RESTRICTED  
  
G/SCM/M/99  
 
16 January 2017  
(17-0281) Page: 1/32 
Committee on Subsidies and Countervailing Measures    
 
MINUTES OF THE REGUL AR MEETING  
HELD ON 2 5 OCTOBER 201 6 
 
CHAIR: MR JIN-DONG KIM  (KOREA ) 
1. The Committee on Subsidies and Countervailing Measures ("Committee") held a regular 
meeting on 2 5 October 201 6, convened in WTO/AIR/SCM/ 12 dated 1 4 October 201 6. 
 
2. Referr ing to the agenda item 13 entitled "Subsidies and overcapacity", China  noted that 
overcapacity was a universal, periodic and structural problem generated in the development of the 
global economy. The slow recovery of the global economy and the depressed ma rket demand were 
the true root causes of the overcapacity. China believed that the G -20 forum, which was eligible 
for bringing about more comprehensive and effective global solutions, was already working on 
establishing a mechanism to deal with the overcap acity problem. Hence, the issue of overcapacity 
was not in the terms of reference of the SCM Committee and it was not an appropriate forum for 
the discussion of this issue. China did not oppose to those Members' briefing on the outcomes of 
the G -20 summit to the WTO. However, China would emphasize that the inclusion of item 13 into 
the agenda shall not constitute any precedent and could not represent any degree of consensus by 
Members on including similar issues into the agenda of future meetings of the SCM  Committee or 
any subsidiary bodies of the WTO. China requested the Committee to take note of its position as 
stated.  
 
3. The Committee took note  of the statement made and adopted  the following agenda:  
 
1   NATIONAL LEGISLATION ................................ ................................ .............................  3 
1.1   Review of Notifications of new or amended legislation or regulations not previously 
reviewed by the committee (including supplemental notifications of existi ng provisions 
not previously reviewed)  ................................ ................................ ................................ ...... 3 
1.1.1    Canada (G/ADP/N/1/CAN/4/Suppl.1 – G/SCM/N/1/CAN/4/Suppl.1)  ................................ . 3 
1.1.2    Kazakhstan  (G/ADP/N/1/KAZ/1/Rev.1 – G/SCM/N/1/KAZ/1/Rev.1 - 
G/SG/N/1/KAZ/1/Rev.1) & (G/ADP/N/1/KAZ/1/Rev.1/Corr.1 – 
G/SCM/N/1/KAZ/1/Rev.1/Corr.1 - G/SG/N/1/KAZ/1/Rev.1/Corr.1)  ................................ ...........  3 
1.1.3    Kuwait, the Stat e of (G/ADP/N/1/KWT/1/Suppl.1 -G/SCM/N/1/KWT/1/Suppl.1 -
G/SG/N/1/KWT/1/Suppl.1) & (G/ADP/N/1/KWT/1/Suppl.1/Corr.1 -
G/SCM/N/1/KWT/1/Suppl.1/Corr.1 -G/SG/N/1/KWT/1/Suppl.1/Corr.1)  ................................ ....... 3 
1.1.4    Qatar (G /ADP/N/1/QAT/3/Suppl.1 -G/SCM/N/1/QAT/3/Suppl.1 -
G/SG/N/1/QAT/3/Suppl.1)  ................................ ................................ ................................ ... 3 
1.1.5    Russian Federation (G/ADP/N/1/RUS/2 -G/SCM/N/1/RUS/2 -G/SG/N/1/RUS/2)  ..................  4 
1.1.6    United States (G/ADP/N/1/USA/1/Suppl.23 - G/SCM/N/1/USA/1/Suppl.23) and 
(G/ADP/N/1/USA/1/Suppl.25 - G/SCM/N/1/USA/1/Suppl.24) & 
(G/ADP/N/1/USA/1/Suppl.25/Corr.1 - G/SCM/N/1/USA/1/Suppl.24/Corr.1)  ...............................  4 
1.1.7   Vanuatu ( G/ADP/N/1/VUT/1 -G/SCM/N/1/VUT/1 -G/SG/N/1/VUT/1)  ................................ ... 4 
1.2   Review of Notifications of New or Amended Legislation or Regulations with 
Outstand ing Written Questions  ................................ ................................ .............................  4 
1.2.1    Cameroon (G/ADP/N/1/CMR/1/Suppl.1 -G/SCM/N/1/CMR/1/Suppl.1 -
G/SG/N/1/CMR/1/Suppl.1)  ................................ ................................ ................................ ... 4 G/SCM/M/99  
 
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  2   NATIONAL  LEGISLATION – CONTINUING REVIEW OF  LEGISLATIVE 
NOTIFICATIONS PREVIO USLY REVIEWED BY THE  COMMITTEE  ................................ .........  5 
2.1   Bahrain, Kingdom of; Oman; Saudi Arabia, Kingdom of (G/ADP/N/1/BHR/3/Suppl.1 -
G/SCM/N/ 1/BHR/2/Suppl.1 -G/SG/N/1/BHR/3/Suppl.1; G/ADP/N/1/OMN/3/Suppl.1 -
G/SCM/N/1/OMN/3/Suppl.1 -G/SG/N/1/OMN/3/Suppl.1; G/ADP/N/1/SAU/2/Suppl.1 - 
G/SCM/N/1/SAU/2/Suppl.1 - G/SG/N/1/SAU/2/Suppl.1)  ................................ ..........................  5 
2.2   Colombia (G/ADP/N/1/COL/4)  ................................ ................................ .......................  5 
2.3   Dominican Republic (G/ADP/N/1/DOM/3/Suppl.2 -G/SCM/N/1/DOM/2/Suppl.2 -
G/SG/N/1/DOM/2/Suppl.2)  ................................ ................................ ................................ .. 5 
2.4   Pakistan (G/ADP/N/1/PAK/3 – G/SCM/N/1/PAK/3)  ................................ ...........................  6 
3   SEMI -ANNUAL REPORTS OF CO UNTERVAILING DUTY AC TIONS 
(ARTICLE  25.11) - G/SCM/N/289 AND G/SCM/N/289/SUPPL.1  ................................ ...... 6 
4   PRELIMINARY AND FINA L COUNTERVAILING DUT Y ACTIONS: 
NOTIFICATIONS (ARTIC LE 25.11)  ................................ ................................ ...................  7 
5   ARTICLE 27.4 EXTENSI ONS OF THE TRANSITIO N PERIOD FOR THE 
ELIM INATION OF EXPORT SU BSIDIES – 31 DECEMBER 2015 END  OF FINAL 
PHASE -OUT PERIOD AND FINAL  NOTIFICATION DUE 30 JUNE 2016 
(G/SCM/N/299)  ................................ ................................ ................................ ..............  7 
6   IMPROVING THE TIMELI NESS AND COMPLETENES S OF NOTIFICATI ONS AND 
OTHER INFORMATION FL OWS ON TRADE MEASURE S UNDER THE SCM 
AGREEMENT  ................................ ................................ ................................ .....................  9 
7   CREATION OF A WORKIN G GROUP ON IMPLEMENT ATION (G/SCM/W/567 -
G/SG/W/236 AND G/SCM /W/568 -G/SG/W/237) – ITEM REQUEST ED BY 
BRAZIL  ................................ ................................ ................................ ...........................  13 
8   QUESTIONS TO CANADA PURSUANT TO ARTICLE 25.8 OF THE SCM 
AGREEMENT (G/SCM/Q2/ CAN/67) – ITEM REQUESTED BY BR AZIL  ...............................  16 
9   NON-NOTIFICATION BY CHIN A OF ALLEGED SUBSIDI ES CONTAINED IN THE 
2014 AND 2015 REQUES TS BY THE UNITED STA TES UNDER ARTICLE 25 .10 OF 
THE SCM  AGREEMENT – ITEM REQUESTED BY TH E UNITED STATES  ...............................  18 
10   NON-NOTIFICATION BY CHIN A OF ALLEGED SUBSIDI ES CONTAINED IN THE 
2016 REQUEST BY THE UNITED STATES UNDER ARTICLE 25.10 OF THE  SCM 
AGREEMENT – ITEM REQUESTED BY TH E UNITED STATES  ................................ ..............  22 
11   ELIMINATION OF EXPOR T SUBSIDIES FOR TEXT ILES AND APPAREL BY 
INDIA PURSUANT TO AR TICLE 27.5 OF THE SC M AGREEMENT – ITEM 
REQUESTED BY THE UNI TED STATES ................................ ................................ ..............  24 
12   ENHANCING FISHERIES SUBSIDIE S TRANSPARENCY – ITEM REQUESTED BY 
THE UNITED STATES  ................................ ................................ ................................ ...... 25 
13   SUBSIDIES AND OVERCA PACITY: FOLLOW UP FR OM THE G20 PROCESS – 
ITEM REQUESTED BY TH E EUROPEAN UNION, JA PAN, MEXICO AND THE UNITED 
STATES (G/SCM/W/569)  ................................ ................................ ...............................  28 
14   OTHER BUSINESS  ................................ ................................ ................................ .... 31 
14.1   Request from the EU to China pursuant to Article 25.8  ................................ .................. 31 
15   DATE OF NEXT REGULAR  MEETING  ................................ ................................ ..........  31 
16   ANNUAL REPORT OF THE  COMMITTEE ON SUBSIDI ES AND 
COUNTERVAILING MEASU RES TO THE COUNCIL F OR TRADE IN GOODS 
(ARTICLE  32.7)  ................................ ................................ ................................ ..............  32 
 G/SCM/M/99  
 
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  1  NATIONAL LEGISLATION  
1.1  Review of Notifications of new or amended legislation or regulations not previously 
reviewed by the committee (including supplemental notifications of existing provisions 
not previousl y reviewed)1 
4. The Chair noted that, in accordance with the Committee's procedures (G/SCM/W/293/Rev.1), 
the new legislative notifications on the agenda were those that had been circulated in all three 
languages not less than six weeks before the meeting. The  deadline for written questions on these 
notifications had been  3 October 201 6. In accordance with the review procedures, the legislative 
notification of Cameroon would also be taken up under this item due to outstanding written 
questions about it.  
 
5. Oral q uestions could be asked at the meeting, and any Member wishing to receive a written 
answer to any such question would have to submit its question in writing to the Member concerned 
and to the Secretariat not later than 1 4 November 201 6. Written answers wer e due not later than 
5 December  2016. 
 
6. The primary review of the notifications would be held in the Committee on Anti -Dumping 
Practices, where all horizontal issues in addition to anti -dumping issues would be addressed. 
Members thus were requested to limit  their questions in this Committee to those specifically 
related to countervailing measures.  
 
1.1.1   Canada  (G/ADP/N/1/ CAN/4 /Suppl.1 – G/SCM/N/1/ CAN/4/Suppl.1)  
7. Written questions and answers with respect to this notification can be found in:  
 
 G/ADP/Q1/CAN/16 - G/SCM/Q1/ CAN/16 – questions from the United States  
 G/ADP/Q1/CAN/17 - G/SCM/Q1/ CAN/17 – replies to the United States  
 
8. The Committee took note  of the notification, questions, and answers.   
 
1.1.2   Kazakhstan  (G/ADP/N/1/ KAZ/1/Rev.1  – G/SCM/N/1/ KAZ/1/Rev.1  - 
G/SG/N/1/ KAZ/1/Rev.1 ) & (G/ADP/N/1/ KAZ/1/Rev.1/Corr.1  – 
G/SCM/N/1/ KAZ/1/Rev.1/Corr.1  - G/SG/N/1/ KAZ/1/Rev.1/Corr.1 ) 
9. Written questions  and answers  with respect to this notification can be found in:  
 
 G/ADP/Q1/KAZ/1 - G/SCM/Q1/ KAZ/1 - G/SG/Q1/KAZ/1 - questions from the United States  
 G/ADP/Q1/KAZ/2 - G/SCM/Q1/ KAZ/2 - G/SG/Q1/KAZ/2 - replies to  the United States2 
 
10. The Committee took note  of the notification  and questions .   
 
1.1.3   Kuwait, the State of (G/ADP/N/1/KWT/1/Suppl.1 -G/SCM/N/1/KWT/1/Suppl.1 -
G/SG/N/1/KWT/1/Suppl.1) & (G/ ADP/N/1/KWT/1/Suppl.1/Corr.1 -
G/SCM/N/1/KWT/1/Suppl.1/Corr.1 -G/SG/N/1/KWT/1/Suppl.1/Corr.1)  
11. No questions were raised in respect of this notification.  
12. The Committee took note  of the notification.  
1.1.4   Qatar  (G/ADP/N/1/QAT/3/Suppl.1 -G/SCM/N/1/QAT/3/Suppl.1 -
G/SG/N /1/QAT/3/Suppl.1)  
13. No questions were raised in respect of this notification.  
14. The Committee took note  of the notification.  
                                                
1 Relevant deadlines for written follow -up questions and written answers in November and 
December  2016, respectively can be found in section 1 of document G/ADP/W/49 5-G/SCM/W/5 70-
G/SG/W/23 8. 
2 Circulated on 26 October 2016.  G/SCM/M/99  
 
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  1.1.5   Russian Federation  (G/ADP/N/1/RUS/2 -G/SCM/N/1/RUS/2 -G/SG/N/1/RUS/2 )  
15. Written questions with respect to this notification can be found i n: 
 
 G/ADP/Q1/ RUS/7 - G/SCM/Q1/RUS/7 - G/SG/Q1/RUS/7 and G/ADP/Q1/ RUS/7/Corr.1 - 
G/SCM/Q1/RUS/7/Corr.1  - G/SG/Q1/RUS/7/Corr.1 – questions from the United States  
 
16. The Committee took note  of the notification  and questions .  
 
1.1.6   United States (G/ADP/N/1/USA/1/Sup pl.23  - G/SCM/N/1/USA/1/Suppl.23)  and 
(G/ADP/N/1/USA/1/Suppl.25  - G/SCM/N/1/USA/1/Suppl.24) & 
(G/ADP/N/1/USA/1/Suppl.25/Corr.1  - G/SCM/N/1/USA/1/Suppl.24/Corr.1)  
17. Written questions and answers regarding these notifications can be found in:  
 
 G/ADP/Q1/USA/29 - G/SCM/Q1/USA/29 – questions from Mexico  
 G/ADP/Q1/USA/ 30 - G/SCM/Q1/USA/ 30 – questions from the Separate Customs Territory 
of Taiwan, Penghu, Kinmen and Matsu  
 G/ADP/Q1/USA/ 31 - G/SCM/Q1/USA/ 31 – replies to questions from the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu  
 G/ADP/Q1/USA/ 32 - G/SCM/Q1/USA/ 32 – replies to questions from Mexico  
 
18. The Committee took note  of the notification, questions, and answers.   
 
1.1.7   Vanuatu ( G/ADP/N/1 /VUT/1 -G/SCM/N/1 /VUT/1 -G/SG/N/1 /VUT/1)  
19. No questions were raised in respect of this notification.  
20. The Committee took note  of the notification.  
1.2  Review of Notifications of New or Amended Legislation or Regulations with 
Outstanding Written Questions  
1.2.1   Cameroon (G/ADP/N/1/CMR/1/Suppl.1 -G/SCM/N/1/CMR/1/Suppl.1 -
G/SG/N/1/CMR/1/S uppl.1)  
21. Written questions with respect to this notification can be found in:  
 
 G/ADP/Q1/CMR/3 -G/SCM/Q1/CMR/3 -G/SG/Q1/CMR/3 – questions from the United States  
 
22. Referring to its intervention at the Safeguards Committee held on the day before, Cameroon  
request ed to deal with this issue bilaterally and remove that item from the agenda.  
 
