WT/DS505/R  
 
5 July 2018 
(18-4174) Page: 1/99 
  Original: English  
 
  
UNITED STAT ES – COUNTERVAILING MEASU RES ON  
SUPERCALENDERED PAPE R FROM CANADA  
REPORT OF THE PANEL  
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  TABLE OF CONTENTS  
 
1   INTRODUCTION  ................................ ................................ ................................ ........  10 
1.1   Complaint by Canada  ................................ ................................ ................................ ..10 
1.2   Panel establishment and composition  ................................ ................................ ............ 10 
1.3   Panel proceedings  ................................ ................................ ................................ .......10 
1.3.1    General  ................................ ................................ ................................ .................. 10 
1.3.2    Working Procedures on Business Confidential Information  ................................ ............. 11 
1.3.3    Working Procedures for open meetings  ................................ ................................ .......11 
2   FACTUAL ASPECTS ................................ ................................ ................................ ..... 11 
2.1   The measures at issue  ................................ ................................ ................................ 11 
3   PARTIES' REQUESTS FO R FIND INGS AND RECOMMENDAT IONS  ................................  12 
4   ARGUMENTS OF THE PAR TIES  ................................ ................................ ...................  12 
5   ARGUMENTS OF THE THI RD PARTIES  ................................ ................................ ........  12 
6   INTERIM REVIEW  ................................ ................................ ................................ ...... 12 
7   FINDINGS  ................................ ................................ ................................ .................  12 
7.1   Introduction  ................................ ................................ ................................ ............... 12 
7.2   General principles regarding treaty interpretation, the standard of review, and 
burden of proof  ................................ ................................ ................................ .................. 13 
7.2.1    Treaty interpretation  ................................ ................................ ................................ 13 
7.2.2    Standard of re view................................ ................................ ................................ ...13 
7.2.3    Burden of proof  ................................ ................................ ................................ .......13 
7.3   Claims concerning the USDOC's CVD determination with respect to PHP  ............................ 14 
7.3.1    Claims conce rning the provision of electricity to PHP by NSPI  ................................ ........ 14 
7.3.1.1    Introduction  ................................ ................................ ................................ ......... 14 
7.3.1.2    Factual background  ................................ ................................ ............................... 14 
7.3.1.2.1    The relevant facts on the USDOC record  ................................ ............................... 14 
7.3.1.2.2    The USDOC's determination ................................ ................................ ................. 16 
7.3.1.3    Main arguments of the parties  ................................ ................................ ................ 20 
7.3.1.4    Evaluation by the Panel  ................................ ................................ ......................... 22 
7.3.1.4.1    Whether the USDOC acted inconsistently with Article 1.1(a)(1)(iv) of the 
SCM Agreement by finding that NSPI was entrusted or directed to provide electricity  ................. 22 
7.3.1.4.1.1    What was the USDOC's financial contribution fi nding?  ................................ .......... 24 
7.3.1.4.1.2    Whether the USDOC's finding of entrustment or direction is inconsistent with 
Article 1.1(a)(1)(iv) of the SCM Agreement  ................................ ................................ ........... 27 
7.3.1.4.2    Whether the USDOC's acted inconsistently with Articles 1.1(b) and 14(d) of 
the SCM Agreement by find ing that the provision of electricity by NSPI conferred a 
benefit to PHP  ................................ ................................ ................................ ................... 30 
7.3.1.4.3    Whether the USDOC acted inconsistently wit h Article 12.8 of the 
SCM Agreement by failing to notify interested parties of "essential facts" regarding the 
provision of electricity ................................ ................................ ................................ ......... 33 
7.3.2    Claims concerning the hot idle funding and the FIF  ................................ ...................... 34 WT/DS505/R  
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  7.3.2.1    Introduction  ................................ ................................ ................................ ......... 34 
7.3.2.2    Whether the USDOC properly found that a benefit resulting from t he hot idle 
funding was conferred to PHP  ................................ ................................ .............................. 34 
7.3.2.2.1    Factual background  ................................ ................................ ............................ 34 
7.3.2.2.1.1    The relevant facts on the record  ................................ ................................ ........ 34 
7.3.2.2.1.2    The USDOC's determination  ................................ ................................ .............. 35 
7.3.2.2.2    Main arguments of the parties  ................................ ................................ ............. 36 
7.3.2.2.3    Evaluation by the panel  ................................ ................................ ....................... 38 
7.3.2.3    Whether the USDOC properly found that any benefit resulting from the FIF was 
conferred to PHP  ................................ ................................ ................................ ................ 39 
7.3.2.3.1    Factual background  ................................ ................................ ............................ 39 
7.3.2.3.1.1    The relevant facts on the record  ................................ ................................ ........ 39 
7.3.2.3.1.2    The USDOC's determination  ................................ ................................ .............. 40 
7.3.2.3.2    Main arguments of the parties  ................................ ................................ ............. 41 
7.3.2.3.3    Evaluation by the Panel  ................................ ................................ ....................... 42 
7.3.3    Claim concerning the provision of stumpage and biomass to PHP  ................................ ...42 
7.3.3.1    Introduction  ................................ ................................ ................................ ......... 42 
7.3.3.2    Factual background  ................................ ................................ ............................... 43 
7.3.3.3    Main arguments of the parties  ................................ ................................ ................ 44 
7.3.3.4    Evaluation by the Panel  ................................ ................................ ......................... 45 
7.4   Claims concerning the USDOC's CVD determination with respect to Resolute  ..................... 47 
7.4.1    Claims concerning the application of AFA to Resolute in relation to information 
discovered at verification  ................................ ................................ ................................ ....47 
7.4.1.1    Introduction  ................................ ................................ ................................ ......... 47 
7.4.1.2    Factual background  ................................ ................................ ............................... 47 
7.4.1.2.1    The relevant facts on the record  ................................ ................................ ........... 47 
7.4.1.2.2    The USDOC's determination ................................ ................................ ................. 49 
7.4.1.3    Main arguments of the parties  ................................ ................................ ................ 49 
7.4.1.4    Evaluation by the Panel  ................................ ................................ ......................... 51 
7.4.2    Claim concerning Resolute's purchase of Fibrek  ................................ ........................... 56 
7.4.2.1    Introduction  ................................ ................................ ................................ ......... 56 
7.4.2.2    Factual background  ................................ ................................ ............................... 56 
7.4.2.3    Main arguments of the parties  ................................ ................................ ................ 57 
7.4.2.4    Evaluation by the Panel  ................................ ................................ ......................... 58 
7.4.3    Claims concerning the PPGTP, FSPF, and NIER programmes  ................................ .......... 64 
7.4.3.1    Introduction  ................................ ................................ ................................ ......... 64 
7.4.3.2    Factual background  ................................ ................................ ............................... 64 
7.4.3.3    Main arguments of the parties  ................................ ................................ ................ 65 
7.4.3.4    Evaluation by the Panel  ................................ ................................ ......................... 66 
7.5   Claims concerning the CVD determinations with respect to Irving and Catalyst ................... 69 
7.5.1    Claims concerning the calculation of the all -others rate  ................................ ................ 69 WT/DS505/R  
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  7.5.1.1    Introduction  ................................ ................................ ................................ ......... 69 
7.5.1.2    Factual background  ................................ ................................ ............................... 70 
7.5.1.3    Main arguments of the parties  ................................ ................................ ................ 71 
7.5.1.4    Evaluation by the Panel  ................................ ................................ ......................... 72 
7.5.2    Claims concerning the expedited reviews  ................................ ................................ ....76 
7.5.2.1    Introduction  ................................ ................................ ................................ ......... 76 
7.5.2.2    Factual background  ................................ ................................ ............................... 77 
7.5.2.3    Main arguments of the parties  ................................ ................................ ................ 77 
7.5.2.4    Evaluation by the Pane l ................................ ................................ ......................... 79 
7.6   Claims concerning the "Other Forms of Assistance -AFA measure"  ................................ .....81 
7.6.1.1    Introduction  ................................ ................................ ................................ ......... 81 
7.6.1. 2   Main arguments of the parties  ................................ ................................ ................ 81 
7.6.1.3    Evaluation by the Panel  ................................ ................................ ......................... 83 
7.6.1.3.1    Whether Canada has established the existence of the "Other Forms of 
Assistance -AFA measure"  ................................ ................................ ................................ ....83 
7.6.1.3.1.1    The precise content of the "Other Forms of Assistance -AFA measure"  .................... 84 
7.6.1.3.1.2    The repeated application of the "Other Forms of Assistance -AFA measure" 
and the likelihood of its continuation  ................................ ................................ .................... 91 
7.6.1.3.2    Conclusion  ................................ ................................ ................................ ........ 96 
8   CONC LUSIONS AND RECOMMEN DATION  ................................ ................................ ... 97 
 
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  LIST OF ANNEXES  
ANNEX A  
PANEL  DOCUMENTS   
Contents  Page  
Annex  A-1 Working Procedures of the Panel  A-2 
Annex  A-2 Additional Working Procedures of the Panel Concerning  
Business Confidential Information  A-7 
Annex  A-3 Additional Working Procedures for the Panel: Open Meetings  A-9 
Annex A -4 Interim review  A-10 
ANNEX B  
ARGUMENTS OF CANADA  
Contents  Page  
Annex  B-1 First integrated executive summary of the arguments of Canada  B-2 
Annex  B-2 Second integrated executive summary of the arguments of Canada  B-13 
ANNEX C  
ARGUMENTS OF THE UNITED STATES  
Contents  Page  
Annex  C-1 First integrated execut ive summary of the arguments of the United States  C-2 
Annex  C-2 Second integrated execut ive summary of the arguments of the United States  C-14 
ANNEX D  
ARGUMENTS OF THE THI RD PARTIES  
Contents  Page  
Annex  D-1 Integrated executive summary of the arguments of Brazil  D-2 
Annex  D-2 Integrated executive summary of the arguments of China  D-5 
Annex  D-3 Integrated executive summary of the arguments of the European Union  D-7 
Annex  D-4 Integrated executive summary of the arguments of India  D-10 
Annex  D-5 Integrated executive summary of the arguments of Japan  D-12 
Annex  D-6 Answers of Turkey to questions of the Panel D-17 
 
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  CASES CITED IN THIS REPORT  
Short title  Full case title and citation  
Argentina – Ceramic Tiles  Panel Report, Argentina – Definitive Anti -Dumping Measures on Imports of 
Ceramic Floor Tiles from Italy , WT/DS189/R , adopted 5 November 2001, 
DSR 2001:XII, p. 6241  
Argentina – Footwear (EC)  Appellate Body Report, Argentina – Safeguard Measures on Imports of 
Footwear , WT/DS121/AB/R , adopted 12 January 2000, DSR 2000:I, p. 515  
Argentina – Import Measures  Appellate Body Reports, Argentina – Measures Affecting the Importation of 
Goods , WT/DS438/AB/R  / WT/DS444/AB/R  / WT/DS445/AB/R , adopted 
26 January 2015  
Argentina – Poultry 
Anti-Dumping Duties  Panel Report, Argentina – Definitive Anti -Dumping Duties on Poultry from 
Brazil , WT/DS241/R , adopted 19 May 2003, DSR 2003:V, p. 1727  
Canada – Aircraft  Appellate Body Report, Canada – Measures Affecting the Export of Civilian 
Aircraft , WT/DS70/AB/R , adopted 20 August 1999, DSR 1999:III, p. 1377  
China – GOES  Panel Report, China – Countervailing and Anti -Dumping Duties on Grain 
Oriented Flat -Rolled Electrical Steel from the United States , WT/DS414/R  
and Add.1, adopted 16 November 2012, upheld by Appellate Body Report 
WT/DS414/AB/R, DSR 2012:XII, p. 636 9 
EC – Bed Linen  
(Article  21.5 – India)  Appellate Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton -Type Bed Linen from India – Recourse to Article  21.5 of 
the DSU  by India , WT/DS141/AB/RW , adopted 24 April 2003, DSR 2003:III, 
p. 965 
EC – Chicken Cuts  Appellate Body Report, European  Communities – Customs Classification of 
Frozen Boneless Chicken Cuts , WT/DS269/AB/R , WT/DS286/AB/R , adopted 
27 September 2005, and Corr.1, DSR 2005:XIX, p.  9157 
EC – Countervailing Measures 
on DRAM Chips  Panel Report, European Communities – Countervailing Measures on Dynamic 
Random Access Memory Chips from Korea , WT/DS299/R , adopted 3 August 
2005, DSR 2005:XVIII, p. 8671  
EC – Hormones  Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R , WT/DS48/AB/R , adopted 13 February 1998, 
DSR 1998:I, p. 135  
EC – Salmon (Norway)  Panel Report, European Communities – Anti-Dumping Measure on Farmed 
Salmon from Norway , WT/DS337/R , adopted 15 January 2008, and Corr.1, 
DSR 2008:I, p. 3  
EC – Tube or Pipe Fittings  Appellate Body Report, European Communities – Anti-Dumping Duties on 
Malleable Cast Iron Tube or Pipe Fittings from Brazil , WT/DS219/AB/R , 
adopted 18 August 2003, DSR 2003:VI, p. 2613  
EC and certain member States 
– Large Civil Aircraft  Appellate Body Report, European Communities and Certain Member States – 
Measures Affecting Trade in Large Civil Aircraft , WT/DS316/AB/R , adopted 
1 June 2011, DSR 2011:I, p. 7  
Egypt – Steel Rebar  Panel Report, Egypt – Definitive Anti -Dumping Measures on Steel Rebar from 
Turkey , WT/DS211/R , adopted 1 October 2002, DSR 2002:VII, p. 2667  
Guatemala – Cement I Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding 
Portland Cement from Mexico , WT/DS60/AB/R , adopted 25 November 1998, 
DSR 1998:IX, p. 3767  
Indonesia – Autos  Panel Report, Indonesia – Certain Measures Affecting the Automobile 
Industry , WT/DS54/R , WT/DS55/R , WT/DS59/R , WT/DS64/R , Corr.1  and 
Corr.2, adopted 23 July 1998, and Corr.3 and Corr.4, DSR 1998:VI, p. 2201  
Korea – Commercial Vessels  Panel Report, Korea – Measures Affecting Trade in Commercial Vessels , 
WT/DS273/R , adopted 11 April 2005, DSR 2005:VII, p. 2749  
Mexico – Anti-Dumpin g 
Measures on Rice  Appellate Body Report, Mexico – Definitive Anti -Dumping Measures on Beef 
and Rice, Complaint with Respect to Rice , WT/DS295/AB/R , adopted 
20 December 2005, DSR 2005:XXII, p. 10853  
Thailand – Cigarettes 
(Philippines)  Appellate Body Report, Thailand – Customs and Fiscal Measures on 
Cigarettes from the Philippines , WT/DS371/AB/R , adopted 15 July 2011 , 
DSR 2011:IV, p. 2203  WT/DS505/R  
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  Short title  Full case title and citation  
Thailand – H-Beams  Appellate Body Report, Thailand – Anti-Dumping Duties on Angles, Shapes 
and Sections of Iron or Non -Alloy Steel and H -Beams from Poland , 
WT/DS122/AB/R , adopted 5 April 2001, DSR 2001:VII, p. 2701  
US – Anti-Dumping and 
Countervailing Duties (China)  Appellate Body Report, United States – Definitive Anti -Dumpin g and 
Countervailing Duties on Certain Products from China , WT/DS379/AB/R , 
adopted 25 March 2011, DSR 2011:V, p. 2869  
US – Anti-Dumping 
Methodologies (China)  Appellate Body Report, United States – Certain Methodologies and Their 
Application to Anti -Dumping Proceedings Involving China , WT/DS471/AB/R  
and Add.1, adopted 22 May 2017  
US – Carbon Steel  Appellate Body Report, United States – Countervailing Duties on Certain 
Corrosion -Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R  and Corr.1, adopted 19 December 2002, DSR 2002:IX, 
p. 3779 
US – Carbon Steel (India)  Appellate Body Report, United States – Countervailing Measures on Certain 
Hot-Rolled Carbon St eel Flat Products from India , WT/DS436/AB/R , adopted 
19 December 2014, DS R 2014:V, p. 1727  
US – Continued Zeroing  Appellate Body Report, United States – Continued Existence and Application 
of Zeroing Methodology , WT/DS350/AB/R , adopted 19 February 20 09, 
DSR 2009:III, p. 1291  
US – Corros ion-Resistant Steel 
Sunset Review  Appellate Body Report, United States – Sunset Review of Anti -Dumping 
Duties on Corrosion -Resistant Carbon Steel Flat Products from Japan , 
WT/DS244/AB/R , adopted 9 January 2004, DSR 2004:I, p. 3  
US – Cotton Yarn  Appellate Body Report, United States – Transitional Safeguard Measure on 
Combed Cotton Yarn from Pakistan , WT/DS192/A B/R, adopted 5 November 
2001, DSR 2001:XII, p. 6027  
US – Countervailing and 
Anti-Dumping Measures 
(China)  Appellate Body Report, United States – Countervailing and Anti -Dumping 
Measures on Certain Products from China , WT/DS449/AB/R  and Corr.1, 
adopted 22 July 2014, DSR 2014:VIII, p.  3027 
US – Countervailing Duty 
Investigation on DRAMS  Appellate Body Report, United States – Countervailing Duty Investigation on 
Dynamic Random Access Memory Semiconductors (DRAMS) from Korea , 
WT/DS296/AB/R , adopted 20 July 2005, DSR 2005:XVI, p. 8131  
US – Countervailing Measures 
(China)  Appellate Body Report, United States – Countervailing Duty Measures on 
Certain Products from China , WT/DS437/A B/R, adopted 16 January 2015  
US – Countervailing Measures 
(China)  Panel Report, United States – Countervailing Duty Measures on Certain 
Products from China , WT/DS437/R  and Add.1, adopted 16 January 2015, 
as modified by Appellate Body Report WT/DS437/AB/R  
US – Countervailing Measures 
on Certain EC Products  Appellate Body Report, United States – Countervailing Measures Concerning 
Certain Products from the European Communities , WT/DS212/AB/ R, adopted 
8 January 2003, DSR 2003:I, p. 5  
US – Export Restraints  Panel Report, United States – Measures Treating Expor ts Restraints as 
Subsidies , WT/DS194/R  and Corr.2 , adopted 23 August 2001, DSR 2001:XI, 
p. 5767  
US – Hot-Rolled Steel  Appellate Body Report, United States – Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan , WT/DS184/AB/R , adopted 23 August 
2001, DSR 2001:X, p. 4697  
US – Lamb  Appel late Body Report, United States – Safeguard Measures on Imports of 
Fresh, Chilled or Frozen Lamb Meat from New Zealand and Australia , 
WT/DS177/AB/R , WT/DS178/AB/R , adopted 16 May 2001, DSR 2001:IX, 
p. 4051 
US – Large Civil Aircraft 
(2nd complaint)  Appellate Body Report, United States – Measures Affecting Trade in Large 
Civil Aircraft (Second Complaint) , WT/DS353/AB/R , adopted 23 March 2012, 
DSR 2012:I, p. 7  
US – Softwood Lumber IV  Appellate Body Report, United States – Final Countervailing Duty 
Determination with Respect to Certain Softwood Lumber from Canada , 
WT/DS257/AB/R , adopted 17 February 2004, DSR 2004:II, p. 571  
US – Softwood Lumber IV 
(Article 21.5 – Canada)  Appellate Body Report, United States – Final Countervailing Duty 
Determinatio n with Respect to Certain Softwood Lumber from Canada – 
Recourse by Canada to Article 21.5 of the DSU , WT/DS257/AB/RW , adopted 
20 December 2005, DSR 2005:XXIII, p. 11357  WT/DS505/R  
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  Short title  Full case title and citation  
US – Softwood Lumber VI 
(Article 21.5 – Canada)  Appellate Body Report, United States – Investigation of the International 
Trade Commission in Softwood Lumber  from Canada – Recourse to 
Article  21.5 of the DSU by Canada , WT/DS277/ AB/RW , adopted 9 M ay 2006, 
and Corr.1, DSR 2006:XI, p. 4865  
US – Stainless Steel (Mexico)  Appellate Body Report, United States – Final Anti -Dumping Measures on 
Stainless Steel from Mexico , WT/DS344/AB/R , adopted 20 May 2008, 
DSR 2008:II, p. 513  
US – Steel Safeguards  Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Certain Steel Products , WT/DS248/AB/R , WT/DS249/AB/R , 
WT/DS251/AB/R , WT/DS252/AB/R , WT/DS253/AB/R , WT/DS254/AB/R , 
WT/DS258/AB/R , WT/DS259/AB/R , adopted 10 December 2003, 
DSR 2003:VII, p. 3117  
US – Upland Cotton  Appellate Body Report, United States – Subsidies on Upland Cotton , 
WT/DS267/AB/R , adopted 21 March 2005, DSR 2005:I, p. 3  
US – Washing Machines  Appellate Body Report,  United States – Anti-Dumping and Countervailing 
Measures on Large Residential Washers from Korea , WT/DS464/AB/R  and 
Add.1, adopted 26 September 2016  
US – Wool Shirts and Blouses  Appellate Body Report, United States – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India, WT/DS33/AB/R , adopted 23 May 1997, 
and Corr.1, DSR 1997:I, p. 323  
US – Zeroing (EC)  Appellate Body Report, United States – Laws, Regulations and Methodology 
for Calculating Dumping Margins ("Zeroing") , WT/DS294/AB/R , adopted 
9 May 2006, and Corr.1, DSR 2006:II, p. 417  
US – Zeroing (EC) (Article 21.5 
– EC) Appellate Body Report, United States – Laws, Regulations and Methodology 
for Calculat ing Dumping Margins ("Zeroing") – Recourse to Article 21.5 of 
the DSU by the European Communities , WT/DS294/AB/RW  and C orr.1, 
adopted 11 June 2009, DSR 2009:VII, p. 2911  
 
 
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ABBREVIATIONS USED I N THIS REPORT  
Abbreviation  Description  
AFA Adverse facts available  
Catalyst  Catalyst Paper Corporation  
BCI Business Confidential  Information  
CAD Canadian dollar  
CCAA  Companies' Creditors Arrangement Act  
CVD Countervailing duty  
DSB Dispute Settlement Body  
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes  
FIA Forestry Infrastructure Agreement  
Fibrek  Fibrek General Partnership  
FIF Forestry Infrastructure Fund  
FSPF Ontario Forest Sector Prosperity Fund  
FULA Forest Utilization License Agreement  
GATT 1994  General Agreement on Tariffs and Trade 1994  
Irving  Irving Paper Ltd. 
Kwh Kilowatt hour  
LRR Load Retention Rate  
LRT Load Retention Tariff  
NewPage PH  NewPage Port Hawkesbury Corporation  
NIER Ontario Northern Industrial Electricity Rate  
NSPI Nova Scotia Power Incorporated  
NSUARB  Nova Scotia Utility and Review Board  
PHP Port Hawkesbury Paper LP  
POI Period of investigation  
PPGTP  Federal Pulp and Paper Green Transformation Program me 
PWCC  Pacific West Commercial Corporation  
Resolute  Resolute FP Canada Inc.  
ROE Return on equity  
Sanabe  Sanabe & Associates LLC  
SC Paper  Supercalendered Paper  
SCM Agreement  Agreement on Subsidies and Countervailing Measures  
TPEA Trade Preferences Extension Act  
USD United States dollar  
USDOC  United States Department of Commerce  
WTO World Trade Organization  
 
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  1  INTRODUCTION  
1.1  Complaint by Canada  
1.1.  On 30 March 2016, Canada requested consultations with the United States  pursuant to 
Article  4 of the Understanding on Rules and Procedures Governing t he Settlement of Disputes 
(DSU), Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (GATT 199 4) and 
Article  30 of the Agreement on Subsidies an d Countervailing Measures ( SCM Agreement ) 
concerning certain countervailing measures with respect to Supercalendered Paper (SC Paper) 
from Canada as well as the United States' alleged ongoing conduct of app lying adverse facts 
available  (AFA)  in respect of  programmes  discovered  during the course of a countervailing duty  
(CVD)  investigation .1 
1.2.  Consultations were held on  4 May 2016 , but failed to resolve the dispute. On 9 June 2016, 
Canada requested the establishment of a panel.2 
1.2  Panel establishment and composition  
1.3.  At its meeting on  21 July 2016 , the Dispute Settlement Body (DSB) established a panel 
pursuant to the request of Canada  in document WT/DS 505/2 , in accordance with Article  6 of 
the DSU.3 
1.4.  The Panel's terms of reference are the following:  
To examine, in the light of the relevant provisions of the covered agreements cited by 
the parties to the dispute, the matter referred to the DSB by Canada  in document 
WT/DS 505/2  and to make such findings as wi ll assist the DSB in making the 
recommendations or in giving the rulings provided for in those agreements.4 
1.5.  On 22 August 2016 , Canada requested the Director -General to determine the composition of 
the panel, pursuant to Article 8.7 of the DSU . On 31 August  2016, the Director -General 
accordingly composed the Panel as follows:  
Chairperson:  Mr Paul O'Connor  
 
Members:   Mr David Evans  
   Mr Colin McCarthy  
 
1.6.  Brazil, China, the European Union, India, Japan, Korea, Mexico,  and Turkey  notified their 
interest in parti cipating in the Panel proceedings as third parties.  
1.3  Panel proceedings  
1.3.1   General  
1.7.  After consultation with the parties, the Panel adopted its Working Procedures5 and timetable 
on 8 December 2016. The Panel revised its timetable on 1 February 2017 and  on 1 Septe mber 
2017. 
1.8.  The Panel held a first substantive meeting with the parties on  21 and 22 March 2017 . 
A session with the third parties took place on  22 March 2017 . The Panel held a second substantive 
meeting with the parties on  13 and 14 June 2017 . At the request of the parties, the Panel's 
meetings with the parties were open to the public , except for those portions of the meetings where 
                                                
1 Request for consultations by Canada, WT/DS505/1  (Canada's consultations request) . 
2 Request for the  Establishment of a Panel by Canada,  WT/DS505/2  (Canada's panel request) . 
3 DSB, Minutes of the meeting held on 21 July 2016, WT/DSB/M/ 383. 
4 Constitution note of the Panel, WT/DS505/3.  
5 See the Panel's Working Procedures in Annex A -1. WT/DS505/R  
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  Business Confidential Information (BCI) was discussed . A portion of the Panel's meeting with the 
third parties was also o pen to the public.  
1.9.  On 29 Septem ber 2017, the Panel issued the descriptive part of its Report to the parties. 
The Panel issued its Interim Report to the parties on 10 November 2017 . The Panel issued its Final 
Report to the parties on 15 December 2017 . 
1.3.2   Worki ng Procedures on Business Confidential Information  
1.10.   After consultations with the parties , the Panel adopted , on 15 December 2016, Additional 
Working P rocedures for the p rotection of Business Confidential Information .6 The Panel revised 
these procedures on 20 January 2017.  
1.3.3   Working Procedures for open meetings  
1.11.   After consultations with the parties , the Panel adopted , on 27 January 2017 , Additional 
Working Procedures for open meetings .7 
2  FACTUAL ASPECTS  
2.1  The measures at issue  
2.1.  Canada has c hallenged the following measures  concerning the imposition by the United 
States of countervailing duties on imports of SC Paper from Canada8: 
a. Supercalendered Paper from Canada: Initiation of Countervailing Duty Investigation, 
80 Fed. Reg. 15981 ( 26 March  2015);  
b. Supercalendered Pa per from Canada: Final Affirmative Countervailing Duty 
Determination, 80 Fed. Reg. 63535 (20  October 2015);  
c. Issues and Decision Memorandum for the Final Determination in the Countervailing Duty 
Investigation of Supercalendered Paper from Canada ( 13 October  2015); 
d. Supercalendered Paper from Canada: Countervailing Duty Order, 80 Fed. Reg. 76668 
(10 December  2015);  
e. the initiation checklist, preliminary determination, questionnaires, verification reports, 
calculations memoranda, other determinations, memoranda,  reports , and measures 
related to the investigation of Su percalendered Paper from Canada;  and 
f. determinations , memoranda, reports , and measures related to the expedited reviews 
initiated pursuant to Supercalendered Paper from Canada: Initiation of Expedited  Review 
of the Countervailing Duty Order, 81 Fed. Reg. 6506 ( 8 February 2016), including:  
i. New Subsidy Analysis Memorandum ( 18 April 2016), in which the U nited States 
initiated an investigation into the new subsidy allegations filed by the  petitioner 
on 16 February 2016;  and 
ii. any further decisions to initiate an investigati on into the amended new subsidy 
allegations filed by the petitioner on 25 April 2016.  
2.2.  Canada has also challenged  what it characterizes as the United States' "ongoing conduct ", or, 
in the alternative, "rule or norm of general and prospective application ", of applying  AFA in respect 
                                                
6 See Panel's Additional Working Procedures of the Panel Concerning  Business Confidential Information  
in Annex A -2. 
7 See Panel's Additional Working Procedures on open panel meetings  in Annex A -3. 
8 Canada's panel request . WT/DS505/R  
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  of programmes discovered  during the course of an investigation , and refusing  to accept or 
consider evidence concern ing these discovered programmes .9 
3  PARTIES' REQUESTS FO R FINDINGS AND RECOM MENDATIONS  
3.1.  Canada requests that the Panel find that the United States' measures, as set above , are 
inconsistent with its obligations under Articles 1.1(a)(1), 1.1(b), 2, 10, 11.1, 11.2, 11.3, 11.6, 
12.1, 12.2, 12.3,  12.7, 12.8, 14, 19.1, 19.3, 19.4, and 32.1  of the SCM Agreement  and 
Article  VI:3 of the GATT 1994.  Canada further requests, pursuant to Article 19.1 of the DSU, that 
the Panel recommend that the United States bring its measures into conformity with the 
SCM Agreement and the GATT 1994.10 
4  ARGUMENTS OF THE PAR TIES  
4.1.  The arguments of the parties are reflected in their executive summaries, provided to the 
Panel in accordance with paragraph 19 of the Working Procedures (see Annexes B -1, B-2, C-1, 
and C-2). 
5  ARGUME NTS OF THE THIRD PAR TIES  
5.1.  The arguments of Brazil, China, the European Union, India, Japan,  and Turkey are reflected 
in their executive summaries, provided in accordance with paragraph 20 of the Working 
Procedures (see Annexes D -1, D-2, D-3, D-4, D-5, and D -6). Mexico submitted written responses 
to the Panel 's questions to third parties,  and Korea did not submit written or oral arguments to the  
Panel.  
6  INTERIM REVIEW  
6.1.  On 10  November 2017, the Panel issued its Interim Report to the parties.  On 24 November 
2017,  Canada and the United States each submitted written requests for the review of precise 
aspects of the Interim Report. On 1 December 2017, both parties submitted comments on each 
other's requests for review. Neither party requested an interim review meetin g. 
6.2.  The parties' requests made at the interim review stage as well as the Panel's discussion and 
disposition of those requests are set out in Annex  A-4. 
7  FINDINGS  
7.1  Introduction  
7.1.  This dispute concerns the imposition by the United States of certain countervailin g measures 
with respect to SC Paper from Canada, as well as the United States' alleged ongoing conduct of 
applying AFA in respect of programmes dis covered during the course of a CVD investigation . 
In Section 7.3, we address Canada's claims concerning the USDOC's determination with respect to 
Port Hawkesbury Paper LP (PHP), including the claims regarding the provision of electricity  to PHP 
by Nova Scotia Power Incorp orated (NSPI) , the assistance under the hot idle f unding and the 
Forestry Infrastructure Fund (FIF), and the provision of stumpage and biomass. In Section 7.4, we 
address Canada's claims concerning the USDOC's determination with respect to Resolute FP 
Canada Inc. (Resolute) , including the claims regard ing the application of AFA  in relation to 
information discovered at verification , Resolute's purchase of Fibrek General Partnership ( Fibrek ), 
and the Federal Pulp and Paper Green Transformation Programme (PPGTP), the Ontario Forest 
Sector Prosperity Fund (FSPF) and the Ontario Northern Industrial Elect ricity Rate (NIER) 
programme. In Section 7.5, we address Canada's claims concerning the USDOC's determinations 
with respect to Irving Paper Ltd. (Irving)  and Cataly st Paper Corporation (Catalyst), including the 
claims regarding the construction of the all -others rate , and the expedited review s. In Section 7.6, 
we address Canad a's claims concerning the United States' alleged "ongoing conduct " of applying 
AFA in respect of programmes discovered during the course of a CVD investigation, or " Other 
Forms of Assistance -AFA measure ", includi ng whether Canada has establish ed the existence of 
such measure and the claims regarding such measure.  
                                                
9 Canada's panel request . 
10 Canada's first writ ten submission, paras. 451 -452. WT/DS505/R  
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  7.2  General principles regarding treaty interpretation, the standard of review, and 
burden of proof  
7.2.1   Treaty interpretation  
7.2.  Article  3.2 of the DSU provides that the WTO dispute settlement system serves to clarify the 
existing provisions of the covered agreements "in accordance with customary rules of 
interpretation of public international law". Article  17.6(ii) of the Anti -Dumping Agreement similarly 
requires panels to interpret that Agreement's p rovisions in accordance with the customary rules of 
interpretation of public international law.11 It is generally ac cepted that the principles codified in 
Articles  31 and 32 of the Vienna Convention on the Law of Treaties are such customary rules.  
7.2.2   Standard  of review  
7.3.  Panels generally are bound by the standard of review set forth in Article  11 of the DSU, which 
provides, in relevant part:  
[A] panel should make an objective assessment of the matter before it, including an 
objective assessmen t of the facts of t he case and the applicability of and conformity 
with the relevant covered agreements.  
7.4.  The Appellate Body has stated that the "objective assessment" to be made by a panel 
reviewing an investigating authority's determination is to be infor med by an examinati on of 
whether the authority provided a reasoned and adequate explanation as to: (a) how the evidence 
on the record supported its factual findings; and (b) how those factual findings supported the 
overall determination.12 
7.5.  The Appellate Body has also clarifie d that a panel reviewing an investigating 
authority's  determination may not conduct a de novo  review of the evidence or substitute its 
judgment for that of the investigating authority. At the same time, a panel must not simply defer 
to the conclusions of t he investigating authority. A panel's examination of those conclusions must 
be "in -depth" and "critical and searching".13 
7.6.  A panel must limit its examination to the evidence that was before the agency during the 
course of the investigation and must take into  account all such evidence submitted by the parties 
to the dispute.14 A panel's examination in that regard is not necessarily limited to the pieces of 
evidence expressly  relied upon by an investigating authority in its establishment and evaluation of 
the fa cts in arriving at a particular conclusion.15 Rather, a panel may also take into consideration 
other pieces of evidence that were on the record and that are connected to the explanation 
provided by the investigating authority in its determination. This flow s from the principle that 
investigating authorities are not required to cite or discuss every  piece of supporting record 
evidence for each fact in the final determination.16 That notwithstanding, since a panel's review is 
not de novo , ex post  rationalizatio ns unconnected to the investigating authority's explanation – 
even when founded on record evidence – cannot form the basis of a panel's conclusion.17  
7.2.3   Burden of proof  
7.7.  The general principles applicable to the allocation of the burden of proof in WTO dispute 
settlement require that a party claiming a violation of a provision of a WTO Agreement must assert 
                                                
11 Article  17.6(ii) of the Anti -Dumping Agreement also provides that if a panel finds that a provision of 
the Anti -Dumping Agreement admits of more than one permissible interpretation, it shall uphold a measure 
that rests upo n one of those interpretations.  
12 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para.  186. 
13 Appellate Body Report, US – Softwood Lumber  VI (Article 21.5 – Canada) , para.  93. 
14 Appellate Body Report, US – Countervailing Duty Inves tigation on DRAMS , paras. 187 -188. 
15 Appellate Body Report, Thailand – H-Beams , paras. 117 -119. 
16 Appellate Body Report, US – Countervailing Duty Investigation on DRAMS , para. 164.  
17 Appellate Body Report, US – Lamb , paras. 153 -161. See also Appellate Body  Reports, US – Steel 
Safeguards , para. 326; and US – Softwood Lumber VI (Article  21.5 – Canada) , para. 97; and Panel Reports, 
Argentina – Ceramic Tiles , para. 6.27; and Argentina – Poultry Anti -Dumping Duties , para. 7.48.  WT/DS505/R  
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  and prove its claim.18 Therefore, as the complaining  party in this proceeding, Canada  bears the 
burden of demonstrating that certain aspects of the measures at issue are inconsistent w ith the 
SCM Agreement and the GATT 1994. The Appellate Body has stated that a complaining party will 
satisfy its burden when it establishes a prima facie  case, namely a case which, in the absence of 
effective refutation by the defending party, requires a panel, as a matter of law, to rule in favour 
of the complaining party.19 Finally, it is generally required that  each party asserting a fact  provide 
proof there of.20 
7.3  Claims concerning the USDOC's CVD determination with respect to PHP  
7.3.1   Claim s concerning the provision of electricity  to PHP by NSPI  
7.3.1.1   Introduction  
7.8.  With respect to the provision of electricity by NSPI to PHP, Canada has brought  the following 
claims:  
a. Canada  claims that the USDOC acted inconsistently with Article 1.1(a)( 1)(iv) of the 
SCM Agreement, by improperly finding  that the Government of Nova Scotia directed 
NSPI to provide a financial contribution to PHP .21  
b. Canada also claims that the USDOC acted inconsistently with Article 12. 8 of the 
SCM Agreement, by failing  to inform the interested parties of the essential facts under 
consideration before finding that the Government of Nova Scotia directed NSPI to 
provide  a financial contribution to PHP .22 
c. Finally, Canada claims that the USDOC acted inconsistently with Articles 1.1(b) an d 
14(d) of the SCM Agreement, by erroneously determining  that the Government of 
Nova Scotia, through the alleged entrustment or direction o f NSPI, conferred a benefit to 
PHP through the provision of electricity for less than adequate remuneration .23 
7.9.  We first t urn to Canada's claims concerning the United States' treatment of the provision of 
electricity to PHP as a financial contribution that confers a benefit.  Specifically, we examine 
whether the United States acted inconsistently with : (a) Article 1.1(a)(1)(iv) of the 
SCM Agreement by improperly finding that the Government of Nova Scotia entrusted or directed 
NSPI to provide a financial contr ibution  within the meaning of Article 1.1(a)(1)(iii); and 
(b) Articles  1.1(b) and 14(d) of the SCM Agreement by erroneously determining that the provision 
of electricity for less than adequate remuneration through the Government of 
Nova Scotia's  alleged en trustment or direction of NSPI conferred a benefit to PHP. We then turn to 
Canada's claim that the USDOC failed  to disclose essential facts under consideration which formed 
the basis for its decision to apply definitive countervailing duties with respect t o the provision of 
electricity, contrary to Article 12.8.  
7.3.1.2   Factual background  
7.3.1.2.1   The relevant facts on the USDOC record  
7.10.   The government -owned power company Nova Scotia Power Corporation was privatized 
in 1992, followed in the same year by the creation of the Nova Scotia Utility and Review Board  
(NSUARB ), a quasi -judicial tribunal and agency responsible for the regulatory oversight of the sale 
of electricity in the province. Pursuant to the Public Utilities Act24, the NSUARB exercises general 
                                                
18 Appellate Body Report, US – Wool Shirts and Blouses , p. 16, DSR 1997:I, p. 323,  p. 337 . 
19 Appellate Body Report, EC – Hormones , paras. 98 and 104.  
20 Appellate Body Report, US – Wool Shirts and Blouses , p. 14, DSR 1997:I, p. 323,  p. 335 . 
21 Canada's panel request, p. 2.  
22 Canada's panel r equest, p. 2 . 
23 Canada's panel request, p. 2 . 
24 Government of Nova Scotia, Questionnaire Response, Vol. XIII (28 May 2015), exhibits NS -EL-1 to 
NS-EL-17 (Nova Scotia Questionnaire Response, Vol. XIII ), (Exhibit CAN -21 (BCI)), exhibit  NS-EL-1: Public 
Utilities Act.  WT/DS505/R  
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  supervision over all electric utilities operating as public utilities within the province. This 
jurisdiction includes setting rates, tolls , and charges; regulations for provision of service; approval 
of capital expenditures in excess of USD  250,000 ; and any other matter the Board feels is 
necessary to exercise its mandate.  
7.11.   The rate base established by the NSUARB for electricity providers pursuant to the Public 
Utilities Act is determined in relation to the value of the physical assets "used and usefu l" in 
furnishing a particular service to the public. A utility is entitled to earn such annual return as the 
NSUARB deems just and reasonable, which "might roughly be equated to profit or net income in a 
nonregulated company". Generally speaking, the Board  sets a rate of return equal to the return 
investors could expect to receive on an investment of comparable risk elsewhere in the economy. 
The last step in the Board's rate setting process is to ensure that the rates are reasonable as 
between the various c lasses of customers.25 
7.12.   The investor -owned, publicly -traded successor of the Nova Scotia Power Corporation, NSPI, 
supplies most of the electricity in the Province of Nova Scotia. NSPI's electricity rates are set using 
a cost -of-service methodology. It mainta ins two types of rates: (a) the "above -the-line" rates, 
calculated using a rate design methodology; and (b) the "below -the-line" rates that are set using a 
cost-based formula. The Load Retention Tariff (LRT) first approved by the NSUARB in 2000 and 
modifie d in 2011 enable s NSPI to negotiate individual below -the-line rates with its largest 
customers in economic distress.26 These below -the-line rates are known as Load Retention Rates 
(LRRs). An application for an LRR must demonstrate that making the LRR availa ble to the 
customer is necessary and sufficient for retaining the load of the customer. In  addition, the 
revenue from the LRR customer must exceed the incremental costs associated with serving that 
customer.  
7.13.   Where a customer applies for service under an L RR, NSPI conducts an initial screening to 
determine whether the implementation of these procedures is warranted27, i.e. whether the 
customer could qualify for the rate.28 If NSPI determines that an applicant meets the screening 
criteria, NSPI and the custome r proceed to implement these procedures and negotiate an LRR, 
with appropriate terms and conditions.29 The LRT stipulates that, "[t]he price, terms and 
conditions  … shall be established jointly by NSPI and the customer" and that they "are determined 
on a cu stomer by customer basis".30 NSPI and the customer then submit the price, terms , and 
conditions offered under this rate to the NSUARB for approval.31  
7.14.   In the period between NewPage Port Hawkesbury Corporation's ( Newpage PH ) entry into the 
Companies' Creditor s Arrangement Act ( CCAA )32 process and the conclusion of Newpage PH's sale 
to the Pacific West Commercial Corporation  (PWCC ), the latter approached NSPI to begin 
negotiations for an LRR. The Port Hawkesbury mill was NSPI's single largest customer, consuming 
                                                
25 USDOC Memorandum dated 2 July 2015 "Placement of Documents on the Record Relating to Public 
Utilities" , (Exhibit CAN -79), pp. 638 -639. 
26 Section 44 of the Public Utilities Act requires the Utilities Commission to authori ze a set of tariffs, 
while Section 64(1) prohibits a public utility from charging for any service until tariffs or rates have been 
approved. (Canada's opening statement at the first meeting of the Panel , para. 102 ; Nova Scotia Questionnaire 
Response, Vol. XIII , (Exhibit CAN -21 (BCI)), exhibit  NS-EL-1: Public Utilities Act).  
27 Government of Nova Scotia Questionnaire Response, Vol. XVII, exhibit NS -EL-17, attachment 1 "Load 
Retention Tariff"  (Nova Scotia Questionnaire Response, exhibit NS -EL-17: Load Retention Ta riff), 
(Exhibit  CAN-143), p.  21. 
28 Port Hawkesbury, Questionnaire Response, exhibit 23 -5 – 2000 NSUARB 72 (24 May 2000)  
(Port Hawkesbury Questionnaire Response, exhibit 23 -5 – 2000 NSUARB 72 ), (Exhibit CAN -26), p.  4. 
29 Nova Scotia Questionnaire Response, e xhibit NS -EL-17: Load Retention Tariff, (Exhibit CAN -143), p.  21. 
30 Nova Scotia Questionnaire Response, exhibit NS -EL-17: Load Retention Tariff, (Exhibit CAN -143), p.  20.  
31 Nova Scotia Questionnaire Response, exhibit NS -EL-17: Load Retention Tariff, (Exhibit CAN -143), p.  21. 
32 The CCAA is a federal law allowing insolvent corporations that owe their creditors more than 
CAD 5 million to restructure their business and financial affairs. The main purpose of the CCAA is to enable 
financially distressed com panies to avoid bankruptcy, foreclosure, or the seizure of the ir assets while 
maximizing return s for their creditors and preserving both jobs and the company's value as a functioning 
business. CCAA proceedings are carried out un der the supervision of a cou rt. (Canada's first w ritten 
submission, para. 14;  Government of Nova Scotia, Questionnaire Response, Vol. VIII ( 28 May 2015 ), exhibits 
NS-HI-1 to NS -HI-7 (Nova Scotia  Questionnaire Response, Vol. VIII ), (Exhibit CAN -1 (BCI) ), p. NS.VIII -2). WT/DS505/R  
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  in excess of 10% of the electricity produced by NSPI.33 On 28 September 2012, following court 
approval of PWCC's purchase o f the mill, the NSUARB approved the LRR negotiated between NSPI 
and PWCC and applicable to PHP34 until the end of 2019. The LRR states that its intent is : 
[T]o create a mechanism whereby the Partnership [PHP] pays the variable incremental 
costs of service, plus a significant positive contribution to fixed costs, such that other 
customers are better off by retaining the Partnership rather than having the 
Partnership depart the system and make no contribution to fixed cost recovery.35 
7.15.   The p rice of NSPI's provis ion of electricity to PHP under the LRR is calculated according to 
the following formula, determined on an hourly basis:  
(hourly incremental cost/kWh + variable capital cost + contribution to fixed costs) * kWh actual load  
7.16.   The contribution to fixed costs i s set at a minimum of CAD 0.20/kWh, with a minimum 
contribution of CAD 20 million by PHP by the end of 2017.36 The LRR also stipulates a monthly 
administrative fee of CAD 20,700 for the LRR, to be made in advance weekly instalments. Under 
the heading "Speci al Conditions ", the LRR states inter alia  that NSPI can interrupt PHP's entire load 
at a ten -minute notice, with provision made for penalty payments in case of PHP's failure to 
comply. PHP also provides weekly electricity purchase payments in advance.37  
7.3.1.2.2   The USDOC's determination  
7.17.   In its Decision Memorandum for the Preliminary Determination in July 2015, the USDOC 
preliminarily found that the Government of Nova Scotia, through the NSUARB, entrusted or 
directed NSPI to provide a financial contribution in the f orm of the LRR to PHP.38 In its Issues and 
Decision Memorandum in October 2015, the USDOC modified its analysis and concluded that the 
Government of Nova Scotia directly entrusted or directed NSPI to provide electricity pursuant to 
the Public Utilities Act.39 In reaching this conclusion, the USDOC discussed the regulatory 
                                                
