RESTRICTED  
  
G/SCM/M/101  
 
4 August  2017 
(17-4237) Page: 1/26 
Committee on Subsidies and Countervailing Measures    
 
 MINUTES OF THE REGUL AR MEETING  
HELD ON 2 5 APRIL  2017 
CHAIR: MR JIN -DONG KIM (KOREA)  
1. The Committee on Subsidies and Countervailing Measures ("Committee") held a regular 
meeting on 2 5 April 2017, convened in WTO/AIR/SCM/ 15 dated 13 April 2017 . 
 
2. Japan  request ed to be included as a co -sponsor for the agenda item 15.  
 
3. Referring to the agenda item 15 entitled "Subsidies and Overcapacity", China  noted that 
overcapacity was not a trade related issue which was related to the operation of the Agreement or 
the furthe rance of its objectives as referred in Article 24.1 of the Agreement.  Therefore, the issue 
of overcapacity was not in the terms of reference of the Committee and it was not an appropriate 
forum for the discussion of this issue. China referred to the Global  Forum on Steel Excess 
Capacity, which had been established under the G -20 framework and noted that similar 
mechanisms could be established for other sectors, when necessary. To facilitate the proceeding of 
the meeting, China would not oppose to the adopti on of the agenda.  However, it emphasized that 
the inclusion of this item 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.  
 
4. The Committee took note  of the statements made and adopted  the following agenda:  
 
1   NATIONAL LEGISLATION ................................ ................................ .............................  2 
1.1   Review of notifications of new or amended legislation or regulations not previously 
reviewed by the Committee (including supplemental notifications of exist ing provisions 
not previously reviewed)  ................................ ................................ ................................ ...... 2 
1.1.1    Armenia (G/ADP/N/1/ARM/3 - G/SCM/N/1/ARM/3 -G/SG/N/1/ARM/3)  .............................  3 
1.1.2    Brazil ( G/ADP/N/1/BRA/3/Suppl.8 - G/ADP/N/1/BRA/3/Suppl.8/Corr.1)  ...........................  3 
1.1.3    El Salvador (G/ADP/N/1/SLV/3/Suppl.1 - G/SCM/N/1/SLV/3/Suppl.1 - 
G/SG/N/1/SLV/3/Suppl.1)  ................................ ................................ ................................ .... 3 
1.1.4    European Union (G/SCM/N/1/EU/2 and G/ADP/N/1/EU/3)  ................................ ..............  3 
1.1.5    Japan (G/ADP/N/1/JPN/2/Suppl.8 -G/SCM/N/1/JPN/2/Suppl.8)  ................................ ....... 4 
1.1.6    Kyrgyz Republic (G/ADP/N/1/KGZ/3 -G/SCM/N/1/KGZ/3 -G/SG/N/1/KGZ/3)  ......................  4 
1.2   Review of notifications of new or amended legislation or regulations with 
outstan ding 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 
1.2.2    Russian Federation (G/ADP/N/1/RUS/2 -G/SCM/N/1/RUS/2 -G/SG/N/1/RUS/2)  ..................  4 
2   SEMI -ANNUAL REPORTS OF CO UNTERVAILING DUTY AC TIONS (ARTICLE 
25.11) – G/SCM/N/313 AND G/SC M/N/313/SUPPL.1  ................................ .....................  5 G/SCM/M/101  
 
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  3   PRELIMINARY AND FINA L COUNTERVAILING DUT Y ACTIONS: 
NOTIFICATIONS (ARTIC LE 25.11) – G/SCM/N/311, G/SCM/N /312, 
G/SCM/N/314, G/SCM/N /316, G/SCM/N/317, A ND G/SCM/N/318  ...............................  6 
4   PROCEDURES FOR REVIE W OF 2017 NEW AND FU LL NOTIFICATIONS  ........................  7 
5   ARTICLE 27.4 EXTENSI ONS OF THE TRANSITIO N PERIOD FOR THE 
ELIMINATION OF EXPOR T SUBSIDIES - 31 DEC EMBER 2015 END OF FI NAL 
PHASE -OUT PERIOD AND FINAL  NOTIFICATION DUE 30 JUNE 2016 
(G/SCM/N/299/…)  ................................ ................................ ................................ ..........  8 
6   IMPROVING THE TIMELI NESS AND COMPLETENES S OF NOTIFICATIONS A ND 
OTHER INFORMATION FL OWS ON  TRADE MEASURES UNDER  THE SCM 
AGREEMENT  ................................ ................................ ................................ .....................  9 
7   CONSTANT DOLLAR METH ODOLOGY FOR GRADUATI ON FROM SCM ANNEX 
VII(B)  ................................ ................................ ................................ ............................  13 
8   PERMANENT GROUP OF EXPERTS  ................................ ................................ ..............  13 
9   REQUEST FROM CHINA T O THE UNITED STATES PURSUANT TO ARTICLE 25.8 
OF THE SCM AGREEMENT  (G/SCM/Q2/USA/70) – ITEM REQUESTED BY CH INA ............  14 
10   QUESTIONS FROM THE U NITED STATES AND THE  EUROPEAN UNION TO 
CHINA PURSUANT TO AR TICLE 25.8 OF THE SC M AGREEMENT 
(G/SCM/Q2/CHN/70) – ITEM REQUESTED BY TH E EUROPEAN UNION AND  THE 
UNITED STATES  ................................ ................................ ................................ .............  14 
11   NON-NOTIFICATION BY CHIN A OF ALLEGED SUBSIDI ES CONTAINED IN THE 
2014, 2015 AND 2016 REQUESTS BY THE UNIT ED STATES UNDER ARTI CLE 25.10 
OF THE SCM AGREEMENT  (G/SCM/Q2/CHN/51, PL US 
G/SCM/Q2/CHN/51/CORR .1; G/SCM/Q2/CHN/5 3; G/SCM/Q2/CHN/59) – ITEM 
REQUESTED BY THE UNI TED STATES ................................ ................................ ..............  16 
12   NON-NOTIFICATION BY CHIN A OF ALLEGED SUBSIDI ES UNDER THE 
INTERNATIONALLY WELL -KNOWN BRAND PROGRAMM E (G/SCM/Q2/CHN/71) – 
ITEM R EQUESTED BY THE UNIT ED STATES  ................................ ................................ ..... 18 
13   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 UNITED STATES  ................................ ................................ ................................ . 19 
14   ENHANCING FISHERIES SUBSIDIES TRANSPAREN CY - ITEM REQUESTED BY 
THE UNITED STATES  ................................ ................................ ................................ ...... 20 
15   SUBSIDIES AND OVERCA PACITY (G/SCM/W /572 PLUS 
G/SCM/W/572/REV.1) – ITEM REQUESTED BY CA NADA, THE EUROPEAN U NION, 
JAPAN, AND THE UNITE D STATES  ................................ ................................ ..................  22 
16   OTHER BUSINESS  ................................ ................................ ................................ .... 25 
16.1   Support Measures for the Construction of a New Cement Facility in Quebec, 
Canada – Item Requested by the United States  ................................ ................................ .....25 
17   DATE OF NEXT REGULAR  MEETING  ................................ ................................ ..........  26 
18   ELECTION OF OFFICERS  ................................ ................................ ..........................  26 
 
 
1  NATIONAL  LEGISLATION  
1.1  Review of notifications of new or amended legislation or regulations not previously 
reviewed by the Committee (including supplemen tal notifications of existing provisions 
not previously reviewed)  
5. 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 lang uages not less than six weeks before the meeting. The deadline for 
written questions on these notifications had been 3 April 2017.  G/SCM/M/101  
 
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  6. Oral questions could be asked at the meeting, and any Member wishing to receive a written 
answer to any such question would h ave to submit its question in writing to the Member concerned 
and to the Secretariat not later than 1 5 May 201 7. Written answers were due not later than 
6 June 2017.1  
7. 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   Armenia (G/ADP/N/1/ARM/3 - G/SCM/N /1/ARM/3 -G/SG/N/1/ARM/3)  
8. Written questions and answers with respect to this notification can be found in:  
 
• G/ADP/Q1/ARM/7 -G/SCM/Q1/ARM/7 -G/SG/Q1/ARM/4 - questions from Mexico  
• G/ADP/Q1/ARM/8 -G/SCM/Q1/ARM/8 -G/SG/Q1/ARM/5 – replies to Mexico  
 
9. The Committ ee took note  of the notification, questions and answers.  
 
1.1.2    Brazil (G/ADP/N/1/BRA/3/Suppl.8 - G/ADP/N/1/BRA/3/Suppl.8/Corr.1)  
10. Written questions and answers with respect to this notification can be found in:  
 
 G/ADP/Q1/BRA/33 - G/SCM/Q1/ BRA/33 – questions f rom the United States  
 G/ADP/Q1/BRA/34 - G/SCM/Q1/ BRA/34 – replies to the United States  
 
11. The Committee took note  of the notification, questions, and answers.  
 
1.1.3    El Salvador ( G/ADP/N/1/SLV/3/Suppl.1 - G/SCM/N/1/SLV/3/Suppl.1 - 
G/SG/N/1/SLV/3/Suppl.1)   
12. Writte n questions  with respect to this notification can be found in:  
 
 G/ADP/Q1/SLV/8 - G/SCM/Q1/ SLV/8 - G/SG/Q1/SLV/7  - questions from the United States  
 G/ADP/Q1/SLV/9 - G/SCM/Q1/ SLV/9 - G/SG/Q1/SLV/8  - questions from Mexico  
 
13. El Salvador  noted that it would pr ovide written answers as soon as possible.  
 
14. The Committee took note  of the notification  and questions .    
 
1.1.4   European Union  (G/SCM/N/1/EU/2 and G/ADP/N/1/EU/3)  
15. Written questions  with respect to this notification can be found in:  
 
 G/ADP/Q1/EU/1 – G/SCM/Q1/EU /1 – questions from the United States  
 G/ADP/Q1/EU/2 – G/SCM/Q1/EU/2 – questions from the Russian Federation  
 
16. The European Union  referred to the changes made to its anti -dumping , anti -subsidy and 
safeguards  procedures in 2014 by virtue of Regulation 37/2013  and the subsequent notification 
made by the EU to the Committee, which stated that once those changes were consolidated, the 
outcome would be sent to the WTO. The EU further explained that the notification currently under 
review was a mere follow -up to it s previous notification without any substantive or procedural 
change.  
 