23. The Chair, recalling the Committee's agreed procedures, informed Members that for new 
legislative notifications to be placed on the agenda of the spring  2017 meeting, they would  have to 
be circulated in all three languages by 1 3 March 201 7. Shortly after that date, the Secretariat 
would circulate a document informing Members of all legislative notifications to be reviewed at the 
spring meeting. The Chair noted that pursuant to pa ragraph 8 of document G/SCM/W/293/Rev.1, 
any legislative notification in respect of which written answers to written questions had not been 
provided would be placed on the agenda of the Committee's subsequent regular meeting.   
 
24. El Salvador, the European Un ion, Japan, and Kyrgyz Republic  had submitted new legislative 
notifications which would be on the agenda for review at the April 201 7 meeting. Written questions 
concerning notifications to be reviewed should be submitted to the notifying Member and to the 
Secretariat by 3 April 201 7. 
 
25. Any Member wishing to place a previously -reviewed legislative notification on the agenda of 
the Committee's April 201 7 regular meeting had to submit to the Member concerned and to the 
Secretariat written questions concerning t hat notification not later than 1 3 March 201 7. The 
Member receiving such questions should submit its written answers not later than 1 0 April 201 7. 
  G/SCM/M/99  
 
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  26. The Secretariat would circulate the usual triple -symbolled document containing th ese and the 
other pertinen t deadlines shortly after the meeting.3  
 
27. Some Members had yet to submit any notification concerning legislations. The Chair  
underlined the importance of these notifications in terms of transparency , and recalled that for 
many Members all that would be req uired was a single nil notification. For any Members that 
conducted countervailing duty investigations but had not yet notified their legislation, it was all the 
more important for the Committee to have the opportunity to review and ask questions about tha t 
legislation. Therefore, the Chair urged all Members that had not yet made a legislative notification 
to do so as promptly as possible.   
 
28. The Chair referred to the document G/SCM/N/18/Add.4 2 which contained the latest revision 
of the list of authorities c ompetent to initiate and conduct investigations within the meaning of 
Article 25.12 of the SCM Agreement and invited all Members with such an authority to submit the 
required notification pursuant to Article 25.12 of the SCM Agreement, or to review and upd ate as 
necessary their previously -submitted notifications.  
 
29. The Committee took note  of the Chair's statement.  
 
2  NATIONAL LEGISLATION  – CONTINUING REVIEW OF  LEGISLATIVE NOTIFICA TIONS 
PREVIOUSLY REVIEWED BY THE COMMITTEE  
2.1  Bahrain, Kingdom of; Oman; Saudi Arab ia, Kingdom of 
(G/ADP/N/1/BHR/3/Suppl.1 -G/SCM/N/1/BHR/2/Suppl.1 -G/SG/N/1/BHR/3/Suppl .1; 
G/ADP/N/1/OMN/3/Suppl .1-G/SCM/N/1/OMN/3/ Suppl.1 -G/SG/N/1/OMN/3/Suppl.1 ; 
G/ADP/N/1/SAU/2/Suppl .1- G/SCM/N/1/SAU/2/Suppl .1 - G/SG/N/1/SAU/2/Suppl.1)  
30. Written questions and  answers regarding these notifications can be found in:  
 
 G/ADP/Q1/BHR/11 -G/SCM/Q1/BHR/11 -G/SG/Q1/ BHR/13 - G/ADP/Q1/OMN/3 -
G/SCM/Q1/OMN/3 -G/SG/Q1/ OMN/3- G/ADP/Q1/ SAU/5-G/SCM/Q1/ SAU/5-
G/SG/Q1/ SAU/7 – follow -up questions from the United States  
 G/ADP/Q1/BHR/ 12-G/SCM/Q1/BHR/ 12-G/SG/Q1/ BHR/14- G/ADP/Q1/OMN/ 4-
G/SCM/Q1/OMN/ 4-G/SG/Q1/ OMN/4- G/ADP/Q1/ SAU/6-G/SCM/Q1/ SAU/6-
G/SG/Q1/ SAU/8 – reply to the United States  
31. The Committee took note  of the notification, questions, and answers.   
 
2.2  Colombia (G/ADP/N/1/COL/4)  
32. Written q uestions and answers regarding these notifications can be found in:  
 
 G/ADP/Q1/COL/8 – G/SCM/Q1/COL/8 – follow -up question from the United States  
 G/ADP/Q1/COL/9 – G/SCM/Q1/COL/9 – reply to the United States  
 
33. The Committee took note  of the notification, ques tions, and answers.   
 
2.3  Dominican Republic ( G/ADP/N/1/ DOM /3/Suppl.2 -G/SCM/N/1/ DOM /2/Suppl.2 -
G/SG/N/1/ DOM /2/Suppl.2 ) 
34. Written questions and answers regarding these notifications can be found in:  
 
 G/ADP/Q1/DOM/9 – G/SCM/Q1/DOM/9 - G/SG/Q1/DOM/9  – follow -up ques tion from the 
United States  
 G/ADP/Q1/DOM/10 – G/SCM/Q1/DOM/10 - G/SG/Q1/DOM/10  – reply to the United States  
 
35. The Committee took note  of the notification, questions, and answers.   
                                                
3 G/ADP/W/49 5-G/SCM/W/5 70-G/SG/W/23 8, circulated on 1 November 2016.  G/SCM/M/99  
 
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  2.4  Pakistan  (G/ADP/N/1/PAK/3 – G/SCM/N/1/PAK/3)  
36. Written questions and answers regarding these notifications can be found in:  
 
 G/ADP/Q1/PAK/11 – G/SCM/Q1/PAK/11  – follow -up questions from the United States  
 G/ADP/Q1/PAK/12 – G/SCM/Q1/PAK/12  – reply to the United States  
 
37. The Committee took note  of the notification, questions, and answers .  
 
3  SEMI -ANNUAL REPORTS OF CO UNTERVAILING DUTY AC TIONS (ARTICLE  25.11) - 
G/SCM/N/289 AND G/SCM/N/289/SUPPL.1  
38. The Chair recalled that document G/SCM/N/ 305 and G/SCM/N/ 305/Suppl .1 had invited  all 
Members to submit, not later than 15 August 201 6, their semi -annual reports under Article 25.11 
of the SCM Agreement of countervailing duty actions taken in the period 1  January - 
30 June 2016. Document G/SCM/N/ 305/Add.1 provided the current status of Members' reporting 
for that period. Paragraph  1 of the document li sted those Members reporting countervailing duty 
actions during the period. Paragraph 2 listed the Members that had notified having taken no 
countervailing duty action during the period. Paragraph 5 of the document listed the 3 7 Members 
that had submitted a one -time notification that they had no investigating authority, had taken no 
countervailing actions to date, and did not anticipate taking any such actions in the foreseeable 
future.  
 
39. The one -time notifications served a useful transparency function, as t hey assisted non -active 
Members to meet their notification requirements in a streamlined way. Any eligible Member that 
had not already done so thus was urged to submit a one -time notification. The Secretariat was 
ready to assist any Member in this regard.  
 
40. Unfortunately, the very large number of Members listed in paragraphs 3 and 4 of the 
document had not submitted a semi -annual report for January - June 201 6. They were urged to do 
so as soon as possible.   
 
41. No comments or questions were raised concerning th e semi -annual reports of Armenia, 
Australia, Brazil,  Canada,  China,  the European Union, India, Kazakhstan, Kyrgyz Republic, 
Pakistan, Peru, the Russian Federation, Turkey or Ukraine . 
 
42. With respect to the semi -annual report of the United States , the Russian  Federation  
expressed  its concern over the investigation on imports of cold -rolled steel flat products originating 
in Russia, which had been terminated without imposition of a measure due to lack of injury. Russia 
had systemic concerns with respect to th e investigation. Despite its full participation in the 
investigation and several interventions in the Committee, the US had reached erroneous 
conclusions regarding the existence of subsidies in the form of provision of natural gas at 
regulated prices and gra nting licences for mining rights.  
 
43. First, the US had considered that selling of natural gas by a joint stock company, Gazprom, 
was a financial contribution provided by a government authority merely because the company was 
partially owned by the government,  ignoring the fact that Gazprom was a profit seeking enterprise 
operating in accordance with the provisions of the national corporate law and by nature could not 
be a governmental or public body. Partial state ownership neither demonstrated government's 
meaningful control over the company nor an authority to provide financial contribution on behalf of 
the government. Therefore, the US findings on financial contribution were not consistent with 
Article 1.1 of the SCM Agreement.  
 
44. Second, the benefit had not b een determined based on the prevailing market conditions in the 
Russian Federation. The investigating authority had stated that Gazprom's prices had not been set 
in a manner consistent with market principles without substantiating that claim. Russia recall ed 
that since its accession to the WTO, producers and distributers of natural gas had been operating 
on the basis of normal commercial considerations based on recovery of costs and profit, as 
provided for in paragraph 132 of the Working Party Report of the  Russian Federation.  
 
45. After rejecting Gazprom's prices, the US had also rejected viable in -country Russian market 
benchmarks for benefit calculation such as prices of gas supplied in the unregulated segment and G/SCM/M/99  
 
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  prices established on the Russian commodity e xchange, which were both profitable for sellers. For 
benchmarking, the US had used regional European natural gas prices disregarding fundamental 
differences between Russian and European gas markets in terms of natural resource endowments. 
Therefore, the de termination of the existence and amount of the benefit had not been consistent 
with Article 14(d) of the SCM Agreement.  
 
46. The conclusions regarding specificity were even less appropriate. The US had concluded that 
the provision of natural gas was de facto specific as the Russian steel industry had been allegedly 
a predominant consumer of natural gas. This was fundamentally incorrect because the share of the 
metallurgical sector in the total consumption of natural gas in the Russian Federation was only 4%.  
 
47. During the verification, the investigating authority had aske d the Government of the 
Russian  Federation to provide details on Gazprom's sales. Since Gazprom was a public company, it 
was not obliged to report commercial data to the government. In addition, n either the company 
nor its consumers had participated in the investigation. Therefore, the request of the investigating 
authority had been simply irrelevant. Despite all the clarifications, however, the US investigating 
authority had concluded that the Rus sian Federation had not cooperated and an adverse inference 
on specificity had been made. As the US approach had been result -oriented and not consistent 
with Article 2.1(c) of the SCM Agreement, the Russian Federation asked the US to correct its 
countervai ling practice in order to ensure objectiveness and WTO -consistency.  
 
48. The United States  noted that the US International Trade Commission had determined that the 
imports from Russia had not caused injury to the domestic industry. As a result, the countervail ing 
duty order had not been issued. The US determination on natural gas pricing in Russia had been 
fully consistent with its WTO obligations. The US indicated that paragraph 132 of the Working 
Party Report of the Russian Federation had been a negotiated pa ragraph which had not included 
any exemption in terms of countervailing duty investigations.   
 
49. The Committee took note  of all semi -annual reports submitted, and all statements made.  
 
4  PRELIMINARY AND FINA L COUNTERVAILING DUT Y ACTIONS: NOTIFICAT IONS 
(ARTICLE  25.11)  
50. The Chair reported that since the Committee's April 201 6 regular meeting, notifications under 
Article 25.11 of preliminary and final countervailing duty actions had been received from Australia, 
Brazil, Canada,  China  the European Union, Pakistan,  and the US. Those notifications were listed in 
documents G/SCM/N/ 304, 306-310.  
 
51. Brazil  noted that it deeply regretted the fact that the US had imposed countervailing duties on 
steel products originating in Brazil. Brazil had actively participated in that i nvestigation and 
provided all sources, information and data to the investigating authority bearing considerable costs 
both in terms of human resources and production of documents. However, Brazil's arguments had 
been discarded from the decision adopted by the US. The US had decided to impose countervailing 
duties on Brazilian exports which did not benefit from subsidies as stated by Brazil in its 
commentaries. Brazil brought that issue to the attention of the Committee because it failed to 
understand how th e current practice applied by the US in countervailing duty investigations 
complied with the SCM Agreement.  
 
52. The United States  recalled that the Committee had discussed that case at the previous 
meeting and that the US had responded to many of Brazil's cla ims and substantive arguments. The 
US indicated that in the final determination the comments from all parties had been summarized 
and responded to in detail.  
 
53. The Committee took note  of the notifications  and statements made . 
 
5  ARTICLE 27.4 EXTENSI ONS OF TH E TRANSITION PERIOD FOR THE ELIMINATION OF 
EXPORT SUBSIDIES – 31 DECEMBER 2015 END  OF FINAL PHASE -OUT PERIOD AND 
FINAL NOTIFICATION D UE 30 JUNE 2016 (G/S CM/N/299)  
54. The Chair  recalled that Members that had been granted extensions under Article 27.4 
pursuant to the procedures in WT/L/691 were required, under paragraph 2(c) of the procedures, to 
submit transparency notifications in respect of each year of the final two -year phase -out period, G/SCM/M/99  
 
- 8 - 
 
  i.e., calendar years 2014 and 2015. The deadline for the notification pertaining to 2014 was 
30 June 2015. A reminder to this effect had been circulated in document G/SCM/N/290/INF.  
 
55. To date, Belize, Costa Rica, Dominica,  Dominican Republic,  El Salvador, Guatemala, Jamaica, 
Jordan,  Mauritius,  and Saint Vincent and the Grena dines had submitted these notifications, which 
had been circulated in the G/SCM/N/290 series.4  
 
56. Furthermore, given that 2015 was the final year of the two -year phase -out period pursuant to 
the previously mentioned procedures, the Members with extensions needed to  have completed the 
elimination of their export subsidies by the end of 2015.  They also had to provide a final 
transparency notification in respect of calendar year 2015 not later than 30 June 2016. A reminder 
concerning that final round of Article  27.4–related notifications had been circulated in document 
G/SCM/N/299.  
57. To date, only six of the beneficiary Members – Belize, Dominican Republic, El Salvador, 
Guatemala, Jamaica, and Jordan – had submitted these final notifications, which had been 
circul ated in the G/SCM/N/29 9 series.  The Chair reminded other Members with extensions to 
submit their final transparency notifications as soon as possible.  The deadline for the elimination of 
the export subsidies had been nearly one year earlier while for submi tting the final notification had 
been four months earlier.  
58. The Chair underlined the importance of the compliance of the beneficiary Members with the 
corresponding substantive and transparency obligations and noted that he had asked Secretariat 
to prepare a room document indicating the current status of notifications and of actions reported 
by Members with extensions under Article 27.4.5  
 
59. New Zealand  recalled that all those export subsidies  should have been removed by 
31 December 2015 and thanked the Chair  for his report and the room document which usefully 
highlighted the current status of notifications. Dominican Republic, El Salvador, Jamaica, Panama, 
Papua New Guinea, and Guatemala had notified the completion and entry into force of their 
necessary refo rms, while Belize and Jordan had both notified that their reforms were yet to be 
complete. Although this was an issue of systemic concern to New Zealand, it nonetheless 
welcomed the transparency they had provided and indicated that for both cases there wer e clear 
plans and efforts to undertake the necessary reforms.  
 