33 Port Hawkesbu ry, Questionnaire Response, exhibit 47 -1 – 2012 NSUARB 126 (20 August 2012)  (Port 
Hawkesbury Questionnaire Response, e xhibit 47-1 – 2012 NSUARB 126 ), (Exhibit CAN -28), para . 4. 
34 When Newpage PH was sold to PWCC, Newpage PH became PHP, wholly owned by PWCC . 
35 Port Hawkesbury, Questionnaire Response , exhibit 23 -11 – NSUARB Order (27 September 2012)  (Port 
Hawkesbury Questionnaire Response, exhibit 23 -11 – NSUARB Order ), (Exhibit CAN -31), appendix  A, p. 1.  
36 More specifically, commencing for fiscal year 2013, PHP is under an obligation to pay 18% of its net 
earnings before tax, such that a maximum contribution to fixed costs would be CAD 0.40/kWh, for the first five 
full fiscal years. Any payment in excess of  CAD 0.20/kWh is paid via an annual lump sum.  (Port Hawkesbury 
Questionnaire Response, exhibit 23 -11 – NSUARB Order , (Exhibit CAN -31), appendix  A, p. 2).  
37 Port Hawkesbury Questionnaire Response, exhibit 23 -11 – NSUARB Order , (Exhibit CAN -31), 
appendix A, pp. 1-6. Furthermore, the NSUARB's decision to approve the negotiated LRR indicates that 
"approval is based on the assumption that the LRR pricing will recover all the incremental costs without 
subsidization from the other ratepayers. In the event that the re are significant adverse differences NSPI, under 
the terms of the LRR, can apply to the Board to alter the LRR on a prospective basis". (Ibid. p. 2).  
38 USDOC, Decision Memorandum for the Preliminary Determination in the Countervailing Duty  
Investigation of Supercalendered Paper from Canada (27 July 2015) (Decision Memorandum for the 
Preliminary Determination), (Exhibit CAN -10), p. 30:  
The approval and provision of the LRR for [PHP]  was made pursuant to the laws and regulations 
established by the [Governme nt of Nova Scotia] . Indeed, the NSUARB on November 29, 2011, 
modified the reasons for applying the LRR to include extra -large industrial customers such as the 
Port Hawkesbury mill that are in economic distress. The negotiation and approval of the LRR was 
one of the critical factors to ensure the purchase of NPPH by PWCC as a going concern, a policy 
goal of the [Government of Nova Scotia]  after NPPH applied to enter CCAA  proceedings. Absent 
the approval of the [Government of Nova Scotia]  through its establis hed agency, the NSUARB, 
the public utility NSPI could not have provided electricity to [PHP]  under the terms and 
conditions of the LRR. For these reasons, we preliminarily determine that under 
section  771(5)(B)(iii) of the Act, the [Government of Nova Scot ia] entrusted or directed the 
public utility NSPI to provide a financial contribution in the form of the LRR to [PHP] . Therefore, 
we preliminarily determine that [PHP]  received a financial contribution in the form of the 
provision of a good or service unde r section 771(5)(D)(iii) of the Act under this program.  
(emphasis original; fn omitted)  
39 USDOC, Issues and Decision Memorandum for the Final Determination in the Countervailing Duty 
Investigation of Supercalendered Paper from Canada (13 October 2015)  (Issues and Decision Memorandum), 
(Exhibit CAN -37), p. 36; see also ibid. p. 108.  WT/DS505/R  
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  framework for the provision of electricity in Nova Scotia and the role of the NSUARB, and found 
that NSPI was obligated under the laws of Nova Scotia to provide electricity to any resident o r 
company within the province.40 
7.18.   The structure of the Issues and Decision Memorandum is such that the analysis under the 
heading "Determining Financial Contribution" starts at page 32. The next heading at page 41 is 
entitled "Determining Specificity", followed on the same page by "Determining the Appropriate 
Benchmark". Under the heading "Determining Financial Contribution", the USDOC describes its 
task as follows at page 33:  
Because NSPI is a private company, in order for its provision of electricity t o [PHP]  to 
potentially give rise to a countervailable subsidy to [PHP] , the [USDOC]  must consider 
two factors under section 771(5)(D)(iii) of the Act:  whether an authority entrusted or 
directed NSPI to make a financial contribution to our respondent, [PHP] , and whether 
the provision of this financial contribution (provision of electricity) w ould normally be 
vested in the government and the practice does not differ in substance from practices 
normally followed by governments.41 
7.19.   The USDOC then procee ds to revi ew the laws and regulations that govern the provision of 
electricity within Nova Scotia. In this context, the USDOC lists at page 35 some of the numerous 
directions the Government of Nova Scotia has imposed on NSPI's service requirements, costs, 
tariff rat es, and equity/ownership requirements under specific sections of the Public Utilities Act. 
Section 52 is mentioned once in this list, with respect to NSPI's requirement to "furnish service 
and facilities reasonably safe and adequate in all respects just an d reasonable".42 From this list, 
the USDOC then concludes that, "[a]s is clear from the Public Utilities Act , the [Government of 
Nova Scotia] controls and directs the methodology that NSPI has to use in rate proposals, and any 
rate that is charged by NSPI m ust be approved by the NSUARB."43 Crucially, the USDOC further 
concludes the following:  
More importantly, with respect to the entrustment or direction  of NSPI to provide a 
financial contribution under section 771(5)(B)(iii) of the Act, NSPI is required by l aw 
to provide electricity to customers who request it anywhere in Nova Scotia. [*] That is, 
NSPI is obligated under the laws of the Province of Nova Scotia to serve any resident 
or company within the Province and to provide electricity to that customer. [*] This is 
a legal obligation that does not exist in some other markets. In deregulated or  totally 
open markets, power companies can chose to provide service only when it makes 
economic sense to do so. [*]44 
 [*fn original]202 See, e.g., section 52 of the Public Utilities Act; "Regulating Electric Utilities – 
Discussion Paper Phase One Governance  Study  – Liberalization and Performance – Based from 
the Province of Nova Scotia at 3 at Attachment 30 of the July 2, 2015  Memorandum t o the File 
regarding Placement of Documents on the Record Relating to Public Utilities. 
[*fn original]203 Id. at 6. 
[*fn original]204 Id. at 3. 
7.20.   As such, this paragraph provides a specific, if illustrative, reference to Section 52 only of the 
Public Utiliti es Act, in addition to referring to the Discussion Paper.  
                                                
40 Issues and Decision Memorandum, (Exhibit CAN -37), pp. 30 -37. 
41 Issues and Decision Memorandum, (Exhibit CAN -37), p. 33.  We note that Canada challenges the 
second factor in its second written submission. (Canada's second written submission, paras. 28 -33). 
42 Issues and Decision Memorandum, (Exhibit CAN -37), p. 35.  
43 Issues and Decision Memorandum, (Exhibit CAN -37), p. 36.  
44 Issues and Decision Memorandum, (Exhibit CAN -37), p. 36. (emphasis added)  WT/DS505/R  
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  7.21.   The USDOC then considers the second factor quoted at paragraph 7.18 above, namely 
whether the provision of the financial contribution would normally be vested in the government 
and that the practice does not differ in substance from practices normally followed by the 
government.45 Following a two -paragraph analysis of this second factor, the USDOC concludes the 
following:  
The [Government of Nova Scotia] directs NSPI by law to provide electrici ty to all 
companies in the Province including  [PHP] . Therefore , the provision of electricity by 
NSPI to [PHP] satisfies the standard of entrustment or direction under 
section  771(5)(B)(iii) of the Act. As a result we determine that [PHP] has received a 
financial contribution in the form of the provision of a good or service under 
section  771(5)(D)(iii) of the Act.46 
7.22.   Having found the existence of a financial contribution in the form of entrustment or 
direction, t he USDOC then turns to consider "the extent to which the [Government of Nova Scotia] 
entrusted or directed th e creation of the LRR without regard to whether the resulting rate 
conferred a benefit".47 Indeed, the Issues and Decision Memorandum states at this  juncture that 
"[i]n addition to the statutory requirement through which the [Government of Nova Scotia] 
entrusted or directed NSPI to provide a financial contribution in the form of a provision of a good 
or service to  [PHP] , the record also demonstrates that the [Government of Nova Scotia] played an 
essential role in the specific LRR that set the price for the e lectricity sold to [PHP] from NSPI."48 
The USDOC then sets out evidence of the Government of Nova Scotia's alleged involvement in the 
process of negotiating PHP's LRR, as well as the NSUARB's role in creating and amending 
the LRT.49 This evidence consists of : the Government of Nova Scotia's creation of a plan to keep 
the paper mill as a going concern; PWCC's assertion that it would not purchase and reopen the mill 
without a favourable rate for electricity50; the Government of Nova Scotia working closely with 
both NSPI and PWCC to address the issue of high electricity costs to the mill; the commitment of 
the Government of Nova Scotia to the NSUARB that if the mill load of Port Hawkesbury triggered 
an additiona l Renewable Electricity Standard obligation during the term of the proposed LRR 
mechanism, and if that resulted in additional incremental costs, then the G overnment of 
Nova Scotia  would guarantee that neither Port Hawkesbury nor any other ratepayers would be 
required to pay these costs; and the NSUARB playing a critical role in the process leading up to the 
negotiation of the LRR, by passing a decision that allowed an LRT for companies in economic 
distress.51 
7.23.   The USDOC "clarif[ies] that the provision of the financial contribution, the provision of 
electricity, is separate from whether t he individual electricity rate provided to [PHP] provides a 
benefit"52, and then proceeds to carry out an analysis the conclusion of which is the following:  
Therefore, not only did the [Government of Nova Scotia] entrust or direct NSPI to 
provide a financial contribution to [PHP] in the form of a provision of a good or service 
within the meaning of section 771(5)(D)(iii) of the Act, the [Government of Nova 
Scotia] also worked to ensure that the provision of that good or service, the provi sion 
of electricity, would be at a specially -designed LRR rate for the respondent. The 
NSUARB also exercised its authority to provide LRRs to companies in economic 
distress. Next we address whethe r this LRR rate provided to [PHP] is specific.53 
                                                
45 Issues and Decision Memorandum, (Exhibit CAN -37), pp. 36 -37. 
46 Issues and Decision Memorandum, (Exhibit CAN -37), p. 37.  
47 Issues and Decision Memorandum, (Exhibit CAN -37), p. 37.  
48 Issues and Decision Memorandum, (Exhibit CAN -37), p. 37.   
49 Issues and Decision Memorandum, (Exhibit CAN -37), pp. 38 -40. 
50 The United States points to the following evidence in this respect : Letter dated 13 March 2012 to 
Nova Scotia Utility and Review Board on the Application pursuant to Nova Scotia Power Inc. 's Load Retention 
Tariff from McInnes Cooper, counsel for PWCC. No exhibit was mentioned by the United States.  
51 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 37 -40. 
52 Issues and Decision Memorandum, (Exhibit CAN -37), p. 37.  
53 Issues and Decision Memorandum, (Exhibit CAN -37), p. 40.  WT/DS505/R  
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  7.24.   After having found that "[t]he provision of the LRR" was specific54, the USDOC then turned 
to consider the appropriate benchmark for determining whether the "government price", i.e. the 
LRR obtained by PHP, co nstituted less than adequate remuneration.55 The USDOC first explained 
that NSPI, which provides electricity to most consumers in Nova Scotia, acts under the 
entrustment or direction of the Government of Nova Scotia. The USDOC also found that the 
Government  of Nova Scotia regulated the rates that NSPI charges for electricity through the 
NSUARB.  From this the USDOC concluded that the market of electricity in Nova Scotia was 
distorted and, therefore, electricity prices in Nova Scotia could not be used as a ben chmark for 
determining the adequacy of remuneration.56 After also rejecting the use of Alberta's prices 
("Tier  1 benchmark") and world prices ("Tier  2 benchmark") as a basis for a benchmark based on a 
market -determined price, the USDOC considered that its f inal alternative was to determine 
whether PHP's LRR was consistent with market principles through an analysis of factors, including 
price-setting philosophy, costs (including rates of return sufficient to ensure future operations), 
and possible price discr imination in the rate making ("Tier  3 benchmark").57 
7.25.   The USDOC explained that the NSUARB oversees most electricity ratemaking in 
Nova Scotia, using standard rate -of-return regulation. Most electricity rates in Nova Scotia are 
"above -the-line" rates set using the cos t-of-service methodology that includes a revenue 
requirement equal to the sum of system -wide fixed costs, variable costs incident to the supply of 
"above -the-line" rates at the expected loads from the forecast, and the expected return on equit y 
(ROE) due t o the electric company. In contrast, the USDOC explained, below -the-line rates are not 
set using the cost -of-service methodology and do not fully cover fixed costs nor contribute to the 
guaranteed ROE. The USDOC stated that LRRs are only requi red to cover all variable costs and 
contribute to fixed costs, but do not require rates of return sufficient to ensure future operations 
by covering all costs and providing for profit. Therefore, the USDOC concluded that PHPꞌs LRR was 
not a market -determin ed price.58  
7.26.   To arrive at a Tier  3 benchmark, the USDOC constructed a price providing for coverage of 
fixed costs, variable costs, and portion of ROE for profit.59 To estimate unrecovered fixed costs, the 
USDOC used an affirmative statement of the level of f ixed costs covered by the last 
"above -the-line" rate used to service the mill when it was owned by Newpage PH (the 2012 
ELI2PRTP (CAD 26/MWh)), and subtracted from it the amount of fixed cost recovery in PHP's LRR 
(CAD 2/MWh), leaving CAD 24/MWh in unrecov ered fixed costs under PHP's LRR. The USDOC 
estimated the 2014 ROE attributable to the mill's load by calculating the proportion of the 
system -wide ROE attributable to its load. To do this, the USDOC divided the mill's actual load by 
the sum of PHP's actua l load and the 2014 Load Forecast total for the system load (calculated 
without the mill's load).60 The USDOC then subtracted from the amount that PHP would have paid 
for the electricity it consumed during the  period of investigation  (POI) according to the benchmark, 
the actual amount paid by PHP during the POI under its LRR. Based upon this methodology, the 
USDOC calculated a countervailable subsidy rate of 14.24% ad valorem .61  
                                                
54 Issues and Decision Memorandum, (Exhibit CAN -37), p. 41.  
55 Issues and Decision Memorandum, (Exhibit CAN -37), p. 41. The United States' general approach to 
selecting a benchmark is explained in the  Issues and Decision Memorandum as follows:  
Generally, pursuant to 19 CFR 351.511(a)(2), the [USDOC]  determines whether a good or 
service is provided for [less than adequate remuneration] by comparing, in order of preference: 
(i) the government price to a  market -determined price for actual transactions within the country 
such as prices from private parties (a "Tier 1" benchmark); (ii) the government price to a world 
market price where it would be reasonable to conclude that such a world market price is 
available to consumers in the country in question (a "Tier 2" benchmark); or (iii), if no world 
market price is available, by assessing whether the government price is consistent with market 
principles (a "Tier 3" benchmark).  
(Ibid.)  
56 Issues and Decision Mem orandum,  (Exhibit CAN -37), p. 41 . 
57 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 42 -43. For an explanation of the tier 
benchmarks generally used by the USDOC, see fn 55 above.  
58 Issues and Decision Memorandum, (Exhibit CAN -37), pp. 44 -48. 
59 In its first written submission, the United States describes its calculation with the following formula: 
Benchmark = variable costs + fixed costs + profit. (United States' first written submission, para. 73).  
60 Issues and Decision Memorandum, (Exhibit CAN -37), p. 48 . 
61 Issues and Decision Memorandum, (Exhibit CAN -37), p. 48 . WT/DS505/R  
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  7.3.1.3   Main arguments of the parties  
7.27.   Canada claims that the USDOC acted inconsistently with Article 1.1(a)(1)(iv) of the 
SCM Agreement by improperly finding that the provision of electricity to PHP constituted a financial 
contribution. More specifically, Canada claims that the USDOC incorrectly considered that 
Nova Scotia had entrusted or di rected NSPI to provide electricity services to all its customers 
through the general service obligation set out in the Public Utilities Act.  
7.28.   In this respect, Canada claims that the USDOC provided no analysis to support its 
determination, and that its reas oning relies on only two pieces of evidence: (a) Section 52 of the 
Public Utilities Act ; and (b) a Discussion Paper62 concerning potential modifications to the 
ownership and oversight of public utilities.63 In Canada's view, the Government of Nova Scotia 
does not exercise authority over NSPI to provide electricity to customers through Section 52, 
which only sets out general requirements as to how electricity is provided.64 It further submits that 
the Discussion Paper relied upon by the USDOC was not sufficient  to understand this duty to 
serve.65  
7.29.   Canada rejects as " post hoc  justifications" the United  States' position that the 
USDOC's  financial contribution determination relied in part on the role of the Government of Nova 
Scotia in negotiating the LRR. Canada ar gues that the most compelling reason for the 
USDOC's  finding that the Government of Nova Scotia directed NSPI to provide electricity was the 
duty to serve, which does not constitute direction to provide a financial contribution through an 
LRR.66 It further contends that the USDOC erroneously determined that the Government of 
Nova Scotia directed NSPI to provide a financial contribution through the general service obligation 
and then proceeded to consider the benefit and specificity associated with a differen t measure (the 
LRR).67 For Canada, NSPI is not required to provide a customer with an LRR, and the NSUARB only 
requires NSPI to negotiate with its customers to determine whether it could provide such rate.68  
7.30.   Canada maintains that the USDOC also failed to properly address the criteria in 
Article  1.1(a)(1)(iv), namely whether the alleged provision of the good or service would "normally 
be vested" in the government, and "in no real sense, differs from practices normally followed by 
governments".69 
7.31.   With respect  to benefit, Canada claims that the USDOC acted inconsistently with 
Articles  1.1(b) and 14(d) of the SCM Agreement by improperly finding that the provision of 
electricity by NSPI conferred a benefit to PHP. In its view, the USDOC  incorrectly considered tha t 
the electricity market in Nova Scotia was distorted because NSPI was the sole provider.70 Canada 
disagrees with the United States' understanding of "prevailing market conditions", noting that 
                                                
62 The "Regulating Electric Utilities – Discussion Paper ", a publication commissioned by Nova Scotia, 
explains that: "As a near monopoly, Nova Scotia Power has responsibilities imposed under law. One of them is 
an obligation to serve – the company must provide electricity to customers who request it, anywhere in Nova 
Scotia." ( Placement of Documents on the Record Relating to Public Utilities, (2 July 2015), attachment 30: 
"Regulating Ele ctric Utilities – Discussion Paper", Government of Nova Scotia (Discussion Paper ), 
(Exhibit  CAN-158), p. 3).  
63 Canada's first written submission , paras. 102, 108, and 111.  
64 Canada's first written submission , para. 108.  
65 Canada's second written submissio n, paras. 10 and 24 -27. 
66 Canada's second written submission, paras. 2 and 16 -23. 
67 Canada's first written submission , para. 116.  
68 Canada's first written submission, para. 115. In Canada's view, although the USDOC appears to 
analyse whether Nova Scotia en trusted NSPI to negotiate an LRR in the final det ermination, in a recent  NAFTA 
Chapter 19 proceeding, the USDOC has clarified that it did not make such a finding . (Canada's first written 
submission, para. 107 (referring to USDOC, NAFTA Brief (5 July 2016)  (USDOC's NAFTA Brief ), 
(Exhibit  CAN-76), p. 64)).  
69 Canada's second written submission, paras. 28 -33; see also first written submission, para. 106. 
The Panel notes that the United States argued that Canada's claim was not within the Panel's terms of 
refere nce; that the presentation of these arguments in the second written submission violated the Panel' 's 
working procedures; and that the claim failed on its merits. (United States opening statement at the second 
meeting  of the Panel , paras. 13 -27). Canada argued in response that this argument fell within its entrustment 
and direction claim and that it had raised this argument in its first written submission. (Canada's response to 
Panel question No. 86, paras. 18 -21). 
70 Canada's first written submis sion, para. 144; second written submission, paras. 38 -48. WT/DS505/R  
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  prevailing market conditions concern "characteristics of an are a of economic activity in which the 
forces of supply and demand interact to determine market prices" , and not an assessment of the 
"predominant price" , as the United States suggests.71 Canada argues that the USDOC incorrectly 
considered that the LRR negotia ted between two private parties, NSPI and PWCC , was not at 
market price, although below -the-line rates applied by NSPI are determined "in relation to 
prevailing market conditions". For Canada, they are part of NSPI's standard rate -setting 
methodology.72 Canada also argues that the USDOC did not take into account demand -side factors 
relevant to electricity markets, such as how rates are set for large customers, the size of 
customers, and the fact that different customers may be treated differently (for exampl e, because 
of the volume or load they take and the role of that load in creating stability in the system) .73 
Canada submits that the benchmark constructed by the USDOC did not reflect "prevailing market 
conditions", and would not apply to any purchaser of e lectricity in Nova Scotia .74 Canada further 
submits that the USDOC constructed an inappropriate benchmark75, which included 
double -count ing the ROE.76 
7.32.   The United States  contends that the USDOC's financial contribution determination for the 
provision of electr icity to PHP was not inconsistent with Article 1.1(a)(1)(iv) of the 
SCM Agreement. In its first written submission, the United States argues that the plain language of 
Section  52 of the Public Utilities Act demonstrates that NSPI is obligated to serve any resident or 
company within the province of Nova Scotia and to provide electricity to that customer, as 
confirmed in the Discussion Paper.77 In its subsequent submissions, the United States emphasizes 
that the USDOC's financial contribution analysis was not only based on Section 52, but also 
considered the Government of Nova Scotia's involvement in the establishment of PHP's LRR.78 
In particular, the United States argues that the USDOC considered : (a) the NSUARB 's decision to 
expand the LRT to allow for an LRR  for companies in economic distress, a decision made at the 
request of NewPage Port Hawkesbury; ( b) Nova Scotia 's commitment to guarantee that neither 
Port Hawkesbury nor other ratepayers would be required to cover costs if Port Hawkesbury 's mill 
load triggered obligations that resulted in increased incremental costs; ( c) statements by the 
Premier of Nova Scotia confirming the government 's active involvement in the negotiation of the 
LRR; and ( d) the unique role of the NSUARB in the negotiation and appr oval of the LRR.79 For the 
United States, Canada's argument that the USDOC erroneously determined that Nova Scotia 
directed NSPI to provide a financial contribution through the general service obligation and then 
proceeded to consider the benefit and specif icity associated with a different measure (the LRR) is 
without merit because benefit and financial contribution are separate elements of a subsidy 
analysis.80 Finally, it argues  that the record plainly shows that the USDOC exhaustively analysed 
the issue, c onsidered the arguments and reached a determination supported by evidence.81 
7.33.   With respect to benefit, the United States submits that the USDOC's benefit determination 
was consistent with Articles 1.1(b) and 14(d) of the SCM Agreement. The United States asse rts 
that the issue before the Panel is whether the benchmark used by the USDOC  – one based on 
above -the-line rates for extra -large industrial customers  – is consistent with the legal obligations 
of Article  14(d) of the SCM Agreement.82 The United States arg ues that "prevailing market 
conditions " are those that are "predominant " or "generally accepted ", and that the record of the 
countervailing duty investigation made clear that above -the-line rates satisfied the legal 
standard.83 The United States adds  that, during the POI, out of all of NSPI 's customers – 
regardless of size or customer class – only PHP did no t pay an above -the-line rate.84 
                                                
71 Canada's second written submission, para. 38.  
72 Canada's first written submission, paras. 143 -144; second written submission, paras. 49 -65; and 
response to Panel question No. 11, paras. 24 -26. 
73 Canada's first written submission, paras. 160 -165; second written submission, para. 42.  
74 Canada's second written submission, para. 41.  
75 Canada's first written submission, para. 165.  
76 Canada's first written submission, para. 174.  
77 United States' first written submission, para. 44; second written submission, paras. 14 -20. 
78 United States' second written submission, paras. 21 -24; response to Panel question No. 5, paras.  1-11. 
79 United States' second written submission, paras. 21 -24; response to Panel question No. 5, 
paras.  1-11. 
80 United States' first written submission, para. 46.  
81 United States' first written submission, para. 48.  
82 United States'  second written submission, para. 40.  
83 United States'  second written submission, para s. 42-43. 
84 United States'  second written submission, para. 43  WT/DS505/R  
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  The United  States asserts that above -the-line rates are based on prevailing market conditions 
while below -the-line rates a re preferential rates that do not permit the recovery of all costs , and 
represent an explicit exception to the standard pricing mechanism used by NSPI .85 For the 
Unite d States, the USDOC did not create an artificial benchmark, but rather applied the 
methodology NSPI uses in developing market rates for similarly situated entities, and therefore, its 
methodology, based on the sum of variable costs, the applicable contribution to fixed costs and the 
standard profit ratio, was consistent with market princ iples.86 The United States rejects as c ircular  
Canada's argument that there was no need for the USDOC to use a benchmark because the 
provision of electricity by NSPI to PHP is itself a market transaction. In its view, a benefit 
determination requires some f orm of comparative exercise.87  
7.34.   The United States posits that the factual premise of Canada's argument, namely that the 
provision of electricity to PHP was purely a private -to-private transaction, is flawed, since the 
USDOC found that the Government of Nova  Scotia played an essential role in the specific LRR 
applied to PHP.88 For the United States, the existence of a private -to-private transaction in this 
case is not unique. It explains that, where an investigating authority makes a finding of 
entrustment or direction pursuant to Article  1.1(a)(1)(iv), the transaction will be between two 
private parties. The United States maintains that it cannot be the case that no benefit exists where 
an authority has made a finding of entrustment or direction, which would b e the result if the 
transaction price is necessarily the benchmark, as Canada suggests. Such an interpretation, it 
contends, would render subparagraph (iv) inutile and cannot be accepted.89 
7.3.1.4   Evaluation by the Panel  
7.3.1.4.1   Whether the USDOC acted inconsistently with  Article 1.1(a)(1)(iv) of the 
SCM Agreement by finding that NSPI was entrusted or directed to provide electricity  
7.35.   Article 1.1(a)(1) of the SCM Agreement provides in relevant part as follows:  
Article  1 
Definition of a Subsidy  
 1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if:  
(a)(1)   there is a financial contribution by a government or any 
public body within the territory of a Member (referred to in this 
Agreement as "government"), i.e. where:  
(i) …  
(iii) a government provides goods or services other than general 
infrastructure, or purchases goods;  
(iv) a government makes payments to a funding mechanism, or 
entrusts or directs a private body to carry out one or more of the type of 
functions illustrated in (i) to (iii) above whic h would normally be vested in 
the government and the practice, in no real sense, differs from practices 
normally followed by governments [.] 
7.36.   Among the possible forms that a financial contribution may take, Article  1.1(a)(1)(iv) of the 
SCM Agreement provides  that there is a financial contribution when a government "entrusts or 
directs a private body" to carry out certain activities listed in Article s 1.1(a)(1)(i) to (iii), in our 
                                                
85 United States' first written submission, paras. 65 and 86 -87; second written submission, 
paras.  40-45. 
86 United States' first written submission, para. 67; second written submission, paras. 46 -60. 
87 United States' second written submission, paras. 33 -36. 
88 United States' second written submission, para. 37.  
89 United States' second written submission, para. 38.  WT/DS505/R  
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  case, the provision of goods or services other than general infrastructure pursu ant to 
Article  1.1(a)(1)(iii).  
7.37.   With respect to the concepts of "entrustment" or "direction" under Article 1.1(a)(1)(iv) of 
the SCM Agreement, the Appellate Body has opined that the terms "entrusts or directs" identify 
the instances where seemingly private  conduct may be attributable to a government for purposes 
of determining whether there has been a financial contribution.90 More specifically, "entrustment" 
occurs where a government gives responsibility  to a private body, and "direction" refers to 
situatio ns where the government exercises its authority  over a private body. In both instances, the 
government uses a private body as a proxy  to bring into existence one of the types of financial 
contributions listed in paragraphs (i)  through (iii).91 Conversely, "situations involving exclusively 
private conduct – that is, conduct that is not in some way attributable to a government or public 
body – cannot  constitute a 'financial contribution ' for purposes of determining the existence of a 
subsidy under the SCM Agreement ".92 Both instances thus "require[] the participation of the 
government, albeit indirectly"93, and there must be a "demonstrable link between the government 
and the conduct of the private body"94 in order to bring into existence a financial contribut ion.95  
7.38.   However, not all government acts necessarily  amount to entrustment or direction in terms 
of Article  1.1(a)(1)(iv) of the SCM Agreement. For instance, policy pronouncements by a 
government would not, by themselves, constitute entrustment or direction  for purposes of 
Article  1.1(a)(1)(iv).96 Additional ly, entrustment and direction do not cover "the situation in which 
the government intervenes in the market in some way, which may or may not have a particular 
result simply based on the given factual circu mstances and the exercise of free choice by the 
actors in that market".97 Thus, entrustment and direction "cannot be inadvertent or a mere 
by-product  of governmental regulation".98 It may be difficult to identify, in the abstract, the types 
of government actions that constitute entrustment or direction and those that do not. Any 
particular label used to describe the governmental action is not necessarily dispositive.99 In most 
cases,  "one would expect entrustment or direction of a private body to involve some form of threat 
or inducement, which could, in turn, serve as evidence of entrustment or direction".100 
7.39.   Furthermore, w ith respect to the provision of goods or services within the me aning of 
Article  1.1(a)(1)(iii), the Appellate Body has stressed that there must be a reasonably proximate 
relationship between t he action of the government providing the good or service on the one hand, 
and the use or enjoyment of the good or service by t he recipient on the other. Very general 
governmental acts may be too remote from the concept of "making available" or "putting at  the 
disposal of". A government must have some control over the availability of the specific thing being 
"made available".101  
7.40.   We recall the standard of review that applies to a panel assessing the WTO -consistency of a 
CVD determination by a Member's investigating authority. In conducting such an assessment, a 
panel may not conduct a de novo  review of the facts of the case "or subst itute its judgement for 
that of the … authorit[y]".102 Rather, the panel must examine "whether, in the light of the evidence 
                                                
90 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para. 108. See also 
Appellate Body Report, US – Softwood Lumber IV , para. 52.  
91 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para.  116. See also Panel 
Reports, US – Export Restraints , paras. 8.29 -8.34; and Korea – Commercial Vessels , paras.  7.368 -7.372.  
92 Appellate Body Report,  US – Countervailing Duty Investigation on DRAMs , para. 10 7. 
93 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para.  112. See also Panel 
Report, EC – Countervailing Measures on DRAM Chips , fn 65. 
94 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para.  112. 
95 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para.  113. 
96 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para.  114. 
97 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para . 114 (quoting Panel 
Report, US – Export Restraints , para. 8.31).  
98 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para.  114. See also 
Appellate Body Report, US – Carbon Steel (India) , para. 4.95; and Panel Report, China – GOES , para. 7.93.  
99 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para . 116. 
100 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para . 116. 
101 Appellate Body Reports, US – Carbon Steel , paras. 4.68 -4.69; US – Softwood Lumber IV , para. 71.  
102 Appellate Body Report, US – Steel Safeguards , para. 299 (referring to Appellate Body Report, 
Argentina – Footwear (EC) , para. 121). See also Appellate  Body Report, US – Anti-Dumping and 
Countervailing  Duties (China) , para. 379.  WT/DS505/R  
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  on the record, the conclusions reached by the investigating authority are reasoned and 
adequate ".103 What is "adequate" will inevitably  depend on the facts and circumstances of the case 
and the particular claims made, but some relevant "lines of inquiry" can be identified.104 First, a 
panel must ascertain whether the investigating authority has "evaluated all of the relevant 
evidence in an objective and unbiased manner", including by "tak[ing] sufficient account of 
conflicting evidence and respond[ing] to competing plausible explanations of that evidence".105 
Second, a panel must "test[] the relationship between the evidence on which the autho rity relied 
in drawing specific inferences, and the coherence of its reasoning".106 Finally, the adequacy of an 
investigating authority's explanations "is also a function of the substantive provisions of the 
specific covered agreements that are at issue in t he dispute".107 
7.41.   The main issue before the Panel is whether the USDOC, in light of the evidence before it, 
made a proper finding of entrustment or direction within the meaning of Article  1.1(a)(1)(iv) of the 
SCM Agreement.108 In light of the parties' submission s in these proceedings, the Panel will first  
clarify the USDOC's financial contribution finding in connection with the provision of electricity by 
NSPI. Once this factual matter is clarified, the Panel will be in a position to determine whether the 
USDOC's  determination was consistent with Article  1.1(a)(1)(iv).  
7.3.1.4.1.1   What was the USDOC's financial contribution finding?  
7.42.   The position expr essed by the United States in its first written submission was that the 
USDOC's finding of entrustment or direction was one of the Government of Nova Scotia entrusting 
or directing NSPI, through the general service obligation that the USDOC read from Secti on 52 of 
the Public Utilities Act, to provide electricity to all customers in the province. The United States 
explains in its f irst written submission that the USDOC's finding was a "straightforward" application 
of Article  1.1(a)(1)(iv) of the SCM Agreement since, as a matter of law, based on the plain 
language of Section 52, the Government of Nova Scotia has given to public utili ties such as NSPI 
the duty to provide electricity.109 
7.43.   In its response to a question from the Panel as to whether the USDOC found th at the 
Government of Nova Scotia entrusted or directed NSPI to provide : (a) electricity ; or (b) an LRR, 
the United States respo nds that "perhaps the best way to summarize is that [the USDOC ] 
determined that the Government of Nova Scotia entrusted or directed Nova Scotia Power to 
provide to [PHP]  electricity at a below market rate (LRR) ".110 The United States posits that the 
USDOC al so determined that the Government of Nova Scotia entrusted or directed NSPI to provide 
electricity to PHP based on the government's actions, including through the NSUARB, which led to 
the provision of electricity to PHP through the LRR.111 In other words, th e USDOC's finding of 
entrustment or direction was one not only based on the general service obligation that it read fro m 
Section 52, but also on the role of Nova Scotia in the negotiation of the LRR, more specifically "the 
unique role of Nova Scotia – including through the Nova Scotia Utility and Review Board …  in the 
provision of electricity to [PHP]  through the Load Retention Rate".112 According to the 
United  States, the USDOC's analysis thus "took account of the unique circumstances surrounding 
the salvation from bankruptcy and dissolution of the Port Hawkesbury mill".113 
                                                
103 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93. (emphasis added)  
104 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93.  
105 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 97. See also 
Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 443.  
106 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 97.  
107 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 95 (referring to 
Appellate Body Reports, US – Countervailing Duty Investigation on DRAMS , para. 184; US – Cotton Yarn , 
paras. 75 -78; and US – Lamb , para. 105).  
108 It is not contested that the provision of electricity falls within the concept of a government provision 
of goods or services within the meaning of Article 1.1(a)(1)( iii) of the SCM Agreement.  
109 United States' first written submission, paras. 29 -30. 
110 United States' response to Panel question No. 7, para. 13. (emphasis added)  
111 United States' response to Panel question No. 9, para. 16, and No. 5, para. 1.  
112 United States' response to Panel question No. 5, paras. 1 -2. 
113 United States' response to Pa nel question No. 5, para. 5. See also response to Panel question No. 5, 
paras. 6 -7 and 9, and No. 17, paras. 23 -24. WT/DS505/R  
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  7.44.   The Panel's analysis must be based on the  "explanations given by the authority in its 
published report".114 The only finding that we can see made by the USDOC pertaining to financial 
contribution was that the Government of Nova Scotia had entrusted or directed NSPI, through the 
existence of a general service obligation that the USDOC read from Section 52 of the Public 
Utilities Act, to provide electricity to all customers in the province . We recall the 
United  States'  assertion in the present proceedings that the role of the Government of Nova Scoti a 
in negotiating the LRR to PHP served in part as a basis for the USDOC's finding of entrustment or 
direction.115 However, while the USDOC discus sed the Government of Nova Scotia's alleged role in 
the negotiation of PHP's LRR as well as the NSUARB's role in the creation and amendment of the 
LRT116, on the face of the Issues and Decision Memorandum, the USDOC made no further findings 
on entrustment or  direction.  
7.45.   The USDOC's finding on entrustment or direction at page 36 is that "NSPI is required by law 
to provide electricity to customers who request it anywhere in Nova Scotia . That is, NSPI is 
obligated under the laws of the Province of Nova Scotia to  serve any resident or company within 
the Province and to provide electricity to that customer ."117 This conclusion is reiterated at 
page 37: "[t]he [Government of Nova Scotia] directs NSPI by law to provide electricity to all 
companies in the Province  including [PHP] ".118  
7.46.   In Comment 10 of the Analysis of Comments  section of the Issues and Decision 
Memorandum,  the USDOC clearly distinguishes between its preliminary finding that the 
Government of Nova Scotia, through the NSUARB, entrusted or directed NSPI  to provide electricity 
to PHP at a reduced rate, i.e. through an LRR, and its much broader finding in the fi nal 
determination that the Government of Nova Scotia, through the Public Utilities Act, directly 
entrusts or directs NSPI to provide electricity ge nerally:  
In our Preliminary Determination , we found that the [Government of Nova Scotia], 
through the NSUARB, entrusted or directed NSPI to provide electricity to [PHP]  at a 
reduced rate. In this final determination, we have modified our analysis to find t hat 
the [Government of Nova Scotia] directly entrusted or directed NSPI to provide 
electricity pursuant to the Public Utilities Act .119 
7.47.   The USDOC's subsequent discussion on "the extent to which the [Government of Nova 
Scotia] entrusted or directed the creati on of the LRR without regard to whether the resulting rate 
conferred a benefit"120 occurs after it has already reached the conclusion that there is entrustment 
or direction and a financial contribut ion at pages 36 and 37. The subsequent discussion does not 
culminate in any other finding of entrustment or direction. Instead, the USDOC states at page 40 
that "the [Government of Nova Scotia] also worked to ensure that the provision of that good or 
service, the provision of electricity, would be at a specifically -designed LRR rate for the 
respondent. The NSUARB also exercised its authority to provide LRRs to companies in economic 
distress."121  
7.48.   This understanding of the USDOC's financial contribution determination is in fact aligned 
with the United States' assertion  in its first written submission that "[t]hese legal obligations 
resulted in a straightforward application of the financial contribution standard: [the USDOC]  
determined that Nova Scotia entrusts or directs Nova Scotia Power to provide electricity to all 
customers".122 
7.49.   In light of the above, we do not consider that the United States' position that "perhaps the 
best way to summarize is that [the USDOC]  determined that the government of Nova Scotia 
                                                
114 Appellate Body Report s, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93;  US – 
Anti-Dumping and Countervailing Duties (China) , para. 379.  
115 United States' response to Panel question No. 5, paras. 1 -2. 
116 Issues and Decision Memorandum, (Exhibit CAN -37), pp. 37 -40. 
117 Issues and Decision Memorandum, (Exhibit CAN -37), p. 36. (emphasis added; fn omitted)  
118 Issues and Decision Memorandum,  (Exhibit CAN -37), p. 37. (emphasis added)  
119 Issues and Decision Memorandum, (Exhibit CAN -37), Comment 10: "Whether the NSUARB is an 
Authority", p. 108. (emphasis original)  
120 Issues and Decision Memorandum, (Exhibit CAN -37), p. 37.  
121 Issues and Decision Me morandum, (Exhibit CAN -37), p. 40.  
122 United States' first written submission, para. 29.  WT/DS505/R  
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  entrusted or directed Nova Scotia Power to provide to [PHP]  electricity at a below market rate 
(LRR) "123 is reflected in the Issues and Decision Memorandum. Stating that the Government of 
Nova Scotia "also worked to ensure that … the provision of electricity … would be at a 
specifically -designed LRR rate", and that the NSUARB "also exercised its authority to provide LRRs 
to companies in economic distress" does not equate to finding that the financial contribution at 
issue was PHP's LRR.  
7.50.   Further to the above, we observe that the USDOC's finding that the Government of  
Nova Scotia entrusted or directed NSPI to provide electricity to all customers in the province is 
based overwhelmingly on the general service obligation that the USDOC read from Section 52 of 
the Public Utilities Act. The USDOC's reference to "the statuto ry requirement through which the 
[Government of Nova Scotia] entrusted or directed NSPI to provide a financial contribution in the 
form of a provision of a good or service to [PHP]  "124 is highly informative: the statutory 
requirement, in the singular – that is the general service obligation – is the manner in which the 
USDOC considered Nova Scotia entrusted or directed NSPI to provide the financial contribution – 
that is the provision of electricity. This position is also reflected in the United States' foll owing 
assertion in its first written submission: "Canada's claim is undermined by a Nova Scotia law that 
unambiguously requires public utilities to do just that – provide electricity to  [PHP] . [The USDOC's]  
conclusion was a straightforward application of A rticle 1.1(a)(1)(iv) of the SCM Agreement."125 
7.51.   The following statement of th e USDOC's position in Comment 11 of the Analysis of 
Comments -section is particularly instructive of the USDOC's reasoning on the issue of entrustment 
or direction:  
In the instant inv estigation, the [Government of Nova Scotia] entrusted or directed a 
privat e party, NSPI, to provide a financial contribution, the provision of electricity, 
directly through its laws . In DRAMs from Korea , the government used a manner other 
than direct legislation to entrust or direct private parties to provide a financial 
contribution to the respondent, Hynix. Therefore, the [USDOC] had to rely on 
circumstantial information to determine that there was ent rustment or direction of a 
private party to provide a financial contribution. This is not the case here. If, similar to 
this instant investigation, the [Government of Korea] had simply passed a law 
directing private financial  institutions to provide a fina ncial contribution to Hynix, the 
[USDOC]  would not have used this two -part test because it would have been able to 
find entrustment or direction based solely on [Government of Korea]  law.126 
7.52.   This statement indicates the USDOC's view that it did not need to rely on any such 
circumstantial information  to find entrustment or direction here, since such entrustment or 
direction was evident from law.127  
7.53.   The express terms  used in the Issues and Decision Memorandum, as well as the sequence 
of the USDOC's analysis therein,  thus indicate  that the USDOC's finding of entrustment or direction 
was one of the Government of Nova Scotia entrusting or directing NSPI, through Section 52 of the 
Public Utilities Act, to provide electricity to all customers in the province. This finding was based 
overwhelmingly on the general service obligation that the USDOC read from Section 52, and found 
further support for in the Discussion Paper. It is the WTO -consistency of this  financial contribution 
finding that the Panel is called to assess.  
7.54.   Our above unders tanding of the USDOC's analysis is in line with factual clarification provided 
by the Unit ed States itself in the  NAFTA proceeding:  
[T]he [Government of Canada] is incorrect that [the USDOC]  analyzed the LRR, rather 
than electricity, as the financial contr ibution for this subsidy. … [The USDOC]  did 
analyze the LRR as a financial contribution in the Preliminary Determination ; however, 
it clarified in the Final Determination  that although the LRR was relevant to its benefit 
                                                
123 United States' response to Panel question No. 7, para. 13. (emphasis added)  
124 Issues and Decision Memorandum, (Exhibit CAN -37), p. 37.  
125 United States' first written submission, para. 19.  
126 Issues and Decision Memorandum, (Exhibit CAN -37), p. 125. (emphasis added)  
127 See also Canada's second written submission, paras. 16 -23. WT/DS505/R  
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  analysis, the LRR was not, in itsel f, the financial contribution. [Issues and Decision 
Memorandum] at 32 -37 and 108. Accordingly, [the USDOC]  based its Final 
Determination  on the provision of electricity without regard to the rate mechanism 
involved. [Issues and Decision Memorandum] at 37 …  [.]128 
7.55.   In the NAFTA proceedings, the United States explained that the USDOC's financial 
contribution determination is not based o n the discussion of Nova Scotia's possible entrustment of 
NSPI to create an LRR, which is instead additional analysis beyond wha t is required.129 
7.56.   After having clarified our understanding of the USDOC's financial contribution finding, the 
Panel turns to wheth er the USDOC's finding of entrustment or direction was inconsistent with 
Article 1.1(a)(1)(iv) of the SCM Agreement.130 
7.3.1.4.1.2   Whether the USDOC's finding of entrustment or direction is inconsistent 
with Article 1.1(a)(1)(iv) of the SCM Agreement  
7.57.   We recall Ca nada's position that the USDOC interpreted Section 52 of the Public Utilities Act 
as directing NSPI to provide electricity to any cust omer in Nova Scotia, while ignoring that 
entrustment or direction cannot be inadvertent or a mere by -product of government al regulation. 
Canada argues that, while Section 52 reflects the principle that NSPI and other public utilities are 
required to provid e electrical service throughout their service area, it does not require NSPI to 
provide electricity in any circumstances, at any cost. Indeed, Nova Scotia could not direct NSPI, 
through the duty to serve, because the LR T does not require NSPI to reach an a greement with any 
customer that requests an LRR.131 Canada further posits that the United States has pointed to no 
other evidence that Nova Scotia directed NSPI by issuing authoritative instructions or otherwise 
exercising its authority to compel it to provide electricity through such a rate.132 
7.58.   The United S tates' position is that the USDOC's twelve -page financial contribution an alysis 
was exhaustive, considered the arguments of the interested parties, and reached a determination 
supported by evidence.133 We recall our finding that the USDOC's determination of entrustment or 
direction was based overwhelmingly on the general service obligation set forth in Section 52 of the 
Public Utilities Act . In this regard, t he United States has argued that the USDOC's  determination  
was based on the "plain terms "134 of the Public Utilities Act , which imposes certain obligations on 
public utilities.  According to the United States, t hese legal obligations resulted in a 
"straightforw ard application of the financial contribution standard ".135 The United States contends 
that, "as a mat ter of law ", Nova Scotia has given  public utilities, including NSPI,  "the duty" to 
provide electricity.136 Contrary to Canada's allegations, the United States argues that the 
USDOC's  financial contribution determination did establish a link between the government action 
and the specific conduct of NSPI, by taking into account the unique role of Nova Scotia in 
NSPI's  LRR to PHP.137 
7.59.   We fail to see an explanation by the USDOC of how NSPI was, through the general service 
obligation that the USDOC read from Sec tion 52 of the Public Utilities Act, either "give[n] 
responsibility" to provide electricity either to any potential customer or to PHP specifically, or how 
                                                
128 USDOC's NAFTA Brief , (Exhibit CAN -76), p. 64.  
129 Canada's first written submission, para. 107.  See also USDOC's NAFTA Brief , (Exhibit CAN -76), p.  65:  
[H]aving determined that NSPI's provision of electricity satisfied the basic elements of the 
statute, [the USDOC] considered additional evidence concerning the extent to which the 
[Government of Nova Scotia] entrusted or directed this particular sale of el ectricity. Thus it did 
not negate [the USDOC's] earlier analysis, but instead demonstrated the extraordinary actions 
taken by the [Government of Nova Scotia] beyond its existing directive that NSPI must provide 
electricity to those who request it to shape how NSPI provided electricity to PHP.  
(emphasis original)  
130 Appellate  Body Report, US – Softwood Lumber VI ( Article  21.5 – Canada) , para.  93. 
131 Canada's first written submission, paras. 108 -115; second written submission, para. 7.  
132 Canada's second written submission, paras. 16 -23. 
133 United States' first written submission, para. 48.  
134 United States' first written submission, para. 26.  
135 United States' first written submission, para. 29.  
136 United States' first written submission, pa ras. 25 -30.  
137 United States' second written submission, paras. 21-23. WT/DS505/R  
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  the Government of Nova Scotia "exercise[d] its authority" over NSPI to provide electricity either to  
any potential customer or to PHP specifically.  
7.60.   Section 52 of the Public Utilities Act, which the USDOC overwhelmingly relied on to make its 
finding of entrustment or direction, is entitled "Duty to furnish safe and adequate service", and by 
its very terms  sets out general requirements as to the quality of the servic e and facilities provided: 
"Every public utility is required to furnish service and facilities reasonably safe and adequate and in 
all respects just and reasonable". This provision applies not o nly to NSPI, but also to every other 
public utility within the scope of the Public Utilities Act, which covers a wide range of goods and 
services beyond the provision of electricity.138 While Canada does not contest the existence of a 
duty to serve, it has c larified in the context of these proceedings that Section 52 o f the Public 
Utilities Act does not independently set out this high level regulatory principle. R ather, the 
provision has been interpreted to include a duty to serve through the common law in th e Nova 
Scotia Court of Appeal ruling in Board of Commissioners of Public Utilities v. Nova Scotia Corp. et 
al.139 Furthermore, this duty to serve is applied in practice through various other provisions of the 
Public Utilities Act.140 The USDOC analysis relied only on Section 52 and the Discussion Paper.  
7.61.   Whether or not Se ction 52 of the Public Utilities Act in fact sets out the legal basis for the 
duty to serve, we do not see how the high-level general service obligation  at issue here  could be 
considered to entr ust or direct NSPI – within the meaning of Article 1.1(a)(1)(i v) – to necessarily 
provide electricity to any customer, in any circumstances, under any conditions.141 Rather, the 
USDOC appears to have done precisely what the Appellate Body has warned against when 
observing that "the interpretation of paragraph (iv) cann ot be so broad as to allow Members to 
apply countervailing measures to products whenever a government is merely exercising its general 
regulatory powers "142, and that entrustment and direction "ca nnot be inadvertent or a mere 
by-product of governmental regulation ".143  
7.62.   The USDOC's determination appears to go counter to the Appellate Body's observation that 
entrustment and direction do not cover situations "in which the government intervenes in the 
market in some way, which may or may not have a particular resu lt simply based on the given 
factual circumstances and the exercise of free choice by the actors in that market".144 In the facts 
of the present dispute, it seems that the exercise of free choice i s precisely reflected in the fact 
that Section 52 of the Publ ic Utilities Act does not necessarily result in the provision of  electricity to 
any customer , no matter the  terms or conditions.  As discussed below, notwithstanding Section 52 
of the Public Utilities Act, NSPI only provides electricity to customers if the terms meet certain 
criteria . If those criteria are not met , no electricity is provided.  
7.63.   As explained by Canada in the present pr oceedings, the duty to serve "should not be 
understood to stand for the proposition that there is an entitlement to service in a ny given 
circumstance, at any given rate". Indeed, the Nova Scotia Court of Appeal ruling in Board of 
Commissioners of Public Ut ilities v. Nova Scotia Corp. et al confirmed that rates must be just and 
reasonable for the public, but also just and sufficient for the utility itself.145 As such, Canada 
explains that NSPI is "not required by law to provide e lectricity if it does not make economic sense 
for it to do so, and the [NSUARB] is not entitled to approve rates that would be uneconomical for 
                                                
