RESTRICTED  
  
G/SCM/M/85  
 
5 August 2013  
(13-4182)  Page: 1/19  
Committee on Subsidies and Countervailing Measures    
 
MINUTES OF THE REGULAR MEETING 
HELD ON 22 APRIL 2013 
CHAIR: MR SAM C.S. HUI (HONG KONG, CHINA) 
1.  The Committee on Subsidies and Countervailing Measures ("Committee") held a regular 
meeting on 22 April 2013, convened in WTO/AIR/4115. The Committee adopted the following agenda: 
1   NATIONAL LEGISLATION – REVI EW OF NOTIFICATIONS OF NEW OR 
AMENDED LEGISLATION OR REGULATIONS NOT PREVIOUSLY REVIEWED BY THE COMMITTEE ...................................................................................................................... 2
 
1.1   Australia (G/SCM/N/1/AUS/2 /Suppl.7, G/SCM/N/1/AUS/2/Suppl.8, 
G/SCM/N/1/AUS/2/Suppl.9 and G/ SCM/N/1/AUS/2/Suppl.10) ................................................. 2  
1.2   Mali (G/SCM/N/1/MLI/1) ............................................................................................. 2  
1.3   New Zealand (G/SCM /N/1/NZL/2/S uppl.4) .................................................................... 2  
1.4   Russia (G/S CM/N/1/RUS /1) ........................................................................................ 2  
1.5   Ukraine (G/SCM/N/1/UKR/1/Suppl.1 and G/SCM/N/1/UKR/1/ Suppl.1/Corr.1) ..................... 2  
2   SEMI-ANNUAL REPORTS OF CO UNTERVAILING DU TY ACTIONS .................................. 3  
3   NOTIFICATIONS OF PRELIMINARY AND FINAL COUNTERVAILING DUTY 
ACTIONS ....................................................................................................................... ... 3 
4   IMPROVING THE TIMELINESS AND COMPLETENESS OF NOTIFICATIONS AND 
OTHER INFORMATION FLOWS ON TRADE MEASURES UNDER THE SCM 
AGREEMENT .....................................................................................................................  4 
5   PROCEDURES FOR REVIEW OF 2013 NEW AND FULL SUBSIDY 
NOTIFICATIONS ............................................................................................................... 7  
6   CONSTANT DOLLAR METHODOLOGY FOR GRADUATION FROM SCM 
ANNEX V II(B) ..................................................................................................................  7 
7   PERMANENT GROU P OF EXPERTS ................................................................................ 8  
8   REQUEST TO CHINA FROM THE US PURSUANT TO ARTICLE 25.8 ................................. 8  
9   ELIMINATION OF EXPORT SUBSIDIE S FOR TEXTILES AND APPAREL BY INDIA 
PURSUANT TO ARTICLE 27.5 OF THE SC M AGREEMENT - REQUEST FROM THE US 
AND TURK EY ....................................................................................................................  9 
10   NON-NOTIFICATION BY CHINA OF ALLEGED SUBSIDIES CONTAINED IN THE 
REQUEST BY THE US UNDER ARTICLE 25.10 OF THE SCM AGREEMENT - REQUEST BY THE US ..................................................................................................................... . 10
 
11   NON-NOTIFICATION BY INDIA OF ALLEGED SUBSIDIES CONTAINED IN THE 
REQUEST BY THE US UNDER ARTICLE 25.10 OF THE SCM AGREEMENT - REQUEST BY THE US ..................................................................................................................... . 15
 
12   LOCAL CONTENT REQUIREMENT IN RENEWABLE ENERGY SECTOR SUBSIDY 
SCHEMES IN THE US - ITEM  REQUESTED BY  INDIA ........................................................ 16  
13   DATE OF NEXT REGULAR MEETING .......................................................................... 17  G/SCM/M/85 
 
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  14   OTHER BU SINESS .................................................................................................... 17  
14.1   Certain possible government assistance provided to a pulp and paper mill in Nova 
Scotia, Canada - Item requested by the US and EU ............................................................... 17 
14.2   United States Countervailing Duty Investigation of Frozen Warm Water Shrimp - 
Item requested by Viet Nam .............................................................................................. 18 
14.3   Article 27.4 communications from four  delegations -  Repo rt by the Chair ....................... 19 
15   ELECTION OF  OFFICERS .......................................................................................... 19  
 
1  NATIONAL LEGISLATION – REVIEW OF NOTIFICATIONS OF NEW OR AMENDED LEGISLATION OR REGULATIONS NOT PREVIOUSLY REVIEWED BY THE COMMITTEE 
1.1  Australia (G/SCM/N/1/AUS/2/Suppl.7, G/SCM/N/1/AUS/2/Suppl.8, 
G/SCM/N/1/AUS/2/Suppl.9 and G/SCM/N/1/AUS/2/Suppl.10) 
2.  Written questions and replies with respect to these notifications can be found in:   - US questions in G/SCM/Q1/AUS/15  
 - Australia's replies in G/SCM/Q1/AUS/16 
 3.  The Committee took note of the no tifications, questions and answers. 
1.2  Mali (G/SCM/N/1/MLI/1) 
4.  There were no comments or questions regarding this notification.  5.  The Committee took note of the notification. 
1.3  New Zealand (G/SCM/N/1/NZL/2/Suppl.4) 
6.  There were no comments or questions regarding this notification.  
7.  The Committee took note of the notification. 
1.4  Russia (G/SCM/N/1/RUS/1) 
8.  Written questions and replies with respect to this notification was available in the following 
documents:  
- Australia's questions in G/SCM/Q1/RUS/1 
- US questions in G/SCM/Q1/RUS/2 
 9.  No written replies have been received to date.  
1.5  Ukraine (G/SCM/N/1/UKR/1/Suppl.1 and G/SCM/N/1/UKR/1/Suppl.1/Corr.1) 
10.  Written questions and replies with respect to this notification was available in the following 
documents: 
- Australia's questions in G/SCM/Q1/UKR/9 
- US questions in G/SCM/Q1/UKR/10 
- Replies to US questions in G/SCM/Q1/UKR/11 - Replies to Australia's questions in G/SCM/Q1/UKR/12 
 
