, 
contrary to Article 12.8, including that it did not accept the interpretation they provided of the 
"other forms of assistance" question or that the information provided regarding Fibrek's hostile 
takeover was considered insufficient to establish extinguishment of benefit.  
C. Commerce Improperly Initiated an Investigation of Alleged Subsidies 
Discovered at Verification  
42. Commerce's conduct was also inconsistent Article 11 of the SCM Agreement, which requires 
investigating authorities to review the accuracy and adequacy of the evidence of a subsidy before 
initiating investigation. Commerce failed to determine that the evidence that it put on the recor d 
constituted sufficient evidence of each element of a subsidy upon the discovery of certain 
information in the context of the verification of Resolute's cross -owned affiliate, Fibrek. Rather, 
it applied AFA without notice and improperly concluded that the  alleged discovered information 
constituted countervailable subsidies without any evidence concerning the existence, amount and 
nature of the alleged subsidies in question.  
43. The United States argues that the initiation standards should be understood wit h respect to 
an entire product under investigation. However, Article 11 refers to initiation with respect to an 
alleged "subsidy" not a "product". Moreover, financial contribution, benefit and specificity cannot 
be assessed with respect to a product in the  abstract.  
D. Commerce Erred in Failing to Find that Resolute's Hostile Takeover of Fibrek 
Extinguished Certain Contributions to Fibrek  
44. Commerce acted contrary to Articles 1.1(b), 10, 14, 19.1, 19.3 and 19.4 of the 
SCM Agreement and Article VI:3 of the GATT 1994 when it failed to recognize that 
alleged  benefits  provided to Fibrek prior to its arm's -length takeover by Resolute were 
extinguished. In US – Countervailing Measures on Certain EC Products , the Appellate Body noted 
that private -to-private tr ansactions are likely to be for "fair market value" and emphasized the 
importance of analyzing "to what extent a change in ownership and control would result from the 
private -to-private sales transactions".  WT/DS505/R/Add.1  
 
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  45. Commerce found that Fibrek received subsidie s from a federal program, the Pulp and Paper 
Green Transformation Program (PPGTP), and assistance discovered at verification that pre -dated 
Resolute's hostile takeover of Fibrek. Commerce concluded that there was no evidence indicating 
that Resolute's purc hase of Fibrek was at arm's -length and for fair market value, and thus it found 
that the alleged assistance to Fibrek was not extinguished when Resolute took over Fibrek.  
46. Commerce ignored clear evidence on the record that Resolute's hostile takeover of  Fibrek 
was at arm's -length and for fair market value. This evidence included questionnaire responses and 
exhibits submitted by both Quebec and Resolute, including information detailing the terms of the 
hostile takeover, the amount paid, a description of t he transaction, competing bids, a court 
proceeding resulting from Fibrek's "poison pill" defence to the takeover, liabilities assumed, and 
accounting treatment.  
47. Commerce had a significant amount of evidence concerning the hostile takeover. It simply 
failed to analyse any of it.  
E. Commerce Improperly Attributed Financial Contributions Tied to the 
Production of Other Products to SC Paper Production  
48. Commerce acted inconsistently with Articles 10, 19.1, 19.3 and 19.4 of the SCM Agreement 
and Article V I:3 of the GATT 1994 when it improperly attributed certain alleged subsidies to the 
production of SC Paper that were tied to the production of other products that were not under 
investigation.  
49. The Appellate Body found in US – Countervailing Measures on  Certain EC Products ; US – 
Anti-Dumping and Countervailing Duties (China); and US – Washing Machines , that subsidies that 
are not attributable to the product under investigation may not be countervailed by an 
investigating authority. That is, a subsidy may either be untied, in which case the allocation of that 
subsidy is made across the sales value of all produ cts, or it may be tied, in which case it may be 
countervailable only if it is tied to the product under investigation. Subsidies tied to the production 
of products other than those under investigation cannot be countervailed.  
50. To that end, in US – Softwood Lumber IV  , the Appellate Body noted that the mere fact that 
a particular enterprise produces the product under investigation and receives a benefit does not 
allow countervailing duties to be imposed without a proper analysis of whether there is a ben efit to 
the specific product under investigation. Furthermore, a subsidy on an input good can only be 
countervailed to the extent that it can be demonstrated that the benefit has passed through to the 
processed product and thus benefits it indirectly. Acco rdingly, if the product to which a subsidy 
was tied did not become part of the final processed product, and no benefit flowed through, those 
benefits cannot be countervailed.  
51. Commerce improperly countervailed contributions to Resolute's Ontario product ion of other 
products under PPGTP, as well as Ontario's Forest Sector Prosperity Fund (FSPF) and Northern 
Industrial Electricity Rate (NIER) programs. These contributions were clearly tied to products other 
than SC Paper. Commerce ignored the record eviden ce and did not calculate the precise amount of 
benefit attributable to Resolute's production of SC Paper. In fact, none of the Ontario mills 
produced SC Paper or an input into SC Paper during the POI.  
52. The benefit from the FSPF contributions was also ti ed to projects in Resolute's Thunder Bay 
and Fort Frances mills. At no time near the POI did either mill produce SC Paper. Nor did any of 
Resolute's Ontario mills produce an input good into SC Paper.  
53. Similarly, with regard to the NIER program, these fu nds were tied to specific facilities in 
Northern Ontario. Commerce improperly attributed the funds to Resolute's total sales, despite the 
fact that no SC Paper was produced in Ontario and none of Resolute's Ontario mills produced an 
input good that was use d in Resolute's SC Paper production during the POI.  
54. Finally, Commerce failed to assess whether "Discovered Programs 1 and 2" that were 
identified during verification were tied to the production of products other than SC Paper or its 
inputs.  WT/DS505/R/Add.1  
 
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  IV. CATALYS T AND IRVING  
A. Commerce Erroneously Constructed an "All Others" Rate Based Almost 
Entirely on Alleged Subsidies That Were Not Available to Irving or Catalyst  
55. Commerce also acted contrary to its obligations under Articles 10, 19.1, 19.3, and 19.4 of 
the SCM Agreement and Article VI:3 of the GATT 1994 in calculating its "all others" rate for Irving 
and Catalyst. The "all others" rate violates the United States' obligations to only apply 
countervailing duty rates in an amount that offsets a subsidy to the  company in question. The "all 
others" rate was based on a rate composed almost entirely of AFA applied to Resolute and a rate 
composed exclusively of alleged subsidies that Commerce determined were only available to PHP. 
Commerce took no steps to ensure t he representativeness of the companies it selected despite 
numerous representations by the parties that the "all others" rate would not be representative.  
56. Article 19.4 of the SCM Agreement establishes the maximum amount of countervailing duty 
that may  be levied. This objective was thwarted when Commerce calculated an "all others" rate 
using margins that are determined, in part, on the basis of the investigated parties' failure to 
supply certain information.  
57. Commerce in conducting its countervailing  duty investigation decided to import an 
anti-dumping methodology of selecting the largest exporters of the product under investigation. 
However, in doing so, it chose to not apply the associated rules, in particular, the Appellate Body 
decision in  US – Hot-Rolled Steel , that "all others" rates may not include margins that were 
established even partially on the basis of "facts available". This approach, inappropriately, would 
lead to the anomalous result of having markedly different results in anti -dumping and 
countervailing duty investigations.  
58. Similarly, Commerce determined that all of PHP's 20.18 percent rate related to alleged 
subsidies associated with the reopening of the paper mill should be included in the "all others" 
rate. These alleged subsidies were and are unavailable to Irving and Catalyst. The United States 
claims that it had insufficient information to determine that Irving and Catalyst did not have 
operations in the locations where the alleged subsidies to PHP were available. However, this 
assertion stands in stark contrast to Commerce's own f indings that all alleged subsidies received 
by PHP were available only to PHP or PWCC.  
B. Commerce Erroneously Initiated De Novo  Investigation into New Subsidy 
Allegations in the Context of an Expedited Review  
59. Article 19.3 of the SCM Agreement states that where an exporter has not been investigated, 
but its goods have nonetheless been made subject to a countervailing duty rate, it is entitled to an 
expedited review in order to "promptly" obtain a company -specific rate. There must be some limits 
to what  is permitted in an expedited review. An expedited review occurs because an investigating 
authority has decided to estimate the countervailing duty rate through an "all others" rate. The 
purpose of an expedited review is to quickly assess an individual dut y rate for a non -investigated 
exporter in a manner consistent with the SCM Agreement and Article VI of the GATT 1994.  
60. Commerce's decision to investigate new subsidy allegations in the context of an expedited 
review frustrated the purpose the review by prolonging the process such that non -investigated 
exporters did not receive prompt relief. The investigation of new subsid y allegations upsets the 
delicate balance the SCM Agreement seeks to achieve between the right to impose duties  to offset 
injurious subsidization and the obligations disciplining the use of countervailing measures. It is also 
contrary to the ordinary meani ng of the word review.  
61. Even if new subsidy allegations could be made in the expedited review, the Petitioner should 
not have been allowed to provide additional evidence at the time of the expedited review unless it 
could demonstrate that the informati on was not available to it at the time it filed the original 
petition, as it was required to provide the information that was reasonably available to it at the 
time of the petition, pursuant to Article 11.2.  WT/DS505/R/Add.1  
 
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  C. Even if Commerce Could Investigate New Subsid y Allegations in Expedited 
Reviews, It Failed to Ensure That There was a Close Nexus Between these 
Allegations and the Programs on which it Initiated in the Original 
Investigation  
62. Commerce failed to consider whether there was a sufficiently close nexus  between programs 
it initiated on in the original investigation and the new subsidy allegations before deciding to 
initiate these new allegations. In US – Carbon Steel (India) , the Appellate Body affirmed the 
significance of this nexus with respect to admi nistrative reviews.  
63. Considering the need to conduct expedited reviews quickly, the requirement to initiate 
investigation into new subsidy allegations in the context of an expedited review should be at least 
as strict as the standard applied in administ rative reviews.  In fact, no such nexus exists. 
Commerce did not consider whether there was any link between the programs in the original 
investigation and the new subsidy allegations.  
D. Even if New Subsidy Allegations are Permitted in Expedited Reviews, 
Commerce Failed to Ensure That There was Sufficient Evidence to Justify 
Initiation  
64. Commerce acted inconsistently with Article 11 when it initiated into the new subsidy 
allegations. Pursuant to Article 11, an investigating authority may only initiate a n investigation into 
allegations where there is sufficient evidence of each element of a subsidy.  
65. Even if Commerce were permitted to initiate investigations into new subsidy allegations in 
the context of an expedited review, it had an obligation to en sure there was accurate and 
adequate evidence in the Petitioner's application to support each allegation before initiating into 
the allegations. Commerce failed to do so in this case.  
V. COMMERCE'S OTHER FOR MS OF ASSISTANCE -AFA MEASURE  
A. Commerce's Other  Forms of Assistance -AFA Measure Can be Considered Both 
Ongoing Conduct or a Rule or Norm of Prospective and General Application  
66. Commerce maintains an "Other Forms of Assistance -AFA" measure. This measure can be 
characterized as ongoing conduct or as a rule or norm of prospective and general application. 
Under both analytical tools, the measure must be attributable to a Member and the precise content 
of the measure must be identified.  
67. This measure is attributable to the United States as Commerce i s an organ of the United 
States government.  
68. The precise content of this measure can be described as follows: when Commerce issues 
questionnaires in an investigation or administrative review with an overbroad any "other forms of 
assistance" question. I f Commerce discovers information during the course of its verifications that 
it considers to be evidence of "other forms of assistance", it applies AFA to that information to 
determine that there is a countervailable subsidy and to inflate the countervaili ng duty rate.  
69. A measure challenged as a "rule or norm" must have "general and prospective application". 
As affirmed by the Appellate Body in US – Oil Country Tubular Goods Sunset Reviews ; US – 
Zeroing (EC);  and US – Zeroing (Japan) , the factors that ma y be considered in determining 
whether there the evidence establishes "general and prospective application" include whether the 
measure has "normative value", provides "administrative guidance", creates "expectations among 
the public and among private acto rs", is "intended" to apply generally and is "consistently" applied, 
or reflects a "deliberate policy".  
70. A challenge against a measure as "ongoing conduct" must provide evidence of the measure's 
"repeated application" and that the conduct will likely co ntinue into the future (see e.g., Appellate 
Body Report, Argentina – Import Measures , para. 5.108).  WT/DS505/R/Add.1  
 
- B-11 - 
 
  71. Since 2012, Commerce has repeatedly applied its Other Forms of Assistance -AFA measure 
to countervail dozens of alleged subsidy programs. During the corr esponding investigations and 
reviews, Commerce asked the "other forms of assistance" question, then "discovered" information 
at verification that it deemed responsive to this question. It then systematically applied AFA 
without making any factual determina tion of whether the elements of a countervailable subsidy 
had been met or assessing whether the information constituted "necessary information" related to 
the alleged subsidy programs it was investigating.  
72. Commerce's Other Forms of Assistance -AFA measu re is described by Commerce as a 
practice. It may not lightly deviate from such a practice, especially given that it has amended 
existing laws in a manner that will make this conduct more punitive. The Other Forms of 
Assistance -AFA measure amounts to more than simple repetition – it is a deliberate policy. 
Commerce has indicated that it intends to apply this practice in future investigations and reviews. 
It considers deviation from this policy to be an "error" and, pursuant to U.S. law, must provide a 
reaso ned explanation for departing from the practice.  
B. Commerce's Other Forms of Assistance -AFA Measure Fails to Ensure That 
There is Sufficient Evidence of a Countervailable Subsidy Before Improperly 
Applying AFA  
73. Commerce's Other Forms of Assistance -AFA Measure is also inconsistent with Articles 11 
and 12.7 of the SCM Agreement.  
74. Articles 11.2 and 11.6 of the SCM Agreement provide that, before any program may be fully 
investigated, there must first be sufficient evidence of the elements of a counterv ailable subsidy. 
In applying its Other Forms of Assistance -AFA measure, Commerce fails to review the accuracy 
and adequacy of the evidence to attempt to determine whether the alleged assistance could have 
constituted a financial contribution, that a benefi t could have been conferred, and that such 
assistance could be specific. Commerce's Other Forms of Assistance -AFA measure eliminates the 
requirement for evidence and effectively replaces it with the hurried impressions and assumptions 
of a Commerce verific ation team.  
75. Article 12.7 of the SCM Agreement allows investigating authorities to rely on facts available 
only if an interested Member or party: (1) refuses access to necessary information within a 
reasonable period; (2) fails to provide necessary info rmation within a reasonable period; or, 
(3) significantly impedes the investigation.  
76. Article 12.7 requires evidence and a finding that the elements of a subsidy exist before 
Commerce self -initiates against a program, and before requests can be said to be for "necessary 
information". The panel in US – Anti-Dumping and Countervailing Duties (China)  saw this as a 
finite list with no possibility to apply facts available in other situations. By asking the "other forms 
of assistance" question, Commerce attemp ts to create a new means to apply facts available 
outside the framework of Article 12.7.  
C. Commerce's Other Forms of Assistance -AFA Measure Fails to Provide 
Respondents with Notice and Ample Opportunity to Present Evidence, and 
Does Not Disclose the Essen tial Facts Under Consideration  
77. Commerce is required under Articles 12.1 and 12.8 of the SCM Agreement to provide 
respondents with notice and ample opportunity to present evidence, and to disclose to 
respondents the essential facts under consideration. At a minimum, Commerce's verifiers are 
required to request and collect any amount of documentation necessary to identify discrepancies 
and fully verify the discovered information. Under its Other Forms of Assistance -AFA measure, 
Commerce fails to offer res pondents these procedural safeguards.  
D. Resolute as an Example of What is Wrong with Commerce's Other Forms of 
Assistance -AFA Measure  
78. Resolute fully cooperated with Commerce throughout the investigation and provided 
Commerce with full access to the electronic version of Fibrek's general ledger.  WT/DS505/R/Add.1  
 
- B-12 - 
 
  79. Commerce took only certain information on the "discovered" assistance onto its record and  
refused to accept other relevant information (for example, it refused to take down the amount of 
the discovered assistance). There was insufficient evidence and no factual basis for Commerce's 
conclusion that the "discovered" assistance met any of the ele ments of a countervailable subsidy.  
80. If Commerce had allowed Resolute to provide further information, at most it would have 
calculated countervailing duty rates that were de minimis . This demonstrates that Commerce's 
practice leads to punitive and unre asonable results.  
81. The Other Forms of Assistance -AFA measure permitted Commerce to ignore any and all 
evidence and exclude the actual amounts received from the record of the investigation.  
 
 
 WT/DS505/R/Add.1  
 
- B-13 - 
 
  ANNEX B -2 
SECOND INTEGRATED EXECUTIVE  SUMMARY OF THE ARGUM ENTS OF CANADA  
I. PORT HAWKESBURY PAPER  
A. The United States' Attempt to Support Commerce's Flawed Financial 
Contribution Finding Must Fail  
1. The United States Improperly Reads the Meaning of Entrustment or 
Direction under Article  1.1(a)(1)(iv) of the SCM Agreement  
1. The United States has improperly conflated the meaning of "entrustment" and "direction" 
under Article 1.1(a)(1)(iv) of the Agreement on Sub sidies and Countervailing Measures  
(SCM  Agreement). "Direction" involves a government exercising its authority, including some 
degree of compulsion, over a private body. "Entrustment" involves a government giving 
responsibility for a task. In each case, th e entrustment or direction must be linked to the "specific 
conduct" in that case.  
2. The United States Cannot Demonstrate Direction through Alleged 
Circumstantial Evidence of an Entrustment Finding That It Did Not Make  
2. The United States cannot claim tha t the U.S. Department of Commerce's (Commerce) 
finding of direction and its comments concerning entrustment can be considered cumulatively. 
Its determination that Nova Scotia directed Nova Scotia Power Inc. (NSPI) and its comments about 
entrustment relate to different financial contributions. Commerce found that Nova Scotia directed 
the general provision of electricity, or a good, to NSPI. It now claims, after the fact, that Nova 
Scotia entrusted NSPI to provide the particular load retention rate (LRR) nego tiated with Pacific 
West Commercial Corporation (PWCC).  
3. Commerce never found that Nova Scotia entrusted NSPI to provide an LRR. The United 
States refers to alleged circumstantial evidence of entrustment, but Commerce never made a 
finding based on this e vidence. In fact, Commerce justified its failure to apply its test under 
U.S. law for assessing entrustment on the basis that it did not rely on this circumstantial 
information. Commerce's submissions in its NAFTA brief and before the NAFTA panel also 
demo nstrate that it did not consider the LRR to be the financial contribution.  
4. Moreover, the circumstantial evidence that Commerce discussed in its decision is taken out 
of context and systematically ignores evidence that runs contrary to its preferred conc lusions.  
3. The Duty to Serve Cannot be Understood through a Discussion Paper 
Summarizing Reports That Did Not Consider This Regulatory Principle  
5. Commerce improperly found that Nova Scotia directed NSPI to provide Port Hawkesbury 
Paper LP (PHP) with an LRR through the duty to serve. Commerce understood the duty to serve 
through a passing reference to it in a discussion paper, which Commerce filed on  its own initiative 
after the close of the evidentiary record. Commerce did not consider the context of this discussion 
paper, which summarized several reports that were prepared as part of Nova Scotia's general 
Electricity System Review. None of these rep orts concerned or analysed the duty to serve.  
6. The United States has also mischaracterized Canada's position on the duty to serve in these 
proceedings. Canada has explained that the duty to serve is only enforceable through the 
investigation of complain ts of customers who have not been provided with service under certain 
tariffs or rates. The Nova Scotia Utility and Review Board (NSUARB) may only approve rates that 
are "just" and "sufficient" for both customers and utilities, an approach that applies in many 
jurisdictions in Canada.  WT/DS505/R/Add.1  
 
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  4. The United States Continues to Ignore Relevant Criteria in 
Article  1.1(a)(1)(iv) of the SCM Agreement  
7. The provision of electricity by NSPI to PHP is not a function that "would normally be vested 
in the government" under  Article 1.1(a)(1)(iv) of the SCM Agreement. Some functions set out in 
Article 1.1(a)(1) are inherently governmental and others are not. There is nothing inherently 
governmental about providing goods or services within the meaning of Article 1.1(a)(1)(iii) .  
8. Commerce failed to establish that the provision of electricity would normally be vested in the 
government of Nova Scotia. In accordance with the Nova Scotia legal regime, Nova Scotia does 
not provide electricity. Providing electricity is primarily th e responsibility of NSPI. The regulation of 
the electricity market in Nova Scotia does not demonstrate that the provision of electricity would 
normally be carried out by the government. Nor does a history of government ownership of the 
utility responsible for providing electricity, which ended in 1992, constitute evidence that the 
provision of electricity would normally be vested in the government.  
5. Commerce Failed to Disclose the Essential Facts under Consideration  
9. The United States alleges that it di sclosed the essential facts because it provided interested 
parties access to the record. In making this claim, the United States advances an incorrect 
interpretation of the disclosure obligation under Article 12.8 of the SCM Agreement.  
10. Canada has expl ained that Commerce did not disclose essential facts concerning the duty to 
serve, and never gave the parties an opportunity to comment on the duty to serve or sought more 
information on it.  
11. Essential facts in the context of a countervailing duty inves tigation are those that underlie 
the investigating authority's final findings and conclusions in respect of the elements of a subsidy, 
specifically financial contribution, benefit and specificity.  
12. An investigating authority meets the requirement under Article 12.8 by disclosing essential 
facts in a manner that permits interested parties to defend their interests. In Guatemala – 
Cement  II, the panel recognized that if interested parties cannot tell b y looking at the record which 
documents will be relied on, the investigating authority has a positive obligation to identify the 
essential facts within the record.  
13. The discussion paper underlies the final findings of subsidization including the investi gating 
authority's analysis of financial contribution. It was placed on the voluminous record without any 
context or guidance as to its relevance. Its placement on the record does not satisfy the disclosure 
obligation under Article 12.8.  
B. PHP Did Not Rec eive a "Benefit" under Article 1.1(b) of the SCM Agreement  
1. The LRR Did Not Confer a "Benefit"  
a) "Prevailing Market Conditions" Applied to the Nova Scotia 
Electricity Market and Commerce's Constructed Benchmark  
14. Article 14(d) of the SCM Agreement pr ovides that the provision of a good only confers a 
"benefit" if it is made for less than adequate remuneration. The adequacy of remuneration is 
determined in relation to prevailing market conditions for the good in question in the country 
of provision (inc luding price, quality, availability, marketability, transportation and other conditions 
of purchase or sale). An analysis of "prevailing market conditions" is therefore based on a number 
of factors, which include but are not limited to "price". They concer n "characteristics of an area of 
economic activity in which the forces of supply and demand interact to determine market prices".  
15. The United States suggests that an assessment of "prevailing market conditions" is an 
assessment of the "predominant price " in a market. This suggestion is necessary for the United 
States because of the need under Commerce's constructed benchmark to characterize above -the-
line rates as "predominant" in Nova Scotia. This argument fails for at least four reasons.  WT/DS505/R/Add.1  
 