138 Nova Scotia Questionnaire Response, Vol. XIII, (Exhibit CAN -21 (BCI)), exhibit NS -EL-1: Public Utilities 
Act, Section 2, pp. 3 -5, and Section 52, p. 16. See also European Union's thir d-party submission, para. 22.  
139 Board of Commissioners of Public Utilities v. Nova Scotia Power Corp. et al., (1977), 18 NSR (2d) 692 
(NSCA) (Board of Commissioners of Public Utilities v. Nova Scotia Power Corp. et al.) , (Exhibit CAN -171), p.  77. 
140 Canada's response to Panel question No. 1, paras. 1 -7. 
141 The USDOC stated in the Issues and Decision Memorandum that NSPI "is required by law to provide 
electricity to customers who request it anywhere in Nova Scotia". (Issues and Decision Memorandum, 
(Exhibit CAN-37), p. 36; see also United States' response to Panel question No. 5, para. 3).  
142 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para. 115. 
(emphasis  added)  
143 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para.  114 
(emphasis  added). See also Appellate Body Report, US – Carbon Steel (India) , para. 4.95; and Panel Report, 
China – GOES , para. 7.93.  
144 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para . 114 (quoting Panel 
Report, US – Export Restraints , para. 8.31).  
145 Board of Commissioners of Public Utilities v. Nova Scotia Power Corp. et al. , (Exhibit CAN -171), p.  77. WT/DS505/R  
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  the utility".146 Even under the LRT, evidence on the record of the investigation indicate s that the 
right of any customer to an LRR is not automa tic. It is subject to the criteria set by the NSUARB 
and ultimate approval by the NSUARB, but the terms and conditions are negot iated between the 
customer and NSPI. As Canada explains in these proceedings, the NSUARB approved the LRT that 
in turn enables N SPI to negotiate LRRs with customers. In particular, the LRT allows for the 
negotiation of LRRs for NSPI's largest customers in economic distress where certain criteria are 
met: (a) the LRR would be in the public interest ; (b) the rate is necessary and suf ficient to retain 
the load of the customer ; and (c) the revenue from the rate exceeds the incremental costs 
associated with serving the customer. However, the LRT stipul ates that "[t]he price, terms and 
conditions … shall be established jointly by NSPI and  the customer" and that they are "determined 
on a customer by customer basis".147 The terms agreed between NSPI and the customer are then 
put before the NSUARB for approval, followed by a thorough and contested review process.148 
The above appears to precisely  be a situation "in which the government intervenes in the market 
in some way, which may or may not have a particular result simply based on the given factual 
circumstances and the exercise of free choice by the actors in that market".149 
7.64.   In addition, we obs erve that t he USDOC's analysis of the entrustment/direction of NSPI to 
provide electricity  also appears to be at odds with  Article 1.1(a)(1)(iii) of the SCM Agreement. The 
ordinary meaning  of the term "provides" in that provision is to " supply or furnish f or use; make 
available ".150 The Appellate Body has opined that a  government provision of goods and services 
requires for a government to have "some control over the availability  of the specific thing being 
'made available'"151, and that general governmental ac ts may be too remote from the concept of 
"making available" or "putting at the disposal of", which requires there to be a reasonably 
proximate relationship between the action of the government providing the goo d or service on the 
one hand, and the use or e njoyment of the good or service by the recipient on the other .152 
We see no evidence to suggest that Section 52 of the Public Utilities Act afforded the Government 
of Nova Scotia any "control over the availability of the specific thing being made available". 
Evidence on the USDOC record as to the freedom of choice of market actors contradicts the 
                                                
146 Canada's response to Panel question No. 2(c), paras. 13 -15. See also response to Panel question 
No. 4, par as. 20 -21. 
147 Nova Scotia Questionnaire Response, exhibit NS -EL-17: Load Retention Tariff , (Exhibit CAN -143), 
p. 20. 
148 Nova Scotia Questionnaire Response, Vol. XIII , (Exhibit CAN -21 (BCI)), response to question Nos. K, 
L, and M, pp. NS.XIII -23-NS.XIII -29; Port Hawkesbury Questionnaire Response, exhibit 23 -5 – 2000 
NSUARB  72, (Exhibit CAN -26), p.  4; Government of Nova Scotia, Questionnaire Response, Vol. XVII 
(28 May 2015), exhibits NS -EL-17 to NS -EL-23, (Exhibit CAN -27); Port Hawkesbury, Questionnaire Respo nse, 
exhibit  23-6 – 2011 NSUARB 184 (29 November 2011) , (Exhibit CAN -82); and Port Hawkesbury Questionnaire 
Response, e xhibit 47-1 – 2012 NSUARB 126 , (Exhibit CAN -28).  
149 Appellate Body Report, US – Countervailing Duty Investigation on DRAMs , para . 114 (qu oting Panel 
Report, US – Export Restraints , para. 8.31). In this respect, we also note certain statements made by third 
parties to these proceedings: "It is difficult for the European Union to see a transaction in a general provision 
or principle that simp ly appears to set out certain basic regulatory principles and lays down the key qualities of 
the relevant services. Even if the provision is supplemented with other considerations creating thus the 
relevant general service obligation … the European Union i s of the view that if that principle amounts to no 
more than a statement that everyone must have access to basic amenities as electricity, water etc. it does not 
as such involve the kind of action from the government that would amount to the necessary tran saction for the 
purposes of Article 1.1(a)(1). … However, this does not mean that a provision or a general principle regarding 
a general service obligation is irrelevant for considering whether a financial contribution exists." 
(European  Union's third -party statement, paras. 26 and 28); "Brazil understands that government legislation 
laying down general principles and establishing general rules in a given market cannot be understood per se  as 
entrusting or directing a private body. Especially legislation re gulating the provision of certain goods in a 
market, which is within the bounds of a Member's policy space. It is upon the investigating authority to 
establish that in each concrete case the concerned regulation has entrusted or directed a private body to 
provide a subsidy. " (Brazil's  third-party statement, para. 5.); and "[A]n obligation imposed on private entities 
under relevant domestic laws and regulations can be one element that an investigating authority may consider 
in conducting this fact -specific analysis in a particu lar case. However, Japan considers that an obligation of a 
public utility to provide such general services does not in itself establish entrustment and direction." 
(Japan's  third-party statement, para.  4).  
150 Shorter Oxford English Dictionary , 6th edn, A.  Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 2, p. 2383.  
151 Appellate Body Reports, US – Carbon Steel (India) , paras. 4.68 -4.69 (emphasis original); US – 
Softwood Lumber IV , para. 71.  
152 Appellate Body Report, US – Softwood Lumber IV , para. 71.  WT/DS505/R  
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  existence of such control. This confirms our finding that the USDOC improperly establishe d 
entrustment or direction to provide a good on the basis of Section 52 of the Public Utilities Act.  
7.65.   The present scenario also highlights the absence of any "transaction" in Section 52  of the 
Public Utilities Act . We recall the Appellate Body's statement i n US – Softwood Lumber IV  that 
"[a]n evaluation of the existence of a financial contribution involves consideration of the nature of 
the transaction through which something of economic value is transferred by a government ".153 
We have difficulty identifying any transaction in either the language of Section 52 or a broader 
general service obligation that would amount to a transfer of economic value by a government.154 
7.66.   Similarly, we refer to  the context provided by the requirement in the SCM Agreement that, 
to co nstitute a subsidy, the act of providing a good or service must "thereby " confer a benefit.  
Assuming arguendo that the general service obligation in this case constituted a "financial 
contribution ", we fail to see how it could be a rgued that such a general service obligation "thereby " 
conferred a benefit to PHP.  By the USDOC 's own analysis, any benefit in this case derived from the 
LRR. However, the LRR was not part of the financial contribution that the USDOC determined to 
exist by virtue of Section  52 of the Public Utilities Act.  
7.67.   We note that, in addition to Section 52 of the Public Utilities Act, the USDOC cites to the 
Discussion Paper which states that NSPI "must provide electricity to customers who request it, 
anywhere in Nova Scotia.  … In deregu lated or totally open markets, power companies can choose 
to provide service only when it makes economic sense to do so."155 The USDOC's reliance on this 
statement seems to be insufficient to expl ain how NSPI was, through Section 52, either "give[n] 
responsibility" to provide electricity to PHP, or how the Government of Nova Scotia "exercise[d] its 
authority" over NSPI to provide electricity to PHP . Besides, the interpretative value of the 
Discussi on Paper is questionable. Its purpose is clearly limit ed to the following: "This document 
summarizes the findings of background reports relating to the governance  study  component of the 
review [of Nova Scotia's electricity system]. The intent of this docum ent is to help shape the 
questions that the final gove rnance study raises about how we should apply this knowledge in the 
Nova Scotia context."156 
7.68.   In light of the foregoing, we find that the USDOC acted inconsistently with 
Article  1.1(a)(1)(iv) of the SCM Ag reement by finding entrustment or direction with respe ct to the 
provision of electricity by NSPI.  
7.3.1.4.2   Whether the USDOC's acted inconsistently with Articles 1.1(b) and 14(d) of 
the SCM Agreement by finding that the provision of electricity by NSPI conferred a 
benefit to PHP  
7.69.   Article 1.1(b) of the SCM Agreement pro vides in relevant part as follows:  
Article  1 
Definition of a Subsidy  
1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if:  
(a) …  
(b) a benefit is thereby conferred.  
                                                
153 Appellate Body Report, US – Softwood Lumber IV , para. 52. (emphasis added)  
154 In this respect, see European Union's third -party submission, para. 26.  
155 Discussion Paper, (Exhibit CAN -158), p. 3.  
156 Discussion Paper, (Exhibit CAN -158), pp. 1 -2. See also Canada's second written submission, 
paras.  24-27; and response to Panel question No. 2(a), paras. 8 -11, and No. 2(b), para. 12.  WT/DS505/R  
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  7.70.   Article 14(d) of the SCM Agreement reads:  
Article  14 
Calculation of  the Amount of a Subsidy in Terms  
of the Benefit to the Recipient  
For the purpose of Part  V, any method used by the investigating authority to calculate 
the benefit to the re cipient conferred pursuant to paragraph  1 of Article  1 shall be 
provided for in th e national legisl ation or implementing regulations of the Member 
concerned and its application to each particular case shall be transparent and 
adequately explained.  Furthermore, any such method shall be consistent with the 
following guidelines:  
… 
(d) the provision of goods or services or purchase of goods by a government 
shall not be considered as conferring a benefit unless the provision is 
made for less than adequate remuneration, or the purchase is made for 
more than adequate remuneration.  The adequacy of remunerati on shall 
be determined in relation to prevailing market conditions for the good or 
service in question in the country of provision or purchase (including 
price, quality, availability, marketability, transportation and other 
conditions of purch ase or sale).  
7.71.   Pursuant to Article 1.1(b) of the SCM Agreement, a subsidy exists for purposes of the 
SCM Agreement when a financial contribution by a government confers a benefit to a recipient. 
Where the financial contribution is in the form of a provision  of goods or services, 
Article  14(d)  provides that such provision "shall not be considered as conferring a benefit unless 
[it] is made for less than adequate remuneration" and that "[t]he adequacy of remuneration is to 
be determined in relation to prevaili ng market conditions for the good or service in question in the 
country of provision."157  
7.72.   As explained above, the USDOC's benefit analysis examined three separate tiers. Canada 
challenges the USDOC's analysis in respect of Tiers 1 and 3. Regarding Tier 1, C anada claims that 
the USDOC erred in finding that domestic electricity prices are distorted . Regarding Tier 3, C anada 
claims that the USDOC erred by not finding the LRR to represent a market price. In the 
alternative, Canada also argues that the Tier 3 ben chmark constructed by the USDOC was not 
appropriate for the purposes of Article 14(d).  
7.73.   The USDOC begins its benefit analysis by assessing whether a Tier 1 benchmark, ba sed on a 
market -determined price for actual transactions within the country, is appropri ate. In rejecting 
prices in Nova Scotia, the USDOC finds that prices in the Nova Scotia electricity market are 
distorted due to government involvement:  
With respect to a Tier 1 Benchmark for the provision of electricity, NSPI is the primary 
electric utilit y company in Nova Scotia providing electricity to most provincial 
consumers, with independent power producers generating a minimal amount of 
electricity by comparison and supplying that electricity over NSPI 's transmission and 
distribution network. Further more, the [Government of Nova Scotia] regulates the 
rates that NSPI charges for electricity through the NSUARB. When the government 
provider constitutes a majority or a substantial portion of the market, the [USDOC] 
determines that prices within the countr y are distorted, that these prices do not 
satisfy the regulatory requirement for a market -determined price and, therefore, 
cannot be used as a benchmark for determining the adequacy of remuneration. We 
have determined that the [Government of Nova Scotia] is providing electricity through 
NSPI to most consumers of electricity in Nova Scotia. Accordingly given that NSPI is 
                                                
157 Appellate Body Report, US – Countervailing Measures (China) , para s. 4.43 and 4.45. See also Panel 
Report, EC – Countervailing Measures on DRAM Chips , para s. 7.178 and 7.209.  WT/DS505/R  
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  entrusted or directed to provide electricity throughout Nova Scotia, electricity prices in 
Nova Scotia are not appropriate Tier 1 benchmark s.158 
7.74.   This extract shows that the USDOC's finding that electricity prices in Nova Scotia are 
distorted, and therefore not appropriate Tier 1 benchmarks, is based on its determination that the 
Government of Nova Scotia , through its entrustment or direction of  NSPI, is providing a major or 
substantial portion of electricity. As a result of its determination of entrustment or direction, the 
USDOC has effectively treated NSPI as a government provider of electricity. This is why the 
USDOC refers to the situation o f "[w]hen the government provider constitutes a majority or a 
substantial portion of the market". And it is because ("given that") NSPI is allegedly entrusted or 
directed to provide electricity that ("[a]ccordingly") the USDOC finds that prices in Nova Sco tia are 
not appropriate Tier 1 benchmarks. Indeed, the USDOC itself confirms this in its response to 
comments by interested parties, where the USDOC states that "electricity prices in Nova Scotia are 
distorted by government involvement in the market becaus e NSPI has been entrusted or directed 
to supply electricity therein and accounts for 95 percent of the province's generation" .159 
7.75.   As already explained above, the USDOC's determination that the Government of 
Nova Scotia  entrusted or directed NSPI to provide e lectricity is flawed. The USDOC therefore had 
no basis to treat NSPI as a government provider of electricity. Nor, therefore, did the USDOC have 
any basis for finding that electricity prices in Nova Scotia were distorted as a result of NSPI being a 
governm ent provider. As a result, the USDOC improperly rejected electricity prices in Nova Scotia 
as Tier 1 benchmarks.  
7.76.   In respect of its Tier 3 benchmark analysis, the USDOC first examined "whether the 
government price is consistent with market principles". The USDOC found that the LRR was not 
consistent with market principles, because it constituted a below -the-line rate.160 We agree with 
the basic approach adopted by the USDOC, in the sense that the issue of whether the provision of 
electricity to PHP conferred a benefit could reasonably be addressed by considering whether the 
terms on which that electricity was provided, i. e. the terms of the LRR, were consistent with 
market principles.161 
7.77.   However, in considering whether or not the terms of the LRR were based on market 
principles, the USDOC failed to consider record evidence suggesting that the LRR had indeed 
resulted from negotiations based on market considerations. In particular, as explained by 
Canada162, the USDOC did not take account of the benefits to NSPI of the flexibilities agreed to by 
PWCC . For example, the USDOC's analysis of whether or not the LRR was based on mar ket 
principles contains no reference to the importance to NSPI of maintaining the load from the 
Port Hawkesbury mill , its biggest customer, on its system. Nor does that analysis refer to PWCC  
agreeing : (a) to become "priority interruptible "; (b) to pay for  its electricity in part on the basis of 
the most expensive incremental source of energy in the stack in any given hour that it purchased 
electricity ; or (c) to pre -pay its bill on a weekly basis. Yet it seems entirely consistent with market 
principles for  an electricity provider to seek to both manage its load and accommodate the needs 
of its largest customer, and for a company that consumes a large amount of electricity to make 
concessions and accept flexibilities that would result in a lower rate being p ayable. The United 
States itself observes that, according to the USDOC's record, the NSUARB had stated that the LRR 
resulted from "vigorous  negotiations carried out for more than six months between [PWCC ] and 
                                                
158 Issues and Decision Memorandum, (Exhibit CAN -37), p. 41. (fns omitted)  
159 Issues and Decision Mem orandum, (Exhibit CAN -37), p. 130 . 
160 Issues and Decisi on Memorandum, (Exhibit CAN -37), p. 4 8. 
161 This approach is consistent with the guidance in Article 14(d) of the SCM Agreement, whereby the 
adequacy of remuneration for the provision by the government of a good shall be determined in relation to 
"prevailing  market conditions". We consider that consideration of whether or not a transaction was based on 
market principles will necessarily indicate whether or not that transaction is consistent with prevailing market 
conditions. The United States suggests at para . 39 of its second written submission that " Article 14(d) requires 
the use of a benchmark to determine the adequacy of remuneration for the provision of a good ". The United 
States refers to the Report of the Appellate Body in US – Softwood Lumber IV to argue that the phrase  "in 
relation to " prevailing market conditions indicates that a benefit determination requires "some  form of 
comparative exercise". (Ibid. para. 34). We understand that the United States refers in this regard to para. 89 
of that Appell ate Body Report. However, we do not read the Appellate Body as requiring the use of a 
benchmark for the purpose of Article 14(d). The Appellate Body was simply addressing the type of benchmark 
(in or out -of-country) that could be used, without considering whether or not a benchmark had to be used.  
162 Canada's first written submission, para s. 153-159; s econd written submission, paras . 49-54. WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  Nova Scotia Power, with the participation of th e government of Nova Scotia and the 
court-approved appointed monitor ".163 The USDOC seems to have focused unduly on the role of  
the Government of Nova Scotia  (despite the absence of any finding of entrustment or direction in 
respect of the terms of the LRR),  while disregarding the vigour of the negotiations that took place 
between NS PI and P WCC.  
7.78.   In light of the above we conclude that the USDOC's determination that the provision of 
electricity by NSPI conferred a benefit to PHP was inconsistent with Articles 1.1(b) and 14(d) of the 
SCM Agreement. In these circumstances, there is no need to examine Canada's alternative 
arguments regarding the Tier 3 benchmark constructed by the USDOC.  
7.3.1.4.3   Whether the USDOC acted inconsistently with Article 12.8 of the 
SCM Agreement  by failing to notify interested parties of "essential facts" regardin g the 
provision of electricity  
7.79.   Finally, Canada claims that the USDOC provided no indication to inter ested parties that it 
was considering relying on Section 52 of the Public Utilities Ac t to find that Nova Scotia directed 
NSPI to provide a financial contribution.164 
7.80.   The United States contends that interested parties were aware of : (a) the contents of the 
Public Utilities Act ; and ( b) the significance of the Public Utilities Act to the finan cial contribution 
determination. The United States contends that interested parties had sufficient opportunity to 
advance arguments on the meaning and content of the Public Utilities Act.165 The United States 
asserts that the USDOC 's preliminary determinatio n – in which the USDOC explained that 
"[p]ursuant to the Public Utilities Act , NSPI, an investor -owned public utility, generates, transmits 
and distributes electricity throughout the Province of Nova Scotia. "166 – made clear that the Public 
Utilities Act, and the obligations placed on Nova Scotia Power therein, were central to the 
USDOC 's financial contribution analysis. The United States also asserts that the 
USDOC' s verification report explains that rates in Nova Scotia are approved in accordance with the 
Public Utilities Act.167 
7.81.   Article 12.8 reads as follows:  
The authorities shall, before a final determination is made, inform all interested 
Members and interested parties of the essential facts under consideration wh ich form 
the basis for the decision whether to apply definitive measures. Such disclosure 
should take place in sufficient time for the parties to defend their interests.  
7.82.   Article 12.8 provides for the disclosure of "essential facts" under consideration whic h form 
the basis for the decision to apply definitive measures . In addressing Canada's claim, it is 
import ant to identify the essential "fact" at issue. The word "fact" is defined inter alia  as "[a] thing 
known for certain to have occurred or to be true".168 The relevant essential fact is therefore not, as 
suggested by the United States, the Public Utilities Act . The Public Utilities Act  is itself not a thing 
that is known to have occurred  or to be true. Nor does the Public Utilities Act , taken as a whole 
and viewed in the abstract, comprise a fact forming the basis for the USDOC's determination. 
In our view, Canada's claim concerns the essential fact that, according to the USDOC, the public 
service obligation enshrined in Section 52 of the Public Utilities Ac t entrusted or directed the NSPI 
to provide electricity to PHP. It is this fact that the USDOC took to be true, and that forms the 
basis for the USDOC's financial contribution determination.  
                                                
163 United States' second written submission, para. 37 (referring to Government of Nova Scotia, 
Questionnaire Response, e xhibit NS -SUPP1 -55A – 2012 NSUARB 126: NSUARB Order Approving Port 
Hawkesbury's Load Retention Rate (20 August 2012) , (Exhibit CAN -35), p. 16). 
164 Canada's first written submission, para. 130.  
165 United States' first written submission, para. 61.  
166 Decision Memorandum for the Preliminary Determination , (Exhibit CAN -10), p. 30.  
167 USDOC Memorandum dated 2 September 2015, "Verification Report: Government of Nova Scotia" , 
(Exhibit CAN -99), p. 16.  
168 Shorter Oxford English Dictionary , 6th edn, A.  Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 916.  See also Panel Report, Argentina – Poultry Anti-Dumping Duties , para. 7.225.  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  7.83.   There is no evidence to suggest that this essential fact was disc losed to interested parties, 
as required by Article 12.8 of the SCM Agreement. Nor does the United States argue that this 
particular essential fact was properly disclosed. Although the USDOC's preliminary determination 
and verification report referred to t he Public Utilities Act , there is nothing in these documents to 
suggest to interested parties that the USDOC would ultimately rely on its factual understanding of 
the public service obligation set forth in Section 52 of the Public Utilities Act  to find tha t the NSPI 
was entrusted or directed to provide electricity to PHP.  
7.84.   For these reasons, we uphold Canada's claim that the United States acted inconsistently 
with Article 12.8 of the SCM Agreement by failing to disclose to interested parties the essential fa ct 
that Section 52 of the Public Utilities Act  entrusted or directed the NSPI to provide electricity 
to PHP. 
7.3.2   Claim s concerning the hot idle funding and the FIF  
7.3.2.1   Introduction  
7.85.   With respect to the hot idle funding and the FIF, Canada has brought the following claims:  
a. Canada claims that the USDOC acted inconsistently with Article 1.1(b) o f the 
SCM Agreement, by erroneously  finding that PHP was the recipient of the hot i dle 
funding  and that the benefit associated with these financial contributions was not 
extingu ished by PWCC's  arm's -length purchase of Newpage PH  for fair market value .169 
b. Canada  equally claims that the USDOC acted inconsistently with Article 1.1(b) of the 
SCM Agreement, by erroneously finding that PHP was the recipient of the FIF and that 
the benefit associated with these financial contributions was not extinguished by 
PWCC's  arm's -length purchase of Newpage PH for fair market value.170 
7.3.2.2   Whether the USDOC properly found that a benefit resulting fr om the hot idle 
funding was conferred to PHP  
7.3.2.2.1   Factu al background  
7.3.2.2.1.1   The relevant facts on the record  
7.86.   PHP's SC Paper mill in Port Hawkesbury, Nova Scotia, was previously owned by 
NewPage  PH.171 On 6 September 2011, Newpage PH filed for creditor protection under the 
CCAA.172 In its CCAA application, Newpage PH decl ared that it was seeking to pursue a going 
concern sale.173 To sell the mill as a going concern, the paper machines had to be maintained in a 
state that would enable a relatively quick return to production operations (i.e. hot idle status).174 
Newpage PH thus took the necessary steps to maintain the mill in hot idle status.175 
                                                
169 Canada's panel request, p. 2.  
170 Canada's panel request, p. 2.  
171 Canada's first written submission, paras. 12 -13; Port Hawkesbur y, Initial Questionnaire Response 
(27 May 2015)  (Port Hawkesbury Initial Questionnaire Response ), (Exhibit CAN -3 (BCI) ), pp. 4 -6. 
172 As explained before, t he CCAA is a federal law allowing insolvent corporations that owe their 
creditors more than CAD 5 million to restructure their business and financial affairs. The main purpose of the 
CCAA is to enable financially distressed companies to avoid bankruptcy, foreclosure, or the seizure of the ir 
assets while maximizing return s for their creditors and preserving  both jobs and the company's value as a 
functioning business. CCAA proceedings are carried out un der the supervision of a court. ( Canada's first w ritten 
submission, para. 14;  Nova Scotia  Questionnaire Response, Vol. VIII , (Exhibit CAN -1 (BCI) ), p. NS.VIII -2). 
173 Nova Scotia Questionnaire Response, Vol. VIII, (Exhibit CAN -1 (BCI) ), exhibit NS-HI-1, p. 3; 
Canada's first written submission, paras. 14 -16.  
174 Canada's first written submission, para. 15. I n order to maintain a paper mill in hot idle , a skeleton 
maintenance crew, administration staff, utility services, and security staff were  required to monitor mill 
systems and prevent damage or hazards in the mill and the surrounding property.  (Nova Scotia  Questionnaire 
Response, Vol. VIII , (Exhibit CAN -1 (BCI) ), p. NS.VIII -3). 
175 Canada's first written submission, para. 15; Nova Scotia Questionnaire Response, Vol. VIII, 
(Exhibit  CAN-1 (BCI)), p. NS.VIII -3. WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  7.87.   Under the CCAA process, Newpage PH and its Monitor, Ernst & Young, hired Sanabe & 
Associates LLC (Sanabe) to assist with the sale of the mill. NewPage PH and Sanabe publicly 
advertised the mill, soliciting bids from interested parties. On 16 December 2011, there were 
four potential purchasers submitting formal offers, two of which were going concern offers and two 
of which were liquidation offers. One of the going concern offers was from PWC C, whose offer 
included the purchase of the company itself, and not only the assets. Sanabe recommended that 
PWCC's offer be accepted, as it would facilitate a going concern sale of the mill and timberlands.176 
Newpage PH then began taking steps to reach an acceptable agreement with PWCC.177 
7.88.   By December 2011, however, the funds to keep the mill in hot idle status were almost 
depleted, so the Government of Nova Scotia intervened to help maintain the hot idle status. 
On [[***** ]], the Government of Nova Scotia approved the first amount of funding to maintain 
the hot idle status and, [[***** ]], the Government of Nova Scotia approved an additional amount 
to continue the hot idle status. The amount of funding was based on the actua l costs of 
maintaining the hot idle status as reported by the Monitor.178 
7.89.   On 6 July 2012, an initial Plan of Arrangement under the CCAA process was established, 
based on the sale of Newpage PH to PWCC.179 [[***** ]].180 NewPage PH also continued 
negotiations with  a back -up purchaser that would liquidate the mill's assets if final negotiations 
with PWCC broke down. The liquidation offer was lower than PWCC's offer.181 The negotiations with 
PWCC succeeded and the change in ownership became effective on 28 September 2012. As of that 
date, Newpage PH became PHP, wholly owned by PWCC. The price paid by PWCC was the same as 
the original bid price submitted in December 2011.182 
7.3.2.2.1.2   The USDOC's determination  
7.90.   To assess whether PHP had received a benefit from the hot idle funding, the USDOC applied 
its "concurrent subsidies methodology"183, under which it "will normally determine that the value 
of concurrent subsidies is fully reflected  in the fair market value price of an arm's length change in 
ownership/privatization and, therefore, is fully extinguished in such transaction"184, if three criteria 
are met: "(1) The nature and value of the concurrent subsidies were fully transparent to all  
potential bidders and, therefore, reflected in the final bid values of the potential bidders ; (2) The 
concurrent subsidies were bestowed prior to the sale; and (3) There is no evidence otherwise on 
the record demonstrating that the concurrent subsidies we re not fully reflected in the transaction 
price."185  
7.91.   The USDOC explained that the hot idle funds were bestowed prior to the conclusion of the 
sale of Newpage PH and, thus, the second criterion was met. However, the USDOC determined 
that the other two criter ia were not satisfied.186 
7.92.   With respect to the first criterion, the USDOC noted that the deadline for submitting bids 
was 16 December 2011 and the decisions by the Government of Nova Scotia to provide hot idle 
                                                
176 Nova Scotia Questionnaire Response, Vol. VIII, (Exhibit CAN -1 (BCI) ), p. NS.VIII -4. 
177 Nova Scotia Questionnaire Response, Vol. VIII, (Exhibit CAN -1 (BCI) ), p. NS.VIII -4; Port Hawkesbury 
Initial Questionnaire Response , (Exhibit CAN -3 (BCI) ), p. 7.  
178 Canada's first written submission, paras. 18-20; Nova Scotia Questionnaire Response, Vol. VIII, 
(Exhibit CAN -1 (BCI)), pp. NS.VIII -4-NS.VIII -5. 
179 Port Hawkesbury, Questionnaire Response, exhibit G-11 – Twelfth Report of the Monitor 
(8 August  2012)  (Port Hawkesbury Questionnaire Response, exhibit G -11), (Exhibit CAN -12), p. 10.  
180 Port Hawkesbury, Questionnaire Response, exhibit G -15 – Plan Sponsorship Agreement , 
(Exhibit  CAN-95 (BCI)), para. 7(1)(e).  
181 Port Hawkesbury Questionnaire Response, exhibit G -11, (Exhibit CAN -12), p. 33.  
182 Canada's first written submission, paras. 26-27; Nova Scotia Questionnaire Response, Vol. VIII, 
(Exhibit CAN -1 (BCI) ), p. NS.VIII -5; and Port Hawkesbury Initial Questionnaire Response , (Exhibit CAN -3 
(BCI) ), pp.  8-10. 
183 Issues and Decision Memorandum , (Exhibit CAN -37), p p. 18-19. 
184 Notice of Final  Modification of Agency Practice under Section 123 of the Uruguay Round Agreements 
Act, United States Federal Register, Vol. 68 No. 120  (23 June 2003)  (Final Modification of Agency Practice ), 
(Exhibit CAN -93); Issues and Decision Memorandum , (Exhibit CAN -37), p.  19. 
185 Final Modification of Agency Practice , (Exhibit CAN -93); Issues and Decision Memorandum , 
(Exhibit  CAN-37), p.  19. 
186 Issues and Decision Memorandum , (Exhibit CAN -37), p. 19.  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  funds were made after the solicitation for bids a nd after the submission of all bids. For that reason, 
the USDOC concluded that, at the time the bids were submitted, the nature and the value of the 
hot idle funds were not fully transparent to all potential bidders.187 
7.93.   With respect to the third criterion, t he USDOC determined that there was evidence on the 
record demonstrating that the hot idle funds were not fully reflected in the transaction price. The 
USDOC explained that, because the hot idle funds were not in existence before the bid price was 
establish ed and approved, the value of the hot idle funds could not have been reflected in the 
transaction price.188 
7.94.   For the USDOC, even if that bid price initially reflected the fair market value of the 
Port Hawkesbury mill, and even though the hot idle funds were b estowed prior to the final sale, 
the value of the hot idle funds could not have been reflected in the final transaction price, which 
was set before the hot idle funds were proposed and approved. Therefore, the USDOC concluded 
that, even assuming an arm's -length transaction for fair market value, the subsidy could not have 
been extinguished.189 The USDOC thus found that the hot idle funds conferred a benefit to 
PWCC.190 
7.3.2.2.2   Main arguments of the parties  
7.95.   Canada claims that the USDOC acted inconsistently with Article  1.1(b) of the 
SCM Agreement, when it erroneously found that PWCC/PHP, rather than NewPage PH, was the 
recipient of the hot idle funds, and that the benefit associated with these financial contributions 
was not extinguished by NewPage PH's sale of the mill  at arm's -length for fair market value.191 
7.96.   Canada argues that PWCC/PHP was not the recipient of the hot idle funds. Canada contends 
that the Government of Nova Scotia made the payments to the monitor, who gave them to 
NewPage PH to maintain the mill in hot i dle status, so the funds did not go to PWCC as the winning 
bidder nor did payment of these funds increase the amount NewPage PH would receive. Canada 
submits that any benefit associated with the hot idle funds went to NewPage PH, or, more 
accurately, to Ne wPage PH's creditors.192 
7.97.   Canada also contends that, when applying its concurrent subsidy methodology, the USDOC 
failed to recognize that PWCC/PHP did not receive anything through payment of the hot idle funds. 
Canada asserts that PWCC's bid was for a mill as  a going concern, so PWCC expected the mill to be 
maintained in hot idle during the CCAA sale process. Canada explains that the hot idle funding 
maintained the status quo  and ensured that the mill could be sold as a going concern, because if 
the mill was n ot maintained in hot idle status, PWCC's offer would have been null. Canada adds 
that the USDOC was unable to articulate what value PHP received that was not included in the fair 
market price PWCC paid for the mill, since PHP received exactly what PWCC bid  and paid for, a mill 
in hot idle. Canada also submits that PWCC's bid represented the best offer NewPage PH would 
receive, even if new bids had been solicited after the hot idle funds were paid. Canada argues that 
the USDOC should therefore have found tha t the payments were reflected in the bids and thus, 
that the "subsidies" were extinguished.193 
                                                
187 Issues and Decision Memorandum , (Exhibit CAN -37), p. 19.  
188 Issues and Decision Memorandum , (Exhibit CAN -37), p. 19 . 
189 Issues and Decision Memorandum , (Exhibit CAN -37), p. 19.  
190 Issues and Decision Memorandum , (Exhibit CAN -37), p. 20.  
191 Canada's first written submission, paras. 179 -207; opening statement at the first meet ing of the 
Panel , paras. 153 -162; and second written submission, paras. 66 -69. 
192 Canada's first written submission, para s. 184-189; opening statement at the first meeting  of the 
Panel , paras. 155 and 157; seco nd written submission, para. 67; and opening st atement at the second 
meeting of the Panel, para. 177.  
193 Canada's first written submission, paras. 194 -200; opening statement at the first meeting  of the 
Panel , para s. 156-157 and 159; second w ritten submission, paras. 68 -69; and opening statement at the 
second meeting of the Panel, para. 176.  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  7.98.   Canada argues, in the alternative, that any benefit related to the hot idle funding was 
extinguished by virtue of an arms -length sale for fair market value. For Ca nada, if a 
private -to-private sale is at arm's length and for fair market value, and the change in ownership is 
complete, any prior subsidy should be considered to have been extinguished. Canada contends 
that the USDOC specifically found that the private -to-private party transaction between NewPage 
PH and PWCC was at arm's -length for fair market value, so it acknowledged that PHP did not 
obtain any assets on less than market terms.194  
7.99.   The United States contends that a benefit exists when the financial contribution makes the 
recipient better off than it would otherwise have been. The United States argues that, absent the 
Government of Nova Scotia's payment of hot idle funds, the financial obligation to maintain the 
mill in hot idle status would have fall en on Newpage PH, so the Government of Nova Scotia 
explicitly subsidized a necessary condition of the sale of the mill as the sale was occurring and, 
thus, PWCC received a benefit.195 
7.100.   The United States adds that the issue was whether the bid and sale prices reflected and 
incorporated the hot idle funds. The United States argues that the final bid price that PWCC 
submitted could not have accounted for the hot idle funds because those funds were approved and 
provided after the submission of the bid. The United States contends  that while the bid and sale 
price for the purchase of the mill in hot idle status was CAD 33 million , it actually cost [[ ***** ]] to 
keep the mill ready for sale as a going concern. The United States adds that N ewpage  PH initially 
contribute d CAD 22 million and, after PWCC 's bid was accepted, the province contributed 
[[*****]] of hot idle funds and an additional CAD 12 million for the FIF. The United States argues 
that the value of an operational mill was [[ *****]] of which the Government of Nova Scotia 
contributed a total of [[ ***** ]] to N ewpage PH  – a dollar amount that [[ ***** ]] PWCC 's CAD 33 
million bid and purchase price. Accordingly, for the United States, the hot idle funds, concurrent 
with and in facilitation of the mill 's sale, benefi ted PWCC .196 In addition,  for the United States, the 
USDOC appropriately concluded that, given that the funding was bestowed as a result of Newpage 
PH's inability to use its own financial reserves to fulfil the obligations to which it agreed, the full 
value of maintaining the mill in hot idle status was not accounted for in the original bid. Also, given 
that the Government of Nova Scotia approved the hot idle funding after the deadline for all bids, 
the potential bidders would not have been aware of the provi sion of hot idle funds and the bids 
submitted could not have reflected the provision of the assistance to maintain hot idle status. The 
United States argues that the USDOC reasonably determined that PWCC received a benefit that it 
did not pay for, i.e. the  Government of Nova Scotia's financial support of the sale.197 
7.101.   With respect to whether the benefit was extinguished through the sale at arm's length and 
for fair market value, the United States argues that a determination of whether a sale was at 
arm's -length and for fair market value between private parties does not answer the question of 
whether benefits conferred prior to the sale have been extinguished. For the United States, a 
fact-intensive inquiry must be conducted on a case -by-case basis to determine not only whether 
the sales price was at arm's -length and at fair market value, but also whether the benefit 
continues to be accounted for after a change of ownership and was reflected in the transaction 
price. The United States argues that the USDOC examin ed the transaction to determine whether 
the purchaser received an advantage or something that made it better off than it would otherwise 
have been, absent that financial contribution. For the United States, the facts demonstrate that the 
hot idle funds all owed Newpage PH to fulfil an obligation it otherwise would not have been able to 
meet, i.e. sell the mill in hot idle status. The United States submits that record evidence 
demonstrates that, due to the timing of the market transaction, the hot idle funds were not 
reflected in the price PWCC ultimately paid, so the purchase did not extinguish the subsidy.198  
                                                
194 Canada's first written submission, paras. 201 -207; opening statement at the first meeting of the 
Panel, para. 162; and opening statement at the second meeting  of the Panel , paras. 182 -189. 
195 United States'  first wri tten submission, para. 125.  
196 United States' response to Panel's question No. 36, paras. 90 -91; closing statement at the second  
meeting  of the Panel , para. 6.  
197 United States'  first written submission, paras. 127 -128. 
198 United States'  first written submiss ion, para. 131.  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  7.3.2.2.3   Evaluation by the panel  
7.102.   Pursuant to Article 1.1(b) of the SCM Agreement, for a subsidy to exist, a benefit must be 
conferred by a financial contribution . The term benefit is not defined in the SCM Agreement and no 
particular methodology to determine whether a benefit is conferred appears therein. The concept 
of benefit has instead been elucidated through panel and Appellate Body case law.199 
7.103.   The Appellate B ody has explained that "the ordinary meaning of 'benefit' clearly 
encompasses some form of advantage"200 and "is concerned with 'benefit to the recipien t' and not 
with the 'cost to government'".201 A "'benefit' does not exist in the abstract, but must be received 
and enjoyed by a beneficiary or a recipient"202, so a benefit can be said to arise only if a person, 
natural or legal, or a group of persons, has in fact received something.203 Also, the focus of any 
analysis should be on legal or natural persons instead of on productive operations.204 
7.104.   Concerning the methodology to establish whether a benefit exists, "the term 'benefit' 
implies some kind of  comparison . … [Since] there can be no 'benefit' to the re cipient unless the 
'financial contribution' makes the recipient 'better off' than it would otherwise have been, absent 
that contribution".205 In undertaking this comparative analysis, the marketplace provides the 
appropriate basis for comparison, because the  trade-distorting potential of a financial contribution 
can be identified only by determining whether the recipient has received that financial contribution 
on terms more favourable than those available in the market.206 
7.105.   The Panel agrees with the Appellate B ody. In the case at issue, the USDOC was required to 
assess whether PWCC/PHP207 was better off than it would otherwise have be en, absent the hot idle 
funding.208 
7.106.   The Panel notes that, for the USDOC, the relevant question was whether the hot idle 
funding was fu lly reflected in the price paid by PWCC/PHP, and the fact that the bid offer preceded 
the proposal and approval of the hot idle funds was det erminative to conclude that the price paid 
did not reflect the hot idle funds. However, the USDOC's methodology failed to address what in the 
Panel's view was the crucial question in the benefit analysis: whether PWCC/PHP was better off 
than it would other wise have been, absent the hot idle funding. In our view, PWCC/PHP bid for and 
paid for a mill as a going concern and, thus, in hot idle status. This is what PWCC/PHP received. 
PWCC/PHP was not made any better off by the hot idle funding, since the hot idl e funding did not 
result in PWCC/PHP receiving anything more than it paid for.  
7.107.   The Panel notes that in its section "Analysis of Comments", the USDOC addressed this 
issue as follows:  
The question of whether the bid price was for a sale of the mill to be del ivered in hot 
idle status, as [the Government of Nova Scotia] contends, is inapposite. The issue is 
actually whether the bid and sale prices reflected and incorporated the hot idle funds 
approved in December 2011 and March 2012. We acknowledge that PWCC's bid was 
offered for the mill as a going concern with the understanding that the mill was being 
                                                
199 Appellate Body Report, EC and certain member States – Large Civil Aircraft , para. 703.  
200 Appellate Body Report, Canada – Aircraft , para. 153. See also  Appellate Body Report, US – Carbon 
Steel (India) , para. 4.123.  
201 Appellate Body Report, Canada – Aircraft , para. 15 5 (emphasis original) . See also  Appellate Body 
Report, US – Carbon Steel (India) , para. 4.123.  
202 Appellate Body Report, Canada – Aircraft , para. 154.  
203 Appellate Body Report, Canada – Aircraft , para. 154. See also  Appellate Body Report, EC and certain 
member States – Large Civil Aircraft , para. 703.  
204 Appellate Body Report, US – Countervailing Measures on Certain EC Products , para. 110.  
205 Appellate Body Report, Canada – Aircraft , para. 157. See also  Appel late Body Report, US – Carbon 
Steel (India) , para. 4.123.  
206 Appellate Body Report, US – Carbon Steel (India) , para. 4.123. See also  Appellate Body Report s, 
US – Large Civil Aircraft (2nd complaint) , para. 63 6; and EC and certain member States – Large Civil Aircraft , 
para. 705. 
207 As the Panel has explained, when Newpage PH was sold to PWCC, Newpage PH became PHP, wholly 
owned by PWCC.  For ease of the analysis, the Panel will refer to PWCC/PHP.  
208 We note that the sale of the mill involve d the full  transfer of ownership  from Newpage PH to PWCC.  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  maintained in hot idle status. However, PWCC made that bid with the expectation that 
[Newpage PH] would maintain it as such and could not have anticipated that [ the 
Govern ment of Nova Scotia] would assume responsibility for that maintenance. Thus, 
once [Newpage PH] could not fulfill its obligations, PWCC received a benefit in the 
form of additional, unanticipated financing from [the Government of Nova Scotia] for 
the mill's  continued hot idle status. Our measurement of that benefit is not a 
cost-to-government analysis, as parties have claimed, but a recognition that the full 
value of maintaining the mill in hot idle status was not accounted for in the original 
bid.209 
7.108.   The USDOC considered as "inapposite"  the fact that PWCC/PHP paid for and received a mill 
in hot idle status. The USDOC instead concludes that, because the full value of maintaining the mill 
in hot idle status was not accounted for in the original bid, PWCC/PHP received a benefit in the 
form of additional, unanticipated financing from the Government of Nova Scotia. The USDOC 
seems to be suggesting that PWCC/PHP should have paid for the value of maintaining the mill in 
hot idle status during the sales process, despite the fact that its bid was for a mill in hot idle 
status. However, precisely because PWCC/PHP bid for a mill in hot idle, it was not PWCC/PHP, the 
buyer who had to bear the burden of maintaining the hot idle status of the mill during the sales 
process, but rather Newpage PH, the sel ler. If anything, therefore, it was Newpage PH that 
benefited from the hot idle funding, since it did not have to incur those costs in order to sell the 
mill in hot idle status.  
7.109.   Also, the USDOC contends that PWCC/PHP somehow received a benefit because it h ad 
made the bid with the expectation that Newpage PH would maintain the mill in hot idle status, and 
could not have anticipated that the Government of Nova Scotia would intervene. From the 
perspective of PWCC/PHP, though, we do not see the relevance of the  source of the funds needed 
to maintain the mill in hot idle status. Again, PWCC/PHP received what it paid for, i.e. a mill in hot 
idle status. This remains true no matter where the funds to maintain the mill in hot idle status 
originated from.  
7.110.   The Panel n otes that the United States has a rgued in these proceedings  that PWCC /PHP 
received a benefit because the Government of Nova Scotia subsidized a necessary condition of the 
sale of the mill, and that, absent the Government of Nova Scotia's payment of hot idl e funds, there 
would have been no transaction. Firstly, the United States has not identified any such finding by 
the USDOC, and we have not been able to identify any. Secondly, t he United States seems to be 
suggesting that PWCC/PHP benefited from the hot i dle funding because, but for that funding, it 
would have received nothing  since the transaction would not have gone ahead . It is true that 
PWCC's offer was for a mill in hot idle, so if the mill had not been maintained in hot idle  status  
there would have b een no transaction. However, in such case PWCC /PHP would not have paid 
anything.  From the perspective of the seller, though, the hot idle funding allow ed Newpage PH to 
sell the mill as a going concern when it would otherwise not have been able to do so. On ce again, 
therefore, the facts indicate that the benefit from the hot idle funding accrued to Newpage PH,  and 
ultimately its creditors,  rather than PWCC /PHP. 
7.111.   In light of the foregoing, the Panel concludes that the USDOC acted inconsistently with 
Article 1. 1(b) of the SCM Agreement, by finding  that the hot idle funding conferred a benefit 
on PWCC/PHP.  
7.3.2.3   Whether the USDOC properly found that any benefit resulting from the FIF was 
conferred to PHP  
7.3.2.3.1   Factual background  
7.3.2.3.1.1   The relevant facts on the record  
7.112.   In its application under the CCAA , Newpage P H indicated that, given the limited period of 
full operation to be sustained following the CCAA filing, the amount of continued goods and 
services required by Newpage PH would be substantially reduced from its normal op eration 
                                                