17. The Committee took note  of the notification , questions  and statement made.    
 
                                                
1 Relevant deadlines for written follow -up questions and written answers in May and June  2017, 
respectively, can be found in section 1 of document G/ADP/W/498 -G/SCM/W/573 -G/SG/W/241.  G/SCM/M/101  
 
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  1.1.5   Japan  (G/ADP/N/1/JPN/2/Suppl.8 -G/SCM/N/1/JPN/2/Suppl.8 )   
18. Written questions  and answers with respect to th is notification can be found in:  
 
 G/ADP/Q1/JPN/16 -G/SCM/Q1/JPN/16  – questions from the United States  
 G/ADP/Q1/JPN/17 -G/SCM/Q1/JPN/17 – replies to the United States2 
 
19. The Committee took note  of the notification, questions, and answers.  
 
1.1.6   Kyrgyz Republic  (G/ADP/N/1/KGZ/3 -G/SCM/N/1/KGZ/3 -G/SG/N/1/KGZ/3 ) 
20. Written questions  and answers with respect to this notification can be found in:  
 
 G/ADP/Q1/KGZ/7 -G/SCM/Q1/KGZ/7 -G/SG/Q1/KGZ/3  – questions from Mexico  
 G/ADP/Q1/KGZ/ 8-G/SCM/Q1/K GZ/8-G/SG/Q1/KGZ/ 4 – replies to Mex ico3 
21. 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/Suppl.1)  
22. 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  
23. Cameroon  noted that its capital was still working on the answers which would be submitted 
to both the WTO and the United State s. 
24. The Committee took note  of the notification  and the statement made . 
 
1.2.2   Russian Federation ( G/ADP/N/1/RUS/2 -G/SCM/N/1/RUS/2 -G/SG/N/1/RUS/2 ) 
25. Written questions  and answers  with respect to this notification can be found in:  
 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  
 G/ADP/Q1/RUS/ 8-G/SCM/Q1/RUS/ 8-G/SG/Q1/RUS/ 8 – replies to the United States  
26. The Committee took note  of the notification, questions, and answers.   
 
27. The Chair, recalling the Committee's agreed procedures, informed Members that for new 
legislative notifications to be placed on the agenda of the fall 2017 meeting, they would have to be 
circulated in all three languages by 11 September  2017. Shortly af ter that date, the Secretariat 
would circulate a document informing Members of all legislative notifications to be reviewed at the 
fall meeting. Pursuant to paragraph 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.  
 
28. India had submitted a new legislative notification which would be on the agenda for review 
at the October meeting. Written qu estions concerning new legislative notifications to be reviewed 
should be submitted to the notifying Member and to the Secretariat by 2 October 201 7. 
29.  For new legislative notifications to be placed on the agenda of the October meeting, they 
must be circula ted in all three languages by 11 September 2017, and written questions concerning 
                                                
2 Circulated on 25 April 2017.  
3 Circulated on 27 Apr il 2017.  G/SCM/M/101  
 
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  such notifications should be submitted to the notifying Member and to the Secretariat by 
9 October  2017.   
 
30. The Secretariat would circulate the usual triple -symbolled documen t containing all of the 
dates and deadlines  shortly after the meeting.4   
 
31. 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 required 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 r eview and ask questions about that 
legislation. Therefore, the Chair urged all Members that had not yet made a legislative notification 
to do so as promptly as possible.   
32. The Chair referred to the document G/SCM/N/18/Add.4 3 which contained the latest revi sion 
of the list of authorities competent 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 S CM Agreement, or to review and update as 
necessary their previously -submitted notifications.  
33. The Committee took note  of the Chair's statement.  
 
2  SEMI -ANNUAL REPORTS OF CO UNTERVAILING DUTY AC TIONS (ARTICLE 25.11 ) – 
G/SCM/N/313 AND G/SC M/N/313/SUPPL.1  
34. The Chair recalled that document G/SCM/N/ 313 and Supplement 1  had invited all Members 
to submit not later than 15 February 201 7, their semi -annual reports under Article 25.11 of the 
SCM Agreement of countervailing duty actions taken during the pe riod 1 July throu gh 
31 December  2016. Document G/SCM/N/ 313/Add.1 provided the current status of Members' 
reporting for that period. Paragraph 1 of the document listed those Members reporting 
countervailing duty actions during the period. Paragraph 2 listed Members that had  notified having 
taken no countervailing duty action during the period. Paragraph 5 of the document listed the 
38 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.   
35. One-time notifications served a useful transparency function, as they 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.  
 
36. The Chair also noted that Madagascar had notified the establishment of an investigating 
authority in document G/SCM/N /202/MDG/Rev.1.  
 
37. Unfortunately, the very large number of Members listed in paragraphs 3 and 4 of the 
document had not submitted a semi -annual report for July - December 201 6. They were urged  to 
do so as soon as possible.  
 
38. Madagascar  informed the Committee  about the establishment of its national authority in 
charge of trade remedy investigations and also noted that it was in the phase of preparing its 
national legislation.  
 
39. No comments or questions were raised concerning the semi -annual reports of Australia , 
Canada, China, Egypt, the European Union, India, Mexico, New Zealand, Pakistan, Peru, Turkey, 
and Ukraine.  
40. China  expressed concern over Brazil 's CVD investigation on hot -rolled steel from China. 
First, the petitioners had failed to provide sufficient evi dence to support the initiation. According to 
Decree No.13.609 dated 21 October 1943, all the evidences and materials originally in a foreign 
language had to be submitted in sworn translations, yet the investigating authority initiated the 
                                                
4 G/ADP/W/498 -G/SCM/W/573 -G/SG/W/241.  G/SCM/M/101  
 
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  investigation wi thout receiving the translation of those materials. China recalled that simple 
assertion, unsubstantiated by relevant evidence,  could not constitute a basis for the initiation. The 
petitioners had only submitted sworn translations for 15 programmes out of 43 in total some of 
which had either been terminated already or not been qualified as actionable subsidies. Second, 
there was no legal basis for requesting the Government of China to answer questions on the 
programmes which the responding companies had alr eady confirmed that they were not benefiting 
from. Third, there were fundamental procedural deficiencies because the investigating authority 
had invited the Government of China for consultations although the sworn translations had not 
been submitted by the  petitioners.  
41. Brazil  recalled Article 11.2 of the Agreement, according to which the application shall contain 
reasonably available information. The application had been submitted with sufficient evidence on 
the existence of actionable subsidies and the inv estigating authority had already had the relevant 
evidence on those programmes without sworn translations. According to Brazil, the mere 
allegation of exporters that they did not benefit from certain programmes was not sufficient to 
refrain from asking que stions on those programmes.  Prior to the initiation, the investigating 
authority had notified China and offered an opportunity for consultation.  
42. With respect to the semi -annual report of  the United States , Turkey  expressed  its concern 
over the investigati ons on iron and steel products originating in Turkey. In these investigations 
there had been inconsistencies regarding public body, specificity, benefit calculation and cross -
cumulation decisions. Therefore, Turkey had taken those issues to the WTO panel. Turkey invited 
the United States to take into account the Appellate Body and Panel decisions on cross -cumulation 
methodology in ongoing investigations and not to cumulate the effects of subsidized imports with 
the effects of non -subsidized, dumped imports.  In addition, referring to Article 27.10(a) of the 
Agreement, Turkey indicated that as a developing Member, it was expecting the United States to 
terminate the investigation for Turkey if the per unit subsidization rate was not exceeding the 2 
per cent thr eshold.  
43. The United States  indicated that the claims on cross -cumulation and the negligibility 
threshold, which was relevant for developing countries, would be assessed carefully.  
44. The Committee took note  of all semi -annual reports submitted, and all stateme nts made.  
 
3  PRELIMINARY AND FINA L COUNTERVAILING DUT Y ACTIONS: NOTIFICAT IONS 
(ARTICLE 25.11) – G/SCM/N/311, G/SCM/N /312, G/SCM/N/314, G /SCM/N/316, 
G/SCM/N/317, AND G/S CM/N/318  
45. The Chair reported that si nce the Committee's October 2016  regular meeting, notif ications 
under Article 25.11 of preliminary and final countervailing duty actions had been received from 
Armenia, Australia, Brazil, Canada,  China, Egypt, Kazakhstan, Kyrgyz Republic, Pakistan, Peru,  the 
Russian Federation, Turkey , and the United  States. T hose notifications were listed in documents 
G/SCM/N/ 311, 312, 314, 316, 317, and 318.  
 
46. Kazakhstan  expressed its concerns regarding Canada's  CVD investigation on imports of 
silicon metal originating in Kazakhstan. First, the initiation of the investigation was inconsistent 
with Article 11.2 of the Agreement because the application lacked sufficient evidence on the 
existence of a subsidy, injury and the causal link. The investigating authority had accepted an 
unsubstantiated application based on mere assertio n; and the causal link between the imports and 
alleged injury was seriously questionable. Although the applicant indicated "KazSilicon" as an 
exporter causing injury to Canadian domestic industry, it had not operated in 2016 and had never 
exported silicon metal to Canada. Canadian producers were in a considerably advantageous 
position because of the existing countervailing duties in force since 2013 and Kazakhstan's share 
in Canadian market had not changed since 2015, corresponding to 4% of total imports of  Canada. 
The injury suffered by the Canadian domestic producer indicated systemic productivity and 
efficiency problems which shall not be attributed to imports from Kazakhstan as stipulated in 
Article 15.5 of the Agreement.  
 
47. Second, Kazakhstan was concerne d with the procedural aspects of the investigation. Many 
pages of the application were left blank due to confidentiality of the information provided. The 
non-confidential versions of the application and exhibits were vague and did not allow G/SCM/M/101  
 
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  understanding t he substance of the information in line with Article 12.4.1 of the Agreement. In 
addition, those documents did not include any explanation on why a summary had not been 
provided. Neither the Government of Kazakhstan nor Kazakhstani producers might effectiv ely 
defend their interests in the absence of meaningful non -confidential summaries.   
 
48. Canada  indicated that it took its obligations under the Agreement very seriously. In that 
case, the governments of Brazil, Kazakhstan, Malaysia, Norway, and Thailand had  been notified in 
January regarding the properly documented complaint invited for consultations in accordance with 
Article 13.1 of the Agreement. The complaint had been thoroughly examined by the Canada  Border 
Services Agency (CBSA)  to determine whether th ere had been sufficient evidence to justify the 
initiation of an investigation in accordance with Article 11.3 of the Agreement. The investigating 
authority had determined that the complainant had provided information about the subsidies in 
Kazakhstan whic h were reasonably available and the decision to initiate the investigation had been 
fully explained in the statement of reasons issued by the CBSA. If it was understood that the 
imports of silicon metal from Kazakhstan had not been subsidized or the amount  of subsidies was 
de minimis , or the volume of the subsidized imports was negligible, the investigation would be 
terminated. Canada invited Kazakhstan to fully participate in the investigation and submit its 
comments in writing to the relevant investigatin g authority. It was also ready to discuss the issue 
bilaterally.  
 