60. New Zealand also noted that an assessment could not be made in the case of other 
beneficiary Members as they had not confirmed the extent of their reforms. It therefore requested 
those Members to submit a final notification in advance of the next Committee meeting confirming 
the extent to which they had completed their reforms. New Zealand would welcome any updates 
that could be provided at the meeting and requested to keep that issue before the  Committee.  
 
61. Panama  noted that in accordance with the procedures in WT/L/691 , it had taken all necessary 
measures and had fulfilled its commitment to eliminate the two export subsidy programmes 
provided pursuant to the extensions granted under Article 27.4 . To comply with its transparency 
obligation, it would submit the updating notification indicating that it had terminated those 
programmes in 2013, before the end of the deadline. It also asked the Secretariat to continue to 
prepare the document that conta ined the status of notifications and progress of the reforms 
undertaken by those Members.  
 
62. Mauritius  indicated that it had contacted the competent authorities and it was hopeful to make 
the final transparency notification before the next meeting of the Com mittee.6 
 
63. The United States  supported New Zealand's statement and recalled that some of the 
beneficiary Members had completed their reforms to eliminate those export subsidies. It urged the 
rest of the beneficiary Members to complete their reforms as soon as possible and to submit their 
                                                
4 Saint Lucia's notification, submitted on 24 October 2016, was circulated on 1 Nov ember 2016 i n 
document G/SCM/N/284/LCA -G/SCM/N/290/LCA.  
5 RD/SCM/25 . 
6 Mauritius's notification, submitted on 25 November 2016, was circulated on 29 November 2016 in 
document G/SCM/N/299/MUS.  G/SCM/M/99  
 
- 9 - 
 
  final transparency notifications. Finally, the US also supported New Zealand's suggestion to keep 
this item on the agenda to continue to monitor the completion of the reforms.  
 
64. Thanking the Chair for the room document showin g the recent status of the export subsidies,  
Australia  appreciated the efforts taken by those Members which had completed their reform 
process and complied with their transparency obligations. It also supported New Zealand's 
suggestion to keep this item on  the agenda for the next meeting.  
 
65. Colombia  thanked Panama for the notification and information provided. It would review the 
document showing the recent status of those subsidy programmes.  
 
66. Papua New Guinea  thanked New Zealand for its statement and indica ted that it had taken 
note of the comments made.  
 
67. The Chair noted that the Committee would revert to that issue at the next meeting.  
 
68. The Committee took note  of the statement s made . 
 
6  IMPROVING THE TIMELI NESS AND COMPLETENES S OF NOTIFICATIONS A ND OTHER 
INFO RMATION FLOWS ON TRA DE MEASURES UNDER TH E SCM AGREEMENT  
69. The Chair recalled that since the request of the Chairman of the Trade Policy Review Body in 
spring 2009, the Committee had been discussing, at formal and informal meetings, "ways to 
improve the timel iness and completeness of notifications and other information flows on trade 
measures". The substance of those discussions was reflected in the minutes of the previous 
meetings.  
70. The Chair recalled that at the Committee's April meeting a number of Members h ad indicated 
their willingness to continue discussions on ways to improve timeliness and completeness of 
notification obligations under the SCM Agreement, with the notification of subsidies being the most 
fundamental. In this regard, there were three topic s to cover under this agenda item:  the status of 
Memb ers' notifications of subsidies;  the Australian suggestion to add a new annex to the 
Secretariat document on the status of Member's notifications; and the US proposal regarding a 
written process for ques tions and answers under Articles 25.8 and 25.9 of the SCM Agreement.  
The Chair suggested to take these topics up one by one and invited Members to make comments 
separately on each.  
71. Regarding the status of subsidy notifications, the Chair recalled that the Secretariat had 
prepared and updated a background note (G/SCM/W/546/Rev.7 and Corrigendum 1  and 2 ) at the 
request of Members since 2009, providing a snapshot of the level of compliance with the various 
notification obligations under the SCM Agreement since  1995.  
72. Unfortunately, compliance with the obligation to notify subsidies remained low. Eighty -seven  
Members had not made their 2015 new and full subsidy notification for which the deadline had 
been 30 June  2015. Sixty-two Members still had not made their 2 013 new and full subsidy 
notification, although the deadline had been more than three  years earlier. Further, fifty -six 
Members still had not made their 2011 notifications, which had been due f ive years earlier. Many 
of these Members either had never notif ied or had done so only in the distant past. The chronic 
low compliance with this fundamental transparency obligation constituted a serious problem in the 
proper functioning of the Agreement.  
 
73. The Members that had not yet made their 2015 notifications were : Angola; Antigua and 
Barbuda; Argentina; Kingdom of Bahrain; Bangladesh; Barbados; Benin; Bolivia; Botswana; 
Brazil; Brunei Darussalam; Burkina Faso; Burundi; Cabo Verde; Cambodia; Cameroon; Central 
African Republic; Chad; Colombia; Côte d'Ivoire; Democra tic Republic of Congo; Djibouti; Egypt; 
Fiji; Gabon; the Gambia; Georgia; Ghana; Grenada; Guatemala; Guinea; Guinea -Bissau; Haiti; 
Iceland; Indonesia; Israel; Kenya; State of Kuwait; Kyrgyz Republic; People's Democratic Republic 
of Lao; Madagascar; Malawi;  Malaysia; Maldives; Mauritania; Moldova; Mongolia; Morocco; 
Mozambique; Myanmar; Namibia; Nepal; Nicaragua; Niger; Nigeria; Oman; Pakistan; Panama; 
Papua New Guinea; Paraguay; Philippines; Rwanda; Saint Kitts and Nevis; Samoa; Saudi Arabia; 
Senegal; Sierr a Leone; Solomon Islands; South Africa; Sri Lanka; Suriname; Swaziland; G/SCM/M/99  
 
- 10 - 
 
  Tajikistan; Tanzania; The Former Yugoslav Republic of Macedonia; Togo; Tonga; Trinidad and 
Tobago; Tunisia; Uganda; Uruguay; Vanuatu; Venezuela; Vietnam; Yemen;  and Zambia.  
 
74. The Chair invited the Members that had not yet submitted their 2015 notifications to provide 
an update to the Committee on their progress in preparing these notifications.  
 
75. India noted that it had recently submitted its new and full subsidy notification for 2014 -2015 
and 2015 -2016.  
 
76. Referring to the Annex B in G/SCM/W/546/Rev.7 /Corr.2, t he European Union  indicated that it 
had submitted notifications for Austria and Slovenia. Although there were some language problems 
in those notifications which had delayed the circu lation of the documents, the Annex B of the 
document should have reflected that the notifications had been submitted.  
 
77. The Chair urged Members that had not yet submitted their 2015 notifications to do so, and 
recalled that the Secretariat continued to be a vailable for enquiries about compliance with 
notification obligations. The Secretariat had assisted many Members in the past and Members 
finding themselves unable to comply with their obligations were encouraged to consult the 
Secretariat. There were as we ll other  resources that delegations could draw upon in working to 
rectify the situation, including the Secretariat Handbook on Notifi cation Requirements for the 
SCM Agreement and the two Geneva -based Internship Programmes coordinated by the 
Secretariat.  
 
78. The United States  urged the Secretariat to continue to provide the report on an annual basis. 
It noted that the report showed relatively low level of compliance declining over time. The level of 
notifications had declined by 30% since 2013. In 2015, only 29 % of all Members had provided a 
notification which was alarming. The US urged all Members to come into compliance as soon as 
possible.  
 
79. New Zealand  noted that it expected Members to make timely notifications and was open to 
explore procedures to improve ti meliness of notifications and proposals regarding to Articles 25.8 
and 25.9. It was willing to discuss other options that Members might have suggested.  
 
80. The European Union  recalled that transparency was one of the fundamental issues to 
underline the work o f the Committee and it was concerned that since 2011, in which the 
compliance was peak at 63% of Members notifying, that had dropped to 35% for the 2015 
exercise. The European Union hoped to see that this figure would increase for the 2017 notification 
exercise and encouraged Members to meet their obligations.  
 
81. With respect to the second topic under this agenda item, the Chair recalled that at previous 
meetings, the Committee had discussed a proposal by Australia to add a new annex to the 
compendium documen t which would list all Secretariat calculations of export competitiveness 
pursuant to Article 27.6.  
82. Australia  clarified that it was not a proposal targeting any WTO Member and reiterated that 
the Secretariat's Background Note was a very useful document. F or the sake of completeness and 
a more balanced document the suggested annex should be included. Australia was seeking to 
include an annex similar to that for Article 25.8 to reflect whether a Member had requested a 
computation f rom the Secretariat.  
83. Austra lia also recalled that it had previously raised the issue of Annex C about the request for 
information under Article 25.8. At the moment, Annex C referred to the requesting member, the 
member concerned and the notification provided. Australia suggested put ting the replies in that 
document.  
84. The United States  expressed its support for the Australian proposal with respect to both 
export competitiveness requests and the issue of Annex C. Regarding the first issue, the US 
indicated that it would be a good item t o add for the sake of completeness of the document. With 
respect to the second issue, the US reiterated that the existing headings were misleading.  
85. India indicated that the suggestions of Australia were still under consideration and it was not 
in a positio n to agree on those issues at that time.  G/SCM/M/99  
 
- 11 - 
 
  86. Regarding the second point raised by Australia, China  noted that since the SCM Agreement 
did not provide for the submission of written replies by Members to the Article 25.8 questions, the 
title of Annex C to the Se cretariat's background note, "request for information under Article 25.8 of 
the SCM Agreement",  was quite clear. In the third column of the annex, the document numbers of 
those requests were shown for information which reflected the heading i.e., the notif ication 
provided as well as the relevant rules of the Agreement. Therefore to change that heading into 
replies by the Members receiving request for information was not legally grounded.  
87. New Zealand  expressed its support for Australia's proposal. Indicating  that it was about 
transparency and not burdensome, it invited Members to come back to the next meeting being 
able to respond fully.  
88. With respect to the statement made by China, the United States  accepted that Article 25.9 did 
not require written replies.  There could be a column citing to the minutes of the meeting in which 
the Member responded to the questions raised under Article 25.8.  
89. Canada  expressed support for both of the Australian proposa ls. 
90. Australia  supported the US suggestion to refer to the min utes of the meeting in which the 
Member responded to the questions raised under Article 25.8.  
91. The Chair suggested reverting to that issue at the next meeting of the Committee.  
92. The Chair recalled that at the Committee's April 201 6 regular meeting, a number of Members 
had indicated their willingness to continue discussions on the proposal from the US 
(G/SCM/W/557/Rev.1) regarding procedures for questions and answers under Articles 25.8 and 
25.9 of the SCM Agreement.  
 
93. The United States  recalled that at the pre vious meeting it had reiterated that the Committee 
should try to reach consensus on common sense procedures for Members to respond to questions 
submitted under Article  25.8. The Chair's summary of the current status of Members' compliance 
with the transpar ency obligations under the SCM Agreement made clear that this was an ongoing 
problem and the proposal aimed to address one aspect of it. The suggested solution was not a 
radical one; rather it was firmly rooted in the accepted practices of the Committee. T he proposal 
reflected the current practice of responding to written questions submitted in regard to regular 
Article 25 subsidy notifications. In that regard, contrary to what some Members had suggested this 
common sense approach would not upset the legal bounds of the Agreement. The shared 
commitment to the principal of transparency should unify Members in support of advancing that 
principal in practice, by adopting pragmatic procedures for the exchange of information as called 
for under Articles 25.8 and 25.9 of the SCM Agreement.  
 
94. The US recalled the concern s raised previously by some Members that the US proposal would 
impose an undue burden on Members with capacity constraints, in particular for lesser developed 
countries. Reflecting on those concerns, t he US saw two distinct issues emerging: answers being 
submitted in writing and adherence to firm deadlines for submitting answers to questions. With 
regard to deadlines, the US had previously noted its willingness to work with Members to find a 
pragmatic s olution to their concerns. The US reiterated that  the underlying rationale of its proposal 
– to enhance information flows among Members – was fundamentally sound and firmly rooted in 
the SCM Agreement itself.  
 
95. The US recalled that the Committee had discuss ed the idea of an informal consultation 
process  that could be implemented in the context of Article 25.8 questions according to which the 
requesting Member could request to meet with the responding Member to discuss how long it 
might take to answer the que stions . The US asked Members whether they could reach an 
agreement that the responses to Article 25.8 questions be submitted in writing if such a 
consultation process had been added to the proposal for firm deadlines.  
 
96. Under the consultation process, it m ight take more than one meeting to determine the 
appropriate length of time; some requests might legitimately take longer than 60 days to answer 
while others might take less. Members would decide between themselves as to reasonable time 
frames to answer th e questions. This would preserve the key feature of the proposal that the 
responses to Article 25.8 questions be submitted in writing.  G/SCM/M/99  
 
- 12 - 
 
  97. The US recalled the previously -raised proposal to respond  to Article 25.8 questions in a 
Member's new and full notificati on and in respon ses to questions related to the new and full 
notification. This suggestion might have merit if the support measures identified in the Article 25.8 
submissions were explicitly addressed in either a new and full notification or in responses t o 
questions submitted in respect of  the new and full notification. The US was ready to hear other 
Members' views on that proposal and i nvited Members that had raised the issue of capacity 
constraints during the previous meetings to provide constructive ide as on how the proposal could 
be improved . The US reiterated that it remained flexible in finding a pragmatic solution that 
satisfied the underlying objective – which presumably  shared by all Members – of faithfully 
implementing the requirements of Article 25.9 and more generally, enhancing the exchange of 
information . 
 
98. Australia  was supportive in order to improve compliance with the transparency obligation. The 
underlying feature of the proposal was not confrontation but the dialogue between Members and 
Australia remained ready to discuss any suggestion which had merit.  
 
99. India noted that its point of view had not changed and  recalled its previously -expressed 
concern that the proposal went beyond the finely crafted balance resulting from the negotiations 
on Articles 25.8 and 25.9. The word "written" had been included in Article 25.8 but carefully 
omitted from Article 25.9. Including it in the proposal disturbed the negotiated balance. Proposed 
time limits for replies to questions received under Article 25.8 n eeded to be examined from the 
point of view of practicability  and especially from the point of view of added burden for developing 
and least -developed countries . Such a strict time -frame might not yield effective results. The 
proposal stated that all pendi ng questions would automatically remain on the agenda until a 
written reply was provided. However , who would determine whether or not a question had been 
appropriately answered?  In any case, any Member could request an item to be placed on the 
agenda.  
 