- B-15 - 
 
  16. First, the  United States fails to explain how its overall approach to benefit was consistent 
with the "prevailing market conditions" requirement in Article 14(d).  
17. Second, below -the-line rates should be considered part of the "prevailing market conditions" 
under  which the LRR was negotiated. Below -the-line rates are part of NSPI's standard pricing 
mechanism and are used in numerous jurisdictions. There was no basis for Commerce to ignore 
these prevailing market conditions.  
18. Third, the United States fails to ac count for the nature of the electricity market, including 
factors such as how rates are set for large customers, the size of customers, and the fact that 
different customers may be treated differently.  
19. Finally, the United States errs by suggesting tha t the phrase "in relation to" within 
Article  14(d) suggests " a more removed relationship" between the benchmark and the price at 
which the good is provided. In fact, the Appellate Body stated that the assessment of "prevailing 
market conditions" allows a b enchmark to be a more exact proxy, allowing for a "meaningful 
[calculation] that does not overstate or understate" benefit.  
20. A proper analysis of "prevailing market conditions" in Nova Scotia must reflect the guidance 
of the Appellate Body. This guidanc e directs one to the LRR, a rate which reflects a negotiated 
outcome between two private parties working within the standard pricing mechanism used in the 
province.  
b) A Proper "Benefit" Analysis Examines Whether a Transaction is a 
Market Transaction  
21. The United States argues that the Appellate Body has required that a benefit determination 
be based on a comparison and, with respect to Article 14(d), the United States adds that the 
phrase "in relation to" indicates that a benefit determination requires s ome form of comparative 
exercise. This is not always "required". The Panel may examine Commerce's benefit determination 
in the context of the specific circumstances of this case, which involves the provision of good 
under a private -to-private transaction t hat was beneficial to both parties.  
22. The text of Article 14(d) does not preclude an investigating authority from considering 
whether a particular transaction between two private parties is a market transaction by its own 
terms. Article 14(d) provides fo r an assessment of whether the provision of goods was made for 
less than adequate remuneration. Unlike Articles 14(b) and 14(c), Article 14(d) does not expressly 
provide for the use of methodologies that contain a comparison and that direct that the "diffe rence 
between" two amounts be found. The adequacy of remuneration is measured "in relation to" 
prevailing market conditions, including price, quality, availability, marketability, transportation and 
other conditions of purchase or sale. Price is only one o f these factors.  
23. The Appellate Body has stated that the assessment of "benefit" under Article  14 calls for an 
examination of the terms and conditions of the challenged transaction at the time it is made and 
compares them to the terms and conditions th at would have been offered in the market at that 
time. In US – Large Civil Aircraft (2nd Complaint) , the Appellate Body examined whether a 
financial contribution was "consistent with what occurs in transactions between two market 
actors", and assessed whether a benefit was conferred without using a comparison price.  
c) Commerce Failed to Consider Whether the LRR Represents a 
Market Price Resulting from Arm's Length Negotiations between 
Two Private Parties  
24. The LRR is a market price which fully recove rs NSPI's marginal costs and contributes to its 
fixed costs. There was no reasonable basis upon which Commerce could reject this rate and the 
United States ignores it as a market transaction.  
25. The LRR was negotiated between two private parties acting a t arm's length. This transaction 
was beneficial to both parties. PHP obtained electricity at an appropriate rate, which was important 
because electricity represented the largest expense of the mill. Maintaining PHP as a customer 
allowed NSPI to ensure a st able system and to address cost issues that would result from losing its WT/DS505/R/Add.1  
 
- B-16 - 
 
  largest customer. PHP agreed to run the mill in a leaner manner and at off -peak hours, which 
offered value to NSPI. It also agreed to be "priority interruptible", so that NSPI could r educe a 
significant block of electricity demand from PHP at one time. PHP further agreed to pay for the 
most expensive incremental source of energy in the stack in any given hour that it used and 
purchased electricity. Finally, it agreed to pre -pay for its  electricity, which eliminated the risk of 
non-payment for NSPI.  
26. The United States cannot explain how it accounted for these factors in the benchmark that 
Commerce developed. Commerce did not seek out any information about the blended Real Time 
pricin g rate, despite using that rate as a foundation for a calculation of a benchmark in the Final 
Determination. Commerce did not take into account that below -the-line rates had previously been 
made available to extra -large users in Nova Scotia and that such a n approach was common in 
other jurisdictions. Commerce also did not take into account PHP's status as an extra -large 
customer and created a flawed benchmark that did not reflect a rate that any NSPI customer 
would pay.  
27. The United States appears to impl y that the NSUARB's decision to allow a Load Retention 
Tariff for companies in distress was made at the behest of PWCC. However, the evidence on the 
record of the investigation demonstrates that the LRR was approved under the framework of the 
existing LRT.  The LRR arose out of negotiations between PWCC and NSPI, without the involvement 
of the NSUARB before its approval in a thorough and contested review process, which all electricity 
rates are subject to in Nova Scotia. The NSUARB found that approving the L RR was in the best 
interest of the whole customer base.  
28. The United States also fails to acknowledge that Commerce improperly found in its Final 
Determination that the Nova Scotia electricity market was distorted solely on the basis that NSPI 
provides electricity to most customers of electricity in Nova Scotia.  
d) Commerce Erred in Constructing a Benchmark  
29. The United States asserts that Commerce's constructed benchmark "reflects a rate that an 
NSPI customer, like PHP, would have paid for electricity". This statement is not true. No NSPI 
customer would pay the rate calculated under the constructed benchmark.  
30. The benchmark does not reflect prevailing market conditions in Nova Scotia, and Commerce 
made several methodological errors in constructing its benchmark. Commerce erred by 
substituting PHP's variable costs in the LRR, which included the highest incre mental fuel costs per 
hour, for average variable costs. Commerce then added the higher fixed costs associated with the 
average variable rate to the highest incremental costs, paid in the LRR. Commerce also erred by 
adding an additional amount for return on  equity, even though return on equity was already 
included in the fixed costs it used.  
31. The United States incorrectly asserts that Commerce's methodology reflected NSPI's 
"standard rate making methodology". In fact, the United States acknowledges that i t could not 
replicate NSPI's standard pricing mechanism using the information provided by the parties. 
Commerce never requested information from NSPI, which is a private entity and not part of the 
government of Nova Scotia.  
2. The Hot Idle Funds and FIF A re Not "Benefits" to PHP  
a) PHP Is Not the "Recipient" of the Hot Idle Funds  
32. The United States fails to acknowledge that PWCC received no benefit from the hot idle 
funds. The "benefit" standard under Article 1.1(b) is not based on the "expectation" o f who will pay 
but rather on the advantage the payment provides to its "recipient". The hot idle funds did not 
increase the value of what PWCC paid for. The United States argues that PWCC received 
"additional unanticipated financing", but PWCC did not rece ive this. If anyone did receive additional 
unanticipated financing, it was NewPage Port Hawkesbury Corporation  (NewPage PH) and its 
creditors. The monitor confirmed that NewPage PH would receive more money from a sale as a 
going concern than it would under  liquidation.  WT/DS505/R/Add.1  
 
- B-17 - 
 
  33. The United States' argument, that that the wording of footnote 36 to Article  10 of the 
SCM Agreement means that the "benefit" referred to in Article  1.1(b) of the SCM Agreement is a 
benefit to productive operations, has already been reje cted by the Appellate Body. The recipient  
must receive the financial contribution on terms more favourable than what is available to it in the 
market.  
b) PHP Is Not the "Recipient" of the FIF Funds  
34. PHP was not the recipient of the Forestry Infrastruc ture Fund (FIF) funds. The FIF funds 
went to third party contractors. These funds were not a "grant" to NewPage PH, as the United 
States suggests. NewPage PH was simply a conduit for these funds, which were required to be cost 
and cash flow neutral to NewP age PH. These funds could not have provided any benefit to PWCC.  
35. The United States' arguments regarding the FIF as a component of the "going concern" sale 
do not form part of Commerce's decision and are a post hoc  rationalization. Rather than finding 
this, Commerce erroneously found that the payments Nova Scotia made to third party contractors 
were "reimbursements" that were equivalent to a grant because NewPage PH had a legal 
obligation to conduct the activities contemplated by the FIF. It then analyze d whether the grants 
paid to third parties were extinguished through the arm's length sale of the paper mill to PWCC.  
36. The record does not support the United States' contention that NewPage PH was obliged to 
maintain its forestry activities once it ent ered the Companies' Creditors Arrangement Act  process. 
The record is clear that the mill was sold as a "going concern", in a manner that the mill was ready 
to re -start operations as a "going concern" once the new owner was in place, but was not 
operational  during the sales process. This is consistent with the fact that maintaining hot idle was 
a condition of the sale, but other operations of the mill were not.  
c) Benefits Conferred on NewPage PH Were Extinguished in the 
Arm's Length Sale for Fair Market Va lue 
37. The Appellate Body's decisions in US – Lead and Bismuth II  and US – Countervailing 
Measures on Certain EC Products  established  a rebuttable presumption that a benefit is 
extinguished if there is complete transfer of ownership (a full privatization)  that is at arm's length 
and for fair market value. The United States argues that this presumption does not apply to 
private -to-private sales. However, if a private -to-private sale is at arm's length and for fair market 
value and the change in ownership is  complete, then like a "full privatization" case, any prior 
subsidy should be considered to have been extinguished. These conditions are satisfied in the 
private -to-private transaction between NewPage PH and PWCC. In addition, PWCC did not obtain 
any asset s on less than market terms, because hot idle and FIF did not change the asset value of 
the mill.  
C. Commerce Initiated an Investigation into Stumpage and Biomass without 
Evidence That a Benefit May Have Been Conferred  
38. The United States offers an after-the-fact rationalization of Commerce's decision to initiate 
into stumpage, claiming that Commerce had "information" supporting the existence of a 
"distorted" and "restricted" market for pulpwood and stumpage in Nova Scotia. These assertions 
are false . Commerce had no such information.  
39. Commerce's initiation without reasonably available evidence relating to the amount of 
subsidy was inconsistent with Articles 11.2 and 11.3 of the SCM Agreement. Article 11.2 sets out 
the evidence that must be contain ed in an application, which includes any reasonably available 
evidence with regard to the existence, amount and nature of the subsidy in question. 
An investigating authority may only initiate pursuant to Article 11.3 if it has a sufficient amount of 
this e vidence for each element of a subsidy. The provision of a proposed benchmark for 
comparison is reasonably available evidence that relates to the amount of a subsidy and was 
therefore required in the application.  
40. Moreover, the provision of a proposed b enchmark price is not the only method of 
demonstrating sufficient evidence of a benefit. Without any evidence of benefit, the Petitioner's 
allegations were mere assertion and "cannot be considered sufficient to meet the requirements" of 
Article 11.2.  WT/DS505/R/Add.1  
 
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  II. RESOLUTE  
A. Commerce's Application of AFA to Information "Discovered" during the 
Fibrek Verification is Inconsistent with the SCM Agreement  
1. The United States' Claim that Initiation of an Investigation Concerns 
"Subsidization of a Product" Ignores the Requirement to Initiate 
Against Specific Subsidies  
41. The United States concedes that it did not initiate an investigation into the "discovered" 
Fibrek General Partnership (Fibrek) programs. If an investigating authority has not initiated into a 
program,  that program cannot lead to the imposition of countervailing duties and cannot be 
"necessary" to the investigation under Article 12.7 of the SCM Agreement.  
42. Canada disagrees with the United States that an initiation of an investigation encompasses 
the entire investigation into the "subsidization of a product". Article  11.2 of the SCM Agreement 
requires that an application, which an investigating authority initiates upon, contain sufficient 
evidence of "a subsidy". It is also clear from Article 11.2(iii)  that initiation requires "evidence with 
regard to the existence, amount and nature of the subsidy in question". The elements of a subsidy 
cannot be evidenced in the abstract; they must be shown in respect of each program that is 
initiated upon.  
43. Article 11.3 adds that investigating authorities "shall review the accuracy and adequacy of 
the evidence" to justify initiation. Commerce failed to initiate or review the accuracy and adequacy 
of the very limited evidence that it did take concerning the discove red information.  
2. Commerce Failed to Provide Canada and Resolute With Notice and 
Ample Opportunity to Present All Relevant Evidence in Relation to the 
Essential Facts under Consideration  
44. Recourse to facts available pursuant to Article 12.7 is condit ioned on an investigating 
authority notifying the interested party of the information required and providing ample 
opportunity to present relevant information. Without Commerce's disclosure of the essential facts 
underlying its decision to apply facts avai lable, Canada and Resolute FP Canada Inc. (Resolute) 
were unaware of the factual basis for Commerce's determination and could not adequately defend 
their interests.  
45. If Commerce was unable to provide the required procedural rights, then it should not h ave 
gathered additional information on uninitiated programs at verification. Doing so violated 
Articles  12.1, 12.2, 12.7, 12.8 and 12.11 of the SCM Agreement.  
46. To avoid these violations, Commerce could have extended its timelines or conducted 
verificat ions earlier, allowing sufficient time to provide procedural rights. Commerce could also 
have completed the information gathering process in a subsequent review.  
3. Only an Unambiguous Question, Specified in Detail, May Lead to 
Necessary Information  
47. Commerce's "other forms of assistance" question cannot lead to the conclusion that 
discovered information was "necessary information" that "should have been disclosed" by 
Resolute, pursuant to Article 12.7. This is because the question is undefined, overly  broad, 
ambiguous and not specified in detail. The question asks about assistance received by "producers 
and exporters" of supercalendered paper (SC Paper), rather than relating to the production and 
export of the product. The question also does not exclud e generally available assistance.  
48. Commerce's presumption that discovered information "should have been disclosed" ignores 
the requirement that information be "necessary" before applying "facts available". Commerce had 
no information before it that dem onstrated that the discovered information constituted subsidies. 
The only information before Commerce was the names of the accounts that it discovered. This 
cannot constitute a legal basis upon which to impose countervailing duties. The manner in which 
bookkeepers use accounts to categorize entries bears no relation to the SCM Agreement and does 
not create a presumption that an entry is a financial contribution conferring a benefit that is 
specific.  WT/DS505/R/Add.1  
 
- B-19 - 
 
  4. Resolute Did Not "Fail to Disclose Subsidies"  
49. The United States' statements that Resolute should have disclosed the discovered 
information overlook the fact that Resolute's answer, in which it communicated a sincere belief 
that it did not receive "assistance", has not been found to be untrue. Commerce's a pplication of 
adverse facts available (AFA) based on the name of the three accounts, does not demonstrate that 
they should have been disclosed. Further, Commerce did not assess whether the amounts were 
provided as a result of fair market transactions, the amounts were related to generally available 
programs, the transactions were extinguished by virtue of the arm's length acquisition of Fibrek, or 
the amounts were properly attributable to the production of SC Paper.  
50. It is also relevant that Canada subm itted to Commerce a clear and detailed answer to the 
"other forms of assistance" question. Canada outlined how it interpreted the question and the 
manner by which Canada and the Canadian respondents were responding to it. The United States 
admits that Comm erce did not question this response, despite having had multiple occasions to do 
so. Resolute and Canada cooperated fully with Commerce's investigation.  
51. Even so, non -cooperation cannot be a sufficient basis for the imposition of adverse 
inferences. Ad verse inferences cannot be used to punish non -cooperation and non -cooperation is 
not itself the basis for replacing "necessary information". Non -cooperation does not mitigate the 
obligation of investigating authorities to engage in a process of reasoning a nd evaluation.  
52. Commerce found that Resolute "withheld information that has been requested". This 
standard is a subjective one, in clear contravention of Article 12.7 of the SCM Agreement. The 
Appellate Body has found that the use of facts available is permissible only in the context of 
information necessary to complete the investigation. This is an objective standard.  
B. Resolute and Quebec Submitted Sufficient Evidence to Demonstrate That the 
Alleged Benefits to Fibrek Were Extinguished   
53. The Unite d States continues to defend Commerce's conclusion that it did not have any 
evidence that would allow it to establish that the purchase of Fibrek was at arm's length and for 
fair market value. This statement is not true. The record includes many descriptio ns of the 
transaction, including a judgment of the Quebec Court of Appeal regarding the "poison pill" 
strategy of Fibrek in response to Resolute's takeover bid and Canada's description of the takeover 
bid during consultations. The arm's length nature of th e hostile takeover, including the value of 
that transaction, was brought to Commerce's attention as early as consultations prior to the 
initiation of the investigation.  
54. The United States now claims that the information regarding the hostile takeover o f Fibrek 
was disregarded by Commerce because it related to a different alleged subsidy program from the 
one originally initiated upon by Commerce. The United States argues that the extinguishment of 
the benefit relating to Fibrek was not known until the Pu lp and Paper Green Transformation 
Program (PPGTP) was reported by Resolute prior to the Preliminary Determination. This disclosure 
of PPGTP funding to Fibrek does not somehow render the vast quantity of evidence submitted in 
respect of Fibrek moot or less reviewable by Commerce, simply because it was provided in the 
context of a different subsidy program. Put differently, Commerce had all the information it needed 
with respect to all subsidy programs that could be applicable to Fibrek; the information was n ot 
program -specific.  
55. Moreover, Commerce had the discretion to issue supplemental questionnaires to collect 
additional information concerning the arm's length nature of this transaction after the Preliminary 
Determination. It failed to do so.  
C. The Alleged Subsidies Tied to Products Other Than SC Paper Were Not 
Countervailable  
56. The United States argues that the proper approach to attribution is one that considers 
whether a grant or a subsidy is "tied" to a product "on the basis of information available to the 
granting authority at the time the subsidy is granted". However, the United States ignores that the 
Appellate Body has expressly rejected this argument.  WT/DS505/R/Add.1  
 
- B-20 - 
 
  57. The appropriate inquiry into a product -specific tie requires a scrutiny of the de sign, 
structure, and operation of the subsidy at issue, aimed at ascertaining whether the bestowal of 
that subsidy is connected to, or conditioned on, the production or sale of a specific product. 
The focus is on the contributions themselves, rather than t he program writ large.  
58. However, even under the standard advocated by the United States, the subsidies were 
improperly attributed. They were tied to the production of products other than SC Paper and this 
was known at least as early as when the contribu tions were provided.  
59. Furthermore, by applying an unrepresentative AFA rate, Commerce failed to consider any 
evidence regarding how any contribution to Fibrek could benefit SC Paper production. 
The evidence demonstrates that less than two percent of Fi brek's production was related to the 
production of SC Paper.  
III. CATALYST AND IRVING  
A. Commerce's Calculation of Catalyst's and Irving's Countervailing "All Others" 
Rate is Inconsistent with the SCM Agreement and the GATT 1994  
60. The United States acte d contrary to its obligations when it calculated the "all others" rate 
from a rate composed almost entirely of AFA and one composed entirely of alleged subsidies that 
Commerce found were specific to one company. This "all others" rate violates Articles 10,  19.1, 
19.3, 19.4 and 32.1 of the SCM Agreement and Article VI:3 of the GATT 1994.  
61. The United States is incorrect when it asserts that no limitations exist for calculating an "all 
others" rate. The Appellate Body explained in US – Carbon Steel  that the  task of ascertaining the 
meaning of a treaty provision with respect to a specific requirement does not end when it is 
determined that the text is silent on that requirement. That silence does not exclude the possibility 
that the requirement was intended t o be included by implication.  
62. Article 19.3 of the SCM Agreement should be read in the context of Article  6.10 and 9.4 of 
the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 
1994 (Anti -Dumping Agreement). These A rticles establish that, as a rule, an investigating 
authority shall determine an individual margin of dumping for each exporter but provides rules to 
be followed where the number of producers is so large that this is impracticable. Article 19.3 of the 
SCM Agreement fulfills a similar function by establishing that where an investigating authority does 
not examine all exporters, it must conduct an expedited review.  
63. Article 19.3 refers to the requirement that countervailing duties be levied in the "appropr iate 
amounts" in each case. The Appellate Body has indicated that Article 19.4 informs what is an 
"appropriate amount" and that an "appropriate amount" cannot be more than the amount of the 
subsidy. Finally, the Appellate Body has found that the meaning of  an "appropriate amount" in 
Article 19.3 must not be based on a refusal to take account of the context offered both by 
Article  VI of the GATT 1994 and by the provisions of the Anti -Dumping Agreement.  
64. Article 19.4 of the SCM Agreement should be read in context of Articles 6.10 and 9.4 of the 
Anti-Dumping Agreement, including the Appellate Body's decision in US – Hot Rolled Steel . This 
interpretation is consistent with the principle that disputes under the two agreements should not 
lead to markedly differ ent results and with the Declaration on Dispute Settlement Pursuant to the 
Agreement on the Implementation of Part VI of the General Agreement on Tariffs and Trade 1994 
or Part V of the Agreement on Subsidies and Countervailing Measures.  
65. Moreover, the United States has essentially imported methodology from the Anti -Dumping 
Agreement into its countervailing duty investigations. The application of that methodology should 
therefore be governed by similar rules as under the Anti -Dumping Agreement.  
66. Comm erce was obligated by Article 10 of the SCM Agreement to take all necessary steps to 
ensure that the countervailing duty rate did not exceed the amount of subsidization and, also, that 
it was appropriate. Commerce ignored these requirements in this investi gation.  WT/DS505/R/Add.1  
 
- B-21 - 
 
  B. Commerce Improperly Initiated an Investigation into New Subsidy 
Allegations against Catalyst and Irving During the Expedited Review  
1. New Subsidy Allegations are Contrary to the Purpose of Expedited 
Reviews and Violate Article 19.3  
67. Part V of the SCM Agreement seeks to strike a balance between the right to impose 
countervailing duties to offset subsidization that is causing injury, and the obligations that 
Members must respect in order to do so. As part of this balance, when an invest igating authority 
avails itself of the flexibility offered by Article 19.3 not to investigate all exporters, it cannot 
expand the scope of an expedited review by allowing the introduction of new subsidy allegations. 
This interpretation is consistent with t he ordinary meaning of the term "review", and the 
requirement that such reviews must be "expedited" and "prompt".  
2. New Subsidy Allegations in an Expedited Review Are Limited to Those 
with a Sufficiently Close Nexus to the Allegations in the Original Pet ition 
68. Even if new subsidy allegations are permitted in an expedited review, only those with a 
sufficiently close nexus to the allegations made in the original petition may be reviewed, following 
the Appellate Body's guidance in the context of administr ative reviews in US – Carbon Steel 
(India) . In both expedited and administrative reviews, it is important that the introduction of new 
subsidy allegations in the review not upset the balance between the interests of exporters and 
investigating authorities.  Both forms of review are intended to review what occurred in the original 
investigation. They should therefore be subject to the same minimum limitation.  
3. Commerce's Initiation into the New Subsidy Allegations Failed to Meet 
the Initiation Standards  
69. In the alternative, if new subsidy allegations are permitted, Commerce acted inconsistently 
with Articles 11.2 and 11.3 of the SCM Agreement when it initiated into the new subsidy 
allegations. In particular, Commerce's initiation into the " British Columb ia Ban on Exports of Logs 
and Wood Residue" illustrates Commerce's failure to evaluate whether there was sufficient 
evidence to justify initiation of an investigation. Evidence of a potential export restraint does not 
constitute sufficient evidence of a fi nancial contribution and does not justify initiation.  
IV. OTHER FORMS OF ASSISTANCE – AFA MEASURE  
A. The Other Forms of Assistance – AFA Measure Violates the United States' 
WTO Obligations  
70. The United States' Other Forms of Assistance – AFA measure can be evidenced as either 
"ongoing conduct" or as a "rule or norm of general and prospective application". These categories 
are analytical tools and do not govern the definition of a measure for t he purposes of dispute 
settlement. Nevertheless, under the framework  of either analytical tool, Commerce's conduct is a 
measure that is inconsistent with the United States' WTO obligations under the SCM Agreement.  
71. First, the measure violates Articles 1 0 and 11, as Commerce assumes financial contribution, 
specificity, and benefit without any regard to the initiation standard. In fact, the United St ates has 
conceded that, in its interpretation, a petitioner need only allege one subsidy, regardless of what  
information might be available to it. Second, the measure violates Article 12.7, as Commerce 
applies adverse facts available to information that is not "necessary information". Finally, the 
measure violates Article 12.1, as Commerce denies respondents amp le opportunity to provide 
evidence when applying the measure.  
B. Ongoing Conduct  
72. A party seeking to demonstrate a measure as "ongoing conduct" must establish that the 
measure is attributable to a Member, the precise content of the measure, the repeate d application 
of the measure, and the likelihood that the measure will continue.  WT/DS505/R/Add.1  
 