49. Kazakhstan  also expressed its concerns with respect to the CVD investigation initiated by 
the United States  on silicon metal originating in Kazakhstan, although the investigation had been 
initiated recently and not yet been notified. It noted that the US producer was one of the largest 
producers in North America and the international market and exports from Kazakhstan were 
considerably low to compete with the US producers in the US market. On e of the respondents in 
the investigation (KazSilicon) had never exported its product to the US. In addition, the alleged 
injury to the US domestic industry could not have been caused by imports from Kazakhstan which 
was too insignificant to cause any adve rse effects on US producers. The injury might be result of 
factors other than allegedly subsidized imports such as dependency on downstream industries like 
aluminium production which had declined throughout the period of investigation.  
 
50. Kazakhstan also ind icated that the application contained a significant amount of confidential 
information which was excluded from the text of the non -confidential version. Neither non -
confidential summaries nor explanations on the reasons for exclusion of those information w ere 
provided, which, according to Kazakhstan, was inconsistent with Article 12.4 of the Agreement. 
Therefore it requested the US to terminate the investigation without imposing any countervailing 
measures.  
 
51. The United States  noted that the investigation ha d been initiated one month before. The 
petitioners were only required to provide information that was reasonably available and more 
definitive facts could be established during the investigation. The investigating authority had found 
that there had been su fficient evidence to justify the initiation. The United States urged 
Kazakhstan to continue to participate in the investigation to make its arguments in the course of 
the investigation and expressed its readiness to meet with Kazakhstan bilaterally.  
 
52. The C ommittee took note  of the no tifications and statements made.  
4  PROCEDURES FOR REVIE W OF 2017 NEW AND FU LL NOTIFICATIONS  
53. The Chair recalled that the 2017 new and full notifications were due on 30 June, and thus 
would be subject to review in special meetings b eginning with the one in October 2017. The 
Committee thus needed to decide on procedures for reviewing those notifications. During the last 
six notification cycles, the new and full notifications had been reviewed on the basis of the 
procedures set forth i n G/SCM/117, first adopted in 2005. The Chair proposed that the Committee 
agree to conduct the review of the 2017 new and full notifications on the basis of the same 
procedures.  
54. The Committee so decided . G/SCM/M/101  
 
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  5  ARTICLE 27.4 EXTENSI ONS OF THE TRANSITIO N PERIOD FO R THE ELIMINATION OF  
EXPORT SUBSIDIES - 31 DECEMBER 2015 END  OF FINAL PHASE -OUT PERIOD AND FINAL  
NOTIFICATION DUE 30 JUNE 2016 (G/SCM/N/2 99/…)  
55. The Chair recalled that Members that had been granted extensions under Article 27.4 
pursuant to the procedures i n 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, 
i.e. calendar years 2014 and 2015. The deadline for the notification pertaining to 2014 w as 
30 June 2015. A reminder to this effect had been circulated in document G/SCM/N/290/INF.  
56. To date, Belize, Costa Rica, Dominica, Dominican Republic, El Salvador, Guatemala, 
Jamaica, Jordan, Mauritius, Saint Lucia, and Saint Vincent and the Grenadines ha d submitted these 
notifications, which had been circulated in the G/SCM/N/290 series.  
57. 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 h ave completed 
the elimination of their export subsidies by 31 December 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.  The Secretariat circulated a table showing the status of notifications and of actions 
reported by those Members in documents G/SCM/W/571 and Revision 1. Following the receipt of 
additional no tifications, the Chair  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 
58. To date, only nine of the beneficiary Members – Belize, Dominican  Republic, El Salvador, 
Grenada, Guatemala, Jamaica, Jordan, Mauritius, and Saint Vincent and the Grenadines  – had 
submitted those final notifications . The Chair reminded other Members with extensions to submit 
their final transparency notifications as soo n as possible.  The deadline for the elimination of the 
export subsidies had been more than one year earlier while for submitting the final notification had 
been nearly one year earlier. He also underlined the importance of the compliance of the 
beneficiary  Members with the corresponding substantive and transparency obligations.  
 
59. Jordan  recalled that its subsidy programmes had been discussed at the Council for Trade in 
Goods upon Jordan's request for a transitional period until the end of 2018. There was pr ogress at 
the national level and Jordan was committed to phase out its current programme by the end of 
2018 in line with the action plan submitted to the CTG. Jordan would update the Committee on the 
progress in due course.  
60. Barbados  informed the Committee that the matter was continuing to receive attention in its 
capital and a submission would be shared as soon as it was received.  
61. Costa Rica  stated that its final notification was almost ready and would be submitted soon. 
The Duty -Free Zone Regime and the In ward Processing Regime had been modified to ensure their 
compliance with the WTO obligations.  
62. New Zealand  recalled that all those export subsidies should have been removed by 
31 December 2015. An assessment could not be made in the case of other beneficiar y Members as 
they had not confirmed the extent of their reforms. Although there had been some progress since 
the last meeting of the Committee, there were still ten Members which had not yet provided their 
final transparency notifications most of which had  not made their 2015 notifications either. 
New Zealand invited those Members to address those transparency deficiencies before the October 
meeting and requested to keep that issue before the Committee.  
 
63. The United States  supported New Zealand's statement a nd urged the rest of the beneficiary 
Members to complete their reforms as soon as possible and to submit their final transparency 
notifications. The US also supported New Zealand's suggestion to keep this item on the agenda  for 
the next meeting.  
 
64. Japan  echoed the views raised by New Zealand and the United States.  
                                                
5 RD/SCM/29/Rev.1.  G/SCM/M/101  
 
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  65. The Chair  noted that the Committee would revert to that issue at the next meeting.  
 
66. The Committee took note  of the statement s made . 
 
6  IMPROVING THE TIMELI NESS AND COMPLETENES S OF NOTIFICATIONS A ND O THER 
INFORMATION FLOWS ON  TRADE MEASURES UNDER  THE SCM AGREEMENT  
67. 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 timeliness 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.  
68. The Chair recalled that at Committee's October 2016 meeting a number  of Members had 
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 wer e three topics to cover under this agenda item, the 
status of Members' notifications of subsidies ; the Australian suggestion to add a new annex to the 
document on the status of Member's notifications; and the US proposal regarding a written process 
for que stions and answers under Articles 25.8 and 25.9 of the SCM Agreement.  
69. Since 2009, the Secretariat had prepared and updated a ba ckground note 
(G/SCM/W/546/Rev.8 ) at the request of Members, providing a snapshot of the level of compliance 
with the various not ification obligations under the SCM Agreement since 1995.  
70. Unfortunately, compliance with the obligation to notify subsidies remained low. Seventy -nine 
Members had not made their 2015 new and full subsidy notification for which the deadli ne had 
been 30 June  2015. Sixty  Members still had not made their 2013 new and full subsidy notification, 
although the deadline had been nearly four years earlier. Further, fifty -five Members still had not 
made their 2011 notifications, which had been due almost six  years ear lier. Many of these 
Members either had never notified 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.  
71. The Members th at had not yet made their 2015 notifications were: Angola; Antigua and 
Barbuda; Argentina; Bahrain, Kingdom of; Bangladesh; Barbados; Benin; Bolivia, Plurinational 
State of ; Botswana; Brunei Darussalam; Burkina Faso; Cabo Verde; Cambodia; Cameroon; Central  
African Republic; Chad; Colombia; Côte d'Ivoire; Democratic Republic of Congo; Djibouti; Egypt; 
Fiji; the Gambia; Ghana; Guatemala; Guinea; Guinea -Bissau; Haiti; Iceland; Indonesia; Israel; 
Kenya; Kuwait, the State of; Kyrgyz Republic; Lao People's Democr atic Republ ic; Liberia; 
Madagascar; Malaysia; Maldives; Mauritania; 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, Kingdom of ; Senegal; 
Sierra Leone; Solomon Islands; South Africa; Sri Lanka; Suriname; Swazil and; Tajikistan; 
Tanzania; The f ormer Yugoslav Republic of Macedonia; Tonga; Trinidad and Tobago; Tunisia; 
Uganda; Uruguay; Vanuatu; Venezuela, Bolivar ian Republic of ; Viet  Nam; Yemen;  and Zimbabwe.  
 
72. The Chair urged Members that had not yet submitted their notifications to do so, and 
recalled that the Secretariat continued to be available 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 was a range of resources that delegations could draw upon in working to rectify 
the s ituation, including the Secretariat Handbook on Notification Requirements for the SCM 
Agreement and the two Geneva -based Internship Programmes coordinated by the Secretariat.  
 
73. The United States  noted that the Secretariat Report was useful but also disturbi ng at the 
same time. Only 38% of Members had notified their subsidies in 2015 which was the lowest since 
1998 and 51% of Members had not provided any notification, which was the highest ever. These 
figures were alarming and all Members had to commit themse lves to meet their obligations under 
the Agreement. The US also indicated that the Secretariat Report did not refer to the quality of the 
notifications and the US had raised that issue with respect to certain Members which have only 
notified a few programm es while they had many other programmes to notify.  Many Members had G/SCM/M/101  
 
- 10 - 
 
  not included sub -central level programmes in their notifications. The US understood that some of 
the less developed Members might have capacity issues, but there were also large developin g 
countries which had not provided a notification since 1995.  
74. New Zealand  stated that it expected all Members to make timely notifications and to comply 
with their obligations under the Agreement. It recognized the challenges that some Members 
might have b ut encouraged them to use sources of the Secretariat or other Members' experiences.  
75. The European Union  added its voice to those of the US and New Zealand. Only 79 Members 
had fulfilled their notification obligations which was less than the half of the Mem bership. It was 
expecting to see an improvement in both the number of the notifying Members as well as the 
quality of notifications. The EU understood that this was a difficult exercise which required a lot of 
resource and invited Members to make every eff ort to have better results in 2017.  
76. Canada  expressed its concern over the low level of compliance with the notification 
obligation which was essential for the proper functioning of the Agreement. It encouraged all those 
Members which had not submitted thei r notifications to do so in a timely and complete manner.  
77. Australia  noted that the Secretariat Report was extremely useful and it attached great 
importance to transparency and the notification process. Without having notifications it became 
extremely diffi cult to assess the potential impact of those programmes on Australian producers 
and exporters. Australia urged those Members which had not submitted their notifications, to do so 
as soon as possible. This was a resource -intensive process and Australia also  had sub -central 
governments. However, as it was a priority for Australian Government, it made every effort to 
submit its subsidy notification.  
78. The Russian Federation  thanked the Secretariat for its efforts to monitor Members' 
compliance with their transpa rency obligations. It believed that transparency was an important 
matter and all Members had to fulfil their obligations equally. The Russian Federation had a 
complex state structure and although it was time -consuming to gather information from regional 
authorities and process it to prepare the notification in accordance with the agreed format, it did 
its best for full compliance with its obligations. Non -compliance by other Members was 
unacceptable.  
79. Chinese Taipei  expressed its concerns over the low level  of compliance with the notification 
obligation. It encouraged those Members which had not submitted their notifications to do so, as 
soon as possible.  
80. With respect to the second topic under this agenda item, the Chair recalled that at previous 
meetings, t he Committee had discussed a proposal by Australia to add a new annex to the 
compendium document which would list all Secretariat calculations of export competitiveness 
pursuant to Article 27.6.  
81. Australia  indicated that its suggestion was not burdensome f or Members because it was not 
requiring Members to provide additional information. Australia was seeking to include an annex 
similar to  Annex C about the request for information under Article 25.8.  The suggestion would 
make it easier to locate older docume nts and facilitate the transparency.  
82. India indicated that its position had not changed since the previous meeting and it did not 
support the proposal by Australia.  
83. New Zealand  and Switzerland  expressed their support for Australian suggestion and noted 
that it was not burdensome for Members.  
84. 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 Secretariat's 
background note, "request for informatio n 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 notification 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 neither legally grounded nor reasonable.  G/SCM/M/101  
 