100.  New Zealand  reiterated its support for the proposal.  
 
101.  China  recalled its position at the previous Committee meetings. The SCM Agreement neither 
provided for any written process for Article 25.8 questions nor any specific time frames for the 
submission of answ ers. Therefore, the requirements for making such written answers or setting 
compulsory deadlines would impose newly added substantive obligations on Members and would 
upset the balance of rights and obligations reflected in the results of negotiations of t hose articles. 
In addition, the proposal would probably increase the workload of Members, who were preparing 
their already delayed notifications and would distract their focus. The background note by the 
Secretariat clearly showed the relatively low level of compliance and the original intention of that 
agenda item was to improve the completeness and timeliness of the notifications. However, the 
proposal, to the contrary, might further delay submissions of notifications. Referring to Australia's 
comments on  dialogue between Members, China invited those Members which had not yet 
submitted their subsidy notifications to have a dialogue on the specific difficulties they had.  
 
102.  In addition, as pointed out at previous meetings, it was not clear as to who could ju dge the 
appropriateness of the Member's answers  to Article 25.8 questions  and by which standard the 
request could remain on the agenda. Under such circumstances, the meeting agenda might be 
extended by request s for information one after another, which migh t result in the continued 
accumulation or even perpetuation of agenda items.  
 
103.  China reiterated the importance of transparency and invited all Members to do their best to 
fulfil their transparency obligations in accordance with th e Articles of the SCM Agree ment, in 
particular in submitting their notifications.  
 
104.  The European Union  expressed its support for the proposal and asked the US to clarify its 
intervention regarding the proposal to reply to Article 25.8 questions in the context of new 
notifications.  
 
105.  The United States  noted that although Article 25.9 did not require written responses, the 
Committee had decided that the questions and answers shall be in written form  in the context of 
reviewing the subsidy notifications. In this regard, the Committee had the authority to agree upon 
the submission of written replies to written questions under Article 25.8. This was a practical 
common sense approach to exchange of information. Regarding lack of any time -frame in G/SCM/M/99  
 
- 13 - 
 
  Article  25.9, the US recalled the language use d in Article 25.9 according to which the responding 
Member was to respond as quickly as possible. Providing answers for Article 25.8 questions after 
one or two years would not be as quickly as possible.  
 
106.  The US suggested that in the context of Article 25.8  questions, the Secretariat could 
determine whether an answer was complete or not. It recalled one suggestion made at previous 
meetings according to which a Member could provide answers to the outstanding questions under 
Article 25.8 in its next notificati on. The US supported that proposal provided that it was explicitly 
laid out in the notification that Article 25.8 questions were being answered.  
 
107.  Brazil  remained open to suggestions to improve transparency noting that its position had not 
changed. Establis hing strict time -frames would not contribute to completeness of the notifications. 
Members could entertain informal consultations with regard to any questions they might have. Any 
questions under Articles 25.8 or 25.9 should be taken up by the Committee.  
 
108.  Canada  expressed its support for the US proposal and noted that it was open to explore 
means of ensuring timely and substantive responses to questions as well as flexible and pragmatic 
solutions.  
 
109.  Chinese Taipei  reiterated its support for the proposal.  
 
110.  The Russian Federation  indicated  that the proposed time limits  might cause additional burden 
on Member s with complex state structures. In addition, Members would be guided by the need to 
meet strict deadlines at the expense of making the replies comprehensiv e. The US proposal on 
determining the time -frame through bilateral consultations might have certain drawbacks because 
additional administrative resources and timing would be required for those consultations. It was 
also unclear what would happen when the i nformal consultations failed to reach a mutually 
acceptable solution. All those concerns should be taken into account and it was ready for further 
discussion on the alternative proposals.  
 
111.  Cameroon  noted that it had been following the discussion with great  interest and there was 
interest in making some progress on the issue of transparency. The burden placed on some 
delegations on this issue and ability of states should be taken into account.  
 
112.  Japan  echoed support for the proposal and expressed its intentio n to participate in future 
discussions.  
 
113.  The United States  noted that it would take and consider all the comments made by Members 
to seek what could be done to address those concerns.  
 
114.  The Chair stated that it appeared that Members wished to continue discu ssions on th ese 
issues at the next regular meeting of the Committee.  
 
115.  The Committee took note  of all of the statements made.  
 
7  CREATION OF A WORKIN G GROUP ON IMPLEMENT ATION (G/SCM/W/567 -
G/SG/W/236 AND G/SCM /W/568 -G/SG/W/237) – ITEM REQUESTED BY BR AZIL  
116.  The Chair recalled that at the previous meeting of the Committee Brazil had raised the issue 
of the establishment of a Working Group on Implementation, and subsequently circulated its 
proposal, in documents G/SCM/W/567 and G/SCM/W/568.  
 
117.  At the April meeting of  the Committee, the then-Chair had suggested that the incoming Chair 
determine the next steps, including the option of holding informal consultation s. Accordingly, 
Members had had the chance to discuss th e proposal in an informal session held jointly with the 
Committee on Safeguards on 20 October 2016.  During that session, Brazil had  explained that its 
idea had been  to establish a Working Group to discuss issues of interest to Members in respect of 
the conduct of countervailing duty investigations and appli cation of such measures, in the same 
manner as was done in the Anti -dumping Working Group on Implementation. Brazil had also noted 
that this proposal should be seen as a step to improve the work of the Committee, as instructed by 
the Ministers in Nairobi, the previous  year. 
 G/SCM/M/99  
 
- 14 - 
 
  118.  The Chair recalled that at the informal session  Members  had expressed divergent views on 
Brazil's proposal.  Some Members  had indicated that they could consider creation of such a Working 
Group on the condition that the Group's scope be widened to cover implementation of the 
SCM Agreement as a whole, rather than being limited to a particular portion of it. Concern also had 
been expressed about how sufficient time could be allocated to such an activity during the Rules 
week.  Other Members  had indicated that the scope of the proposed Working Group should be 
limited to countervailing actions only as proposed by Brazil. Those delegations had noted that the 
discussions on subsidy notifications already taking place in the Committee were sufficie nt and that 
there were many important issues regarding countervailing actions which require focused 
discussion.  
 
119.  Referring to those discussions, the Chair noted that  there had been no real convergence of 
views on which to propose that the Committee t ook a concrete action on the proposal at the 
meeting.  
 
120.  Brazil  confirmed the Chair's statement and indicated that it had engaged with some Members 
in order to see whether there was a common ground for the proposal. The main target was not to 
sort all the problems  of the Committee out. The idea was simply to create a forum in which the 
investigating authorities would be able to engage in technical discussions. Members would be able 
to benefit from technical exchange among investigating authorities in order to corre ctly understand 
the disciplines of the SCM Agreement. Brazil was open to any suggestions that could make it 
possible to create a forum for the investigating authorities to exchange technical information.  
 
121.  The European Union  recalled its comments at the pre vious meetings of the Committee 
including the informal session held the previous week which had also been summarized by the 
Chair. There were various interpretations on what should be the scope of such a Working Group. It 
remained ready to discuss issues t hat would contribute t o better functioning of the 
SCM Agreement and the work of the Committee. The most urgent problem of the Committee was 
the lack of transparency and acknowledging it was only the first step. Solving it was the next step 
which required a  serious commitment by all Members. In that context, a Working Group on 
Implementation could be a useful forum to tackle the problem and the EU remained interested in 
such work.  
 
122.  Mexico  stated that it would be very useful to have such a forum and noted tha t it had already 
expressed its concerns. First, the time available during the Rules week was limited for such a 
forum due to the meetings of the Implementation Group on Anti -Dumping and the Technical 
Group. Mexico believed that the Technical Group meetings  were very important so it should not be 
taken out of the agenda. Second, the possibility of issuing recommendations could affect the 
development of discussions and the exchange of experiences. Rather than engaging in an honest 
discussion, the work could e volve to a negotiation debate based on national interests. Mexico was 
open to continue to discussions on the scope of the proposed Working Group.  
 
123.  China  recalled its previous statements on the importance of advancing the Rules Negotiations 
in various fora.  It was also very important to enhance the regular work of the Committee as 
decided by the Ministers in Nairobi. Therefore China supported Brazil's proposal to establish a 
Working Group on Implementation where Members could have the opportunity to exchange  their 
experiences on technical issues in the countervailing duty investigations. China did not believe that 
it was necessary to include the issue of notifications to the scope of the proposed Working Group 
because the completeness and timeliness of subsid y notifications could be addressed at the special 
and regular meetings of the Committee. Considering the limited time available for the Working 
Group meeting it was not applicable to include these items to the scope.  
 
124.  Canada  supported further consideratio n of the proposal as the information exchange was 
useful for promoting greater transparency and understanding each other's practices. However, 
Canada shared the concerns of other Members regarding the need for reflecting a balanced scope. 
Subsidy notificat ions were an essential aspect of transparency under the SCM Agreement and they 
should form a part of the agenda of any Working Group.  
 
125.  Chile expressed its concern regarding the time available for the work of the proposed Working 
Group on Implementation and  noted that it was open to continue for further discussions.  
 G/SCM/M/99  
 
- 15 - 
 
  126.  The Russian Federation  reiterated its support for the proposal and noted that the core 
objective of the Working Group should be to ensure substantial discussions among experts and to 
further cla rify existing legal provisions so that such an exercise would create neither additional 
obligations nor opportunities to deviate from the existing ones. The Group should contribute to 
common understanding of provisions of the Agreement by all Members and f rom that perspective, 
the proposal to discuss countervailing measures was comprehensible for all. CVD proceedings were 
complex and consisted of lots of technical details and the investigating authorities might 
understand the provisions of the Agreement gov erning those technical aspects differently. The 
added value in discussing the notification requirements, however, was not so obvious. If that issue 
was included to the scope of the Group, the discussions might drift away from discussing how to 
implement th e Agreement to discussion on whether the Agreement was implemented. Russia 
remained ready for further discussions on the proposal.  
 
127.  Costa Rica  expressed its support to Brazil's proposal.  
 
128.  India indicated that Brazil's proposal was to create a Working Group  on Implementation 
similar to the one under the Anti -Dumping Committee. India was open to considering the idea of 
setting up a similar mechanism to discuss the implementation issues. There were similarities 
between these two trade remedy instruments and sh aring of experiences between Members could 
be useful for all. India also noted that it could only agree if the discussions focused only on 
countervailing duty investigations and it would not support the discussions on notification related 
matters. The Comm ittee was already taking up the notification related issues and that could be 
seen from the length of discussions therein. Besides, it was not clear how notification related 
issues would be taken up in such a Group.  
 
129.  Hong Kong, China  recalled its statement s at both the joint informal session and Safeguards 
Committee and indicated that the proposal had taken into account the comments and concerns of 
most of the Members that had spoken at the April meeting of the Committee. Hong Kong, China 
would endorse the proposal if Members could agree on it. It hoped that concerns raised by some 
Members could be addressed through further consultations and compromise.  
 
130.  Referring to its statements at the Safeguard Committee and joint informal session, Australia  
expressed it s concerns over the proposal. Transparency was a vital element for the work of the 
Committee and there was no linkage between this proposal and the proposal made at the 
Safeguard Committee. Therefore Australia was looking at the proposal distinctly through  the prism 
of the SCM Committee. Australia was concerned that the proposal focused on developing 
recommendations and seeking coherence in practices adopted by Members. The priority should be 
to build confidence and encourage participation and sharing rathe r than seeking coherence in 
practices. In terms of CVD investigation practice, only a small number of Members had that 
experience; therefore the burden would fall on a few Members. Australia recalled the difficulties in 
identifying discussants in the Worki ng Group on Implementation of the Anti -Dumping Committee. 
The first step in a CVD investigation was to determine the existence of the subsidy which was 
obviously related to transparency on subsidies provided by Members. In this regard, any Working 
Group on  Implementation needed to look at transparency issues and the SCM Agreement as a 
whole.  
 
131.  The Republic of Korea  noted the significant gap between Members regarding the scope of the 
proposed Working Group on Implementation and stated that it supported all th e efforts for 
transparency. It encouraged Members who had different ideas to keep discussing bilaterally.  
 
132.  Chinese Taipei  expressed its reservations on the proposal. It first noted the limited time 
available and then echoed the fact that countervailing me asures were not frequently used by 
Members. Anti -dumping and countervailing duty investigations had some overlapping issues, with 
respect to injury determinations in particular, which had been discussed at the Working Group on 
Implementation  of the Anti -Dumping Committee. The lack of notifications was an outstanding 
issue for the Committee and needed to be addressed. Chinese Taipei was considering the value of 
creating a Working Group with the suggested mandate and remained open for further discussions.  
 
133.  The United States  indicated that its position had not changed since the previous meeting of 
the Committee. As discussed under a previous agenda item,  the continued poor compliance with 
the transparency obligations of the Agreement required urgent attention o f the Membership. The 
burden of the proposed group  would fall disproportionally on a small number of Members which G/SCM/M/99  
 
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  took countervailing duty actions. The US did not see a basis to engage in further discussions 
regarding the adoption of this proposal until t he nature and scope of responsibilities were 
addressed.  
 
134.  With respect to the concerns raised on time constraints, Brazil  stated that as long as Members 
could agree on the need to have technical discussions, a reasonable time slot could be arranged. 
Looking  for alternative ways to improve the work of the Committee should not be overlooked due 
to the time limitations. Brazil recognized that the lack of transparency was behind the suggestions 
for an expanded scope. However, as stated by China and India, timeli ness and completeness of 
the notifications was already dealt with under a separate agenda item. According to the proposed 
dynamic of the group, a Member might bring an issue or a problem to the attention of Members 
and explain how it solved it. It requeste d Members, who had raised the scope issue, to explain 
how Members could consider a transparency related issue under that proposed dynamic.  
 
135.  The United States  indicated that the selection of topics would be same with the selection of an 
investigation -relate d topic. Although lack of notifications had been discussed at the Committee 
Meetings, the US noted that it was looking for a different format, namely a dialogue between 
Members.  
 
136.  Brazil  agreed that in terms of transparency, a different format might be frui tful and asked 
Members whether it was possible to create a different format or dialogue under the agenda item 
related to timeliness and completeness of notifications and to leave CVD -related issues for the 
proposed working group.  
 
137.  Australia  recalled its co mment at the joint informal session regarding the Working Group on 
Subsidy Notifications which might be used in terms of improving transparency. With respect to the 
issue of recommendations it requested Brazil to explain whether it was considering having 
cohesion on practices of Members.  
 
138.  Brazil  questioned the reasons for expanding the scope of the proposed working group while 
there was already a separate agenda item and a Working Group specifically dealing with 
notification issues.  
 