209 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 87 -88. (fn omitted)  WT/DS505/R  
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  levels.210 This included the ancillary forestry infrastructure activities.211 The Government of 
Nova Scotia, however, wanted Newpage PH to keep contracting forestry infrastructure activities 
while the CCAA process was underway.212 As a result, on 16 Sept ember 2011, the Government of 
Nova Scotia and Newpage PH concluded the Forestry Infrastructure Agreement (FIA), which was 
put into effect on 23 September 2011.  
7.113.   The FIA established the FI F to fund all eligible costs of the works approved in advance by 
the G overnment of Nova Scotia. Those works  included: [[***** ]].213 The FIA was cost and cash 
flow neutral to Newpage PH214 and [[ ***** ]].215 The first amount of the FIF was approved on 
16 September 2011, and a second amount was approved on [[***** ]].216  
7.3.2.3.1.2   The USDOC's determination  
7.114.   The USDOC noted the Government of Nova Scotia's argument that the programme was 
cost and cash flow neutral to Newpage PH and that the services provided under the programme 
were designed to accrue to the benefit of Nova Scotia. The USDOC deter mined, however, that the 
internal documentation submitted by the Government of Nova Scotia demonstrated that the FIF 
was provided to support the ongoing operations of the mill during the bankruptcy process and to 
maintain the mill ready for sale as a going  concern, which demonstrated that the programme was 
established to support the mill through the CCAA and sale process, rather than only to support 
unrelated contractors.217 
7.115.   The USDOC then determined that, based upon the manner in which the company was sold, 
the private -to-private party transaction between Newpage PH and PWCC was at arm's -length for 
fair market value.218 The USDOC considered that it still had to determine whether any subsidies 
were extinguished. As in the case of the hot idle funding, the USDOC applied the three criteria set 
forth in the abovementioned concurrent subsidies methodology.219 
7.116.    With respect to the initial FIF approval amount, the USDOC determined that the three 
criteria were met because: (a) the order approving this original agreement w as announced publicly 
prior to the submission of formal offers for the purchase of the mill and prior to the submission of 
PWCC's final bid, so the nature and value of the initial FIF funds were fully transparent to all 
potential bidders; (b) the funds wer e bestowed prior to the conclusion of the sale of Newpage PH 
to PWCC; and  (c) there was no evidence on the record demonstrating that the amounts related to 
the first FIF approval were not fully reflected in the transaction price. Therefore, the USDOC 
concluded that the subsidies related to the initial FIF approval were extinguished in the fair market 
price of the arm's -length sale.220 
7.117.    With respect to the second FIF approval, the USDOC determined that the first criterion 
was not satisfied because the second F IF amount was approved after PWCC's final bid was 
submitted, so, at the time the bids were submitted, the nature and the value of the second FIF 
                                                
210 Government of Nova Scotia, Questionnaire Response, Vol. X – Forestry Infrastructure (28 May 
2015), exhibits  NS-FI-1 to NS -FI-12 (Nova Scotia Questionnaire Response, Vol.  X), (Exhibit CAN -16 (BCI) ), 
p. NS.X-3. 
211 Canada's first written submission, para. 21; Nova Scotia Questionnaire Response, Vol.  X, 
(Exhibit  CAN-16 (BCI) ), p. NS.X -3. 
212 Canada's first written submission, paras. 21-22; Nova Scotia Questionnaire Response, Vol.  X, 
(Exhibit CAN -16 (BCI) ), p. NS.X -3; and Port Hawkesbury, Questionnaire Response, exhibit G-6 – Supreme 
Court of Nova Scotia, Initial Order (9 September 2011)  (Port Hawkesbury Questionnaire Response, 
exhibit  G-6), (Exhibit  CAN-8), pp.  15-16. 
213 Canada's first written submission, para. 23; Nova Scotia Questionnaire Response, Vol.  X, 
(Exhibit  CAN-16 (BCI) ), p. NS.X -4. 
214 Canada's first written submission, paras. 21-22; Nova Scotia Questionnaire Response, Vol.  X, 
(Exhibit CAN -16 (BCI) ), p. NS.X -3; and Port Hawkesbury Questionnaire Response, exhibit G -6, 
(Exhibit  CAN-8), pp.  15-16. 
215 Nova Scotia Questionnaire Response, Vol.  X, (Exhibit CAN -16 (BCI)), pp. NS.X -4-NS.X-5. 
216 Canada's first written submission, para. 23; Nova Scotia Questionnaire Response, Vol.  X, 
(Exhibit  CAN-16 (BCI) ), pp. NS.X -5-NS.X-6. 
217 Issues and Decision Memorandum , (Exhibit CAN -37), p. 21.  
218 Issues and Decision Memorandum , (Exhibit CAN -37), p. 22.  
219 Issues and Decision Memorandum , (Exhibit CAN -37), p. 22.  
220 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 22 -23. WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  was not fully transparent to all potential bidders and it was not possible that the bids could have 
reflected t he provision of the assistance under the FIF.221 
7.118.   The USDOC also determined that the third criterion was not satisfied because there was 
evidence on the record demonstrating that the second FIF approval was not fully reflected in the 
transaction price. The US DOC explained that, because those funds were not disbursed before the 
bid price was established and approved, the value of the second FIF approval could not have been 
reflected in the transaction price.222 The USDOC thus found that the second FIF approval co nferred 
a benefit to PWCC.223 
7.3.2.3.2   Main arguments of the parties  
7.119.   Canada argues that the USDOC acted inconsistently with Article 1.1(b) of the 
SCM Agreement, when it erroneously found that PHP was the recipient of the FIF and that the 
benefit associated with the F IF was not extinguished by NewPage PH's sale of the mill at 
arm's -length for fair market value.224 
7.120.   Canada contends that the FIA was undertaken at the behest of the Government of Nova 
Scotia, and that the FIF merely facilitated this outcome by allowing for th e passing of payments 
through NewPage PH to third-party providers of forestry services. Consequently, for Canada, these 
funds could not have provided any benefit to PWCC/PHP, and it was the third -party contractors 
who were the recipients of the FIF funds.225 
7.121.   Canada also contends that NewPage PH was not a recipient of any benefit that may be 
associated with these funds because it had no obligations related to forestry activities once it 
entered the CCAA process, and, even assuming arguendo  that NewPage PH had received a subsidy 
under the FIF, that subsidy did not relate to PWCC/PHP because the Government of Nova Scotia 
ceased making any payments under the FIF upon sale of the mill to PWCC.226 
7.122.   Canada argues that PWCC's bid was for a mill as a going concern, so PWCC knew about 
the payments of the FIF funds and the bid reflected knowledge of the FIF funding. Canada argues 
that the USDOC should therefore have found that the payments were reflected in the bids and 
thus, that the subsidies were exti nguished. For Canada, the USDOC failed to identify what the 
benefit was that PWCC/PHP is alleged to have received.227 Canada states in this regard that the 
FIF funds neither increased the value of the assets acquired by PWCC, nor increased the future 
return on those assets.   
7.123.   Canada submits, in the alternative, that any benefit related to the FIF funds was 
extinguished by virtue of an arms -length sale for fair market value. For Canada, if a 
private -to-private sale is at arm's length and for fair market value a nd the change in ownership is 
complete, then any prior subsidy should be considered to have been extinguished and the USDOC 
specifically found that "the private -to-private party transaction between NewPage PH and PWCC 
was at arm's -length for fair market va lue". For Canada, the USDOC acknowledged that PHP did not 
obtain any assets on less than market terms.228  
                                                
221 Issues and Decision Memorandum , (Exhibit CAN -37), p. 23.  
222 Issues and Decision Memorandum , (Exhibit CAN -37), p. 23.  
223 Issues and Decision Memorandum , (Exhibit CAN -37), p. 23.  
224 Canada's first written submission, paras. 179 -207; opening statement at the first meeting  of the 
Panel , paras. 153 -162; and second written submission, paras. 66 -69. 
225 Canada's first written submission, para. 190 -193; opening statement at the first meeting  of the 
Panel , para s. 160-161; second w ritten submission, paras. 70 -72; and opening statement at the second 
meeting of the Panel, paras. 179 -181.  
226 Canada's first written submission, para. 190 -193; opening statement at the first meeting  of the 
Panel , para s. 160-161; second w ritten submission, paras. 70 -72; and opening statement at the second 
meeting of the Panel, paras. 179 -181. 
227 Canada's first written submission, paras. 194 -200; opening statement at the first meeting  of the 
Panel , para s. 156-157 and 159;  and second written submission, paras. 68 -69. 
228 Canada's first written submission, paras. 201 -207; opening statement at the first  meeting of the 
Panel, para. 162; and opening statement at the second meeting of the Panel, paras. 182 -189. WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  7.124.   The United States argues that positive evidence on the record supports the 
USDOC's  finding that the FIF was a fund intentionally created by the Governm ent of Nova Scotia to 
ensure that the mill was sold as a going concern in order to keep the mill in operation. 
The United  States adds that the Verification Report of the Government of Nova Scotia 
demonstrates that the FIF was implemented to enable the fore stry operations to continue during 
the bankruptcy process and not interrupt supply chain operations at the mill, and all of these 
activities contributed to the sale of Newpage PH as a going concern. The United States adds that 
the USDOC examined the transa ction and determined, based on record evidence, that, without the 
Government of Nova Scotia's FIF grant, Newpage PH would not have been able to sell the mill as a 
going concern – a condition to which Newpage PH agreed. Thus, PWCC received a benefit when th e 
Government of Nova Scotia provided a grant to maintain the ongoing forestry operations of the 
mill during the bankruptcy process.229 
7.125.   The United States maintains that the pertinent question on the extinguishment analysis is 
whether the change in ownership r esulted in an extinguishment of the subsidy, such that it no 
longer benefited the recipient. The United States adds that a subsidy extinguishment analysis 
entails a careful case -by-case analysis, and an important factor is the extent to which the benefit 
from the subsidy is fully reflected in the transaction price, i.e. whether the transaction price has 
incorporated and, thereby, "extinguished" the subsidy. The United States adds that, accordingly, 
the USDOC concluded that because the second payment of the FIF grant was provided after the 
PWCC bid was submitted, and the bid price did not change throughout the duration of the sales 
process, the value of the funds could not have been reflected in the final transaction price.230 
7.3.2.3.3   Evaluation by the Panel  
7.126.   We recall that the term benefit encompasses some form of advantage to a recipient, and 
there can be no benefit to a recipient unless the financial contribution makes the recipient better 
off than it would otherwise have been, absent that contribution. Ther efore, in the case at issue, 
the USDOC was required to assess whether PWCC/PHP was better off than it would otherwise have 
been, absent the FIF . For essentially the same reasons that we set out in respect of the hot idle 
funds, we consider that the USDOC f ailed to properly determine benefit in this manner.  
7.127.   The Panel notes that the USDOC first concluded that the FIF was established to maintain 
the mill as a going concern and that the sale of Newpage PH to PWCC/PHP was an 
arm's -length  sale for fair market val ue. After concluding this, the relevant question for the USDOC 
was whether the FIF was fully reflected in the price paid by PWCC/PHP231, and the fact that the bid 
offer preceded the approval of the second FIF amount was determinative to conclude that the pri ce 
paid did not reflect the second FIF amount. However, as with the hot idle funding, the 
USDOC's  methodology failed to address what in the Panel's view is the crucial question in the 
benefit analysis: whether PWCC/PHP  was better off than it would otherwis e have been, absent the 
FIF. As with the hot idle funding, there is no evidence that, as a result of the FIF, PWCC/PHP 
received anything more than it paid . There was in particular no determination by the USDOC that 
the value of the assets acquired by PWCC/ PHP was  increased as a result of the FIF, or that future 
returns on those assets wer e increased as a result thereof.232 
7.128.   In light of the foregoing, the Panel concludes that the USDOC acted inconsistently with 
Article 1.1(b) of the SCM Agreement, by finding that PWCC/PHP was the recipient of the benefits 
from the second FIF amount.  
7.3.3   Claim concerning the provision of stumpage and biomass to PHP  
7.3.3.1   Introduction  
7.129.   Canada claims that the USDOC acted inconsistently with Articles 11. 2 and 11.3 of the 
SCM Agreement, by improperly initiating  an investigation on the provision of stumpage and 
                                                
229 United States' first written submission, para. 132; second written submission, paras. 63 -69. 
230 United States' first written submi ssion, para. 132; second written submission, paras. 70 -74. 
231 As the Panel has explained, when Newpage PH was sold to PWCC, Newpage PH became PHP, wholly 
owned by PWCC.  For ease of the analysis, the Panel will refer to PWCC/PHP.  
232 [[***** ]] WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  biomass by the Government of Nova Scotia to PHP, in the absence of any evidence that a benefit 
was conferred .233 
7.3.3.2   Factual background  
7.130.   In its petition to initiate a CVD investigation on SC Paper, the petitioner alleged that, based 
on information reasonably available to it, PHP harvests a significant portion of the pulpwood and 
biomass from Nova Scotia Crown land and benefits from countervailable subsidies as a result.234 
7.131.   In support of this all egation, the petitioner submitted the publicly available version of a 
20-year Forest Utilization Licen se Agreement (FULA) between Nova Scotia and PHP235, and 
explained that:  
This agreement specifies that PHP may harvest up to 400,000 green metric tons 
("GMT") of spruce or fir pulpwood per year and another 175,000 MT of biomass fuel 
from Crown lands. The FULA also calls for PHP to purchase 200,000 GMT of pulpwood 
and 200,000 MT of biomass fuel from private suppliers. Thus, under the agreement, 
PHP is slated to  obtain approximately two -thirds of its pulpwood from Crown land and 
one-third from private sources.236 
7.132.   Specifically with respect to benefit, the petitioner alleged that the Government of Nova 
Scotia provides a benefit "to the extent that PHP pays less than adequate remuneration for the 
stumpage and biomass" .237 The petitioner explained that " [d]espite significant effort", it was 
unable to locate the stumpage prices actually paid by PHP for stumpage rights because the 
Government of Nova Scotia had redacted the details on prices from the FULA. The petitioner then 
argued that the USDOC should determine the benefit to PHP by evaluating the prevailing market 
conditions for the stumpage and biomass purchased.238 
7.133.   The USDOC decided to initiate an investigation on the pro vision of stumpage and biomass  
to PHP . With respect to all the programmes on which the USDOC initiated an investigation, 
including the provision of stumpage and biomass to PHP, the USDOC explained as follows:  
We recommend investigating the programs listed under "Programs on Which the 
[USDOC] is Initiating an Investigation." For each program, the petitioner alleged the 
elements of a subsidy, i.e., financial contribution, benefit, and specificity. We find that 
the petitioner's allegations are supported by ade quate and accurate information that 
was reasonably available to it.239 
7.134.   On the element of benefit with respect to the provision of stumpage and biomass, the 
USDOC described the petition as follows:  
The petitioner alleges that the [Government of Nova Scotia] provides a benefit 
through this program to the extent that PHP pays less than adequate remuneration for 
the stumpage and biomass, consistent with section 771(5)(E)(iv) of the Act. Despite 
significant effort, the petitioner states that it was unable to loca te the stumpage prices 
actually paid by PHP for stumpage rights because the [Government of Nova Scotia] 
has redacted this information from public documents. While the petitioner states it 
was able to obtain the FULA between PHP and the [Government of Nova Scotia], the 
[Government of Nova Scotia], however, redacted from this document the details of 
                                                
233 Canada's panel request, p. 2.  
234 Petition for the Imposition of Countervailing Duties in the Matter of Supercalendered Paper from 
Canada, Vol. II: Canada Subsidy Allegations (26 February 2015)  (Petition, Vol. II ), (Exhibit CAN -39), p. II -46. 
235 Petition for the Imposition of Countervailing Duties in the Matter of Supercalendered Paper from 
Canada, Vol. II: Canada Subsidy Allegations (26 February  2015), exhibit II -66 – Forest Utilization License 
Agreement, (27 September 2012) , (Exhibit CAN -138).  
236 Petition, Vol. II , (Exhibit CAN -39), pp. II -46-II-47. (fns omitted)  
237 Petition, Vol. II , (Exhibit CAN -39), p. II -48. 
238 Petition, Vol. II , (Exhibit CAN-39), p. II -48. 
239 USDOC, Enforcement and Compliance Office of Antidumping and Countervailing Duty (CVD) 
Operations , CVD Investigation Initiation Checklist  (18 March 2015 ) (USDOC initiation checklist), 
(Exhibit  CAN-40), p. 7.  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  the prices it charges for public resources. Consistent with section 771(5)(E) of the Act, 
the petitioner requests that the [USDOC] investigate the benefit to PHP by evaluating 
the prevailing market conditions for stumpage and biomass purchased, including the 
"price, quality, availability, marketability, transportation, and other conditions" in 
relation to the conditions otherwise available.240 
7.3.3.3   Main arguments of the p arties  
7.135.   Canada claims that the USDOC initiation of an investigation into Nova Scotia's provision of 
stumpage and biomass did not meet the standard for sufficient evidence under Articles 11.2 and 
11.3 of the SCM Agreement and thus the USDOC failed in its obl igation to evaluate the accuracy 
and adequacy of the evidence in the application, in violation of Article 11.3 of the 
SCM Agreement.241 
7.136.   Canada argues that the petition provided no information with respect to benefit and simply 
alleged that the provision of s tumpage and biomass for less than adequate remuneration was a 
countervailable subsidy, because PHP harvests a significant portion of the pulpwood and biomass 
from Nova Scotia Crown land. Canada contends that the petition did not include the stumpage rate 
paid by PHP or any pricing information about either government or private sales.242  
7.137.   Canada contends that none of the documents submitted by the petitioner constitute 
positive evidence  of a benefit to PHP.243 Canada asserts that the version of the FULA relied o n by 
the petitioner only specified the quantity of pulpwood and biomass fuel PHP is permitted to harvest 
annually from Crown lands and did not provide a stumpage rate. For Canada, mere evidence of a 
purchase from the government is not an indication that a subsidy exists .244 
7.138.   Canada argues that, even if there was no evidence of a benefit reasonably available to the 
petitioner, the USDOC was not justified in initiating an investigation wi th no evidence of benefit 
before it. Canada adds that, even if the FULA had  not been redacted, it would have only been a 
mere assertion of benefit because no comparator was provided.245 
7.139.   Canada also contends that the United States' argument that the USDOC had information 
supporting the existence of a distorted market for pulpwood is  a post hoc rationalisation. Canada 
asserts that the petitioner had requested the USDOC to investigate the benefit to PHP by 
evaluating the prevailing market conditions for stumpage and biomass, but the USDOC did not 
make any finding that there was evidenc e that prevailing market conditions were distorted or that 
the market was restricted.246 
7.140.   The United States argues that the petition contained sufficient evidence with respect to  the 
existence of a subsidy that was reasonably available to the applicant. The U nited States contends 
that the USDOC investigated the provision of stumpage, based on its determination that the 
petitioner provided adequate and accurate information that was reasonably available to it in 
support of the allegation. Concerning benefit, the  United States contends that the USDOC 
explained that the specific stumpage rates had been redacted from the publicly available version of 
the FULA, and were not otherwise publicly available, so it concluded that the petitioner had 
presented adequate and a ccurate information that was reasonably available to it, and 
recommended investigation of the program me.247 
7.141.   The United States adds that, in particular, the application demonstrated that PHP did not 
procure pulpwood based on market principles and, rather, PHP  entered into an agreement with 
Nova Scotia that sets restrictions on PHP's  sourcing of pulpwood. The United States adds that the 
                                                
240 USDOC initiation checklist , (Exhibit CAN -40), p. 18.  
241 Canada's first written submission, paras. 208 and 217.  
242 Canada's first written submission, para. 212.  
243 Canada's first written submission, para. 213.  
244 Canada's first written submission, paras. 214 -216. 
245 Canada's response to Panel question No. 43, para. 89.  
246 Canada's second written submission, paras. 73 -75. 
247 United States' first written submission, paras. 134 -137; second written submission, para. 76; and 
response to Panel question No. 46, paras. 101 -103. WT/DS505/R  
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  FULA stipulates certain volumes of pulpwood a nd biomass that PHP is required to purchase from 
private suppliers, so the agreem ent indicates the existence of a distorted market for pulpwood that 
is not based on market principles, and supports the potential existence of a countervailable 
subsidy by which a benefit has been conferred.248 
7.142.   For the United States, the absence of pricing d ata, which is often confidential and not 
available to an applicant, does no t preclude initiation of an investigation.249 The United States adds 
that the pricing information, which is evidence that might best be used to demonstrate a benefit, 
had been redacte d from the agreement, so, under these circumstances, it cannot be the case that 
a petitioner is required to provide pricing information to which it does not have access. The 
United  States adds that Article 11 does not require pricing data to support an allegation of the 
provision of goods for less than adequate remuneration and t hat, if the petitioner does not have 
access to the pricing information underlying the agreement, the n a provision of a proposed 
benchmark would have no purpose.250  
7.3.3.4   Evaluation by t he Panel  
7.143.   Articles 11.2 and 11.3 of the SCM Agreement read, in relevant parts, as follows:  
11.2 An application under paragraph 1 shall include sufficient evidence of the 
existence of (a) a subsidy and, if possible, its amount [.] … Simple assertion, 
unsubstantiated by relevant evidence, cannot be considered sufficient to meet the 
requirements of this paragraph. The application shall contain such information as is 
reasonably available to the applicant on the following:  
… 
(iii) evidence with regard to the existence, amount and nature of the subsidy in 
question;  
… 
11.3 The authorities shall review the accuracy and adequacy of the evidence provided 
in the application to determine whether the evidence is sufficient to justify the 
initiation of an investigation.  
7.144.   Article 11 sets out a number of evidentiary requirements that must be satisfie d in order to 
initiate a CVD investigation, including the requirement of sufficient evidence in an application. 
Article 11.2 provides that an applicatio n shall include sufficient evidence of the existence of a 
subsidy and Article 11.2(iii) specifies that the application shall contain such information as is 
reasonably available to the applicant on evidence with regard to the existence, amount , and nature 
of the subsidy in question. Article 11.3, in turn, states that the authorities shall review the 
accuracy and adequacy of the evidence provided in the application to determine whether the 
evidence is sufficient to justify the initiation of an investigation.  
7.145.   The obligation upon Members in relation to the sufficiency of evidence in an application 
finds expression in Article 11.3 of the SCM Agreement, and must be read together with 
Article  11.2. This means that i f an investigating authority initiates an investig ation without 
sufficient evidence, it acts inconsistently with Article 11.3, and a panel does not need to make 
separate findings under Article 11.2.251 
7.146.   The term "evidence" is defined as " [f]acts or testimony in support of a conclusion, 
statement, or belief " and " [s]omething serving as proof ". The term "sufficient" is defined, 
                                                
248 United States' first written submission, para. 144; response to Panel question No. 46 , para. 100.  
249 United States' first written submission, para. 145 ; response to Panel question No. 46 , 
paras.  102-103. 
250 United States' second written submission, paras . 77-80. 
251 Panel Reports, China – GOES , para. 7.50; US – Countervailing Measures (China) , para. 7.144.  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  relevantly, as "adequate".252 The p hrase  "sufficient evidence" in Articles 11.2 and 11.3 of the 
SCM Agreement is used in the context of determining whether the initiation of a CVD investig ation 
is justified.253 
7.147.   As other panels have explained, in making a  determination of sufficiency of evidence, the 
investigating authority is balancing two competing interests, namely the interest of the domes tic 
industry in securing the initiation of an investigation and the interest of respondents in ensuring 
that investigations are not initiated on the basis of frivolous or unfounded suits.254 At the stage of 
initiating an investigation, an investigating authority is not required to reach definitive concl usions 
regar ding the existence of a subsidy. However, while the amount and quality of the evidence 
required at the time of initiation is less than that required to reach a preliminary or a final 
determination, the requirement of sufficient evidence is a me ans by which investigating authorities 
filter those applications that are frivolous or unfounded.255 
7.148.   Article 11.2 requires "sufficient evidence of the existence of a subsidy"256, namely  the 
existence of a financial contribution, a benefit, and specificity. The refore, although definitive proof 
of the existence and nature of a subsidy is not necessary at the stage of initiation, adequate 
evidence, tending to prove the existence of a subsidy, is required. Simple assertion, 
unsubstantiated by relevant evidence, is not sufficient to justify the initiation of an investigation.257 
7.149.   The Panel also notes that Article 11.2 explicitly refers to "such information as is reasonably 
available to the applicant", acknowledging that certain information may not be available. However,  
as the panel in China – GOES observed, an investigation cannot be justified where there is no 
evidence of the existence of a subsidy before an investigating authority, even if such evidence is 
not reasonably available to the applicant.258 
7.150.   In light of the ab ove, the question before this Panel is whether an unbiased and objective 
investigating authority could have found that the information provided in the CVD application on 
SC Paper contained adequate evidence tending to prove that PHP received a benefit from  the 
provision of stumpage and biomass by the Government of Canada. More precisely, whether an 
unbiased and objective investigating authority could have found that the FULA between PHP and 
the Government of Nova Scotia, stipulating that PHP must purchase a  minimum volume of 
pulpwood and a maximum volume of biomass from  private suppliers, provides sufficient evidence 
that PHP received a benefit. In its assessment, the Panel must take into account that the pricing 
information was redacted from the public vers ion of the FULA and thus was not publicly available 
to the petitioner.  
7.151.   Firstly, the Panel notes a difference between what the USDOC did, as reflected in the 
Initiation Checklist, and what the United States argues that the USDOC did. While the Initiation 
Checklist notes that "the petitioner requests that the [USDOC] investigate the benefit to PHP by 
evaluating the prevailing market conditions for stumpage and biomass purchased"259, it does not 
explicitly state any conclusion by the USDOC "that, based on the evidence reasonably available to 
the petitioner indicating a restricted market for stumpage and biomass, it would be necessary to 
analyse the existence of prevailing market cond itions for the provision of stumpage and biomass", 
as argued by the United States.260 Although the existence of a restricted market for stumpage and 
biomass might be relevant for a benefit analysis, the USDOC did not reach  such a conclusion and, 
therefore, t he Panel will not take into account this argument by the United States.  
7.152.   In the Panel's view, an agreement between a government and a private party, stipulating 
that the private party must purchase a certain volume from private suppliers, is not sufficient  
evidence of  a benefit. More precisely, to say that PHP received a benefit from the Government of 
                                                
252 Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 1, p. 880, and Vol. 2, p. 3097.  
253 Panel Report s, China – GOES , para. 7.54; US – Countervailing Measures (China) , fn 184.  
254 Panel Report s, China – GOES , para. 7.54; US – Countervailing Measures (China) , fn 184.  
255 Panel Report s, China – GOES , para. 7.55; US – Countervailing Measures (China) , fn 184.  
256 Emphasis added.  
257 Panel Reports, China – GOES , para. 7.55; US – Countervailing Measures (China) , para. 7.151.  
258 Panel Report, China – GOES , para. 7.56.  
259 USDOC initiation checklist, (Exhibit CAN -40), p. 18.  
260 United States' response to Panel question No. 46, para. 103.  WT/DS505/R  
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  Nova Scotia because the FULA stipulates that PHP must purchase a minimum volume of pulpwood 
and a maximum volume of biomass from private suppliers constitutes  a simple assertion, 
unsubstantiated by relevant evidence. The petitioner provided no evidentiary support to 
substantiate its statement that PHP pays less than adequate remuneration for the stumpage and 
biomass harvested from Crown land.  
7.153.   The Panel acknowle dges that the information on pricing was redacted by the 
Government  of Nova Scotia. However, even if the pricing information was not available to the 
applicant, the initiation could not be justified without sufficient evidence of the existence of a 
benefit . 
7.154.   For the reasons set out above, the Panel concludes that the USDOC acted inconsistently 
with Article 11.3  of the SCM Agreement , by failing in its obligation to evaluate the accuracy and 
adequacy of the evidence in the application with respect to the exist ence of a benefit in the 
provision of stumpage and biomass by the Government of Nova Scotia to PHP.  
7.4  Claims concerning the USDOC's CVD determination with respect to Resolute  
7.4.1   Claims concerning the application of AFA to Resolute in relation to information 
discovered at verification  
7.4.1.1   Introduction  
7.155.   With respect to the application of AFA to Resolute in relation to information discovered at 
verification, Canada has brought the following claims:  
a. Canada claims that the USDOC acted inconsistently with Article 12.7 of t he 
SCM Agreement, by improperly  applying AFA to Resolute in relation to information 
discovered at verification .261 
b. Canada also claims that the USDOC acted inconsistently with Articles 12.1, 12.2, 12.3 , 
and 12.8 of the SCM Agreement , by failing  to inform Canada and Resolute of relevant 
information and the essential facts under consideration prior to the final determination 
and to provide Resolute and Canada with a mple opportunity to present relevant evidence 
in relation to the information it discovered dur ing verification .262 
c. Finally, Canada claims that the USDOC acted inconsistently with Articles 11.2 and 11.3 
of the SCM Agreemen t, by improperly initiating an investigation of alleged subsidies 
discovered during Resolute's verification, without assessing whether information 
discovered during the course of the verification was accurate, adequate and provided 
sufficient evidenc e of the existence of a subsidy.263 
7.4.1.2   Factual b ackground  
7.4.1.2.1   The relevant facts on the record  
7.156.    In April 2015, after initiating the original C VD investigation, the USDOC issued its initial 
questionnaires. Section  1 of the USDOC initial questionnaire entitled "General Instructions and 
Information", begins with the following language:  
The Department of Commerce (the [USDOC] ) requests information about the 
programs on which an investigation was initiated  in order to determine whether 
countervailable subsidies have been provided to Canadian producers/exporters of 
supercalendered paper (SC paper or subject merchandise). Section 775 of the Tariff 
Act of 1930, as amended (the Act), also requires the [USDOC]  to investigate any 
other potential countervailable subsidies  it discovers during the course of this 
                                                
261 Canada's panel request, p. 3.  
262 Canada's panel request, p. 3.  
263 Canada's panel request, p. 3.  WT/DS505/R  
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  investigation  that pertain to the manufacture, production, or exportation of SC paper 
from Canada .264 
7.157.   The initial questionnaire addressed to Resolute included the following question:   
Does [Canada] or entities directly owned, in whole or in part, by [Canada] or any 
provincial or local government provide, directly or indirectly, provide [ sic] any other 
forms of assistance to your company? If so, please describ e such assistance in detail, 
including the amounts, date of receipt, purpose and terms, and answer all questions in 
the appropriate appendices.265 
7.158.   Resolute responded that it had "examined its records dil igently and [was] not aware of any 
other programs by [Canada] or its entities, or any provincial or local government, that provided, 
directly or indirectly, any other forms of assistance to Resolute's production and export of 
SC Paper".266 
7.159.   The initial questi onnaire addressed to Canada and the relevant provincia l governments also 
included the following similarly worded question:  
Does [Canada] or entities directly owned, in whole or in part, by [Canada] or any 
provincial or local government provide, directly o r indirectly, any other forms of 
assistance to producers or exporters of SC Paper? Please coordinate with the 
respondent companies to determine if they are reporting usage of any subsidy 
program(s). For each such program, please describe such assistance in  detail, 
including the amounts, date of receipt, purpose and terms, and answer all questions in 
the Standard Questions Appendix, as well as other appropriate appendices attached to 
this questionnaire.267 
7.160.   Canada and the provincial governments indicated in the ir responses to the  "any other 
forms of assistance" qu estion  that the question was overly broad and inconsistent with the 
SCM Agreement, and that no reply was warranted or required . Nonetheless, they noted that they 
had attempted to comply in good faith wi th this question, and had limited their responses to 
respondent companies and assistance provided with respect to the production or export of 
SC Paper , and had omitted assistance that was generally available within Canada.268  
7.161.   The USDOC issued supplemental questionnaires to Resolute on various questions, but did 
not follow -up on the responses to the "other forms of assistance" question specifically, nor did it 
indicate disagreement with the response.269 
7.162.   In August 2015, the USDOC conducted verifications of Reso lute and its subsidiaries. During 
the verification of Fibrek,  Resolute's wholly owned subsidiary,  as a result of running electronic 
searches for the French word "subvention"270 (subsidy) in its general ledger, the USDOC found 
entries of interest in four acco unts. One account was disregarded by the USDOC because it was 
                                                
264 USDOC Initial Questionnaire to Canada (6 April 2015 ), (Exhibit CAN -114), section I.  
(emphasis  added)  
265 Canada's first written submission, para. 60. See also  Resolute FP Canada Inc.,  Questionnaire 
Response, Section III (27 May 2015)  (Resolute Questionnaire Response, Section III), (Exhibit CAN -41 (BCI)), 
p. 32.  
266 Canada's first written submission , para. 61; opening statement at the first meeting of the Panel , 
para. 16. See also  Government of Canada,  Questionnaire Response, Vol. VIII ( 27 May 2015)  
(GOC Questionnaire Response, Vol. VIII), (Exhibit CAN -42 (BCI) ), pp. GOC -49-GOC-50. 
267 Canada's first written submission, paras. 59, 74, and 410, and table 1; GOC Questionnaire Response, 
Vol. VIII, (Exhibit CAN -42 (BCI) ), p. GOC -49. 
268 Canada's first written submission, paras. 60 and 62-63. See also  GOC Questionnaire Response, 
Vol. VIII, (Exhibit CAN -42 (BCI) ), pp. GOC -49-GOC-50. 
269 Canada's first written submission, para. 64; opening statement at the first meeting of the Panel, 
para. 17.  
270 Canada's second written submission, paras. 102 -103; response to Panel question No. 74, para.  162. WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  empty. The USDOC found that the other three accounts "showed reimbursements and/or funds 
received by Fibrek"271 as follows : 
a. an account labe lled "Subsidy yet to be received" , which included reimbu rsements for a 
portion of the infrastructure cost for the conversion of its facility from heavy oil to 
natural gas from Hydro Quebec that indicated it had been made in 2013 and 2014 ; 
b. an accou nt labelled "Subsidy from Hydro for Kiln" that contained transfers  of funds from 
Hydro Quebec for the conversion of a heavy oil kiln to a biomass kiln that had been 
provided in 2010 and 2011 ; and  
c. an account labelled "Other subsidies" relating t o manpower training assistance, such 
funds bei ng received from 2010 to 2014 .272 
7.163.   The USDOC grouped the first two accounts together as a programme labelled "Discovered 
Program  1" and named the third account "Discovered Program 2". The USDOC examined the 
accounts but refused to accept onto its record any of the information contained in t he accounts as 
to their nature or the amounts of reimbursement.273  
7.4.1.2.2   The USDOC's determination  
7.164.   In its Issues and Decision Memorandum, the USDOC explained that, at  the verification of 
Resolute's questionnaire responses, it noted entries in three accounts that showed reimbursements 
and/or funds received by Fibrek, and company officials provided descriptions of the funds in the 
accounts.274 The USDOC indicated that "as a matter of standard procedure", its CVD questionnaire 
asked Resolute to report "other subsidies"  through the "other forms of assistance" question. 
Resolute responded that it was not aware of "any other program [] that provided … any other 
forms of assistance to Resolute's production and export of SC paper".275 However, in the 
USDOC's  view, the CVD quest ionnaire clearly instructed respondents to report any other forms of 
assistance to the company, not only assistance that the respondent considers to have been 
provided to subject merchandise.276 
7.165.   The USDOC concluded that, given its questionnaire response, and  in light of the 
unreported information discovered at verification, the use of facts available was warranted with 
respect to Resolute. The USDOC also determined that, because Resolute failed to respond to the 
best of its ability regarding the "other forms of assistance" question, an adverse inference was 
warranted with respect to the discovered subsidy programmes. The USDOC concluded that, as 
AFA, these discovered forms of assistance provided a financial contribution, were specific and a 
benefit was conferr ed.277 
7.4.1.3   Main arguments of the par ties 
7.166.   Canada claims that the USDOC applied AFA inconsistently with Article 12.7 of the 
SCM Agreement to the assistance discovered during Fibrek's verification. In particular, Canada 
argues that the USDOC improperly applied AFA as a result of an alleged failure to respond to the 
"other forms of assistance" question which could not have led to "necessary information" within 
the meaning of Article 12.7 of the SCM Agreement. First, the question did not relate to either the 
allegatio ns made by the petitioner or to programmes upon which the USDOC self -initiated.278 
Second, the question was overly broad and was not specified in detail.279 According to Canada, 
only an unambiguous question, specified in detail, can lead to necessary informati on, whereas the 
                                                
271 Issues and Decision Memorandum , (Exhibit CAN -37), p. 12.  
272 Canada's first written submission, paras. 65 -67.  
273 Canada's first written submission, paras. 68 -69; response to Panel question No. 49, para. 103.  
274 Issues and Decision Memorandum , (Exhibit CAN -37), p. 12.  
275 Issues and Decision Memorandum , (Exhibit CAN -37), p. 12.  
276 Issues and Decision Memorandum , (Exhibit CAN -37), p. 12.  
277 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 12 -13. 
278 Canada's opening statement at the first meeting of the Panel, para s. 40 and 43.  
279 Canada's first wri tten submission, paras. 235 -249; second written submission, paras. 87 -92; and 
response to Panel question No. 94, paras. 33 -36. WT/DS505/R  
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  "any other forms of assistance" question posed by the USDOC which led to the application of 
AFA is overly broad, amb iguous and not specified in detail.280 
7.167.   In Canada's view, an investigating authority may always require that an exporter 
participate in an information -gathering process, including verification. However, resort to "facts 
available" pursuant to Article 12.7 wou ld be impermissible unless the request for information was 
precise and specified in detail.281 If the authority seeks to  gather additional information at the time 
of verification, and that information pertains to programmes on which the authority has not 
initiated, it would be required to seek the cooperation of the respondent parties to gather 
additional information and pr ovide them with an opportunity to be presented with, and comment 
on, such information.282  
7.168.   In any event, even if the USDOC had determined that the discovered information was 
necessary to the investigation, Canada argues that the investigating authority had a t its disposal 
all the information required to apply an amount of subsidy based on the discovered information 
and, instead, applied as fac ts available a duty rate far in excess of any potential realistic amount of 
subsidy.283 Canada argues that, while the US DOC refused to accept any informati on about these 
accounts into evidence, and claimed that there was no evidence to evaluate that the amount of 
funds were readily available, they later described the fourth account they discovered as "empty", 
which seems to  show that the accounts were appare nt to the USDOC when they were examined.284 
7.169.   The United States argues that : (a) Canada mischaracterizes the scope of the investigation; 
(b) the SCM Agreement does not prescribe the type of questions an investigating authorit y may 
ask an interested party; and (c) Resolute impeded the investigation by failing to fully answer the 
"any forms of assistance" question.285 According to the United States, the "other forms of 
assistance" question was posed by the USDOC in order to unders tand the extent of  subsidization  of 
the product under investigation, which corresponds to the scope of the investigation.286 In the 
investigation at issue, the USDOC determined to use facts available after the respondent failed to 
answer a question pertainin g to "other forms of assistance" and the USDOC discovered 
programmes not previously disclosed in response to this question. For the United States, t he use 
of AFA was thus based on Resolute 's lack of collaboration and  Resolute's flat denial in response to 
the question did not call for a follow -up query by the USDOC.287 The United States adds that, 
despite Canada's argument in these proceedings that the term "assistance" was not defined in the 
USDOC's questionnaire, Resolute did not inform the USDOC that it had  difficulty defining 
"assistance".288 The USDOC submits that, i n any event, it is not for a respond ent to determine 
what information is necessary; such a unilateral decision can disrupt the investigation.289 
7.170.   The United States further submits that it was only i n the late stage of the proceeding, at 
Resolute's verification, that the USDOC discovered the new  programmes , and therefore  that 
Resolute  had failed to respond to the "other forms of assistance" question . For the United States, 
the timing of the USDOC's di scovery was therefore a direct result of Resolute's failure to cooperate 
and a  course of action other than that adopted by the USDOC would create an incentive for 
                                                
280 Canada's second written submission, paras. 87 -92. 
281 Canada's response to Panel question No. 5 1(a), paras. 110 -111. Canada clarifies that the recourse to 
Article 12.7 would not normally be available, except when an exporter refused access to or did not provide 
necessary information or significantly impedes the investigation. The latter must be obje ctively assessed and 
cannot refer to the failure to respond adequately to an overly broad and ambiguous question. 
(Canada's  response to Panel question No. 51(c), paras. 119 -122).  
282 Canada's response to Panel question No. 51(b), paras. 115 -116. See also se cond written submission, 
para. 98.  
283 Canada's first wri tten submission, paras. 250 -257; second written submission, paras. 100 -112. 
284 Canada's opening statement at the first meeting of the Panel, paras. 21 -22. 
285 United States' first written submission, para . 203; second written submission, para. 82.  
286 United States' first written submission, para. 204; opening statement at the first meeting of the 
Panel, para. 29.  
287 United States' response to Panel question No. 54, para. 110.  
288 United States' second written  submission, para. 89.  
289 United States' first written submission, para. 206; opening statement at the first meeting of the 
Panel, paras. 27 -28. WT/DS505/R  
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  exporters not to be forthcoming with an investigating authority seeking to determine the exte nt of 
a particular product's subsidization .290 
7.4.1.4    Evaluation by the Panel  
7.171.   Article 12.7 of the SCM Agreement provides as follows:  
In cases in which any interested Member or interested party refuses access to, or 
otherwise does not provide, necessary information  within a reasonable period or 
significantly impedes the investigation, preliminary and final determinations, 
affirmative or negative, may be made on the basis of the facts available.  
7.172.   Broadly speaking, Article 12 of the SCM Agreement, and its counterpart A rticle 6 of the 
Anti-Dumping Agreement291, have been interpreted in previous dispute settlement reports as 
serving the dual purpos e of providing investigating authorities with as broad an evidentiary basis 
as possible while guaranteeing due process rights fo r interested parties.292 In this context, the 
purpose of Article 12.7 is to ensure that a lack of information does not hinder the ability of an 
investigating authority to conduct its investigation, thus allo wing the authorities to fill in the gaps 
by using the "facts available" they deem relevant in order to make a determination.293 
7.173.   We note at the outset that while the United States at  times alludes in its submissions to 
Resolute impeding  the USDOC's investigation294, we consider that the disagreement between th e 
parties concerns "refus[ing] access to, or otherwise … not provid[ing], necessary information 
within a reasonable period", rath er than "significantly imped[ing] the investigation". Indeed, the 
USDOC's Issues and Decision Memorandum refers to "the failure  of Resolute to accurately respond 
to the [USDOC's] questionnaires concerning other subsidies".295 
7.174.   Neither the SCM Agreement nor the Anti -Dumping Agreement defines the concept of 
"necessary" – the ordinary meaning of which is "[t]hat cannot be dispensed with  or done without; 
requisite, essential, needful"296 – information that must be requested by an investigating authority. 
Nonetheless, we concur with the Appellate Body's observation that "the use of the term 'necessary' 
to qualify the term 'information' carri es significance. It is meant to ensure that Article 12.7 is not 
directed at mitigating the absence of 'any' or 'unnecessary' information, but is rather concerned 
with overcoming the absence of information required to complete a determination ."297 Similarly, 
when interpreting Article 6.8 of the Anti -Dumping Agreement in light of paragraph 1 of Annex II of 
that Agreement, the panel in EC – Salmon (Norway)  opined that "'necessary information' refers to 
the specific information held by an interested party that is  requested by an investigating authority 
                                                
290 United States' second written submission, paras. 91 -93; response to Panel question No. 76, 
para. 175.  
291 Most relevantly, Article 6.8 of the Anti -Dumping Agreement provides the following: " In cases in  
which any interested party refuses access to, or otherwise does not provide, necessary information within a 
reasonable period or significantly impedes the inve stigation, preliminary and final determinations, affirmative 
or negative, may be made on the basis of the facts available. The provisions of Annex II shall be observed in 
the application of this paragraph."  
292 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , para. 292.  
293 Appellate Body Report , Mexico – Anti-Dumping Measures on Rice , para. 291 . 
294 United States' first written submission, para. 176: "Canada has failed to address the fact that 
Resolute impeded the investigation by not fully answe ring [the USDOC's] question concerning 'any other forms 
of assistance'"; ibid. heading (i) at p. 51: "[the USDOC] did not err when it determined to resort to facts 
available when Resolute impdede d the investigation by failing to provide necessary informati on". See also 
ibid. para. 203; and second written submission, para. 82.  
295 Issues and Decision Memorandum, (Exhibit CAN -37), p. 10. See also ibid. p. 13: "Resolute failed to 
respond to the best of its ability regarding our questions"; and United States' fir st written submission, 
para. 154: "[the USDOC], in its final determination, determined that Resolute failed to respond to the best of 
its ability to [the USDOC's] question related to additional assistance"; and para. 186: "[the USDOC] 
determined that  … Res olute failed to respond to the initial questionnaire to the best of its ability".  
296 Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 2, p. 1901.  
297 Appellate Body Report, US – Carbon Steel (India) , para. 4 .416 (emphasis added). See also Appellate 
Body Report, Mexico – Anti-Dumping Measures on Rice , para. 293: "[Article 12.7 of the SCM Agreement] 
permits the use of facts on record solely for the purpose of replacing information that may be missing, in order 
to arrive at an accurate subsidization or injury determination".  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  for the purpose of making determinations ".298 In this respect, we also agree with the distinction 
drawn by the panel in Egypt – Steel Rebar between information that is "necessary" on the one 
hand, and information that  is merely "required" or "requested" on the other.299 According to the 
terms of Article 12.7, only a request for the former may justify resorting to facts available.  
7.175.   The parties to these proceedings are in agreement that new programmes may be added to 
an inv estigation when they are discovered during that investigation.300 As this point is not 
contested by the parties to these proceedings, it is not addressed by the Panel in this Report. 
Assuming that new programmes may be added to an investigation, it is logica l to postulate that 
information pertaining to the existence of as -of-yet unidentified subsidy programmes benefiting 
the product under investigation is necessary information within the meaning of Article 12.7 of the 
SCM Agreement – that is information neces sary to complete a determination on as -of-yet 
unidentified subsidization  of the product under investigation. In order to justify recourse to facts 
available on the grounds that  such necessary information was refused access to or was otherwise 
not provided,  the USDOC first needed to establish that the information discovered was information 
necessary to complete a determination on subsidization  of the product under investigation.  
7.176.   The USDOC failed to do so. Instead, having found entries referring to "reimburse ments 
and/or funds"301 in the company ledger at verification, the USDOC inferred302 that these entries 
pertained to countervailable subsidization  of SC paper, without taking any further steps to confirm 
that this was in fact the case and providing a reasoned and adequate explanation to that effect.303 
In the Resolute Final Calculation Memo, the USDOC acknowledges that  "we do not know the nature 
of th is assistance"304, and expresses the following view in the Issues and Decision 
Memorandum:  "In the instant investigation, we have no information on the record to demonstrate 
that the apparent assistance discovered at verif ication did not benefit the subject merchandise that 
would justify Resolute's failure to report."305 More was required from the USDOC in these 
circumstances to establish that the information discovered was necessary information, 
i.e. information necessary to complete a determination on additio nal subsidization  of the product 
under investigation. Resorting to the use of facts available in these circumstances was not 
consistent with Article 12.7.  
7.177.   While we acknowledge the United States' arguments on practical difficulties related to the 
timing of  verifications and the closing of the record of the USDOC's investigation306, we note the 
Appellate Body's consideration that, like Article  6 of the  Anti-Dumping Agreement, Article 12 of the 
SCM Agreement  as a whole "set[s] out evidentiary rules that apply throughout  the course of 
the … investigation, and provide[s] also for due process rights that are enjoyed by 'interested 
                                                