- 11 - 
 
  85. Chinese Taipei  reiterated its concerns over the low level of compliance with notification 
obligations and expressed its support for any initiative to enhance transparency.  
86. Canada  and the United States  expressed their support for Australia's suggestion.  
87. Australia  asked India to clarify the nature of its concerns indicating that its proposal was not 
targeted  at any particular Member. The documents relating to the requests made to the 
Secretariat for computation pursuant to Article 27.6 were very difficult to find on the website of 
the WTO and Australia was only seeking a table to make that easier. The proposa l did not relate to 
Article 25.8, but rather to the relevant paragraph in the Secretariat Report. Australia asked India 
to clarify what its remaining concerns were and stated that it remained open to meet India 
bilaterally.  
88. India stated that it was ready t o engage with Australia bilaterally.  
89. Thailand  added its support to the Australian proposal noting that it would promote 
transparency without imposing any burden on Members.  
90. The European Union  expressed its support for the Australian suggestion.  
91. The Chair  suggested reverting to that issue at the next meeting of the Committee.  
92. The Chair recalled that at the Committee's October  2016 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 previous meeting it had reiterated that the Committee 
should try to reach consensus on common sense proce dures for Members to respond to questions 
submitted under Article  25.8. The Chair's summary of the current status of Members' compliance 
with the transparency 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.  
94. The US recalled the concern s raised previously by some Members according to which  the US 
proposal would  impose an undue burden on Members with capacity constraints, in particular for 
lesser developed countries. Reflecting on those concerns, the US saw two distinct issues emerging: 
answers being submitted in writing and adherence to firm deadlines for submit ting answers to 
questions. With regard to deadlines, the US had previously noted its willingness to work with 
Members to find a pragmatic solution to their concerns.  
95. The US recalled that at its October 2016 meeting the Committee had discussed 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 questions . The Unit ed States referred to the room 
document distributed at the meeting and explained that according to the proposal, the answers to 
Article 25.8 questions would be submitted within 60 days unless otherwise agreed by the 
requesting and responding Members.  
96. The United States invited Members that had raised the issue of capacity constraints during 
the previous meetings to provide constructive ideas on how the proposal could be improved . The 
US reiterated that it remained flexible in finding a pragmatic solution th at would satisf y 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 . 
 
97. India indicated that its position had not changed a nd recalled its previously -expressed 
concern that the proposal went beyond the finely crafted balance resulting fr om 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. I ncluding it in the proposal disturbed the negotiated balance. Proposed 
time limits for replies to questions received under Article 25.8 needed to be examined in the light 
of practicability and from the point of view  of added burden to developing and least developed G/SCM/M/101  
 
- 12 - 
 
  countries. Such timelines might not actually yield effective  results . India also noted that the 
proposal stated that all pending questions would automatically remain on the agenda until a 
written reply was provided. However,  who would determine w hether or not a question had been 
appropriately answered?  In any case, Members could always request an item to be placed on the 
agenda. According to India, the flexibility shown by the United States did not answer the problem 
presented by several Members. Finally, India indicated that it was going to take th e proposal to its 
capital . 
98. Australia  remained interested and supportive of the US proposal. The US had usefully 
identified a gap in the Committee's procedures and the suggested approach had been flexible  to 
accommodate the concerns raised by Members. Greater clarity in that procedure would encourage 
compliance with the notification obligations and improve the completeness and timeliness of the 
notifications.  
99. New Zealand  reiterated  its support for the US p roposal . 
100.  Japan  supported  the US proposal and indicated its intention to constructively engage in 
further discussion.  
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 answers. Therefore, the requirements for making such written answers or setting 
compulsory deadlines would impose newly added substantive obligations on Members for which 
there was no legal basi s. As expressed by many Members during previous meetings of the 
Committee, this would upset the balance of rights and obligations reflected in the results of 
negotiations of those articles. The proposal would cause difficulties and challenges for developin g 
Members with capacity constraints. It would increase their workload and distract their focus on 
preparing the notifications. The proposal, contrary to the original intention, might further delay 
submissions of notifications.  
102.  China echoed the view raised by India by noting that any Member could raise any item for 
the agenda. In addition, it was not clear as to who could judge 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 might result in the continued accumulation or even 
perpetuation of agenda items.  
 
103.  China reiterated the importance of transparency and  its ho pe to have discussions in a down -
to-earth manner. It  invited all Members to do their best to fulfi l their transparency obligations in 
accordance with th e Agreement.  
 
104.  Canada  expressed its support for the proposal which would lead greater clarity and 
predic tability to the Committee's work on transparency.  
105.  Brazil  shared the concerns expressed by India and China and noted that it was ready to 
engage in further discussion with all Members.   
106.  The European Union  reiterated its support for the proposal and thanke d the US for its 
flexibility. It remained ready to engage in further discussions on that topic.  
107.  Chinese Taipei  reiterated its support for the proposal.  
 
108.  Venezuela  added its voice to the concerns raised by Brazil, China and India. The assessment 
of its capi tal on the proposal was still ongoing and it reserved its right to come back with additional 
comments.  
109.  Mexico  understood the concerns raised by China and India. If Members continued to look for 
the obstacles which prevented them from complying with transpa rency obligations it would be very 
difficult to achieve their objectives. As a developing Member, Mexico was very interested in making 
progress on that matter. The opposing Members could prepare a counter -proposal which would 
enable the Committee to make p rogress towards greater transparency and timely notifications.  G/SCM/M/101  
 
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  110.  The Russian Federation  noted that there was a room for improvement in terms of 
completeness of notifications, meeting deadlines for their submission and timely responses by 
Members. The Russian  Federation welcomed the efforts to find a balanced solution on those issues. 
In general, Russia did not oppose to the establishment of deadlines for replies to written questions 
but Members should take due account of the problems faced by Members with com plex state 
structure and allocation of budget funding. Russia was ready to consider the idea of having 
informal consultations to reach an agreement on the deadlines. It should be considered in detail in 
terms of available administrative resources and timin g. 
111.  The United States  noted that the draft language had been submitted recently and Members 
needed to look at it more closely. There was clearly a fundamental problem regarding the 
implementation of Articles 25.8 and 25.9. Finally, the US echoed the idea ra ised by Mexico and 
invited the opposing Members to submit a counter -proposal.  
112.  The Chair encouraged Members to give further thoughts on the US proposal and to make 
counter -proposals. He also invited them to engage in bilateral discussions on that matter and  
stated that it appeared that Members wished to continue discussions on th ose issues at the next 
regular meeting of the Committee.  
 
113.  The Committee took note  of all the statements made.  
 
7  CONSTANT DOLLAR METH ODOLOGY FOR GRADUATI ON FROM SCM ANNEX VI I(B)  
114.  The Chair recalled that, pursuant to the Doha Ministerial Decision on Implementation -
Related Issues and Concerns (document WT/MIN (01)/17, paragraph 10.1), Annex VII (b) to the 
SCM Agreement listed Members until their GNP per capita reached US$1,000 in constant  1990 
dollars for three consecutive years. As of 1 January 2003, the methodology set forth in G/SCM/38, 
Appendix 2 had applied for making those calculations. In accordance with that Decision, since then 
the Secretariat had circulated annual notes in docume nt series G/SCM/110 updating the GNP per 
capita figures for the Members listed in Annex VII (b) based on that methodology. The most recent 
version, Addendum 1 3, had been circulated in 201 6. The Secretariat would circulate updated 
calculations during the su mmer, when the necessary World Bank data became available.6 
115.  The Committee took note  of the Chair's statement.  
8  PERMANENT GROUP OF E XPERTS   
116.  The Vice Chair  recalled that the term of office of Mr Welber Barral  as a member of the 
Permanent Group of Experts was  expiring and the Committee should elect a new member to 
replace him.  
117.  The Secretariat had received four nominations to fill this vacancy, all by the announced 
deadline: Ms Lanye ZHU from China, Mr Jaemin LEE from Korea, Ms Marina Foltea from Moldova, 
and M s Tsai-yu LIN from Chinese Taipei.  
118.  The Chair ha d asked the Vice -Chair to serve as the Chair for this issue , given that his 
delegation was one of those that had nominated an expert to fill the PGE vacancy.   
119.  Following the call for consultations, however, som e issues had been identified regarding one 
of the CVs received, and since it had not been possible to resolve the matter, the Vice Chair had 
decided to suspend the consultations. Members had been informed about the suspension of 
consultations on 13 March 2 017. For that reason, the Vice Chair had no basis to make a 
recommendation for the election of the nominees and the issue would be taken up by the next 
Chair of the Committee.  
120.  Moldova  regretted the impasse of the negotiation process and counted that the on going 
consultations would help moving things forward. Due to lack of agreement among Members, often 
the process of PGE election had taken a very long time leaving the expert role uncovered. Moldova 
reiterated the importance of the principle of inclusivenes s of smaller Members, respecting the 
                                                