139.  The Chair indicated th at the Committee was not ready to take action on the proposal as the 
positions had not changed since the joint informal session held previous week. He noted significant 
divergence of views among Members on the issue of scope, time constraints and the role on 
recommendations. He encouraged Members to continue to discuss the proposal among 
themselves.  
 
140.  The Committee took note  of the statements made.  
 
8  QUESTIONS TO CANADA PURSUANT TO ARTICLE 25.8 OF THE SCM AGRE EMENT 
(G/SCM/Q2/CAN/67) – ITEM REQUESTED BY BR AZIL  
141.  Brazil  stated that it had already explored its questions, which were related to the launch aid 
agreements and equity infusion programmes that Bombardier had benefited, with Canada on 
various occasions yet had failed to receive complete responses.  
 
142.  The Ca nadian Federal Government and the Government of Quebec had provided Bombardier 
with CAN$ 350 million and CAN$ 118 million, respectively, in launch aid for the development of the 
C-Series. Bombardier had obtained the launch aid from the Canadian Federal Gov ernment and the 
Government of Quebec rather than from the commercial market. Brazil requested Canada to 
explain whether the Canadian Federal Government and the Government of Quebec had provided 
taxpayer -funded aid to a private company due to the fact that the same amount of aid on the 
same terms had not been available from commercial sources.  
 
143.  Brazil noted that t he Canadian Federal Government and the Government of Quebec had made 
minor adjustments to the terms of the launch aid agreements with Bombardier and requested 
Canada to explain the nature of th ose minor adjustments . 
 
144.  Brazil requested Canada to explain whether t he Canadian Federal Government  had provide d 
funding or other support to Bombardier or any of  its suppliers for the C -Series through the G/SCM/M/99  
 
- 17 - 
 
  Strate gic Aerospace and Defence Initiative and Technology Partnerships Canada schemes, and 
disclose information on the amounts of funds provided and the terms and conditions.  
 
145.  In February 2016, Bombardier had received $1.5 billion from the Quebec's Caisse de Dép ôt et 
Placement du Québec (CDPQ) in exchange for an interest in Bombardier's transportation assets, 
which had been placed in a new company – Bombardier Transportation (BT Holdco). Under the 
applicable law, CDPQ was a mandatary of the Quebec government, who se property belonged to 
the Quebec Government and whose mission included contributing to Quebec's economic 
development. These funds would not be used by BT Holdco, which was the entity in which CDPQ 
had acquired an ownership interest. Rather, according to a press release, Bombardier intended to 
use the CDPQ funds for general corporate purposes. Brazil requested Canada to explain whether 
the Government of Canada knew how those funds had been used and whether they had been 
spent to support, directly or indire ctly, the C -Series programme of Bombardier.  
 
146.  In its press release regarding its agreement with CDPQ, Bombardier reported that "[a]fter a 
thorough review process, including an initial public offering and a competitive international auction 
process for the p rivate placement of a minority stake, the Board of Directors of Bombardier 
determined the transaction announced today, contemplating the sale of 30% of Bombardier 
Transportation to CDPQ, is the most attractive option."  Brazil understood that Bombardier had  
engaged in a competitive international auction process to identify funding available in the 
commercial market and instead of obtaining funding from the commercial market through this 
auction process, it agreed to an investment on more favourable terms off ered by CDPQ.  Brazil 
requested Canada to clarify why CDPQ had provided that investment on terms more favourable 
than available in the commercial market.  
 
147.  In October 2015, Bombardier had entered a memorandum of understanding with the 
Government of Qu ebec fo r the provision of a $1  billion equity  investment, with the proceeds used 
entirely for cash flow purposes of  the C -Series aircraft program.  Bombardier and the Government 
of Quebec had entered a definitive agreement for the equity investment on 23 June 2016 . The 
Government of Quebec had made a payment of $500 million on 30 June 2016 and had been  
scheduled to make a second  payment of $500 million on 1 September 2016. Brazil requested 
Canada to explain w hy the Government of Quebec , rather than commercial inves tors, was 
providing that  investment . 
 
148.  Bombardier's agreement with the Government of Quebec include d the issuance of warrants 
exercisable by the Government of Quebec to acquire up to 100 million shares of Bombardie r at an 
exercise price of $1.72 according t o which the Government of Quebec w ould provide up to $172 
million in additional funds to Bombardier. Brazil requested explanation whether the Government of 
Quebec  was required to exercise these warrants at the exercise price  and whether it was possible 
to exercise the warrants at a share price below the trigger price . 
 
149.  Brazil invited Canada to explain why it had not notified the CAN$ 468 million in launch aid 
subsidies, the $2.5 billion in Quebec subsidies, and other support to Bombardier for the C -Series t o 
the Committee under Article 25 of the SCM Agreement. It also noted that the Canadian Federal 
Government was considering making an additional equity infusion in the C -Series program of $1 
billion and requested Canada to clarify the status of that addition al support.  
 
150.  Brazil noted that Bombardier had succeeded in making sales to, for example, Air Canada in 
the Canadian market and Delta in the US market. It had also conceded that the pricing of these 
sales, together with sales to Air Baltic, would require it  to record a $500 million onerous contract 
charge. Bombardier claimed that this loss was normal for the early sales of a new aircraft. Brazil 
requested Canada to explain whether  Bombardier had taken similar charges in any of its previous 
aircraft programme s and why there had not been a similar charge in relation to all of the prior 
sales of the C -Series, including its sales to Lufthansa, the launch customer.  
 
151.  The Parliament of Canada ha d recently amended the Air Canada Public Participation Act to 
allow Air Canada greater flexibility as to where maintenance work was done. During testimony to 
the Senate Committee, Air Canada had  threatened to walk away from the C -Series purchase if the 
legislation had not been  passed. Referring to p ress reports  that indicated  Air Canada's purchase of 
the C -Series had been  contingent on the Parliament changing the legislation and on the 
Government of Quebec dropping a related lawsuit , Brazil requested Canada to explain what 
agreement or discussions had occurred between Air  Canad a, the Government of Canada and the G/SCM/M/99  
 
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  Government of Quebec in relation to the legislative amendments  and termination of the lawsuit. 
Brazil invited Canada also to explain whether the Canadian Federal Government or the 
Government of Quebec  had provide d any ot her commitments or any other incentives, including 
export finan cing, to Bombardier's customers.  
 
152.  Finally, Brazil quoted a statement made by the Premier of Quebec on 25 April 2016 in which 
he said "[i]f you ask Bombardier … they will acknowledge that it's b ecause we (the government) 
were there that this transaction happened". Brazil requested Canada to explain whether this was a 
public recognition that subsidies provided by the Government of Canada had distorted 
international competition in the aviation sect or and whether the Government of Quebec had 
provided any formal or informal guarantees or other commitments to customers of Bombardier 
regarding its investment.  
 
153.  The United States  indicated that it had long had concerns about Canadian federal and 
provincia l support for the development of C -Series aircraft many of which were reflected in Brazil's 
questions to Canada. The US was concerned about the recent reports regarding provincial and 
federal government funding to support Bombardier C -Series for two reason s. First the support was 
in addition to substantial previous support provided by the federal and provincial governments and 
did not appear that it had been contemplated when development of plane first began. This raised 
questions regarding commercial justi fication for further investment in C -Series and whether even 
more government funds might be needed in the future. Second, the support being provided 
appeared to be in the form of equity infusions which might further inflate the company and its 
management f rom leaning to respond to market and commercial pressures in future company 
decisions. The US appreciated the efforts of Canada in explaining the terms and conditions of the 
recently provided financing; however it also noted that many of the critical assum ptions remained 
proprietary  and therefore it was difficult to properly evaluate commercial basis for the decisions. It 
urged Canada to be as forthcoming as possible in describing the relevant assumptions justifying 
the recent support and in providing the t erms and conditions of the support thereby assuring 
Members that the new government support would not distort the market for commercial jet liners 
or otherwise contravene WTO rules.  
 
154.  Canada  indicated that the subsidies notification process including reques ts for information 
made under Article 25.8 was fundamental to achieve transparency. It was working on the 
responses diligently and would make every effort to provide a written response in a timely 
manner. Some of the questions raised by Brazil were regardi ng a sub -central entity and 
consultations with that jurisdiction had to take place in order to prepare the responses. Canada 
was a strong supporter of rules -based trade and fully committed to fulfilling its WTO obligations. In 
this respect, it took into ac count those obligations in considering any support. Canada would be 
open to discuss this matter with both Brazil and the US, bilaterally.  
 
155.  The Committee took note  of the questions and statements made.  
 
9  NON-NOTIFICATION BY CHIN A OF ALLEGED SUBSIDI ES CONTAIN ED IN THE 2014 
AND 2015 REQUESTS BY  THE UNITED STATES  UNDER ARTICLE 25.10 OF THE 
SCM AGREEMENT – ITEM REQUESTED BY TH E UNITED STATES  
156.  The United States  recalled that China ha d submitted only three subsidy notifications in fifteen 
years all of which had been  submitted well beyond the deadline for the periods covered and all had 
been grossly incomplete . For the first time in its fifteen -year-membership, China had recently 
provided a subsidy notification of its sub-central measures  which represented a very smal l fraction 
of the subsidy measures at the sub -central level . China's subsidy notifications suffered not only 
from significant under -reporting, but also from substantial over -reporting of programmes that 
could hardly be considered "subsidies" under the SCM Agreement, such as social -welfare 
programmes designed to alleviate poverty , promote employment , subsidies for HIV medication 
and preferential tax treatment for endangered animals . The inclusion of such programmes inflated 
artificially the number of program mes reported and did not represent a serious effort.  
 
157.  Following years of frustration, the US had begun to use the counter -notification procedure set 
out in Article 25.10.  Those counter -notifications, all of which had been translated, had included 
certain m easures supporting China's steel and aluminium industries . Although the US had made 
many of these points earlier, it was important to repeat a number of key observations regarding 
the subsidy measures included in its Article 25.10 requests.  G/SCM/M/99  
 
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  158.  First, a very high percentage of  the programmes in its Article 25.10  submission s were sub -
central in nature, supporting the long -standing US position that sub -central programmes were 
critically important in China, as the cost of those programmes was often shared between  the 
central and sub -central governments and actual implementation of central government industrial 
subsidy policies was often, if not normally, the responsibility of the sub -central governments  which 
seemed to have a degree of freedom to implement some pr ogrammes according to local 
conditions.  Sub-central governments m ight provide slightly different subsidies in the course of 
implementing  the central government programmes which could complicate the nature of any 
central -level programme. According to the US , such a sub -central measure was potentially a 
separate programme and needed to be sufficiently described when the central level programme 
was notified.  
 
159.  Second, the Committee previously had discussed the importance of China's five -year plans. 
China had re sponded that five -year plans and other industry plans did not establish subsidy 
programmes. Whether or not this was true in a narrow, technical sense, it was nevertheless clear 
that China's industrial plans established blueprints  under which actual subsidy  programmes were  
designed and  implemented. That was particularly clear with respect to the recently counter -
notified fishery subsidy measures. The US referred to the press reports mentioning that a legal 
measure had been issued by the Central Committee and  the State Council which called for 
clarifying all responsibilities for implementing the Thirteenth F ive-Year Plan and issuing binding 
objectives to local levels of government. In addition, the National Development and Reform 
Commission became responsible for tracking of the implementation of major projects which 
indicated that the Thirteenth Five -Year Plan was much more than a mirror blueprint.  
 
160.  Third, certain Chinese subsidy programmes were in effect for a short period, such as two 
years, and then were re placed by other measures. This underscored the importance of China 
notifying its subsidy programmes on a regular and timely basis. If this did not occur, many 
programmes would have come and gone  without any notification while the programmes were 
actually i n effect. The result was little, if any, meaningful transparency, contrary to the intention of 
Article 25.  
 
161.  Fourth, the US indicated that insisting on a complete and timely notification of China 's specific 
subsidy programmes had meaningful implications bey ond the necessary transparency obligations 
because some of the subsidy measures that the US had identified appeared to be prohibited export 
and import substitution subsidies.  
162.  Fifth, the fact that US compiled and analysed all of the info rmation included in  its 
Article  25.10 submissions, -all from public ly available Chinese government sources - cast doubt on 
China 's repeated claims that it lacked the ability to collect and report the same information, 
especially after more than 15 years of Membership. China w as the world 's largest exporter, and 
was verging on becoming the world 's largest economy; claims of capacity constraints were difficult 
to take seriously.  
163.  The US recalled that at previous meetings, China had provided some information orally on 
numerous pro grammes from the counter -notifications claiming that they had been notified in some 
manner. The US would be willing to review those very technical questions in a bilateral setting but 
China had refused to do so. The US had many questions as to the operatio n of subsidy 
programmes in China, specifically the interaction among dozens of legal measures of coming from 
a variety of government entities at both the central and sub -central levels of government all of 
which could relate to a single programme. China it self had admitted this in the context of its trade 
policy reviews.  
164.  The US noted that under Article 25.3 of the SCM Agreement the content of notifications 
should be sufficiently specific to enable Members to evaluate the trade effects and to understand 
the operation of the subsidy programmes. Although China had provided a helpful initial response 
to the counter -notifications, it fell far short of what was required. Such technical issues were better 
resolved bilaterally but unfortunately China seemed to be re luctant to engage in a serious bilateral 
conversation.  
165.  The US indicated that all of its counter -notifications had followed the same pattern. It first 
submitted questions under Article 25.8, often identifying specifically the underlying legal measure 
at issue. Under Article 25.9, a Member was obliged to respond "as quickly as possible and in a G/SCM/M/99  
 
- 20 - 
 
  comprehensive manner" to such requests. The US had resorted to the Article 25.10 counter -
notification mechanism only after a year  or more  had passed without any meani ngful response 
from China to its Article 25.8 questions.   
166.  The US recalled that its previous counter -notifications had covered important sectors for 
Members. Particularly noteworthy was steel in which China became the largest producer and 
exporter in the wo rld. The US indicated that China had recognized that over -capacity was a severe 
problem in the steel sector and that zombie companies could not go out of business, because they 
were too important to the local economy and were consequently kept alive by gov ernment 
support. China 's own Steel Trade Association had made this point and yet China had not notified a 
single steel subsidy measure. It was clear, not only from China 's Steel Trade Association, but also 
from previous steel -related legal measures, that t he Government of China was very much involved 
in China 's steel industry. For example, the central government 's Steel Industry Adjustment and 
Revitalization Plan of 2009 issued by the State Council, which was the highest executive organ of 
state power, stat ed that special funds would be available for the investment in capital construction 
within the central budget, and loans for supporting the technical reconstruction of steel 
enterprises.  
167.  The US also recalled that it had counter -notified a similar measure f rom 2009 for the non -
ferrous industries which included aluminium. Despite the specificity of those measures , China often 
indicated that such planning documents did not establish support programmes. However, even the 
steel and aluminium companies themselves  stated that they had received significant subsidies 
from the government. Although  not all those support measures listed in the financial statements of 
the steel and aluminium companies in China met the technical definition of a specific subsidy under 
the SCM Agreement, many of them did and none had been notified. It appeared that China 's 
position was that it did not subsidize those  industries although the legal measures that had been 
counter -notified and the financial statements of the companies in these t wo industries indicated 
the opposite.  
168.  The US recognized that it was every Member's right to decide the degree of government 
intervention in its economy. Every Member also had agreed that its subsidies were subject to WTO 
rules and to the transparency oblig ations that were central to the proper functioning of the 
Agreement. It had been unfortunate that the US had repeated ly had to resort to the 
counter -notification mechanism. The US did so reluctantly but China 's latest subsidy notification 
demonstrated that  hundreds of measures were not being notified by China.  
 