11.  The Chair indicated that 13 May 2013 was th e deadline for any written follow-up questions, 
and 3 June 2013 was the deadline for the written replies, to all written questions regarding 
legislative notifications reviewed at the present meeting.  
12.  The Committee took note of the notification, questions, answers, and statements. G/SCM/M/85 
 
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  2  SEMI-ANNUAL REPORTS OF CO UNTERVAILING DUTY ACTIONS  
13.  Reports on countervailing duty actions taken in the second half of 2012 had been received 
from Australia, Brazil, Canada; China, EU, Mexico , Pakistan, Peru, and the US. Members that had 
made a nil notification were listed in paragraph 2 of document G/SCM/N/250/Add.1. A large 
number of Members, listed in paragraph 3, still had not submitted a report and thus had failed to 
comply with this important notification requirement. After circulation of the document, Croatia had submitted a nil notification which would be refl ected in the next addendum to this document. 
The 21 Members that had submitted a one-time notification (of no investigating authority, no 
countervailing actions to date, and no expectation thereof for the foreseeable future) were listed in paragraph 5 of G/SCM/N/250/Add.1. Members that qualified were urged to make such a notification.  
14.  With respect to Australia 's report (G/SCM/N/250/AUS), China noted that, according to the 
Australian trade remedy legislation, the time period for completing an investigation was strictly 
limited to 135 days, plus 20 days to determine the initiation after receiving an application. The 
rapidity of the process hampered the investigatin g authority's ability to properly evaluate the 
issues, and interested parties' ability to present their cases. In addition, Australia's Trade Measures Review Office was specifically defined in Australia's trade remedy investigation system to supervise 
and monitor the determinations and findings issued by Customs. However, in practice, Customs 
and Ministers often ignored the TRMO's opinions, meaning that the supervision system existed in name only. 
15.  Australia said that during its notional 155-day investigation period, interested parties could 
request extensions, and in some cases this had amo unted to about 70 days' extension, so that all 
interested parties could present their views. The process was fair and transparent and to date all extensions requested by China had been granted. The Trade Measures Review Officer was an 
administrative review statutory position that could review certain decisions but could not reopen 
the facts of an investigation. China's expectations of this role might not be realistic, as decisions 
ultimately were for the Minister. Australia would be happy to further discuss this issue or specific 
cases with China. 
16.  On Mexico 's report (G/SCM/N/250/MEX), India indicated that it had a number of concerns 
over the measures on imports from India of "Dicloxacillin Sodium" and "Amoxicillin Trihydrate", in 
which it was pursuing bilaterally.  
17.  With respect to the US report (G/SCM/N/250/USA), China recalled the WTO Appellate Body 
ruling in DS379 that double remedy was inconsistent with SCM Article 19.3. Countervailing duties 
should be levied in the appropriate amounts in  each case, and the US Department of Commerce 
had failed to fulfil that obligation, so that the US had acted inconsistently with SCM Article 19.3 
and consequently with Articles 10 and 32.1. The US had expressed its views on this finding on 
21 April 2011. However, in the next two combined anti-dumping and countervailing investigations, 
concerning solar panels and wind towers, the US di d not fulfil its obligations to make the necessary 
adjustments and Chinese companies were injured accordingly.  
18.  The US said that it conducted its investigations in an open and transparent manner, in 
accordance with US law and its international obligations, and taking into account the views of 
interested parties. The US reasons and rationale in each case were fully explained in the final 
determination issues and decision memoranda which, along with additional information, were available on the website http://www.trade.gov/ia . WTO dispute settlement proceedings were 
underway on this case, where the US would continue to engage with China. The US would refer 
China's comments regarding the findings of the case to capital.  
19.  The Committee took note of the semi-annual reports and statements made. 
3  NOTIFICATIONS OF PRELIMINARY AND FINAL COUNTERVAILING DUTY ACTIONS 20.  Since the last regular meeting of the Committee in October 2012, notifications under 
Article 25.11 of the SCM Agreement ""of preliminary and final countervailing duty actions had been 
received from Australia, Canada, China, the EU, Mexico, and the US. These notifications are listed 
in documents G/SCM/N/252, and 254-256.  G/SCM/M/85 
 