6 G/SCM/110/Add.14 was circulated on 11 July 2017 . G/SCM/M/101  
 
- 14 - 
 
  meritocracy criteria, availability of the candidates and an equal balance between Members. The 
selection process entailed consultations by the Chair in order to find a compromise on the 
candidates. Moldova urged Members  to have a pragmatic approach towards the selection process 
considering the wide scope of the WTO subjects to be covered by their delegates and the time 
required. It also encouraged Members to agree on the PGE candidates within a reasonable time -
frame.  
121.  According to Moldova, Members should pay more attention to make the PGE operational to 
exercise its mandate set out in Article 24 of the Agreement. Members needed to ensure full 
capitalization of the PGE potential, which could be used for dispute settlement cases on subsidies 
and countervailing measures. Qualified, impartial, transparent and available experts to offer 
consultations to Members and a new strategy to increase the role of the PGE were needed. PGE 
candidates should be assessed not only based on th eir knowledge of the subsidies and 
countervailing measures but also on the meritocracy criteria, their willingness and availability to 
make the PGE operational.  
122.  The Committee took note  of all of the statements made.  
9  REQUEST FROM CHINA T O THE UNITED STATES PURSUANT TO ARTICLE 25.8 OF THE 
SCM AGREEMENT (G/SCM /Q2/USA/70) – ITEM REQUESTED BY CH INA   
123.  China  indicated that it had noticed some of the steel subsidy policies of the United States 
and submitted a request in accordance with Article 25.8 of the Agreement . China invited the US to 
explain whether those steel subsidy policies had specificity and whether the US had included them 
in its subsidy notification.  
124.  The United States  noted that it had received the questions recently and would provide 
preliminary answe rs. 
125.  With respect to the first programme, the Pension Benefit Guaranty Group , the US indicated 
that no government funds had gone to the Pension Benefit Guarantee Corporation (PBGC). The 
PBGC provided insurance for pensions in exchange for the payment of a f ee and if a company went 
out of the business it would take over the responsibility and make the pension payments to 
workers. In fact, the PBGC facilitated the restructuring of an industry because in the absence of it 
there might be hesitancy in letting a c ompany to go bankrupt.  
126.  The second programme raised by China, the Continued Dumping and Subsidy Offset Act of 
2000, which was also known as the Byrd Amendment, had already been terminated. The US 
recalled that that legislation had also been litigated at the  WTO.  
127.  With respect to state and local subsidies, the US indicated that one or two of the 
programmes had been already notified . Some of the programmes were about worker training or 
building skills of workers which were common in many of the States. Very of ten, if not always, 
those programmes were not limited to particular industries and were widely available for various 
companies and industries. Finally, the US noted that it would provide written replies by the time of 
the October meeting of the Committee.  
128.  China  stated that it would be pleased if the US could provide written replies. Noting that the 
Byrd Amendment was 15 years ago, it recalled a previous statement by the US in which the US 
indicated that even if it had been 10 years ago a subsidy programme s hould be notified as 
Members might have an interest to know about it.  
129.  The Committee took note  of all of the  questions and  statements made.  
10  QUESTIONS FROM THE U NITED STATES AND THE  EUROPEAN UNION TO CH INA 
PURSUANT TO ARTICLE 25.8 OF THE SCM AGRE EMENT (G/SCM /Q2/CHN/70) – ITEM 
REQUESTED BY THE EUR OPEAN UNION AND THE UNITED STATES    
130.  The United States  recalled that it had been concerned with the lack of transparency of 
China's industrial subsidy regime since 2001. It had raised questions to China under the old G/SCM/M/101  
 
- 15 - 
 
  Transitional Review Mechanism, pursuant to Article 25.8 of the Agreement, under the normal 
Committee procedures and also counter -notified subsidy measures under Article 25.10.  
131.  It had raised questions and counter -notified numerous possible steel subsidy me asures in 
China as steel was a vital sector in the US. China, however, had not notified a single subsidy 
programme during its WTO membership.  
132.  The growth of the steel industry in China had been remarkable since China had become a 
WTO Member. Its steel capac ity had grown approximately 580 per cent since 2001 and it 
accounted for half of the global steel production. The growth of capacity in China had outpaced the 
growth in demand. Its steel capacity exceeded domestic demand by over 400 million tons.  
133.  In a mar ket economy, when capacity outpaced demand, the owners of that capacity were 
threatened by financial loses which forced them to reduce capacity or exit from the market. In a 
market economy, when there was excess capacity in an industry it would be difficul t to obtain 
commercial financing for even more capacity investments. However, those fact patterns did not 
appear to apply in China.  
134.  The financial crisis in 2008 had led to a severe drop in global demand for steel. In China, 
however, the financial crisis ha d not affected the increase in capacity. Steel capacity in China had 
gone up substantially by over 440 million tons or 160 percent since 2009. The capacity increase 
since 2009 was more than the total capacity of the US, Japan, India, and Brazil combined.  
135.  Ministry of Industry and Information Technology of China and many market analysts agreed 
that China's steel demand had peaked, and it had been declining  since 2013.  
136.  It was not surprising that China's excess production had spilled over to export markets whi le 
there was insufficient domestic demand. China's exports had grown from less than 5 million tons 
to over 100 million tons between 2001 and 2016 which had led to a rise in trade remedy cases 
around the world against Chinese steel products.  
137.  According to Ch ina, the tremendous growth in capacity and exports had been accomplished 
without a single specific subsidy while a superficial examination of the annual reports of several of 
the largest steel companies in China indicated the otherwise. In those reports, u nder the title of 
"government subsidies" or "government grants", many of China's top steel companies listed 
dozens of government -funded projects through the provision of grants.  
138.  The Article 25.8 questions co -submitted by the European Union and the US asked  about 160 
government subsidies or government grants listed in the annual reports of six of the largest steel 
companies in China. The US recognized that all those listed programmes might not be notifiable 
under Article 25, but certainly there were more tha n the three non -specific programmes which 
China had claimed previously.  
139.  According to steel company annual reports, several of China's steel companies had also 
received government equity infusions which were not surprising given that most of the largest 
steel companies in China were government -owned. While it was possible that none of the 
government equity infusions had provided a benefit to the recipient companies, the US and the EU 
had asked China to explain whether those government investments could be c ommercially 
justified.  
140.  The European Union  reiterated that compliance with the notific ation obligations under 
Article  25 of the Agreement was crucial for the effective work of the Committee. Those obligations 
existed to ensure that Members had knowledge on their domestic subsidy regimes as well as an 
understanding on the effects of those subsidies. The submission of a subsidy notification was a 
step to meet the obligations under the Agreement but not sufficient without complete information 
on all specific su bsidies. In this respect, the EU drew Members' attention to China's notifications 
which had not been complete as regards to subsidies administered either at sub -central level or in 
relation to particular sectors, including steel. The purpose of the questio ns was to ask China to 
provide information regarding those subsidies received by the Chinese steel companies as well as 
explanations as to why they had not been notified so far.  G/SCM/M/101  
 
- 16 - 
 
  141.  Japan  noted that within the perspective of transparency it was beneficial to strengthen the 
implementation of the notification obligations and it supported the discussions in this regard.  
142.  China  indicated that it had received the questions prior to the meeting. It had noticed the 
concerns of the US and the EU and would reply them up on careful verification. China did not have 
specific subsidy policies for the steel industry at the moment. As stated at a previous regular 
meeting of the Committee, China's existing supportive policies to the steel industry, which were 
not targeted at the  steel industry alone, could be mainly divided into three categories: (i) those 
aimed at encouraging environmental protection and energy conservation; (ii) those supporting 
technological research, development, and innovation; and (iii) those aimed at facil itating 
enterprises' structural adjustments. Those policies were neither implemented for the steel industry 
nor contingent upon export performance. Many of them fell into the traditional category of non -
actionable subsidies in the WTO history which reflect ed the real efforts made by China to address 
the global overcapacity and industrial restructuring.  
143.  In terms of the three categories referred by China, the United States  indicated that the 
policies regarding environmental protection and energy conservation  might not be specific. 
However, as the policies on research and development were often specific, the US would be 
interested in details of the government grants provided under the R&D programmes. According to 
the US, the structural adjustment subsidies wou ld be specific under any circumstances unless 
those programmes were for all companies operating in all sectors, which would be unusual.  
144.  The US also noted that there were programmes that would not fall under the three 
categories referred by China, such as the programme entitled " Key Industry Rejuvenation and 
Technology Modification" . According to the US, "Key Industry" indicated that there was a selection 
of certain industries. Similarly, there was a programme called " Cold-Rolled Sheet Production Line 
Interest Subsidy " which seemed to be related to the production of cold -rolled steel sheet not to 
environmental protection or R&D.  
145.  China  stated that it would verify those questions and would have a response as soon as 
possible.  
146.  The Committee took note  of all of  the questions and  statements made.  
11  NON-NOTIFICATION BY CHIN A OF ALLEGED SUBSIDI ES CONTAINED IN THE 2014, 
2015 AND 2016 REQUES TS BY THE UNITED STA TES UNDER ARTICLE 25 .10 OF THE SCM 
AGREEMENT (G/SCM/Q2/ CHN/51, PLUS  G/SCM/Q2/CHN/51/CORR .1; 
G/SCM/Q2/CHN/53; G /SCM/Q2/CHN/59) – ITEM REQUESTED BY TH E UNITED STATES  
147.  The United States  indicated that while it had become routine for the US to highlight China's 
poor notification record, it had become routine for China to claim that it respected and fully 
adhered to it s transparency obligations under the Agreement which was undermined by the facts.  
148.  The US recalled that China ha d submitted only three subsidy notifications in sixteen years all 
of which had been submitted well beyond the deadline for the periods covered a nd all had been  
grossly incomplete . For the first time since its membership, China had provided its first  subsidy 
notification of its sub-central measures  the previous year and its notifications represented a very 
small fraction of the subsidy measures at both central and  sub-central level . China's subsidy 
notifications had failed to cover important industry sectors such as steel, aluminium and fisheries 
and had not included subsidies for all of its provinces. Finally, China had padded its notification 
with programmes that could hardly be considered as subsidies under the Agreement, such as 
programmes for poverty alleviation, HIV medications, and preferential tax treatment for 
endangered animals that benefited a government entity.  
149.  The US recalled that it had  repeatedly expressed its concerns over China's poor notification 
record in the Committee. Given the important role of central and sub -central governments in 
pursuing industrial policies in China, Members had a keen interest in obtaining a complete 
underst anding of China's subsidy regime, especially in those sectors experiencing overcapacity. 
China, however, continued to resist providing the level of transparency envisioned by the 
Agreement by denying critical information on its subsidy policies.  G/SCM/M/101  
 