298 Panel Report, EC – Salmon (Norway) , para. 7.343. (underlying omitted; italics added)  
299 Panel Report, Egypt – Steel Rebar , para. 7.151 . 
300 This is the case notwithstanding the parties' disagreement on the procedural steps required to add 
such programmes to an investigation . Canada argues that for programmes not listed in the petition to be 
added to an investigation, they would need to meet the self -initiation threshold, consistent with A rticle 11.6 of 
the SCM Agreement. (Canada's response to Panel question No. 94, para. 34). The United States rejects 
Canada's position on the basis that the discovered programmes in this case were already included within the 
scope of the investigation which  concerned the subsidization  of SC Paper. (United States' comments on 
Canada's response to Panel question No. 94, paras. 22 -29). 
301 Issues and Decision Memorandum, (Exhibit CAN -37), p. 12.  
302 Issues and Decision Memorandum, (Exhibit CAN -37), p. 13.  
303 Issues and Decision Memorandum, (Exhibit CAN -37), p. 30: "For the subsidies discovered at 
Resolute's verification, we have identified the remaining two programs that we find, as AFA, to provide a 
financial contribution, to be specific, and to confer a benefit."; USDOC's Position on Comment 17: Whether to 
Apply AFA to Resolute, p. 153: "[W]e find that Resolute failed to provide information regarding this assistance 
discovered at verification, and thus, section 776(a)(2)(B) of the Act applies. We further find that …  Resolute 
failed to cooperate[.] … Thus, pursuant to Section 776(b) of the Act, we are determining, as AFA, that the 
unreported assistance in question is countervailable."  
304 USDOC, Final Determination Calculations for Resolute FP Canada Inc. (13 October 20 15), 
(Exhibit  CAN-100 (BCI)), p. 4. After noting the entries in the company ledger discovered at verification, the 
USDOC states the following: " Because we do not know the nature of this assistance , we have determined that 
it is appropriate to treat … two e ntries … as one program (Discovered Program 1), and … funds … as a separate 
program (Discovered program 2)." (emphasis added)  
305 Issues and Decision Memorandum, (Exhibit CAN -37), USDOC's Position on Comment 17: Whether to 
Apply AFA to Resolute, p. 155.  
306 United States' second written submission, para. 93.  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  parties' throughout … an investigation".307 In these circumstances, it is the right of respondents 
that the investigating authority may on ly resort to the facts available mechanism after properly 
determining that information necessary to complete a determination on additional subsidization  of 
the product under investigation had been withheld. The fact that it would have been inconvenient 
or impractical for the USDOC to take further steps to confirm the basic nature of the discovered 
information cannot outweigh the due process rights enshrined in the WTO Agreements. This is all 
the more applicable where an investigating authority elects to add  subsidy programmes to an 
ongoing investigation, rather than investigating only the subsidies identified in its notice of 
initiation.  
7.178.   We recall that the Appellate Body has indicated that Annex II of the 
Anti-Dumping  Agreement provides guidance in the inter pretation of Article 12.7 of the 
SCM Agreement.308 Paragraph 1 of Annex II most relevantly states the following:  
As soon a s possible after the initiation of the investigation, the investigating 
authorities should speci fy in detail  the information required from any interested party, 
and the manner in which that information should be structured by the interested party 
in its response.309 
7.179.   We also recall the view of the panel in Egypt – Steel Rebar  – expressed in the context of 
Article 6 .8 of the Anti -Dumping Agreement – that while it is left to the discretion of an 
investigating authority to specify what information is "necessary", context provided by Annex II of 
that agreement suggests that such discretion is tempered by "a clear burden  on the authority to 
be both prompt and precise  in identifying the information that it needs from a given interested 
party".310 
7.180.   In this case, the USDOC request ed information concerning other  assistance through the 
following question : 
Does the [Go vernment of Canada] or entities directly owned, in whole or in part, by 
the [Government of Canada] or any provincial or local government provide, directly or 
indirectly, provide [ sic] any other forms of assistance to your company? If so, please 
describe such assistanc e in detail, including the amounts, date of receipt, purpose and 
terms, and answer all questions in the appropriate appendices.311 
7.181.   The parties to this dispute do not contest the USDOC's right to pose the question on "other 
forms of assistance". Canada itself  concedes that "[t]he formulation of a question cannot, in and of 
itself, violate the requirements of the SCM Agreement".312 However, the question posed by the 
USDOC is very broad. While such a broad question might pertain to necessary information 
regarding additional subsidization  of the product under investigation, it may also pertain to a much 
                                                
307 Appellate Body Report, EC – Tube or Pipe Fittings , para. 138 (quoting Appellate Body Report,  
EC – Bed Linen (Article 21.5 – India) , para. 136 (emphasis added in  EC – Tube or Pipe Fittings )). See also  
Appellate Body Report, M exico – Anti-Dumping Measures on Rice , para. 292.  
308 In the view of the Appellate Body, "it would be anomalous if Article 12.7 of the SCM Agreement  were 
to permit the use of 'facts available' in countervailing duty investigations in a manner markedly different from 
that in anti -dumping investigations."  (Appellate  Body Report, M exico – Anti-Dumping Measures on Rice , 
para. 295). In US – Anti-Dumping Methodologies (China) , the Appellate Body explained that:  
Given the similarities between the text of Article  12.7 of the Agreement in Subsidies and 
Countervailing Measures (SCM  Agreement) and Article  6.8 of the Anti -Dumping  Agreement and 
that both provisions permit an investigating authority, under certain circumstances, to fill in gaps 
in the  information necessary to arrive at a conclusion as to dumping or subsidization and injury, 
we consider that the interpretation of Article  12.7 of the SCM  Agreement developed by the 
Appellate Body in Mexico – Anti-Dumping Measures on Rice  and US – Carbon S teel (India)  is 
relevant to the understanding of the legal standard applied under Article  6.8 and paragraph  7 of 
Annex  II to the Anti -Dumping  Agreement.  
(Appellate Body Report, US – Anti-Dumping Methodologies (China) , fn 502) 
309 Emphasis added.  
310 Panel Rep ort, Egypt – Steel Rebar , para. 7.155. (emphasis added)  
311 Resolute Questionnaire Response, Section III, (Exhibit CAN -41 (BCI)) , p. 32.  
312 Canada's response to Panel question No. 75, para. 164.  WT/DS505/R  
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  broader range of "assistance".313 In these circumstances, the investigating authority may not infer 
that a respondent's failure to respond fully to such a question resulted in a failure to provide 
information necessary to establish the existence of additional subsidization  of the product under 
investigation; m ore is required of the investigating authority.  
7.182.   Furthermore, the manner in which the USDOC then proceeded to use facts available with 
respect to determining the amount of benefit is also problematic, since relevant and available 
information was ignored by the  USDOC. In this respect, Canada argues that, even if the USDOC 
had correctly determined that th e discovered information was necessary to the investigation, the 
proper application of facts available should have resulted in the calculation of an amount of 
subsidy in accordance with the actual amounts discovered at verification, rather than a 1997 
administrative review on Magnesium from Canada .314 According to Canada, had the USDOC 
properly selected facts from the best information on record, or not improperly cl osed its eyes to 
information before it, the USDOC would have been required to use the actual amounts received by 
Resolute.315 In Canada's view, the use of the amounts discovered would have resulted in no 
missing information with respect to benefit.316  
7.183.   We are unconvinced by the United States' argument that actual amounts were not 
available to the USDOC to place onto the record of the investigation because they were not 
verifiable at that late stage of the investigation. According to the United States, at that p oint in 
time, the USDOC was unable to verify the newly discovered subsidies, i.e. whether the i nformation 
discovered at verification was reliable and fully reflected the amount of assistance Resolute had 
received. The USDOC was, according to the United Sta tes, deprived of the opportunity to solicit 
information from the relevant government authority regarding the programme or programmes 
under which these funds were provided.317  
7.184.   We recall that the purpose of Article 12.7  of the SCM Agreement is to ensure that lack of 
information does not hinder the ability of an  investigati ng authorit y to conduct an investigation by 
allowing the authorities to fill in the gaps by using the "facts available" they deem relevant in order 
to make a determination.318 Howeve r, it is we ll established  that this allowance is not boundless. 
An investigating authority must use those "facts available" that "' reasonably replace the 
information that an interested party failed to provide', with a view to arriving at an accurate 
determination".319 The facts available must be facts that are in the possession of the investigating  
authority and on its written record.320 An investigating authority cannot resort to non -factual 
assumptions or speculation and must take into account all substantiated facts o n the record.321 
Ascertaining the "reasonable replacements for the missing 'necessary information' involves a 
process of reasoning and evaluation" of all substantiated facts on the record  on the part of the 
investigating authority.322 In the event that the inv estigating authority must choose among several 
facts available, the process of reasoning and evaluation would involve a degree of comparison in 
                                                
313 The USDOC sta tes in its Issues and Decision M emorandum (p. 12 ) that the questionnaire asked 
Resolute to report "other subsidies". This is not correct. The relevant question uses the term "assistance".  
314 Canada's first written submission, paras. 250 -257. 
315 Canada's first written submission, para. 448.  
316 Canada's response to Panel question No. 48, paras. 98 -99.  
317 United States' second written submission, paras. 92 -93; response to Panel question No. 81, 
paras.  188-190. See also Issues and Decision Memorandum, (Exhibit CAN -37), pp. 153 -154. 
318 Appellate Bod y Report. Mexico – Anti-Dumping  Measures on Rice , para. 291 . 
319 Appellate Body Report, US – Carbon Steel (India) , para. 4.416 (quoting  Appellate Body Report, 
Mexico – Anti-Dumping Measures on Rice , para.  294 (emphasis added in US – Carbon Steel (India) ). See also  
Appellate Body Report, US – Countervailing Measures (China) , para. 4.178.  
320 Appellate Body Report, US – Carbon Steel (India) , para.  4.417.  See also  Appellate Body Report, US – 
Countervailing Measures (China) , para. 4.178.  
321 Appellate Body Report, US – Carbon Steel (India) , para s. 4.417 and 4.419 (referring to Appellate 
Body Report, Mexico – Anti-Dumping Measures on Rice , para.  294).  See also  Appellate Body Reports, US – 
Countervailing Measures (China) , para. 4.178; and US – Anti-Dumping Methodologies  (China) , para. 5.172.  
322 Appellate Body Report, US – Carbon Steel (India) , para.  4.424. See also  Appellate Body Reports, 
US – Countervailing Measures (China) , para. 4.179; and US – Anti-Dumping Methodologies (China) , 
para. 5.172.  WT/DS505/R  
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  order to arrive at an accurate determination.323 In such a process, no substantiated facts on the 
record can be a priori  excluded from consideration.324 
7.185.   As such, the Panel does not consider that the USDOC was justified in simply disregarding 
the actual amounts discovered during verification. The USDOC should have made a comparative 
evaluation of all available informatio n before deciding which information constituted the best 
information available.325 Especially in light of the fact that Article  12.7 should not be used as 
punishment326, relianc e on rates from an unrelated investigation  over information found by the 
verification team in a respondent's own company ledger, without analysing that information, was 
not justified. This is especially the case since the USDOC had already relied on information in that 
ledger to infer the existenc e of a countervailable subsidy. While an investigating authority may 
encounter difficulty in establishing the factual foundation for a determination made on the basis of 
facts available in respect of additional subsidy programmes discovered at verification , this difficulty 
results from the authority's decision to expand the scope of the investigation beyond the subsidy 
program mes expressly identified in the notice of initiation. In light of the above we find that the 
USDOC's use of facts other than actual a mounts present in the company ledger  discovered at 
verification, without reasoned and adequate explanation, was inconsistent with Article 12.7.  
7.186.   Further to its claim under Article 12.7 of the SCM Agreement, Canada argues that the 
USDOC's treatment of the d iscovered programmes was inconsistent with Articles 11.2, 11.3, 12.1, 
12.2, 12.3, and 12.8 of the SCM Agreement.327 We understand that Canada's main concern in 
bringing these additional claims is to ensure that respondents enjoy certain 
"procedural  safeguard s" in respect of subsidy programmes discovered during the course of an 
investigation.328 Canada refers in this regard to Article 12, arguing that the exporter shall be 
provided appropriate notice and ample opportunity to present all relevant evidence in resp ect of 
the essential facts under consideration. Canada also refers to Article 11, regarding the 
USDOC's  alleged failure to review the accuracy and adequacy of evidence that the USDOC placed 
on the record concerning the discovered programmes. Generally, we consider that our 
interpretation and application of the facts available mechanism in the present case already reflects 
the type of procedural safeguards envisaged by Canada. We have explained above that the USDOC 
failed to establish that information necess ary to its investigation was missing. In addition, the 
evidentiary rules of Article  12 apply throughout the investigation, requiring a degree of cooperation 
between the investigating authority and respondents in the development of the record. 
Accordingly, we see no need to separately consider Canada's claims under these additional 
provisions.329 
                                                
323 Appellate Body Report, US – Carbon Steel (India) , paras.  4.431 and 4.435. See also  Appellate Body 
Report, US – Countervailing Measures (China) , para. 4.179.  
324 Appellate  Body Reports, Mexico – Anti-Dumping  Measures on Rice , para. 294; US – Carbon Steel 
(India) , para. 4.419 ; and US – Anti-Dumping Methodologies (China) , para. 5.172 . 
325 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice , para. 289.  
326 Appellate Body Report, US – Carbon Steel (India) , paras.  4.419 and 4.422.  See also Appellate Body 
Report, US – Countervailing Measures (China) , para. 4.179; and US – Anti-Dumping Methodologies (China) , 
para. 5.172.  
327 Canada's first written submission, paras. 267, 272, and 280.  
328 See, for example, Canada's response to panel question No. 50, para. 108; and first written 
submission,  paras. 258 and 277.  
329 That said, we are troubled by Canada's approach to the application of Article 11 in respect of the 
discovered programmes. Canada asserts that the USDOC should have self -initiated an investigation into the 
discovered programmes. Canad a explains that, in order to meet the initiation standard set out in Articles 11.2 
and 11.3, the USDOC was required to first review the adequacy of the evidence to attempt to determine 
whether the alleged assistance could have constituted a financial contr ibution, that a benefit could have been 
conferred, and that such assistance was specific. (Canada's first written submission, para. 280). At the same 
time, though, Canada does not interpret the relevant provisions of the SCM Agreement as requiring a formal  
issuance of a Notice of Initiation when "self -initiations take place during the course of an investigation already 
in process". (Canada's response to Panel question No. 50, para. 106). We note that footnote 37 of the 
SCM Agreement defines "initiated" as r eferring to a "procedural action by which a member formally commences 
an investigation". If – as suggested by Canada – an investigation is "already in process" in respect of a 
discovered programme, then the Article 11 initiation standard does not apply in respect of that programme. 
That standard only applies before the decision to initiate is made, i.e. before the "procedural action" referred to 
in footnote 37 is undertaken. In order to apply the Article 11 initiation standard in respect of a discovered 
programme, one would need to consider that the discovered programme is not yet covered by any 
investigation. This, though, is not the position that Canada is asking us to adopt.  WT/DS505/R  
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  7.4.2   Claim concerning Resolute's purchase of Fibrek  
7.4.2.1   Introduction  
7.187.   Canada claims that the USDOC acted inconsistently with Articles 1.1(b), 10, 14, 19.1, 
19.3, and 19.4 of the SCM Agreement  and Article VI :3 of the GATT 1994 , by failing to conclude 
that Fibrek, rather than Resolute, was the reci pient of certain financial contributions, and that the 
benefit associated with these financial contributions was extingu ished by Resolute's arm's -length 
purchase of Fibrek for fair market value.330 
7.4.2.2   Factual background  
7.188.   In the context of the CVD investigation o n SC Paper, Resolute provided information with 
respect to Fibrek, a wholly owned subsidiary, which produces kraft pulp i n a mill located in 
Saint Felicien, Quebec.331 In its questionnaire response of 28 May 2015, Resolute explained that it 
had acquired Fibre k in a "hostile takeover that [was] a poster child for an arm's -length transaction 
in which the benefit of any subsidy t hat might have existed would have been paid to the seller and 
no longer be of benefit to the acquired operations under a new owner" .332 Resolute submitted, as 
evidence of the terms in which it acquired Fibrek, its Form 10 -K filings to the US Securities and 
Exchange Commission from 2012, 2013 , and 2014.333 
7.189.   In its questionnaire response of 27 May 2015, the Government of Quebec also described 
Fibrek's acquisition.334 It submitted, as evidence, a copy of the Quebec Court of Appeal decision 
regarding Fibrek's defense against Resolute's takeover effort335; a financial report [[***** ]] 
detailing Fibrek's acquisition by Resolute336; and a timeline published by Reuters on the "Takeover 
battle for Canada's Fibrek" .337 The Government of Canada had also mentioned that Fibrek was 
acquired by Resolute through a hostile takeover in its consultation paper of 12  March  2015.338 
7.190.   On 22 July 2015, five days before the scheduled date for the issuance of the preliminary 
determination of the CVD investigation, the Government of Canada submitted a  revision to its 
questionnaire response of 27 May 2015, indicating that it had provided assistance to Fibrek under 
the PPGTP.339 On that same date, Resolute submitted a supplemental response detailing that 
PPGTP funds were provided for four specific projects  in Fibrek's Saint -Felicien mill, and that, 
although the mill had not produced SC Paper, it had provided small amounts of kraft pulp to 
Resolute's SC Paper mills during the POI.340 
7.191.   The USDOC determined that the grants from the Government of Canada to Fibrek under 
the PPGTP constituted a financial contribution in the form of a direct transfer of funds from the 
government. Also, by maintaining its baseline presumption that non -recurring subsidies can 
benefit the recipient over a period of time, the USDOC conclu ded that the financial contributions to 
Fibrek had bestowed a benefit on Resolute.341 
                                                
330 Canada's panel request, p. 2.  
331 Issues and Decision Memorandum , (Exhibit CAN -37), p. 6.  
332 Resolute Questionnaire Response, Section III, (Exhibit CAN -41 (BCI)) , pp. 4 and 26.  
333 Resolute Questionnaire Response, Section III, (Exhibit CAN -41 (BCI)) , exhibits 2,  3, and 4.  
334 Government of Quebec, Questionnaire Response, Vol. I (27 May 2015) , (Exhibit CAN -49), p. QC -12. 
335 Government of Quebec, Questionnaire Response, Vol. III (27 May 2015)  (GOQ Questionnaire 
Response, Vol. III), (Exhibit CAN -48 (BCI)),  exhibit QC -RENFORT -4 – 2012 QCCA 569 (27 March 2012).  
336 GOQ Questionnaire R esponse, Vol. III , (Exhibit CAN -48 (BCI)) , exhibit QC -RENFORT -5 – [[*****]] 
(22 April 2015).  
337 GOQ Questionnaire Response, Vol. III, (Exhibit CAN -48 (BCI)) , exhibit QC -RENFORT -3 – Reuters 
Article (11 April 2012).  
338 Hughes Hubbard & Reed LLP, "Supercalendered Paper from Canada: Consultations Paper" 
(13 March  2015)  (Consultations Paper ), (Exhibit CAN -5), pp. 18 -19. 
339 Government of Canada,  Revised Questionnaire Response (22 July 2015) , (Exhibit CAN -46), 
pp. GOC-2-GOC-3.  
340 Resolute FP Canada Inc. , Supplemental Questionnaire Response (22 July 2015) ( Resolute 
Supplemental Questionnaire Response ), (Exhibit CAN -45 (BCI)), pp. 2 -3 and appendix D.  
341 Issues and Decision Memorandum,  (Exhibit CAN -37), p. 26.  WT/DS505/R  
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  7.192.   In its Analysis of Comments section, the USDOC rejected an argument by Resolute and the 
Government of Canada that the subsidies received by Fibrek were extinguished when Re solute 
acquired Fibrek through a hostile takeover.342 
7.193.   The USDOC explained as follows:  
With respect to Resolute's purchase of Fibrek, the [USDOC]  does not have any of the 
evidence or documentation that it would require to establish that the purchase of 
Fibrek was an arm's -length transaction for a fair market price, or any detailed 
information related to the timing, bidding or bid acceptance process and, thus, cannot 
determine whether any of the subsidies received before or during the purchase of 
Fibrek by Resolute were exti nguished. The [USDOC's]  original questionnaire stated:  
Finally, if your company obtained all or substantially all the assets of 
another company during the AUL period, and that company still exists as 
an ongoing entity, we require a complete questionnaire r esponse for such 
company. It is essential to include a discussion of all such "change in 
ownership " transactions within your responses to the questions below 
regarding your company's history.  
While Resolute and the [Government of Canada] responded on behal f of Fibrek, they 
did not supply any evidence or detailed information regarding the purchase of Fibrek 
by Resolute. Instead, throughout the investigation, Resolute and the [Government of 
Canada] have submitted unsubstantiated assertions that the purchase o f Fibrek was a 
"hostile takeover in 2012. " As a result, the [USDOC]  has no evidentiary basis for 
determining whether the purchase, or hostile takeover, of Fibrek properly extinguishes 
the subsidies received by Fibrek (through a finding of both an arm 's-length transaction 
and a transaction price reflective of fair market value). Therefore, the [USDOC]  
maintains its baseline presumption that the subsidy benefits are not extinguished.343 
7.4.2.3   Main a rguments of the p arties  
7.194.   Canada claims that the USDOC acted inconsiste ntly with Articles 1.1(b), 1 0, 14, 19.1, 
and 19.4 of the SCM Agreement, by improperly finding that the ben efits conferred to Fibrek 
through the PPGTP were not extinguished when Resolute acquired Fibrek in a hostile takeover.344 
7.195.   Canada argues that the United States' assertion that there was no evidence indicating that 
the purchase of Fibrek was at arm's  length for fair market value ignores the fact that both Quebec 
and Resolute reported its acquisition in their questionnaire responses, and provided extensive 
evidence, including Securities and Exchange Commission reports and a Quebec Court of Appeal 
decision, detailing the hostile takeover.345 Canada also asserts that the USDOC had been aware 
that the takeover was hostile since consultations at the outset of the i nvestigation.346 Canada adds 
that, to the extent the USDOC required even more information, it failed in its responsibility to 
request it.347 
7.196.   Canada contends that the fact that Resolute reported the assistance under the PPGTP at a 
later stage, but prior to the Preliminary Determination, cannot render moot all evidence and 
arguments submitted in respect of Fibrek.348 
                                                
342 Issues and Decision Memorandum , (Exhibit CAN-37), pp. 163-164. 
343 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 164 -165. (fn omitted)  
344 Canada's first written submission, para. 281.  
345 Canada's first written submission, paras. 282 and 287 -291; opening statement at the first meeting of 
the Panel , paras. 46 -49; and second written submission, para. 115.  
346 Canada's first written submission, para. 282; second written submission, para. 119.  
347 Canada's first written submission, para. 287; second written submission, para. 116.  
348 Canada's second wri tten submission, paras. 117 -120; opening statement at the second meeting  of 
the Panel,  paras. 89 -92. WT/DS505/R  
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  7.197.   Canada asserts that the USDOC should have concluded that the full value of all PPGTP 
assistance to Fibrek was extinguished when Resolute acquired Fibr ek in an arm's -length 
transaction for fair market value.349 
7.198.   The United States argues that none of the evidence on the record supports 
Canada's  assertion that Fibrek's subsidies were fully reflected in Resolute's purchase price of the 
company and that, despit e Canada's arguments, Resolute simply characterized Fibrek's acquisition 
as a hostile takeover without any supporting evidence to that assertion. The United States adds 
that, without adequate supporting evidence of the change in ownership transaction, the USDOC 
did not have sufficient evidence to determine that Fibrek was acquired through an arm's -length 
transaction.350 
7.199.   The United States asserts that a proper analysis of extinguishment is not dependent upon 
an interested party's characterization of a private transaction, but rather, an authority should 
consider the circumstances of the transaction, including whether the final transaction price 
reflected the full value of any subsidies received. The United States contends that 
Resolute's  response characterized the transaction as a hostile takeover but offered no additional 
explanation.351 
7.200.   The United States also argues that, because Resolute failed in its initial questionnaire to 
provide any information on the subsidy that Fibrek had received, the USDOC was not in a position , 
five days before the preliminary determination,  to request additional information about 
Fibrek's  acquisition.352 
7.4.2.4   Evaluation by the Panel  
7.201.   The Panel notes tha t the USDOC's determination that the benefit was not extinguished is 
based on the alleged failure by the Government of Canada and Resolute to provide evidence 
regarding the purchase of Fibrek by Resolute. The USDOC stated in particular  that Resolute and 
the Government of Canada had not supplied "any evidence or detailed information regarding th e 
purchase of Fibrek by Resolute"353 and, instead, they had submitted "unsubstantiated assertions 
that the purchase of Fibrek was a 'hostile takeover in 2012 '"354; and tha t it had "no evidentiary 
basis for determining whether the purchase, or hostile takeover,  of Fibrek properly extinguishes 
the subsidies received by Fibrek (through a finding of both an arm's -length transaction and a 
transaction price reflective  of fair market value)".355 
7.202.   The Panel recalls its task of examining "whether, in the light of the evide nce on the record, 
the conclusions reached by the investigating authority are reasoned and adequate ".356 For this 
purpose, the Panel must ascertain whether the USDOC "evaluated all of the relevant evidence in 
an objective and unbiased manner" .357 Therefore, the Panel will assess whether the 
USDOC's  conclusion , in the sense  that it had no evidentiary basis for determining whether the 
purchase of Fibrek extinguished the subsidies , was reasoned and adequate.  For that, the Panel will 
go through the evidence submitt ed during the CVD investigation by the Government of Canada 
and Resolute.  
7.203.   Firstly, in the consultations paper of 12 March 2015, the Government of Canada explained 
the following:  
                                                
349 Canada's first written submission, paras. 284 and 292; second written submission, para. 121.  
350 United States' first written submission, paras. 264 -269. 
351 United States' first written submission, paras. 95 -97; response to Panel question No. 58, para. 132.  
352 United States' response to Panel question No. 57(b), paras. 128 -130; second written submission, 
para. 96.  
353 Issues and Decision Memorandum , (Exhibit CAN -37), p. 165. 
354 Issues and Decision Memorandum , (Exhibit CAN -37), p. 165. 
355 Issues and Decision Memorandum , (Exhibit CAN -37), p. 165. 
356 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 93.  
(emphasis  added)  
357 Appellate Body Report, US – Softwood Lumber VI (Article 21.5 – Canada) , para. 97. See also 
Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 443.  WT/DS505/R  
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  [Resolute] launched a formal public offer to acquire at least 66.7% of the iss ued and 
outstanding shares of Fibrek. The  purchase offer was estimated at C$130 million. 
Management resisted the hostile takeover, even to the point of pursuing litigation up 
to the Supreme Court of Canada. In response to the opposition [Resolute] increase d 
its offer and the final transaction has been valued at C$218 million  … [t]he purchase 
of Fibrek in a contested, public offering for its outstanding shares is an arms -length 
sale … [.]358 
7.204.   Then, i n its questionnaire response of 28 May 2015, Resolute explained that it had 
acquired Fibrek in 2012 "through a hostile takeover that is a poster child for an arm's -length 
transaction in which the benefit of any subsidy that might  have existed would have be en paid to 
the seller and no longer be of benefit to the acquired operations under a new owner ".359 Resolute 
submitted, as evidence, Resolute's Form 10 -K filings to the US Securities and Exchange 
Commission from 2012, 2013, and 2014.  
7.205.   These Form 10 -K filings,  wherein Resolute had provided to the US Securities and Exchange 
Commission its financial statements of 2012, contained information  on Fibrek's acquisition, 
presented in the following terms:  
Note 3. Acquisition of Fibrek Inc.  
Overview  
On December 15, 2011,  we announced an offer to purchase all of the issue d and 
outstanding shares of Fibrek Inc. ( "Fibrek "), a producer and marketer of virgin and 
recycled kraft pulp, operating three mills. On May 2, 2012, we acquired a controlling 
interest in Fibrek and began consolidating the results of operations, financial position 
and cash flows of Fibrek in our consolidated financial statements.  
… 
Our acquisition of Fibrek was achieved in stages. In connection with the offer, 
between  April 11, 2012 and April 25, 2012, we acquired approximately 48.8% of the 
then outstanding Fibrek shares. On May 2, 2012, we acquired additional shares of 
Fibrek, after which we owned a controlling interest in Fibrek (approximately 50.1% of 
the then outst anding Fibrek shares) and Fibrek became a consolidated subsidiary. 
After May 2, 2012, we acquired additional shares of Fibrek and, as of May 17, 2012, 
the offer expiry date, we owned approximately 74.6% of the then outstanding Fibrek 
shares. On July 31, 20 12, we completed the second step transaction for the remaining 
25.4% of the outstanding Fibrek shares.  
As aggregate consideration for all of the Fibrek shares we purchased, we distributed 
approximately 3.3 million shares of our common stock and Cdn$63 mill ion 
($63 million, based on the exchange rates in effect on each of the dates we acquired 
the shares of Fibrek) in cash. In connection with the Fibrek shareholder vote on the 
arrangement, certain former shareholders of Fibrek exercised (or purported to 
exercise) rights of dissent in respect of the transaction, asking for a judicial 
determination of the fair value of their claim under the Canada Business Corporations 
Act. No consideration has to date been paid to the former Fibrek shareholders who 
exercised ( or purported to exercise) rights of dissent. Any such consideration will only 
be paid out upon settlement or judicial determination of the fair value of their claims 
and will be paid entirely in cash. Accordingly, we cannot presently determine the 
amount t hat ultimately will be paid to former holders of Fibrek shares in connection 
with the proceedings, but we have reserved approximately Cdn$14 million 
($14 million, based on the exchange rate in effect on December 31, 2012) for the 
eventual payment of those claims, which was recorded in "Other long -term liabilities " 
in our Consolidated Balance Sheet as of December 31, 2012.  
                                                
358 Consultations Paper, (Exhibit CAN -5), p. 19. 
359 Resolute Questionnaire Respon se, Section III, (Exhibit CAN -41 (BCI)) , p. 26. WT/DS505/R  
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  … 
Acquisition of controlling interest  
The acquisition of a controlling interest in Fibrek on May 2, 2012 was accounted for as 
a business combination in accordance with the acquisition method of accounting 
pursuant to FASB ASC 805, which requires recording identifiable assets acquired and 
liabilities assumed at fair value (except for deferred income taxes and pension and 
OPEB plan obligation s). Additionally, on the acquisition date, we remeasured our initial 
equity investment in Fibrek at the acquisition -date fair value. The acquisition -date fair 
value of our previously -held equity interest in Fibrek was $58 million, resulting in a 
loss of $1  million, which was recorded in "Other income (expense), net " in our 
Consolidated Statements of Operations for the year ended December 31, 2012.  
In connection with the acquisition, we also assumed $121 million of Fibrek 's 
outstanding indebtedness. For addi tional information, see Note 17, "Long term 
Debt. "360 
7.206.   These 10K filings therefore contain information with respect to the timing of the acquisition 
of shares, from the announcement of the intention to take over Fibrek until the completion of the 
takeover, as  well as with respect to the amounts paid by Resolute. This information contradicts the 
USDOC's assertion that Resolute had not supplied "any evidence or detailed information regarding 
the purchase of Fibrek by Resolute" .361 
7.207.   The Government of Quebec, for its  part, filed a copy of the Quebec Court of 
Appeal's  decision regarding Fibrek's defense against Resolute's takeover. In its decision, the 
Quebec Court of Appeal provided a contextual description of Resolute's efforts to acquire Fibrek, 
presented in the fol lowing terms:  
8 Fibrek, whose head office is in Quebec, is a business incorporated under the Canada 
Business Corporations Act, R.S.C. (1985), c. C -44. Its shares are listed on the Toronto 
Stock Exchange (TSX).  
9 AbitibiBowater (Abitibi) is a company listed  on both the New York Stock Exchange 
(NYSE) and the Toronto Stock Exchange, and has been doing business under the 
name Resolute Forest Products since its reorganization. On November 28, 2011, it 
announced its intention to launch a takeover bid to purchase all of Fibrek's issued and 
outstanding shares. Before officially launching its takeover bid on December 15, 2011, 
Abitibi made sure that it had the support of Fibrek's three most important 
shareholders: Fairfax, Pabrai, and Oakmont. Until April 13, 2012, i t could count on the 
steadfast support of 59,502,822 shares, i.e., 46.5% of Fibrek's 130,075,556 
outstanding shares.  
10 Initially, its offer was conditional to the tender of at least two -thirds of Fibrek's 
shares, a percentage that was later reduced to 50. 01% on March 20, 2012. A portion 
of the consideration was payable in money and another in Abitibi shares, representing 
a value of approximately $1 per share, based on Abitibi's share price in December 
of 2011.  
11 Being of the view that this bid was low con sidering the potential or actual value of 
Fibrek, its board of directors decided to adopt various tactics to discourage this 
takeover bid, which it deemed hostile, and to gain more time to elicit one or several 
higher bids. It therefore amended the contrac ts of its executives, hired consultants to 
establish the value of the business and its shares, set up an independent committee, 
and hired lawyers and other advisors.  
                                                
360 Resolute Questionnaire Response, Section III, (Exhibit CAN -41 (BCI)) , exhibit 2 : FY 2012 Audited 
Financial Statement (Form 10 -K), p. 85.   
361 Issues and Decision Memorandum , (Exhibit CAN -37), p. 165. WT/DS505/R  
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  12 On December 19, 2011, the board adopted a shareholders' rights scheme that 
would come i nto play in the event Abitibi purchased a single share and would 
neutralize Abitibi's offer (a defensive tactic commonly referred to by those in the [sic] 
as a poison pill). Following an application by Abitibi, this rights scheme was subjected 
to a prohibition order issued by the Bureau on February 9, 2012, effective February 
13, 2012: [TRANSLATION] « WHEREAS it is now time, in the public interest, to allow 
the shareholders of Fibrek to decide of their own free will whether or not to tender 
their sha res in answer to Resolute's bid ( AbitibiBowater inc . (Resolute Forest Products) 
v. Fibrek inc. , 2012 QCBDR 8). In other words, this delaying tactic to give Fibrek time 
to find a white knight had been going on long enough and the time had come to let 
the sh areholders respond to Abitibi's bid.  
13 Meanwhile, Mercer International inc., a British Columbia corporation operating in 
the same industry as Fibrek and whose shares are registered on the TSX and 
NASDAQ, had shown interest. In early February, after having  been given access to 
Fibrek's books, Mercer agreed to act as their white knight. After various dealings, 
which included a support agreement in which Fibrek's upper management undertook 
to support Mercer's bid and an $8.5M break fee if they chose to suppor t a better offer, 
it launched a takeover bid for Fibrek. Its bid, in cash and shares, represented a value 
of approximately $1.30 per share, according to the share price at the time. It was 
conditional to the tender of 50.1% of the shares and to various app rovals, including 
that of its shareholders regarding the issuance of the shares required to complete the 
takeover bid. These agreements were negotiated on February 9, the day on which the 
Bureau rendered its first ruling, and were made public the very next  day. 
14 In the course of negotiations with Fibrek, Mercer demanded the option of buying 
32,320,000 warrants for the price of $1 each, convertible to as many shares of Fibrek. 
In the event of a conversion, Mercer would hold 32,320,000 common shares of Fibr ek, 
representing 19.9% of Fibrek's issued capital, for the price of $1 per share – the price 
offered by Abitibi. Moreover, from the moment a single share is purchased, Mercer is 
entitled to require the nomination of two directors to Fibrek's board.  
15 Merc er's takeover bid is not conditional upon the issuance of the warrants or their 
conversion, as was confirmed in clarifications sent to Fibrek's shareholders on March 
19, 2012, following a request from the United States Securities and Exchange 
Commission (S EC): "The Offer is not conditional upon the issuance or conversion of 
the Special Warrants".  
16 On February 13, 2012, being of the view that Mercer's takeover bid and ancillary 
agreements (break fee and warrants) were abusive toward the shareholders and 
financial markets, Abitibi applied to the Bureau for a prohibition order respecting 
Mercer's takeover bid and warrants pursuant to section 93 of the Act respecting the 
Autorité des marches financiers , R.S.Q. c. A -33.2 ( AAMF ) and section 265 of the 
Securities  Act, R.S.Q. c. V -1.1 (SA). 
17 On February 16, 2012, Steelhead Partners LLC (Steelhead), a Fibrek shareholder 
with 6,479,000 issued and outstanding Fibrek shares at the time, after reviewing 
Mercer's takeover bid, confirmed that it would tender its shares in favour of Abitibi. 
Steelhead is also a shareholder of Abitibi (13.3%).  
18 As at February 16, 2012, Abitibi's bid appeared to have the support of 50.7% of 
Fibrek shareholders, thereby condemning Mercer's rival bid to failure if it had not had 
the warrant s, its weapon to dilute the shareholders.  
19 In its February 23, 2012 ruling, the Bureau found that the break fee, which was 
included in the Mercer takeover bid, was outside the norm and that the issuance of 
warrants constituted an unconscionable transacti on on the markets. It prohibited the 
issuance of warrants and their conversion into shares, but it did not prohibit Mercer's 
takeover bid, even if it was tied to an overly generous break fee.  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  20 Being of the view that the Bureau's ruling was contrary to Notice 62 -202 relating to 
take-over bids – Defensive tactics  (NP 62 -202) adopted by the Canadian securities 
administrators (CSA), which includes the AMF, Mercer and Fibrek resorted to the 
appeal under section 115.16 AAMF to the Court of Quebec, civil divisio n, which does 
not suspend the Bureau's decision (section 115.21 AAMF). The case was heard on an 
urgent basis before the administrative and appellate division on March 5, 6, and 7, 
2012. In a judgment rendered on March 9, 2012, completed on March 16 and 
corrected on March 19, the appeal was allowed and the Bureau's decision was set 
aside.  
21 Unhappy with this outcome, Abitibi turned to this Court to seek leave to appeal 
pursuant to section 115.22 AAMF , which it was granted on March 16. The appeal was 
heard o n an expedited basis on March 22, 2012.362 
7.208.   The Government of Quebec also filed a financial report [[***** ]], detailing Fibrek's 
acquisition by Resolute, in the following terms:  
[[***** ]]363 
7.209.   The Government of Quebec submitted, in addition, a timeline published by Reuters 
outlining  relevant events in the "takeover battle for Canada's Fibrek" .364 The article explains as 
follows:  
April 11 (Reuters) – Specialtv pulp maker Fibrek Inc has become the target of a 
takeover battle between AbitibiBowater Inc  and Mercer International, signaling that 
the outlook for Canada's forest products industry is brightening.  
Mercer has raised its already higher cash -and-stock offer to C$182 million from 
C$170  million, but Fibrek's largest shareholders, including Prem Wat sa's Fairfax 
Financial Holdings, continue to back AbitibiBowater's C$130 million bid.  
Following are the milestones in this battle:  
Nov 28 – AbitibiBowater commences bid for Fibrek, offers C$1 per share valuing the 
company at C$130 million.  
Nov 29 – Fibrek acknowledges unsolicited takeover bid from AbitibiBowater. Says 
AbitibiBowater's bid appears opportunistic.  
Dec 15 – AbitibiBowater starts formal takeover bid for Fibrek.  
Jan 3 – Fibrek rejects AbitibiBowater bid. Board recommends shareholders with draw 
the tendered shares immediately.  
Jan 19 – Fibrek opposes AbitibiBowater's application to strike down its shareholder 
rights plan.  
Jan 20 – AbitibiBowater extends offer to February 13 from January 20.  
Feb 6 – Fibrek says receives proposals from third p arties related to its strategic 
alternative process. Says a formal valuation of its common shares by Canaccord 
Genulty arrives at a fair value of between C$ 1.25 and C$ 1.45 per share.  
                                                
362 GOQ Qu estionnaire Response, Vol. III, (Exhibit CAN -48 (BCI)),  exhibit QC -RENFORT -4 – 2012 
QCCA  569 (27 March 2012). (fns omitted)  
363 GOQ Questionnaire Response, Vol. III, (Exhibit CAN -48 (BCI)) , exhibit QC -RENFORT -5 – S&P Capital 
IQ Financial Report for Resolute Fores t Products Inc. (22 April 2015).  
364 GOQ Questionnaire Response, Vol. III, (Exhibit CAN -48 (BCI)), exhibit  QC-RENFORT -3 – Reuters 
Article (11 April 2012 ). WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  Feb 10 – Mercer says to buy Fibrek for about C$170 million, or C$1.30 a s hare, 
topping AbitibiBowater's hostile bid by 30 percent, Mercer's offer Includes C$70 million 
in cash, rest in stock. Abitibi's offer also has the same cash portion.  
Feb 13 – AbitibiBowater looks to block Mercer's offer, and extends its offer to Feb 23.  
Feb 16 – Fibrek opposes AbitibiBowater's application to cease trade the Mercer offer.  
Feb 23 – AbitibiBowater says Fibrek's special warrants to Mercer cease traded. These 
special warrants can be fully converted to Fibrek shares. Abitibi extends offer to 
March 9. 
March 9 – Court of Quebec reverses cease trade order against 21 private placement of 
special warrants by Fibrek to Mercer . 
March 15 – AbitibiBowater extends offer to March 19 . 
March 19 – Mercer says offer will expire on April 6. AbitibiBowater extend s its offer for 
Fibrek to March 29 . 
March 20 – Toronto Stock Exchange approves private placement of special warrants 
by Fibrek to Mercer.  
March 21 – AbitibiBowater says reduces minimum condition to acquire Fibrek to 
50.01  percent from 66.67 percent earlier.  Extends offer to April 2.  
March 27 – AbitibiBowater says court of appeal reinstates cease trade order on 
Fibrek's 32.3 million special warrants placement to Mercer.  
March 28 – Fibrek and Mercer say will move the Supreme Court against the Quebec 
court deci sion blocking a key term of their deal.  
April 1 – AbitibiBowater extends offer to April 11 and further reduces minimum 
condition to buy Fibrek to 45.7 per cent.  
April 5 – Mercer extends offer to April 16.  
April 11 – Mercer raises its offer by 8 percent to C$1.40 per share.365 
7.210.   The evidence presented by the Government of Quebec clearly contains information on the 
purchase of Fibrek by Resolute. It contains information on the timing of the acquisition of shares; 
on the nature of the takeover, including that Reso lute's takeover efforts were deemed "hostile" by 
Fibrek's board of directors and that the board of directors opposed the takeover through various 
tactics, including a "poison pill" and an attempt to find a second bidder (or "white knight"); and on 
the rele vant numbers regarding the value of the transaction. This contradicts the 
USDOC's  assertions that Canada had not supplied "any evidence or detailed information regarding 
the purchase of Fibrek by Resolute"366 and, instead, it had submitted "unsubstantiated a ssertions 
that the purchase of Fibrek was a 'hostile takeover in 2012 '".367  
7.211.   The evidence provided by Resolute and Quebec demonstrates that the USDOC had on 
record detailed information related to the timing, bidding and bid acceptance process in respect of 
the acquisition of Fibrek by Resolute, including that this acquisition was opposed by Fibrek, and 
therefore "hostile". This information is relevant to the q uestion of whether Fibrek's acquisition was 
an arms -length transaction for fair market value.  
                                                
365 GOQ Questionnaire Response, Vol. III, (Exhibit CAN -48 (BCI)), exhibit QC -RENFORT -3 – Reuters 
Article (11 April 2012).  
366 Issues and Decision Memorandum , (Exhibit CAN -37), p. 165. 
367 Issues and Decision Memorandum , (Exhibit CAN -37), p. 165. WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  7.212.   In thes e circumstances, the USDOC could not reasonably or adequately have concluded 
that it had no evidentiary basis for determining whether Fibrek's acquisition properly extinguished 
the subsidies received by Fibrek. At the very least, the above information prov ided sufficient basis 
for the USDOC to investigate this matter further.  
7.213.   Also, the Panel is not convinced by the United States' argument that, because Resolute 
failed in its initial questionnaire to provide any information on the subsidy that Fibrek had 
received, the USDOC was not in a position to request additional information about 
Fibrek's  acquisition. As established above, the USDOC had a substantial amount of information 
concerning Resolute's acquisition of Fibrek from the outset of the investigation.  
7.214.   Based on the above, the Panel concludes that the USDOC acted inconsistently with 
Article  1.1(b) of the SCM  Agreement, by finding – on the basis of an alleged lack of relevant 
evidence – that the benefits conferred to Fibrek through the PPGTP were not extinguished when 
Fibrek was acquired by Resolute.368 
7.4.3   Claim s concerning the PPGTP, FSPF, and NIER programme s 
7.4.3.1   Introduction  
7.215.   Canada claims that the USDOC acted inconsistently with Articles 10, 19.1, 19.3 , and 19.4 
of the SCM Agreement and Article VI:3 of the GATT 1994, by failing to ascertain the precise 
amount of the subsidies attributable to the product under investigation and improperly attributing 
financial contributions under the PPGTP , the NIER programme and the FSPF, tied to the production 
of other products, to Resolute's SC  Paper production.369 
7.4.3.2   Factual background  
7.216.   These claims concern the manner in which the USDOC determined that subsidies provided 
to Resolute and Fibrek under the PPGTP, the  NIER Programme and the FSPF benefitted 
Resolute's  production and sales of SC Paper.  
7.217.   Regarding the PPGTP, the USDOC explained that the purpose of the programme was to 
improve the environmental performance of Canada's pulp and paper industry; credits were o nly to 
be granted to Canadian pulp and paper companies; projects had to be capital investments at a 
Canadian pulp and paper mill directly related to t he mill's industrial process; and project location 
had to be at a pulp and paper mill in Canada.370 The USDO C found that Resolute's mills received 
subsidies directly under this program me. The USDOC also found that Resolute benefited from 
subsides received under this program me by Fibrek. The USDOC explained that, during the POI, 
Fibrek had supplied Resolute with kraft pulp to add tensile strength to paper that Resolute 
produced, including SC Paper. The USDOC determined that the kraft pulp that Fibrek supplied to 
Resolute was pr imarily dedicated to the production of SC Paper and other downstream paper 
products.371 The USDOC found that PPGTP subsidies were tied to the production of pulp and paper 
products, and therefore benefited Resolute's production of these prod ucts. The USDOC de termined 
an ad valorem  rate of subsidization under this program me by expressing the amount of subsidy 
received by Resolute and Fibrek as a percentage of Resolute's sales of pulp and paper during 
the POI.372  
                                                