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  21.  No delegation raised comments or questions with respect to these notifications.  
22.  The Committee took note of the notifications. 
4  IMPROVING THE TIMELINESS AND COMP LETENESS OF NOTIFICATIONS AND OTHER 
INFORMATION FLOWS ON TRADE MEASURES UNDER THE SCM AGREEMENT 
23.  The Chair recalled that, since the request of the Chairman of the Trade Policy Review Body in 
spring 2009, the Committee had discussed this matter at formal and informal meetings, as 
reflected in the meeting minutes. At the reques t of Members, the Secretariat had prepared a 
background note (G/SCM/W/546 dated 28 April 2009), providing a snapshot of compliance with 
various notification obligations under the Agreement since 1995. This compendium had been updated for every spring meeting since then, with the most recent version in G/SCM/W/546/Rev.4.  
24.  The Chair had consulted with concerned Members over the process by which certain changes 
were introduced in Revision 3. These concerns were mainly over due process when the changes 
were introduced, against the backdrop of a prior inconclusive Committee discussion on certain proposed revisions to the document format. These Members' concerns were not with the 
substance; they requested that future, potentiall y useful changes be introduced through a fully 
transparent process. The Chair considered this to be  a fair point, and in the spirit of transparency 
noted that Revision 4 followed the same format as Revision 3. The document, which first had been 
circulated in 2009 as a Job document, was a factual background note under the Secretariat's own 
responsibility. Members were invited to consider future changes from the perspective of accuracy 
and user-friendliness.  
25.  The Chair recalled that at the Committee's October 2012 regular meeting, a number of 
Members had indicated their willingness to continue discussing ways to improve timeliness and 
completeness of notification obligations under the Agreement, of which the notification of subsidies 
was the most fundamental. Unfortunately, the low level of compliance with this important 
notification obligation continued to undermine the transparency function of this Committee. As of 
the date of the Committee meeting, 71 Members still had not made their 2011 new full subsidy notification. Many of these Members either had never notified or had only done so in the distant 
past. The 2011 new and full notifications had been due on 30 June 2011, and the next cycle of 
new and full notifications was due in two months. The poor compliance with this fundamental transparency obligation constituted a serious proble m in the proper functioning of the Agreement. 
26.  The 71 Members that had not yet made their 2011 notifications were: Angola; Bangladesh; 
Benin; Bolivia; Botswana; Brunei Darussalam; Burundi; Cambodia; Cameroon; Cape Verde; 
Central African Republic; Chad; China; Congo; Côte d'Ivoire; Democratic Republic of Congo; Djibouti; Dominica; Egypt; Fiji; Gabon; the Gambia; Ghana; Guinea; Guinea-Bissau; Guyana; 
Haiti; Iceland; Indonesia; Kenya; Kuwait; Kyrgyz Republic; Lesotho; Madagascar; Malawi; 
Maldives; Mauritania; Moldova; Mongolia; Morocco; Mozambique; Myanmar; Namibia; Nepal; Niger; Nigeria; Oman; Pakistan; Panama; Papu a New Guinea; Paraguay; Philippines; Rwanda; 
Saint Kitts and Nevis; Saint Vincent and the Grenadines; Senegal; Sierra Leone; Solomon Islands; 
South Africa; Sri Lanka; Suriname; Tanzania; Thailand; Togo; Trinidad and Tobago; Tunisia; Uganda; United Arab Emirates; Venezuela; Viet Nam; and Zimbabwe. The Chair asked these Members to explain why they had not yet notified and indicate when they might do so.  
27.  There were no comments on the Chair's report. The Chair urged those Members who had not 
yet submitted their 2011 notifications to do so as soon as possible, and to submit their 2013 new 
and full notifications before the 30 June 2013 deadline - only 4 had been submitted to date.  
28.  The Chair recalled that at its October 2012 regular meeting, the Committee had granted the 
final annual extensions under Article 27.4 pursuant to the procedures in WT/L/691, based on the 2012 notifications pursuant to these procedures. No further extensions were possible under those 
procedures, and thus no Article 27.4 notifications were required for 2013. All beneficiaries of 
Article 27.4 extensions nonetheless were subject to the general obligation that applied to all 
Members to provide new and full notifications pursuant to Article 25 not later than 30 June. These notifications would be subject to the normal Committee review process.  G/SCM/M/85 
 
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  29.  The Chair recalled that at the October 2012 meeting, the Committee discussed a US proposal 
in document G/SCM/W/557 regarding the treatment of questions and answers under Articles 25.8 
and 25.9 of the Agreement. A number of Members had expressed interest in continuing the discussion.  
30.  The US found the Secretariat document useful as it clearly demonstrated the disconcerting 
situation regarding notifications. While it was understandable that some least developed countries 
had difficulty consistently meeting transparency requirements, there was little justification for late 
or absent subsidy notifications from larger export ing Members. In a rules-based trading system, if 
Members consistently failed to adhere to the tran sparency rules, the validity and sustainability of 
the system were questioned. The Secretariat should regularly update the document.  
31.  'The US proposal sought to address the historic and on-going problem of Members not 
providing timely and complete responses to questions submitted under Article 25.8 of the 
Agreement, despite the clear language in Article 25.9. The proposal was to establish a schedule for such written answers, consistent with how answers regarding Members' subsidy notifications were 
provided. If Article 25.8 questions were not answer ed, the questions should remain on the agenda 
until answers were provided, as was done for unanswered questions on subsidy notifications. 
32.  Certain Members had previously questioned whether written answers could be required under 
Committee procedures. Written answers within a specified time period were required for routine 
questions on a Member's subsidy notification, and questions submitted pursuant to Article 25.8 deserved, at a minimum, equal treatment. The US also proposed that unanswered Article 25.8 
questions remain on the agenda, to coax Members to adhere to their obligations under 
Article 25.9.  
33.  The US was considering a revision to its previous proposal of a 60-day deadline for answers to 
Article 25.8 questions and any subsequent questions.  This was consistent with Article 25.9's 
requirement that Members respond to Article 25.8 questions "as quickly as possible". It also was 
consistent with the established timeframe in the Committee's agreed procedures under G/SCM/117 for answering questions on subsidy notifications. These procedures were a useful example of the 
Committee agreeing to workable, common sense procedures to facilitate the notification provisions 
of the Agreement. Something similar could and should be agreed for Article 25.8 and Article 25.9. Finally, any revision of the proposal document would remove the reference to Article 25.8 questions submitted to South Africa in footnote 2; South Africa had, in fact, responded to the 
questions received.  
34.  Japan found the Secretariat document useful and was struck by the figures on page 4 showing 
that the percentage of non-notifying Members was lowest in 1995, and had hovered around 45% 
since then. Twenty-seven of 71 non-notifyin g Member Members in 2011 had never made a 
notification. Forty-four Members had notified previously, but did not to do so thereafter. It could be interesting to examine the background behind these discontinued notifications. Japan fully 
supported the principal of transparency and emphas ized that the Secretariat should continue to 
update and improve the document under its own responsibility. 
35.  Japan attached great importance to the notifi cation and surveillance scheme in Part VII of the 
Agreement. The rules-based multilateral trading system, from which all Members were benefitting, 
was supported by and depended on each Member fulfilling its obligations, of which notification was 
a key. Japan supported providing more clarity an d predictability in the Article 25.8 and 25.9 
process and was ready to discuss the US proposal.  
36.  Canada considered that the subsidy notification process was a fundamentally important 
transparency exercise and appreciated the Secret ariat's work reporting on the notifications. 
Canada was open to exploring the concept of a mechanism to address Article 25.8 requests, 
including the possibility of introducing mandatory timelines for written replies. 
37.  The EU was alarmed by the Secretariat's report in G/SCM/W/546/Rev.4 which showed that in 
2011 all most half of all Members had not notified . While some were least developed countries with 
resource constraints, others were large exporting countries. These notification obligations were 
essential to ensuring transparency under the Agre ement, and to the work of the Committee. Being 
a Member of the rules-based trading system carried not only rights but obligations. Members who G/SCM/M/85 
 