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  150.  The lack o f transparency was exacerbated by the fact that China had not published its 
subsidy measures in a single official journal or made translations available, although it had agreed 
to do so when it had become a Member which added another layer of darkness to a n already 
opaque subsidy regime.  
151.  The US noted that it had repeatedly tried to work bilaterally but China refused to meet and 
discuss those measures. Therefore, to provide some degree of transparency, the US had submitted 
numerous requests for information u nder Articles 25.8 and 25.10 and had counter -notified over 
470 subsidy measures providing full, translated copies of each of them. China's approach to the 
submissions made by the US under Articles 25.8 and 25.10, however, was very troubling because 
it refu sed to provide any written replies to those questions. It had provided partial oral responses 
with little effort and resisted to answer questions under normal Committee procedures concerning 
well-documented subsidy programmes. In addition, China had taken the position that if it had not 
notified a subsidy programme, it would not answer any questions on it.  
152.  The US stated that it failed to see how that approach fit in with the transparency obligations 
of the Agreement. This approach left the US with many una nswered questions concerning the 
operation of subsidy programmes in China; in particular, the interaction among dozens of legal 
measures coming from various government entities at both the central and sub -central levels.  
153.  China itself had admitted that prob lem in the context of its Trade Policy Reviews. The US 
noted that according to Article 25.3 of the Agreement, "the content of notifications should be 
sufficiently specific to enable Members to evaluate the trade effects and to understand the 
operation of t he subsidy programmes."  
154.  The US referred to the Programme No.42 in China's subsidy notification which was 
corresponding to Item No.35 in the US' fisheries counter -notification. While Programme No.42 was 
about the tax benefits for fishermen under certain pro jects, Item No.35 in the counter -notification 
was about the total income tax exemption for deep -water fishermen. The counter -notification 
referred to 2011 State Administration of Taxation which was not mentioned in China's notification 
and all the referenc es made in China's notification were to legal measures dated before 2011.  
155.  The US recalled that China argued that Programme No.47 in its subsidy notification was the 
same with Item No.42 in the fisheries counter -notification although there was no reference to 
fisheries in the notification. It was unclear to see what sectors were actually benefiting from the 
notified programme. China had also claimed that Programme No.55 in its notification was the 
same with Items No.30 and 31 in the counter -notification. How ever, the cited legal measures and 
even the titles of the programmes were completely different. Similarly, while the Programme 
No.84 in China's notification was same with Items No. 36 and 37 of the counter -notification, there 
was no reference to fish in th e notification.  
156.  Since China had refused to meet the US to discuss those issues on a technical basis, the US 
felt itself obligated to raise those questions. The US recognized that it was every Member's right to 
decide the degree of government intervention i n its economy. Every Member also had agreed that 
its subsidies were subject to WTO rules and to the transparency obligations that were central to 
the proper functioning of the Committee. It had been unfortunate that the US had  repeatedly  had 
to resort counter-notification  mechanism but China's latest notification demonstrated that 
hundreds of measures were not notified by China. The US reiterated its willingness to meet 
bilaterally to discuss the specifics of the measures in its Article 25.10 submissions.  
 
157.  The US urged China to abide fully by its subsidy notific ation obligations under the 
SCM Agreement, and stated that it was ready to work with China to take concrete steps to move 
rapidly toward a subsidy notification that would present the full picture of i ts subsidy regime in a 
clear and transparent manner.  
 
158.  China  believed that the purpose of counter -notification under Article 25.10 of the SCM 
Agreement was to promote timely fulfilment  of Members' notification obligation . Although the US 
had kept on submitt ing such requests, much content of which had been overlapped, when 
preparing its notifications, China had done its utmost to provide clarification and explanation at the 
previous regular meetings of the Committee. Following the submission of its subsidy no tifications 
at both the central and sub -central level in October 2015 and July 2016, China had believed that 
those efforts had been able to address the majority of the concerns raised by the US.  G/SCM/M/101  
 
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  159.  With respect to steel, China had repeatedly stressed at previ ous meetings that it did not 
have specific subsidies for the steel industry. Therefore, the US requests noting that China had 
never notified its steel subsidy policies were groundless. In its subsidy notification in documents 
G/SCM/N/220/CHN, G/SCM/N/253/C HN, and G/SCM/N/284/CHN, China had incorporated some of 
the subsidy policies related to steel industry, which were not policies for steel industry in particular 
but rather related with the steel industry, such as Programme No. 72, "the Incentive Fund for 
Energy -Conserving Technology Upgrading and the Special Fund for Clean Energy" which had been 
notified as a sub -programme of Programme No. 79, "the Special Fund for the Development of 
Circular Economy." Since other policies were not specific, they had not be en included in subsidy 
notifications. China called Members to understand its subsidy policies on the basis of its subsidy 
notifications and to exchange ideas based on those notifications.  
160.  China indicated that it had verified the relevant contents in the co unter -notification 
submitted by the US in document G/SCM/Q2/CHN/59 regarding its fishery policies and noted that 
the majority of the contents were overlapping with G/SCM/Q2/CHN/52 submitted by the US in 
April 2015. In the previous meetings, China had alrea dy provided clarifications on those 
programmes. China requested the US to provide details regarding the programmes, which were 
not overlapping according to the US, so that China could verify and provide clarifications. China 
also noted that it would active ly consider incorporating more fisheries programmes into its new 
subsidy notification.  
161.  With respect to China's explanations that the counter -notified programmes were overlapping 
with the programmes notified by China, the United States  noted that while ther e were 44 counter -
notified measures, China had talked about four or five of them. Even if there had been an overlap 
for four or five measures, there would be 40 measures that China had to notify. Although the US 
had identified a lot of boat building progra mmes at the provincial level, there were no fishery boat 
building programmes in China's notifications. Due to the difficulties to work on those issues under 
the Committee setting, the US invited China to work bilaterally.  
162.  China  reiterated that the majority  of its subsidies related with fisheries had already been 
notified and overlapping. China had talked about four or five programmes to give examples on the 
overlapping programmes; otherwise it would take too much time. Finally, China indicated that it 
neede d more clarification from the US to make its notification more perfect.  
163.  The Committee took note  of the statements made.  
12  NON-NOTIFICATION BY CHIN A OF ALLEGED SUBSIDI ES UNDER THE 
INTERNATIONALLY WELL -KNOWN BRAND PROGRAMM E (G/SCM/Q2/CHN/71) – ITEM 
REQUESTED BY THE UNITED STATES   
164.  The United States  indicated that the focus of its fifth counter -notification was China's 
Internationally Well -known Brand Programme. That issue went back to 2008, when the US had 
asked for dispute settlement consultations regarding th e Famous Export Brand Programme (FEBP) 
which had been alleged to be a prohibited export subsidy under the Agreement.  
165.  The statement of evidence had included more than 90 legal measures that had established 
and implemented the FEBP at the central and sub -central levels of government. The central level 
measures had laid out the parameters of the programme which had been implemented at the sub -
central levels in a variety of ways.  
166.  Following the consultations, the US and China had conducted settlement discussions  for 
several months. Towards the end of 2009, China had terminated or amended many of the 
measures at issue and demonstrated that the remaining programmes had expired or been no 
longer in effect. A mutually agreed solution had been signed in December 2009 in which China had 
confirmed "that no export -contingent benefit [would] be provided to entities in China under any 
measures contained in the consultation request or any subsequent related measure."  
167.  Following that agreement, the US had begun to see legal me asures at the central and sub -
central levels establishing the Internationally Well -Known Brand Programme. The relevant central 
government legal measure had stated that the FEBP had been "adjusted and perfected" and that 
the title Famous Export Brand would be changed to Internationally Well -Known Brand.  G/SCM/M/101  
 
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  168.  While the export -related eligibility criteria had been removed from the central level measure, 
very similar export -related eligibility criteria had been included in the sub -central measures.  
169.  In China's most r ecent subsidy notification regarding sub -central level programmes, the 
FEBP was notified by many sub -central governments although it had been effectively terminated in 
2009. Notifying a programme after seven years from its expiration was not particularly h elpful in 
furthering the transparency objectives of the Agreement.  
170.  While many of the Famous Export Brand measures had been notified after the termination of 
the programme, neither the central nor sub -central notifications of China had included the 
measures  implementing the Internationally Well -known Brand Programme which had become 
effective more recently. Those actions did not appear to provide Members with the level of 
transparency envisioned by the Agreement and indeed raised questions as to the brand 
programmes currently in place and whether they were consistent with the rules of the Agreement 
regarding export subsidies.  
171.  China  stated that it had received the counter -notification prior to the meeting and would 
provide reply upon careful verification.  
172.  The Committee took note  of the statements made.  
13  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  
173.  The United States  recalled its view, based on the Secretaria t's calculations, that the Indian 
textile and apparel sector had reached export competitiveness no later than 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 and all export subsidies to India's textile sector should have been terminated. While 
India's recently released Foreign Trade Policy for 2015 -2020 recognized the need to ter minate 
certain programmes, unfortunately it did not establish any procedural framework for doing so and 
appeared to target 2018 as the operative date for termination.  Following its expected graduation 
from Annex VII, India would be obligated to terminate a ll of its export subsidies to all sectors. The 
US urged India to eliminate those export subsidies benefited by the textile and apparel industries 
as a first step.  
174.  The US had made clear to India that it would welcome further dialogue on these issues in 
the context of their continued bilater al engagement and indicated that it was content to wait for 
the updated Annex VII calculations.7 
175.  India stated that it was committed to meeting its obligations under the SCM Agreement in 
time, and to engage constructively i n the clarification of the obli gations 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 
consid ered that since the information on export competitiveness had been  provided in 2010, 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 not export subsid y schemes and 
some of which had been discontinued. A number of them had been removed from or rationalised in 
the Foreign Trade Policy of 2015 -2020. Further, whil e 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 and propos ed to remove this item from the agenda of the future meetings 
as it had been discussed several times.   
176.  The United States  recognized that some of the programmes at issue were duty -drawback -
like programmes and there might be a legal issue whether they were technically export subsidies. 
However, there were other programmes which appeared to be export subsidies benefited by the 
                                                