- B-22 - 
 
  1. The Measure is Attributable to the United States  
73. The United States Department of Commerce is an organ of the United States government . 
Its actions, including the Other  Forms of Assistance – AFA measure are attributable to the 
United  States.  
2. The Precise Content of the Measure  
74. Canada is challenging the entire Other Forms of Assistance – AFA measure. The measure 
consists of  Commerce asking the "other forms of assist ance" question, "discovering" inf ormation 
that it perceives to be responsive to this question, refusing to accept or consider information from 
the respondent related to the discovered information, and applying AFA to find a financial 
contribution, specific ity and benefit with no supporting analysis. Commerce has stated that, 
in 2012, it determined that the proper course of action when it discovers a potential subsidy at 
verification is to use adverse inferences.  
75. The fact that the application of this measure includes multiple stages and is applied in varied 
fact scenarios does not exclude it from being a measure for the purposes of WTO dispute 
settlement. The components of the measure are closely linked, and the fa ct that minor variations 
exist in the underlying facts when the measure is applied does not detract from the existence of 
the measure.  
3. The Repeated Application of the Conduct  
76. This conduct has been applied repeatedly by Commerce. Canada has provide d nine 
examples of this conduct being applied. In each case, Commerce asks the "other forms of 
assistance" question, "discovers" inf ormation that it perceives to be responsive to this question, 
refuses to accept or consider information from the respondent related to the discovered 
information, and applies AFA to find a financial contribution, specificity and benefit with no 
supporting analysis.  
4. The Likelihood That Such Conduct Will Continue  
77. The statements made by Commerce in its determinations, as we ll as before the NAFTA 
Chapter 19 panel, demonstrate that Commerce will continue to apply the Other Forms of 
Assistance – AFA measure.  
78. The United States asserts that the manner by which an authority chooses to characterise its 
practice in its determin ations is not relevant to WTO dispute settlement. However, previous panels 
have found that Commerce's characterization of its actions in its determinations can be evidence of 
future conduct.  
79. Additionally, each of Commerce's determinations applying the  Other Forms of Assistance – 
AFA measure reference that the application of the measure is consistent with Commerce's practice 
in a previous case. This conduct is a practice under U.S. law, a characterization that has legal 
consequences.  
80. The United Sta tes suggested in its responses to the Panel's questions that the Other Forms 
of Assistance – AFA measure does not constitute a "practice" for the purposes of U.S. law. Canada 
therefore requested that Mr. Grant Aldonas, former Under Secretary of Commerce fo r International 
Trade, prepare an expert report on whether the Other Forms of Assistance – AFA measure 
constitutes a practice under U.S. law.  
81. Mr. Grant Aldonas explains in his report that the practice of applying AFA to programs 
"discovered" during ver ification that were not otherwise reported by cooperating respondents, in 
response to Commerce's "other assistance" question, clearly constitutes "agency practice" under 
U.S. law and "agency action" within the meaning of the U.S. Administrative Procedure A ct. 
Mr. Aldonas explains that this practice has "the force of law" and that parties "have ample reason 
to rely on its continued application". Mr. Aldonas concluded that the Other Forms of Assistance – 
AFA measure represents a precedent on which parties in future countervailing duty investigations 
are entitled to rely and is a practice that Commerce has emphatically affirmed it will apply going 
forward.  WT/DS505/R/Add.1  
 
- B-23 - 
 
  C. Rule or Norm of General and Prospective Application  
82. A party seeking to demonstrate a measure as a "rule or norm of general and prospective 
application" must establish that the measure is attributable  to a Member, the precise content of 
the measure, and the general and prospective application of the measure.   
83. The first two of these criteria are identical to and are supported by the same analysis as the 
first two criteria in the ongoing conduct analysis. The third criterion has two elements: general 
application and prospective application.  
84. A measure i s of general application if it is "not limited to a single import or importer" and 
"to the extent that it affects an unidentified number of economic actors". The Commerce 
determinations presented as evidence by Canada demonstrate that this measure is not l imited to a 
single import or importer and is not addressed at specific economic actors.  
85. A measure has prospective application to the extent that "it applies in the future" and is 
"intended to apply to future investigations". There is no requirement tha t a complaining Member 
demonstrate certainty. Factors that may demonstrate prospective application include: the 
existence of an underlying policy, systematic application of the rule or norm, the extent to which 
the rule or norm provides administrative guid ance for future conduct, and the expectations it 
creates among economic operators.  
86. In this case, there is ample evidence of these factors: in issues and decision memoranda, 
Commerce's statements, and the statements of petitioners before Commerce seeki ng to rely on 
the measure. For example, Commerce has publically acknowledged that in 2012 it made the 
decision that it would follow this course of action going forward. Mr. Aldonas confirms that the 
Other Forms of Assistance – AFA measure qualifies as an " agency practice" which, under U.S. law, 
creates a presumption that this practice "will continue". The measure guides Commerce's conduct 
and has created public expectations. As Mr. Aldonas explains in his report, the underlying policy 
objective of the conce pt of an agency practice is to allow parties to rely on an agency's past 
practice.  
D. Resolute as an Example of the Measure  
87. Canada has submitted as evidence screenshots of the information that Commerce refused to 
take at Fibrek's verification. The info rmation on these documents was seen by Commerce verifie rs. 
88. The screenshot evidence was presented to the Panel in order to demonstrate the results of 
the WTO -inconsistent Other Forms of Assistance – AFA measure. The screenshots show that one of 
the disc overed programs would not have added to Resolute's countervailing duty rate and the 
other discovered program could only have added 0.17 percent to the rate. Without the application 
of AFA, Resolute would have received a de minimis rate of 0.94 percent. The  application of the 
Other Forms of Assistance – AFA measure brought Resolute's rate to 17.87 percent. As well, 
Commerce's decision to exclude this evidence from the record makes it far more difficult for a 
respondent to challenge this practice before a U.S . court or a NAFTA tribunal reviewing the 
determination.  
89. The United States asserts in its submissions that it cannot verify the screenshots were seen 
by Commerce verifiers. The United States justifies its answer on the basis that Commerce 
accepted no information from the verification. This is circular reasoning: the decision not to accept 
the relevant information was Commerce's, and it now attempts to rely on that decision as 
a defense.  WT/DS505/R/Add.1  
 
- B-24 - 
 
  E. The Practice of Canada Border Services Agency  
90. The United S tates attempts to justify its WTO -inconsistent behaviour by alleging that the 
Canada Border Services Agency (CBSA) engages in a practice similar to the U.S. Other Forms of 
Assistance – AFA measure. CBSA's practice and actions are not before this Panel. The y are of no 
relevance in this case. However, in response to this allegation, Canada adduced evidence that the 
United States misrepresented CBSA's practice which is not similar to Commerce's. Here, it is only 
the United States' practice and measure that is inconsistent.  
_______________  
 WT/DS505/R/Add.1  
 
- C-1 - 
 
  ANNEX  C 
ARGUMENTS OF THE UNI TED STATES  
Contents  Page  
Annex C -1 First i ntegrated executive summary of the arguments of the United States  C-2 
Annex C -2 Second i ntegrated executive summary of the arguments of the United States  C-14 
 
 WT/DS505/R/Add.1  
 
- C-2 - 
 
  ANNEX  C-1 
FIRST I NTEGRATED EXECUTIVE SUMMARY OF THE ARGUM ENTS OF THE UNITED STATES  
EXECUTIVE SUMMARY OF THE U.S. FIRST WRITTEN SUBMISS ION 
I. INTRODUCTION  
1. Canada has raised numerous claims, many involving complex issues under the 
SCM Agreement  and the GATT 1994. Ultimately, however, this dispute is about a decision of the 
Canadian government to bail out and subsidize a bankrupt paper mill – a decision that r esulted in 
subsidized exports and injury to a U.S. industry – as well as attempts by the respondents to shield 
from scrutiny evidence of subsidization. Canada 's claims lack merit, and should be rejected.  
II. CANADA 'S CLAIMS WITH RESPEC T TO PORT HAWKESBURY  ARE WITHOUT MERIT  
A. Commerce 's Financial Contribution Determination for the Provision 
of Electricity to Port Hawkesbury Was Not Inconsistent with 
Article  1.1(a)(1)(iv) of the SCM Agreement  
2. Commerce properly found that Nova Scotia entrusted or direct ed Nova Scotia Power to 
provide electricity to Port Hawkesbury based on evidence of the role of the government of Nova 
Scotia in the provision of electricity, specifically as it related to Port Hawkesbury. A financial 
contribution exists within the meaning  of Article 1.1(a)(1) where the government "entrusts or 
directs " a private body to provide a good. Central to the analysis is the meaning of the terms 
"entrust or direct, " which the Appellate Body has summarized in the following manner: 
"'entrustment ' occurs where a government gives responsibility to a private body, and 'direction ' 
refers to situations where the government exercises its authority over a private body. " 
The delegation by the government may take a variety of forms, and a written measure with the 
force of law that is binding on a private body satisfies the standard of Article 1.1(a)(1)(iv). 
Commerce applied this WTO legal standard to the evidentiary record befo re it.  
3. Commerce 's determination was based on the plain terms of the Public Utilities Act . Nova 
Scotia Power is defined as a "public utility " under section 2(e) of the Public Utilities Act . That act 
unambiguously confers certain obligations on entities defined as "public utilities. " Section 52 states 
the following:  
Every public utility is required to furnish service and facilities reasonably safe and 
adequate and in all respects just and reasonable.  
4. Commerce 's determination noted that a publication commissioned by Nova Scotia, titled 
"Regulating Electric Utilities – Discussion Paper, " explained Nova Scotia Power 's obligations in the 
following manner:  
As a near monopoly, Nova Scotia Power has responsibilities imposed under law. One 
of them is an obligation to serve – the company must provide electricity to customers 
who request it, anywhere in Nova Scotia.  
5. Commerce also found that the Public Utiliti es Act  provides the NSUARB with the authority to 
approve all rates proposed by public utilities and to compel a public utility to comply with the 
provisions of that act. Based on its review of the Public Utilities Act , Commerce concluded that 
"{Nova Scotia } controls and directs the methodology that {Nova Scotia Power} has to use in rate 
proposals, and any rate that is charged by {Nova Scotia Power} must be approved by the 
NSUARB. "  
6. This factual determination, based on the plain language of section 52 and  premised on the 
same understanding as Canada acknowledges in its first submission, led Commerce to conclude 
that Nova Scotia entrusted or directed – as the terms are defined within the meaning of WT/DS505/R/Add.1  
 
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  Article  1.1(a)(1)(iv) – Nova Scotia Power to provide electr icity, which constitutes the provision of a 
good within the meaning of Article 1.1(a)(1)(iii). As noted, the Appellate Body has found 
entrustment or direction to occur where "the government gives responsibility to a private body 'to 
carry out ' one of the t ypes of functions listed in paragraphs (i) through (iii), " and that 
responsibility may be given through "formal or informal " means. Here, through a formal, legally 
binding measure, the government "gave responsibility to " or "exercised its authority over " Nova 
Scotia Power  "to carry out " the provision of electricity. Canada has not demonstrated that 
Commerce 's finding of entrustment or direction was inconsistent with Article 1.1(a)(1).  
B. Commerce 's Disclosure of the Essential Facts Was Not Inconsistent wit h 
Article 12.8 of the SCM Agreement  
7. Canada 's claim under Article 12.8 with respect to Commerce 's financial contribution analysis 
is without merit. Article 12.8 does not prescribe a particular manner for disclosure, so long as the 
disclosure takes place "in sufficient time for the parties to defend their interests. " The United 
States fully complied with these obligations, and Canada 's argument is baseless: the essential 
facts under consideration that Commerce allegedly failed to disclose were a Nova Scoti a law (the 
Public Utilities Act)  submitted by Nova Scotia and a discussion paper commissioned by Nova Scotia 
on the provision of electricity in Nova Scotia. These two documents were served on all interested 
parties. These materials also were extensively ad dressed in the record of the proceeding, and 
interested parties had more than ample opportunity to defend their interests. Canada has failed to 
establish that Commerce did not disclose the Public Utilities Act  and the discussion paper to all 
interested par ties, and the Panel should reject Canada 's claims under Article 12.8.  
C. Commerce 's Benefit Determinations for the Provision of Electricity to Port 
Hawkesbury Was Not Inconsistent with Article 1.1(b) of the SCM Agreement  
8. Canada has not demonstrated th at Commerce 's benchmark was inconsistent with 
Articles  1.1(b) and 14(d) of the SCM agreement. Instead of presenting an argument based on the 
text of the agreement, Canada essentially asks the Panel to conduct a new benchmark analysis 
and to use an alternat ive benchmark that Canada would prefer.  
9. Article 14(d) does not specify the benchmark to be used when determining the adequacy of 
remuneration, so long as, in the first instance, the benchmark is "connected with the prevailing 
market conditions in the c ountry of provision. " Indeed, the Appellate Body in US – Carbon Steel 
(India)  recently found that there is no "hierarchy between different types of in -country prices that 
can be relied upon in arriving at a proper benchmark, " observing that "whether a pric e may be 
relied upon . . . is not a function of its source but, rather, whether it is a market -determined price 
reflective of prevailing market conditions in the country of provision. " The Appellate Body in that 
case recognized that "it is permissible for an investigating authority in a benefit calculation to 
construct a price " to serve as the benchmark for the benefit analysis.  
10. Article 14(d) does not prescribe the source of the benchmark, be it individual transaction 
prices or constructed prices, so lo ng as the benchmark prices are consistent with "prevailing 
market conditions. " The Appellate Body has observed "that the 'market conditions ' are further 
modified by the term 'prevailing, ' which means 'predominant, ' or 'generally accepted. '" 
In developing a  benchmark to determine adequate remuneration, the focus is thus on the norm, 
and identifying the prices that are "generally accepted " based on typical market conditions.  
11. Commerce 's benchmark complied with the obligations of Article 14(d). Commerce 's benefit 
analysis compared the electricity rate paid by Port Hawkesbury to a benchmark price constructed 
using Nova Scotia Power 's standard ratemaking methodology. That is, Commerce did not create an 
artificial benchmark; rather, it applied the methodology that Nova Scotia Power uses in developing 
rates for similarly situated entities.  
12. To determine the appropriate methodology t o calculate a benchmark, Commerce first 
considered the two types of rates offered by Nova Scotia Power. Those two rates are called above -
the-line and below -the-line. The above -the-lines rates constituted the appropriate choice, as these 
are the normal rate s based on the recovery of electricity generation and transmission costs. In 
contrast, the below -the-line rates are preferential, non -market rates that do not include the WT/DS505/R/Add.1  
 
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  recovery of costs. Commerce understandably determined that the above -the-line methodo logy 
best approximated the prevailing market conditions necessary to calculate a benchmark.  
13. Commerce then considered whether any of the above -the-line rates in Nova Scotia Power 's 
schedule of rates for the relevant period (2014) could be used as a benc hmark. Prior to receiving 
the LRR, under Port Hawkesbury 's previous owner, the mill received an above -the-line rate under 
the tariff class called "Extra Large Industrial 2 Part Real Time Pricing. " During the relevant period, 
this tariff class was not liste d in Nova Scotia Power 's tariff because at that time, there was no 
above -the-line ratepayer with a sufficiently large usage requirement to qualify for that tariff class. 
With respect to the rate for the next smaller class of industrial consumer (called the  
"large industrial " rate), Port Hawkesbury confirmed that it would not be eligible for the rate 
because of its significantly larger electricity consumption. Accordingly, Commerce properly 
concluded that "there were no electrical tariffs applicable to a cus tomer with an extra -large 
connection size in the {Nova Scotia Power} rate schedule. "  
14. In the absence of applicable tariffs in the Nova Scotia Power  rate schedule, Commerce 
"constructed a price {benchmark} that provides for complete coverage of fixed an d variable costs, 
as well as a portion of ROE {return on equity} for profit using available information on the record. " 
Commerce 's benchmark comprised the following:  
Benchmark = variable costs + fixed costs + profit  
15. For variable costs, Commerce relied on the actual amount paid by Port Hawkesbury through 
the LRR. Commerce determined that the LRR "covers all variable costs and makes a contribution to 
fixed costs. " 
16. For fixed costs, Commerce started with the actual amount paid by Port Hawkesbury through  
the LRR (C$2/MWh). To estimate the amount of fixed costs not covered by the fixed cost 
contribution of the Port Hawkesbury LRR but that would have been covered by a rate 
representative of prevailing market conditions, Commerce identified the fixed cost ra te per MWh 
that was most recently applied under the above -the-line rate for an extra -large industrial 
customer. The General Rate Application identified the standard fixed cost rate that would be 
applied to an extra -large industrial customer as C$26/MWh fro m the most current rate of this type 
available. The result is an unrecovered fixed cost of C$24/MWh. Commerce calculated the amount 
of total unrecovered fixed costs by multiplying Port Hawkesbury 's actual electricity consumption 
(in MWh) by the per -unit am ount of unrecovered fixed costs (C$24/MWh).  
17. For profit, Commerce determined that the NSUARB approved for Nova Scotia Power  a 
guaranteed profit rate of 9 percent. Commerce identified the portion of Nova Scotia Power 's total 
profit that would be attribu table to Port Hawkesbury. It did so by first isolating the percentage of 
Nova Scotia Power 's electricity consumption that was accounted for by Port Hawkesbury. 
Commerce then multiplied that percentage by Nova Scotia Power 's total profit to identify the exa ct 
amount of profit that would have been attributable to Port Hawkesbury.  
18. Commerce then "added together the three portions of the benchmark payments calculated 
above {variable costs, fixed costs, and return on equity} to arrive at a total amount that Port 
Hawkesbury would have paid for its electricity…using the benchmark. "  
19. Commerce 's benchmark was based on the prevailing market conditions for electricity in 
Nova Scotia and therefore consistent with Articles 1.1(b) and 14(d) of the SCM Agreement.  
D. Commerce 's Determination that the Hot Idle and Forestry Infrastructure 
Subsidies Received by Port Hawkesbury Were Not Extinguished because of a 
Change of Ownership Is Consistent with the SCM Agreement and GATT 1994  
20. Commerce properly determined that Port Hawkesbury was the recipient of "hot idle " funds 
and disbursements under the Forestry Infrastructure Fund (FIF) and that the benefit associated 
with these financial contributions was not extinguished by a change of ownership.  
21. As part of the sale process, NPPH and NewPage Corporation (New Page), NPPH 's U.S. parent 
company, entered into a Settlement and Transition Agreement, under which NewPage committed WT/DS505/R/Add.1  
 
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  approximately US$22 million to maintain the mill in hot idle status. It was necessary to maintai n 
the mill in hot idle status because machinery and equipment at mills like the Port Hawkesbury mill 
had to be in constant operation in order to maintain their efficiency, and even operability. NPPH 
also negotiated an agreement with Nova Scotia to establis h a forestry infrastructure fund to pay 
for ancillary forest operations that were previously undertaken by NPPH. The purpose of the 
forestry infrastructure fund was to ensure that certain forestry operations would continue because 
NPPH intended to shut dow n its mill and ancillary forestry operations. Nova Scotia, however, 
deemed these operations directly beneficial to the province and the provincial economy, and did 
not want them to cease immediately.  
22. Benefit, as understood by the SCM Agreement, exists  where the financial contribution makes 
the recipient better off than it would otherwise have been, absent that contribution. Here, absent 
Nova Scotia 's payment of hot idle funds, the financial obligation to maintain the mill in hot idle 
status would have fallen on NPPH. Nova Scotia explicitly subsidized a necessary condition of the 
sale of the mill as the sale was occurring ; thus, PWCC received a benefit.  
23. The issue was "whether the bid and sale prices reflected and incorporated the hot idle funds 
appro ved in December 2011 and March 2012. " Given that the funding was bestowed as a result of 
NPPH 's inability to use its own financial reserves to fulfill the obligations to which it agreed, 
Commerce properly recognized that "the full value of maintaining the mill in hot idle status was 
not accounted for in the original bid. " As Commerce explained, given that Nova Scotia did not 
approve the hot idle funding until after the December 16, 2011 deadline for all bids, "the potential 
bidders would not have been aware  of the provision of hot idle funds from {Nova Scotia}; 
therefore, the bids submitted could not have reflected the provision of the assistance by the 
{Nova  Scotia} to maintain hot idle status. "  
24. The bid value itself was the result of a market process t hat began in September 2011 and 
concluded on December 16, 2011, and Nova Scotia played an important role in the transaction 
after that price was established. Commerce appropriately recognized the nuances of those 
circumstances and reasonably determined tha t PWCC received a benefit that it did not pay for – 
Nova Scotia 's financial support of that sale.  
25. As an alternative argument, Canada claims that the facts support a conclusion that the 
purchase of Port Hawkesbury was a private transaction conducted at  arm's-length and for fair 
market value, and that such a transaction must automatically extinguish a subsidy, regardless of 
how much a government subsidizes that transaction, because there can be no benefit to the 
purchaser under those conditions. To suppo rt its claim, Canada relies on the US – Countervailing 
Measures on Certain EC Products  panel report. Canada 's reliance, however, is misplaced. That 
report simply states the proposition that an arm 's-length transaction for fair market value 
generally exting uishes prior subsidies. The report does not state that concurrent subsidies – that 
is, those reflected in the circumstances of the transaction – are always extinguished.  
26. Commerce, per Articles 1 and 14 of the SCM Agreement, has the authority to apply a 
methodology to determine whether a benefit has been conferred. As such, Commerce took into 
account the precise nature and circumstances surrounding the transaction in examining whether 
the benefit from the subsidy was extinguished upon change in ownershi p. Commerce examined 
the transaction to determine whether the purchaser received an advantage or something that 
makes the recipient 'better off ' than it would otherwise have been, absent that financial 
contribution. The facts here demonstrate that the hot idle and FIF funds provided by Nova Scotia 
allowed NPPH to fulfil an obligation – to sell the mill to Port Hawkesbury as a going concern – it 
otherwise would not have been able to meet. The record evidence demonstrates that due to the 
timing of the market transaction the hot idle grants and FIF were not reflected in the purchase 
price PWCC ultimately paid. And, accordingly PWCC 's purchase of the mill did not extinguish the 
subsidy.  
E. Commerce 's Investigation of the Government of Nova Scotia 's Provision of  
Stumpage to Port Hawkesbury Was Initiated in a Manner Consistent with 
Articles 11.2 and 11.3 of the SCM Agreement  
27. Canada has failed to establish that Commerce 's investigation into Nova Scotia 's provision of 
stumpage and biomass to Port Hawkesbury is inconsistent with Articles 11.2 and 11.3 of the WT/DS505/R/Add.1  
 