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  were not fully compliant needed to improve thei r efforts. The US proposal and its suggested 
deadline of 60 days was a good basis for further work.  Was the US going to table a revision?  
38.  Brazil supported efforts to increase transparency among Members. The Secretariat document 
contained information that was not unknown to Members. Brazil had systemic concerns, not on the 
content, but on the process regarding how the changes were included in the revisions. Any further 
format changes should be based on transparency and consensus. Brazil was open to discussing the 
US proposal further, and looked forward to seeing the revision.  
39.  Australia was concerned over the shortfall in transparency shown in the Secretariat document. 
Sharing information on subsidy programmes gave confidence in the system and showed 
collectivism in notifying these programmes without singling out any Member's programmes. Notifications were onerous and resource-intensi ve but vital to the Agreement. Australia had 
previously provided detailed comments on the US proposal which it supported. Preliminarily, the 
proposed 60-day period seemed reasonable because it was a familiar timeframe and concerned an ad hoc  notification, usually on a single programme. A firm deadline would assist the responding 
Member. 
40.  China's preliminary position on the US proposal was that Article 25.9 does not require written 
answers to questions posed under Article 25.8. In Part VII of the Agreement, Article 25 addressed 
notification, and Article 26 addressed surveillance. The procedures for written questions and 
answers for review or surveillance, or examinatio n of new and full subsidy notifications, were 
developed based on Article 26.1 rather than Article 25. Article 26 only provided for surveillance of notifications submitted under Article 25.1, and th ere was no legal basis for surveillance under 
Article 25.8 and 25.9 using a written procedure as proposed by the US.  China agreed with others 
that a careful balance was struck between Articl es 25.8 and 25.9, and that it was unnecessary to 
maintain un-answered Article 25.8 questions on the Committee's agenda. According to 
Article 25.9, any Member considering that its ques tions had not been appropriately answered could 
bring the matter to the Committee's attention.  
41.  Concerning the Secretariat document, despite factual clarifications raised in previous 
meetings, some mistakes still remained uncorrected in Revision 4:  G/SCM/Q2/CHN/32 contained 
questions raised by the EU under the Transitional  Review Mechanism pursuant to section 18 of the 
Protocol on the Accession of China, and Article 25.10,  and thus should not be listed in Annex D. In 
Annex C, questions received under Article 25.8 we re contained in document G/SCM/Q2/CHN/4, not 
G/SCM/Q2/CHN/19 (the latter contained US questions on China's first subsidy notification and, 
therefore, should not be listed in Annex C; China's replies were circulated in document G/SCM/Q2/CHN/28). Page 17 in Annex B of Rev.2 and Rev.3, and page 18 in Annex B of Rev.4 
should indicate that China fulfilled its new and full subsidy notification obligation for 2003 because 
China's first notification covered the years 2001-2004. To avoid misunderstanding, China 
requested that to reflect this, a second symbol be added to the document via a corrigendum.  
42.  New Zealand echoed the concern of other Members regarding the lack of compliance with 
notification obligations, which undermined the Committee's work to improve timeliness and 
completeness. Transparency was one of the main principals of the WTO and timely and complete notifications were one of the ways to ensure this.  
43.  South Africa continued to support updating the Secretariat document but considered that 
possible future changes first be discussed in the Committee. This was essential for transparency 
and inclusiveness, the credibility of the Committ ee, and trust among Members. South Africa also 
would raise some factual clarifications in Annex C with the Secretariat.  
44.  On the US proposal, South Africa had made initial comments at the October 2012 meeting, 
and looked forward to the revision which would correct the error concerning South Africa. South 
Africa supported efforts to improve transparency but remained cautious over the Committee 
amending subsidy disciplines, crafted in balanced negotiating outcomes, as this was in the mandate of the Negotiating Group on Rules. The US should consider the concerns expressed on 
strict time-frames for replies. Pragmatism should prevail as some Members had capacity 
challenges in compiling the information from different agencies. With regard to maintaining an 
item on the agenda pending written replies, it was not clear who would determine whether the G/SCM/M/85 
 