7 G/SCM/110/Add.14 was circulated on 11 July 2017 . G/SCM/M/101  
 
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  Indian textile and apparel sector. With respect to the various legal questions referred by India, it 
would be better to wait for the u pdated Annex VII calculations.  
177.  The Committee took note  of the statements made.  
14  ENHANCING FISHERIES SUBSIDIES TRANSPAREN CY - ITEM REQUESTED BY TH E 
UNITED STATES  
178.  The United States  recalled that it requested that agenda item to discuss ways of improving 
and enhancing the transparency of fisheries subsidies and had circulated an informal room 
document consisting of seven questions to guide the discussion. It clarified that those questions 
were submitted in the context of the discussions made during previous C ommittee meetings and it 
had no intention to submit them to the Rules Negotiating Group.  
179.  As a general matter, the US asked what other information might be needed to assess the 
trade and resource impacts that a fishery subsidy might have. Previously the US had suggested (i) 
catch data by species; (ii) status of the fish stocks; (iii) fleet harvesting capacity; (iv) conservation 
and management measures; and (v) total imports/exports per species.  
180.  Catch data and the status of the fishery being targeted was impo rtant for the US to monitor 
the status of the targeted fishery and generally not to subsidize the harvesting of depleted stocks 
which would likely lead to even more fish to be harvested.  
181.  The US recognized the point made about the difficulty of linking a su bsidy to any one fishery 
in certain circumstances and welcomed ideas on addressing that issue. It understood that defining 
"harvesting capacity" was difficult and asked whether there was a practical approach to that issue 
which might provide valuable infor mation.  
182.  The US also asked whether any of the relevant international fishing organizations could help 
Members to fill in some of the information gaps regarding the catch data and status of stocks and 
fleet capacity. The WTO was not a fishery management orga nization and might not have the 
expertise to evaluate management plans, but if harvesting a particular fish stock was going to be 
subsidized it would be critical to have a management regime to prevent overfishing.  
183.  Under the regular notification obligations  of the Agreement, information on the trade effects 
of a subsidy was requested. While the reasoning behind that requirement was understandable, 
Members found it difficult to answer. Therefore the US asked whether there was concrete 
information that could b e provided such as imports and exports, which might shed light on 
possible trade effects.  
184.  The US noted that its ultimate goal was to ensure that the notifications provided greater 
transparency on fisheries subsidies programmes and allowed a better understa nding of the 
operation of notified programmes.  
185.  New Zealand  noted that the discussions held in the Committee showed that progress could 
be made on that issue in parallel to the negotiations. With respect to the first question raised by 
the US, New Zealand a greed that those types of information were important in assessing the trade 
and resource impacts of fisheries subsidies. It underlined the importance of information on imports 
and exports of related species which would help establishing a picture of the st atus of fish stocks, 
fishing fleets, catches and impacts on markets. As much support to the sector was provided in the 
form of subsidies beyond those defined in the Agreement, enhanced transparency in that area 
would be helpful.  
186.  With respect to the third q uestion raised by the US, it was relevant to recall the FAO Code of 
Conduct on Responsible fishing, which talked about how 'states should ensure that timely, 
complete and reliable statistics on catch and fishing effort were collected ' and where relevant , 
report them to regional organisations.  New Zealand certainly strive d to do that, and it employ ed a 
variety of methods including daily and monthly catch reporting by fishermen supported by 
government monitoring and compliance systems . G/SCM/M/101  
 
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  187.  With respect to the fif th question, New Zealand indicated that even if methods of measuring 
fishing capacity var ied amongst the Membership, it would seem only logical for an assessment to 
be undertaken before and after the provision of capacity enhancing subsidies.  Without this , how 
else was it known that such support was necessary? And how else was it known whether the 
support ha d met its policy objective?  
 
188.  Regarding the sixth question, New Zealand noted that the basic question was whether there 
was any management at all.  It w as hard to imagine fisheries subsidies not being harmful where 
there was no fisheries management. Another basic question was whether the fishery had open 
access. If anyone was free to enter the fishery then overcapacity and overfishing was again a likely 
outcome, even without subsidies. Beyond that, the type and effectiveness of the fisheries 
management system was all relevant to understand the context of fisheries subsidies 
programmes.  
189.  Finally, with respect to the seventh question, New Zealand was of the v iew that the types of 
information mentioned by the US together with imports and exports should be helpful in assessing 
the trade impacts of fisheries subsidies. An appropriate level of detail was also important in all 
those types of information.  Simply re porting at a high level, such as a general species level, might 
be unhelpful if there were several stocks being fished and some of them were shared with other 
Members.  
190.  The European Union  indicated that it was supportive of any reasonable measures that woul d 
help greater and strengthened transparency and it remained open and ready to discuss that issue 
in the context of fisheries subsidies, in particular. The lack of transparency in notifications was a 
general problem in the WTO and it was not unique to fish eries subsidies. Although the US noted 
that the informal room document had been submitted only for the purposes of the Committee, the 
topic was also related to the ongoing discussions in the NGR. The EU recalled the joint proposal 
made by Australia and the  EU on the issue of notification and transparency of fisheries subsidies, 
which had been on the table during the last Ministerial meeting of the WTO yet led to nothing.  
191.  Canada  remained interested in exploring ways for improved transparency on harmful 
subsidies to the fishery sector and therefore it continued to engage in constructively in the 
negotiations. It was relevant to point out the link between transparency and disciplines, more 
specifically, the nature and scope of any disciplines on fisheries subs idies and what information 
would be required in order to implement and enforce them. It was still considering the questions 
raised by the US, but in the meantime it might be helpful to identify some relevant external 
resources for guidance when considering  the ways to improve transparency in fisheries subsidies. 
Canada acknowledged that the data on fishery subsidies varied among Members but there were 
guiding principles contained in the FAO Code of Conduct on Responsible F ishing , and certain 
regional fisher y management organizations also could provide similar guidance. National fisheries 
authorities could be helpful in informing Members about their practices on data and information 
collection which in turn could lead enhanced transparency.  
192.  Australia  was sti ll considering the questions raised by the US. It would be useful for the 
Committee to consider transparency aspects of fisheries subsidies and what the role of the 
Committee could be in enhancing notification obligations. Obviously, that would also be hel pful in 
the context of ongoing negotiations. Members needed to focus on the subsidy, the role of the 
WTO, and where there were existing data obligations in other organizations, not to duplicate data 
requirements. Given that there were ongoing negotiations,  it would be useful to see what was 
practicable, implementable, and tailored to the fishery sector.  
193.  Brazil  shared the concerns over transparency and noted that it had been engaged in the 
work in the WTO for enhanced disciplines. However, it had serious dou bts about the role of the 
Committee and was also concerned about possible duplication of work, in the NGR and in other 
international organizations. It shared the point raised by Canada about the link between 
transparency and disciplines and noted that it w as not supporting the discussion on transparency 
without having a discussion on the disciplines. Although it saw merit in the points raised by the 
US, Brazil was of the view that the appropriate forum to discuss those issues would be the NGR.  
194.  Argentina  indicated that its capital was still considering the document submitted by the US. 
Noting the importance of transparency on fisheries subsidies, it took note the clarification made by 
the US that the document had been submitted only for the Committee work.  G/SCM/M/101  
 
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  195.  India noted that the issue of transparency and enhanced notification of fisheries subsidies 
had been discussed at the NGR and echoed the views expressed by Brazil and others that the 
duplication of work should be avoided. India had already supported transpa rency -plus outcomes in 
fisheries subsidies but the principle of S&DT, which had been mandated in several Ministerial 
Declarations, needed to be respected. According to India, the problem was lack of will to notify 
and adding more details to the WTO notific ation format would not prompt new notifications. India 
was notifying its fisheries subsidies regularly and requested other Members to fulfil their 
obligations rather than seeking to expand them.  
196.  Japan  noted that it had received the US submission recently and would make comments if 
necessary.  
197.  The United States  understood that the questions had been submitted late and there had to 
be further consultations. It was expecting to continue discussions on the topic.  
198.  The Committee took note  of the statements made.  
15  SUBSIDIES AND OVERCA PACITY (G/SCM/W/572 PLUS G/SCM/W/572/REV .1) – 
ITEM REQUESTED BY CA NADA, THE EUROPEAN U NION, JAPAN8, AND THE 
UNITED  STATES  
199.  The European Union  indicated that it strongly believed in the importance of the WTO and the 
Committee in particul ar, to continue analysing the links between subsidies and creation of excess 
capacity in various sectors. For that reason, along with Canada, Japan and the United States, it 
had submitted a paper entitled "Role of Subsidies in Creating Overcapacity and Opt ions for 
Addressing This Issue in the Agreement on Subsidies and Countervailing Measures" which was a 
follow -up to a previous paper in document G/SCM/W/569 that had been discussed at the 
October  2016 meeting of the Committee.  
200.  G20 Leaders had recognized in 2016 that industrial overcapacity had become a major 
problem for the global economy as it was one of the key causes of the distortions in international 
trade. They had also highlighted the importance of collective action in addressing the issue of 
overcapa city and recognized that subsidies and other types of support from governments or 
government sponsored institutions could cause market distortions and contribute to global excess 
capacity. The Committee should play a central role in addressing government s upport contributing 
to overcapacity and complement other fora dealing with other factors contributing to overcapacity 
such as the Global Forum on Steel Excess Capacity facilitated by the OECD. The Committee was a 
unique forum to discuss that agenda item, w hile other fora such as the Global Forum might more 
affectively look into other factors contributing to overcapacity in certain industries. The Committee 
had the capacity, expertise, and powers to explore the extent to which subsidies contributed to 
overca pacity. According to its analysis, the more the state functioned as a leading economic actor 
retaining a significant role in resource allocation, the more prominent the role of subsidies as a 
major contributor to overcapacity and the less relevant the role  of market forces was.  
201.  The range of subsidies that might be provided by the state was enormous reaching from 
providing support to kick -start companies in preferred industries to providing input at below 
market prices to economically non -viable companies in  the strategic sectors. The problem was that 
once overcapacity was created and domestic demand was not big enough to accommodate it, it 
was often exported to the detriment of the competing industries in other countries. At this point, 
the distortion of int ernational trade was felt most severely and the Agreement did not offer any 
sufficient remedy. Therefore, the Committee should look at the ways to make such subsidies be 
subject to more stringent disciplines.  
202.  The difficulty in analysing the situation was compounded by the lack of sufficient information 
regarding subsidy programmes of Members. The overall state of subsidy notifications was 
deplorable which required the attention of the Committee when discussing the subsidies and their 
contribution to overca pacity. The EU was expecting to hear Members' views on that issue in view 
of the clear call for collective action by the Heads of States of the G20.  
                                                