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  SCM Agreement. The relevant inquiry is to determine whether an application contains "sufficient 
evidence " or "adequate facts or indications " to justify initiation of an investigation , not to sustain a 
prelimi nary or final determination. The amount of evidence that is "sufficient " for the initiation of 
an investigation must be considered in light of the qualification in Article 11.2 that an "application 
shall contain such information as is reasonably available to the applicant " on the existence, 
amount and nature of the subsidy in question. Thus, an application can comply with the standard 
set out in Article 11.2 "even if it does not include all the specified information if such information 
was simply not reason ably available to the applicant. "  
28. Commerce 's decision to investigate Nova Scotia 's provision of stumpage to Port Hawkesbury 
fully complied with this requirement because the application contained sufficient evidence with 
regard to the existence of a su bsidy, and such evidence that was "reasonably available to the 
applicant. " In particular, the application demonstrated that Port Hawkesbury did not procure 
pulpwood based on market principles. Furthermore, the application contained evidence that was 
"reaso nably available " to the applicant to indicate the existence of a subsidy, consistent with 
Articles 11.2 and 11.3.  
III. CANADA HAS FAILED TO  ESTABLISH THAT COMME RCE'S COUNTERVAILING DUT Y 
DETERMINATION WITH R ESPECT TO RESOLUTE W AS INCONSISTENT WITH  THE 
SCM AGREEMENT OR GAT T 1994  
A. Canada 's "As Applied " Claims Concerning Discovered Information Are 
Without Merit  
29. Commerce initiated an investigation into SC Paper imp orts to determine whether 
manufacturers, producers, or exporters of SC Paper from Canada received countervailable 
subsidies. In other words, Commerce initiated an investigation into a product alleged to have been 
subsidized. Commerce 's investigation into S C Paper imports included, but was not limited to, an 
examination of the programs listed by name in the petition.  
30. As reflected in the record, the investigation was in relation to subsidies received by 
producers of a product, and not limited to particul ar programs. Commerce published a notice of 
initiation in the Federal Register explaining that Commerce accepted a petition and would examine 
further the information contained in that petition in the context of an examination of the 
subsidization of SC Pap er.  
31. An investigation into a product and the subsidies received by producers of that product is 
consistent with WTO requirements. The structure and content of Article 11 confirm that an 
initiation of an investigation under the SCM Agreement is not limi ted to an investigation of 
particular programs, but encompasses an investigation into the subsidization of a product . 
Articles  11.2 and 11.3 make clear that the petition (or application) must contain "sufficient 
information " on the existence of an alleged subsidy, together with injury and causal link. But the 
text does not limit the subsequent investigation initiated to the subsidy alleged in the petition. The 
chapeau of Article 11.2 of the SCM Agreement indicates that an investigating authority may initiat e 
an investigation and examine programs not included in the written application. In particular, the 
chapeau of Article 11.2 requires only that there be "sufficient evidence " of the existence of 
"a subsidy " in an application to justify initiation of an inve stigation. The use of the indefinite article 
"a" preceding the noun "subsidy " in Article 11.2 is significant. The use of the phrase "a subsidy " as 
opposed to "the subsidy " indicates that the petition must contain "sufficient evidence " of 
subsidization to justify initiation of an investigation pursuant to Article 11.3, but not that an 
application need have covered all possible subsidies in order to justify an initiation into the 
subsidization of a product.  
32. Article 11.3 provides add itional interpretative guidance on the scope of an investigation. It is 
important to note that before initiating an investigation, Article 11.3 requires that an investigating 
authority determine if there is sufficient evidence of injury  within the meaning of Article VI of 
GATT  1994. And, examples of evidence of alleged injury listed in Article 11.2 focus on import 
volume and price data related to a specific product . Accordingly, the injury analysis outlined in 
Article 11.2 to determine sufficient evidence f or initiating an investigation relates to a product , not 
a specific subsidy program. Accordingly, Article 11.2(iv) supports the view that an investigating 
authority can initiate an investigation into a product.  WT/DS505/R/Add.1  
 
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  33. Further support for the distinctions dra wn in Article 11 between the petition (or application) 
and its contents, the evaluation of whether the petition (or application) contains "sufficient 
evidence " to justify initiation of an investigation, and the investigation into the product  and the 
subsid ies received by the producers of that product is provided by the notification provisions of 
Article 25 of the SCM Agreement. Article 25 of the SCM Agreement requires WTO Members to 
notify to Members in the SCM Committee any subsidy granted or maintained in  their territory.  
34. On June 30, 2015, Canada notified the SCM Committee of its industrial, cultural, 
agricultural, and fisheries programs at the federal and sub -federal government level, for fiscal 
years 2012 -2014. However, Canada failed to disclose to M embers any of the programs discovered 
during verification, depriving Members of the ability to understand the subsidies and evaluate their 
trade effects, if any.  
35. Properly understood, the SCM Agreement permits Members to discover and countervail 
non-transparent subsidies as part of a properly initiated investigation. Where a country has failed 
to act in a transparent manner and properly notify its subsidy programs, it would be a perverse 
outcome to require an investigating authority to ignore informatio n on non -notified or transparent 
subsidies and to require the authority not to counteract their contribution to injurious subsidization 
when calculating the final countervailing duty rate. To that end, Article 11 permits an investigating 
authority to initi ate an investigation into the subsidization of a product, and examine subsidies not 
necessarily listed in the written application. Accordingly, Commerce 's initiation of an investigation 
into SC Paper was conducted in accordance with Article 11 of the SCM A greement.  
1. Commerce 's use of facts available regarding subsidies discovered 
during verification was not inconsistent with Article 12.7 of the 
SCM Agreement  
36. Canada 's argument that Commerce 's decision to resort to facts available was inconsistent 
with obligations under the SCM Agreement suffers from three fundamental problems. First, Canada 
mischaracterizes the scope of the investigation, and thus Canada 's argument on what information 
was or was not necessary is not based on the actual record in this d ispute. Second, regardless of 
the scope of the investigation, the SCM Agreement does not prescribe the type of questions an 
investigating authority may ask an interested party, and Canada has not identified any provision 
that would foreclose Commerce from asking a question concerning "any other forms of assistance " 
that may be subsidizing the product in question. Third, Canada 's arguments do not address the 
fundamental fact that Resolute impeded the investigation by failing to fully answer Commerce 's 
questi on concerning "any other forms of assistance. " 
37. First, Canada mischaracterizes the scope of Commerce 's investigation. Commerce properly 
initiated an investigation into a product  alleged to have been subsidized. Commerce then, as part 
of the investigatio n, requested information on "any other forms of assistance " to determine 
whether Canada was, in fact, subsidizing the production of SC Paper. The "any other forms of 
assistance " question was asked in order to understand and collect information related to t he 
alleged subsidization of the product under investigation – SC Paper.  
38. Second, the SCM Agreement does not prescribe the type of questions an investigating 
authority may ask an interested party, and Canada has not identified any provision that would 
foreclose Commerce from asking the "any other forms of assistance " question. Canada argues that 
the information requested was not "necessary information. " However, it is not for a respondent to 
determine subjectively what information is "necessary " to Commerce 's investigation and analysis. 
The investigating authority determines what information to request and what is "necessary " on the 
basis of the investigation, including the responses by interested parties in the course of that 
investigation.  
39. Third, Canada 's argument fails to address the key factual underpinning for the use of facts 
available: namely, Resolute 's decision not to provide a complete response to a question posed by 
Commerce in its questionnaire. In responding to the initial questi onnaire, Resolute failed to report 
subsidies that were labeled in its own accounting system as "subsidies. " This was not information 
that was "mitigating the absence of 'any' or 'unnecessary ' information. " Instead, Commerce 
discovered the information at ve rification when it was verifying the non -use of subsidy programs. WT/DS505/R/Add.1  
 
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  Consistent with Article 12.7, Commerce, then, resorted to facts available, and ultimately 
determined that the programs were countervailable subsidies.  
40. By not divulging the receipt of th e unreported assistance prior to the commencement of 
verification, Resolute precluded this unreported assistance from being "verifiable " and impeded the 
investigation by refusing to provide complete and verifiable answers. As a result of Resolute 's 
failure  to respond to Commerce 's question, necessary information was missing from the record of 
the investigation which prevented Commerce from analyzing the relevant facts concerning the 
element of benefit. Accordingly, Commerce needed to rely on facts available  to determine whether 
the discovered programs, found in accounts labeled as "subsidies " constituted countervailable 
subsidies.  
41. Canada 's objection to the applied duty rate in Magnesium from Canada  is not based on any 
provision of the SCM Agreement. Article 12.2 provides that any decision of the investigating 
authority must be based "on the written record of this authority. " In the countervailing duty 
investigation, Commerce complied with this oblig ation and used the limited record information that 
was available to it. The amount of the subsidy rates and the dates of receipt of the discovered 
subsidies were not "facts available " to Commerce because Resolute failed to divulge this 
information prior to  verification and thus did not provide verifiable information. Consequently, 
Commerce selected a rate of 8.55 percent calculated in Magnesium from Canada for the "Article 7 
Grants from Quebec Industrial Development Corporation, " a program that provided ass istance in 
the form of grants. Canada has not identified any breach of the SCM Agreement related to 
Commerce 's calculation of the countervailing duty rate for Resolute. Accordingly, Commerce 's facts 
available rate for Resolute was WTO -consistent.  
2. Comme rce adhered to all of the procedural requirements outlined in 
Articles 12.1, 12.2, 12.3, and 12.8 of the SCM Agreement  
42. Canada errs in arguing that Commerce acted inconsistently with the procedural 
requirements outlined in Article 12 of the SCM Agreement. Canada does not contest the fact that 
Commerce provided all interested parties at least thirty days to reply to the initial questionnaire 
issued at the outset of the investigation. Resolute had numerous opportunities to ensure that its 
responses  to Commerce 's questions were correct, and, indeed, both Resolute and Canada filed 
amendments to their original submissions when they discovered that benefits to Fibrek under the 
Federal Pulp and Paper Green Transformation Program ( "FPPGTP ") were not prope rly reported. 
Moreover, the parties were notified that Commerce had discovered subsidies at verification and 
was including them in the investigation when Commerce released Resolute 's verification report. In 
fact, interested parties submitted comments on th is issue to Commerce prior to the issuance of the 
final determination.  
43. Contrary to Canada 's unsubstantiated Article 12.2 claim, Commerce provided Resolute with 
an opportunity to present information and arguments orally. During the September 24, 2015,  
public hearing, after the August 2015 verification, Resolute orally presented information and 
arguments related to the programs discovered during verification, specifically as to why Commerce 
should not apply facts available to the programs discovered duri ng verification. These arguments 
were recorded by Commerce and reflected in the final determination.  
44. Canada does not provide any evidence or adequate argumentation supporting its 
Article  12.3 claim. Furthermore, the record in the countervailing duty i nvestigation shows that 
Commerce placed all relevant evidence on the record and thus made it available for interested 
parties and the public to view. There is no evidence presented by Canada that Commerce failed to 
provide interested parties with an opport unity to see all information relevant to the investigation.  
45. In addition, Canada has failed to identify any facts, let alone essential facts contemplated 
under Article 12.8 of the SCM Agreement, that Commerce has failed to disclose. The disclosure 
obligation does not apply to the reasoning or conclusions of the investigating authority, but rather 
to the "essential facts " underlying the reasoning and conclusion.  WT/DS505/R/Add.1  
 
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  B. Commerce 's Determination that Certain Benefits Conferred to Fibrek Were 
Not Extinguished W hen Resolute Acquired Fibrek Is Consistent with the 
SCM Agreement  
46. Commerce properly determined that the record did not contain sufficient evidence to support 
Resolute 's claim that subsidy benefits received by Fibrek were extinguished by Resolute 's purc hase 
of its wholly -owned subsidiary, Fibrek. Despite Canada 's arguments, Resolute simply characterized 
the Fibrek acquisition as a "hostile takeover " without any supporting evidence to that assertion. 
Commerce explicitly requested a discussion of all such "change in ownership " transactions within 
Resolute 's responses to the questionnaire regarding Resolute 's history, and, in turn, Resolute 
responded with brief, unsupported declarations. Resolute did not demonstrate that the price it paid 
for Fibrek reflecte d the subsidies Fibrek received. And, without that demonstration, Commerce was 
unable to reach a finding of extinguishment. As a result, Commerce properly determined that the 
benefits provided to Fibrek under the FPPGTP and the subsidies discovered at veri fication 
continued to benefit Resolute after Resolute 's acquisition of Fibrek.  
C. Commerce 's Calculation of Resolute 's Subsidy Rate for the FPPGTP, FSPF, and 
NIER Programs Was Not Inconsistent with the SCM Agreement and the 
GATT  1994  
47. Commerce 's attrib ution of the benefits received pursuant to the FPPGTP, the Ontario Forest 
Sector Prosperity Fund ( "FSPF"), and the Ontario Northern Industrial Electricity Rate Program 
("NIER") was consistent with the GATT 1994 and the SCM Agreement.  
48. Article 19.4 of t he SCM Agreement and Article VI:3 of the GATT 1994 do not dictate 
precisely how an investigating authority should allocate the numerator and denominator when 
calculating countervailing duty ratios. In determining whether and what amount of subsidy has 
been bestowed on the production, manufacture, or export of a product, a Member may examine a 
subsidy and determine that the benefits received from the countervailable subsidy are spread 
across the entire company, and cannot be linked to a particular product. U nder such 
circumstances, it is appropriate to treat that subsidy by a company as essentially "untied, " and to 
divide the benefit by the company 's total sales for purpose of attributing the benefits to the 
company. This is precisely the exercise contemplated when the Appellate Body explains that the 
"correct calculation of a countervailing duty rate requires matching the elements taken into 
account  in the numerator with the elements taken into account in the denominator. " A subsidy 
that benefits all products would accordingly be attributed to all sales.  
49. This matching exercise does not require the authority to trace subsidy benefits from receipt  
to the moment of actual use. Instead, as the Appellate Body has observed, "the appropriate 
inquiry into the existence of a product -specific tie requires a scrutiny of the design, structure, and 
operation of the subsidy at issue, aimed at ascertaining whet her the bestowal of that subsidy is 
connected to, or conditioned on, the production or sale of a specific product. " Although Canada 
seeks to cast blame on Commerce for failing to ascertain as precisely as possible the correct 
amount of the subsidy, in fact , Commerce undertook the very "matching " exercise described by 
the Appellate Body.  
50. Commerce 's attribution of the benefits received pursuant to the FPPGTP, FSPF, and NIER 
subsidy programs was consistent with the GATT 1994 and the SCM Agreement.  
51. FPPGTP : Commerce properly attributed to Resolute 's total sales of pulp and paper products 
the subsidy benefits received by Resolute under the FPPGTP program. The program 's eligibility 
requirements explicitly targeted and limited benefits to Canada 's pulp and  paper industry. 
Commerce analyzed the design, structure, and operation of the program, explaining that the 
subsidy was limited to "capital investments at a Canadian pulp and paper mill, " and that "costs 
associated with other types of projects…are ineligib le for the program. " Commerce appropriately 
determined that these grants were "tied to the production of only pulp and paper products. "  
52. FSPF : Commerce properly attributed the subsidy benefits received by Resolute under the 
FSPF to Resolute 's total sal es. In its consideration of the design, structure, and operation of the 
program, Commerce found that grants conferred under the program were not limited to the 
production of a particular product; rather, the grants were "issued to the forest industry to su pport WT/DS505/R/Add.1  
 
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  and leverage new capital investment projects. " Commerce concluded that Resolute received a 
countervailable subsidy that benefited all of Resolute 's production activities.  
53. NIER : Commerce properly attributed the subsidy benefits received by Resolu te under the 
NIER program to Resolute 's total sales. In its consideration of the design, structure, and operation 
of the program, Commerce explained that the "purpose of the program is to assist Northern 
Ontario 's largest qualifying industrial electricity consumers which commit to developing and 
implementing an energy management plan to manage their energy usage and improve energy 
efficiency and sustainability. " Accordingly, in calculating the rate of subsidization, Commerce 
properly matched the elements ta ken into account in the numerator – a benefit to support all of 
Resolute 's production – with the elements taken into account in the denominator – Resolute 's total 
sales.  
IV. COMMERCE 'S CALCULATION OF CAT ALYST 'S AND IRVING 'S COUNTERVAILING 
DUTY RATES IS NO T INCONSISTENT WITH THE SCM AGREEMENT  
A. Commerce 's Calculation of the All Others Rate Was Consistent with the 
GATT  1994 and the SCM Agreement  
54. Canada has failed to demonstrate that Commerce 's determination was inconsistent with the 
obligations of Articles 10, 19.1, 19.3, 19.4, and 32.1 of the SCM Agreement and Article VI:3 of the 
GATT 1994. The SCM Agreement does not prescribe a methodology for calculating a rate for 
non-investigated firms.  
55. Under DSU Article 3.2 the Panel is to apply customary rules of interpretation, under which a 
provision is to be interpreted in accordance with the ordinary meaning of the terms in their 
context, and in light of its object and purpose. Conversely, the Appellate Body has recognized 
"the fact that a particular t reaty provision is 'silent ' on a specific issue 'must have some meaning. '" 
An agreement 's silence on a particular issue cannot be filled by imputing the obligation of an 
entirely distinct agreement. Rather, a Member 's obligations under the SCM Agreement ar e derived 
from t he text of the SCM Agreement.  
56. Canada 's reliance on the Appellate Body report in US – Hot-Rolled Steel is misplaced. 
The Anti-Dumping Agreement and the SCM Agreement impose fundamentally different obligations 
to the calculation of an antidumping margin or a countervailing duty rate for a non -investigated 
entity. Article 9.4 of the Anti -Dumping Agreement identifies with parti cularity the antidumping 
margins that can and cannot be used in the calculation of a margin for non -investigated exporters. 
This level of prescription has no parallel in the SCM Agreement; Article 19.3 of the SCM Agreement 
establishes only that non -investi gated exporters may be subject to countervailing duties and may 
request an expedited review.  
57. Commerce adopted a reasonable approach for determining the rate for non -investigated 
companies – namely, to base that rate on the countervailing duty rates de termined for the 
investigated producers. The weighted -average of Port Hawkesbury 's and Resolute 's countervailing 
duty rates provided the best approximation for the countervailable subsidies received by all other 
SC Paper producers during the relevant perio d of investigation. This was an eminently reasonable 
approach that resulted in a countervailing duty rate supported by evidence on the record.  
B. Commerce Properly Initiated an Investigation into New Subsidy Allegations 
Against Catalyst and Irving During an Expedited Review  
58. The United States disagrees with Canada 's argument that the SCM Agreement contains 
some sort of unspecified limitation on the new subsidy allegations that may be included in an 
expedited review under Article 19.3.  
59. The obligati on outlined in Article 19.3 is clear: an investigating authority must provide an 
expedited review to an exporter who is subject to a countervailing duty investigation but was not 
individually investigated to establish an individual countervailing duty rate  for that exporter. 
There  is no limitation, express or implied. Canada agrees with this reading of Article 19.3. 
However, despite the clear obligation outlined in Article 19.3, Canada asks the Panel to expand WT/DS505/R/Add.1  
 
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  upon that obligation and place certain restrict ions on a Member 's conduct of an expedited review; 
restrictions that appear nowhere in the text of Article 19.3.  
60. Moreover, Canada 's reliance on the Appellate Body report in US – Carbon Steel (India)  is 
misplaced. Canada is using the US – Carbon Steel ( India)  Appellate Body report to compare the 
purpose  of an administrative review outlined in Article 21 to the conduct of an expedited review 
discussed in Article 19. This argument provides no basis to read into the text of Article 19.3 an 
obligation that i s not there. For these reasons, Canada 's claim under Article 19.3 fails and should 
be rejected.  
C. Commerce 's Initiation of the New Subsidy Allegations Was Consistent with 
Article 11 of the SCM Agreement  
61. Commerce 's decision to initiate an investigati on into the new subsidy allegations was 
consistent with Article 11 of the SCM Agreement. Article 11.3 requires an authority to determine 
whether an application contains "sufficient evidence " or "adequate facts or indications " to justify 
initiation of an investigation, a lesser standard than is required to support a final finding by the 
investigating authority. In addition, the amount of evidence that is "sufficient " for the initiation of 
an investigation must be considered in light of the qualification in Article 11.2 that an "application 
shall contain such information as is reasonably available to the applicant " on the existence, 
amount and nature of the subsidy in question. For each new subsidy allegation, Commerce 's 
decision  to initiate was based on sufficient evidence and consistent with Article 11. We note that 
Canada has not notified to the WTO 's SCM Committee any of the programs identified in the new 
subsidy allegations.  
V. CANADA 'S "AS SUCH " CLAIMS CONCERNING DI SCOVERED  INFORMATION ARE 
WITHOUT MERIT  
62. As a fundamental matter, the so -called "ongoing conduct " cannot be subject to WTO dispute 
settlement because it appears to be composed of an indeterminate number of potential future 
measures. Measures that are not yet in existence at the time of panel establishment cannot be 
within a panel 's terms of reference under the DSU. The purported "ongoing conduct " does not exist 
apart from the instances of use of facts available in the context of a particular investigation. Unlike  
a measure that constitutes a rule or norm of general and prospective application, Canada 's 
so-called ongoing conduct measure simply describes actions that Commerce has taken in small 
number of its countervailing duty determinations. Yet, for Canada 's so-called measure to give rise 
to a breach of a WTO obligation, the measure would have to "constitute an instrument with a 
functional life of its own " and "do something concrete, independently of any other instruments. " 
63. Even aside from the fact that "ongoi ng conduct " is not a measure in existence as of the time 
of the Panel 's establishment, and thus is not within its terms of reference, Canada 's claims relating 
to such an alleged "measure " also fail because Canada has failed to establish that any such 
"ongoing conduct " exists or is likely to continue under the challenged order that is at issue in this 
dispute.  
64. Canada 's "as such " challenge related to discovered information fails because Canada has not 
identified the precise content of the alleged rule or norm or its general and prospective application. 
Canada seeks to characterize actions taken by Commerce in seven determinations as a "rule or 
norm of general and prospective application. " Canada 's effort fails. First, Canada seeks to define 
the precise content of the rule or norm by identifying a series of actions that theoretically could 
occur in any countervailing duty investigation. Canada merely reproduces a table listing a series of 
questions  included in seven investigations that it collectively refers to as the "any other forms of 
assistance " question. The wording of the questions Canada has reproduced in Table 1 varies. 
In Table 2, Canada lists excerpts from the issues and decisions memorand a which correspond to 
the seven investigations. Similar to Table 1, the excerpts listed in the second table differ from each 
other. It is not clear what "application " Canada is challenging as a purported rule or norm. It is 
also unclear if Canada is challe nging the application of a particular question, the application of 
facts available, a combination of both, or an application of something entirely different.  
65. Canada 's use of a series of varying, vague, and imprecise terms to identify the so -called 
"Other Forms of Assistance -AFA measure " is insufficient to meet the precise content requirement WT/DS505/R/Add.1  
 
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  previously outlined by the Appellate Body. Including selective excerpts from questionnaires and 
issue and decision memoranda does not identify with any precision t he content of the measure 
Canada is challenging.  
66. Second, in addition to insufficiently identifying the precise content of the so -called measure 
it is challenging, Canada has not demonstrated that the alleged measure is of general and 
prospective appli cation. Canada presents little more than a "string of cases, or repeat action " in 
support of its claim that a measure exists that can be considered a norm or rule of general and 
prospective application. Indeed, these pieces of evidence support the opposite  finding.  
67. In all seven of the determinations Canada relies upon, Commerce made unique findings and 
reached different results. In two of the cases mentioned by Canada, Shrimp from China in 2013 
and PET Resin from China in 2015, the "discovered " informat ion was presented to Commerce by 
the companies, either as "minor corrections " at the outset of the verification or independently. 
In those two proceedings, Commerce accepted or rejected the corrections depending on the nature 
of the correction submitted.  
68. In the instant case, during the verification of Resolute, Commerce discovered four potential 
previously unreported subsidy accounts. Three of the accounts showed reimbursements or funds 
received. For these three accounts, Commerce used facts available t o determine that there were 
two countervailable programs. However, Commerce determined that it was not necessary to apply 
facts available to the other subsidy account discovered during verification.  
69. With respect to Section 502 of the Trade Preferences Extension Act ( "TPEA"), Canada simply 
cites to three determinations in which the Act was referenced. Canada does not explain how those 
citations to TPEA in any way support the existence of an alleged unwritten norm of general and 
prospective application. F urthermore, on its face, the TPEA provides Commerce with the discretion 
to use facts available in its determinations. The statute does not mandate any particular outcome, 
and thus even if a statute were somehow relevant to establishing the existence of an unwritten 
measure, this statue provides no support for Canada 's position. As explained by Canada in its first 
written submission, the TPEA provides flexibility to Commerce, was recently enacted, and has only 
been referenced in a few administrative determin ations. The sum total of the evidence Canada 
adduces to support its claim consists of a handful of determinations by Commerce and a broad 
reference to Section 502 of the TPEA. Such evidence is insufficient.  
VI. CONCLUSION  
70. For the foregoing reasons, the  United States respectfully requests that the Panel reject all of 
Canada 's claims.  
EXECUTIVE SUMMARY OF THE U.S.  STATEMENT AT THE FIRST SUBSTANTIVE MEETING OF THE PANEL 
71. [A summary of the U.S. statement at the first substantive meeting is reflected in the above 
Executive Summary of the U.S. First Written Submission.]  
EXECUTIVE SUMMARY OF U.S.  RESPONSES TO PANEL QUESTIONS  
Summary of U.S. Response to Question 5  
72. Commerce 's conclusion of financial contribution was based on its consideration of two 
related factors: (1) section 52 of the Public Utilities Act , which requires a public utility to provide 
electricity to its customers, and (2) the unique role of Nova Scotia – including through the Nova 
Scotia Utility and Review Board ( "NSUARB ") – in the provision of electricity to Port Hawkesbury 
through the Load Retention Rate ( "LRR"). With respect to the Public Utilities Act, Commerce found 
that Nova Scotia Power "is required  by law to provide electricity to customers who request it 
anywhere in Nova Scotia. "  
73. With respect to the second factor identified above – the role of Nova Scotia in the 
negotiation of the LRR – Commerce 's analysis took account of the unique circumstan ces 
surrounding the salvation from bankruptcy and dissolution of the Pork Hawkesbury mill. In this 
regard, Commerce noted that "{Nova Scotia} stated that Port Hawkesbury would not exist if it had WT/DS505/R/Add.1  
 
- C-13 - 
 
  to pay any of the published electricity tariffs for industri al users. " Indeed, the prospective new 
owner of the Port Hawkesbury mill made a lower price for electricity a precondition for the 
purchase of the mill. Because of Nova Scotia 's keen interest in saving the mill as an ongoing 
concern, Nova Scotia ensured th at Nova Scotia Power would offer to provide electricity at below 
market rates. Commerce 's final determination identified record evidence on the role of Nova Scotia 
and the NSUARB in the negotiation of the LRR.  
74. Commerce also relied on the fact that the  government of Nova Scotia through the NSUARB 
changed the regulatory framework in order to make Port Hawkesbury eligible for a LRR. Under 
existing practice, an LRR had been available only to companies on the electric system that sought 
alternative means of  generation. But in the Port Hawkesbury situation, Nova Scotia Power used the 
LRR to allow for the salvation of a bankrupt customer. In particular, Commerce found that, in 
June 2011, "{NewPage Port Hawkesbury} and Bowater filed an application with the NSUA RB to 
change the pre -existing LRT to make it available to a company facing 'impending business closure 
due to economic distress ' and to allow for an LRR for a company in economic distress. " NewPage 
Port Hawkesbury required the LRR in order to operate the m ill, and it was not eligible for this 
special rate under the existing Load Retention Tariff framework. Commerce considered the 
expansion of the Load Retention Tariff to be highly relevant to the government 's entrustment or 
direction for the provision of el ectricity to Port Hawkesbury.  
75. Accordingly, Commerce 's financial contribution determination was based on section 52 of the 
Public Utilities Act  and the government of Nova Scotia 's conduct, including through the NSUARB, 
in ensuring the provision of elect ricity to Port Hawkesbury.  
 