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  Member had appropriately responded. Any Member could request that an item be placed on the 
agenda of a Committee meeting.  
45.  India recalled that it and others had expre ssed concerns on the process to change the format 
of the Secretariat document, but not over the substance of those changes. These concerns were 
on record. India agreed with Brazil and South Af rica. India also had provided views on the US 
proposal which were on record, and looked fo rward to receiving the revised US proposal. 
46.  Colombia attached great importance to tran sparency. To improve notifications, Members could 
make complementary efforts. For example, as in the Agriculture Committee, a workshop on 
notifications could be held. Technical assistance could be provided. Also, during the Trade Policy Review preparation, the Secretariat could assist  the Member in getting up to date with its 
notifications. Beyond finger-pointing, Members also could take initiatives.  
47.  The US believed the language in Articles 25.8 and 25.9 was clear and strong. Under 
Article 25.8 any Member, at any time, could request information. Article 25.9 required Members to 
provide such information as quickly as possible and in a comprehensive manner. The Committee 
had demonstrated its ability to develop reasonable time-frames for meeting certain requirements 
in Article 25, as in G/SCM/117, a useful exam ple of Members agreeing in the Committee on 
workable, common-sense procedures to facilitate th e notification procedures of this Agreement. 
Something could and should be agreed with resp ect to Articles 25.8 and 25.9. This simple and 
transparent procedural proposal did not require ag reement by the Negotiating Group on Rules, as 
was demonstrated by the Committee's previous actions in G/SCM/117. The standard practice of the Committee for regular notification questions under Article 25 of the Agreement was to keep 
unanswered questions on the agenda. Identical treatment should be given to unanswered 
questions under Article 25.8.  The US would take on board the comments provided in considering whether to revise the proposal and how to move forward.  
48.  The Chair informed the Committee that it had received a notification from Gabon for the 
years 2011 – 2013.  
49.  The Committee took note of the statements made.  
5  PROCEDURES FOR REVIEW OF 2013 NEW AND FULL SUBSIDY NOTIFICATIONS 50.  The Chair recalled that the 2013 new and full notifications were due on 30 June 2013, and 
would be subject to review in special meetings beginning in the autumn. The Committee needed to 
decide on procedures for the review of the notifications. During the last four cycles, reviews were 
based on the procedures in G/SCM/117, adopted in 2005. The Chair proposed that the Committee 
agree to conduct the review of the 2013 new an d full notifications on the basis of the same 
procedures.  
51.  The Committee so decided. 
6  CONSTANT DOLLAR METHODOLOGY FOR GRADUATION FROM SCM ANNEX VII(B)  
52.  The Chair recalled that, pursuant to the Doha Ministerial Decision on Implementation-Related 
Issues and Concerns (document WT/MIN(01)/17, paragraph. 10.1), Annex VII(b) to the SCM 
Agreement listed Members until their GNP per capita reached US $1,000 in constant 1990 dollars for three consecutive years. As of 1 January 2003, the methodology set forth in G/SCM/38, Appendix 2 had applied for making these calculations. In accordance with this Decision, since then 
the Secretariat circulated annual notes in document series G/SCM/110 updating the GNP per capita 
figures for the Members listed in Annex VII(b) based on that methodology. The most recent version, Addendum 9, had been circulated in June 2012. The Secretariat would circulate updated 
calculations when the necessary World Bank data became available, during the summer.  
53.  The Committee took note of the Chairman's statement. G/SCM/M/85 
 
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  7  PERMANENT GROUP OF EXPERTS 
54.  The Chair informed Members that the term of office of Mr Jeffrey May on the Permanent 
Group of Experts was expiring, and that the Commi ttee should elect a new Member to replace him. 
Two nominations had been received by the deadlin e :  M r  C h r i s  P a r l i n  o f  t h e  U S ,  a n d  M r  J o s e  
Antonio de la Puente of Peru.  
55.  At its October 2012 regular meeting, the Committee had discussed certain procedural changes 
aimed at increasing transparency in the election process. The Chair had indicated that he would 
take into account some of these changes for this election. The main proposed changes were:(i) the 
Chair would circulate a communication to all Members establishing a clear deadline for submission of nominations, and providing notice of the timeline for his or her informal consultations with Members on the nominations; (ii) as soon as the deadline for nominations had passed, the 
Secretariat would distribute directly to Members the CVs of all candidates whose nominations were 
received by the deadline; and (iii) the Chair woul d organize an informal meeting of the Committee 
before finalizing a recommendation to the Committee for which candidate would be proposed for 
election at the formal meeting. Concerning the selection criteria to be applied, a number of 
delegations had emphasized at the October 2012 meeting that the criteria set forth in Article 24.3 were sufficient, and no Member had proposed additional criteria.  
56.  The Chair had circulated to Members a document announcing the deadline for the submission 
of candidacies, and also the CVs of the two nomi nees. He had convened an informal meeting on 
25 March in which he reported, in general terms, on the status of his informal consultations. Following that meeting, he extended to 12 April the deadline for Members to express any views or 
preferences. Between 25 March and 12 April he was contacted by several additional Members. 
While all Members expressing views considered th at both candidates fulfilled the criteria of 
Article 24.3 of being independent and highly qualifie d in the fields of subsidies and trade relations, 
and a number of Members indicated that they could join a consensus around either candidate, 
other Members expressed clear preferences for one of the candidates. On the basis of the views 
expressed, the Chair had recommended by fax that  the Committee elect Mr Chris Parlin to the 
Permanent Group of Experts.  
57.  The Committee so decided.  
8  REQUEST TO CHINA FROM THE US PURSUANT TO ARTICLE 25.8 
58.  The Chair recalled that written questions from the US to China pursuant to Article 25.8 could 
be found in document G/SCM/Q2/CHN/46, dated 29 October 2012. 59.  The US said that it had not submitted these questions frivolously. The US had deep concerns 
about the transparency of China's industrial subsidy regime, and the incomplete and untimely 
nature of China's two subsidy notifications during the past 12 years. The incompleteness of the 
notifications was obvious to anyone who had studied China's economic development policies. In the fall of 2011, the US had counter-notified nearly 200 programmes it had found in China, and 
had provided full, legal documentation for each program. Many of these programmes had been 
terminated by China pursuant to dispute settlement proceedings started by the US. All but a handful still had not been notified.  
60.  In the light of China's failure to respond substantively to the US counter-notification, and 
China's grossly deficient second subsidy notification, the US was forced to seek information under 
Article 25.8 on additional, newer programmes. Members should read through the questions, all of which were based on solid documentary evidence covering the following sectors: iron and steel, 
fisheries, high-tech, textiles, non-ferrous metals, light industry, shipbuilding, semiconductors and 
civil aircraft. The types of support included: grants, loans, interest rebates, tax breaks, preferential 
land use and exemptions from land development fees. China was required to provide information 
regarding these programmes "as quickly as possibl e and in a comprehensive manner." However, it 
had been nearly six months since China received the questions. The US looked forward to China's answers. 
61.  China was still studying the details of the request but noted that it had notified some items 
referred to therein. Item 8, the interim review on tax deduction for research and development G/SCM/M/85 
 