368 The Panel notes that, with respect to this issue, Canada has also made claims of inconsistency with 
Articles 10, 14, 19.1, 19.3, and 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994. Given that the 
Panel has already found an inconsistency with the main substantive provision at issue, i.e. Article 1.1(b) of the 
SCM Agreement, and considering that Canada did not give any explanation with respect to these provisions, 
the Panel does not consider necessary to address these additional claims by Canada . The Panel also notes that 
Canada has also made these claims with respect to the discovered programmes. The Panel has already 
concluded that, in applying facts available to the discovered programmes, the USDOC acted inconsistently with 
Article 12.7 of the  SCM Agreement. Consequently, it would be premature to reach any further conclusion with 
respect to the discovered programmes.  
369 Canada's panel request, p. 2.  
370 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 26 -27. 
371 Issues and Decision Memorandum , (Exhibit CAN -37), p. 6.  
372 Issues and Decision Memorandum, (Exhibit CAN -37), p. 27.  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  7.218.   Regarding the NIER Program me, the USDOC concluded that electricity rebates received 
under this program me by Resolute's Thunder Bay, Fort Frances , and Iroquois Falls mills in Ontario 
constituted countervailable subsidies. The USDOC explained that the purpose of the program me is 
to assist Northern Ontario's  largest qualifying industrial electricity consumers which commit to 
developing and implementing an energy management plan; and companies eligible for assistance 
are industrial facilities located in Northern Ontario. The USDOC determined that these subsidi es 
were not tied to any specific product, and that they therefore benefitted all of 
Resolute's  production activities. The USDOC calculated an ad valorem  rate of subsidization by 
expressing the amount of subsidy  received as a percentage of Resolute's total sales during the 
POI.373 
7.219.   The USDOC adopted the same approach in respect of funding received by Resolute under 
the FPSF for specific projects at certain of its Ontario mills. The USDOC determined that the 
funding received by Resolute for the projects at these  mills constituted countervailable subsidies. 
The USDOC explained that the FSPF Programme was to support capital investment projects in 
value -added manufacturing, increased fibre use efficiencies, energy conservation/efficiency and 
development of electricity co -generation; and eligible projects were restricted to sites in northern 
or rural Ontario. The USDOC found that FPSF subsidies were not tied to any product, and therefore 
allocated the amount of FPSF subsidies to Resolute's total sales during the POI.374 
7.4.3.3   Main arguments of the parties  
7.220.   Canada  claims that the USDOC acted inconsistently with Article VI:3 of the GATT 1994 and 
Articles 19.1, 19.3 , and 19.4 of the SCM Agreement, by improperly countervailing contributions 
under the PPGTP, the FSPF , and t he NIER Programme s that are not attributable to SC Paper. 
Canada argues that a proper assessment of the design, structure and operation of the PPGTP, the 
NIER Programme and  the FSPF  shows that subsidies provided under these programmes are tied to 
products other than SC Paper, and therefore cannot be attributed to SC Paper.375 
7.221.   Regarding the PPGTP funding for Resolute, Canada asserts that Resolute had informed the 
USDOC that although funding under this programme was available to the pulp and paper industry 
in general, the specific contributions were conditioned on the approved projects and, therefore, 
tied to the products impacted by those projects.376 In particular, Resolute had reported that the 
relevant contributions were for specific projects at mills in Ontar io. Resolute had further reported 
that, during the POI , none of its Ontario mills produced SC Paper [[***** ]].377  
7.222.   Regarding the PPGTP funding for Fibrek, Ca nada does not deny that certain subsidized 
inputs produced by Fibrek at a mill in Quebec were used by  Resolute in the production of 
SC Paper. However, Canada asserts that Resolute had reported to the USDOC that only small 
amounts of such inputs had been us ed by Resolute for the production of SC Paper.378 Canada 
argues that there was therefore no basis for t he USDOC to allocate the entirety of the PPGTP 
subsidies provided to Fibrek to Resolute's production of pulp and paper.379 
7.223.   Regarding subsidies provided under the NIER Programme  and the FSPF, Canada asserts 
that these contributions were provided for specific projects at specific facilities in Ontario, and 
therefore tied to the products made in those facilities. Canada contends that, because no SC Paper 
                                                
373 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 27 -28. 
374 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 28 -29. 
375 Canada's first written submission, para. 302; opening statement at the first meeting of the Panel , 
paras. 54 -59; second written submission, para. 128; and opening statement at the second meeting of the 
Panel,  paras. 95 -102.  
376 Canada's first written submi ssion, paras. 303 -308; opening statement at the first meeting of the 
Panel, para. 54; and confidential statement  at the second meeting of the Panel, para. 3.  
377 Resolute Questionnaire Response, Section III, (Exhibit CAN -41 (BCI)) , pp. 22-23. 
378 Resolute Supp lemental Questionnaire Response , (Exhibit CAN -45 (BCI)), pp. 2 -3 and appendix D.  
379 Canada's first written submission, paras. 309 -311; opening  statement at the first meeting of the 
Panel, para. 55; second written submission, para. 129; and opening statement  at the second meeting of the 
Panel, para. 103 . Canada argues that this argument is also applicable to the alleged assistance to Fibrek 
discovered during verification.  The Panel has already concluded that the USDOC acted inconsistently with 
Article 12.7 of  the SCM Agreement by applying AFA to the discovered programmes. Consequently, it would be 
premature to reach any further conclusion with respect to the information discovered at verification.  WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  [[***** ]] were produced at those Ontario facilities during the POI, these subsidies should not be 
allocated t o Resolute's production of SC Paper.380, 381 
7.224.   The United States  argues that Canada has failed to demonstrate that the USDOC's 
attribution of the countervailable subsidies received by Resolute was inconsistent with the 
GATT  1994 or the SCM Agreement. The United States contends that neither the GATT 1994 nor 
the SCM  Agreement limit the imposition of countervailing duties only to subsidies tied to the 
product under investigation. The United States argues that an investigating authority is to examine 
the design, str ucture, and operation of the measure that is granting the subsidy.382 The 
United  States further argues that a subsidy is "tied" to a particular product if bestowal of the 
subsidy is "connected to, or conditioned upon, the production or sale of the subject 
merchandise ".383 The United States argues that the GATT 1994 and  the SCM Agreement both 
contemplate the application of countervailing duties for subsidies that may benefit more than the 
product under investigation. The United States asserts that a Member ma y examine a subsidy and 
determine that the benefits received from that subsidy are spread across the entire company and 
cannot be linked to a particular product. For the United States, under such circumstances, it is 
appropriate to treat that subsidy as untie d, and to divide the benefit by the company's total sales 
for purpose of attribution.384 
7.225.   The United States contends that the USDOC properly attributed the subsidy benefits 
received by Resolute under the PPGTP to Resolute's total sales of pulp and paper pr oducts. 
The United States argues that the USDOC appropriately determined, based on the evidence on the 
record, that these grants were tied to the production of only pulp and paper products, and that 
Resolute received a countervailable subsidy that benefited R esolute's pulp and paper production. 
For the United States, in calculating the rate of subsidization, the USDOC properly matched the 
elements taken into account in the numerator (a benefit to support Resolute's pulp and paper 
production during the POI) wit h the elements taken into account in the denominator 
(Resolute's  sales of pulp and paper).385 
7.226.   With respect to the assistance to Fibrek under the PPGTP, the United States argues that 
the USDOC found that the PPGTP subsidized Fibrek's production of pulp, an  input on SC Paper. 
The United States asserts that a Member may offset countervailable subsidies received by a 
producer of a processed product without having to undertake a pass -through analysis, if the 
producers of the input and processed product are affi liated.386 
7.227.   The Unite d States asserts that the USDOC properly attributed the subsidy benefits received 
by Resolute under the NIER Programme and the FSPF to Resolute's total sales. The United States 
asserts that the programmes did not condition Resolute's rece ipt of the grant on the production of 
particular merchandise, so, based on the evidence on the record, the USDOC correctly concluded 
that Resolute received a countervailable subsidy that benefited all of Resolute's production 
activities. For the United Sta tes, the USDOC properly matched the elements taken into account in 
the numerator (a benefit to support all of Resolute's production) with the elements taken into 
account in the denominator (Resolute's total sales).387 
7.4.3.4   Evaluation by the Panel  
7.228.   The main issue b efore this Panel is whether the USDOC properly attributed to the 
production of SC Paper the full amount of assistance provided to Resolute and Fibrek under the 
PPGTP, FSPF , and NIER Programmes.  
                                                
380 Canada's first written submission, paras. 317 -321; opening s tatement at the first meeting of the 
Panel, para. 59; and confidential statement at the second meeting of the Panel, paras. 7 -8. 
381 Canada's first written submission, paras. 312 -316; opening statement at the first meeting of the 
Panel, para. 58; and confide ntial statement at the second meeting of the Panel, paras. 9 -11. 
382 United States ' first written submission, paras. 281 -287; second written submission, paras. 99 -100. 
383 United States ' first written submission, para. 284 (quoting  Appellate Body Report, US – Washing 
Machines , para. 5.273 ). 
384 United States' first written submission, paras. 271 -288; second written submission, paras. 98 -101; 
and response to Panel question No. 60, paras. 136 -143. 
385 United States' first written submission, paras. 290 -291; second w ritten submission, paras. 102 -104. 
386 United States' first written submission, paras. 287 and 291.  
387 United States' first written submission, paras. 292 -296; second written submission, paras. 105 -107. WT/DS505/R  
BCI deleted, as indicated [[*** **]] 
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  7.229.   Canada's claim is based on Article VI:3 of the GATT 1994 and A rticle 19.4 of the 
SCM Agreement. Article VI:3 of the GATT 1994  reads as follows:  
No countervailing duty shall be levied on any product of the territory of any 
contracting party imported into the territory of another contracting party in excess of 
an amoun t equal  to the estimated bounty or subsidy determined to have been 
granted, directly or indirectly, on the manufacture, production or export of such 
product in the country of origin or exportation, including any special subsidy to the 
transportation of a p articul ar product. The term "countervailing duty " shall be 
understood to mean a special duty levied for the purpose of offsetting any bounty or 
subsidy bestowed, directly, or indirectly, upon the manufacture, production or export 
of any merchandise.388 
7.230.   Article 19.4 of the SCM Agreement, in turn, provides:  
No counterv ailing duty shall be levied389 on any imported product in excess of the 
amount of the subsidy found to exist, calculated in terms of subsidization per unit of 
the subsidized and exported produ ct. 
7.231.   Article  VI:3 of the GATT 1994 and Article 19.4 of the SCM Agreement provide t hat 
countervailing duties shall not be levied in excess of the amount of the subsidy found to exist, 
calculated in terms of subsidization per unit of the subsidized and export ed product.  
7.232.   The Appellate Body has explained that Article VI:3 of the GATT 1994 and Article 19.4 of 
the SCM Agreement "establish the rule that investigating authorities must, in principle, ascertain 
as accurately as possible the amount of subsidization bes towed on the investigated products . It is 
only with respect to those products that a countervailing duty may be imposed, and only within 
the limits of the amount of subsidization that those products received."390 The Appellate Body has 
also found  that the SC M Agreement does not dictate any particular methodology for calculating 
subsidy ratios, nor specify explicitly which elements should be taken into account in the numerator 
and the denominator. As a result, the investigating authority has discre tion to choo se the most 
appropriate methodology, "provided that such methodology allows for a sufficiently precise 
determination of the amount of subsidization bestowed on the investigated products" .391 
The Appellate Body has also explained that an investigating authori ty is permitted to calculate the 
rate of subsidization on an aggregate basis, i.e. by dividing the total amount of the subsidy by the 
total sales value of the product to which the subsidy is attributable.392 We agree with the approach 
adopted by the Appella te Bod y, and shall therefore be guided by it in resolving the matter 
before  us. 
7.233.   The USDOC found that subsidies received by Resolute under the PPGTP, the NIER 
Programme and the FSPF were provided for specific projects at specific mills. While PPGTP fundi ng 
was in principle available for relevant projects throughout Canada, the projects for which Resolute 
received PPGTP funding were situated at mills in Ontario. Funding under the NIER  programme and 
the FSPF was only available for projects situated in Ontario.393 Resolute had reported to the 
USDOC that it did not produce SC Paper [[***** ]] at any of its facilities in Ontario . Resolute had 
reported that its production of SC Paper during the POI took place exclusively in Quebec.394 The 
USDOC never con tested that Reso lute's SC Paper production took place exclusively in Quebec and 
that the funding under the PPGTP, the NIER Programme  and FSPF was only provided to Resolute's 
facilities in Ontario.395 
                                                
388 Fn omitted.  
389 Fn omitted.  
390 Appelate Body Report, US – Washing Machines , para. 5.2 68. (fn omitted)  
391 Appelate Body Report, US – Washing Machines , para. 5.269.  
392 Appellate Body Report,  US – Washing Machines , para. 5.267.  
393 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 26 -29. 
394 Resolute Questionnaire Re sponse, Section III, (Exhibit CAN -41 (BCI)) , pp. 5-9 and 22 -25. 
395 USDOC, Verification to the Questionnaire Responses of Resolute FP Canada Inc. (27 August 2015) , 
(Exhibit CAN -47 (BCI)), pp. 6 -7. WT/DS505/R  
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  7.234.   The Panel notes that the USDOC rejected Resolute's argument that it was no t appropriate 
to countervail subsidies received by its mills in Ontario, that did not produce SC Paper. According 
to the USDOC, its "subsidy attribution regulations explicitly rejected the concept that benefits from 
regional subsidies are tied to the produ ction in that particular region and to the particular factory 
located in that region"396 and "the statute and the regulations do not provide for, or require, the 
attribution of a domestic subsidy to a specific entity within a firm".397 
7.235.   There may often be circu mstances where it is reasonable for an investigating authority to 
attribute subsidies provided to one part of a corporate entity to products produced by other parts 
of that entity. The fact that the relevant entities are situated in different geographic ar eas of a 
Member is not necessarily determinative in this regard. However, there may also be circumstances 
where an investigating authority should not proceed in this manner, particularly when such an 
approach is at odds with the investigating authority's o verarching obligation to ensure that it 
ascertains as accurately as possible the amount of subsidization bestowed specifically on the 
product under investigation . In the present case, record evidence indicated that certain subsidies 
provided to entities wi thin Resolute's corporate structure could not reasonably be considered to 
benefit the sale or production of SC Paper. This is because the subsidies were provided for specific 
projects at mills that were not involved in the sale or production of that produc t. In such 
circumstances, the mere fact that subsidies were provided to entities within Resolute's corporate 
structure is not enough to justify the inclusion of such subsidies when calculating as accurately as 
possible the amount of subsidy bestowed on Res olute's production of SC Paper.398 In order to 
countervail the relevant subsidies, the USDOC was required to show that such subsidies benefited 
Resolute's production of SC Paper, notwithstanding the fact that these subsidies were provided for 
specific projec ts at mills that were not involved in that production. The USDOC failed to do so. 
Its decision to countervail those subsidies is therefore inconsistent with Article VI:3 of the 
GATT  1994 and Article 19.4 of the SCM  Agreement.  
7.236.   Regarding subsidies provided to Fibrek under the PPGTP, Resolute provided the USDOC 
with evidence showing that only a small amount of kraft pulp produced at a Fibrek mill benefitting 
from PPGTP funding was used for the production of SC Paper by Resolute.399 In response, the 
USDOC explai ned that it does not trace subsidized inputs through a company's production process. 
For the USDOC, "the question is whether the input could have  been used to produce the subject 
merchandise exported to the United States, not whether the inputs were actual ly used for that 
purpose during the POI."400 The USDOC further determined that, because Resolute had reported 
that some of Fibrek's kraft pulp is, in fact, used in the production of SC  Paper, such inputs 
produced by Fibrek are primarily dedicated to the prod uction of SC Paper.  
7.237.   There may be circumstances where it is reasonable for an investigating authority to 
proceed as if the totality of subsidized inputs produced by an entity are used in the production of a 
finished product, without necessarily proving that  this is the case . However, this will not be the 
case in circumstances where record evidence indicates that only a very small amount of the 
subsidized input produced by an entity is in fact used in the production of the finished product. 
In such circumstan ces, assuming tha t all inputs are used in the production of the finished product 
would be at odds with the requirement to ascertain as accurately as possible the amount of 
subsidization bestowed on the investigated product. In light of evidence provided by  Resolute 
regardi ng the very limited amount of inputs from Fibrek actually used by Resolute for the 
production of SC Paper, the USDOC's assumption that all such inputs were used by Resolute for 
the production of SC Paper meant that its determination of the  amount of subsid ization of 
SC Paper in this regard failed to meet the degree of accuracy required by Article VI:3 of the 
GATT  1994 and Article 19.4 of the SCM Agreement.  
                                                
396 Issues and Decision Memorandum , (Exhibit CAN -37), p. 161.  
397 Issues and Decision Memorandum , (Exhibit CAN -37), p. 161.  
398 We recall that Article VI:3 of the GATT 1994 and Article 19.4 of the SCM Agreement link the amount 
of countervailing duty to the amount of subsidization of the exported product, not the amount of  subsidization 
of the entities within the exporter's corporate structure.  
399 Resolute Supplemental Questionnaire Response , (Exhibit CAN -45 (BCI)), pp. 2 -3 and appendix D.  
400 Issues and Decision Memorandum , (Exhibit CAN -37), p. 161. (emphasis original)  WT/DS505/R  
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  7.238.   Canada has also presented claims under Articles 19.1 and 19.3 of the SCM Agreement. 
Article 1 9.1 of the SCM Agreement401 provides that, after making a final determination of the 
existence and amount of the subsidy, a Member may impose a countervailing duty in accordance 
with the provisions of this Article.402 Therefore, the imposition of count ervailing duties in a manner 
inconsistent with Article 19.4 of the SCM Agreement is also inconsistent with Article 19.1.  
7.239.   Also, Article 19.3 of the SCM Agreement403 contains the obligation to levy countervailing 
duties in the appropriate amounts. Amounts that  have been calculated in a manner inconsistent 
with Article 19.4 of the SCM Agreement cannot be considered "appropriate" within the meaning of 
Article 19.3.404 
7.240.   Canada has also presented a claim under Article 10 of the SCM Agreement. Article 10405 
mandates Members to  take all necessary steps to ensure that the imposition of a countervailing 
duty is in accordance with Article VI of the GATT 1994 and the SCM Agreement. The 
Appellate  Body has treated claims under Article 10 as consequential in the sen se that, when 
counte rvailing duties have been imposed in a manner inconsistent with Article VI of the GATT 1994 
and/or any substantive provision of the SCM Agreement, the right to impose a countervailing duty 
has not been established, so the countervailing  duties imposed are, as a consequence, inconsistent 
with Article  10 of the SCM Agreement.406 The Panel has found that the USDOC's failed to meet the 
degree of accuracy required by Article VI:3 of the GATT 1994 and Article 19.4 of the 
SCM Agreement. As a cons equence, the USDOC acted inconsistently with Article 10 of the 
SCM Agreement.  
7.241.   Based on the above, the Panel concludes that, by attributing to the production of SC Paper 
subsidies provided to Resolute and Fibrek under the PPGTP, the NIER Programme and the  FSPF, 
the USDOC acted inconsistently with Articles VI:3 of the GATT 1994 and Articles 10, 19.1, 19.3 , 
and 19.4 of the SCM Agreement.  
7.5  Claim s concerning the CVD determinations with respect to Irving and Catalyst  
7.5.1   Claim s concerning the calculation of the all -others rate  
7.5.1.1   Introduction  
7.242.   Canada claims that the USDOC acted inconsistently with Articles 10, 12.7, 19.1, 19.3 , 
19.4, and 32.1 of the SCM Agreement an d Article VI:3 of the GATT 1994, by improperly calculating 
an all -others rate for Irving and Catalyst that was derived from: ( a) alleged company -specific 
subsidies that were only provided to PHP ; and ( b) Resolute's countervailing duty rate which was 
based, in part, on AFA.407 
                                                
401 Article 19.1 of the SCM Agreement provides that "I f, after reasonable efforts have been made to 
complete consultations, a Member makes a final determination of the existence and amount of the subsidy and 
that, through the effects of the subsidy, the subsidized  imports are causing injury, it may impose a 
countervailing duty in accordance with the provisions of this Article unless the subsidy or subsidies are 
withdrawn. " 
402 Appellate Body Report, US – Countervailing Measures on Certain EC Products , para. 80.  
403 Article 19.3 of the SCM Agreement provide s, in relevant part, that "[w] hen a countervailing duty is 
imposed in respect of any product, such countervailing duty shall be levied, in the appropriate amounts in each 
case … on imports of such product from all sour ces found to be subsidized and causing injury" . 
404 Appellate Body Report , US – Anti-Dumping and Countervailing Duties (China) , paras. 552 -556. 
405 Article 10 of the SCM Agreement, concerning the Application of Article VI of GATT 1994, reads as 
follows:  
Member s shall take all necessary steps to ensure that the imposition of a countervailing duty  on 
any product of the territory of any Member imported into the territory of another Member is in 
accordance with the provisions of Article VI of GATT 1994 and the term s of this Agreement. 
Countervailing duties may only be imposed pursua nt to investigations initiated and conducted in 
accordance with the provisions of this Agreement and the Agreement on Agriculture.  
(fns omitted)  
406 Appellate Body Reports, US – Countervailing and Anti -Dumping Measures (China) , paras. 4.19 -4.21; 
US – Anti-Dumping and Countervailing Duties (China) , para. 358; and US – Softwood Lumber IV , para. 143.  
407 Canada's panel request, p. 3.  WT/DS505/R  
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  7.5.1.2   Factual background  
7.243.   Catalyst and Irving are producers of SC Paper that were not selected as mandatory 
respondents and, there fore, did not receive an individual countervailing duty rate. Instead, they 
were subject to the all -others countervailing duty rate of 18.85.408  
7.244.   In the petition to initiate the CVD investigation, Catalyst and Irving were i dentified as 
producers of SC Paper.409 Both companies provided comments on the initiation and requested to 
be included as mandatory respondents in the investigation.410 However, t he USDOC selected PHP 
and Resolute as the only mandatory respondents, explaining that it was within its discretion to 
limit the selection of producers and/or exporters for individual examination " [i]n light of the 
resource constraints and practical considerations" .411 
7.245.   The USDOC constructed the all -others  rate by weight -averaging PHP's 2 0.18% and 
Resolute's 17.87 % rates to  arrive at a rate of 18.85 %.412 The USDOC explained its decision as 
follows:  
[T]he resulting rate is a reasonable, statutorily mandated estimate of the rate 
applicable to the non -selected respondents given the [USDOC's]  inability to 
investigate all potential respondents. The all -others rate therefore reasonably reflects 
potential countervailable subsidy rates to all other companies.413 
7.246.   While 17.10 of the 17.87 % rate for Re solute was calculated using AFA414, the 20.18 % rate 
for PHP was based mainly on subsidies pertaining to the sale/acquisition of the Port Hawkesbury 
mill415, which were available only to PHP.416 
                                                
408 Supercalendered Paper from Canada: Countervailing  Duty Order, United States Federal Register, 
Vol. 80, No. 237 (10 December 2015)  (CVD Order ), (Exhibit USA -2). 
409 Petition, Vol. II,  (Exhibit CAN -39). 
410 USDOC Memorandum dated 3 April 2015 on Respondent Selection (Respondent Selection Decision ), 
(Exhibit CA N-58). 
411 Respondent Selection Decision , (Exhibit CAN -58), p. 6.  
412 Issues and Decision Memorandum , (Exhibit CAN -37), p. 7 4. 
413 Issues and Decision Memorandum , (Exhibit CAN -37), p. 76 . 
414 Issues and Decision Memorandum , (Exhibit CAN -37), p. 30. 
415 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 13 -15, 17, 20, 25 , and 38.  
416 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 13, 15 -17, 20, 23 -25, 41, and 50. With 
respect to the Government of Nova Scotia  loan for working capital, the USDOC determined tha t "the program 
is specific in accordance with section 771(5A)(D)(i) of the Act because the [Government of Nova Scotia ] 
offered and  provided the assistance only to PWCC ". (Ibid. p. 14). With respect to the Government of Nova 
Scotia  loan to improve productiv ity and efficiency, the USDOC determined that "[ t]he program is specific in 
accordance with section 771(5A)(D)(i) of the Act because the [Government of Nova Scotia ] only offered and  
provided the assistance to PWCC ". (Ibid. p. 15). With respect to the PWCC indemnity loan, the USDOC 
determined that "[ t]he program is specific in accordance with section 771(5A)(D)(i) of the Act because the  
[Government of Nova Scotia ] only provided assistance to PWCC for the due diligence work and restructuring 
planning in  conne ction with the acquisition of NPPH ." (Ibid. p. 16) . With respect to the Richmond County (Nova 
Scotia) Promissory Note for Property Taxes , the USDOC determined that "[b]ecause the granting of the 
promissory note and the payment of property taxes in this manner required the passage of  specific legislation 
by the [Government of Nova Scotia ], the Richmond Port Hawkesbury Paper Ltd. Taxation Act, we  determine 
that it is specific to an enterprise under section 771(5A)(D)(i) of the Act. " (Ibid. p. 17). With res pect to the hot 
idle funding, the USDOC determined that "t he program is de jure  specific, in accordance with 
section  771(5A)(D)(i) of the Act, because the [Government of Nova Scotia ] authorized the assistance  only to 
[PHP] ." (Ibid. p. 20). With respect to the FIF, the USDOC determined  "[t]hat the program is de jure  specific, in 
accordance with se ction 771(5A)(D)(i) of the Act, because the [Government of Nova Scotia ] authorized the 
assistance  only to [PHP] ." (Ibid. p. 23). With respect to Government of Nova Scotia  Grants for the Sustainable 
Forest Management and Outreach Program Agreement , the USDOC determined that "the program is specific in 
accordance with section 771(5A)(D)(i) of the Act because the [Government of Nova Scotia ] provided the 
assistance  only to [PHP]  ". (Ibid. p. 24). With respect to the Government of Nova Scotia  Provision of Funds for 
Worker Training and Marketing , the USDOC determined that "[ t]he program is specific in accordance with 
section 771(5A)(D)(i) of the Act because the [Govern ment of Nova Scotia ] and ERDT provided the assistance 
only to [PHP] ". (Ibid. p. 25). With respect to the provision of electricity, the USDOC determined that "[t] he 
provision of the LRR was approved f or and expressly limited to one company, [PHP] ". (Ibid. p. 41). With 
respect to the provision of stumpage and biomass, the USDOC determined that [t] he provision of  stumpage 
under terms of t he FULA is expressly limited tor [ sic] [PHP]  ". (Ibid. p. 50).  WT/DS505/R  
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  7.5.1.3   Main arguments of the parties  
7.247.   Canada claims that, when it constructed the all -others rate, the USDOC acted contrary to 
its obligations under Articles 10, 12.7, 19.1, 19.3, 19.4 , and 32.1 of the SCM Agreement and 
Article VI:3 of the GATT 1994 to establish the appropriate amount of the d uty and not to levy 
countervailing duties in excess of the amount of subsidization.417 
7.248.   Canada contends that the all -others rate of 18.85 % applied to Catalyst and Irving does not 
correspond to economic reality because the subsidies allegedly received by Resol ute and PHP, 
upon which duties were levied, were not available to either Catalyst or Irving.418 
7.249.   With respect to the use of Resolute's rate of 17.87 % to construct the all -others rate, 
Canada argues that the assistance allegedly received by Resolute was not av ailable as a matter of 
law to other companies because 95 % of that rate was an AFA rate related to Resolute's supposed 
failure to respond to the  "other forms of assistance" question.419 
7.250.   Canada asserts that the Appellate Body in US – Hot-Rolled Steel  found tha t it was 
inconsistent with Article 9.4 of the Anti -Dumping Agreement to include in the calculation of the 
all-others -rate margins established e ven partially on the basis of facts available.420 Canada 
contends that this reasoning applies equally in countervai ling duty proceedings, because the same 
considerations inform the purpose of the all -others rate provision in Article 19.4 of the 
SCM Agreemen t.421 Canada adds that it would be unfair and inconsistent with Article 12.7 of the 
SCM Agreement to allow exporters who have not even been given the opportunity to cooperate , to 
face the consequences of the alleged non -cooperation of another exporter.422 
7.251.   With respect to the use of PHP's rate of 20.18 % to construct the all -others rate, Canada 
contends that the entire rate calculated for PHP related to alleged subsidies provided in the context 
of the reopening of the Port Hawkesbury mill, so these subsidies were no t available to Catalyst and 
Irving.423 Canada asserts that the USDOC could easily have identified the program mes specific to 
PHP that could not have benefited any other companies because it had investigated those 
programmes thoroughly, and it had information  on Catalyst and Irving from their voluntarily 
responses and from the information provided by all relevant provinces and Canada. Canada adds 
that the USDOC, indeed, found that these program mes were only available to PWCC or PHP.424 
7.252.   The United States argues t hat Canada makes its claim without explaining how any of the 
listed provisions of the SCM Agreement specifically supports Canada's position.425 The 
United  States asserts that, by citing to multiple articles, Canada attempts to create obligations that 
have no  basis in the text of the covered agreements.426 
7.253.   The United States contends that, according to the language in Article 19.3, the 
SCM Agreement expressly contemplates that a Member may adopt a methodology that may 
subject individual exporters or producers to countervailing duties without individually investigating 
them.427 The United States argues that neither the SCM Agreement nor the GATT 1994 prescribe a 
                                                
417 Canada's first wr itten submission, paras. 322 and 328; second written submission, para. 130; and 
opening statement at the first meeting of the Panel, para. 182.  
418 Canada's first wr itten submission, para. 329.  
419 Canada's first wr itten submission, paras. 323 and 330.  
420 Canada's first wr itten submission, paras. 3 26 and 331 (quoting Appellate Body Report, US – 
Hot-Rolled Steel , paras. 111 -130). 
421 Canada's opening statement at the first meeting of the Panel, paras. 172 -173. 
422 Canada's opening statement at the first meeting of the Panel, para. 178; response to Panel question 
No. 61, para. 139, and No. 62, paras. 140 -143. 
423 Canada's first wr itten submission, paras. 324 and 332.  
424 Canada's first wr itten submission, paras. 332 -334; opening statement at the first meeting of the 
Panel, paras. 179 -181. 
425 United States' first written submission, para. 298.  
426 United States' second written submission, paras. 111 -118. 
427 United States' fir st written submission, para. 299 . WT/DS505/R  
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  methodology for calculating a countervailing duty rate for non -investigated firms, so the 
USDOC's  chosen m ethodology is otherwise consistent with those agreements.428  
7.254.   With respect to the use of Resolute's rate of 17.87 % to construct the all -others rate, the 
United States asserts that  nothing in the text of Article 19.4 of the SCM Agreement prohibits the 
inclusi on of a facts available rate in a n all-others rate calculation .429 The United States adds that, 
by arguing that the SCM Agreement imposes certain obligations which derive from Article 9.4 of 
the Anti -Dumping Agreement, Canada is asking the Panel to disregard the customary rules of 
treaty interpretation.430 
7.255.   With respect to the use of PHP's rate of 20.18 % to construct the all -others rate, the 
United  States contends that Canada's position that the assigned all -others rate does not 
correspond to economic realit y assumes the conclusion that certain countervailable subsidies 
received by PHP and Resolute may not have been available to the non -investigated companies, 
and has no support in the record of the investigation. The United States adds that, because the 
investigation did not cover Catalyst and Irving, Canada has no basis for  asserting that their 
economic reality was different than the economic reality for PHP and Resolute.431 
7.256.   The United States contests Canada's argument that the amounts of countervailing duties 
levied exceed the amount of subsidies found to exist, because the a ll-others rate was based 
entirely on the subsidies found to exist with respect to producers of SC Paper in Canada. 
The United States argues that the USDOC adopted a reasonable approach, given that the 
weighted -average of PHP's and Resolute's countervailing  duty rates provided the best 
approximation for the countervailable subsidies received by all other SC Paper producers during 
the relevant POI.432 
7.5.1.4   Evaluation by the Panel  
7.257.   Canada's claims concern the manner in which the USDOC calculated the all -others rate 
applied on exports from export ers/producers that were not investigated during the underlying 
investigation.  
7.258.   Canada does not challenge per se  the right of the United States to determine an all -others 
rate for non -investigated exporters. We note in this regard  that t he second sentence of Article 19.3 
of the SCM Agreement provides that any exporter that was not actually investigated for reasons 
other than a refusal to cooperate shall be entitled to an expe dited review . This provision therefore 
envisages the application of some form of countervailing duty rate to non -investigated exporters. 
However, there is no specific provision in the SCM Agreement prescribing the methodology that an 
investigating authorit y can use in order to determine the countervailing du ty rate for 
non-investigated exporters or producers. The United States contends that the absence of any 
prescribed methodology for calculating countervailing duty rates for non -investigated exporters 
should lead the Panel to reject Canada's claims.433 Canada , by contrast, contends that an 
investigating authority may use the methodology of its choice, so long as that methodology and 
the results it produces are consistent with the SCM Agreement and Article VI of the GATT 1994.434  
7.259.   The fact that there is no specif ic provision in the SCM Agreement prescribing the 
methodology for determining the countervailing duty rate for non -investigated exporters does not 
give investigating authorities an unfettered right to impose the non -individual countervailing duty 
rate that  they prefer. Members can only impose countervailing duties – including to 
non-investigated exporters or producers  – in accordance with the GATT 1994 and the 
SCM Agreement. This includes the obligations, under Article 19.3 of the SCM Agreement, to levy 
                                                
428 United States' first written submission, para. 298; second written submission, para. 109.  
429 United States' fir st written submission, para. 302; second written submission, paras. 120 -121; and 
response to Panel question No. 64, paras. 145 -148. 
430 United States' fir st writte n submission, paras. 300 -301; response to Panel question No. 64, 
paras.  145-148. 
431 United States' fir st written submission, para. 303 . 
432 United States' fir st written submission, para. 304; second written submission, para. 119.  
433 United States' second writt en submission, para. 110.  
434 Canada's response to Panel question No. 62, para. 140.  WT/DS505/R  
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  countervailing duties in the appropriate amounts in each case, and, under Article  19.4 of the 
SCM Agreement and Article VI:3 of the GATT 1994, not to levy countervailing duties in excess of 
the amount of the subsidies found to exist. This is consistent with t he object and purpose of the 
SCM Agreement of striking a balance between the right to impose countervailing duties to offset 
subsidization that is causing injury, and the obligations that Members must respect in order to 
do so. 
7.260.   In light of these considerat ions, we begin by addressing Canada's claim under Article 19.3 
of the SCM Agreement, which provides : 
When a countervailing duty is imposed in respect of any product, such countervailing 
duty shall be levied, in the appropriate amounts in each case, on a no n‑discriminatory 
basis on imports of such product from all sources found to be subsidized and causing 
injury, except as to imports from those sources which have renounced any subsidies 
in question or from which undertakings under the terms of this Agreemen t have been 
accepted. Any exporter whose exports are subject to a definitive countervailing duty 
but who was not actually investigated for reasons other than a refusal to cooperate, 
shall be entitled to an expedited review in order that the investigating a uthorities 
promptly establish an individual countervailing duty rate for that exporter.  
7.261.   Canada claims that it was not "appropriate" for the USDOC to determine the all -others rate 
for non -investigated exporters on the basis of : (a) subsidies provided to one  of the investigated 
exporters, PHP, that were not available to non -investigated exporters ; and ( b) subsidy amounts 
determined for one of the investigated exporters, Resolute, using facts available.  
7.262.   With respect to the meaning of the phrase "appropriate am ounts", we observe that the 
Appellate Body has stated:  
[T]hat relevant dictionary definitions of the term "appropriate" include "proper", 
"fitting" and "specially suitable ( for, to )".[*] These definitions suggest that what is 
"appropriate" is not an autono mous or absolute standard, but rather something that 
must be assessed by reference or in relation to something else. They suggest some 
core norm  – "proper", "fitting", "suitable"  – and at the same time adaptation to 
particular circumstances. Within Article  19.3, the circumstance -specific quality of "the 
appropriate amounts" is further reinforced by the immediate context provided by the 
words "in each case". We also note that the term "amount" is defined as something 
quantitative, a number, "a quantity or su m viewed as the total reached". [*]435 
[*fn original]531 Shorter Oxford English Dictionary , 6th edn, A.  Stevenson (ed.) (Oxford 
University Press, 2007), Vol.  1, p. 106. 
[*fn original]532 Shorter Oxford English Dictionary , 6th edn, A.  Stevenson (ed.) (Oxford 
University Press, 2007), Vol.  1, p. 71. 
7.263.   In our view, an all -others rate determined by reference to the countervailing duty rates 
established for investigated exporters will generally be "appropriate", in the sense of fitting or 
suitable, for non -investigat ed exporters, since the subsidization available to investigated exporters 
generally constitutes a reasonable proxy for the amount of subsidization that may have been 
available to non -investigated exporters. Even if record evidence suggests that non -investi gated 
exporters may not have had access to all of the particular subsidies available to investigate 
exporters, the fact that investigated exporters benefited from a certain amount of subsidization 
suggests that non -investigated exporters in the same sector  may also have had access to a similar 
amount of subsidization, albeit through different subsidy programmes.  
7.264.   The second sentence of Article 19.3 envisages the determination of a rate for exporters 
that were "not actually investigated". Since those exporter s were "not actually investigated", we 
see no basis to conclude that an investigating authority should need to "investigate" which of the 
subsidies available to investigated exporters were also available to non -investigated exporters. 
While it may be that certain subsidies available to investigated exporters were not actually 
                                                
435 Appellate Body Report , US – Anti-Dumping and Countervailing Duties (China) , para. 552.  
(emphasis  original)  WT/DS505/R  
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  available to non -investigated exporters, the opposite could also be true. Non -investigated 
exporters or producers may benefit from subsidies that are not available to investigated expo rters 
or producers, and which would not therefore be reflected in the all -others rate. Since those 
exporters have not been investigated, the determination of a fitting or suitable rate of 
subsidization for non -investigated exporters will necessarily not be  precise. This lack of precision 
can be addressed in the expedited review envisaged in the second sentence of Article 19.3. For 
this reason, we reject Canada's claim that the USDOC acted inconsistently with Article 19.3  of the 
SCM Agreement  by determining the all -others rate for non -investigated exporters on the basis of 
subsidies provided to investigated exporters that were not available to non -investigated exporters.  
7.265.   We emphasize that it is the rate of subsidization available to investigated exporters tha t 
provides an appropriate basis for determining the rate applicable to non -investigated exporters. 
This does not mean that it is always appropriate to base the all -others rate for non -investigated 
exporters on the countervailing duty rate determined for in vestigated exporters, particularly when 
that rate is determined, wholly or in part, using the Article 12.7 facts available mechanism.  
7.266.   The Article 12.7436 mechanism is triggered when a producer or exporter refused access to, 
or otherwise did not provide, nece ssary information within a reasonable period or significantly 
impeded the investigation. If the investigating authority uses the rate calculated with facts 
available to construct the all -others rate, this would effectively mean that the non -investigated 
exporters or producers are similarly treated as being non -cooperative, even though there has been 
no finding of non -cooperation in their regard, and even though they may have been willing to 
participate fully in the investigation. This would not be fitting, or appropriate, since the use of facts 
available pursuant to non -cooperation may lead to an outcome that is less favourable for the 
non-cooperating party.437  
7.267.   Our interpretation of the term "appropriate" in this context finds support in the context 
provided by Article 9.4 of the Anti -Dumping Agreement438, which directs investigating authorities 
to disregard, when constructing the all -others rate, margins of dumping established using facts 
available.439 The Appellate Body has clarified that this includes margins o f dumping constructed 
even partially on the basis of facts available.440 As the Appellate Body considered that it would be 
anomalous if Article 12.7 of the SCM Agreement, concerning the use of facts available, were to 
permit the use of facts available in cou ntervailing duty investigations in a manner markedly 
different from that in anti -dumping investigations441, the Panel considers that it would be 
anomalous if the SCM Agreement allowed for the construction of the all -others rate on the basis of 
rates calculated using facts available when the Anti -Dumping Agreement prohibits it.  
7.268.   The Panel's view also finds support in the WTO Declaration on Dispute Settlement Pursuant 
to the Agreement on Implementation of Article VI of the General Agreement on Tariffs an d Trade 
1994 or Part V of the Agreement on Subsidies and Countervailing Measures, in which Ministers 
recognized "the need for the consistent resolution of disputes arising from anti -dumping and 
countervailing duty measures" . 
                                                
436 Article 12.7 of the SCM Agreement provides that: "I n cases in which any interested Member or 
interested party refuses access to, or otherwise does not provide, necessary information within a reasonable 
period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, 
may be made on the basis of the facts available. " 
437 Appellate Body Report, US – Carbon Steel (India) , paras. 4.425 -4.426.  
438 Article 9.4 of the Anti -Dumping Agreement provides, in relevant part:  
When the authorities have limited their examination in accordanc e with t he second sentence of 
paragraph 10 of Article 6, any anti -dumping duty applied to imports from exporters or producers 
not included in the examination shall not exceed:   
(i) the weighted average margin of dumping established with respect to the sele cted e xporters or 
producers … provided that the authorities shall disregard for the purpose of this paragraph  … 
margins established under the circumstances referred to in paragra ph 8 of Article 6.  
Article 6.8, in turn, provides that: "[i] n cases in which any interested party refuses access to, or 
otherwise does not provide, necessary information within a reasonable period or significantly impedes the 
investigation, preliminary and final determinations, affirmative or negative, may be made on t he basis of t he 
facts available."  
439 Appellate Body Report, US – Zeroing  (EC) (Article 21.5 – EC), para. 449. 
440 Appellate Body Report, US – Hot-Rolled Steel , para. 122.  
441 Appellate Body Report s, Mexico – Anti-Dumping Measures on Rice , para. 295; US – Carbon Steel 
(India) , para. 4.423 . WT/DS505/R  
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  7.269.   For the above reasons, we concl ude that, by constructing the all -others rate relying on 
Resolute's rate, which was mainly calculated using AFA, the USDOC acted contrary to its obligation 
under Article 19.3 of the SCM Agreement.442 
7.270.    The Panel will now address Canada's claims concerning Article VI:3 of the GATT 1994 and 
Article 19.4 of the SCM Agreement . In this respect, the Panel recalls that, under both Article  VI:3 
of the GATT 1994 and Article 19.4 of the SCM Agreement, Members must not levy countervailing 
duties in an amou nt greate r than  the amount of the subsidy found to exist and, thus, in order to 
determine the proper amount of a countervailing duty, an investigating authority must first 
ascertain the precise amount of the subsidy to be offset. The Appellate Body has characterized 
Articles 19.3 and 19.4 of the SCM Agreements as "closely related" provisions, because both 
paragraphs specifically address the quantitative limits on the imposition of countervailing duties, 
and as sharing an "interlinked nature", given that both provisions pe rtain to the final stage of 
countervailing duty proceedings.443 
7.271.   With regard to non -investigated exporters, an investigating authority will not have 
determined a precise amount of subsidization for the purpose of Article 19.4  of the 
SCM Agreement  and Article VI:3 of the GATT 1994. In this context, we consider that the 
appropriate amount of subsidization determined in respect of investigated exporters may serve as 
the ceiling for applying countervailing duties on non -investigated exporters. Accordingly, in the 
context of determining rates for non -investigated exporters, the failure to use an appropriate 
amount of subsidization under Article 19.3 also results in the levying of a countervailing duty in 
excess of the amount prescribed by Article 19.4 of the  SCM Agr eement and Article VI:3 of the 
GATT 1994.  
7.272.   As explained before, it is uncontested that the all -others rate in the CVD investigation on 
SC Paper was constructed, in part, on the basis of Resolute's countervailing duty rate, and that 
17.10  of the 17.87 % of that rate was calculated using facts available. Because all -others rates 
constructed on the basis of countervailing duty rates calculated using facts available are 
inconsistent with the obligation under Article 19.4 of the SCM Agreement and Article VI:3 of t he 
GATT 1994 not to levy countervailing duties in excess of the amount of the subsidy found to exist, 
the Panel concludes that, by constructing the all -others rate relying on Resolute's rate, which was 
mainly calculated using AFA, the USDOC acted contrary to its obligation under Article 19.4 of the 
SCM Agreement and Article VI:3 of the GATT 1994.444 
7.273.   Canada has also presented claims under Articles 10, 19.1 and 32.1 of the SCM Agreement. 
Article 10445 mandates Members to take all necessary steps to ensure that th e imposition of a 
countervailing duty is in accordance with Article VI of the GATT 1994 and the SCM Agreement and 
Article 32.1446 mandates that actions against a subsidy of another Member may be taken only if it 
is in accordance with the provisions of GATT 1 994, as interpreted by the SCM Agreement.447 
The Appellate Body has treated claims under Articles 10 and 32.1 as consequential claims in the 
sense that, when countervailing duties have been imposed in a manner inconsistent with Article VI 
of the GATT 1994 an d/or any substantive provision of the SCM Agreement, the right to impose a 
                                                
442 This is  regardless of whether the facts available were or were not used in a WTO -consistent manner . 
443 Appellate Body Report, US – Countervailing and Anti -Dumping Measures (China) , para. 4.23.  
444 This is  regardless of whether the fact s available were or were not used in a WTO -consistent manner . 
445 Article 10 of the SCM Agreement, concerning the Application of Article VI of GATT 1994, reads as 
follows:  
Members shall take all necessary steps to ensure that the imposition of a countervaili ng duty  on 
any product of the territory of any Member imported into the territory of another Member is in 
accordance with the provisions of Article VI of GATT 1994 and the terms of this Agreement. 
Countervailing duties may only be imposed pursua nt to inves tigations initiated and conducted in 
accordance with the provisions of this Agreement and the Agreement on Agriculture.  
(fns omitted)  
446 Article 32.1 of the SCM Agreement provides that: "No specific action against a subsidy of another 
Member can be taken ex cept in accordance with the provisions of GATT 1994, as interpreted by this 
Agreement."  
447 Appellate Body Report, US – Countervailing and Anti -Dumping Measures (China) , paras. 4.19 -4.20. WT/DS505/R  
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  countervailing duty has not been established , so the countervailing duties imposed are, as a 
consequence, inconsistent with Articles 10 and 32.1 of the SCM Agreement.448 
7.274.   This means that, when Articles 10 and 32.1 of the SCM Agreement are invoked as 
consequential claims and the countervailing duties are found to be inconsistent with Article VI of 
the GATT 1994 or any substantive provision of the SCM Agreement, those countervailing dut ies 
will also be inconsistent with Articles 10 and 32.1, without the need for the complainant raising 
these claims to advance further arguments to establish the consequential violation.449 
7.275.   Similarly, the relevant part of Article 19.1 of the SCM Agreement450 provides that, after 
making a final determination of the existence and amount of the subsidy, a Member may impose a 
countervailing duty in accordance with the provisions of this Article.451 This means that a claim of 
violation of Article 19.1 of the SCM Agreem ent, concerning this relevant part, is consequential to a 
violation of the substantive obligations contained in Article 19.  
7.276.   The Panel has already concluded that, by constructing the all -others rate relying on 
Resolute's rate, which was mainly calculated us ing AFA, the USDOC acted contrary to its 
obligations under Articles 19.3 and 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994. 
The Panel concludes that, as a consequence to this violation, the USDOC also acted inconsistently 
with Articles 10, 19 .1, and 32.1 of the SCM Agreement.452 The Panel rejects 
Canada's  consequential claims in respect of the USDOC's failure to adjust the all -others rate in 
respect of subsidies that were not available to non -investigated exporters.  
7.5.2   Claim s concerning the expedit ed reviews  
7.5.2.1   Introduction  
7.277.   With respect to the expedited reviews for Irving and Catalyst, Canada has brought  the 
following claims:  
a. Canada claims that the USDOC acted inconsistently with Article 19.3 of the 
SCM Agreement , by improperly initi ating an investigat ion into new subsidy allegations in 
the context of the expedited reviews of Irving and Catalyst, which are intended to 
provide company -specific rates with respect to the subsidy allegations that were made in 
the original investigation.453 
b. Canada also claims that the USDOC acted inconsistently with Articles 11.2 and 11.3 of 
the SCM Agr eement, by improperly initiating an investigation into new subsidy 
allegations during the expedited reviews of Irving and Catalyst on the basis of an 
applicati on that contains insufficient evidence concerning the existence, amount, and 
nature of the alleged subsidies.454 
                                                