 
 WT/DS505/R/Add.1  
 
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  ANNEX C -2 
SECOND I NTEGRATED EXECUTIVE SUMMARY OF THE ARGUM ENTS OF THE UNITED STATES  
EXECUTIVE SUMMARY OF THE U.S.  SECOND WRITTEN SUBMISSION  
I. CANADA HAS FAILED TO DEMONSTRATE THAT COMMERCE 'S COUNTERVAILING 
DUTY DETERMINATION WITH RESPECT TO PORT HAWKESBURY WAS 
INCONSISTENT WITH THE SCM AGREEMENT AND THE GATT 1994  
A. Commerce 's Financial Contribution Determination for the Pr ovision of 
Electricity to Port Hawkesbury Was Consistent with Article 1.1(a)(1)(iv) of 
the SCM Agreement  
1. In this submission, the United States responds to two arguments: first, Canada 's repeated 
assertion that section 52 of the Public Utilities Act  does not impose a duty to serve, despite 
Canada 's own acknowledgment that the utility had a duty to serve; and second, that a general 
service obligation alone is not sufficient to find the existence of a financial contribution, even 
though Commerce 's analysis  was not limited to this single factor.   
2. Canada has argued that the plain language of section 52 does not impose an obligation to 
serve.  This argument is unavailing.  First, Canada acknowledges that a legal obligation is derived 
from section 52 of the Public Utilities Act , but suggests that because "the duty to serve is not 
expressly set out in section 52, " Commerce 's record did not support the interpretation.  
But Canada 's own statements make clear that Commerce properly interpreted the obligation of 
section 52. In its responses to the Panel 's questions, Canada explains that "section 52…has been 
interpreted to include a duty to serve through the common law, " and cites to a decision by the 
Nova Scotia Court of Appeal that found the predecessor provision to section 52 to "set out a 
'service requirement ' or a duty to serve. "  
3. Canada 's second new argument – also contradicted by Canada 's own statements – is that 
section 52 is "not directly enforceable by law " and that Nova Scotia Power "is not required by law  
to provide electricity to customers if it does not make economic sense to do so. " Canada itself 
recognizes that "the {Nova Scotia Utility and Review Board ( "NSUARB ")} has the authority under 
section 46 to order public utilities to comply with the Public U tilities Act ," and "sections 112 
and 114 make it an offence to violate the Public Utilities Act ." Of course, in both instances, this 
includes the duty to serve.  
4. Canada 's answers to the Panel 's questions fault Commerce 's financial contribution 
determinat ion for not establishing a link between the government action and the specific conduct 
of Nova Scotia Power.  But, without government involvement – through the financial contribution – 
Port Hawkesbury would not have received the provision of electricity for  less than adequate 
remuneration.  The United States has explained that ample evidence on the record of the 
countervailing duty investigation supported Commerce 's conclusion:  
 The NSUARB 's decision to expand the Load Retention Tariff to allow for a Load Rete ntion 
Rate ( "LRR") for companies in economic distress, a decision made at the request of 
NewPage Port Hawkesbury.  Without this government action, Port Hawkesbury would not 
have qualified for an LRR and would not have received the LRR.  
 The government of Nov a Scotia negotiated with Pacific West Commercial Corporation 
("PWCC ") the terms of a commitment whereby if Port Hawkesbury 's mill load triggered 
certain obligations that resulted in increased incremental costs, Nova Scotia would 
guarantee that neither Port  Hawkesbury nor other ratepayers would be required to pay.  WT/DS505/R/Add.1  
 
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   Nova Scotia 's decision to hire a consultant "to help facilitate the discussions between 
PWCC and {Nova Scotia Power} and to provide advice and technical support to both of 
these parties in designin g and negotiating an LRR that could be delivered to the NSUARB 
for approval. "  
 The unique role of the NSUARB in the negotiation and approval of the LRR.   
5. Contrary to Canada 's claims, Commerce 's final determination identified a clear link between 
the gov ernment action and the granting of Port Hawkesbury 's LRR.   
B. Commerce's Disclosure of the Essential Facts Was Consistent with 
Article  12.8 of the SCM Agreement  
6. As discussed in the U.S. first written submission, interested parties had ample opportunity – 
and availed themselves of that opportunity – to provide comments and arguments on the two facts 
that are the focus of Canada 's claim: the Public Utilities Act  and a discussion paper.  Nova Scotia 
submitted to Commerce the Public Utilities Act on May 28, 2015 – 60 days before the preliminary 
determination  – and Commerce 's preliminary determination made clear that the Public Utilities Act  
and the obligations placed on Nova Scotia Power therein were central to Commerce 's financial 
contribution analysis.  As for the discussion paper, which Canada has not established to be an 
"essential fact, " Commerce submitted to the record and distributed the paper to all interested 
parties 110 days before the final determination.  Commerce explicitly provided interested parti es 
the opportunity to "submit factual information to rebut, clarify, or correct the factual information. " 
Canada does not dispute this timeline.  
7. Canada 's first interpretive argument – made without textual support – asserts that "the 
United States was ob ligated to request that interested parties address the relevance of section 52 
and the duty to serve in written submissions, if it was contemplating relying on it to establish a 
financial contribution. " Article 12.8 imposes no such obligation, and instead contains only a 
"disclosure obligation " that extends to the essential facts.  The provision requires the authority to 
make the disclosure of the facts "in sufficient time for the parties to defend their interests. " Given 
that some parties did in fact avail themselves of the full opportunity they were provided to "defend 
their interests " with respect to the Public Utilities Act  and the submission containing the discussion 
paper, there is no basis for Canada 's claim under Article 12.8.  
C. Commerce's Benefit D etermination for the Provision of Electricity to Port 
Hawkesbury Was Consistent with Articles 1.1(b) and 14(d) of the 
SCM Agreement  
1. Article 14(d) requires the use of a market benchmark to determine the 
existence and extent of a benefit for the provision  of a good or service  
8. In its opening statement and in its responses to the Panel 's questions, Canada continued to 
advance the extraordinary argument that "there was no need for Commerce to use a benchmark " 
because "the provision of electricity by {Nova  Scotia Power} to {Port Hawkesbury} is itself a 
market transaction. " Canada 's argument assumes the conclusion.  The very purpose of a 
benchmark is to determine if the transaction was made for less than adequate remuneration "in 
relation to the prevailing ma rket conditions. " The Appellate Body has recognized that a benefit 
determination requires a comparison between a market benchmark price and the price at which 
the good has been provided.   
9. Furthermore, the underlying factual premise for Canada 's argument  – that the transaction 
for electricity concerns only two private entities, Nova Scotia Power and Port Hawkesbury, and is 
therefore necessarily a market transaction – is flawed.  Commerce 's final determination concluded 
that "{Nova Scotia} played an essenti al role in the specific LRR that set the price for the electricity 
sold to Port Hawkesbury from {Nova Scotia Power}. "  WT/DS505/R/Add.1  
 
- C-16 - 
 
  2. Canada has failed to demonstrate that an above -the-line rate is not 
"in relation to the prevailing market conditions"  
10. In its respo nses to the Panel 's questions, Canada argues that below -the-line rates are part 
of "prevailing market conditions " in Nova Scotia.  The question for the Panel is not whether a 
below -the-line rate could serve as a benchmark for electricity – that is, whether the Panel, were it 
to engage in de novo review of this issue, would consider a below -the-line rate more appropriate 
for use as a benchmark.  Rather, the issue before the Panel is whether the benchmark used by 
Commerce  – one based on above -the-line rates for  extra-large industrial customers – is consistent 
with the legal obligations of Article 14(d) of the SCM Agreement.   
11. Above -the-line rates for extra -large industrial users are in relation to the prevailing market 
conditions for an extra -large customer o f electricity in Nova Scotia, consistent with Article 14(d) of 
the SCM Agreement.  In considering the prices that were in relation to the prevailing market 
conditions for electricity in Nova Scotia, the record of the countervailing duty investigation made 
clear that above -the-line rates satisfied the legal standard.  During the period of investigation, out 
of all of Nova Scotia Power 's customers – regardless of size or customer class – only Port 
Hawkesbury did not pay an above -the-line rate . 
12. Within the di fferent categories of above -the-line rates, the extra -large industrial rate was 
the appropriate above -the-line rate under the circumstances of this investigation.  This fact is clear 
based on Port Hawkesbury 's own experience: prior to receiving the LRR, und er Port Hawkesbury 's 
previous owner, the mill received the above -the-line rate for extra -large industrial users.  In other 
words, without government involvement, Port Hawkesbury would have paid an above -the-line rate 
for extra -large industrial users.  
13. Canada has not established that an above -the-line rate for extra -large industrial users is not 
"in relation to the prevailing market conditions " for an entity that satisfies the requirements of an 
extra-large industrial user of electricity in Nova Scotia.   
3. Canada's arguments regarding Commerce's construction of the 
benchmark are not supported by the record of the countervailing duty 
investigation  
14. Commerce 's constructed benchmark replicated the standard ratemaking methodology used 
by Nova Scotia Powe r to develop above -the-line rates for similarly situated entities.  Indeed, like 
any above -the-line rate developed by Nova Scotia Power, Commerce 's constructed benchmark was 
based on the sum of variable costs, the applicable contribution to fixed costs, and  the standard 
profit ratio ( i.e., Benchmark = variable costs + fixed costs + profit).   
15. Canada 's first argument, which it does not support with citation to the record of the 
investigation, is that the constructed benchmark did not account for Port Hawke sbury 's status as a 
priority interruptible customer.  In the final determination, Commerce observed, "there were no 
interruptible rates available to use as a benchmark " during the period of investigation.  Confronted 
with this reality, Commerce 's constructed  benchmark reflected a rate – the extra -large industrial 
rate – that was priority interruptible . As explained in the NSUARB order setting the framework for 
the Load Retention Tariff, the extra -large industrial rate requires that "customers served under thi s 
tariff must accept priority supply interruption. "  
16. Canada also argues that Commerce did not request accounting and operational information 
from Nova Scotia Power, or an explanation of the cost components of the extra -large industrial 
rate. Commerce r equested the information necessary that would have been required to 
substantiate Canada 's claims that additional adjustments should be made to the constructed 
benchmark, but neither Canada nor Nova Scotia Power provided the requested information.  
In additi on to the requests for information in the questionnaires, Commerce specifically identified 
those issues as topics it intended to pursue as part of its on -site verification.  Despite these specific 
requests, at verification, counsel for Nova Scotia informed Commerce that Nova Scotia Power was 
asked to participate and assist with the agenda items, but declined to do so.  WT/DS505/R/Add.1  
 
- C-17 - 
 
  17. Canada 's challenge to Commerce 's selected contribution to fixed costs – C$26 per MWh – for 
the constructed benchmark is also without meri t. The 2012 rate for extra -large industrial 
customers was designed based on the load for Port Hawkesbury and Bowater Mersey pursuant to 
Nova Scotia Power 's standard pricing mechanism, enabling Commerce to identify in a factual 
statement in the General Rate  Application the fixed cost rate assigned to these companies in 2012.  
At no point in the countervailing duty investigation – or even (although it would be untimely) in 
this WTO proceeding – has Canada supported with evidence an alternative cost.  
D. Commerc e's Determination that the Hot Idle and Forestry Infrastructure 
Subsidies Received by Port Hawkesbury Were Not Extinguished because of a 
Change of Ownership Is Consistent with the SCM Agreement and GATT 1994  
18. The United States will focus on the benefit PWCC received related to the forestry 
infrastructure subsidies (known as FIF).  In its responses to the Panel 's questions, Canada 
advances additional arguments against Commerce 's determination pertaining to the forestry 
infrastructure subsidies.  Canada ackn owledges that PWCC 's bid was conditioned on receiving the 
mill in hot idle status so that PWCC could sell the mill as a "going concern. " Canada presents the 
new argument that one of the provincial subsidies – the FIF – was not designed to achieve the sale 
as a "going concern. " First, the purpose of a subsidy is not a determining factor in a benefit 
analysis.  Rather, the pertinent question is whether the subsidy was fully reflected in the final 
transaction price.  Second, record evidence, in fact, demonstrate s that the creation of the FIF aided 
in selling the mill to PWCC as a "going concern. "  
19. In a questionnaire response, Nova Scotia 's statements are evidence that Nova Scotia 
created the FIF to maintain the supply chain of the mill during the sale process . Likewise, in an 
answer to a question regarding the extension of FIF and hot idle funding in March 2012, the 
government of Nova Scotia made explicit statements demonstrating that the FIF was created and 
maintained to ensure that the mill was sold as a "going concern. " Without the FIF, the bankruptcy 
proceeding would have directly impacted NPPH 's forestry operations.  Moreover, as the Verification 
Report of the Government of Nova Scotia demonstrates, the FIF was implemented to enable the 
forestry operations to continue during the bankruptcy process and not interrupt supply chain 
operations at the mill.  When it became clear that NPPH was ceasing production, Nova Scotia 
negotiated the Forestry Infrastructure Agreement, and was obliged to extend the agreement in to 
2012, well past PWCC 's initial bid proposal, in order to maintain NPPH 's ongoing forestry 
operations.  All of these activities contributed to the sale of NPPH as a "going concern " to PWCC.  
Canada points to the fact that the marketing materials provided t o prospective buyers of NPPH do 
not mention the FIF; this, however, does not undercut the record evidence demonstrating that the 
FIF contributed to the overall operations of the mill and allowed NPPH to continue its forestry 
operations during the bankruptc y process and sell the mill as a going concern.   
20. Accordingly, despite Canada 's arguments, the FIF was not merely a means of fulfilling 
NPPH 's forestry obligations, but was created to sell the mill as a "going concern. " Strikingly, as 
evident from Nova Scotia 's questionnaire responses, Nova Scotia was directly involved in the 
ongoing efforts to sell the mill and agreed to inject subsidies that were intended to benefit the 
purchaser of the mill.  The Province was committed to ensuring that the paper mill w ould be 
operational and globally competitive from the moment the paper mill was sold.  In short, positive 
evidence on the record supports Commerce 's finding that the FIF was a fund intentionally created 
by Nova Scotia to ensure that the mill was sold as a g oing concern in order to keep the mill in 
operation.  
21. Turning to the extinguishment analysis, the pertinent question is whether there was a grant 
to NPPH, and whether the change in ownership resulted in an extinguishment of the subsidy, such 
that it no longer benefited the recipient.  
22. As Japan correctly notes in its answers to the Panel 's questions, "in addition to examining 
whether the sale was at arm 's-length and for fair market value, a separate inquiry should be 
conducted to determine whether the sales price reflects the full value of any remaining benefits … 
{and} accordingly, if the company, asset, or equipment is purchased based on such going -concern 
value, the benefit could be considered to accrue to the target company/the purchaser. " A subsidy  
extinguishment analysis entails a careful case -by-case analysis, and an important factor is the 
extent to which the benefit from the subsidy is fully reflected in the transaction price, i.e. whether 
the transaction price has incorporated, and thereby "extinguished, " the subsidy.  WT/DS505/R/Add.1  
 
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  23. Although not at issue under the facts of this dispute, the United States notes its 
disagreement with the European Union 's blanket statement that a sale at arm 's-length and for fair 
market value between private parties a priori  extinguishes any benefit conferred prior to the sale.  
(Indeed, the European Union 's third -party statement seems aimed at preserving its positions in a 
separate, ongoing dispute involving facts unlike those in the present dispute.)  Though the issue is 
not r aised here, the United States recalls that the Appellate Body in EC – Large Civil Aircraft  
distinguished between private -to-private sales and privatizations.   
24. Thus, a determination of whether a sale was at arm 's-length and for fair market value 
between  private parties does not answer the question of whether benefits conferred prior to the 
sale have been extinguished.  A fact -intensive inquiry must be conducted on a case -by-case basis 
to determine not only whether the sales price was at arm 's-length and a t fair market value, but 
also whether the benefit continues to be accounted for after a change of ownership and was 
reflected in the transaction price.  
25. Commerce determined that PWCC  received a benefit when Nova Scotia provided a grant to 
maintain the ongoing forestry operations of the mill during the bankruptcy process.  Accordingly, 
Commerce concluded that because the C$12 million forestry infrastructure fund grant was 
provided after  the PWCC bid was submitted, and the bid price did not change throughout the 
duration of the sales process, the value of the forestry infrastructure funds could not have been 
reflected in the final transaction price.  Canada has not established that Commerc e's determination 
related to the hot idle and forestry infrastructure subsidies is inconsistent with the SCM Agreement 
or the GATT 1994.  
E. Commerce 's Investigation of the Government of Nova Scotia 's Provision of 
Stumpage and Biomass to Port Hawkesbury Was  Initiated in a Manner 
Consistent with Articles 11.2 and 11.3 of the SCM Agreement  
26. As previously explained, in Commerce 's initiation checklist, Commerce stated that the 
evidence submitted in support of the allegation demonstrated the possible existenc e of a 
countervailable subsidy for the provision of stumpage and biomass material for less than adequate 
remuneration.  In particular, the Forest Utilization License Agreement indicated a restricted market 
for stumpage and biomass fuel worthy of additional investigation, and Commerce specifically 
identified the Forest Utilization License Agreement as evidentiary support for its decision to initiate.  
Furthermore, Commerce explained that the petitioner provided information to determine benefit 
that was reasona bly available to it.  
27. Canada argues – without support in the text of the SCM Agreement – that "even if there was 
no evidence of benefit reasonably available to the Petitioner, Commerce was not justified in 
initiating an investigation with no evidence of  benefit before it. " Article 11.2 states that an 
application "shall contain such information as is reasonably available to the applicant on the " 
amount and nature of the subsidy in question.  The provision recognizes that there may be 
circumstances where an  applicant cannot ascertain evidence to demonstrate the nature and 
amount of a subsidy.  Furthermore, Article 11 does not require pricing data to support an allegation 
of the provision of goods for less than adequate remuneration.   
II. COMMERCE'S COUNTERVAILING DUTY DETERMINATION WITH RESPECT TO 
RESOLUTE WAS CONSISTENT WITH THE SCM AGREEMENT AND THE GATT 1994  
A. Canada 's "As Applied " Claims Concerning Discovered Information Are Without 
Merit  
28. First, in Canada 's opening statement at the first pa nel meeting, Canada states that while the 
scope of the investigation is defined with respect to the product under investigation for the 
purposes of the any other forms of assistance question, Article 11 initiation standards should not 
be understood to refe r to initiation with respect to a product.  Canada 's statements are inconsistent 
and not supported by any legal justification.  The content and structure of Article 11 support that 
the investigating authority is able to satisfy the Article 11 initiation stan dards when it launches an 
investigation into an alleged subsidization of a particular product that need not be constrained to 
particular programs specified in the application.  Particularly if – as appears to be the case – 
Canada accepts that the scope of C ommerce 's investigation was into the alleged subsidization of a WT/DS505/R/Add.1  
 
- C-19 - 
 
  product, it is only logical that Article 11 likewise should be understood to apply with respect to the 
product under investigation.   
29. To that end, Article 11 permits an investigating author ity to initiate an investigation into the 
subsidization of a product, and examine subsidies not explicitly identified in the written application.  
The purpose of a CVD investigation is for an investigating authority to discover the extent of the 
subsidizati on of a product.  Although an investigating authority may at the outset initiate its 
investigation into a product based on its evaluation of programs specifically identified in the 
written application, those programs focus, but do not limit, the inquiry of the investigating 
authority in determining the extent of the subsidization of a product.  Accordingly, Commerce 's 
initiation of an investigation into SC Paper was in accordance with Article 11 of the 
SCM Agreement.  
30. Second, Canada argues that the "any ot her forms of assistance " question is problematic 
because the question is ambiguous, overly broad, and not specified in detail.  Canada further 
argues that the "any other forms of assistance question " is applied in such a broad manner that it 
requires report ing measures that are not financial contributions and requires respondents to report 
all "assistance " received without defining the term "assistance. " As an initial matter, Canada has 
conceded in its response to the Panel 's questions that "a question cannot, in and of itself, violate 
the requirements of the SCM Agreement. " Nonetheless, Canada argues that "poorly drafted, overly 
broad or ambiguous questions cannot request 'necessary information ' and the failure to provide 
information in response to such  a question cannot constitute an action that significantly impedes 
an investigation pursuant to Article 12.7. "  
31. Canada 's arguments are not rooted in the SCM Agreement.  Indeed, consistent with its 
approach throughout this dispute, Canada fails to cite t o any relevant authority under the 
SCM Agreement.  Furthermore, to the extent Canada argues that the "any other forms of 
assistance " question is unrelated to necessary information, Canada lacks any basis for its 
argument.  The question can aid in discovering  information related to the subsidies identified in the 
petition, in that the authority and the responding parties may have different views on the scope of 
the initially identified subsidies.  In addition, whether there are any additional subsidy programs 
(other than those alleged in the petition) is relevant to determine the total level of subsidization to 
the product under investigation.   
32. Canada also makes an unconvincing argument that the authority should ask more detailed 
questions about unknown subs idies.  This argument makes no sense.  At that stage, an 
investigating authority is unable to ask detailed questions about programs of which it is not yet 
aware.   
33. With respect to Canada 's argument that the term "assistance " was not defined in 
Commerce 's questionnaire to Resolute, it is important to note that Resolute did not inform 
Commerce that it had difficulty defining "assistance. " Had there been limitations to its answer, 
Resolute should have disclosed to Commerce what those limitations were from the  outset.  This 
would have provided Commerce with the maximum time to examine the additional assistance and 
consider arguments by the parties concerning the relevancy of their contents.  However, Resolute 
provided a blanket assertion that there was no further  information for it to provide.  Thus, as a 
result of Resolute 's representation to Commerce that it had provided all information requested, 
Commerce was unaware that in reality there was unreported assistance that may have warranted 
a more detailed inquiry.  
34. Third, in its opening statement, Canada argues that Commerce issued supplemental 
questionnaires, but never followed -up on these responses to the "other forms of assistance " 
question.  This argument does not match up with the record – as just explained,  Resolute asserted 
that it received no other forms of assistance.  Thus, on its face, Resolute 's response to Commerce 
was complete, and Commerce had no basis to follow up on Resolute 's response.  In particular, 
Resolute represented that it had "examined its records diligently and {was} not aware of any 
other programs by {the government of Canada} . . . that provided, directly or indirectly, any other 
forms of assistance to Resolute 's production and export of SC Paper. " Nor did the government of 
Canada 's quest ionnaire response indicate that Resolute had received "other forms of assistance. " 
Thus, Commerce had no indication at that time that Resolute 's response was deficient in any way.  WT/DS505/R/Add.1  
 