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  expenses, was notified in G/SCM/N/155/CHN in programme No. 42. Item 9, tax deduction for 
technology development, also had been notified, as programme no. 40 in China's notification. Items 10 and 11, related to the integrated circui t industry, reflected the latest development in 
China's policies regarding the industry. Their predecessors had been notified as Programmes 
Nos. 85 and 86 in China's notification. These would be updated in China's future notification. 
Item 17 in the US request related to trade promotion for the agriculture sector, and light industrial and textile products. The central Government was waiting for information from local governments 
on their own such programmes. The central le vel programme had already been notified as 
Programme 51. China would keep the Committee informed as further information became available.  
62.  The US recalled that Article 25.9 provided that Members "shall provide sufficient details to 
enable the other Member to assess their compliance with the terms of this Agreement". Although 
carefully noting China's answers, the US considered that the level of detail provided might not be sufficient for an assessment. Did China intend to provide its answers in writing as this would be 
valuable to Members' assessments? The US reserved its right to ask further questions. 
63.  China noted the comments, which would be reported to capital. 64.  The Committee took note of the questions, answers and statements made. 
9  ELIMINATION OF EXPORT SUBSIDIES FOR TEXTILES AND APPAREL BY INDIA 
PURSUANT TO ARTICLE 27.5 OF THE SCM AGREEMENT - REQUEST FROM THE US AND TURKEY 
65.  The US stated that on the basis of 2010 Secretariat calculations on the export 
competitiveness of Indian textile and apparel products, India had reached export competitiveness 
no later than 2007. Therefore, India had an obligation – since at least 2007 – to gradually phase out export subsidies provided to numerous products in this sector. The US did not believe that 
India had taken concrete action towards implementing this obligation, and was concerned about 
Indian press reports and various legal measures that indicated that India had implemented new or had extended existing export incentives. Coming well after India's phase-out obligation was 
triggered, these actions were particularly disturbing. 
66.  For the language of Article 27.5 to "gradually phase out" these subsidies to have meaning, it 
must at least require that no new, additional  export subsidies be provided to the export 
competitive sector. India had made various claims that certain programmes might have been 
terminated and that perhaps others were not specific subsidies. India also had argued that this 
Committee must consider and resolve all legal questions before India had to begin any action. The US questioned whether this was the proper ro le of the Committee and feared the systemic 
implications if all Members were to take a similar position with respect to WTO obligations that 
might be subject to more than one legal interpretation. The US would welcome further bilateral engagement, but numerous requests to meet had yet to result in a substantive discussion. 
67.  Turkey said that the Secretariat's calculations  made clear that, according to Article 27.6, India 
had reached export competitiveness at least in 2007 in the textile and apparel sector, and 
therefore had to phase out its export subsidies over 8 years starting in 2007. This matter had been on the Committee's agenda since 2010 with no steps taken by India to phase out its export 
subsidies. The textile and apparel sector was of significant importance in Turkey, providing 15.3% 
of industrial production, 6.7% of GDP, 16.7% of total exports, and 25% of total employment. 
While India's export subsidies in this sector were  a systemic issue, Turkey also had a commercial 
interest. Where Indian export subsidies resulted in significant trade distorting effects, they created 
unfair competition for Turkish textile and apparel companies operating in international and domestic markets. Turkey urged India to identify to the Committee its full range of export subsidy 
programmes that benefitted the textile and apparel industry and not to adopt new export subsidy 
programmes during this phase-out period. Turkey looked forward to information about a structured phase-out plan for these programmes. 
68.  Japan recalled that export subsidies were one of the most trade distortive, prohibited under 
the Agreement. If a developing Member gained export competitiveness in any given product, it 
must phase out its export subsidies, per Article 27. 5. If a Member kept providing export subsidies G/SCM/M/85 
 
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  even after it became export competitive, its exports would be hugely advantaged compared to 
those exports from other developing Members without export competitiveness. Thus, it might hurt the exports of other smaller developing Members and even hinder their possibility of becoming 
export competitive in the future. Japan reiterated the importance of phasing out export subsidies 
and urged those Members who gained export competitiveness to immediately take necessary 
actions. 
69.  The EU supported the previous speakers in asking India to make every effort to ensure 
compliance with the 8-year phase-out period under Article 27.5 for this sector. The EU asked India 
what steps it was taking in this matter.  
70.  India recalled its previous intervention on this issue. India was committed to meeting its 
obligations under the Agreement but wanted clarity and a common understanding on the definition 
of product and when the 8-year period for phasing out any subsidies started. The clarity of the 
relevant Articles was systemic, not specific to India or the US, and India was prepared to work with others to reach this goal. The US view that regardless of the resolution of the legal issues of 
product definition or the beginning of the phase- out period, India would be export competitive, 
was over-simplified. At the implementation level, the results would be different in terms of coverage of tariff lines and where and when export competitiveness was reached, because the 
share in world trade was computed in respect of section or heading level.  
71.  India was not convinced by the US argument against raising questions of interpretation of 
obligations before their implementation. India wa s equally concerned about the counter question 
of what would happen if a Member was asked to comply with unclear obligations because certain 
Members had a specific interest. India did not raise the issue of interpretation of obligations in 
general, and this was not a situation in which a Member was refusing to abide by its obligations. On the contrary, India was committed to meeting its obligations and remained constructively 
engaged in the Committee to further develop clarity on interpretation of the obligations in 
Articles 27.5 and 27.6 of the Agreement. Th e various WTO Agreements provided enough 
instruments to deal with this issue.  
72.  Further, subsidies had not increased in this  sector. Many of the schemes quoted by the US 
and Turkey were in the nature of remission or refund of duties on inputs used in exported goods and were not export subsidy schemes. As said prev iously, one of the major schemes in this sector, 
the Duty Entitlement Passbook (DEPB) scheme, whic h was in the nature of remission or refund of 
duties on inputs used in exported goods, had been discontinued from October 2011. India did not 
understand why Turkey and the US believed that there had been an increase in the schemes 
covering this sector. Also, Articles 27.5 and 27.6 did not have any specific standstill provisions. 
India was willing to engage, and was not aware of any request for bilateral consultations made to 
its Geneva Mission.  
73.  The US clarified that requests for bilateral consultations had been made through the capitals. 
India said that it would contact its capital to inquire as to why the US requests did not receive a 
response. 
74.  The Committee took note of the statements made.  
10  NON-NOTIFICATION BY CHINA OF A LLEGED SUBSIDIES CONTAINED IN THE 
REQUEST BY THE US UNDER ARTICLE 25.10 OF  THE SCM AGREEMENT - REQUEST BY THE 
US  
75.  The Chair recalled that the US request to China under Article 25.10 could be found in 
document G/SCM/Q2/CHN/42, dated 11 October 2011. This document had been discussed at 
previous meetings of the Committee. 
76.  The US noted that, until autumn 2011, China had submitted only a single subsidies 
notification in its ten years of WTO Membership. This notification, submitted in 2006 and covering 
the period 2001 to 2004, was considered by the US and several other Members to be incomplete. The US and several other Members repeatedly had requested that China submit its subsidy notifications for the periods subsequent to 2004. At the May 2011 Committee meeting, the US 
made clear that if China did not submit a new notification, it would consider other alternatives G/SCM/M/85 
 