448 Appellate Body Reports, US – Countervailing and Anti -Dumping Measures (China) , paras. 4.19 -4.21; 
US – Anti-Dumping and Countervailing Duties (China) , para. 358; and US – Softwood Lumber IV , para. 143.  
449 Appellate Body Reports, US – Countervailing and Anti -Dumping Measures (China) , paras. 4.19 -4.21; 
US – Anti-Dumping and Countervailing Duties (China) , para. 358; and US – Softwood Lumber IV , para. 143.  
450 Article 19.1 of the SCM Agreement provides that "[i] f, after reasonable efforts have been made to 
complete consultations, a Member mak es a final determination of the existence and amount of the subsidy and 
that, through the effects of the subsidy, the subsidized imports are causing injury, it may impose a 
countervailing duty in accordance with the provisions of this Article unless the su bsidy or subsidies are 
withdrawn. " 
451 Appellate Body Report, US – Countervailing Measures on Certain EC Products , para. 80.  
452 Canada has also presented a claim under Article 12.7 of the SCM Agreement with respect to the 
construction of  the all -others rate r elying on Resolute's rate. Given that the  Panel has already concluded that, 
in applying facts available to the discovered programmes, the USDOC acted inconsistently with Article 12.7 of 
the SCM Agreement , and considering that the Panel has already found a violation of Articles 10, 19.1, 19.3, 
19.4, and 32.1 of the SCM Agreement and Article VI:3 of the GATT, the Panel does not consider necessary to 
address this claim.  
453 Canada's panel request, pp. 3 -4. 
454 Canada's panel request, p. 4.  WT/DS505/R  
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  7.5.2.2   Factual background  
7.278.   Following the issuance of the countervailing duty order on SC paper from Canada on 
10 December 2015455, Catalyst and Irving requ ested the initiat ion of expedited reviews on 15 and 
16 December 2015, respectively.456 The USDOC initiated an expedited review relating to both 
companies on 8 February 2016 with respect to the eleven programmes identified in the context of 
the original investigation.457 On 16 February 2016, the petitioner in the original investigation 
requested the USDOC to initiate an investigation, within the expedited review, into several new 
subsidy allegations.458 Despite submissions  by Canada, British Columbia, New Brunswick, 
Nova Scotia, I rving, and Catalyst contesting both the appropriateness of investigating new subsidy 
allegations in the context of expedited reviews and the lack of sufficient evidence459, the USDOC 
issued an "Analysis of New Subsidy Allegations" on 18 April 2016 that recom mended investigating 
six new subsidy allegations.460 On 25 April 2016, the petitioner submitted two amended new 
subsidy allegations461, which Catalyst, Irving , and the Canadian provinces argued were also 
insufficient.462 The USDOC issued an "Analysis of Amended New Subsidy Allegations" that 
recommended investigating one  amended new subsidy allegations  on 12 July 2016 .463 The USDOC 
issued the preliminary results of the expedited reviews on 18 November 2016, imposing a 
de minimis countervailing duty rate of 0.79% on Catalyst and a countervailing duty rate of 7.99% 
on Irving. The USDOC also determined that both Catalyst and Irving should continue to pay cash 
deposits at the all -others rate of 18.85% until the issuance of the final results of the expedited 
reviews.464 In the course of these proceedings, the United States has informed the Panel that the 
USDOC issued the final results of the expedited review on 24 April 2017, imposing a de minimis 
countervailing duty rate of 0.94% on Catalyst and a rate of 5.87% on Irving.465 
7.5.2.3   Main arguments of the parties  
7.279.   Canada  argues that the USDOC incorrectly initiated a n investigation with respect to new 
subsidy allegations in the context of an expedited review. In particular, Canada argues that the 
inclusion of the new subsidy allegations within the context of an expedited review is contrary to 
                                                
455 CVD Order , (Exhibit US A-2). 
456 Catalyst Paper Corporation, Request for Expedited Review (15 December 2015) , (Exhibit CAN -63); 
Irving Paper Ltd., Request for Expedited Review  (16 December 2015) , (Exhibit CAN -64). 
457 The original petition alleged that Catalyst had received the following subsidies: ( a) a Canad ian grant 
to Catalyst through the PPGTP, to improve the environmental performance of its Powell River, BC, facility, and 
an additional grant for its Port Alberni, BC, facility; ( b) a cap on property taxes paid by Catalyst to  the City of 
Powell River, BC, pursuant to an Agreement in Principle between Catalyst and the City of Powell River; ( c) a 
grant from BC Hydro through British Columbia's Power Smart Program; and ( d) grants from British Columbia 
and Canada for Catalyst's Cro fton Pulp and Paper mill. The original petition also alleged that Irving had 
received the following subsidies: ( a) three grants from Canada and New Brunswick for Irving's facility at 
Sussex Tree Nursery, to derisk investment in technology in the industry; (b) the Federal Atlantic Innovation 
Program ; (c) New Brunswick Funds for J.D. Irving; ( d) an PPGTP grant from Canada to Irving;  (e) two grants 
from New Brunswick and Efficiency NB; ( f) a grant from New Brunswick under its NB Climate Change Action 
Plan 2007 -2012; and ( g) a rebate of property taxes to offset electricity price increases from New Brunswick to 
Irving for mills running at the start of the program me at 85% of the prior year's production.  (Petition, Vol. II , 
(Exhibit CAN -39)). 
458 New Subsidy Allegat ions Regarding Catalyst Paper and Irving Paper on the expedited review 
(16 February 2016) , (Exhibit CAN -65). 
459 Canada, British Columbia, New Brunswick, and Nova Scotia, Response to Petitioner's New Subsidy 
Allegations  (26 February 2016) , (Exhibit CAN -66); Catalyst Paper Corporation, Response to Petitioner's New 
Subsidy Allegations and Request for Meeting (29 February 2016) , (Exhibit CAN -67); Irving Paper Ltd. and 
Government of New Brunswick, Response to Petitioner's New Subsidy Allegations Concerning New Br unswick 
(26 February 2016) , (Exhibit CAN -68); and Irving Paper Ltd., Response to Petitioner's New Subsidy Allegation 
Concerning the Provision of Stumpage in Nova Scotia (26 February 2016) , (Exhibit CAN -69). 
460 USDOC, Analysis of New Subsidy Allegations (18 April 2016) , (Exhibit CAN -70). 
461 Petitioner's Amended New Subsidy Allegations (25 April 2016) , (Exhibit CAN -71). 
462 Catalyst Paper Corporation, Response to Petitioner's Amended New Subsidy Allegations (5 May 
2016) , (Exhibit CAN -72); Canada, British Columbia , New Brunswick and Irving Paper Ltd., Response to 
Petitioner's Amended New Subsidy Allegations (5 May 2016) , (Exhibit CAN -73). 
463 USDOC, Analysis of Amended New Subsidy Allegations (12 July 2016) , (Exhibit CAN -74). 
464 USDOC, Preliminary Results of Countervailing Duty Expedited Review, (18 November 2016) , 
(Exhibit  CAN-75), p. 3; Issues and Decision Memorandum, (Exhibit CAN -37), p. 74 . 
465 Supercalendered Paper from Canada: Final Results of Countervailing Duty Expedited Review, 
United  States Federal Register, Vol. 82, No. 77 (24 April 2017) , (Exhibit USA -26), p. 18897; see also 
United  States' second written submission, para. 123; and response to Panel question No. 67, para. 157.  WT/DS505/R  
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  the purpose of expedited reviews and violates Article  19.3 of the SCM Agreement. T he purpose of 
an expedited review is to look back at the original investigation and see what the countervailing 
duty rate would have been for an exporter had they been investigated; it should not be an 
opportunity to delay the initiation of an investigation for non -selected exporters while 
simultaneously requiring them to pay provisional duties.466 Based on its ordinary me aning, a 
"review" should be a "reconsideration of some subject or thing", i.e. look back at what was already 
considered in the initial investigation and consider those programmes. The concept of 
reconsidering would necessarily exclude the consideration of new allegations.467 Furthermore, an 
expedited review must be "expedited" and "promp t". In the context of Article X:3 of the 
GATT  1994, the Appellate Body has interpreted the term "prompt" as performance "in a quick and 
effective manner and without delay", suggesting that an expedited review should similarly be done 
in a quick and effective manner and without delay caused by the introduction of new subsidy 
allegations.468 Canada rejects the United States' position that a review is expedited so long as it is 
completed before the completion of the first administrative review, stating that such  an approach 
renders Article 19.3 inutile.469  
7.280.   Canada further  takes the view that the scope of an expedited review is limited to a review 
of the level of subsidization  that no n-investigated exporters received from alleged subsidies that 
the investigating authority either : (a) initiated on in response to a petition ; or (b) self -initiated on 
in the context of the original investigation.470 Examining new subsidy allegations will alw ays cause 
more delay than reviewing those programmes that were considered in the original investigation, 
since an investigating authority will already have collected information on the latter.471 In the 
alternative, even if new subsidy allegations are permit ted in an expedited review, Canada submits 
that these are limited to those with a sufficiently close nexus to the allegations in the original 
petition and, in the expedited review at issue, the new subsidy allegations did not have a 
sufficiently close nexu s to the allegations in the original petition.472 Referring to the Appellate Body 
in US – Carbon Steel (India) , Canada argues that administrative and expedited reviews are both 
intended to review what occurred in the original investigation, and should theref ore at least be 
subject to the same minimum limitation, i.e. that any new subsidy allegations have a sufficiently 
close nexus to the initial investigation.473  
7.281.   Finally, Canada argues that the USDOC's initiation into the new subsidy allegations violated 
Articles 11.2 and 11.3 of the SCM Agreement due to its failure to ensure that there was sufficient 
evidence of each element of a subsidy.474  
7.282.   The United States  argues that Canada is asking the Panel to expand upon the clear 
obligation in Article 19.3 – namely tha t an investigating authority must provide an expedited 
review to an exporter who is  subject to a countervailing duty investigation but was not individually 
investigated – and place certain restrictions on a Member's conduct of an expedited review that 
have no foundation in the text of Article 19.3.475 The United States argues that, similar to original 
investigations, an expedited review examines the potential subsidization  of a particular product , 
and the scope of an expedited review is thus limited to the product under investigation identified in 
the original petition, rather than to particular subsidy programmes.476 The investigation of new 
subsidy allegations in an expedited review is therefore a permissible method of examining the 
potential subsidization  of a particular product and the exporter under review.477 Indeed, the text of 
                                                
466 Canada's opening statement at the first meeting of the Panel, para. 192 ; see also first written 
submission, paras. 336 -348. 
467 Canada's second written submission, paras. 144 -145 (quoting Definition of "reconsider" at Shorter 
Oxford English Dictionary , 5th edn, A. Stevenson (ed.) (Oxford University Press, 2003) Vol. 2, p. 2492 , 
(Exhibit  CAN-195)).  
468 Canada's second written submission, para. 146 (quoting Appellate Body Report, Thailand – 
Cigarettes (Philippines) , para. 220).  
469 Canada's second written submission, para. 147.  
470 Canada's response to Panel question No. 68, para. 153.  
471 Canada's response to Panel question No. 70, paras. 156 -160. 
472 Canada's first written submission, paras. 349 -359. 
473 Canada's second written submission, paras. 148 -153 (referring to Appellate Body Report, US – 
Carbon Steel (India) , para. 4.543).  
474 Canada's  first written submission, paras. 364 -391; second written submission, paras. 154 -156. 
475 United States' first written submission, paras. 305 -308. 
476 United States' response to Panel question No. 68, para. 158.  
477 United States' second written submission, par a. 123.  WT/DS505/R  
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  Article 19.3 does not limit the scope of an expedited review to subsidy programmes identified in 
the original petition, but rather focuses on the amount of duties imposed on a parti cular 
product.478 
7.283.   The United States considers that an expedited review is expedited so long as it is 
completed before the completion of the first administrative review after the issuance of a 
countervailing duty order, which in the present case the United St ates does not expect to be 
completed before the end of 2017 at the earliest.479 The United States also rejects 
Canada's  reliance on a statement by the Appellate Body in US – Carbon Steel (India)  that the 
scope of administrative reviews under Article 21.2 of the SCM Agreement is limited to subsidy 
programmes with a sufficiently close nexus to those initiated upon in the original investigation.480 
The United  States expresses concern as to the relevance of what it characterizes as dictum481, and 
further argues that the Appellate Body's statement does not apply to expedited reviews.482  
7.284.   Finally, the United States rejects Canada's argument that the USDOC's initiation into the 
new subsidy allegations violated Articles 11.2 and 11.3 of the SCM Agreement. With respect to on e 
new subsidy allegation (New Brunswick's provision of stumpage to Irving for less than adequate 
remuneration), the United States argues that Canada's claim is not properly before the Panel 
because it was not included in Canada's panel request .483 With respe ct to the other new subsidy 
allegations, the United States argues that the USDOC's decision to initiate in each instance was 
based on sufficient evidence and consistent with Article 11.484  
7.5.2.4   Evaluation by the Panel  
7.285.   Article 19.3 of the SCM Agreement provides , in relevant part, that : 
Any exporter whose exports are subject to a definitive countervailing duty but who 
was not actually investigated for reasons other than a refusal to cooperate, shall be 
entitled to an expedited review in order that the investigating  authorities promptly 
establish an individual countervailing duty rate for that exporter.  
7.286.   The main issues raised by the parties' claims and arguments relate to the purpose and 
scope of expedited reviews under Article 19.3 of the SCM Agreement. Article 19.3  of the 
SCM Agreement does not explicitly limit the scope of an expedited review to either the product 
under investigation or the subsidy programmes identified in the original petition, nor does the 
provision set any timeline for the review. However, the p rovision requires that the review that a 
non-investigated, cooperating exporter is entitled to be "expedited" and that the investigating 
authority establish an individual countervailing duty rate "promptly".  
7.287.   The ordinary meaning of the term "expedite" is to "perform quickly"485, while the meaning 
of "prompt" is " [q]uick to act" and "without delay".486 As pointed out by Canada, the French 
version of "expedited review" is "réexamen accéléré", which can be translated as "accelerated 
re-examination" or "accelerate d reconsideration". The French version of "promptly" is "moindres 
délais", which can be understood to mean "as soon" or "as quickly" as possible487, or "with as little 
delay as possible". The Spanish version provides that a non -investigated,  cooperating prod ucer 
                                                
478 United States' response to Panel question No. 69, paras. 159 -160. 
479 United States' response to Panel question No. 67, para. 156; second written submission, para. 123.  
480 Appellate Body Report, US – Carbon Steel (India) , para. 4.543.  
481 United State s' second written submission, para. 124; response to Panel question No. 73, paras. 164, 
165, 167, and 172.  
482 United States' response to Panel question No. 73, paras. 168 -172. 
483 United States' first written submission, para. 309.  
484 United States' first writ ten submission, paras. 309 -324. 
485 Definition of "expedite" at Shorter Oxford English Dictionary , 5th edn, A. Stevenson (ed.) 
(Oxford  University Press, 2003) Vol. 1, p. 893 , (Exhibit CAN -104).  
486 Definition of "prompt" at Shorter Oxford English Dictionary , 5th edn, A. Stevenson (ed.) 
(Oxford  University Press, 2003) Vol. 2, p. 2366 , (Exhibit CAN -105).  
487 Canada's first written submission, para. 340.  WT/DS505/R  
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  "tendrá derecho a que se efectúe rápidamente  un examen para que la autoridad investigadora fije 
con prontitud  un tipo de derecho compensatorio individual para él".488 
7.288.   On the basis of the ordinary meaning of the language of Article 19.3, the Panel sees no 
basis for the United States' position that the purpose of an expedi ted review is "to allow the 
manufacturers, producers, and exporters of the subject merchandise who were not selected as 
mandatory respondents to receive an individual CVD rate at an earl ier point in the administrative  
process (i.e. , prior to the completion of the first administrative review after the issuance of a 
countervailing duty order) ".489 
7.289.   Rather, on the basis of the language used in the last sentence of Article 19.3 of the 
SCM Agreem ent and the context provided by the first sentence of that provision, the purpose of 
the relevant part of Article 19.3 is, to the greatest extent possible, to put non -investigated, 
cooperating exporters in the same position they would have been in had they  been investigated in 
the original proceeding, and thus levy countervailing duties "in the appropriate amounts in each 
case". The focus of the last sentence of Article 19.3 is on such exporters being "entitled" to an 
individual countervailing duty rate, in  the same manner as investigat ed exporters ("aura droit", 
and "tendrá derecho" in the French and Spanish versions). Article 19.3 further states that this 
entitlement must be provided "promptly", through an "expedited" review. In this respect, the 
Panel not es Brazil's observation that, in the context of Article 19.3, the decision not to investigate 
a particular cooperating exporter was made by the investigating authority, independent of the 
exporter itself.490 The relevant part of Article 19.3 thus reflects, o n the one hand, th e possibility for 
an investigating authority not to investigate each cooperating exporter in the original investigation, 
and on the other hand, the entitlement for such a non -investigated, cooperating producer to 
nonetheless get an indivi dual countervailin g duty rate, in a prompt manner through an expedited 
review. A similar balance is provided by Article 6.10 of the Anti -Dumping Agreement.  
7.290.   We thus agree with Canada's position that, based on the text of Article 19.3 of the 
SCM Agreement, the purpose of an expedited review is "to look back at the original investigation 
and see what the countervailing duty rate would have been for an exporter had they been 
investigated".491 In other words, an expedited review should be aimed at putting, to the  greatest 
extent possible, a non -investigated, cooperating exporter into the situation it would have been in, 
had it been investigated in the original investigation, on the basis of the measures covered by that 
investigation.  Allowing the inclusion of any new subsidy allegations in the expedited review would 
frustrate the purpose of Article 19.3 as discussed above.  
7.291.   While the United States is correct to point out that the first sentence of Article 19.3 of the 
SCM Agreement refers to a countervailing duty imp osed in respect of any "product"492, the Panel 
does not consider this to imply that any and all new subsidy allegations relating to the product 
under investigation can be added to the scope of an expedited review. Rather, as explained above, 
the Panel consid ers that the purpose of an expedited review determines its scope: the purpose is 
to put non -investigated, cooperating exporters into the situation they would have been in, had 
they been investigated in the original investigation, and therefore the scope of  the review should 
be limited to the measures covered by that investigation.  
7.292.   In light of the above, the Panel finds that the USDOC's inclusion of new subsidy allegations 
in the context of the expedited review into Catalyst and Irving was not consistent wi th Article 19.3 
of the SCM Agreement. Since new subsidy allegations should not be included in an expedited 
review, Canada's other arguments on the initiation into the new subsidy allegations in an 
expedited review not being conform to Article 11  of the SCM  Agreement  are thereby rendered 
moot.  
                                                
488 Emphasis added.  
489 United States' response to Panel question No. 67, para. 156. (emphasis added)  
490 Brazil's th ird-party response to Panel question No. 6.  
491 Canada's opening statement at the first meeting of the Panel, para. 196.  
492 United States' response to Panel question No. 69, para. 160.  WT/DS505/R  
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  7.6  Claims concerning the "Other Forms of Assistance -AFA measure"  
7.6.1.1   Introduction  
7.293.   In addition to its above claim related to specific instances of AFA being applied in the 
SC Paper investigation, Canada challenges what it refe rs to as the "Other Forms of Assistance -AFA 
measure". According to Canada, this unwritten measure consists of the USDOC applying AFA to 
subsidy programmes "discovered" during the course of a countervailing duty investigation that 
were not reported in respo nse to its "other forms of assistance" question. Canada characterizes 
this unwritten measure as "ongoing conduct" or "rule or norm of prospective and general 
application". The United States disputes the mere  existence of any such measure.  
7.294.   With respect to t he "Other Forms of Assistance -AFA measure" , Canada has brought the 
following claims:  
a. Canada claims that the USDOC acts inconsistently with Articles 12.1, 12.7 , and 12.8 of 
the SCM Agreement, by applying AFA to information discovered at verification , with  no 
assessment of whether that  information is "necessary " to the investigation .493 
b. Canada also claims that the USDOC acts inconsistently with Articles 10, 11.1, 11.2, 11.3 , 
and 11.6 of the SCM Agreement, by initiating investigations into transactions, financial 
transfers of funds, and any assistance  whatsoever , without gathering sufficient evidence 
of financial contribution, benefit, and specificity.494 
7.6.1.2   Main arguments of the parties  
7.295.   Canada challenges the "Other Forms of Assistance -AFA measure" as an unwri tten measure 
that consists in the USDOC applying AFA to subsidy programmes "discovered" during the course of 
a CVD investigation that were not reported by respondent companies in response to the "other 
forms of assistance" question. Canada characterizes this unwritten measure as either 
"ongoing  conduct" or "rule or norm of prospective and general application".495 According to 
Canada, this measure is evidenced not only by a series of investigations since 2012, but through 
legislative changes and public stateme nts of policy. In its view, the USDOC has made clear that its 
current and future response to what it perceives as an "unreported potential subsidy" being 
discovered at verification is to rely on adverse inferences in making all findings on that potential 
subsidy.496 Canada provided determinations from seven USDOC investigations in its first written 
submission, each one of these determinations containing at least one application of the conduct.497 
At the first substantive meeting Canada provided two further dete rminations that also contained 
applications of this measure.498 Canada also introduced an addi tional determination containing the 
application  of this measure  at the second substantive meeting .499 
7.296.   Canada raises three sets of claims of inconsistency with respect  to the "Other Forms of 
Assistance -AFA measure": ( a) Article 12.7 of the SCM Agreement because the "Other Forms of 
                                                
493 Canada's panel request, p. 5.  
494 Canada's panel request, p. 5.  
495 Canada's first written submission, paras. 392 -393. 
496 Canada refers to USDOC's NAFTA Brief,  (Exhibit CAN -76), p. 149.  (Canada's first written submission, 
para. 393).  
497 Canada's first written submission, para. 411.  
498 Canada refers to USDOC, Issues and Decis ion Memorandum for the Final Determination in the 
Countervailing Duty Investigation of Truck and Bus Tires from the People's Republic of China; and Final 
Affirmative Determination of Critical Circumstances, in Part (19 January 2016)  (Truck and Bus Tires fr om 
China, Issues and Decision Memorandum (2016) ), (Exhibit CAN -163); and USDOC, Issues and Decision 
Memorandum for the Final Determination in the Countervailing Duty Investigation of Stainless Steel Sheet and 
Strip from the People's Republic of China (1 Fe bruary 2017)  (Stainless Steel Sheet and Strip from China, 
Issues and Decision Memorandum (2017) ), (Exhibit CAN -164). (Canada's second written submission, 
para. 167).  
499 Canada refers to USDOC, Issues and Decision Memorandum for the Final Affirmative Determination 
in the Countervailing Duty Investigation of Steel Concrete Reinforcing Bar from the Republic of Turkey (15 May 
2017) ( Exhibit CAN -211) (Canada 's opening statement at the second meeting of the Panel, paras. 26 and 30).   WT/DS505/R  
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  Assistance -AFA measure" eliminates the requirement for evidence under this provision500 and sets 
an exceedingly high standard of cooperation501; (b) Articles 10, 11.1, 11.2, 11.3, and 11.6 of the 
SCM Agreement because the USDOC failed to review the adequacy of the evidence regarding 
financial contribution, benefit , and specificity502; and ( c) Articles 12.1, 12.7,  and 12.8 of the 
SCM Agreement503 becaus e the USDOC failed to offer respondents the procedural safeguards in 
the SCM  Agreement, including opportunities to present evidence, prior to applying AFA to 
determine the elements and amount of a subsidy.504  
7.297.   Canada states that it has laid out two paths for  how to evidence the challenged measure. 
According to Canada, the Panel could see the conduct that is currently going on, and rely on 
statements made by the USDOC as evidence that it is likely to continue. Alternatively, the Panel 
could look at the evidenc e Canada has produced and determine that it is reflective of a deliberate 
policy that has general and prospective application.505 
7.298.   The United States contends that Canada has failed to identify the existence of any "Other 
Forms of Assistance -AFA measure" , as i t has established neither the existence of any 
"ongoing  conduct" that is likely to continue, nor the precise content of the alleged rule or norm or 
its general and prospective application.506 The United States posits that it is unclear whether 
Canada is chal lenging a particular question, the application of facts available, a combination of 
both, or the application of something entirely different.507  
7.299.   The United States arg ues that the "ongoing conduct" alleged by Canada cannot be subject 
to WTO dispute settlemen t because it appears to be composed of an indeterminate number of 
potential future measures, and measures that are not yet in existence at the time of panel 
establis hment cannot be within a panel's terms of reference under the DSU.508  
7.300.   In any event, the Unit ed States argues that the facts of the current dispute are 
markedly  different from the facts in US – Continued Zeroing  and therefore, even under the 
Appellate  Body's broad approach in that dispute, Canada 's claim fails.509 Canada has failed to 
establish that  any "ongoing conduct" exists or is likely to continue.510 Canada has also failed to 
identify the alleged future mea sures comprising the "ongoing conduct", and the conduct within 
such measures that is purportedly inconsistent with the SCM Agreement.511 The Uni ted States also 
submits that  Canada has failed to establish that the alleged measure is a rule or norm because it 
has not demonstrated its precise content and its prospective and general application. 
The United  States  maintains that Canada has presented li ttle more than a string of cases, or 
repeat action.512 For the United States, i n all nine of the determinations that Canada relies upon, 
the USDOC made unique findings and reached different results.513 
                                                
500 Canada's first written submission, para. 426.  
501 Canada's first written submission, para. 432.  
502 Canada's first written submission, para. 423.  
503 In its submission, Canada adds references to Articles 11.1, 11.2, 11.3 , and 11.6 of the 
SCM Agreement under this claim although there is no argumentation.  
504 Canada's first written submission, para. 435.  
505 Canada's opening statement at the first meeting of the Panel, para. 210.  
506 United States' first written submission, para. 325.  
507 United States' first written submission, para. 350; response to Panel question No. 77, para. 176.  
508 The United States refers to the Panel Reports, US – Upland Cotton , para. 7.158 (finding that a 
measure that had not yet been adopted could not form a part  of the Panel 's terms of reference);  and Indonesia 
– Autos , para. 14.3 (agreeing with the responding party that a measure adopted after the establishment of a 
panel was not within the panel 's terms of reference). It also refers to Appellate Body Report, EC – Chicken 
Cuts, para. 156 : "[t]he term 'specific measures at issue ' in Article 6.2 suggests that, as a general rule, the 
measures included in a panel 's terms of reference must be measures that are in existence at the time of the 
establishment of the panel ." (United States' first written submission, para. 327  and fn 445) . 
509 United States' first written submission, para. 336.  
510 United States' first written submission, para. 335.  
511 United States' first written submission, para. 339.  
512 United States' first written submission, para. 346; second written submission, para. 132.  
513 United States' second written submission, para. 132. See also  first written submission, 
paras.  341-362. WT/DS505/R  
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  7.6.1.3   Evaluation by the Panel  
7.6.1.3.1   Whether Canada has established the  existence of the "Other Forms of 
Assistance -AFA measure"  
7.301.   The main issue before the Panel is whether Canada has demonstrated the existence of the 
"Other Forms of Assistance -AFA measure", either as "ongoing conduct " or as a "rule or norm of 
general and pros pective application ". 
7.302.   Most relevantly, Articles 3.3514, 4.4515, and 6.2516 of the DSU refer to "measures" that can 
be challenged in WTO  dispute settlement. The Appellate Body has explained that, "[i]n principle, 
any act or omission attributable to a WTO Member c an be a measure of that Member for purposes 
of dispute settlement proceedings"517, and that "[t]he scope of measures that can be challenged in 
WTO dispute settlement is therefore broad" .518 Nonetheless, the Appellate Body has also sounded 
the following note of  warning: " a panel must not lightly assume the existence of a 'rule or norm' 
constituting a measure of general and prospective application, especially when it is not expressed 
in the form of a written document".519 Indeed, "[p]articular rigour is required on  the part of a 
panel to support a conclusion as to the existence of a 'rule or norm' that is not expressed in the 
form of a written document", and "[a] panel must carefully examine the concrete instrumentalities 
that evidence the existence of the purported  'rule or norm' in order to conclude that such 'rule or 
norm' can be challenged, as such."520 The Appellate Body has explained that its concerns are 
based on the following:  
When an "as such" challenge is brought against a "rule or norm" that is expressed in 
the form of a written document – such as a law or regulation – there would, in most 
cases, be no uncertainty as to the existence or content of the measure that has been 
challenged.  The situation is different, however, when a challenge is brought against a 
"rule or norm" that is not expressed in the form of a written document.  In such cases, 
the very existence of the challenged "rule or norm" may be uncertain.521  
7.303.   A complainant seeking to prove the existence of a measure, whether written or unwritten, 
will inv ariably be required to prove the attribution of that measure to a Member and its precise 
content . Depending on the specific  measure challenged  and how it is described or characterized by 
a complainant, however, o ther elements  may need to be proven .522  
7.304.   We wi ll first consider whether Canada has established the existence of the "Other Forms of 
Assistance -AFA measure" as unwritten "ongoing conduct". In US – Continued Zeroing , the 
Appellate Body considered the legal standard that must be met by a complainant when bringing a 
claim against an unwritten measure as "ongoing conduct". On that occasion, the measure 
                                                
514 "The prompt settlement of situations in which a Member co nsiders that any benefits accruing to it 
directly or indirectly under the covered agreements are being impaired by measures taken by another Member 
is essential to the effective functioning of the WTO and the maintenance of a proper balance between the rig hts 
and obligations of Members. " 
515 "All such requests for consultations shall be notified to the DSB and the relevant Councils and 
Committees by the Member which requests consultations. Any request for consultations shall be submitted in 
writing and shall give the reasons for the request, including identification of the measures at issue and an 
indication of the legal basis for the complaint."  
516 "The request for the establishment of a panel shall be made in writing.  It shall indicate whether 
consultations w ere held, identify the specific measures at issue and provide a brief summary of the legal basis 
of the complaint sufficient to present the problem clearly.  In case the applicant requests the establishment of a 
panel with other than standard terms of refer ence, the written request shall include the proposed text of 
special terms of reference. " 
517 Appellate Body Report, US – Corrosion -Resistant Steel Sunset Review , para. 81. See also Appellate 
Body Reports, US – Softwood Lumber IV (Article  21.5 – Canada) , para. 67; and US – Anti-Dumping 
Methodologies (China) , para.  5.122.  
518 Appellate Body Report, EC and certain Member States – Large Civil Aircraft , para. 794. See also 
Appellate Body Reports, Guatemala – Cement I , fn 47; Argentina – Import Measures , paras.  5.106 and 5.109 ; 
and US – Anti-Dumping Methodologies (China) , para.  5.122 . 
519 Appellate Body Report, US – Zeroing (EC) , para. 196.  
520 Appellate Body Report, US – Zeroing (EC) , para. 198.  (emphasis original)  
521 Appellate Body Report, US – Zeroing (EC) , para. 1 97. (emphasis original)  
522 Appellate Body Report, Argentina – Import Measures , para.  5.110.  WT/DS505/R  
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  consisted of the continued use of the zeroing methodology in success ive proceedings by which 
duties in each of 18  cases were maintained.523 The Appellate Body found that establishing the 
existence of the measure at issue required evidence of the use of the zeroing methodology, as 
ongoing conduct, with respect to duties resul ting from each of the 18  anti-dumping duty orders at 
issue.524 In sum, a complainant that is challenging a measure characterized as " ongoing conduct " 
would thus need to provide evidence that the measure is attributable to a Member, of its precise 
content, of  its repeated application, and of the likelihood that such conduct  will continue.525 
7.305.   In light of the above, we will thus consider whether Canada has established the existence 
of the "Other Forms of Assistance -AFA measure" as unwritten "ongoing conduct", that  is whether 
Canada has established : (a) that the measure in question is attributable to the United States ; 
(b) its precise content ; (c) its repeated application ; and ( d) the likelihood that such conduct will 
continue.526 While the United States contests the mere existence of the measure challenged by 
Canada, the attributability of the USDOC's conduct – that is the conduct of a US government 
authority – to the United States does not seem to be at question here.527 We will address the third 
and fourth factors – namely repeated application and likelihood of continuation – together, since 
Canada relies to a great extent on the same evidence.  
7.306.   Before turning to the analysis below, we acknowledge the fundamental position expressed 
by the United States in these proceedi ngs that "ongoing conduct" cannot be subject to 
WTO dispute settlement because it may be composed of an indeterminate number of potential 
future measures, as well as the United States' concerns about the rationale articulated by the 
Appellate Body in US – Continued Zeroing .528 Despite the arguments put forth by the United States 
in these proceedings, and considering the need to ensure "security and predictability" in the 
dispute settlement system as contemp lated in Article 3.2 of the DSU, we do not see any "c ogent 
reasons" to depart from the Appellate Body's approach to "ongoing conduct" expressed in US – 
Continued Zeroing .529  
7.6.1.3.1.1   The precise content of the "Other Forms of Assistance -AFA measure"  
7.307.   We first turn to consider whether Canada has demonstrated the precise  content of the 
"Other Forms of Assistance -AFA measure", the existence of which is contested by t he 
United  States.  
7.308.   According to Canada, the "Other Forms of Assistance -AFA measure" consists in the USDOC 
asking the "other forms of assistance" question and, where the USDOC "discovers" information 
that it deems should have been provided in response to the above question, applying AFA with 
respect to the respondent to determine that the "discovered" information amounts to 
countervailable subsidies.530 
7.309.   As to the f irst step of this alleged measure – that is the USDOC asking the "other forms of 
assistance" question – Canada submits in the table below the various formulations of the "other 
forms of assistance" question in investigations starting in 2012531: 
Table 1: Iterations  of the "other forms of assistance" question  
Investigation  USDOC's "other forms of assistance" question to respondent company  
Solar Cells from 
China 2012532 Initial questionnaire to Trina Solar : "Did [China] (or entities owned d irectly, in whole or in 
part, by [China] or any provincial or local government) provide, directly or indirectly, any 
                                                
523 Appellate Body Report, US – Continued Zeroing , para. 181.  
524 Appellate Body Report, US – Continued Zeroing , para. 181. See also Appellate Body Report, 
Argentina – Impor t Measures , para.  5.105.  
525 Appellate Body Report, US – Continued Zeroing , para. 191. See also  Appellate Body Report, 
Argentina – Import Measures , para.  5.108.  
526 Appellate Body Report, US – Continued Zeroing , para. 191. See also  Appellate Body Report, 
Argen tina – Import Measures , para.  5.108.  
527 Canada's first written submission, para. 407; second written submission, para. 160.  
528 United States' first written submission, paras. 327 -336. 
529 Appellate Body Report, US – Stainless Steel (Mexico) , para. 160.  
530 Canad a's second written submission, para. 161; first written submission, para. 392.  
531 The table is modelled  on table 1 provided by Canada in its first written submission, para. 410.  WT/DS505/R  
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  Investigation  USDOC's "other forms of assistance" question to respondent company  
other forms of assistance to your company? If so, please describe such assistance in 
detail, including the amounts, date of  receipt, purpos e and terms, and answer all 
questions in the appropriate appendices".533  
Shrimp from 
China 2013534 Initial Questionnaire to Guolian Companies : "Did [China] (or entities owned directly, in 
whole or in part, by [China] or any municipal, provincial or local gov ernment) provide, 
directly or indirectly, any other forms of assistance to your company (including 
cross-owned companies)? If so, please describe such assistance in detail, including the 
amounts, date of receipt, purp ose and terms, a nd answer all questions in Standard 
Questions Appendix and other relevant appendices as appropriate".535 
Solar Cells from 
China 2014536 Initial Questionnaire to Trina Solar : "Did [China] (or entities owned directly, in whole or in 
part, by [China] or any prov incial or local governm ent) provide, directly or indirectly, any 
other forms of assistance to your company between January 1, 2003, and the end of the 
POI? If so, please describe such assistance in detail, including the amounts, date of 
receipt, purpose an d terms, and answer all  questions in the appropriate appendices".537 
Solar Cells from 
China 2015538 Initial Questionnaire to Lightway : "Did your government (or entities owned directly, in 
whole or in part, by your government or any provincial or local government) provide, 
directly or indirectly, any other forms of assistance to your company between January 1, 
2003 and the end of the POR? I f so, please describe such assistance in detail, including 
the amounts, date of receipt, purpose, and terms, and answer all questions in the 
appro priate appendices".539 
Supercalendered 
Paper from 
Canada 2015540 Initial Questionnaire to Resolute : "[d]oes [Cana da] or entities directly owned, in whole or 
in part, by [Canada] or any provincial or local government provide, directly or indirectly, 
provide  [sic] any other forms of assistance to your company? If so, please describe such 
assistance in detail, including  the amounts, date of receipt, purpose and terms, and 
answer all questions in the appropriate appendices".541 
PET Resin from 
China 2016542 Initial Qu estionnaire :  
"Did [China] (or entities owned directly, in whole or in part, by [China] or any provincial 
or local government) provide, directly or indirectly, any other forms of assistance to your 
company during the AUL through the end of the POI? If so, please describ e such 
assistance in detail, including the amounts, date of receipt, purpose and terms, and 
answer all questions in the appropriate appendices."543 
                                                                                                                                                  
532 Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules , from the 
People's  Republic of China: Final Affirmative Countervailing Duty Determination and Final Affirmative Critical 
Circumstances Determination , United States Federal Register, Vol. 77, No. 201 (17 October 2012) , 
(Exhibit  CAN-115). 
533 USDOC, Issues and Decision Memorandum for the Final Determination in the Countervailing Duty 
Investigation of  Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, from the 
People's Republic of China (9 October 2012 ) (Solar Cells from China, Issues and Decision Memorandum 
(2012) ), (Exhibit CAN -116), p. 9.  
534 Certain Frozen Warmwater Shrimp from the People's Republic of China: Final Affirmative 
Countervailing Duty Determination, United States Federal Register, Vol. 78, No. 160 (19 August 2013) , 
(Exhibit CAN-117). 
535 USDOC, Issues and Decision Memorandum for the Final Determination in the Countervailing Duty 
Investigation of Certain Frozen Warmwater Shrimp from the People's Republic of China (12 August 2013)  
(Shrimp from China, Issues and Decision Mem orandum (2013) ), (Exhibit CAN -118), pp. 75 -76. 
536 Countervailing Duty Investigation of Certain Crystalline Silicon Photovoltaic Products from the 
People's Republic of China: Final Affirmative Countervailing Duty Determination, United States Federal 
Register , Vol. 79, No. 246 (23 December 2014) , (Exhibit CAN -120). 
537 USDOC, Issues and Decision Memorandum for the Final Determination in the Countervailing Duty 
Investigation of Certain Crystalline Silicon Photovoltaic Products from the People's Republic of China (15 
December 2014)  (Solar Cells from China, Issues and Decision Memorandum (2014) ), (Exhibit CAN -121), p. 17.  
538 Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, from the People's 
Republic of China: Final Results of Antidumping Duty Administrative Review and Final Determination of No 
Shipments; 2012 -2013, United States Federal Register, Vol. 80, No. 134 (14 July 2015) , (Exhibit CAN -122). 
539 Issues and Decision Memorandum for the Final Results of the Countervailing Duty Administrative 
Review: Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, from China (7 July 
2015) (Solar Cells from China, Issues and Decision Memorandum on the Final Anti -Dumping Administrative 
Review (2015) ), (Exhibit USA-8), p. 19.  
540 Supercalendered Paper from Canada: Final Affirmative Countervailing Duty Determination, United 
States Federal Re gister, Vol. 80, No. 202 (20 October 2015) , (Exhibit CAN -36). 
541 Issues and Decision Memorandum , (Exhibit CAN -37), p. 12.  
542 Countervailing Duty Investigation of Certain Polyethylene Terephthalate Resin from the 
People's  Republic of China: Final Affirmative Determination, United States Federal Register, Vol. 81 No. 49 
(14 March 2016) , (Exhibit CAN -124). 
543 USDOC, Investigation of Certain Polyethylene Terephthalate Resin from the People's Republic of 
China: Countervailing Duty Questionnaire (28 April 2015) , (Exhibit CAN -126), p. 19. WT/DS505/R  
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  Investigation  USDOC's "other forms of assistance" question to respondent company  
Stainless Pressure 
Pipe from India544 First Supplemental Questionnaire to Steamline : "Did [India]  (or entities owned directly, in 
whole or in part, by [ India] or any provincial or local government, including the state of 
Gujarat) provide, directly or indirectly, any other forms of assistance to your company 
during the POI or during the 14 years prior to the POI? If so, please describe such 
assistance in detail, including the amounts, date of receipt, purpose and terms, and 
answer all questions in the appropriate appendices (from the initial questionnaire).545  
7.310.   Canada argues that the wording of this question has remained substantially the same for 
over a decade until the present, and submits that it and numerous other governments and 
exporters have recently been asked the "all other forms of assistance" question.546 
7.311.   Canada also points out that, when ask ed by the Panel whether there are "any CVD 
investigations conducted by the US authorities since 2012 in which the 'other forms of assistance' 
question has not been asked", the United States failed to provide any example of such an 
occurrence .547 Canada point s out the USDOC's statement in the Issues and Decision Memorandum 
in Supercalendered Paper  that "[a]s a matter of standard procedure, [ the USDOC's ] initial CVD 
questionnaire asked Resolute to report 'other subsidies'".548 In Canada's view, this demonstrates 
that it is the USDOC's standard procedure to include the "other forms of assistance" question in its 
questionnaires.549 
7.312.   As to the second step of this alleged measure – that is the USDOC's application of AFA 
where it finds information during verification that  it deems should have been submitted in 
response to the "other forms of assistance" question – Canada argues that the USDOC has relied 
on this question to justify the use of AFA since 2012.550 As such, the measure that Canada is 
challenging is the USDOC's po st-2012 conduct.  
7.313.   Canada provides extracts from a number of USDOC determinations allegedly showing this 
repeated conduct, including in particular reliance on the "other forms of assistance" question.551 
Canada argues that a review of these determinations evid ences the precise content of this 
measure.552  
Table 2: Application of facts available by the USDOC  
Investigation     Application of facts available by the USDOC  
Solar Cells from 
China 2012  During verification, the USDOC  examined the respondent company, Trina's, "special 
payables" account. The USDOC applied AFA to countervail one of the entries in the 
account, labelled "bonus for employees from government", as it held Trina was unable to 
tie this entry to a grant reported in its questionnaire response, or to demonstrate that it 
was not a countervailable subsidy.553 
"[The USDOC ] determines that the use of facts available … is warranted in determining 
the countervailability of this apparent subsidy . Trina was unable to establish its claim that 
it had identified all non -recurring subsidies provided by [China]. In addition, [ the USDOC ] 
determines an adverse inference is warranted … [ the USDOC ] discovered numerous 
unreported subsidies during the course of this investigation . As such, in addition to 
requesting information concerning the discovered subsidies, we asked Trina to confirm 
that all additional non -recurring subsidies had been reported. Trina was unable to 
                                                
544 Countervailing Duty Investigation of Welded Stainless Pressure Pipe From India: Final Affirmative 
Determination, United States Federal Register, Vol. 81, No. 189 (29 September 2016) , (Exhibit CAN -129). 
545 USDOC, Countervailing Duty Investigation on Welded Stainless Pressure Pipe from India: First 
Supplemental Questionnaire for Steamline Industries Limited, (2 February 2016) , (Exhibit CAN -127), p. 7 . 
546 Canada refers to USDOC, Countervailing Duty Investigation of Certain Softwood Lumbe r Products 
from Canada: Countervailing Duty Questionnaire (19 January 2017) , (Exhibit CAN -207). (Canada's second 
written submission, para.  164). 
547 United States' res ponse to Panel question No. 77, paras. 176 -178. 
548 Issues and Decision Memorandum , (Exhibit CAN-37), p. 12.  
549 Canada's second written submission, para. 163.  
550 Canada's second written submission, para. 166.  
551 Canada's first written submission, para. 411.  
552 Canada's second written submission, para. 166.  
553 Solar Cells from China, Issues and Decision  Memorandum (2012) , (Exhibit CAN -116), pp. 9 -10. WT/DS505/R  
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  Investigation     Application of facts available by the USDOC  
establish at verification its reported statement that it had done so. Thus, it failed to 
cooperate to the best of its ability. As AFA, we determine that the amount entered under 
'bonus for employees from government' in Trina's special payables account is a 
countervailable grant".554  
Shrimp  from 
China 2013  The USDOC  countervailed, as AFA, three alleged grants that were discovered at 
verification of Guolian company.   
"Despite [ the USDOC 's] questions concerning 'Other Subsidy Programs' in the Initial QNR, 
[China] and the Guolian Companies did not report the existence of these three grants in 
their initial and supplemental questionnaires".555 
"We find the Guolian Companies failed to provide information regarding the three grant 
programs at issue by the deadlines established [.] … We further determine that by not 
divulging the receipt of these thre e additional grants prior to the commencement of 
verification or during the 'Minor Corrections' phase of verification, the Guolian Companies 
failed to cooperate by not acting to the best of their ability and, thus … we are applying  
AFA. The Guolian Companies' failure to divulge the receipt of these three grant programs 
precluded [ the USDOC ] from conducting an adequate examination (e.g., [the USDOC ] 
was unable to issue a supplemental questionnaire to [China] concerning the extent to 
which these programs cons titute a financial contribution or are specific …). Thus, as AFA, 
we are determining that each of the three grants meet the financial contribution and 
specificity criteria under these two provisions of the statute. Furt her, as AFA,  we are 
determining that each of the three grant programs confers a benefit  …".556 
Solar Cells from 
China 2014  The USDOC  countervailed, as AFA: ( a) twenty -eight unreported "grant programs;" and 
(b) an unreported tax deduction for "wages paid for placement o f disabled persons" . The 
"grants" and the tax deduction were "discovered" by the USDOC  at Trina's verification.557  
"[The USDOC ] determines that the use of facts available … is warranted in determining 
the countervailability of these apparent subsidies that were discovered during verification . 
And because Trina Solar failed to respond to the best of its ability regarding our questions 
on other, non -reported subsidies provided by [China], we determine that an adverse 
inference is warranted with res pect to thes e subsidies [.] … With respect to the unreported 
tax deduction for disabled persons, we determine, as AFA, that this tax deduction is 
countervailable. As a result, we are finding that, as AFA, these discovered subsidies 
provide a financial contribution and are specific … [and a] benefit is conferred ".558 
"[The USDOC 's] verifiers explained that while they would take the names, dates, and 
amounts received for these unreported grants as verification exhibits, we would consider 
any additional information on these grants to be new factual information, and thus 
declined to  accept the additional information that was offered by counsel for Trina Solar 
with respect to these grants."559 
"With respect to Trina Solar's argument that [ the USDOC ] should use the information 
taken at verification, [ the USDOC ] disagrees . … [The USDOC ] is applying an adverse 
inference in determining the benefit of these unreported programs, not neutral facts 
available . By its own actions, Trina Solar precluded [ the USDOC ] from verifying this 
information when it withheld it  until after the deadline for the submission of new factual 
information had passed."560  
                                                