169.  The US reiterated its willingness to meet bilaterally to discuss the specifics of the measures in 
its Article 25.10 submissions and urged China to abide fully by its subsidy notification obligations 
under the SCM Agreement. The US  was ready to work with China to take concrete steps to move 
rapidly forward towards a subsidy notification that would present the full picture of its subsidy 
regime in a clear and transparent manner.  
170.  China  noted that it att ached great importance to transp arency obligation under the 
SCM Agreement and had submitted its updated subsidy notifications at both the central and sub -
central levels in 2015 and July 2016, respectively. It took other Members' requests for information, 
including the counter -notifications, seriously and indicated that various US submissions had 
overlapping content and included quite a number of policies which had been already notified by 
China. It once again called on the US to carefully study other Member s' notification before raising 
any requests and noted that it had done its utmost to verify and clarify the items in the US 
submissions  for the sake of transparency. China also noted that the US should and could have 
found the information it had sought in China's subsidy notifications at the central and sub -central 
government levels.  
 
171.  Regarding the US submission in G/SCM/Q2/CHN/42 , in the section of actionable subsidies in 
Part I concerning green technology subsidies, Item 20, i.e. Provisional Measures for  Administration 
of Land Use for Engineering Construction and Environmental Protection of Wind Electricity Field and 
Item 28, i.e. Notice of Several Opinions on Further Promoting Wind Power Development, did not 
have any content involving subsidies. The same  applied to Item 1 in the section of other relevant 
measures in Part I, i.e. Circular of the National Development and Reform Commission on Printing 
and Distributing Catalogue for the Guidance of the Industrial Development of Renewable Energy. 
Item 5 in thi s section, i.e. Eleventh Five Year Plan for Renewable Energy 2008, did not have any 
content involving subsidy and the document became invalid.  G/SCM/M/99  
 
- 21 - 
 
  172.  Item 1 in the section of actionable subsidies in Part IV, i.e. Guiding Opinions on Share -Trading 
Reform of Listed  Companies  and Notice on Issues Concerning the Administration of the Stock Right 
of State -Owned Shares in the Share -Trading Reform of Listed Companies did not involve any 
taxation related content.  
 
173.  With respect to the US submission in G/SCM/Q2/CHN/51, Item  1, i.e. Iron and Steel Industry 
Development Policy ; Item 2, i.e.  Iron and Steel Industry Adjustment and Revitalization Plan ; Item 
16, i.e. Textile Industry Adjustment and Revitalization Plan ; and Item 19,  i.e. Shipbuilding 
Industry Adjustment and Revitali zation Plan  did not involve any specific subsidy to relevant 
industries.  
 
174.  Regarding the US submission in G/SCM/Q2/CHN/53, China noted that some items had already 
been included in China's notification. For example, Item 1, i.e. State Council Decision on 
Accelerating the Cultivation and Development of Strategic Emerging Industries and Item 3 , i.e. 
Interim Measure on the Administration of the Strategic Emerging Industries Development Special 
Fund had been notified as Programme 81 in China's notification. The s upport measures for new 
energy alternatives in Item 50 , i.e. 12th Five-Year Plan on Energy -Saving and New Energy 
Automotive Industry Development (2012 -2020) had been notified as Programme 22 in the 
notification.  
 
175.  Other items in that submission did not inc lude subsidy policies. For example , Item 7, Jiangxi 
Province Interim Measure on the Administration of the Strategic Emerging Industries Investment 
Guidance Fund was operated in a market oriented way and did not involve any subsidy. Many 
items were in guidi ng nature such as plans and catalogues which did not involve specific tax 
preferences or financial support policies. Examples included Item 22, Heilongjiang Province 12th 
Five-Year Plan on Strategic Emerging Industries Development; Item 26, Hunan Province Catalogue 
on the Guidance of Strategic Emerging Industries Key Crucial Generic Technology Development, 
Item 27, Sichuan Province Economic and Informatization Commission Catalogue on the Guidance 
of Strategic Emerging Industries Development (2011); Item 28,  Sichuan Province Catalogue on 
the Guidance of Strategic Emerging Industries (Products) Development (2014); Item 29, Zhejiang 
Province Catalogue on the Guidance of Strategic Emerging Industries  Development (2011); 
Item 32, 12th Five-Year Plan on National S trategic Emerging Industries Development; Item 33, 
12th Five-Year Plan on Energy -Saving and Environmental Protec tion Industry Development; 
Item 34, 12th Five-Year Plan on Renewable Energy Development; Item 35, 12th Five-Year Plan on 
Environmental Protectio n Equipment; Item 38, 12th Five-Year Plan on Internet Industry 
Development; Item 39, 12th Five-Year Plan on Electronic Information Manufacturing Industry 
Development; Item 41, 12th Five-Year Plan on Internet of Things Development; Item 42, 12th Five-
Year P lan on Integrated Circuit Industry Development; Item 43, 12th Five-Year Plan on 
Telecommunications Industry Development; Item 44, 12th Five-Year Plan on Software and 
Information Technology Services Industry Development; Item 47, 12th Five-Year Plan on High -end 
Equipment Manufacturing Industry Development; Item 48, 12th Five-Year Plan on New Materials 
Industry Development; Item 57, Jiangsu Province 12th Five-Year Plan on the Cultivation and 
Development of Strategic Emerging Industries; and Item 60, Sichuan P rovince 12th Five-Year Plan 
on Strategic Emerging Industries Development.  
 
176.  China noted that the US had repeated its statement made at the previous meetings although 
China had already provided responses for most of the points raised. With respect to the iss ue of 
over-reporting and under -reporting, it was up to Members to decide which programmes to notify 
based on their understanding of the  definition of subsidy as well as the specificity as required by 
the SCM Agreement.  
 
177.  Regarding the relationship between c entral and sub -central subsidy schemes, China recalled 
its statement made at the regular meeting of the Committee in October 2015 and noted that its 
position had not changed. China also reiterated that the five -year plans had guiding nature only 
and did no t include any specific support policies or subsidy p rogrammes as defined by the 
SCM Agreement. According to China, the SCM Committee was not the proper forum to discuss the 
prohibited subsidies; Members had other fora in the WTO to approach those issues.  
 
178.  China recalled the US' comments that the notification did not include much detail for some of 
the programmes for which only the concrete information might have been provided. The level of 
details provided in other Members' notifications was not the same ei ther. China, therefore invited 
the US to submit written questions for technical issues. China referred to its statement about the G/SCM/M/99  
 
- 22 - 
 
  timeliness and the completeness of the notifications and underlined the distinction between other 
types of requests for inform ation and the written Q&A proc ess under Article 25 of the 
SCM Agreement. China stood ready to answer any questions put forward by Members.  
 
179.  There were mainly three types of policies related to steel and iron industry in China. The first 
type was aiming at encouraging environmental protection and conservation of resources. The 
second type was in support of technological research and development as well as innovation. The 
third type intended to promote structural adjustment of enterprises. None of those polic ies were 
specific for the steel and iron industry.  
 
180.  The United States  thanked China for its detailed statement and stated that it would examine 
the responses provided. The US had counter -notified over 400 legal measures and it was not 
conducive to take up  that issue at the Committee meeting. Therefore, the US had repeatedly 
asked China to engage in bilateral conversations which had been refused to date, unfortunately. 
The US was ready to sit down and look at all those technical questions and go measure by 
measure.  
 
181.  As an example of over -reporting, in its latest notification, China had notified a programme 
involving the preferential tax treatment for endangered animals for which it was hard to see where 
the subsidy was. Regarding the discussion on whether th e five -year plans were blueprints or not, 
the US recalled the recent opinion issued by the Central Committee and State Council the title of 
which was "Opinions for Establishing and Perfecting Implementing Mechanism for the National 13th 
Five-Year Plan". Ac cording to the press reports, under that legal measure there would be binding 
objectives that would be imposed upon local governments. In addition, the National Development 
and Reform Commission became responsible for tracking the implementation of major p rojects.  
 
182.  With respect to various measures that included catalogues, the US agreed that those were not 
subsidy programmes per se, but it was more likely for a company to get a grant for a particular 
piece of equipment if that equipment was listed in those  catalogues. That point had also been 
made during China's TPR. China had admitted that there had been no steel -specific subsidy 
provided in China which was difficult to accept.  
 
183.  China  reiterated that it would welcome any written follow -up questions with re gard to its 
notifications and invited the US to submit written questions, including for the programme on 
endangered animals. The Committee was already very busy with reviewing notifications of 
subsidies as well as national legislations and had specific ter ms of reference as agreed by 
Members. China would keep the Committee informed of any further comments and response to the 
US submissions under that agenda item. It invited the US to carefully study its notification and 
submit written questions bearing in m ind China's position on the nature of plans and opinions.  
 
184.  The Committee took note  of the statements made.  
 
10  NON-NOTIFICATION BY CHIN A OF ALLEGED SUBSIDI ES CONTAINED IN THE 2016 
REQUEST BY THE UNITE D STATES UNDER ARTIC LE 25.10 OF THE SCM AGREEMENT – 
ITEM RE QUESTED BY THE UNITE D STATES  
185.  The United States  recalled that in  China's TPR, in May 2014, the Secretariat had included 
information that it had uncovered on 30 support programmes for China's fisheries sector.  The 
Secretariat's Report had noted that China h ad not notified any of these programmes to th e 
Committee and further that China  could not provide any further information to the  Secretariat  at 
that time . During the TPR meetings China had responded to Members' questions by stating that it 
needed more time  to identify and verify information regarding th ose support programmes.  Two 
years later nothing had been  provided with respect to th ose programmes and the US was  still 
waiting for answers to questions in China's 2016 TPR.  
 
186.  Beginning with the support progra mmes uncovered by the Secretariat in China's  2014 TPR 
report, the US had performed further research and uncovered information on additional support 
programmes appeared to benefit China's fisheries sector . The US had submitted questions to China 
under Artic le 25.8 with respect to the support measures found by the Secretariat in addition to 
programmes that the US had uncovered independently. China had never responded to those 
questions despite its obligations under Article 25.9.  
 G/SCM/M/99  
 
- 23 - 
 
  187.  The dire state of the world's  fisheries had led to calls for greater disciplines on fisheries 
subsidies that contribute d to overfishing and overcapacity , beyond the obligations of all Members 
to notify their subsidy programmes under Article 25 of the SCM Agreement.  While reaching an 
agreement on such disciplines had been difficult, countries had recognised that an initial step 
should be greater transparency with respect to the existing fisheries subsidy program mes. For 
example, in August 2014, at the 4th APEC Ocean Related Ministerial Meeting, APEC Ministers had 
agreed to the Xiamen Declaration. Paragraph 21 of this Declaration stated: "In light of the Rio+20 
outcome document, particularly paragraph 173, we encourage APEC members to further improve 
the transparency and reporting of exis ting fisheries subsidies programmes through the WTO, and 
to eliminate subsidies that contribute to overcapacity and over -fishing, and to refrain from 
introducing new such subsidies, without prejudice to the WTO Doha negotiations."   
 
188.  Given the lack of any m eaningful response from China to its Article 25.8 request, the US had 
filed its fourth Article 25.10 submission counter -notifying over 40 fisheries subsidy measures in 
China in April 2016. Overall the US had counter -notified nearly 400 subsidy measures in China. As 
it had done in previous Article 25.10 submissions involving Chinese measures, this Article 25.10 
submission was based entirely on programmes previously identified in its Article 25.8 request to 
China that had been submitted in April 2015 and had never been answered by China. Although not 
required by the Agreement it had translated nearly 300 pages of all the relevant Chinese legal 
measures, an obligation China had, under its Protocol of Accession that, it had not adhered to with 
respect to the mea sures in question. The US had resorted to the Article 25.10 counter -notification 
mechanism only after a year had passed without any meaningful response from China and any 
time or any timeframe as to when a response might be forthcoming despite China's clea r 
obligation under Article 25.9.  
 
189.  The number and variety of programme s in the US  Article 25.10  submission on China's 
fisher ies support programmes was quite noteworthy.  The list included  a multitude of measures for 
fishing ves sel acquisition and renovation;  a 100% corporate income tax exemption; grants for new 
fishing equipment ; subsidies for insurance ; subsidized loans for processing facilities ; fuel 
subsidies ; preferential provision of water, electricity and land ; grants to explore new offshore 
fishing gro unds; grants for establishing famous brands ; and special funds for strategic emerging 
industries in the marine economy.  Perhaps the most important ones were the support programmes 
China had in place for its distant water fleets. The particulars of these pr ogram mes appeared to be 
implemented mostly by the provinces. Members should read these measures and reach their own 
conclusions, but the US thought it would be instructive to highlight three measures in particular.  
 
190.  The first legal measure was in Annex 8 on page 60 of the submission in which the province 
stated that, it would, "implement the hundreds of thousands of fishing vessels upgrading and 
reconstruction project, by 2020 ; complete the upgrading and reconstruction of 100 distant water 
fishing vessels,  reconstructing 1000 domestic fishing vessels for equipment modernization and 
reconstructing 10,000 wooden fishing vessels with fibre glass material. "  
 
191.  The second legal measure could be found in Annex 5 on page 39 of the submission, in which 
the relevant province stated, "by the end of the 12th five-year period, the province [was] planning 
to have 400 distant water fishing vessels with the fishing output at 280,000 tonnes".  
192.  The third legal measure was in Annex 13 on pages 90 -92 in which the relevant provi nce 
states that it would "strive to increase the scale of distant water fishing vessels in the entire 
province to 700 vessels, by 2017, with distant water capture of 600,000 tonnes and output value 
of 8 billion yuan, as well as cultivating 10 leading enter prises in the distant water fishing industry 
with output value of more than 100 million yuan and establishing 15 domestic and international 
distant water fishing industrial bases. " In the same measure, the province stated that it would 
"strengthen the basi c skills and officer training for crew members in the distant water fishing 
industry with the support of the Xiamen Ocean Vocational College, provincial marine technical 
schools and other top -level training institutes for crew -members in the fishing indust ry. 1000 
officers in the distant water fishing industry and 3000 crew members in the distant water fishing 
industry shall be trained annually. " 
193.  The US noted that all of the big producers such as the US, the EU, Japan, Korea, Australia, 
Brazil, and India ha d fishery subsidies , and that  they all notified them. The SCM Agreement 
allowed Members to provide nearly every type of subsidy and for whatever reason, fish products 
had not been a common source of trade friction. The US did not understand  China's relucta nce to G/SCM/M/99  
 
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  notify its programmes.  In total, the US had counter -notified 44 fishery subsidy measures many of 
which had been first raised in the context of China's TPR in 2014 and later in Article 25.8 questions 
submitted to China. In response, at the previous m eeting China had noted that one measure was a 
commercial agreement, one measure was not specific and two programmes had been notified. 
Accepting these statements as true there still remained 40 measures that had not been notified. 
The US requested China to  explain when these measures would be notified. Given the rapid 
depletion of the world's fisheries, the US again requested China to join those seeking a solution , 
which  could start with Members putting all of their programmes on the table for all Members t o 
see. 
 