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  under the Agreement, such as the mechanism under Article 25.10. Given the continued absence of 
China's subsidies notification, despite the US urging over many years, the prevalent use of subsidies in China, and China's increasingly important role in the world economy, the US had had no choice but to pursue the procedure under Article 25.10.  
77.  On 6 October 2011, the US submitted a request to China under Article 25.10 of the 
Agreement listing approximately 200 subsidy programmes that China had not notified, with the request that China promptly notify them. Although not required under Article 25.10, as part of its 
submission the US included translated copies of  every underlying legal measure establishing each 
programme. The central and sub-central government subsidy programmes in the request largely covered the period from 2004 to 2011. China had not included any of these programmes in its first notification submitted seven years before. As indicated during the special meeting, the US review 
of China's second subsidies notification, which was submitted in autumn 2011 after the US 
Article 25.10 submission, indicated that approxim ately 190 of the 200 programmes in the Article 
25.10 request were not included. In autumn 2011, the US requested that these 190 subsidy 
programmes be promptly notified to the Committee in accordance with Article 25.10 of the 
Agreement. In the eighteen months since the US co unter notification, China had taken no action in 
response to the US Article 25.10 request.   
78.  The US had reason to believe that the 200 subsidy programmes in its 2011 submission 
represented no more than a small fraction of th e full range of Chinese sub-central and central 
government level subsidies. Concerning the subsidy programmes included in its Article 25.10 request: first, over half of the programmes were at the sub-central level. This supported the point 
that the US had been making for years - sub-central programmes were critically important in 
China, as they were often, if not normally, responsible for implementing central government industrial subsidy policies. On-going US research continued to demonstrate the critical role of sub-
central governments in implementing China's subsidy policies. A subsidy notification from China 
that did not include sub-central programmes was not a full notification. 
79.  Second, this Committee had discussed the importance of five-year plans in China. In 
response, it had heard that five-year plans and other industrial plans did not establish subsidy 
programmes in China. Whether this was true in a narrow, technical sense, it was clear that China's plans established industrial support policies under which actual subsidy programmes were implemented. This process was unfolding in the la test planning cycle. Following the issuance by 
the central government of the twelfth five-year plan for strategic and emerging industries, sub-
central governments were developing subsidy pr ogrammes implementing the central government 
policies. 
80.  Third, certain subsidy programmes in China were  in effect for only a short period, such as two 
years, and then replaced by slightly different  measures. China's use of temporary measures 
underscored the importance of China notifying its subsidy programmes on a regular and timely 
basis. Otherwise, many programmes would have come and gone without any notification provided 
during the programme's effective period, leaving Members in a never-ending game of catch up. 
81.  Fourth, insisting on China's complete and timely notification was not simply an academic 
exercise. The 200 subsidies that the US had identi fied in the 2011 submission appeared to include 
prohibited export and import-substitution subsidies, as well as actionable subsidies that had been 
found to be a direct and significant cause of harm to US industries. Not providing a complete and timely notification of these subsidies fundamentally upset the balance of Members' rights and 
obligations under the Agreement. 
82.  Fifth, that the US had been able to compile  and analyse the information included in its 2011 
submission – much, if not all, from publicly-available Chinese government sources – cast doubts 
on China's repeated claims that it lacked the ability to collect and report the same information, 
especially after more than eleven years of WTO Membership. China was now the world's largest exporter and second largest economy; claims of capacity constraints were difficult to accept. 
83.  Pursuant to the provisions of Article 25. 10, the US had brought these issues to China's 
attention in autumn 2011. China had argued that a handful of programmes in the Article 25.10 
submission overlapped with programmes in one of China's notifications or that the programmes in the Article 25.10 submission were based on a misunderstanding.  G/SCM/M/85 
 