554 Solar Cells from China, Issues and Decision Memorandum (2012) , (Exhibit CAN -116), p. 10. 
(emphasis added)  
555 Shrimp from China, Issues and Decision Memorandum (2013) , (Exhibit CAN -118), p. 77.  
556 Shrimp from  China, Issues and Decision Memorandum (2013) , (Exhibit CAN -118), p. 15. 
(emphasis  added)  
557 Solar Cells from China, Issues and Decision Memorandum (2014) , (Exhibit CAN -121), pp. 16 -17. 
558 Solar Cells from China, Issues and Decision Memorandum (2014) , (Exhib it CAN -121), p. 17. 
(emphasis added)  
559 Solar Cells from China, Issues and Decision Memorandum (2014) , (Exhibit CAN -121), p. 86.  
560 Solar Cells from China, Issues and Decision Memorandum (2014) , (Exhibit CAN -121), p. 87. 
(emphasis added)  WT/DS505/R  
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  Investigation     Application of facts available by the USDOC  
Solar Cells from 
China 2015  During the first administrative review, the USDOC countervailed unreported grants that 
were discovered during verification of the respondent  Lightway.  
"[W]e determine that the use of facts available … is warranted in determining the 
countervailability of these apparent subsidies that were discovered during verification . 
Lightway and [China] withheld information that was requested of them by no t providing 
information regarding other subsidies in response to the [other assistance question] 
above. Further, due to this withholding, we could not verify Lightway's usage of other 
subsidies. Because Lightway and [China] failed to respond to the best of  their ability 
regarding our questions on other, non -reported subsidies provided by [China], we 
determine that an adverse inference is warranted with respect to these subsidies[.] … As 
a result, we are finding that, as AFA, these discovered subsidies provi de a financial 
contribution and are specific[.] … As a result of Lightway's and [China's] non -cooperation, 
we can infer that Lightway benefitted from the programs at issue ".561 
"Regarding Lightway's and Goal Zero's arguments that we should use the informatio n 
taken at verification to calculate a subsidy rate, we disagree. First … we are relying on an 
adverse inference in determining the benefit of these unreported programs, and not 
neutral facts available. By their own actions, Lightway and [China] precluded [the 
USDOC ] from verifying this information when they withheld such information until after 
the deadline for the submission of new factual information has passed."562  
Supercalendered 
Paper from 
Canada 2015  The USDOC  countervailed, on the basis of AFA, information discovered during verifications 
of respondent -company Resolute and Nova Scotia.563  
"In its initial questionnaire response, Resolute responded to [the 'other assistance'] 
request by stating that it had 'examin ed its record diligently and is not aware  of any other 
programs … that provided, directly or indirectly, any other forms of assistance to 
Resolute's production and export of SC paper. ' However, the CVD questionnaire is clear 
that respondents are instructed to report 'any other forms of assistance to [the] 
company ,' not only assistance that the respondent considers to have been provided to 
subject merchandise. Therefore, given Resolute's questionnaire response, and in light of 
the unreported information discover ed at verification, [ the USDOC ] determines that the 
use of facts available … is warranted in determining the countervailability of these 
apparent subsidies that were discovered duri ng verification. Moreover, because Resolute 
failed to respond to the best of its ability regarding our questions on other, non -reported 
subsidies provided by [Canada], including assistance discovered within Resolute's 
accounting system and apparent assista nce discovered during verification of the 
[Government of Nova Scotia ], we determine that an adverse inference is  warranted with 
respect to these subsidies [.] … As a result, we are finding that, as AFA, these discovered 
forms of assistance provide a financial contribution and are specific  … [and a] benefit is 
conferred ".564 
"We disagree with Resolute as to why we did n ot take information regarding the amounts 
of the funds in these accounts. By its own actions, Resolute precluded [ the USDOC ] from 
fully investigating and verifying this information when it not only withheld the information 
until after the deadline for the submission of new factual information had passed, but 
never provided this information at all, leaving [ the USDOC ] to discov er it during the 
verification process. The purpose of verification is 'to verify the accuracy of information 
previously submitted to the record by the respondent,' not to collect new information that 
had been previously requested but not reported . … Additi onally, the record evidence does 
not demonstrate that the information collected at the verification constitutes the entirety 
of the accounting information regarding unreported government grants . … Instead, we 
must rely on the adverse inference that Resolut e chose not to timely report this 
information and subject it to verification because doing so would have resulted in a less 
favorable result than allowing [ the USDOC ] to discover this information at verification."565 
PET Resin from 
China 2016  Two companies,  Xingyu and Dragon Group, presented previously unreported grants as 
minor corrections on the first day of verification.  The USDOC  rejected four of the six 
grants presented by Xingyu as minor corrections, and countervailed the grants as AFA. 
Similarly, the USDOC  rejected one of the three grants presented by Dragon Group as 
                                                
561 Solar Cells from China, Issues and Decision Memorandum on the Final Anti -Dumping Administrative 
Review (2015) , (Exhibit USA-8), p. 20. (emphasis added)  
562 Solar Cells from China, Issues and Decision Memorandum on the Final Anti -Dumping Administrative 
Review (2015) , (Exhibit  USA-8), p. 57.  
563 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 12 -13 and 29 -30. 
564 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 12 -13. (emphasis  added ; fn omitted ) 
565 Issues and Decision Memorandum , (Exhibit CAN -37), pp. 153 -154. WT/DS505/R  
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  Investigation     Application of facts available by the USDOC  
minor corrections, and countervailed it as AFA. In total, the USDOC  countervailed five 
grants because "whether a program was used or not by a company is not 'minor'" .566  
"[The USDOC 's] init ial questionnaire asked respondents to report 'other subsidies.' The 
questionnaire is clear in instructing respondents to report 'any  other forms of assistance 
to [the] company.' Therefore, we find that necessary information is not available on the 
record,  and [the companies] withheld information requested by [ the USDOC ]. … [W]e 
determine that the use of AFA is warranted in calculating [the companies'] benefits from 
these programs. Moreover, because [the companies ] failed to the best of their ability to 
answer our questions on 'other subsidies,' … we find that [the companies] failed to act to 
the best of their abilities in providing requested, necessary information that was in their 
possession, and that the applicat ion of AFA is warranted … in determining benefit ."567 
"[W]e find that by not divulging the receipt of this unreported assistance prior to 
verification in their initial questionna ire response and subsequent 'other subsidies' 
response, [the companies] preclude d [the USDOC ] from an adequate examination of the 
grants ( e.g., [the USDOC ] was unable to issue a supplemental questionnaire to [China] 
concerning the extent to which these programs constitute a financial contribution or are 
specific …)."568 
"Consistent with Supercalendered Paper Canada and Shrimp from PRC , as AFA, we find 
each of the unreported grants meet the financial contribution and specif icity criteria under 
these two provisions of the statute. Further, as AFA, we find that each of the t hree grant 
programs confers a benefit  …".569 
Stainless 
Pressure Pipe 
from India 2016  At verification, the USDOC  discovered that Steamline, the respondent company, received 
a rebate for electricity duty paid, which had not been previously reported. The USDOC  
applied AFA to find a countervailable subsidy.570 While the USDOC  considered new 
information discovered at verification in assessing benefit, in its Final Calculation Memo it 
notes that this wa s an inadvertent error, inconsistent with its practice of refusi ng to 
consider new information at verification.571 
"As discussed below, we find the application of partial adverse facts available ( 'AFA') is 
warranted with respect to Steamline's and [India's  (sic)] responses for their failure to 
provide information related  to the electricity duty exemption provided by the 
[state-owned enterprise ]."572 
"As AFA for the electricity duty rebate discovered at verification , [the USDOC ] is finding 
that the program is sp ecific … and provides a financial contribution  … as revenue 
forgone."573 
"Although this program was not alleged, in our first supplemental questionnaire, we 
requested that both [ India] and Steamline report 'any other forms of assistance' provided 
'directly or indirectly ' by [India] or State Government of Gujarat ( 'SGOG ') or state -owned 
enterprises.  Neither Steamline nor [ India] reported any additional assistance . … [I]f we 
find evidence of a possible subsidy i n the course of a proceeding, we will pursue it by 
gathering information to understand the nature of the program.  … The information 
examined by [ the USDOC ] at verification showed the duty paid, as well as that Steamline 
received a certificate of exemption in December 2014, and that it received a rebate of the 
electricity duty paid, which company officials booked into  Steamline's accounts during the  
POI. There is no response on the record from [ India] regarding eligibility criteria. The 
Bombay Electricity Duty Act, 1958, states that an application is required and that the 
                                                
566 USDOC, C ountervailing Duty Investigation of Certain Polyethylene Terephthalate Resin from the 
People's Republic of China: Issues and Decision Memorandum for the Final Determination (4 March 2016) 
(PET Resin from China,  Issues and Decision Memorandum (2016) ), (Exhibit CAN -125), pp. 18 -19. 
567 PET Resin from China,  Issues and Decision Memorandum (2016) , (Exhibit CAN -125), p. 19. 
(emphasis added ; fns omitted ) 
568 PET Resin from China,  Issues and Decision Memorandum (2016) , (Exhibit CAN -125), pp. 52 -53. 
569 PET Resin from China,  Issues and Decision Memorandum (2016) , (Exhibit CAN -125), p. 53. 
(emphasis added)  
570 USDOC, Issues and Decision Memorandum for the Final Affirmative Determination in the 
Countervailing Duty Investigation of Welded Stainless Pressure Pipe from India ( 22 September 2016)  
(Stainless Pressure Pipe from India, Issues and Decision Memorandum (2016) ), (Exhibit CAN -152), p. 28. 
571 USDOC, Countervailing Duty Investigation of Welded Stainless Pressure Pipe from India: Final 
Calculation Memorandum for Steamline In dustries Limited (22 September 2016)  (Stainless Pressure Pipe from 
India, Final Calculations Memorandum (2016) ), (Exhibit CAN -148), fn 3. 
572 Stainless Pressure Pipe from India, Issues and Decision Memorandum (2016), (Exhibit CAN -152), p. 6.  
573 Stainless Pressure Pipe from India, Issues and Decision Memorandum (2016) , (Exhibit CAN -152), 
p. 8. (emphasis  added)  WT/DS505/R  
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  Investigation     Application of facts available by the USDOC  
government may prescribe 'terms and conditions ' to be eligible for this program, none of 
which has been explained or provided by [India]. Moreover, [India] did not identify any 
record evidence in its case brief in support of its argument that the program is 
'automatically available to all '. Additionall y, there is no evidence of an application on the 
record from Steamline, and no explanation of the procedure for how Steamline obtained 
the exemption. Thus, we find the program specific … based upon an adverse inference 
pursuant to sections 776(a) and (b) o f the Act.  Further, based on an adverse 
inference  … we find that the rebate of electricity duties to Steamline from the 
[state-owned enterprise ] constitutes a financial contribution … and that the rebated duty 
confers a benefit …".574 
"As discussed in the Issues and Decision Memorandum … we have included the amount 
for this program which was recorded in Steamline's accounting system during the period 
of investigation ."575  
"Through an inadvertent error, and inconsistent with [ the USDOC 's] practice of not 
collecting new information at verification, [ the USDOC ] obtained information about the 
amount rebated to Steamline under the program. Thus, [ the USDOC ] is in th e specific 
position of having a verified benefit amount on the record and, acco rdingly, is using that 
amount in its calculations."576  
7.314.   Canada argues that in each post -2012 investigation or review listed above, the USDOC 
"discovered" information at verification that it believed should have been disclosed in response to 
the "other form of assistance" question, and then refused to accept add itional information from the 
respondents in question when such information was offered. Instead, the USDOC relied on AFA to 
determine all of the necessary components of a subsidy. In Stainless Pressure Pipe from India , 
Canada points out that the USDOC was forced to depart from its own practice because it had 
accidentally collected information at verification.  
7.315.   The United States argues that Canada has failed to provide sufficient evidence to clearly 
establish the precise content of the alleged measure. Instea d, Canada has merely identified a 
series of actions that could theoretically occur in any countervailing duty investigation. The 
wording of the questions and excerpts from determinations listed by Canada in the above two 
tables vary. The United States subm its that Canada's use of a series of varying, vague , and 
imprecise terms to identify the so -called "Other Forms of Assistance -AFA measure" is insufficient 
to meet the precise content requirement previously outlined by the Appellate Body.577 The United 
States  maintains that in all the determinations Canada relies upon, the USDOC made unique 
findings and reached different results, reflecting the fact -specific nature of each of the 
USDOC's  determinations.578 
7.316.   Upon careful examination of the arguments of the parties  and evidence before us, the 
Panel is of the view that Canada has provided sufficient evidence to establish the "precise content" 
of the "Other Forms of Assistance -AFA measure". The variations pointed out by the United States 
in the wording of the "other f orms of assistance" question, as well as the relevant excerpts of 
USDOC determinations, do not in our view detract from the fact that substance of the questions 
and the USDOC's conduct is the same. Variations in the wording of the questions appear to mainl y 
be due to the circumstances of any given investigation (interested parties, dates etc.) while the 
object of the question remains in essence the same. Similarly, the substance of the 
USDOC's  reactions remains the same: the USDOC applies AFA with respect t o the concerned 
respondent when it discovers, upon verification, information that it deems should have been 
reported in response to the "other forms of assistance" question to find countervailable subsidies. 
We thus consider that Canada has established the  precise content of the "Other Forms of 
Assistance -AFA measure", which consists in the USDOC asking the "other forms of assistance" 
question, and where the USDOC "discovers" information that it deems should have been provided 
                                                
574 Stainless Pressure Pipe from India, Issues and Decision Memorandum (2016) , (Exhibit CAN -152), 
pp. 28-29. (fns omitted)  
575 Stainless Pressure Pipe fr om India, Final Calculations Memorandum (2016) , (Exhibit CAN -148), p. 2 . 
576 Stainless Pressure Pipe from India, Final Calculations Memorandum (2016) , (Exhibit CAN -148), fn 3. 
577 United States' first written submission, paras. 349 -351. 
578 United States' second written submission, para. 132.  WT/DS505/R  
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  in response to that question, applying AFA to determine that the "discovered" information amounts 
to countervailable subsidies.579  
7.317.   We note that, as pointed out by Canada580, the USDOC's description of this measure at the 
NAFTA Chapter 19 proceeding appears to be in line with Canada's desc ription of the precise 
content of the challenged measure:  
[The USDOC's]  finding that the complainants' failure to report these subsidies earlier 
in the proceeding warranted the use of adverse inferences was reasonable … as was 
[the USDOC's]  resulting adver se inference that each discovered subsidy provided a 
financial contribution, conferred a benefit, and was specific  – the elements of a 
countervailable subsidy [.]581  
… 
It is true, as [the USDOC]  acknowledged, that [the USDOC's]  practice has "varied" 
over time.  … However, [the USDOC]  determined, in 2012, that the proper course of 
action when an unreported  potential subsidy is discovered at verification is to rely on 
adverse inferences in making  findings on that potential subsidy.582 
7.6.1.3.1.2   The repeated application of the "Other Forms of Assistance -AFA measure" 
and the likelihood of its continuation  
7.318.   We next turn to consider whether Canada has established the repeated application of the 
challenged "Other Forms of Assistance -AFA measure", as well as whether Canada has established 
that the challenged conduct is likely to continue. As Canada's arguments in this respect rely to a 
great extent on the same evidence, we will address these factors together.  
7.319.   Canada argues that the application of the " Other Forms of Assistance -AFA measure" by the 
USDOC is evidenced by a number of cases since 2012, as well as through legislative changes and 
public statements of policy. Canada argues that the USDOC has made clear that its current and 
future response to wh at it perceives as an "unreported potential subsidy" being discovered at 
verification is to rely on AFA in making all findings on that potential subsidy.583  
7.320.   Canada submits the following statements by the USDOC as evidence of the repeated 
application of the measure, as well as the likelihood of its continuation584:  
                                                
579 In this respect, we note that the panel in US – Anti-Dumping Methodologies (China)  considered the 
description by China of a measure as follows: "[W]henever [the] USDOC considers that an NME -wide entit y has 
failed to cooperate to the best of its ability, it systematically makes an adverse inference and selects, to 
determine the rate for the NME -wide entity, facts that are adverse  to the interests of that fictional entity and 
each of the producers/exporters included within it ". (Panel Report, US – Anti-Dumping Methodologies (China) , 
para. 7.422 (quoting  China's opening statement at the second  meeting  of the panel , para.  63 (emphasi s 
original) ). The panel found that the 73 anti -dumping determinations on the record demonstrated the precise 
content of the so -called "AFA Norm " as described by China. According to the panel, these determinations show 
that "whenever the USDOC made a findin g that an NME -wide entity failed to cooperate to the best of its ability, 
it adopted adverse inferences and, in determining the duty rate for the NME -wide entity, selected facts from 
the record that were adverse to the interests of such entity, and the exp orters included within it."  
(Panel  Report, US – Anti-Dumping Methodologies (China) , para. 7.454 ). 
580 Canada's first written submission, para. 415.  
581 USDOC's NAFTA Brief , (Exhibit CAN -76), pp. 147 -148. 
582 USDOC's NAFTA Brief , (Exhibit CAN -76), p. 149.  
583 Canad a refers to USDOC's NAFTA Brief , (Exhibit CAN -76), p. 149. (Canada's first written submission, 
para. 393).  
584 We note that Canada also argues that this table demonstrates that the "Other Forms of 
Assistance -AFA measure" is of prospective and general applica tion, as part of the test of demonstrating that a 
measure is a rule or norm  of prospective and general application.  (Canada's first written submission, 
para. 412).  WT/DS505/R  
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  Table 3: USDOC's statements regarding AFA  
Investigation    USDOC's statements of practice regarding the "Other Forms of Assistance -AFA 
measure"  
Shrimp from 
China 2013  "We acknowledge that [ the USDOC 's] practice regarding grant programs discovered at 
verification has varied in past cases. However, we find that the facts of this particular 
case merit the application of AFA. For example, in Washers from Korea , the respondent 
reported a previously unreported grant at verification. However, in doing so, the 
respondent demonstrated that the grant in question was not tied to subject merchandise, 
and thus was not relev ant to the investigation at hand. Thus, [ the USDOC ] concluded tha t 
the grant in question was not tied to subject merchandise and was not countervailable. In 
the instant investigation, the Guolian Companies provided no demonstration that the 
apparent subsid ies did not benefit the subject merchandise that would justify th eir failure 
to report."585 
Solar Cells from 
China 2014  "We acknowledge that [ the USDOC 's] practice regarding assistance discovered during 
verification has varied in past cases. However, we find that the facts of this particular 
case merit the application of AFA. For example, in Washers from Korea , the respondent 
demonstrated that the grant in question was not tied to subject merchandise, and thus 
was not relevant to the investigation at hand; thus, [ the USDOC ] concluded that the 
grant in question was not tied to subject merchandise and was not countervailable. In the 
instant investigation, w e have no information to demonstrate that the apparent 
assistance discovered at verification did not benefit the subject merchandise that would 
justify Trina Solar's failure to report."586 
"[F]or the assistance discovered at Trina Solar's verification, and consistent with our 
practice  [citing Shrimp from the PRC ], we will apply  our CVD AFA methodology  to 
determine the CVD rate(s) to apply for the unreported assistance discovered at Trina 
Solar's verification."587 
Solar Cells from 
China 2015  "While [ the USDOC 's] practice regarding assistance discovered during verification has 
varied in past cases, we find that the facts of this particular proceeding merit the 
application of AFA. For example, in Large Residential Washers from Korea , the respondent 
demonstrated that the grant in question was not tied to subject merchandise, and thus, 
was not relevant to the investigation at hand. Therefore, [ the USDOC ] concluded that the 
grant in question was not tied to subject merchandise and was not countervailable. In the 
instant proceeding, we have no information to demonstrate that the apparent assistance 
discovered at Lightway's verification did not benefit subject merchandise or would 
otherwise not be countervailable. When these grants were discovered at verification, 
Lightway made no attempt to explain why they might not be countervailable."588 
"[C]onsistent with our practice  [citing Solar Panels from China ], we will apply our 
CVD AFA methodology  to determine the CVD rate to apply for the unreported 
assistance discovered during Lightway's verification."589 
"[The USDOC ] has countervailed subsidies d iscovered at verification in prior proceedings 
without a prior allegation. [The USDOC 's] questionnaire clearly states that respondents 
must identify all government assistance."590 
Supercalendered 
Paper from 
Canada 2015  "We acknowledge that [ the USDOC 's] practice regarding assistance discovered during 
verification has varied in past cases. However, we find that the facts of this particular 
case merit the application of AFA. For example, in Washers from Korea , the respondent 
demonstrated that the grant in question was not tied to subject merchandise, and was 
not relevant to the investigation at hand; thus, [ the USDOC ] concluded that the grant in 
question was not tied to subject merchandise and was not countervailable. In the instant 
investigation, we hav e no information on the record to demonstrate that the apparent 
assistance discovered at verification did not benefit the subject merchandise that would 
justify Resolute's failure to report."591 
                                                
585 Shrimp from China, Issues and Decision Memorandum (2013) , (Exhibit CAN -118), p. 78.  (fn omitted)  
586 Solar Cells from China, Issues and Decision Memorandum (2014) , (Exhibit CAN -121), p. 88.  
(fn omitted)  
587 Solar Cells from China, Issues and Decision Memorandum (2014) , (Exhibit CAN -121), p. 88.  
(emphasis added ; fn omitted ) 
588 Solar Cells from  China, Issues and Decision Memorandum on the Final Anti -Dumping Administrative 
Review (2015) , (Exhibit USA-8), p. 58.  (fn omitted)  
589 Solar Cells from China, Issues and Decision Memorandum on the Final Anti -Dumping Administrative 
Review (2015) , (Exhibit USA-8), p. 59. ( emphasis  added ; fn omitted ) 
590 Solar Cells from China, Issues and Decision Memorandum on the Final Anti -Dumping Administrative 
Review (2015) , (Exhibit USA-8), p. 57.  (fn omitted)  
591 Issues and Decision Memorandum , (Exhibit CAN -37), p. 155.  (fn omitted)  WT/DS505/R  
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  Investigation    USDOC's statements of practice regarding the "Other Forms of Assistance -AFA 
measure"  
 "[F]or the assistance discovered at Resolute's verification, and consistent with our 
practice [citing Shrimp from PRC ], we have applied our CVD AFA methodology  to 
identify the CVD rate(s) to apply for the unreported assistance discovered at 
Resolute's  verification" .592 
"[The USDOC ] did not 'verify' this information. In the course of its long -standing 
verificati on procedures, [ the USDOC ] examined only certain accounts in order to 
determine non -use of programs and conduct its standard completeness methodology."593 
PET Resin from 
China 2016  "Consistent with Supercalendered Paper Canada and Shrimp from PRC , as AFA, we find 
each of the unreported grants meet the financial contribution and specificity criteria under 
these two provisions of the statute. Further, as AF A, we find that each of the three grant 
programs confers a benefit ".594 
Stainless Pressure 
Pipe from India 
2016 "Through an inadvertent error, and inconsistent with [the USDOC 's] practice of not 
collecting new information at verification , [the USDOC ] obtained information about 
the amount rebated to Steamline under the program."595  
7.321.   In addition to the above determinations, Canada, in its oral statement at the first 
substantive meeting, referred to two determinations subsequent to the ones listed as evide nce in 
its first written submission596, where, according to Canada, the USDOC applied the same 
practice.597 The first determination is Truck and Bus Tires from China  2016 where the USDOC 
appears to have used a similar language to that included in the above tab le for PET Resin from 
China 2016 . In Stainless Steel Sheet and Strip from China 2017 , the USDOC has further changed 
its language although, again, it treated discovered programmes in the same manner. The relevant 
language is as follows:  
Table 4: USDOC's statements regarding AFA  
Investigation    USDOC's statements of practice regarding the "O ther Forms of Assistance -AFA 
measure"  
Truck and Bus 
Tires from 
China 2016  "We find that Guizhou Tyre failed to provide complete information in response to our 
questions about other forms of assistance provided by the [Government of 
China ]. … Therefore, consistent with prior determinations,[citing Certain Polyethylene 
Terephthala te Resin from China 2016  and SC Paper from Canada ] we find that the Guizhou 
Tyre has not cooperated to the best of its ability. …  Pursuant to the [USDOC's]  
authority  … we determine the application of AFA is warranted. We are finding that, as AFA, 
these dis covered forms of assistance provide a financial contribution and are specific within 
the meaning of sections 771(5)(D) and 771(5A) of the Act, respectively. A benefit is 
conferred pursuant to section 771(5)(E) of the Act."598 
Stainless Steel 
Sheet and Strip  
from China 
2017 "On the first day of verification, the Taigang Companies presented previously unreported 
grants [.] … The [USDOC]  rejected information concerning the specific amounts received by 
the Taigang Companies as untimely new information . … The [USDOC] also discovered 
several unreported grants [.] … [T]he [USDOC's]  initial questionnaire asked respondents to 
report 'other subsidies .' The questionnaire is clear in instructing respondents to report 'any 
other forms of assistance to [the] company .' Theref ore …  [i]n accordance with 
sections  776(a)(2)(A) and 776(a)(2)(D) of the Act, we determine that the use of facts 
available is warranted in calculating Taigang 's benefits from these programs. "599  
 
"Consistent with U.S. law, the [USDOC] is not precluded from inquiring about other 
assistance to make determinations. … The [USDOC]  may determine to use AFA in deciding 
whether the elements  of a countervailable subsidy are met for both categories of subsidies 
(those alleged in a petition and th ose 'discovered ' during an investigation) if the [USDOC] 
                                                
592 Issues and Decision Memorandum , (Exhibit CAN -37), p. 155. ( emphasis  added ; fn omitted ) 
593 Issues and Decision Memorandum , (Exhibit CAN -37), p. 153.  
594 PET Resin from China,  Issues and Decision Memorandum (2016) , (Exhibit CAN -125), p. 53.  
595 Stainless Pressure Pipe from India, Final Calculations Memorandum (2016) , (Exhibit CAN -148), fn 3. 
(emphasis added)  
596 Truck and Bus Tires from China, Issues and Decision Memorandum (2016) , (Exhibit CAN -163); 
Stainless Steel Sheet and Strip from China, Issu es and Decision Memorandum (2017) , (Exhibit CAN -164). 
597 Canada's opening statement at the first meeting of the Panel, para.  222. 
598 Truck and Bus Tires from China, Issues and Decision Memorandum (2016) , (Exhibit CAN -163), 
pp. 15-16. (fn omitted)  
599 Stainless  Steel Sheet and Strip from China, Issues and Decision Memorandum (2017) , 
(Exhibit  CAN-164), p. 9. (fns omitted)  WT/DS505/R  
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  Investigation    USDOC's statements of practice regarding the "O ther Forms of Assistance -AFA 
measure"  
determines that the respondents are being uncooperative. … [Taigan's] failure to report the 
discovered assistance to the [USDOC] in a timely manner reflects a deliberate and 
unilateral decision that the discovered subsidies were not relevant to the [USDOC's]  
investigation. A deliberate decision not to cooperate warrants the applica tion of adverse 
facts available. "600 
7.322.   Canada considers  the USDOC's determination in Stainless Pressure Pipe from India to be 
particularly notable, as the determination indicated that the practice of applying the "Other Forms 
of Assistance -AFA measure" has evolved to the point where the USDOC perceives itself as 
committing an "error" if it collects information on the alleged subsidies "discovered" at 
verification.601  
7.323.   The United States contests Canada's reading of the above determinations. The 
United  States argues that, u nlike in US – Zeroing (EC) , there are i nstances wherein the USDOC 
has not applied facts available to countervail information discovered during verification. The United 
States maintains that in all nine of the determinations Canada relies upon, the USDOC made 
unique findings and reached different r esults; there is no single approach taken by the USDOC.602  
7.324.   In spite of certain slight variations in the language used in the determinations, an 
examination of the above Issues and Decision Memoranda shows that the USDOC has acted 
substantially in the sam e manner when treating information discovered at verification that it 
considers should have been provided in response to the "other forms of assistance" question. 
We thus consider that Canada has shown that the USDOC has applied the "Other Forms of 
Assista nce-AFA measure" in nine determinations since 2012, and thus adduced sufficient evidence 
of the repeated application of the challenged measure.  
7.325.   In reaching the above conclusion, we have carefully considered each instance w here the 
United States alleges the USDOC did not apply the "Other Forms of Assistance -AFA measure". 
However, we have been unable to identify any instance where the "Other Forms of Assistance -AFA 
measure" was not applied, except in the case of "inadvertent error" on the part of the USDOC.603  
7.326.   In this respect, we first acknowledge the United States' argument that Canada's position 
fails to highlight Washers from Korea 2012 , an example of a determination issued after Solar Cells 
from China 2012  where the USDOC d id not countervail certain grants d iscovered at verification 
because they were deemed to not be tied to subject merchandise.604 This determination is further 
cited by the USDOC in the SC Paper Issues and Decision Memorandum.605 Canada explains that 
Washers from Korea 2012 was an investigation concurrent to Solar Cells from China 2012 , with 
final determinations issued within two months of each other, where the USDOC's verification teams 
handled a similar situation in different ways, a fact Canada has never denied. Canada's c laim 
relates instead to the USDOC's post -2012 practice.606 As such, we do not consider that the 
United  States has provided evidence of any instance subsequent to 2012  where the USDOC did not 
apply AFA to a respondent on the basis of the "other forms of assis tance" question. Furthermore, 
we note that while the USDOC refers to Washers from Korea 2012 in the SC Paper determination 
in refer ence to its varied practice in the past, it goes on to conclude the following: "for the 
assistance discovered at Resolute's v erification, and consistent with our practice  [citing  Shrimp 
from PRC ], we have applied our CVD AFA methodology to identify the CVD rate(s) to apply for the 
unreported assistance discovered at Resolute's verification" .607 It seems to us that the reference to  
Washers from Korea 2012 pertains to past practice, as opposed to the USDOC's practice at the 
                                                
600 Stainless Steel Sheet and Strip from China, Issues and Decision Memorandum (2017) , 
(Exhibit  CAN-164), pp. 20-21. (fns omitted)  
601 Canada's fir st written submission, para. 414.  
602 United States' second written submission, para. 132.  
603 Stainless Pressure Pipe from India, Final Calculations Memorandum (2016) , (Exhibit CAN -148), fn 3. 
604 USDOC, Issues and Decision Memorandum for the Final Determinatio n in the Countervailing Duty 
Investigation of Large Residential Washers from the Republic of Korea (18 December 2012) , (Exhibit USA -19), 
p. 22.  
605 Issues and Decision Memorandum, (Exhibit CAN -37), p. 155.  
606 Canada's opening statement at the second meeting of the Panel, paras. 15 -17. 
607 Issues and Decision Memorandum, (Exhibit CAN -37), p. 155. (emphasis added; fn omitted)  WT/DS505/R  
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  time of the SC Paper investigation. As such, we do not consider Washers from Korea 2012  to 
undermine Canada's demonstration of the repeated application of the " Other Forms of 
Assistance -AFA measure".  
7.327.   Second, we acknowledge the United States' argument that the "Other Forms of 
Assistance -AFA measure" was not applied in two of the cases put forth by Canada – namely 
Shrimp from China 2013  and PET Resin from China 2016608 – where the USDOC accepted new 
information concerning grants that were presented by the respondent companies at the outset of 
verifications.609 Nonetheless, we note that a situation where a respondent presents information to 
the USDOC at the outset of a ver ification is factually different from one where the USDOC itself 
discovers previously unreported information. The conduct challenged by Canada pertains 
specifically to situations where previously unreported information is discovered by the USDOC. 
Furthermo re, in both instances, the USDOC went on to discover information during the verification 
and applied AFA because the companies did not report the programmes in response to the 
"other  forms of assistance" question.   
7.328.   Further to the above, we consider that th e evidence adduced by Canada sufficiently 
establishes that the challenged conduct is likely to continue. The consistent manner in which the 
USDOC refers to the measure, or to precedents where the measure was applied, in each of the 
above determinations sug gests to us that the challenged conduct is likely to continue. The USDOC 
itself refers to the "Other Forms of Assistance -AFA measure" as described by Canada as its 
"practice" in the above -referenced determinations. For instance, in Solar Cells from China 2 014, 
the USDOC indicates that "for the assistance discovered at Trina Solar's verification, and consistent 
with our practice [citing Shrimp from the PRC ], we will apply our CVD AFA methodology to 
determine the CVD rate(s) to apply for the unreported assist ance discovered at T rina Solar's 
verification."610 In Solar Cells from China 2015 , the USDOC indicates that "consistent with our 
practice [citing Solar Panels from China ], we will apply our CVD AFA methodology to determine the 
CVD rate to apply for the unreported assistance dis covered during Lightway's verification."611 
Similar language is used in the other determinations with either specific reference to the word 
"practice" or to precedents where the "Other Forms of Assistance -AFA measure" was applied. Th e 
fact that the USDOC its elf has characteri zed a departure from this conduct as "inadvertent error" 
in Stainless Pressure Pipe from India  strongly supports this conclusion.612  
7.329.   We observe that the disagreement between the parties in this respect focuses to a  great 
extent on whether the challenged conduct by the USDOC amounts to a "practice" by the USDOC 
under US law.613 However, we consider that whether the "Other Forms of Assistance -AFA 
                                                
608 Shrimp from China, Issues and Decision Memorandum (2013) , (Exhibit CAN -118); PET Resin from 
China,  Issues and Decision Memorandum (2016) , (Exhibit CAN -125). We note that the United States refers to 
the latter investigation as PET Resin from China 2015. (See, for example, United States' first written 
submission, para. 357). While th e investigation was initiated in 2015, the Issues and Decision Memorandum 
was published on 4 March 2016, and has been submitted by Canada as Exhibit CAN -125, to which the 
United  States also refers in its submissions.  
609 United States' first written submissi on, para. 357; response to Panel question No. 78, para. 179.  
610 Solar Cells from China, Issues and Decision Memorandum (2014) , (Exhibit CAN -121), p. 88. 
(fn omitted)  
611 Solar Cells from China, Issues and Decision Memorandum on the Final Anti -Dumping Administ rative 
Review (2015) , (Exhibit USA-8), p. 58. (fn omitted)  
612 Stainless Pressure Pipe from India, Final Calculations Memorandum (2016) , (Exhibit CAN -148), fn 3. 
613 Canada relies to a great extent on the  report of Mr. Grant Aldonas, former Under Secretary of 
Commerce for International Trade, which concludes the following: "[T]he [USDOC's]  practice  of applying AFA 
to programs 'discovered'  during verification that were not reported by otherwise cooperating respondents  in 
response to the [USDOC's] 'other assistan ce' question clearly constitutes 'agency practice' under U.S. law and 
'agency action'  within the meaning of the [Administrative Procedure Act]. " Mr. Aldonas explains that this 
practice has "the force of law" and that parties "have ample reason to rely on i ts continuing application". He 
explains that the USDOC must continue to follow this practice or risk having its actions overturned on judicial 
review as being "arbitrary" or "capricious". In this view, this practice serves to limit the USDOC's discretion a nd 
obliges it to follow the precedent that it sets. ( G. Aldonas, "Other Forms of Assistance -Adverse Facts 
Available", Expert Report , (Exhibit CAN -209), pp. 2, 9, and 11 -12; Canada's second written submission, 
paras.  171-172). The United States rejects Canada's position that the "Other Forms of Assistance -AFA 
measure" constitutes a practice by the USDOC. The United States argues that the manner in which an 
investigating authority chooses in certain instances to characteri ze a particular action for purpos es of its 
municipal law is not dispositive of whether that same action constitutes a rule or norm of general and 
prospective application that would be subject to an "as such" challenge before the DSB. If the USDOC had a 
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  measure" constitutes a legally -binding practice or p olicy under US law is not determinative as to 
the likelihood of the continuation of the measure. As with the standard to determine the 
prospective application of a "rule or norm", we do not consider that Canada is required to prove 
the "certainty" of the future application of t he "Other Forms of Assistance -AFA measure", but 
rather the likelihood that it will continue to apply. As such, we concur with the Appellate Body that 
"A complainant would not be able to show 'certainty' of future application, because any measure, 
including  rules or norms, written or unwritten, may be modified or withdrawn in the future. The 
mere possibility that a rule or norm may be modified or withdrawn, however, does not remove the 
prospective nature of that measure."614 Therefore, without pronouncing ours elves on whether or 
not the challenged conduct amounts to a "practice" under US law as argued by Canada, we 
consider that Canada has adduced sufficient evidence to establish the likelihood of continuation of 
that condu ct.  
7.330.   Finally, we acknowledge Canada's reliance on the Trade Preferences Extension Act (TPEA), 
a legal instrument signed on 29 June 2015 as further evidence of the likelihood of continuation of 
the "Other Forms of Assistance -AFA measure". According to Canad a, this instrument was adopted 
to faci litate the application of the "Other Forms of Assistance -AFA measure" and to make it more 
punitive. Canada argues that the TPEA has consistently been relied upon by the USDOC to support 
its refusal to accept informatio n from respondents after it "discovers " information at verification.615 
Canada provides examples of CVD investigations that refer to the TPEA.616 The United States 
argues that the TPEA does not mandate any particular outcome, and thus even if a statute were 
somehow relevant to establishing the exi stence of a n unwritten measure, this statute provides no 
support for Canada's position.617 The United States further argues that, as acknowledged by 
Canada itself618, the TPEA provides flexibility to the USDOC, was recently enacted, and has only 
been reference d in a few administrative determinations.619  
7.331.   We do not consider that Canada has established that the TPEA allows the USDOC free hand 
with the use of AFA in cases of non -cooperation. We agree with the United States to the extent 
that the statute does not appear to mandate any particular outcome.620 Crucially, the statute does 
not appear to link the use of AFA to the "other forms of assistance" question, whic h we consider to 
be an integral element in the measure challenged by Canada. The Panel is thus not convinced that 
this has an impact on the likelihood of the continuation of the "Other Forms of Assistance -AFA 
measure".  
7.6.1.3.2   Conclusion  
7.332.   Having carefully considere d the arguments of both parties and the evidence before us, the 
Panel is of the view that Canada has adduced sufficient evidence to establish that the challenged 
"Other Forms of Assistance -AFA measure" constitutes "ongoing conduct". As such, we do not 
consider it necessary to address Canada's argument that the challenged measure amounts to a 
"rule or norm of general and prospective application".621  
7.333.   In line with our findings in Section 7.4.1.4  above, we find that the unwritten measure  
challenged by Canada is inconsistent with Article 12.7 of the SCM Agreement. While a broad 
question such as "other forms of assistance" might pertain to necessary information regarding 
                                                                                                                                                  
"practice" under US municipal law, a s Canada claims, then all investigations should have reached the same 
result. Instead, in some cases the USDOC accepted new information at verification, while in others it declined 
to do so. (United States' response to Panel question No. 79, paras. 181 -185). 
614 Appellate Body Report, US – Anti-Dumping Methodologies (China) , para. 5.132.  
615 Canada's first written submission, para. 419.  
616 See table 4 submitted by Canada in its first written submission, para. 419.  
617 Determinations on basis of facts available, Un ited States Code, Title 19, Section 1677e, as amended 
by Section 502 of the Trade Preferences Extension Act of 2015 , (Exhibit USA -10). 
618 Canada' first written submission, para. 419.  
619 United States'  first written submission, para. 361.  
620 United States' fir st written submission, para. 361.  
621 We note that, explaining its approach, Canada has laid out "two paths … for the Panel on how to 
evidence this measure. The Panel could see the conduct that is currently going on, and rely on statements 
made by [the USDOC ] as evidence that it is likely to continue. The Panel could look at the evidence Canada has 
produced and determine that it is reflective of a deliberate policy that has general and prospective application." 
(Canada's opening statement at the first meeting  of the Panel, para. 210).  WT/DS505/R  
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  additional subsidization  of the product under investigation, it may al so pertain to a much broader 
range of "assistance". As we have said, in these circumstances, an investigating authority may not 
simply infer that a respondent's failure to respond fully to the "other forms of assistance" question 
resulted in a failure to p rovide information necessary to establish the existence of additional 
subsidization  of the product under investigation.622 In light of the due process rights enjoyed by 
interested parties throughout an investigation623, it is the right of respondents that the 
investigating authority may only resort to the facts available mechanism after properly 
determining that information necessary to complete a determination on additional subsidization  of 
the product under investigation had been withheld. This is all the mor e applicable where an 
investigating authority elects to add subsidy programmes to an ongoing investigation, rather than 
investigating only the subsidies identified in its notice of initiation.  
7.334.   Finally, we note that in addition to Article 12.7, Canada challenges the "Other Forms of 
Assistance -AFA measure" under Articles 10, 11.1, 11.2, 11.3, and 11.6 of the SCM Agreement 
because the USDOC failed to review the adequacy of the evidence regarding financial contribution, 
benefit and specificity624, as well as  Articles 12.1 and 12.8 of the SCM Agreement625 because the 
USDOC failed to offer respondents the procedural safeguards in the SCM  Agreement, including 
opportunities to present evidence, prior to applying AFA to determine the elements and amount of 
a subsidy .626 We understand that Canada's main concern in bringing these additional claims is to 
ensure that respondents enjoy certain "procedural safeguards" in respect of subsidy programmes 
discovered during the course of an investigation.627 As with our findings in Section 7.4.1.4  above, 
we consider that our interpretation and application of the facts available mechanism in the present 
case already reflects the type of proced ural safeguards envisaged by Canada, and accordingly see 
no need to separately consider Canada's claims under these additional provisions.628  
8   CONCLUSIONS AND RECO MMENDATION  
8.1.  On the claims concerning the USDOC's CVD determination with respect to PHP, for the  
reasons set forth in this Report, the Panel concludes as fol lows:  
a. The USDOC acted inconsistently with Article 1.1(a)(1)(iv) of the SCM Agreement, by 
making a  finding of entrustment or direction with respect to the provision of electricity 
by NSPI.  
b. The USD OC acted inconsistently with Articles 1.1(b) and 14(d) of the SCM Agreement, 
when it determined that the provision of electricity by NSPI to PHP, through the LRR, 
conferred a benefit.  
c. The USDOC acted inconsistently with Article 12.8 of the SCM Agreement, b y failing to 
disclose to interested parties the essential fact that, in the view of the USDOC, 
Section  52 of the Public Utilities Act entrusted or directed NSPI to provide electricity to 
all customers, including PHP.  
                                                
622 In this respect, we note in particular the following statements by the USDOC in the investigations at 
issue: "In the instant investigation, the Guolian Companies provided no demonstration that the apparent 
subsidies did not ben efit the subject merchandise …" ( Shrimp from China , Issues and Decision Memorandum 
(2013), (Exhibit CAN -118), p. 78); "In the instant investigation, we have no information to demonstrate that 
the apparent assistance discovered at verification did not benef it the subject merchandise …" ( Solar Cells from 
China , Issues and Decision Memorandum (2014), (Exhibit CAN -121), p. 88); "In the instant proceeding, we 
have no information to demonstrate that the apparent assistance discovered at Lightway's verification di d not 
benefit subject merchandise or would otherwise not be countervailable" ( Solar Cells from China, Issues and 
Decision Memorandum on the Final Anti -Dumping Administrative Review (2015) , (Exhibit USA -8), p. 58); and 
"In the instant investigation, we have  no information on the record to demonstrate that the apparent 
assistance discovered at verification did not benefit the subject merchandise …" (Issues and Decision 
Memorandum, (Exhibit CAN -37), p. 155).  
623 Appellate Body Report, EC – Tube or Pipe Fittings , para. 138 (quoting Appellate Body Report,  
EC – Bed Linen (Article 21.5 – India) , para. 136).  
624 Canada's first written submission, para. 423.  
625 In its submission, Canada adds references to Articles 11.1, 11.2, 11.3 , and 11.6 of the 
SCM Agreement under this claim although there is no argumentation.  
626 Canada's first written submission, para. 435.  See also Canada's panel request,  pp. 3-5. 
627 See, for example, Canada's first written submission, paras. 422 -436. 
628 See, also, fn 329 above.  WT/DS505/R  
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  d. The USDOC acted inconsistently with Art icle 1.1(b) of the SCM Agr eement, by finding  
that the hot idle funding conferred a benefit on PWCC/PHP.  
e. The USDOC acted inconsistently with Article 1.1(b) of the S CM Agreement, by finding  
that the second FIF amount conferred a benefit on PWCC/PHP.  
f. The USDO C acted inconsistently with Article 11.3 of the SCM Agreement , by failing in its 
obligation to evaluate the accuracy and adequacy of the evidence in the application with 
respect to the existence of a benefit in the provision of stumpage and biomass by the 
Government of Nova Scotia to PHP.  
8.2.  On the claims concerning th e USDOC's CVD determination with respect to Resolute, for the 
reasons set forth in this Report, the Panel concludes as follows:  
a. The USDOC acted inconsistently with Article 12.7 of the SCM Agreeme nt, by applying 
facts available to the discovered programmes . 
b. The Panel declines to rule on Canada's claims under Articles 11.2, 11.3, 12.1, 12.2, 
12.3, and 12.8 of the SCM Agreement, regarding the discovered programmes.  
c. The USDOC acted inconsistently with  Article 1.1(b) of the SCM Agree ment, by finding, on 
the basis of an alleged lack of relevant evidence, that the benefit conferred on Fibrek 
through the PPGTP was not extinguished when Fibrek was acquired by Resolute.  
d. The Panel declines to rule on Canada's  claims under Articles 10, 14, 1 9.1, 19.3, and 19.4 
of the SCM Agreement  and Article VI:3 of the GATT 1994 , regarding the USDOC's finding 
that the benefit conferred on Fibrek through the PPGTP was not extinguished when 
Fibrek was acquired by Resolute.  
e. The Panel declines to rule on Canada's claims under Articles 1.1(b), 10, 14, 19.1, 19.3, 
and 19.4 of the SCM Agreement  and Article VI:3 of the GATT 1994,  regarding the 
USDOC's finding that the benefit conferred on Fibrek was not extinguished when Fibrek 
was ac quired by Resolute, with respect to the alleged assistance discovered during the 
verification of Fibrek.  
f. The Panel concludes that the USDOC acted inconsistently with Articles 10, 19.1, 19.3 , 
and 19.4 of the SCM Agreement and Article VI:3 of the GATT 1994, by attributing to the 
production of SC Paper subsidies provided to Resolute and Fibrek under the PPGTP, 
FSPF, and NIER Programmes.  
g. The Panel declines to rule on Canada's claims under Articles 10, 19.1, 19.3 , and 19.4 of 
the SCM Agreement and Article VI:3 o f the GATT 1994, regarding the attribution to the 
production of SC Paper of the alleged assistance discovered duri ng the verification of 
Fibrek.  
8.3.  On the claims concerning the CVD determinations with respect to Irving and Catalyst, for the 
reasons set forth in this Report, the Panel concludes as follows:  
a. The USDOC acted inconsistently with Articles 10, 19.1, 19.3, 19.4 , and 32.1 of the 
SCM Agreement and Article VI:3 of the GATT 1994, by constructing the all -others rate 
relying on Resolute's rate, which was ma inly calculat ed using AFA.  
b. The Panel declines to rule on Canada's claim under Article 12.7 of the SCM Agreement, 
regarding the construction of  the all -others rate relying on Resolute's rate.  
c. The Panel rejects Canada's claims under Articles 10, 19.1, 19.3, 19.4, and 32.1 of the 
SCM Agreement and Article VI:3 of the GATT 1994, regarding the USDOC's failure to 
adjust the all -others rate in respect of subsidies that were not available to 
non-investigated exporters.  WT/DS505/R  
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  d. The USDOC acted inconsistently with Article 19 .3 of the SCM Agreeme nt, by including 
new subsidy allegations in the context of the expedited reviews undertaken for Catalyst 
and Irving.  
e. The Panel declines to rule on Canada's claims under Articles 11.2 and 11.3 of the 
SCM Agreement, regarding the USDOC's  alleged initiation of an investigation into new 
subsidy allegations during the expedited reviews of Catalyst and Irving.  
8.4.  On the claims concerning the "Other Forms of Assistance -AFA measure", for the reasons set 
forth in this Report, the Panel concludes as  follows:  
a. Canada has adduced sufficient evidence to establish that the challenged "Other Forms of 
Assistance -AFA measure" constitutes "ongoing conduct" and, therefore, the Panel does 
not consider it necessary to address Canada's argument that the challenge d measure 
amounts to a "rule or norm of general and prospective application".  
b. The unwritten measure challenged by Canada is inconsistent with Article 12.7 of the 
SCM Agreement.  
c. The Panel declines to rule on Canada's claims under Articles 10, 11.1, 11.2, 11 .3, 11.6, 
12.1, and 12.8  of the SCM Agreement, with respect to the "Other Forms of 
Assistance -AFA measure".  
8.5.  Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations 
assumed under a covered agreement, the action is considered prima facie to constitute a case of 
nullification or impairment. The Panel concludes that, to the extent th at the measures at issue are 
inconsistent with certain provisions of the SCM Agreement and the GATT 1994, they have nullified 
or impaired benefits accruing to Canada under those agreements.  
8.6.  Pursuant to Article 19.1 of the DSU, the Panel recommends that the  United States bring its 
measures into conformity with its obligations under those Agreements.  
 
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