- C-20 - 
 
  35. It was not until the late stage of the proceeding, at Resolute 's verific ation, that Commerce 
discovered that Resolute had failed to respond fully to Commerce 's initial questionnaire with 
regard to other assistance received by Fibrek.  The timing of Commerce 's discovery of Fibrek 's 
accounts was a direct result of Resolute 's failure to cooperate with Commerce and fully disclose its 
accounts of assistance from the outset of the investigation.  Moreover, per Article 25 of the 
SCM Agreement, Canada failed to notify to Members any of the programs discovered during 
verification, dep riving Members of the ability to understand the subsidies and evaluate their trade 
effects, if  any.  
36. It is important to emphasize that Canada 's interpretation of the relevant provisions of the 
SCM Agreement, if accepted, would create an incentive for e xporters not to be forthcoming with an 
investigating authority seeking to determine the extent of a particular product 's subsidization.  
Exporters that choose not to answer initial questions about other forms of assistance or possible 
subsidization – or cho ose to answer those questions untruthfully or incompletely – would benefit 
from the non -disclosure and possibly avoid a full investigation into the alleged subsidization should 
an investigating authority make such a discovery at verification or at a simila rly late stage of an 
investigation.  In that scenario, the distortive effects of injurious subsidization for which the 
SCM Agreement provides a remedy would go unaddressed.  Canada 's approach would privilege lack 
of transparency and undermine the subsidy dis ciplines of the WTO Agreements.  
37. Finally, in its response to the Panel 's question, Canada argues that Commerce had available 
the amounts received by Fibrek, and that the information was therefore not missing.  Canada is 
incorrect.  These amounts were not available to Commerce to place onto the record because they 
were not verifiable at that late stage of the proceeding.  It was because of Resolute 's failure to 
disclose the assistance from the outset that accounts which clearly indicated the existence of oth er 
forms of assistance were not discovered until the onsite verification.  At that late juncture, 
Commerce officials were not able to verify the newly discovered subsidies, i.e., whether the 
information discovered at verification was reliable and fully refl ected the amount of assistance 
Resolute had received.  Without the timely disclosure by Resolute of this assistance, Commerce 
was deprived of the opportunity to solicit information from the relevant government authority 
regarding the program or programs und er which these funds were provided.  Thus, Commerce 
properly relied on facts available to fill in the missing information.   
B. Commerce 's Determination that Certain Benefits Conferred to Fibrek Were 
Not Extinguished When Resolute Acquired Fibrek Is Consiste nt with the 
SCM Agreement  
38. In its responses to the Panel 's questions, Canada defines the term hostile takeover and 
argues that a hostile takeover is "always an arm 's-length transaction. " However, the term "hostile 
takeover " is not used in the SCM Agreement, nor is it contained in U.S. countervailing duty laws or 
regulations.  Accordingly, one cannot conclude that Resolute 's unsupported assertion that a "hostile 
takeover " occurred requires, or even supports, a finding that any  such transaction extinguished 
subsidy benefits.   
39. A proper analysis of extinguishment is not dependent upon an interested party 's bare 
characterization of a private transaction.  Rather, in order to make a finding of possible 
extinguishment, an authorit y should consider the circumstances of the transaction, including 
whether the final transaction price reflected the full value of any subsidies received.  In the 
investigation at issue, Resolute 's response to Commerce 's request for information about changes  
in ownership characterized the transaction as a hostile takeover but offered no additional 
explanation.  Of course, the fact that Canada now offers justification and explanations is irrelevant 
– those comments were not on the record in the investigation.  Resolute also did not explain how – 
even if characterized as a hostile takeover – the price Resolute paid for Fibrek might reflect the 
value of any subsidy benefits received.  Moreover, until Commerce 's discovery at verification of 
other forms of assistance provided to Fibrek, Commerce had no reason to pursue additional 
information regarding the change in ownership.   WT/DS505/R/Add.1  
 
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  C. Commerce's Calculation of Resolute's Subsidy Rate for the FPPGTP, FSPF, 
and NIER Programs Was Not Inconsistent with the SCM Agreement and the  
GATT  1994  
40. As already addressed extensively and with specific reference to the text of the 
SCM Agreement , the United States has demonstrated that Commerce 's calculation of Resolute 's 
subsidy rate for the Federal Pulp and Paper Green Transformation Prog ram ("FPPGTP "), Forest 
Sector Prosperity Fund ( "FSPF"), and the Ontario Northern Industrial Electricity Rate ( "NIER") 
programs was consistent with the applicable obligations under the covered agreements.   
41. The appropriate inquiry, as explained by the Appellate Body, is on the subsidy at the time of 
bestowal.  In US – Washing Machines , the Appellate Body explained that "we consider that a 
subsidy is 'tied' to a particular product if the bestowal of that subsidy is connected to, or 
conditioned upon, the p roduction or sale of the production concerned. " In conducting this 
assessment, "an investigating authority must examine the design, structure, and operation of the 
measure granting  the subsidy at issue and take into account all the relevant facts surroundi ng the 
granting  of that subsidy. " Canada appears to agree with this interpretation.  Commerce 's 
determination was consistent with this approach.  To review:  
 FPPGTP:  Commerce concluded that this program 's eligibility requirements conditioned 
bestowal of the subsidy on the production of pulp or paper products.  In its final 
determination, Commerce found that the program 's application guide "states that the 
intent of the program was to improve the environmental performance of Canada 's pulp 
and paper industry, an d credits were only to be granted to Canadian pulp and paper 
producers. " Furthermore, the application checklist requires that all proposals under the 
program demonstrate that "the project is a capital investment at a Canadian pulp and 
paper mill that is di rectly related to the mill 's industrial process and will result in 
demonstrable improvements in environmental performance. "  
 Forest Sector Prosperity Fund:  The FSPF  program was a grant program supporting 
capital investment projects in northern or rural Ontario.  The program eligibility criteria – 
which are listed on page 00207 of Exhibit CAN -50 – did not condition Resolute 's receipt 
of the grant on the production of a  given product.  Resolute received a subsidy benefiting 
all of its production activities, not one "connected to, or conditioned on, the production 
or sale of a specific product. "  
 Ontario Northern Industrial Electricity Rate:  The NIER program was intended "to 
assist Northern Ontario 's largest qualifying industrial electricity consumers to reduce 
energy costs and use resources efficiently. " Companies with "industrial facilities { } 
situated in Northern Ontario " received an energy rebate based on their energy 
consumption levels (subject to a cap) in exchange for "commit{ting} to developing and 
implementing an energy management plan { } to manage their energy usage and 
improve energy efficiency and sustainability. " Thus, Resolute received a subsidy 
benefiting al l of its production activities, not one "connected to, or conditioned on, the 
production or sale of a specific product. " 
III. COMMERCE'S CALCULATION OF CATALYST'S AND IRVING'S COUNTERVAILING 
DUTY RATES WAS CONSISTENT WITH THE SCM AGREEMENT  
A. Commerce's Ca lculation of the All Others Rate Was Consistent with the 
GATT  1994 and the SCM Agreement  
42. Canada has not established that Commerce 's calculation of the all others rate was 
inconsistent with the covered agreements.  In its past submissions, the United Sta tes has 
articulated the applicable obligations and explained that Commerce 's calculation of the all others 
rate in this investigation is consistent with those obligations.  In this submission, the United States 
will address Canada 's arguments from its oral statement and responses to Panel questions with 
respect to the relevant legal obligations under the GATT 1994 and the SCM Agreement.  Canada 's 
arguments are without merit because neither the SCM Agreement nor the GATT 1994 prescribe a 
methodology for calcul ating a countervailing duty rate for non -investigated firms.  WT/DS505/R/Add.1  
 
- C-22 - 
 
  43. Canada admits that the SCM Agreement does not prescribe a particular method for 
calculating countervailing duty rates for non -investigated exporters.  This acknowledgment should 
end the Panel 's inquiry, as Canada cannot establish a breach.   
44. Canada now attempts to create obligations by citing to multiple articles.  In particular, 
Canada argues that Article VI:3 of the GATT 1994 and Articles 10 and 19.4 of the SCM Agreement 
impose several obli gations that, in actuality, have no basis in the text of the covered agreements.  
Each provision, individually, does not support the finding of a breach; Canada 's attempt to read 
these provisions together does not cure this defect.   
45. Canada 's first argum ent is that Articles 10 and 19.3, when read together, require an 
authority to ensure that the investigated exporters are representative of the industry as a whole in 
order to produce the most representative all others rate possible.  Although Canada states that an 
authority is required to "take all necessary steps to ensure that the rate is accurate, " that is not, in 
fact, the standard of Article 10.  Rather, under Article 10, a Member is to take all necessary steps 
to ensure compliance with a separate provis ion of the GATT 1994 or the SCM Agreement.   
46. As with Article 10, Canada has not identified a relevant obligation in Article 19.3.  Article 19.3 
entitles a non -investigated exporter to an expedited review in order to establish an individual 
countervailing  duty rate; this provision has no bearing on the manner in which an authority is to 
calculate an all others rate.  To that end, the United States agrees with the European Union view 
that it is because of this procedural safeguard that "investigating authori ties are allowed to set 
duties at a level which is a reasonable proxy. "  
47. Canada 's next argument – concerning Article 19.4 – lacks support in the record of the 
investigation.  Canada argues that the calculated all others rate is inconsistent with Article  19.4 of 
the SCM Agreement because the "amounts of countervailing duties levied exceed the amount of 
subsidies found to exist. " But, the record of the investigation demonstrates that the all others rate 
is based entirely on the "subsidies found to exist " with respect to SC Paper producers in Canada.  
Canada 's third argument, again without support in the text of the covered agreements, faults the 
inclusion of Resolute 's CVD rate in the all others calculation because Resolute 's CVD rate was 
based in part on fa cts available.  Canada refers to Article 12.7 of the SCM Agreement, but has not 
demonstrated the relevance of that provision to the calculated all others rate.   
B. Commerce Properly Initiated an Investigation into New Subsidy Allegations 
Against Catalyst an d Irving During an Expedited Review  
48.  Canada 's argument that examining new subsidy allegations will "always " cause more delay 
in the context of an expedited review is misplaced.  First, Canada offers conjecture, but no 
evidence in support of its sweepin g generalization that a particular result would "always " occur. 
Canada fails to demonstrate how the examination of new subsidy allegations necessarily delays 
this process and offers no comparison point for the Panel to determine what, if anything, might 
constitute a "delay. " Second, Canada fails to acknowledge the purpose of an expedited review.  
Similar to original investigations, an expedited review examines the potential subsidization of a 
particular product and determines the individual countervailing duty rate for the exporter under 
review.  To that end, the investigation of new subsidy allegations in an expedited review is a 
permissible method of examining the potential subsidization of a particular product and the 
exporter under review.  Moreover, an e xpedited review allows unexamined exporters to receive an 
individual countervailing duty rate sooner and on an expedited basis in the administrative process 
than would otherwise be the case.  In fact, since our last submission in this dispute, Commerce has 
completed its expedited review of Catalyst and Irving.   
49. Additionally, the United States disagrees with the Canada 's reading of the Appellate Body 
report in US – Carbon Steel (India) . The SCM Agreement does not contain any type of unspecified 
limitation  on the new subsidy allegations that may be included in an expedited review under 
Article  19.3. Canada presents no valid basis for this proposed interpretation of the 
SCM Agreement.  Similarly, the close nexus language that the European Union cites in its a nswers 
to the Panel 's questions is simply dictum . Neither the complaining party nor the responding party 
addressed this issue.  Nor did the panel make any findings that could have been appealed.  The 
United States has serious concerns under the DSU with an a pproach where the Appellate Body WT/DS505/R/Add.1  
 
- C-23 - 
 
  issues dictum in one dispute, and then a party or adjudicator relies on that dictum as if it were 
treaty text in a subsequent dispute.  
IV. CANADA'S "AS SUCH" CLAIMS CONCERNING DISCOVERED INFORMATION ARE 
WITHOUT MERIT  
50. Canada's challenge to a purported rule or norm rests on Canada meeting a high threshold 
that such unwritten rule or norm does in fact exist.  Canada has not clearly established – as it must 
– the precise content of an alleged rule or norm and the existence of  general and prospective rules 
or norms that govern Commerce 's action.  Rather, Canada 's additional arguments and evidence 
relate to past action, not what Commerce will do in the future.  
51. The United States further notes that Canada has acknowledged in i ts response to the Panel 's 
questions that "a question cannot, in and of itself, violate the requirements of the 
SCM Agreement. " Therefore, Canada 's acknowledgment suggests that Canada is not challenging 
the "any other forms of assistance question " itself, but rather the application of facts available to 
discovered information.  If Canada is in fact only challenging Commerce 's application of facts 
available to discovered information, then Canada has the burden of proving the 1) precise content 
of the alleged rule or norm; and 2) that the alleged rule or norm has general and prospective 
application.  
52. In each of the nine determinations that Canada relies upon, Commerce made unique 
findings and reached different results.  Canada argues incorrectly that the Unit ed States is 
"point{ing} to minor variations in language and try{ing} to say these are different actions. " 
Rather, the substantial variations in language in each determination reflects the fact -specific 
nature of each of Commerce 's determinations.   
53. In addition, although Canada alleges that Commerce began the practice of applying facts 
available to discovered subsidies at verification in 2012, Canada fails to highlight Large Residential 
Washers from the Republic of Korea , a December 2012 decision, whi ch Commerce cited to in its 
final determination as an example of a determination where Commerce did not countervail certain 
discovered grants at verification because they were deemed to not be tied to subject merchandise.  
The Large Residential Washers determination was issued after Solar Cells from China 2012 , which 
Canada relies upon in support of its demonstration of the purported measure.  
54. Thus, the nine cases cited by Canada, as well as Large Residential Washers , demonstrate 
that there is no rule or norm of general and prospective application when Commerce uses facts 
available for information discovered during verification.  Instead, these cases show that the use of 
facts available is based on the particular circumstances of each case.  While each case cited by 
Canada may concern information discovered during verification, the treatment of that information 
has varied in each determination.  
55. Moreover, Canada fails to highlight the determinations where Commerce has asked a 
question involving the "any ot her forms of assistance " question, and where a respondent has 
cooperated and Commerce has verified the response (either a response of non -use of other forms 
of assistance, or a response of specifically identified programs).  In those cases, Commerce would 
have no basis to apply facts available.  As discussed above, the use of facts available is dependent 
on the circumstances of each case and is a fact -specific inquiry.   
56. Canada 's "as such " challenge, in addition to lacking legal merit, is remarkable in tha t it is 
inconsistent with the actions of its own administering authority.  As described below, Canada 
Border Services Agency (CBSA) takes similar actions to those taken by Commerce in the SC Paper 
investigation with respect to other forms of assistance.  CBSA both asks a similar question, and 
applies facts available if it later discovers that a party has failed to fully respond to the question.  
57. First, in its requests for information, in addition to asking questions concerning the alleged 
subsidy programs , CBSA also asks questions concerning "any other programs not previously 
addressed. " For instance, in OCTG from India and Other Countries , CBSA asked the Government of 
Turkey to identify "any other assistance programs . . . not previously addressed. " Additionally, in 
Copper Pipe from China , CBSA asked the Government of China to identify "any other assistance 
programs . . . not previously addressed, " and specifically requested disclosure of programs China WT/DS505/R/Add.1  
 
- C-24 - 
 
  did not identify it its notification to the SCM Commi ttee, per Article 25 of the SCM Agreement.  
Likewise, other investigating authorities also ask a similar question.  For instance, the European 
Commission has asked questions concerning other types of subsidies received in its investigation 
of bioethanol orig inating in the United States.  Similarly, Australia has asked a question concerning 
other forms of assistance in an investigation of steel shelving from China.  
58. Second, not only does CBSA ask a similar question concerning other forms of assistance not 
otherwise alleged, but if CBSA discovers that a respondent failed to fully answer the question, 
CBSA has applied facts available.  For instance, in OCTG from India and Other Countries , CBSA 
included additional programs after the initiation of the investigatio n concerning subsidization by 
the governments of India and Thailand.  Specifically, for its investigation concerning Thailand, in its 
final determination, CBSA included program 8 and 9, which were not previously identified in the 
preliminary determination.  In the final determination, CBSA then applied facts available to 
determine the countervailability for programs 8 and 9.  
59. To the extent that Canada is challenging Commerce 's "any other forms of assistance " 
question, the application of facts available, or a combination of both, the United States notes that 
CBSA takes similar action.  Although the actions of CBSA may not be dispositive to the Panel 's 
interpretive inquiry, they do reflect how another Member, wi th an active and sophisticated 
investigating authority, understands the obligations in the SCM Agreement.   
EXECUTIVE SUMMARY OF THE U.S.  STATEMENT AT THE SECOND SUBSTANTIVE MEETING OF THE PANEL 
60. Canada 's second written submission attempts to introduce a  new claim: that Commerce 
"inadequately addressed " whether the provision of electricity would "normally be vested " in the 
government within the meaning of Article 1.1(a)(1)(iv) of the SCM Agreement.  Canada 's new claim 
was not the subject of consultations a nd was not included in Canada 's panel request.  Article 6.2 of 
the DSU defines the scope of the dispute and requires that a panel request "identify the specific 
measures at issue and provide a brief summary of the legal basis of the complaint sufficient to 
present the problem clearly. " Quite simply, with respect to this new claim, Canada 's panel request 
did not "provide a brief summary of the legal basis of the complaint sufficient to present the 
problem clearly. "  
61. Canada 's introduction of a new claim an d supporting arguments also contravenes 
paragraph  5 of the Working Procedures of the Panel.  Paragraph 5 of the Working Procedures 
requires that before the first meeting of the Panel, "each party shall submit a written submission in 
which it presents the fa cts of the case and its arguments. " Canada 's first written submission did 
not present facts or arguments that would support this new claim.   
62. Canada 's claim also fails on the merits.  At the outset, we note that Commerce did address 
the issue raised in Canada 's new claim, and did provide a well -reasoned, factual basis for its 
conclusion.  Canada simply disagrees with Commerce 's decision.   
63. Canada 's new claim refers to the second part of Article 1.1(a)(1)(iv).  A financial co ntribution 
can exist where a government "entrusts or directs a private party 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 fr om practices normally followed by governments. " 
Canada argues that Commerce failed "to establish that the provision of electricity would normally 
be vested in the government of Nova Scotia. " 
64. Commerce 's final determination properly considered if the pro vision of electricity is a 
function within the authority of the government of Nova Scotia.  Commerce concluded that 
"because of the nature of electricity and Nova Scotia 's experience, we find that the provision of 
electricity…would normally be vested in the  government, and…does not differ substantively from 
the normal practices of the government. " Commerce also found that, even where an electric utility 
is not "owned " by the government, "it still is said to be 'affected with a public interest ' and subject 
to a degree of government regulation from which other businesses are exempt. " In the case of 
Nova Scotia, the provision of electricity remained within the regulatory control of the government: 
Commerce concluded that Nova Scotia Power was required "by law to  provide electricity to all 
companies in the Province including Port Hawkesbury. " Commerce made a fact -specific, WT/DS505/R/Add.1  
 
- C-25 - 
 
  well-reasoned finding based on record evidence that the provision of a good – in this case, 
electricity – is a function that is normally within  the authority of the government of Nova Scotia.   
65. As we have shown, Canada 's claim is outside of the Panel 's terms of reference, is supported 
only by untimely arguments presented for the first time in a rebuttal submission, and in any event, 
fails on t he merits.   
66. Finally, in its second written submission, Canada suggests that Commerce must make a 
preliminary determination as to the countervailability of a subsidy before it initiates an 
investigation.  Canada supports its argument with a so -called "Expert Report. " A so-called "expert 
report " is nothing more than a section of Canada 's submission.  It obtains no particular probative 
value simply because Canada named the Canadian representative that supposedly prepared it, or 
because it is cut from the main submission and placed in a separate document.  
EXECUTIVE SUMMARY OF U.S.  COMMENTS ON CANADA 'S RESPONSES TO PANEL QUESTIONS  
Summary of U.S. Comment on Canada Response to Question 106(c ) 
67. Contrary to Canada 's argument, Commerce did not act in the same  manner in each of these 
cases.  The change of language further demonstrates that Commerce makes its determinations on 
a case -by-case basis.  Commerce 's explanations vary because in reaching a determination, 
Commerce considers arguments presented by the part ies and provides an explanation as to 
whether it agrees or disagrees with a party.  While Canada points to Truck and Bus Tires from 
China  as an example where Commerce allegedly had to explain why it was deviating from a 
purported practice, Commerce was mere ly ensuring that it was responsive to that specific 
respondent 's arguments.  In all of the determinations Canada relies upon, Commerce made unique 
findings and reached different results.  
68. As the United States has explained, Canada 's brief summaries fail  to reflect the fact -specific 
nature of each of these determinations.  For example, in some of these cases, such as in Stainless 
Sheet and Strip from China and Shrimp from China , respondents had the opportunity to report the 
discovered assistance in respons e to other questions from Commerce pertaining to named grants 
and subsidy programs.  Therefore, the discovered assistance in those cases were not reported 
despite specific questions concerning certain grants and rewards.  
69. Further, Canada 's reference to a  portion of its submission signed by an ex -U.S. official adds 
nothing to Canada 's argument.  The relevant inquiry for WTO dispute settlement is whether an 
alleged rule or norm is attributable to a Member, the complainant is able to identify the precise 
content of that alleged rule or norm, and there exists an alleged rule or norm that has prospective 
and general application.  How an ex -government official in the employ of the Government of 
Canada characterizes certain past Commerce determinations has no impor t for this proceeding.   
70. Finally, the United States would highlight that no U.S. court has ever determined under 
U.S. municipal law that Commerce has a practice of applying facts available to subsidies 
discovered at verification, and Canada has not show n otherwise.  
 