8 At the beginning of the meeting Japan requested to be included as one of the co -sponso rs of this item.  G/SCM/M/101  
 
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  203.  The United States  noted that the role of subsidies in the creation and maintenance of 
overcapacity was a co mplex issue. Governments often identified strategic industries to create and 
promote, which entailed significant government financing in the form of subsidized lending and 
equity contributions. When the government also owned and controlled the leading indu strial 
enterprises and banking entities, and used them to favour and grow the identified strategic 
industries, those industries became uncoupled from supply and demand signals, and the discipline 
of the market diminished.  
204.  In the same way, when strategic in dustries with economically unsustainable capacity began 
to fail, governments sought to maintain employment, production and capacity by forgiving debt, 
rolling -over loans, converting debt to equity or providing new equity, without restructuring the 
failing companies such that they could operate profitably and their capacity was in line with market 
demand. Consequently, despite a drop in demand, production and capacity were maintained and 
might even be increased which could lead to the excess production being  exported and severe 
disruptions in international trade flows. Therefore, although those subsidies might not be 
prohibited under the Agreement, their distortive impact could be similar to export subsidies. For 
that reason, they should be considered for mor e stringent disciplines. The first step for Members 
under the existing rules was to be more transparent in their provision of subsidies and to 
implement the transparency obligations under the Agreement more conscientiously.  
205.  Canada  supported the paper as a  reflection of its broader concerns over the pressing 
situation of global manufacturing overcapacity which had become a major problem for the global 
economy through trade and market distortion it caused. While the Global Forum on Steel Excess 
Capacity was making an important contribution, meaningful solutions required collective action 
across many international fora. In addition, in order to be effective it was essential that the efforts 
be aimed at addressing the underlying causes of excess capacity includ ing the subsidizations and 
government interventions. The WTO and the Committee in particular, were uniquely situated to 
support discussions on the role subsidies played in contributing to overcapacity, and to address 
them. Canada expected that Members woul d give a thorough consideration to the aim of the paper 
which was to encourage the discussion among Members to address subsidies contributing to global 
overcapacity. It urged Members to engage constructively in those discussions and to make the full 
use of  the expertise and capacity of the Committee to find lasting solutions to the global 
overcapacity problem.  
206.  Japan  noted that market distortive subsidies had been recognized as one of the causes for 
global overcapacity by various international fora includin g G20 Leaders' Summit and the Ministerial 
Meetings. Japan was of the view that it was important for Members to deepen the discussions on 
the necessity to strengthen the current subsidy deregulations. In this regard, it was important for 
each Member to comp ly with the existing notification obligations. Japan also emphasized that the 
joint proposal did not intend to discuss the overcapacity problem itself, but instead to discuss the 
necessity to strengthen subsidies disciplines by taking into account the over capacity problem. 
Since the problem of overcapacity was also present in various industrial sectors other than steel, 
the Committee was the appropriate forum to discuss the subsidies disciplines and subsidies in 
general.  
207.  Israel  believed that industrial over capacity had become a major problem with serious 
negative consequences stemming from the distortions it caused on international trade. Therefore, 
this was an opportunity for the Committee to address that issue through a focused and detailed 
debate. Israel highlighted that the discussions could be beneficial for and could also benefit from a 
parallel discussion held in different fora.  
208.  Australia  had preliminary comments on the paper submitted by the co -sponsors. It shared 
the concerns over global overcapacit y problem which was real and the impacts of which were seen 
in the Australian market as well. Although there were other fora that were looking at overcapacity 
in specific sectors, the Committee, which had the expertise, could appropriately conduct parallel  
work. As a preliminary comment, Australia indicated that it was not clear what the options were 
for addressing the issue and the way that the co -sponsors were looking to take this exercise. 
Australia shared the view that transparency was a vital first ste p to understand what was 
happening in the market. Therefore it was concerned with the declining compliance with the 
subsidy notification obligation.  G/SCM/M/101  
 
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  209.  Mexico  recalled that it had expressed its concerns over the issue of overcapacity jointly with 
the European  Union, Japan and the United Stated at the October 2016 meeting. One of the major 
effects of those subsidies was the artificial increase in supply at the international level and the 
market distortions it created. As it had become difficult to maintain the existing situation, it 
became necessary to find ways to cope with it. In this regard, it was important for Members to 
contribute to understand what had happened and then they could take actions to avoid the 
situation getting worse to the detriment of the c orrect functioning of the market. Mexico agreed 
with the idea that the objective was to identify the contribution of certain subsidies on 
overcapacity which was full of with challenges, and a fundamental step forward would be to 
increase transparency.  
210.  Mexico reiterated its readiness to have a discussion in the Committee as well as in other 
international fora with the participation of those countries that had been affected by the 
overcapacity and those others that had contributed to the existing situation.  
211.  Korea  noted that overcapacity had become a major problem in the global economy and G20 
Leaders in Hangzhou had recognized the need for collective action to deal with the issue which had 
let to the creation of the Global Forum to address overcapacity in th e steel sector. The EU's 
proposal was meaningful as the discussion on the potential relationship between subsidies and 
overcapacity within the mandate of the Committee could complement the work of the Global 
Forum. Despite different views on how and to wha t extent subsidies should be discussed, Members 
could build a common understanding on the potential role of the Committee through an open -
minded dialogue.  
212.  As the EU's proposal indicated, transparency was one of the most crucial elements to 
facilitate info rmed discussions; therefore great emphasis had been given on information sharing in 
the Global Forum. In this regard, Korea encouraged Members to join efforts to enhance 
transparency, including through implementation of the notification obligations under t he WTO.  
213.  The Russian Federation  reiterated its view that industrial overcapacity was one of the major 
problems of the global economy that distorted international trade and welcomed the efforts to 
overcome it, in particular within the Global Forum on Steel E xcess Capacity. Collective action was 
needed to address the challenges arising from overcapacity and subsidies were not the only face of 
the problem. Other causes should be equally addressed to be able to get a result from the efforts.  
214.  For instance, anoth er major factor contributing to overcapacity was trade protectionism. 
Broad use of trade -restrictive measures, in particular trade remedies, was a reaction to market 
failures arising from the excess capacity which exaggerated those failures at the same tim e. 
Reactive measures negatively affected trade flows and hampered competition. As a result, the 
exporters subject to such measures also suffered from global excess output and had to seek 
compensation for the loss of export markets. For that reason, trade -restrictive measures were not 
a lesser factor boosting overcapacity compared to subsidies. Looking into subsidies only would be 
a one -sided approach which was unlikely to be effective.  
215.  According to the Russian Federation, Members should first draw an all -inclusive picture of 
the strategy to tackle excess capacity. In this regard, the first thing to do was to pick all the fruit 
from the Global Forum. The Russian Federation was hoping that the first report of the Global 
Forum to the G20 Ministers  would highli ght all the elements of the problem and afterwards 
Members could see how they could use the venues of the Committee as well as other Rules 
Committees to eliminate the negative effects of excess capacity.  
216.  Turkey  was still examining the paper. The issue had different angels and Turkey was fully 
aware that Members were dealing with the overcapacity problem in different fora. Turkey 
requested the co -sponsors to clarify what was meant by more stringent disciplines and how 
Members could deal with the problem with in the disciplines of the Committee.  
217.  China  recalled its previous statement made at the beginning of the meeting and reiterated 
that the Committee was not the proper forum to discuss overcapacity and subsidies were not the 
major cause of it. It echoed the v iews of the Russian Federation and reiterated that overcapacity 
was a global, periodic and structural problem and the root cause of overcapacity was not subsidies 
but the slow recovery of the global economy as well as the sluggish demand conditions since t he G/SCM/M/101  
 
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  international financial crisis in 2008, which was also confirmed by the G20 Leaders previous year 
in China. The overuse of trade remedies made that situation even worse. Focusing on only 
subsidies ignoring other important elements would not help to solv e the problem but would lead 
Members to an erroneous direction and cause a rise in protectionism.  
218.  With respect to the view that subsidies were not the major cause of the overcapacity, the 
European Union  indicated that market forces such as decrease in dem and might also play an 
important role in contributing to overcapacity. However, the relevance of market forces diminished 
sharply when the state functioned as the leading economic actor and retained a significant role in 
resource allocation. Under such a s cenario, subsidies became the dominant contributor of excess 
capacities because governments pursued their policies without taking supply and demand properly 
and adequately into account when making their decisions. As the EU had indicated previously, the 
co-sponsors were proposing to address only the subsidies within the Committee. Other factors, 
such as the demand conditions, would be addressed in other fora, including the Global Forum. The 
EU also noted that they had received overwhelming support and since  the Committee met only 
twice a year there was a need for a concrete course of action. As suggested by Korea, it would be 
an open dialogue among Members which was necessary for confidence to engage in further 
discussions. One step would then follow the oth er. The EU also agreed with others underlying the 
need for greater transparency through notifications.  
219.  China  noted that the WTO was not based on majority and only less than ten Members had 
spoken on that topic. It was premature to draw any conclusion that an overwhelming majority had 
agreed to discuss the overcapacity issue in the Committee. It reiterated its position noting that 
subsidies were not the main cause for overcapacity but the lack of demand was. There were other 
factors but the market factor was  the most important one compared to the so -called subsidy 
factors. Finally, China reiterated that since the issue was not within its terms of reference, it 
should not be discussed in the Committee.  
220.  The Chair  noted that there were divergent views including on the potential role that the 
Committee could play and encouraged the co -sponsors to reach out other Members to find a 
common ground and to explore what kind of role the Committee could play.  
221.  The Committee took note  of the statements made.  
16  OTHER BUSINESS  
16.1  Support Measures for the Construction of a New Cement Fac ility in Quebec, Canada 
– Item Requested by the United States  
222.  The United States  indicated that it had a number of concerns about support provided by 
governmental entities for the development of a ne w cement facility in Port -Daniel -Gascons, 
Québec.  
223.  First, although a facility at that site had been under consideration since the 1990s, it had 
never attracted sufficient commercial investment. According to press reports, non -governmental 
participants in t he project had explained that the official support made the project possible which 
indicated that commercial financing had not been available previously perhaps because the project 
had been too risky and high financing charges had made the project economic ally unfeasible.  
224.  Second, the magnitude of the support was quite significant, a half billion dollars in loans and 
equity investment all by government -owned entities.  
225.  The US was concerned that both the government and company officials involved in the 
project had indicated that a significant amount of the plant's subsidized production would be 
exported to the US. The creation of a new cement producer with nearly half a billion dollars in 
government funds which would focus on exporting much of its production to the US could have 
serious and troubling consequences for the US cement producers. The US asked the Governments 
of Canada and Québec to demonstrate that those support measures were on commercial terms 
and not contingent to de facto  export performance. Th e US also expected Canada to notify those 
support measures to the Committee as soon as possible if they met the definition of a specific 
subsidy.  G/SCM/M/101  
 
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  226.  Canada  noted that it was a strong supporter of the rules -based trading system and 
continued to take its obliga tions under the Agreement very seriously. Although the measures in 
question were under the per -view of the Québec Government, the Government of Canada was 
confident that they were fully consistent with its international obligations. Canadian and the US 
officials had met bilaterally in the past to discuss the US' concerns and Canada would make itself 
available to the US to discuss the issue.  
227.  The Committee took note  of the statements made.  
17  DATE OF NEXT REGULAR  MEETING  
228.  The Committee decided  to hold its next re gular meeting during the week of 
23 October  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.  
 
18  ELECTION OF OFFICERS  
229.  The Chair informed Mem bers that consultations as regards the selection of the new chair of 
the Council of Trade in Goods (CTG) and the chairs of the Committees under the CTG were still 
under way. The Chair suggested that the Secretariat send a fax once the CTG has completed its  
work, indicating the Chair identified by the CTG. The new Chair would be deemed to be elected by 
the Committee absent any objection .9 The Chair proposed to postpone the election of a 
Vice-Chairperson until the new Chair was appointed.10 
 
230.  The meeting was closed.  
 
 
__________  
                                                
9 On 22 May 2017 a fax was sent conveying to the member ship the appointment of 
Ms Ieva Baršauskaitė (Lithuania) by the CTG as the Chair of the Committee. No objection was received and the 
Chair was deemed to be elected by the Committee.  
10 On 11 July 2017, Ms Ieva Baršauskaitė , the Chair of the Committee, sent a fax to the membership 
conveying  the appointment of Mr Dick K.Y. Mak  (Hong Kong, China) as the new Vice -Chair of the Committee. 
No objection was received and the Vice -Chair was deemed to be elected by the Committee.