194.  China  noted that the US statement was referring to China's 2014 TPR report and indicated 
that the information should be updated according to the latest TPR concluded in July 2016. It 
reiterated that some of the programmes mentioned in the US docume nt had been already notified 
by China. For example Item No. 35 in the submission, Public Notice  on Issues Concerning  
Implementation of  Preferential Enterprise Income Tax for Agriculture, Forestry, Animal Hus bandry 
and Fishery Projects  had been listed as Pr ogramme No. 42 in China's latest notification of subsidy 
at central government level.  Item No. 42, the Ministry of Agriculture 's 2014 Guiding Opinions on 
the Implementation of Subsidies for Purchasing Agricultural Equipment had been included in 
China's lat est subsidy notification as Programme No. 47.   
195.  China had never intended to challenge Members' rights to submit requests for information but 
emphasized the importance of studying already submitted notifications carefully before raising 
relevant questions. I t invited Members to avoid counter -notifying already notified items to reduce 
the burden of unnecessary and repeated verifications and clarifications. It had continued to verify 
the relevant content of document G/SCM/Q2/CHN/59 and would make some clarifica tions at the 
meeting.  
196.  Some items had already been notified by China such as Items No.30 and 31 regarding 
fishermen switching to other types of production and work, which could be found in Programme 
No.55 of China's notification. Items No.36 and 37 regardin g the support provided to leading 
enterprises engaging in the processing of agricultural products and duty free importation of 
equipment for self -use had been notified as Programme No.84 in China's notification. The policy 
regarding tax preferences for the  purchases of environmental -friendly, energy -saving and water -
conserving equipment had been notified as Programme No.14. The US submission also included 
some items which were guiding in nature such as plans and opinions which did not involve any 
specific s ubsidy. Examples included Item No.1 - Ministry of Agriculture Opinions on Promoting 
Sustainable and Healthy Development of Distant Marine Fishery Industry; Item No.2 - State 
Council Opinions on Promoting Sustainable and Healthy Development of Distant Marin e Fishery 
Industry; and Item No.3 - Guangdong Province Opinions on Upgrading Marine Fishery Industry, 
Guangdong Province . In the context of Items 36 and 37, which were about support policies for 
leading enterprises, no tax preferences had been provided to those which obtained famous brands. 
These were the verification results that China had collected from the relevant departments so far. 
China would keep the Committee updated on any further comments and responses.  
197.  The United States  indicated that it would examine those particular issues and reiterated that it 
was more appropriate to take up such technical discussions bilaterally. It was ready to sit down 
with China and go measure by measure to review the points made. The US also noted that it had 
not heard anything about many of the distant water fishery subsidy programmes which were of 
great concern to the US as well as to presumably other Members.  
198.  The Committee took note  of the statements made.  
 
11  ELIMINATION OF EXPOR T SUBSIDIES FOR TEXT ILES AND APPAREL BY INDIA 
PURSUANT TO ARTICLE 27.5 OF THE SCM AGRE EMENT – ITEM REQUESTED BY TH E 
UNITED STATES  
199.  The United States  recalled its view, based on the Secretariat's calculations, that the Indian 
textile and apparel sector had reached export competitiveness no later th an 2007. Therefore, India 
had had an obligation – at least since 2007 – to gradually phase out export subsidies provided to 
numerous products in the textile and apparel sector, meaning that the eight year phase -out period 
had ended. While India's recently released Foreign Trade Policy for 2015 -2020 recognized the need G/SCM/M/99  
 
- 25 - 
 
  to terminate certain programmes, unfortunately it did not establish any procedural framework for 
doing so and appeared to target 2018 as the operative date for termination. It was unfortunate 
that India was instituting new subsidy programmes rather than taking steps to eliminate export 
contingent subsidies. In November 2015 India had introduced a programme providing 3% interest 
subsidy for exporters across a large range of sectors includi ng tex tiles. In addition, on 
22 September 2016, it had expanded the scope of an export contingent programme, the 
Merchandise Exports from India Scheme, to include additional textile products. Under the 
programme, exports of listed products became eligible for cr edit that could be transferred or used 
to offset taxes.  This appeared to be a significant step backward for India in meeting its obligations 
under the SCM Agreement . 
 
200.  The US noted that the recent Annex VII calculation update issued by the Secretariat 
sugge sted that India was expected to reach the per capita GNP threshold the following year and 
urged India to eliminate those export subsidies which benefited the textiles and apparel industries. 
It had made clear to India that it welcome d further dialogue on t hese issues in the context of their 
continued bilateral engagement. Unfortunately, it had not been possible to schedule these 
discussions among  knowledgeable government officials. The US remained open to  a substantive 
discussion of the issue noting that it s patience worn thin.  
 
201.  India stated that it was committed to meeting its obligations under the SCM Agreement in 
time, and to engage constructively in the clarification of the obligations under Articles 27.5 and 
27.6, i n particular the definition of product , the coverage of tariff lines, where and when export 
competitiveness was reached and when the eight year phase -out period would begin. India 
considered that since the information on export competitiveness had been  provided in 2010, 
pursuant to Article  27.6(b), India would have to phase out the export subsidies after 2018. As 
mentioned by the US on the Merchandise Exports from India Scheme, many of the schemes were 
in the nature of remission or refund of duties on inputs used in exported goods, which were n ot 
export subsid y schemes and some of which had been discontinued. A number of them had been 
removed from and/or rationalised in the Foreign Trade Policy of 2015 -2020. Further, while the 
government had not set out any procedures regarding domestic content requirement s, 
domestically manufactured goods were entitled to apply for subsidies, as per the SCM Agreement. 
India renewed its commitment to meet bilaterally with the US.  
 
202.  The Committee took note  of the statements made.  
 
12  ENHANCING FISHERIES SUBSIDIES TRA NSPARENCY – ITEM REQUESTED BY TH E 
UNITED STATES  
203.  The United States  indicated that it had requested this agenda item to discuss again ways of 
improving and enhancing the transparency of fisheries subsides which could have a significant 
environmental, economi c and social impact and required special attention. The world 's fisheries 
resources were declining and in certain cases at risk of collapse, with nearly 30% of all global 
stocks had been classified as being overfished by the FAO in 2014. There was diminish ing room for 
growth in catches through increased fishing effort, with 61% of global stocks had been classified 
as being fully fished. Despite the state of global stocks, governments were spending billions of 
dollars on harmful fisheries subsidies which con tinued to be a major contributing factor to the 
worsening situation. Ultimately there was need to develop ambitious and effective disciplines on 
fisheries subsidies which was no small task.  
204.  The US raised that issue to see what could be done to realistical ly and practically move 
forward. Given that global fisheries were rapidly being depleted, there was a need to take action. 
The US recalled that it was working closely with a group of countri es including Australia, 
New Zealand and Peru in APEC, with an effo rt to develop stronger reporting and notification 
requirements for fisheries subsidies. In 2015 , the US and New Zealand had proposed to establish 
fisheries assistance reporting mechanism in APEC under which  the APEC economies would report 
the information r equired under Article 25.3 of the Subsidies Agreement and to the extent possible, 
additional information including the legal authority for the program, catch -data by species in the 
relevant fishery, status of fish stocks in the relevant fishery, fleet harv esting capacity in the 
relevant fishery, conservation and management measures in place for the relevant fish stock and 
total imports and exports by species.  G/SCM/M/99  
 
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  205.  The US brought that work to the attention of the Committee, given its relevance to its 
responsibil ities. Many of the concepts discussed in APEC had carried forward ideas that had been 
raised before and during the Nairobi Ministerial Conference. The US believed that the Committee 
could play an important role in enhancing the transparency of fisheries su bsidies and expected to 
discuss and explore actions that the Committee could undertake to help achieving that objective.  
206.  The US noted that despite the requirement in Article 25 of the SCM Agreement to notify 
specific subsidies, unfortunately all too often  Members, including the ones with substantial fishing 
fleets and subsidy programmes , did not notify their programmes. The US recognized that this 
issue needed to be addressed generally, but also specifically with respect to fisheries subsidies 
programmes a nd expected to explore ways that the Committee could do more to bring about 
better compliance with the existing notification requirements. The US invited Members to initiate a 
dialogue on steps the Committee could take to enhance the information they provi ded in their 
fisheries subsidies notification, for example by including supplemental information in the 
notifications of the sort that had been included in the APEC proposal. Such information would build 
on and complement the existing notification requirem ents of Article 25 of the SCM Agreement.  
207.  The US indicated that the goal of Members should be to ensure that their notifications 
provided greater transparency that was unique to fishery subsidies programmes and allowed 
better understanding of the operation of the notified programmes. The US was open to other ideas  
and expected to hear from Members which had indicated that they needed to consult their capitals 
at the previous meeting.  
208.   Australia  joined the US indicating that transparency was a vital element and noted the 
current status of the global fisheries resources. It recalled its proposal on the transparency 
obligations and stated that it would be pleased to continue to discuss the issue at the Committee. 
It was also open to explore what additional info rmation could be included to the existing 
notification format. APEC exercises were valuable because it was looking at the compendium of 
fisheries subsidies programmes and the Committee could take an important role in developing the 
notification format.  
209.  Brazil agreed that the Committee could explore ways to improve the notifications that all 
Members had to make under A rticle 25 of the SCM Agreement and noted that f isheries subsidies 
deserved careful attention . Brazil remained open and interested in participa ting in any initiative 
that could contribute to a more transparent and a more effective way of notifying subsidies in 
fisheries sector. It also requested the US to explain whether it was following a separate track for 
alternatives or modifications in the n otification of fisheries subsidies from the one  related to 
timeliness and completeness of notifications.  
210.  According to China , transparency in fisheries subsidies were about two distinct but linked 
issues. While the first one was about improving the implemen tation of current disciplines under the 
SCM Agreement, the second one was about enhancing compliance with the notification 
requirements through the ongoing fisheries subsidies negotiations under the Doha Mandate. China 
reiterated its willingness to engage in multilateral fisheries negotiations and noted that it would 
discuss the future disciplines on the fisheries subsidies notification as long as the difference in 
capacities between developed and developing Members were taken into account. For example, 
stock assessment was both time and resource consuming and there should be special and 
differential treatment on the notification requirement for developing countries in addition to a 
transition period. China expressed its desire to discuss the transparency is sue in fisheries subsidies 
negotiations within the Working Group on Rules and invited all Members to fully engage in the 
discussion of other issues in this group, such as anti -dumping, which, in China's point of view, 
would contribute to the successful con clusion of the negotiations on fisheries subsidies.  
 
211.  Panama  stated that fisheries subsidies created an excess production and over -exploitation of 
marine resources and distorted the competitive advantages significantly. Panama was concerned 
with the lack of  compliance with notification requirements and noted that the disciplines related to 
transparency should be reinforced to be more precise, practical and viable. This could allow 
Members, which were currently providing subsidies, to notify specific details of their programmes. 
Such information would allow Members to understand the magnitude and impact of those subsidies 
and contribute discussions for the elimination and prohibition of fisheries subsidies which led to 
over-exploitation, as targeted in point 1 4.6 of the Sustainable Development Goals . 
 G/SCM/M/99  
 
- 27 - 
 
  212.  India recalled that the issue of transparency and enhancing notification requirements for 
fisheries subsidies had been a part of the negotiations under the Rules Negotiating Group before 
Nairobi. It supported the transparency -plus outcomes in fisheries but noted that special and 
differential treatment had to be respected as mandated in several Ministerial Declarations.  
 
213.  India reiterated that the problem was the lack of political will to notify and adding  more 
details to the existing format would not prompt new notifications. India had been notifying its 
fisheries subsidies and invited other Members to adhere to their WTO obligations before seeking to 
expand them. Regarding the US proposal and previous proposals by t he European Union and 
Australia prior to  Nairobi, India noted that additional information request s could be very resource 
intensive and onerous for developing countries.  
214.  Peru indicated that transparency was extremely relevant as it would lead to establishm ent of 
stronger disciplines which would allow the elimination of fisheries subsidies. As Peru explained 
previously, both the transparency and disciplines had to be interlinked. Members had divergent 
opinions on the issue; while some of them were favouring transparency, some others thought it 
was an excessive burden. Peru was interested in exchanging different views to see what categories 
should be included and what categories would imply excessive burden. Peru referred to the draft 
decision on fisheries sub sidies that it proposed in October 20157 and recalled that it had suggested 
some measures that would lead to better control and the prohibition of certain forms of fisheries 
subsidies. For example, in that document, Peru had included a suggestion to provid e information 
on fuel subsidies that might have an impact on fisheries and status of the fish stocks in the fishery.  
 
215.  Canada  agreed that improved transparency on fisheries subsidies was an important step in 
taking action to address world's fisheries. It su pported further discussion on the proposal for 
enhanced transparency in fisheries subsidies including the incorporation of more comprehensive 
notification format to better understand the impact of the related subsidies.  
 
216.  Switzerland  expressed its interest and noted that transparency was fundamental for the 
multilateral trading system. It was dedicated for great level of transparency in all WTO areas 
including the fisheries subsidies and was looking forward for further discussions.  
 
217.  The European Union  recall ed its previous comments at the April 2016 meeting of the 
Committee and reiterated that it attached great importance to Members' compliance with the 
transparency obligations under the SCM Agreement. Transparency was important across all sectors 
and all sub sidies granted including fisheries sector. Increased transparency obligation was an 
important element of the fisheries subsidies proposal circulated by the EU in the context of Rules 
Negotiating Group, the week before.  
 
218.  Norway  indicated that it would suppo rt any initiative for greater transparency in fisheries 
sector.  
 
219.  Chile stated that transparency in fisheries subsidies was extremely important and wished to 
carry on working on the proposal.  
 
220.  New Zealand  recalled its support for the US initiative at the pr evious Committee meeting and 
noted that the WTO had made some progress on improving fisheries subsidies transparency 
through the notifications and questions and answers under the SCM Committee as well as the 
questions and answers in the Trade Policy Review s. This was an issue that could be and indeed 
was progressed outside the Rules Negotiating Group. There had been many reasons for lack of 
transparency, such as capacity limits, but the proposal would be useful to identify what 
information could be included  by Members in their notifications. New Zealand would be supportive 
of having a discussion within the Committee.  
 