_______________  
 
 
 WT/DS505/R/Add.1  
 
- D-1 - 
 
  ANNEX D  
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex D -1 Integrated executive summary of the arguments of Brazil  D-2 
Annex D -2 Integrated executive summary of the arguments of China  D-5 
Annex D -3 Integrated executive summary of the arguments of the European Union  D-7 
Annex D -4 Integrated executive summary of the arguments of India  D-10 
Annex D -5 Integrated executive summary of the arguments of Japan D-12 
Annex D -6 Answers of Turkey to questions of the Panel D-17 
 
 
  WT/DS505/R/Add.1  
 
- D-2 - 
 
  ANNEX  D-1 
INTEGRATED EXECUTIVE  SUMMARY OF THE ARGUM ENTS OF BRAZIL  
1. Brazil is a third party in this dispute because of its systemic interest in the matters before 
the Panel. In its third party submissi on, oral statement and answers to the Panel´s questions, the 
following aspects were highlighted.  
I. The use of facts available under Article 12.7 of the SCM Agreement  
2. In cases where the necessary information is not provided, the Agreement allows, under 
Article 12.7, that the findings of an investigation be made on the basis of the "facts available ". 
Article 12.7 ensures that the lack of information does not hinder the ability of investigation 
authorities to conduct the investigation, allowing them to fil l in the gaps by using the relevant facts 
available in order to make a determination.1 
3. However, this flexibility has limits. As the Panel in EC – DRAM Chips stated, "[...] we do not 
suggest that non -cooperation provides a blank cheque for simply basing a  determination on 
speculative assumptions or on the worst information available ".2 The authority therefore cannot 
"cherry -pick" facts which could lead to a biased determination, it should use the "best information 
available".  
4. Therefore it is not any in formation that can be used to fill in the gaps. According to the 
Appellate Body in Mexico -Rice, the available information to be used should be "the most fitting or 
most appropriate information available in the case at hand. " The SCM Agreement makes it clea r 
that the application of Article 12.7 cannot entail a punishment for lack of information3, as "[…] 
mere non -cooperation by itself does not suffice to justify a conclusion which is negative to the 
interested party that failed to cooperate with the investig ating authority. " 4  
5. The Appellate Body, referring to Article 6.8 of the AD Agreement, has also explained that the 
use of facts available is only permitted in a context of missing necessary information, that is, the 
use of facts available is not intende d to mitigate the absence of any information, but rather to 
overcome the absence of information required to complete a determination.5 
6. For Brazil, Article 12. 7 strikes an adequate and necessary balance in the use of "facts 
available ". On the one hand, A rticle 12.7 allows authorities to induce cooperation of interested 
parties, as it ensures that non -cooperating parties will not be in a better position than those who 
cooperate. On the other, it provides that the investigating authority's discretion is not  unlimited 
with respect to use of this recourse and with respect to the facts it may use when faced with 
missing information. The treatment of information that does not follow these rules would lead to 
an improper basis for the determination.  
II. Government participation does not in itself indicate price distortion  
7. Brazil recalls that government participation or presence in a given market does not in itself 
indicate price distortion, allowing a deviation in the use of in -country private prices b y the 
investigating authority6.  
8. This is even more relevant in sectors such as telecommunication, water supply and energy 
which are frequently regulated by governmental agencies. Because of its strategic nature, more 
often than not, governmental partici pation occurs in order to correct distortions related to market 
                                                
1 Appellate Body Report , Mexico - Rice, para. 291.  
2 Panel Report , EC - Countervailing Measures on DRAM Chips , para.  7.61. 
3 Panel Report , Mexico - Rice, para. 7.238 . 
4 Panel Report , EC - Countervailing Measures on DRAM Chips , para.  7.60. 
5 Appellate Body Report , Mexico – Rice, para. 259. 
6 Appellate Body Report , United States - Definitive Anti -Dumping and Countervailing Duties on Certain 
Products from China , para. 442 . WT/DS505/R/Add.1  
 
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  size, offer, demand, external factors affecting price, etc. Governmental presence, in these cases, 
may, in fact, be there to prevent market distortions such as the use of monopoly power. In th ese 
sectors, governmental presence is intrinsic to the prevailing market conditions, and should not per 
se authorize a determination that market conditions do not prevail.  
9. In Brazil' s view, the mere presence of a government in a given market does not e ntail per se 
the existence of price distortion. Price distortion cannot be inferred, and should be carefully 
established by investigating authorities.  
III. Entrustment or direction under Article 1.1(a)(1)(iv) of the SCM Agreement  
10. Regarding the  proper characterization of "entrustment or direction " of a private body in 
regulated  markets, Brazil contends that government legislation laying down general principles and 
establishing general rules in a given market cannot be understood per se  as entrusting or directing 
a private body, as such legislation merely reflects a government 's regulatory powers.  
11. As the Panel in Korea – Vessels stated, paragraph (iv) of Article 1. 1(a)(1)  of the 
SCM Agreemen t is not concerned with "[…] a government's  power, in the abstract, to order 
economic actors to perform certain tasks or functions ", but rather with the concrete actions by a 
government in a particular case.7  
12. According to Appellate Body, in US – DRAMs, paragraph (iv) must be viewed as striking  a 
balance between addressing situations "[…]where a government uses a private body as a proxy to 
provide a financial contribution " and allowing for situations where "[…]a government is merely 
exercising its general regulatory powers.8" Brazil believes tha t striking an adequate balance 
between these two situations is particularly relevant in highly regulated markets such as the 
electricity market.  
13. In this context, it is upon the investigating authority to establish that in each concrete case 
the concern ed regulation has entrusted or directed a private body to provide a subsidy . 
14. Furthermore, the Appellate Body has stated that Article 1.1(a)(1)(iv) is an 
anti-circumvention provision.9 A finding of a financial contribution under said provision must only  
be made, on a case -by-case basis, in situations where the government is attempting to disguise a 
subsidy through a private entity. In this regard, to the extent that the government is regulating 
the market to provide general infrastructure, there would be  no financial contribution, and hence 
no subsidy, in the sense of Article 1.1 of the SCM Agreement.  
IV. The presumption that the benefit is extinguished in privatizations  
15. Brazil recalls that the Appellate Body has recognized that there is a rebuttable  presumption 
that the benefit is extinguished whenever there a sale at arms -length for fair -market -value in 
privatizations. The same reasoning should apply to sales between private parties . 
V. The Scope of a CVD investigation  
16. Brazil considers that the  scope of a CVD investigation is defined by the evidence presented 
on the subsidy, the injury and the causal link, as per Article 11 of the SCM Agreement.  
17. With regard to necessary information, Brazil agrees with Canada that information that falls 
outside the scope of the investigation cannot be considered as "necessary information" pursuant to 
Article 12.7 of the SCM Agreement. It must be acknowledged, however, that what is "necessary 
information" is not always easily determined . 
                                                
7 Panel Report, Korea – Vessels , para . 7.392.  
8 Appellate Body Report, US – DRAMs, para. 115.  
9 Appellate Body Report, US – DRAMs, para. 113; Appellate Body Report, US – Softwood Lumber IV , 
para. 52.  WT/DS505/R/Add.1  
 
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  VI. Article 11 and expe dited reviews  
18. Brazil acknowledges that many obligations inscribed in Article 11 are not directly applicable 
for an expedited review under Article 19.3 without adaptations. However, this does not entail that 
the provisions of Article 11 cannot be releva nt to the expedited review process in Article 19.3, 
especially where it guarantees certain rights to the exporter.  WT/DS505/R/Add.1  
 
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  ANNEX D -2 
INTEGRATED EXECUTIVE  SUMMARY OF THE ARGUMENTS OF CHI NA 
1. This executive summary integrates  the Third Party Written Submission , Oral Statement and 
Responses to the Panel's Questions by China.  
2. First, o n the issue of the application of facts available by the USDOC under 
Article  12.7 of the SCM agreement , it should be noted that the purpose of the use of "facts 
available" by the investigating authorities should be to "reasonably replace" the missing necessary 
information to arrive at an "accurate" determination. In this respect, Article 1 2.7 does not confer 
unfettered or unlimited discretion to the investigating authorities for selecting replacements when 
applies facts available. Otherwise, it would have jeopardised the purpose of the application of 
"facts available". More specifically, for arriving an accurate determination under this respect, it 
requires the investigating authority conducts a process of evaluati on of available evidence, the 
extent and nature of which depends on the particular  circumstances of a given case. "1.  
3. Also in respect of ascertaining which "facts available" to use , Article 12.7 of the 
SCM Agreement  requires  a proper balance between the  rights and obligations of a Member's 
investigating authority in its application of facts available.  While the right to resort to facts 
available is necessary for the investigating authority to continue its investigation and make its 
determinations if nece ssary information is missing, the exercise of its rights is subject to strict 
disciplines. Specifically, the Appellate Body has found that "where there are several 'facts 
available ' from which to choose, it would seem to follow naturally that the process o f reasoning 
and evaluation would involve a degree of comparison. "2 If such a process were missing from the 
investigation proceeding , the investigating authorities should not be considered to have met its 
legal obligations . 
4. Further , the application of fa cts available pursuant to Article 12.7 of the SCM Agreement 
does not presuppose that non -cooperation of a party in itself forms  the basis for less favorable 
result for the interested parties.  Rather, it just provides  a situation in which a less favourable 
result becomes possible, and it does not mitigate the obligation of the investigating authorities for 
"reasoning and evaluation" where there are several "facts available" from which to choose.3 
In addition, "the use of inferences in order to select adverse  facts that punish non -cooperation 
would lead to an inaccurate determination and thu s not accord with Article 12.7."4 
5. Specifically, in the underlying investigation of this dispute, China 's view is  that the USDOC 
appears to have failed to engage in a pro per process of "reasoning and evaluation", in the 
circumstance where there were more than one  "fact available" from which to choose. By simply 
selecting a "fact available" with the highest rate, without sound reasoning and analysis, the 
USDOC appears not t o have met its obligations.  The USDOC could only be understood to have 
applied adverse inference for the alleged non -cooperation of the respondent as a punishment.  
6. Second ly, on the issue of the obligation for the disclosure of essential facts under 
Article  12.8 of the SCM Agreement , China 's view is that it is an important procedural obligation 
for the investigating authority "for ensuring the ability of the parties concerned to defend their 
interests."5  
7. This obligation has multiple dimensions. The timing of the required disclosure is "before a 
final determination is made", and "in sufficient time for the parties to defend their interests." 
The contents of the required disclosure are those essential facts under the consideration by the 
investigating authority, which are about to form the basis for its determination of the investigation. 
Thus, the investigating authorities would not fulfil its obligation by simply providing access to 
                                                
1 Appellate Body Report, US – Carbon Steel (India) , para . 4.435 . 
2 Ibid. 
3 Ibid, paras . 4.425 -4.426 . 
4 Appellate Body Report, US – Carbon Steel (India) , para . 4.468. 
5 Appellate Body Report, China  – GOES , para . 240. WT/DS505/R/Add.1  
 
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  document  or documents to interested parties, without identifying the facts contained therein that 
are under their consideration and form the basis for the determination.6 
8. Thirdly, o n the issue of the claim by Canada on "other forms of assistance -AFA 
measure ", China believe s that the legal standard for proving the future application of a measure 
is not "certainty", whether the measure is written or unwritten, or whether the claim by the 
complainant is framed as ongoing conduct or rule or norm of prospective and g eneral application.  
9. China also observes that Members are allowed to challenge a measure with prospective 
effect serves important purposes, including preventing future disputes and protect the security and 
predictability needed to conduct future trade.  
10. Finally,  on the issue  of "entrustment or direction" , China has a concern about whether a 
general provision that sets out certain basic regulatory principles is a sufficient link between the 
government and the specific conduct at issue for a finding of  entrustment or direction under 
Article  1.1(a)(1)(iv). China also believes that the government legislation laying down general 
principles and establishing general rules in a given market cannot be understood per se  as 
entrusting or directing a private body.  
                                                
6 Panel Report, Guatemala  – Cement II , para. 8.230. The panel discussed the relationship between 
Article 6.9 and 6.4 of the Antidumping Agreement which is similar to Article 12.8 and 12.3 of the 
SCM Agreement . WT/DS505/R/Add.1  
 
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  ANNEX D -3 
INTEGRATED EXECUTIVE  SUMMARY OF THE ARGUM ENTS OF THE EUROPEAN  UNION  
1. This executive summary integrates comments made by the European Union at the Third 
Party Hearing on 22 March and  in its reply to the written questions by the Panel of 6 April 2017.  
2. On the notion of financial contribution through general service obligations , an 
evaluation of the existence of a financial contribution involves consideration of the nature of the 
transaction through which something of economic value is transferred by a government . 
In addition to monetary contributions, a contribution having financial value can also be made in 
kind through a government providing goods or services or directing a private body to do so.  
3. For there to be a financial contribution in the first place, a government (or a private body 
directed by a government) needs to provide  the relevant good or service. However, 
Article  1.1(a)(1)(iii) requires there to be a reasonably proxim ate relationship between the action of 
the government providing the good or service on the one hand, and the use or enjoyment of the 
good or service by the recipient on the other. Very general governmental acts may be too remote 
from the concept of "making  available" or "putting at the disposal of". A government must have 
some control over the availability of the specific thing being "made available" . 
4. What matters for purposes of determining whether a government "provides goods" in the 
sense of Article 1 .1(a)(1)(iii), is the consequence  of the transaction. This implies, however, that 
there must be a transaction  in the first place. In this respect it has been considered that granting a 
right to certain goods suffices for there to be a transaction. However,  the situations examined in 
the jurisprudence have concerned exclusive rights, not rights that are available to everyone.  
5. Electricity is a good that has economic value. If a government provides electricity or directs 
a private body to provide electricit y, there may be a financial contribution within the meaning of 
Article 1.1(a)(1)(iii). However, the basis on which a determination is made that electricity has 
indeed been provided by a government (or it has directed a private body to do so) must be clearl y 
established. In the view of the European Union it cannot be lightly derived from very general 
provisions that may have more to do with setting out the general principles on the adequacy and 
safety of the relevant infrastructure and service. There must be  a reasonably proximate 
relationship between the action of the government, and the use or enjoyment of the good or 
service by the recipient. It is difficult for the European Union to see a transaction in a general 
provision or principle that simply appears  to set out certain basic regulatory principles and lays 
down the key qualities of the relevant services. If that principle amounts to no more than a 
statement that everyone must have access to basic amenities such as electricity, water etc. it does 
not as  such involve the kind of action from the government that would amount to the necessary 
transaction for the purposes of Article 1.1(a)(1).  
6. The way in which the European Union understands the concept of a general service 
obligation is that it does not i nterfere with the principles of supply and demand in a certain 
market. It rather underpins the relevant market by providing certain predictability to that market. 
The actual provision of the good or service in question requires the performance of contractu al 
obligations between the supplier and recipient of the good or service. Non -performance of 
contractual obligations eventually leads to a breach of contract and the consequent possibility that 
the provision of the good or service is terminated or suspende d until contractual obligations are 
complied with. The terms of the contract may also vary depending on the forces of supply and 
demand despite there being an underlying general service obligation.  
7. The European Union would like to add that general servi ce obligations are commonplace in 
sectors that often require significant public investment for the creation of the relevant general 
infrastructure. It is only natural that everyone will be entitled to basic access to the goods and 
services that are provide d through such infrastructure even if the provision of the relevant goods 
and services is subsequently privatised and made subject to competition between private parties 
under strict public regulatory conditions. The European Union is concerned that if gen eral service 
obligations as such and without more would fulfil the conditions of a financial contribution, be it as WT/DS505/R/Add.1  
 
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  such or as an alleged direction of a private body, investigating authorities would essentially be 
allowed to forego any serious analysis on the existence of a financial contribution in certain key 
sectors of the economy. However, this does not mean that a provision or a general principle 
regarding a general service obligation is irrelevant for considering whether a financial contribution 
exists. For instance, the situation could be different in the case of broad state intervention, which 
would have as its consequence a genuine transfer of something of economic value.  
8. It is not clear to the European Union why the actual provision of electrici ty by NSPI to PHP, 
on the terms set forth in the LRR was not the focus of the investigating authority's financial 
contribution analysis. In the view of the European Union, the investigating authority's emphasis 
and focus on the general service obligation a ppears to be misplaced.  
9. Secondly, on the so -called "any other assistance question" and the subsequent 
application of facts available : As a starting point, the European Union considers that 
investigating authorities should have some discretion in determi ning what information they need 
for their investigation, and thus, what is "necessary" information. This determination on whether 
the information requested is necessary must be assessed ex ante  and not ex post , that is, at the 
moment when the request is ma de. It may very well be that at a certain stage of the investigation, 
investigating authorities legitimately consider some information is needed, which afterwards turns 
out not to have any impact on the final determination. This discretion, however, cannot  be 
completely unfettered - information which is visibly irrelevant to the investigation, for instance 
because it is unmistakably related to issues outside the scope of the investigation, cannot be 
considered as "necessary information" pursuant to Article 12.7 SCM, even if the investigating 
authority requests it.  
10. The application of facts available pursuant to Article 12.7 SCM does not only presuppose that 
necessary information is missing. It also presupposes that the investigating authority had clearly  
and precisely requested it from the interested party concerned. As Annex II.1 of the Anti -dumping 
Agreement (which is relevant context for the interpretation of Article 12.7 SCM1) confirms, such 
requests must be sufficiently clear and precise as to what i nformation is needed – too broad, too 
vague or too general questions cannot entail the use of facts available2.  
11. This is particularly important in cases where the question (such as the "any other assistance 
question") also covers information that, foll owing the above principles, the investigating authority 
might validly consider "necessary" at the beginning of the investigation, but which is objectively 
not relevant. While investigating authorities have a legitimate interest to find out (and ask) 
whethe r there are more countervailable subsidies relevant for the investigation at stake, failure to 
reply to such a general question should not automatically lead to the application of adverse facts 
available, denying interested parties any opportunity to comme nt on the new schemes discovered 
during the investigation, especially where it is doubtful in light of the circumstances of the case 
whether the failure to reply can indeed be considered as non -cooperation.  
12. Information collected on new schemes discove red during the investigation should not be 
rejected on the sole grounds that those schemes were not disclosed in the initial reply as long as 
that information can be properly verified as to its accuracy and comprehensiveness. This ties  in 
with the prohibit ion of a punitive use of facts available.  
13. On the calculation of so -called "all -others -rates"  in cases where rates for investigated 
exporters have been calculated using facts available, the European Union considers that Article 9.4 
ADA is certainly rele vant context that should inform how sampling in CVD investigations is done, 
but adapted where necessary to take into account the specificities of the CVD instrument. 
For instance, a straightforward application of the prohibition to use margins calculated o n the basis 
of facts available in Article 9.4 might not be appropriate where investigating authorities resort to 
facts available because of non -cooperation of the subsidising Member. Information held by the 
subsidising Member, for instance on structure and  ownership of upstream funding organisations, 
might be crucial for establishing the existence of countervailable subsidies, and for the calculation 
of margins. The information gap resulting from non -cooperation by the government of the 
subsidising Member i s one that has repercussions on all potential exporters. The rationale from 
US – Hot-Rolled Steel  that non -investigated exporters must not be prejudiced by shortcomings in 
                                                
1 Appellate Body Report,  US – Carbon Steel (India) , para. 4.423.  
2 Panel Report, Argentina – Ceramic Tiles , paras. 6.54-6.67, in particular 6.66.  WT/DS505/R/Add.1  
 
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  the information supplied by the investigated exporters not imputable to the non -investigated 
exporters3 does not seem to be pertinent in such a case.  
14. On expedited reviews pursuant to Article 19.3  of the SCM Agreement, the 
European  Union considers that the possibility to include new subsidies in an expedited review 
should be the same a s what the Appellate Body has found for administrative reviews, namely the 
sufficiently close nexus to the subsidies identified in the original investigation4.  
15. Finally, on the standard of proof and characterisation of unwritten measures , the 
European Union attaches great importance to the principle that "any act or omission attributable to 
a WTO Member can be a measure of that Member for purposes of dispute settlement 
proceedings"5, and that measures, including unwritten measures must not fit into cert ain "boxes" 
or categories in order to be susceptible to challenge in WTO dispute settlement6. The various types 
of unwritten measures that the Appellate Body has recognised over time in specific cases were 
certainly useful in capturing the phenomena at sta ke in each particular case. However, going 
forward, the European Union would caution against considering them as a typology that would be 
mechanistically applied to fact patterns which might not necessarily correspond to earlier cases. 
Complainants should be allowed to challenge whatever measure they can substantiate, without 
having to squeeze it into a particular box.  
                                                
3 Appellate Body Report, US – Hot-Rolled Steel , para. 123.  
4 Appellate Body Report, US – Carbon Steel (India) , paras. 4.541 -4.543; see also the European Union's 
position on the criteria for a close nexus, referred to in footnote 1256 of the Appellate Body Report.  
5 Appellate Body Report, US – Corrosion -Resistant Steel Sunset Review , para. 81.  
6 Appellate Body Reports, US – Continu ed Zeroing , para. 179; Argentina – Import Measures , 
para. 5.102.  WT/DS505/R/Add.1  
 
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  ANNEX D -4 
INTEGRATED EXECUTIVE  SUMMARY OF THE ARGUM ENTS OF INDIA  
1. The present dispute raises certain systemic issues regarding the interpretation of the 
SCM Agreement. The present dispute is one of the disputes that highlight the consistent 
undermining of the delicate balance crafted into the provisions of the SCM Agreement . 
 
2. Whilst not taking a position on the specif ic facts of this case, except for the purpose of 
establishing the systemic issues involved, India would like to provide its views on certain legal 
claims advanced in the dispute.  
3. Accordingly, India will focus on 3 issues in its statement : 
(a) issues pertaining to sub -paragraph (iv) of Article 1.1(a)(1);  
(b) improper use of the "facts available " standard; and  
(c) examination of new subsidies during an expedited review under Article 19.3 of the 
SCM Agreement.  
First Issue relating to Interpretat ion and application of Article  1.1(a)(1)(iv)  
4. Sub-paragraph (iv) of Article 1.1(a)(1) of the SCM Agreement represents an exceptional 
case where actions of private bodies, pursuant to  entrustment or direction by a government, are 
relevant for determining the existence of a subsidy. The provision requires an investigating 
authority to determine two aspects, i.e., (1) that the action or practice in question is 'normally ' 
vested in the Government and (2) that the said action or practice does not, in the real sense, differ 
from practices normally followed by governments. Needless to mention that the determination 
regarding both these aspects shall be based on positive evidence.  
5. We recall the findings of the Appellate Body in US - AD and CVD (China)  (para. 2 97) that for 
a function or activity to be "normally " vested in the government, it should ordinarily be considered 
part of governmental practice in the legal order of the relevant Member . The Appellate Body also 
clarified that not all activities can simply be presumed to be 'governmental ' in nature.  
6. In the facts of this dispute, it is necessary to establish that provision of electricity is 
ordinarily viewed as a governmental practice in the legal order of the exporting country. It is not 
appropriate to de termine a practice in question to be a governmental practice for the simple 
reason that it was carried out by the Government in the past or that only one entity is authorized 
to carry out that practice by the Government concerned.  
7. Further, sub paragrap h (iv), also mandates that the practice, in no real sense, differs from 
practices normally followed by governments . We recall the Appellate Body 's observations in US - 
AD and CVD (China) that this refers to the classification and functions of entities with in 
WTO Members. While arriving at a decision, an investigating authority is required to examine the 
practices prevailing in other Member countries before concluding that the practice in question, in 
no real sense, differs from the practices followed by oth er governments.  
Issue No. 2 relating to Use of "Adverse Facts Available " standard  
8. India would like to cover two aspects in this regard. Firstly, India would like to state that an 
investigating authority shall not resort to application 'facts available ' standard in an indiscriminate 
manner. Due caution shall be exercised before resorting to application of facts available standard. 
With respect to the programs 'discovered ' during verification, India considers that it is not 
appropriate to include them within the scope of the investigation without an evaluation of the 
essential elements such as financial contribution, benefit and specificity within the meaning of 
Articles 1 and 2 of SCM Agreement. To make such an evaluation, an investigating authority is 
required to seek all relevant information specific to the program/s in question in terms of WT/DS505/R/Add.1  
 