221.  Japan  understood that enhancing transparency in fisheries subsidies would contribute to 
tackling subsidies which had negative effects on fish stocks through overfishing as well as 
subsidies provided to IUU fishing vessels. Careful examination was necessary as to which 
additional elements should be notified and, in this regard, Japan wished to play a role in an open 
and constructive manner.  
 
                                                
7 TN/RL/W/264, dated 21 October 2015.  G/SCM/M/99  
 
- 28 - 
 
  222.  The United States  agreed with Japan regarding careful examination of the elements that 
needed to be notified and was taking into account the points mentioned by Peru. In response to 
Brazil's question, the US explained that it would seek a separate track largel y devoted to fisheries 
subsidies. It thanked all Members for their support and indicated that it would engage in bilateral 
discussions with other Members which were less supportive.  
 
223.  Brazil  indicated that it remained open to engage bilaterally with the US.  
 
224.  The Committee took note  of the statements made.  
 
13  SUBSIDIES AND OVERCA PACITY: FOLLOW UP FR OM THE G20 PROCESS – ITEM 
REQUESTED BY THE EUR OPEAN UNION, JAPAN, MEXICO AND THE UNITE D STATES 
(G/SCM/W/569)  
225.  The European Union  highlight ed the positive outcomes of China's recent G20 Presidency  
indicating that the G20 play ed an important role on global matters, including trade and economics . 
As a characteristic of the G20 process , the issues, the importance of which reach ed well beyond 
the immediate circle of G20 mem bers, were raised and addressed . One example of that was the 
relationship between subsidies and overcapacity, placed on the agenda by the four co -sponsors; 
the EU, Japan, Mexico , and the US.  
 
226.  Although the issue of overcapacity was a highly complex one – resulting from a number of 
factors, and to be addressed in a number of fora – it was an inescapable fact that certain types of 
subsides play ed a significant role. G20 leaders in Hangzhou explicitly  had recognized th at, and 
called for collective action which could  – and should – take place in a number of different settings 
– including multilaterally and bilaterally.  
 
227.  One such multilateral avenue  was the WTO, including the SCM Committee.  Under this agenda 
item, the  objective was to stimulate a discussion among Members on the issue, including the role 
of subsidies. In order to facilitate that discussion, the submission of the co -sponsors suggest ed 
three questions.  
 
228.  The EU noted that it was widely recognized that the global markets for certain goods, 
particularly industrial metals, were seriously affected by production overcapacity. In certain 
economic sectors, most notably, but not only, in steel, the gap between global supply and demand 
had reached unprecedented levels, with supply exceeding demand by a huge marg in. 
 
229.  The problem of overcapacity  and the link with subsidization had been  recognized repeatedly in 
the context of G20 meetings in 2016 . The G20 Leaders at the Hangzhou Summit in September; 
the G20 Finance Ministers and the G20 Trade Ministers at their meet ings in July, in Chengdu and 
Shanghai respectively, all had recognized  that "excess capacity in some industries […] [ha s] 
caused a negative impact on trade and workers"; that "excess capacity in steel and other 
industries is a global issue which require s collective responses"; and that "subsidies and other 
types of support from governments and government -sponsored institutions can cause market 
distortions and contribute to global excess capacity and therefore require  attention".  
 
230.  Given the recognition of th e gravity of the problem, as well as of the relationship between 
subsidization and overcapacity, the EU invite d Members to explore  collectively  to what extent the 
current global overcapacity in certain economic sectors – for instance, but not only, the ste el and 
aluminum sectors – had been  created, or maintained, by subsidization.  In addition, it would be 
useful for the Membership to collectively seek to identify the types of measures or actions, 
whether attributable to government, or to economic operators,  that contribute d to the creation of 
overcapacity.  
 
231.  If the collective assessment confirm ed that subsidization was a significant contributor to 
overcapacity, the SCM Committee could usefully assess whether the Agreement on Subsidies and 
Countervailing Measu res was a sufficiently effective tool in tackling overcapacity -creating 
subsidization; and, identify specific areas where disciplines might  warrant improvement.  
 
232.  To facilitate an exchange of views between Members on that topic, the EU, Japan, Mexico and 
the US, had tabled a brief submission which explained the problem and the G20 call for collective 
action, and raised three questions : G/SCM/M/99  
 
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   "To what extent have subsidies contributed to the creation of excess capacity?"  
 "What are the specific government or busines s practices that have contributed to the 
creation of excess capacity?"  
 "In what areas are current SCM Agreement disciplines incomplete or inadequate to 
address these practices?"  
233.  Regarding the first question, the EU noted that subsidization was a significan t, if not the main, 
contributor to the creation and to the maintenance of overcapacity. Absent government support 
supply would adapt to demand and less efficient producers would eventually exit the market.  In 
the sectors where the gap between supply and de mand was the highest, such as the steel and 
aluminum sectors, it was implausible that the existing levels of overcapacity could  be sustained 
absent government support. However, the lack of transparency with regard to support measures 
made a mor e precise as sessment difficult.  
 
234.  With respect to the second question, the EU provided examples of policies that ha d 
contributed to the creation of overcapacity  such as (i) provision of "easy financing" to companies, 
including loans and loan guarantees on non -market/be low-market terms or debt -to-equity swaps 
in a manner inconsistent with usual practices ; (ii) p reventi on of bankruptcies by providing financial 
support to ailing companies without credible restructuring plans; or exempting certain producers 
from the enforce ment of otherwise applicable bankruptcy laws;  and (iii) s upporting business 
operations by artificially low -priced inputs . 
 
235.  With regard to the third question, the EU noted that there were a number of gaps in the 
SCM Agreement, as well as a number of provisi ons which ha d proved to be ineffective or lacking in 
clarity . For example,  
 The provisions of Part VII of the Agreement, addressing notifications and surveillance, 
were a case in point. While providing some transparency particularly among those 
Members who regularly fulfill ed their notification obligations, they were generally 
regarded as not having ensured a satisfactory level of transparency ; 
 Part II of the Agreement, on prohibited subsidies, cover ed export subsidies and subsidies 
contingent on import subs titution. There m ight however be other types of subsidies 
which were also trade distortive and which would merit being addressed in a similar 
manner. Examples of such could include below -cost financing under certain specific 
conditions;  
 The legal standard for determinations of "serious prejudice" under Article 6 of the 
Agreement ha d proved to be exceedingly exacting, rendering the provisions on 
actionable subsidies difficult to use – especially following  the lapse of Article 6.1;  
 Certain terms in the Agreem ent ha d proved to be lacking in clarity. For instance, there 
are still uncertainties regarding the question how to properly determine whether an 
enterprise constitutes a ''public body" in Article 1.1(a)1;  
 It was not clear whether the definition of a subsid y cover ed certain subsidies not 
explicitly referred to in Article 1.1 of the Agreement, such as financial contributions in 
the form of "sham" purchases of services from goods producers.  
236.  Japan  noted that granting distortive subsidies has been recognized at  the G20 meeting as  one 
of the reasons for global overcapacity problem. As to follow -up the G20 meeting, Japan indicated 
that it was essential to deepen the discussion among Members in this forum on the necessity to 
strengthen the current subsidy disciplin e in response to the overcapacity problem.  
 
237.  The United States  stated that global excess industrial capacity was a serious problem in the 
world economy which was not only negatively affecting countries with overcapacity but also 
spilling over to the third c ountries. The negative effects had been acute in steel and aluminum 
industries for the US. The long -term effect of the overcapacity was often a lose -lose situation for 
both the source country and its trading partners through declining prices, uncompetitive  G/SCM/M/99  
 
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  production and choices made by governments dictated by political rather than economic  
considerations. Addressing excess capacity could produce significant economic gains by freeing up 
resources to flow to more productive and dynamic sectors. It also would  help addressing growing 
trade tensions. To the extent that government subsidies distorted investment decisions and 
propped up failing investments, the issue of overcapacity was an appropriate topic for the 
Committee.  
 
238.  Concrete steps needed to be taken by all relevant governments to create conditions where 
industries made investment and production decisions in a manner consistent with market 
conditions and demand. Governments should eliminate or minimize their policies that created or 
sustained excess capac ity. Members should recognized that government support measures and 
other preferential policies had played a key role in creating excess capacity, uneconomic 
production, unfair trade and distortions in trade flows. Members should consider the steps to be 
taken to address distortive practices that could contribute to excess capacity including subsidies 
encouraging investments in new capacity, subsidies sustaining uneconomic or consistently loss 
making enterprises and plants, and the provision of special bene fits to SOEs that could distort 
competition.  
 
239.  Finally, the US noted that transparency was required to be able to fully evaluate government 
subsidies that might be facilitating investment in new capacity or sustaining uneconomic capacity. 
Adherence to tran sparency provisions of the SCM Agreement would go a long way in providing the 
needed level of transparency.  
 
240.  According to Mexico , there might be a close relationship between subsidies and excess 
capacity which had been recognized as a global problem for t he steel industry, in particular. It was 
essential to call upon all Members to reflect and analyse the situation to reach a better agreement 
on the actions that should be undertaken. To this end, having a large scale dialogue was 
necessary. As it was a wor ld-wide problem the solution had to be global as well. Mexico invited the 
Committee to analyse the factors that caused excess capacity together with the ways to deal with 
that problem and expected all Members to participate in discussions to provide soluti ons to it.  
 
241.  Canada  was supportive of collective action to address global overcapacity and agreed on the 
need to assess the role that subsidies played in contributing to global overcapacity. The WTO 
forum was uniquely situated to contribute to those discuss ions. Canada welcomed the proposal 
and encouraged further discussions on this issue within the Committee as a complement to work in 
other fora.  
  
242.  The Bolivarian Republic of Venezuela  stated that it had an observation about overcapacity and 
overfishing iss ue. As previously mentioned by China and India, there was a mandate in the Doha 
Ministerial Declaration and the best forum to discuss that issue would be Rules Negotiations.  
 
243.  Brazil  expected to take up the issue of overcapacity within a wider framework pre ferably by 
taking into account the studies and data that could elaborate the hypothesis on the causes of 
overcapacity and its distortive effects on the markets. Referring to the third question in the paper, 
Brazil noted that it had difficulty in identifyin g why the disciplines of the SCM Agreement were not 
sufficient to deal with those subsidies that might cause adverse effects on Members' economies. It 
would be premature to seek any outcomes from that discussion such as an amendment in the 
SCM Agreement. I t shared the proponents' concerns with regard to the effects of those subsidies 
on the balance of supply and demand, in the steel sector in particular. Those subsidy programmes 
impeded the closedown of the loss -making companies and made non -viable plants t o keep 
working. Brazil was also concerned with the successive use of trade defence measures in the steel 
sector which considerably disrupted the supply side of the equilibrium and stated that a more 
global approach was needed.  
 
244.  The Russian Federation  agree d with the proponents that industrial overcapacity was a major 
problem of the global economy which caused trade distortions and deepened structural problems. 
The G20 Leaders and Trade Ministers highlighted that, "excess capacity in steel and other 
industri es is a global issue which requires collective responses". Urgent and right steps were 
needed from all major producing economies to ensure that those responses yielded prompt 
results. The G20 Leaders and Trade Ministers had agreed on increased cooperation through the 
formation of the Global Forum on steel excess capacity and the progress report on its efforts was 
expected in 2017. Consideration of possible solutions how to mitigate the negative causes of G/SCM/M/99  
 
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  overcapacity should occur at the Global Forum which w as currently the most relevant and focused 
forum. This work should first result in identifying the most effective ways to address the challenge 
and only then it would be clear whether and how other venues, including the WTO Committees, 
should be employed i n order to overcome the overcapacity problem.  
 
245.  Acknowledging the need for a global collective action to address the structural problem of 
excess capacity in steel and other industries,  The Republic of Korea  indicated that multilateral 
discussions could pla y their own roles beyond the G20 process. It welcomed the proposal and 
expected to have productive discussions.  
 
246.  Australia  stated that this was a global issue and the Committee had the competency to 
consider it. It had had the opportunity to refer to the i mpacts of safeguard actions on third country 
markets at the SG Committee the day before. As Canada had mentioned, consideration of that 
issue within the Committee would be complementary to Global Steel Forum which was a positive 
outcome of the G20 Leaders Summit held in September 2016.  
 
247.  The European Union  noted that the first round of reactions were encouraging considering that 
the proposal had been tabled recently. Given the importance of the issue further reflections in 
capitals would be needed. It agreed  that there was a complementarity between different fora but 
noted that in its view the Global Steel Forum was not exclusive. The SCM Committee was uniquely 
placed with respect to subsidies and the EU was proposing a possible role for the Committee. It 
would be a more focused discussion on subsidies and the link between subsidies and overcapacity. 
The proponents were not asking the Committee to talk about and address the multitude of factors 
that could contribute to overcapacity. In response to Brazil's com ments on the third question, the 
EU stressed that its reflections were preliminary and this could be a subject of discussion.  
 
248.  Brazil  reiterated that the issue deserved a wider approach. It was interested in discussing it 
and believed that it might be poss ible to explore other alternatives bilaterally to analyse the issue 
in a more complete manner.  
 
249.  The Chair indicated that there was some interest to engage in further discussions on that 
issue and invited Members and the proponents to engage in informal con sultations with each other 
regarding the whereabouts of the proposal.    
 
250.  The Committee took note  of the statements made.  
 
14  OTHER BUSINESS  
14.1  Request from the EU to China pursuant to Article 25.88 
251.  The European Union  noted that the questions submitted in G/SCM/Q 2/CHN/67 had been 
raised with respect to The China Structural Reform Fund which  had been launched in 
September  2016. Based on various press reports, the EU requested China to provide clarification 
on the nature, size and purpose of the fund. The EU underst ood that it was to address some 
supply side issues, such as addressing overcapacity and increasing capacity in other high -end 
sectors.  
 
252.  China  indicated that it had received the questions just before the meeting and was still in the 
process of seeking repl ies from the relevant departments in China and it would provide information 
once it got responses.  
 
253.  The Committee took note  of the statements made.  
 
15  DATE OF NEXT REGULAR  MEETING  
254.  The Committee decided  to hold its next regular meeting during the week of 2 4 April 2017, 
with the exact date to be confirmed in due course. As usual, that meeting would be immediately 
preceded by a special meeting for review of subsidy notifications.  
 
                                                
8 G/SCM/Q2/CHN/67.  G/SCM/M/99  
 
- 32 - 
 
  16  ANNUAL REPORT OF THE  COMMITTEE ON SUBSIDI ES AND COUNTERVAILIN G 
MEASURES TO THE CO UNCIL FOR TRADE IN G OODS (ARTICLE 32.7)  
255.  The Committee adopted  its Annual Report (2016) to the Council for Trade in Goods.9 
 
 
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9 G/L/1 157-G/SCM/ 148; G/L/1157/Corr.1 - G/SCM/ 148/Corr.1 and G/L/1157/Corr.2 - G/SCM/ 148/Corr.2.