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  Article  12.1. of the SCM Agreement. Fact available standard under Article 12.7 of the 
SCM Agreement cannot be applied without following the due process so envisaged.  
9. Secondly, India would like to state that the use of "facts available " standard is meant to 
enable Authorities to conclude the investigation and determine subsidization b y 'reasonably ' 
supplying or introducing the 'necessary ' information that is 'missing '. While Article 12.7 of 
SCM Agreement ensures that an investigation may continue unhindered even in the event of 
failure of interested parties to supply necessary informat ion, it is an established principle that 
Article 12.7 does not permit 'selection ' of facts that lead to the least favorable outcome . 
10. The Appellate Body in US - Carbon Steel (India)  stated that Article 12.7 requires an 
investigating authority to use "fa cts available" that reasonably replace the missing "necessary 
information", with a view to arriving at an accurate determination, which calls for a process of 
evaluation of available evidence, the extent and nature of which depends on the particular 
circum stances of a given case" . 
11. Accordingly, even while applying 'facts available ' standard, an investigating authority cannot 
discard all the information that was 'discovered ' during the investigation and adopt a CVD rate that 
was determined in the past. Further, India strongly believes that the "facts available " standard 
does not permit an investigating authority to automatically adopt "the highest non -de minimis rate 
calculated " for a program in another CVD investigation involving the same country. Such an  
approach  is contrary to the standard articulated by the Appellate Body in US – Carbon 
Steel (India) . 
Third issue relating to New Subsidy Allegations  
12. Article 19.3 of the SCM Agreement mandates the investigating authorities to establish an 
individual co untervailing duty rate for an exporter whose exports are subject to a definitive 
countervailing duty but who was not actually investigated for reasons other than a refusal to 
cooperate . The provision does not permit investigating authorities to determine the existence or 
degree of 'any' alleged subsidy. India is of the view that Article 19.3 is only meant to calculate 
individual duty rates on programs already determined to be subsidy in  an original investigation. 
Therefore, introduction of new subsidies at the stage of expedited reviews, are implausible under 
Article 19.3 of the SCM Agreement.  
13. In case the Panel deems inclusion of new subsidies in an expedited review as permissible, 
India believes that the standard articulated by the Appellate Body in US - Carbon Steel (India) for 
inclusion of new subsidies in an administrative review should be applicable to expedited reviews as 
well. In the context of administrative reviews the Appel late Body stated that such "new subsidies " 
must have a sufficiently close link  to the subsidies that resulted in the imposition of the original 
countervailing duty. India believes that an unrestrained introduction of new subsidies into 
expedited reviews wo uld upset the delicate balance of Part V of the SCM Agreement, which was 
the basis of the Appellate Body to reach its conclusion regarding new subsidies in US - Carbon 
Steel (India).  
 WT/DS505/R/Add.1  
 
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  ANNEX D -5 
INTEGRATED EXECUTIVE  SUMMARY OF THE ARGUM ENTS OF JAPAN  
1. In this proceeding, Japan addresses the following issues: (1) the definition of "entrustment 
or direction" under Article 1.1(a)(1)(iv); (2) the standard for assessing market distortion under 
Article 14(d); (3) the punitive application of "facts available" under Article 12.7 of the Agreement 
on Subsidies and Countervailing Measures ("SCM Agreement");  (4) the extinguishment of benefit 
through a private sale of a subsidized firm or asset at arm 's-length and for fair market value ; and 
(5) Canada's argument about unwritten measures that are "rules or norms of general and 
prospective application" or "ongoi ng conduct."  
I. ENTRUSTMENT OR DIRECTION OF PRIVATE  BODIES UNDER ARTICLE  1.1(A)(1)(IV)  
2. Canada argues in its First Written Submission that the United States Department of 
Commerce ("USDOC") improperly found that the government of Nova Scotia directed No va Scotia 
Power Inc. ("NSPI"), a private company, to provide a financial contribution, or that Nova Scotia 
entrusted NSPI or the Nova Scotia Utility and Review Board ("NSURB") to provide a financial 
contribution under Article 1.1(a)(1)(iv) of the SCM Agree ment. Japan considers that the test to 
determine  whether a private body acted under the entrustment or direction of the government 
under Article  1.1(a)(1)(iv) requires a case -by-case analysis.  
3. The Appellate Body has recognized that  the demonstration of entrustment or direction will 
hinge on the particular  facts of the case given the difficulty of precisely identifying, in the abstract, 
the types of government actions that constitute entrustment or direction and those that do not.  
Moreover, t he Appellate Body has found that, in order to demonstrate entrustment or direction 
under Article 1.1(a)(1)(iv), inferences may be reasonably drawn from the examination  of the 
totality of evidence.   
4. Japan considers that an obligation of a public  utility to provide general services does not in 
itself establish entrustment or direction. Rather, in order to determine whether entrustment or 
direction exist s under Article 1.1(a)(1)(iv), an investigating authority must conduct a fact -specific 
analysis.  An obligation imposed on private bodies under relevant domestic laws and regulations, 
including a general service obligation, can be one element that an investigating authority may 
consider in this analysis. However, in order to give rise to entrustment or direction, it should be 
additionally shown, for example, that the regulation imposing such general obligation, through its 
design and structure, makes private bodies act against commercial considerations, such as 
continuing their activities despite a def icit.  
5. Japan agrees with Brazil that government legislation laying down general principles and 
establishing general rules in a given market does not by itself establish entrustment or direction, 
unless, for example, such principles or rules, through the ir design and structure, make private 
bodies act against commercial considerations. As a result, Japan agrees that the existence of 
governmental general regulatory powers by itself does not satisfy the definition of financial 
contribution under Article 1.1 (a)(1)(iv).  
6. Japan notes, in this regard, the panel's finding in Korea – Commercial Vessels  that the issue 
of entrustment or direction does not have to do with a government's power, in the abstract, to 
order economic actors to perform certain tasks or f unctions, but it has instead to do with whether 
the government in question has exercised such power in a given situation subject to a dispute. 
This finding is consistent with the understanding that the existence of governmental regulatory 
power over the pr oducers per se  does not establish entrustment or direction under 
Article  1.1(a)(1)(iv). Rather, it is when the exercise of such power causes private bodies to engage 
in a specific conduct (i.e., causes private bodies to act against commercial consideration s) that the 
exercise of power constitutes an entrustment or direction.  
7. The United States argues that Canada is conflating the analysis of "financial contribution" 
with a separate analysis of "benefit" based on Canada's argument that USDOC identified the  WT/DS505/R/Add.1  
 
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  general service obligation as the basis of the financial contribution but assessed benefit with 
respect to the Load Retention Rate ("LRR"). Thus, the United States seems to imply that, even in a 
case of entrustment or direction, only the general obligatio n of the private body is to be assessed 
in determining financial contribution, and the specific conduct giving rise to the financial 
contribution must be assessed only under the analysis of "benefit."  
8. However, Article 1.1(a)(1)(iv) recognizes that, unli ke public bodies whose conduct will 
always constitute a financial contribution so long as the conduct falls under subparagraphs (i) -(iii), 
the conduct of private bodies is generally not directly linked with a government function. 
Therefore, as the Appellat e Body  has confirmed in United States – Anti-Dumping and 
Countervailing Duties (China) , a private body will be found to provide a financial contribution only 
if the entity's conduct falls under subparagraphs (i) -(iii), and in addition, the requisite link b etween 
the government and that conduct is established by a showing of entrustment or direction. Thus, 
according to the Appellate Body, the second clause of subparagraph (iv) requires an affirmative 
demonstration of the link between the government and the s pecific conduct , whereas all conduct 
of a governmental entity constitutes a financial contribution to the extent that it falls within 
subparagraphs (i) -(iii) and the first clause of subparagraph (iv). This confirms that in the instance 
of a private body, t he relevant conduct should be evaluated under the "financial contribution" 
analysis.  
II.  STANDARD FOR MARKET DISTORTION UN DER ARTICLE 14(D)  
9. In the original investigation, USDOC found that electricity was provided for less than 
adequate remuneration. USDOC's assessment was based on a constructed benchmark that it used 
once it had determined that it could not use NSPI's actual price, because it found that the Nova 
Scotia market for electricity was "distorted." According to Canada, this assessment was so lely 
based on USDOC's determination that NSPI was a dominant supplier in the Nova Scotia electricity 
market. Canada challenges USDOC's determination on two grounds: that NSPI's prices could not 
reflect government distortion because NSPI is a private party,  and that USDOC's finding of 
distortion based on the prominence of NSPI in the market was per se  improper.  
10. Canada points out that the analysis of whether a "benefit" was received is guided by 
Article  14(d), which permits a finding of benefit only when  the provision of goods by a government 
"is made for less than adequate remuneration, or the purchase [of goods] is made for more than 
adequate remuneration." Whether the remuneration was "adequate" must be determined in 
relation to prevailing market condi tions for the good or service in question in the country of the 
provision or purchase.  
11. In this dispute, Japan presents its views on the assessment of such "market distortion" and 
the circumstances in which an investigating authority may disregard in -country prices. In order to 
find an appropriate benchmark for determining the adequacy of remuneration, the Appellate Body 
has stated that an authority must determine a comparator that reflects prevailing market 
conditions for the goods in question. Thus,  the Appellate  Body found  that, based on the facts of 
the case, it must be demonstrated that the benchmark chosen relates to, or is connected with, the 
conditions prevailing in the country of provision.  
12. The Appellate Body in US – Lumber IV  has recognized that , while the prices of the same or 
similar goods sold by private suppliers in the country of provision are the primary benchmark,  
investigating authorities may use a benchmark other than private prices in the country of provision 
under Articl e 14(d), if it is first established that private prices in that country are distorted because 
of the government's predominant role in providing those goods. The determination of whether 
private prices are distorted due to the government's predominant role in the market must be made 
on a case -by-case basis, according to the particular facts underlying each countervailing duty 
investigation. The fact -specific nature of determining a proper benchmark is further confirmed in 
US – Carbon Steel (India) , where the  Appellate Body has explained that what  an investigating 
authority must do in conducting the necessary analysis for the purpose of arriving at a proper 
benchmark will vary depending upon the circumstances of the case, the characteristics of the 
market bein g examined, and the nature, quantity, and quality of the information supplied by 
petitioners and respondents.  WT/DS505/R/Add.1  
 
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  13. Japan agrees with Canada that an investigating authority is not permitted to apply a "per se " 
rule in which it rejects in -country private pric es solely  on the basis of evidence that the 
government is the predominant supplier of the goods in question. Rather, if the authority has 
concerns that the predominance of the government likely distorts private prices in the market, it 
must examine whether  the predominance actually caused a distortion of prices in the market by 
conducting a case -by-case analysis, based on all of the evidence.  As to  the specific elements to 
consider in assessing price distortion, the Appellate Body has found that this may in volve  an 
assessment of the structure of the relevant market, including the type of entities operating in that 
market, their respective market share, as well as any entry barriers,  and it could also require 
assessing the behavior of the entities operating i n 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.  
14. In this regard, Japan notes that  the Appellate Body has found that the primary be nchmark 
that the investigating authority must use is the price of similar goods sold by private suppliers in 
the country of provision. In other words, the primary benchmark price should be the price formed 
through arm's-length transactions by private suppl iers in the country of provision, which is the 
price based solely on commercial considerations . 
15. It should be noted that the Appellate Body in US — Softwood Lumber IV  has upheld the 
panel's determination  that the terms "market" or "market conditions" in Article 14(d) do not 
necessarily mean "pure" market, "fair market value" or a market "undistorted by government 
intervention." Thus, the mere fact that there is government involvement or intervention in th e 
market does not necessarily mean that market prices are distorted, i.e., that the benchmark price 
is not formed through arm's -length transactions by private suppliers. As  also upheld by the 
Appellate Body in the same case, the benchmark price must repres ent prices determined by 
independent operators  following the principles of supply and demand, even if supply or demand 
are affected by the government's presence in the market.  
III. PUNITIVE APPLICATION  OF FACTS AVAILABLE UNDER ARTICLE 12.7  
16. Canada argu es that USDOC's application of an "all others rate" that incorporated an 
"adverse facts available" ("AFA") rate calculated for respondent company Resolute constituted a 
punitive action, and that the United States' recent amendments to its legislation make the 
application of the "Other Forms of Assistance -AFA" measure easier to apply in a more punitive 
manner. Japan presents its views on the standard for applying "facts available" under Article 12.7 
of the SCM Agreement, and in particular, whether Members ar e permitted to apply Article 12.7 in a 
punitive manner.  
17. As the Appellate Body noted in Mexico – Anti-Dumping Measures on Rice , Article 12.7 is 
intended to ensure that the failure of an interested party to provide necessary information does 
not hinder an agency's investigation. The Appellate Body has explained that the provision permits 
the use of facts on the record solely for the purpose of replacing information that may be missing, 
in order to arrive at an accurate subsidization or injury determinati on. The Appellate Body has 
further cautioned against indiscriminate use of "facts available," noting that recourse to facts 
available does not permit an investigating authority to use any information in whatever way it 
chooses.  
18. Japan recognizes that t he Appellate Body has found in US – Carbon Steel (India)  that the 
grant of authorization to use adverse inferences under the SCM Agreement is not in itself "as such" 
inconsistent with Article 12.7, insofar as it could comport with the legal standard for Ar ticle 12.7. 
However, the Appellate Body's determination in th at case  was based on the fact that the text of 
the relevant U.S. statute was permissive, and did not require  USDOC to use adverse inferences. 
The Appellate Body  considered that the permissive language meant that the use of adverse 
inference is capable of being limited to those instances where it accords with the legal standard for 
Article 12.7 of the SCM Agreement.  
19. Japan does not understand the Appellate Body 's rulings as allowing Members to apply 
adverse inferences in a punitive manner, i.e., in a manner intended to punish a non -cooperating 
respondent. Nor is it Japan's view that the WTO agreements contemplate the use of adverse 
inferences as a means of deter ring non -cooperation by imposing the threat of punishment in the WT/DS505/R/Add.1  
 
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  form of margins that go beyond the boundaries of what could reasonably be inferred based on the 
data that is on the administrative record, especially if there is evidence that the use of that  
adverse inference would result in an inaccurate result. In fact, the Appellate Body has made clear 
that such punitive use of adverse inferences would not comport with the requirements of 
Article  12.7. 
20. Japan finds further support for this position in A rticle 6.8 of the Anti -Dumping Agreement 
and in Annex II of the Anti -Dumping Agreement, which contain seven specific requirements that 
must be satisfied in order for an authority to resort to facts available. Japan believes that 
Article  6.8 and Annex II of  the Anti -Dumping Agreement provide interpretive guidance on a 
Member's obligations under Article 12.7 of the SCM Agreement. The Appellate Body has noted that 
it would be anomalous if Article 12.7 of the SCM Agreement were to permit the use of "facts 
available" in countervailing duty investigations in a manner markedly different from that in 
anti-dumping investigations.  
21. The panel in US – Hot-Rolled Steel  has stated that Article 6.8 and Annex II are meant to 
ensure that "even where the investigating aut hority is unable to obtain the "first -best" information 
as the basis of its decision, it will nonetheless base its decision on facts, albeit perhaps 
"second -best" facts. " Moreover, neither Article 12.7 of the SCM Agreement nor Article 6.8  
(incorporating  Annex II) of the Anti -Dumping Agreement refer s to the use of "adverse facts 
available" or "adverse inferences." This is in contrast with paragraphs 7 and 8 of Annex V to the 
SCM Agreement, which explicitly permit the use of "adverse inferences" when developi ng 
information concerning serious prejudice. In particular, paragraph 7 of Annex II states that "if an 
interested party does not cooperate and thus relevant information is being withheld from the 
authorities, this situation could lead to a result which is less favourable  to the party than if the 
party did cooperate." While paragraph 7 recognizes that a non -cooperating respondent may be 
subject to determinations based on facts on the record that may be less favorable than the facts 
that the respondents would  have submitted, it is Japan's view that this language does not grant 
permission for the investigating authority to bring about an outcome that is punitive and does not 
reasonably reflect an accurate margin calculation based on the available facts.  
IV. EXTINGUISHMENT OF BE NEFIT THROUGH A PRIV ATE SALE OF A SUBSID IZED FIRM 
OR ASSET AT ARM 'S-LENGTH AND FOR FAIR MARKET VALUE  
22. Japan also addresses the Panel's inquiry with  regard to whether a sale at arm's -length and 
for fair market value between private parties extinguishes any benefit conferred prior to the sale. 
Japan does not consider that a sale at arm's -length and for fair market  value between private 
parties a priori  extinguish es any benefit conferred prior to the sale. Japan recalls that , with respect 
to partial privatization and private -to-private sales , the Appellate Body in EC and certain member 
States — Large Civil Aircraft  has found it necessary to conduct  a fact -intensive  inquiry into the 
circumstances surrounding the changes in ownership to determine the extent to which there are 
sales at fair market value and at arm 's-length and whether a prior subsidy could be deemed to 
have come to an end .  
23. This finding  suggests th at a determination of whether a sale was at arm's -length and for fair 
market value between private parties does not by itself resolve the question of whether benefits 
conferred prior to the sale have been extinguished. Therefore, a fact -intensive inquiry m ust be 
conducted on a case -by-case basis to determine not only whether the sales price was at arm's -
length and at fair market value, but also whether residual benefits of a subsidy still remain that 
are not reflected in the arm's -length price  in question . Japan considers that t his fact -intensive 
inquiry should include consideration of the design,  the nature, and the structure of subsidy itself, 
in addition to the circumstances surrounding the sale. For example, w hen purchasing a target 
company, assets, or e quipment, a purchaser would consider the ability to use remaining  benefits 
in the future in assessing the going -concern value of the company, asset, or equipment. 
Accordingly, if the sales price is based on this going -concern value, the benefit could be co nsidered 
to accrue to the purchaser.  WT/DS505/R/Add.1  
 
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  V. CANADA'S ARGUMENT ON UNWRITTEN MEASURES  
24. In its First Written Submission, Canada argues that USDOC's "Other Forms of 
Assistance -AFA" measure can be characterized as ongoing conduct or as a rule or norm of 
prospective and general application. Canada notes that regardless of how the measure is 
characterized, the analysis of attribution and the precise content of the measure is the same. It is 
only in relation to the prospective application of the measure that  the relevant standards slightly 
differ. Japan agrees with Canada  to the extent  that the scope of measures that can be challenged 
in a WTO dispute settlement proceeding is broad.  
25. In this respect, Japan notes that the Appellate Body in Argentina — Impo rt Measures has 
confirmed that a broad range of measures can be challenged, finding that the distinction between 
"as such" and "as applied" claims neither governs the definition of a measure for purposes of 
WTO dispute settlement, nor defines exhaustively the types of measures that are susceptible to 
challenge. Although the Appellate Body has not found it necessary for a complainant to categorize 
its challenge either "as such" or "as applied," it has implied that a distinction should be made with 
respect to  different categories of challenged measures. The Appellate Body  has further explained 
that unwritten measures susceptible to challenge in WTO dispute procedures include any act or 
omission that is attributable to a WTO Member, and the elements that a pane l needs to review in 
ascertaining the existence of the measure will depend on the specific measure being challenged 
and how it is described or characterized by the complaining Member.  
26. Japan is of the view that an unwritten measure can be challenged as long as a complaining 
Member clearly describes and characterizes what aspects of the measure it is challenging, as the 
characterization of the measure may determine the evidentiary requirements to establish the 
measure's existence.  
 WT/DS505/R/Add.1  
 
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  ANNE X D-6 
ANSWERS OF TURKEY TO  QUESTIONS OF THE PAN EL 
QUESTIONS AND ANSWER S 
1.8 In its opening statement, Canada submitted that requested information that falls 
outside the scope of the investigation cannot be considered as "necessary information" 
pursuant to Arti cle 12.7 of the SCM Agreement, even if the investigating authority 
requests it. Would you agree with Canada? Please elaborate.  
Turkey considers that whether the information requested by an investigating authority is 
necessary or not within the context of a n investigation should be analysed in a case -by-case 
manner. In some cases, the investigating authority might need to request some information in 
order to decide whether this information is necessary for the determination of the related 
investigation.  
On the other hand, the investigating authority should be as precise as possible in deciding on 
which information is to be requested from the interested parties.  
That is, the investigating authority should be constrained in requesting information when it is 
apparent that this information is totally unrelated with the investigation.  
2.10 In paragraph  6 of its oral statement, Japan refers to paragraph  284 of the 
Appellate Body Report in US – Antidumping and Countervailing Duties (China) . Please 
comment on its r elevance to the present case.  
Turkey understands that the relevance of this referral hinges on the discussion whether "direction " 
or "entrustment " by definition, necessitates a specific type of "conduct " of the government. 
In other words, in our understanding, the discussion focuses on the issue whether an affirmative 
and explicit action is needed to establish the "entrustment " or "direction " element in 
Article  1.1(a)(1)(iv)of the SCM Agreement.  
We do not have a one -size-fits-all answer to this question. The point we may agree with Japan, 
however, is that the conduct of the government, irrespective of being affirmative or adverse, is 
imperative to satisfy the first stage of a three phase assessment which, in our understanding, 
includes whether the conduct amounts to "direction " or "entrustment " and whether it controls the 
private entity to provide benefit conferring financial contribution.  
2.11 In paragraph  4 of its oral statement, Japan states that "an obligation of a public 
utility to provide such general service does not in itself establish entrustment and 
direction". Would you agree?  
2.12 In paragraph  4 of its oral statement, Japan states that "[t]he mere obligation to 
provide electricity to all customers does not impede a pr ivate entity's ability to operate 
in accordance with the principles of supply and demand in a certain market." Would you 
agree?  
3.13 The European Union asserts at paragraph  26 of its third party submission that: 
"[i]t is difficult for the European Union t o see a transaction in a general provision or 
principle that simply appears to set out certain basic regulatory principles and lays down 
key qualities of the relevant services". Please comment.  
4.14 In paragraph  5 of Brazil's oral statement, Brazil states that it "understands that 
government legislation laying down general principles and establishing general rules in 
a given market cannot be understood per se as entrusting or directing a private body." 
Please comment in light of the jurisprudence cited by B razil in paragraphs  4 to 6.  WT/DS505/R/Add.1  
 
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  Turkey understands that the last four questions concerns different aspects of the same issue, 
namely the "entrustment " or "direction " analysis as used in Article 1.1(a)(1)(iv)of the 
SCM Agreement. Therefore, for the sake of brie fness Turkey would like to answer these four 
questions under one single section as follows.  
In relevant part, Article 1.1(a)(1)(iv) of the SCM Agreement reads as follows:  
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:  
… 
(iv) a government  […] 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 from practices 
normally followed by gov ernments;…  
In US -DRAMS, the Appellate Body states that paragraph (iv) covers situations where a private 
body is being used as a proxy by the government to carry out one of the types of functions listed 
in paragraphs (i) through (iii). Seen in this light, the terms "entrusts" and "directs" in paragraph 
(iv) identify the instances where seemingly private conduct may be attributable to a government 
for purposes of determining whether there has been a financial contribution within the meaning of 
the SCM Agreem ent1. According to the Appellate Body, Article 1.1(a)(1)(iv) is, in essence, an anti -
circumvention provision. Thus a finding of entrustment or direction, requires that the government 
give responsibility to a private body —or exercise its authority over a pr ivate body —in order to 
effectuate a financial contribution. Thus Turkey agrees with the Appellate Body there must be a 
demonstrable link between the government and the conduct of the private body2.  
In order to establish such a link, evidence relating to t he intent and involvement of the 
government has to be founded on reasonable and adequate explanation  by the Investigating 
authority3. Furthermore in Turkey 's understanding, the investigating authority should assess the 
totality of evidence to conclude whet her an "entrustment " or "direction " is present or not4. 
Considering the facts of the dispute, Turkey shares the approach that a single factor or information 
cannot suffice to reach a conclusion concerning the presence or absence of government 's 
"entrustmen t" or "direction " of a private entity.  
Accordingly, Turkey considers that a "basic regulatory principle " alone is not adequate to be used 
as a yardstick to determine entrustment or direction in terms of Article 1.1(a)(1)(iv). In Turkey 's 
view the "entrust ment-direction " analysis necessitates an inclusive assessment bringing together 
evidence showing that this "basic regulatory principle " is in fact a reflection of a system of 
entrustment or direction. Thus, the focus of such an evaluation, is not whether t his "general " or 
"regulatory " principle is merely stipulated in a legal text but whether an unbiased and objective 
investigating authority can present an explanation on how such a "principle " can be assessed as an 
instrument of "entrustment " or "direction " by using evidence establishing the link between the 
government and the private body.  
 
 
__________  
                                                
1 Appellate Body Report, US -Countervaili ng Duty Investigation on Drams para. 108. 
2 Ibid, para . 112-113. 
3 Appellate Body Report, Japan – DRAMs (Korea), para . 131-134. 
4 Ibid.