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  84.  The US had accepted Chinese offers to meet bilaterally to discuss the specifics of the 
programmes in the Article 25.10 submission, but th ose discussions had been fruitless. China had 
been unwilling or unable to provide a detailed acco unting of the alleged overlaps or specifics on 
the alleged errors or misunderstandings in the Article 25.10 submission. For the past 18 months, 
China had not taken any action to address substantively the Article 25.10 submission – it had 
neither notified the programmes at issue nor explained why they should not be notified. China also argued that what constituted a subsidy to be notified could be difficult to determine. The US 
considered many of the programmes clear and st raightforward. For example, the Provisional 
Administrative Measures on Exports of Hi-Tech and Equipment Manufacturing Products for Financial Interest Assistance of Laioning Province stated: "The interest assistance fund is mainly for supporting high-tech and equipment manufacturing enterprises whose annual export values are 
more than USD 1 million whose export projects have certain economic benefits and drive the 
development of the regional economy." The Provin cial Administrative Measures on the Northeast 
Old Industrial Base Foreign Trade Development Fund stated: "The foreign trade development 
special fund is ... to support the export enterprises in increasing the competition capacity of export 
products, to optimize the structure of export products, and to support the construction of export processing bases". There seemed little doubt that these programmes should have been notified.  
85.  Most critically, China had not notified any programmes pursuant to the US request made 
eighteen months ago, despite the requirement of Article 25.10 that any specific subsidy programme not notified should be notified "promp tly" to the Committee. China should abide fully 
by its subsidy notification obligations under the Agreement. The US was ready to work with China 
to take concrete steps to move rapidly toward a subsidy notification that presented the full picture 
of China's subsidy regime in a clear and transparent manner. 
86.  The EU continued to be concerned about China's record in notifying its subsidies in trade in 
goods under the Agreement. In October 2011 the US  had activated the provisions of Article 25.10, 
bringing to China's attention the latter's failure to notify all relevant subsidies to the WTO. Following this US action, China should have promptly notified the alleged subsidies in question. It 
was regrettable that to date this had not been done. 
87.  Notification of subsidies to the WTO was an  important element in ensuring the transparency 
provisions of the Agreement as well as the effectiv eness of the work of this Committee. The lack of 
notification by Members not only undermined other Members' rights, but also ignored the 
obligations imposed by the Agreement. It was a ca use of concern that almost half of the Members 
did not make any subsidy notification in 2011. The fa ct that this figure included China, a country 
with a very significant share of world trade wi th many subsidy programmes at both central and 
sub-central level, was all the more serious. 
88.  China had acknowledged in this Committee the importance of the Agreement's notification 
obligations. However, this statement was not supp orted by concrete actions by China. Since its 
October 2011 notification, which covered the period up to 2008 and did not include subsidies 
administered at local level, China had made no further notifications. In previous Committee meetings, China had stated that it was making every effort to produce a complete and comprehensive notification. The deadline for the most recent notification exercise under 
Article 25.1 of the Agreement was 30 June 2011. The EU welcomed China's report that it was 
working on its 2011 notification and looked forward to  receiving it without further delay. It should 
be comprehensive and up to date and include all subsidies administered at central and sub-federal 
level. The deadline for the 2013 exercise was ra pidly approaching and the EU hoped China would 
also meet those obligations.  
89.  Canada supported the US and EU statements, and reiterated that the subsidy notification 
process was a fundamentally important transparency exercise. Canada had strong doubts as to the 
fullness and completeness of China's notification to date, and was looking forward to receiving China's response to the US written submission. 
90.  Japan agreed with the previous speakers. It was disappointing that there had been little 
progress on this issue in the past 18 months. Japan urged China to take further steps to fully 
respond to the questions posed by the US on the counter-notified programmes and to make timely and complete notifications as soon as possible. G/SCM/M/85 
 
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  91.  Australia shared the concerns regarding the in complete notifications, particularly at the sub-
central level, and the disregard for the transparen cy provisions of the Agreement. While it was 
difficult for Australia to make these notifications, particularly at the sub-central level, it managed to do so in a timely fashion. Australia looked  forward to receiving China's notification soon. 
92.  China replied that, as it had said in previous meetings, the US had misunderstood China's 
subsidy programmes and had failed to understan d the interrelationship between the programmes 
notified by China and those contained in the US Ar ticle 25.10 submission. This was particularly the 
case in respect of local subsidies in the form of preferential tax treatment. A number of such 
programmes listed as local subsidies in the US submission had, in fact, been programmes of the central government. As they had been applicable  nationwide, they had been implemented by all 
local governments. These programmes could be found in China's subsidy notifications. While 
Beijing was verifying and analysing the formidable amount of information gathered by the US over 
almost a decade, China would share some of the findings to date in respect of the relationship between the "items" in the US submission and the "programmes" that had been notified 
(terminology that was used in China's statement).  
93.  In the first part of the US submission concerning green technology subsidies, the first item 
concerning the fund for industrialization of wind power equipment had been notified. It was 
programme No. 26 in China's notification in documents G/SCM/N/155 and 186/CHN. In the same 
part of the US submission, under "Central Government Measures", item No.8 concerning Enterprise Income Tax Preferences for Environmental Protection and Energy and Water Saving Programmes had been notified as programme No. 20 in China's notification. Also in this part, 
under the same subtitle of "Central Government Measures", Item No.16 referred to the Enterprise 
Income Tax Law of the People's Republic of China. Programmes related to the Law had all been notified, as programmes Nos. 1, 4, 5, 8, 9, 10, 11, 12, 13, 14, 15, 19, 20, 22, 29, 34, 42, 44, 54, 
and 85 in China's notification.  
94.  Item No.18 on Tax Incentives for Imported Large Power Wind Turbine System had been 
notified as programme No. 83 in China's notification. Item No.19 referred to Value-Added Tax 
Policies on Products Made through Comprehensive Utilization of Resources. While this was a 
relatively new policy issued only at the end of 2008 and was not included in China's notification 
covering 2005-2008, China believed that its predecessor policies, applicable before 2009, had been notified in Nos.23 and 24 in China's notification. 
95.  In the third part of the US submission concerning tax-related subsidies, items No.1 and 2 in 
the US submission actually pointed to the same  programme that China had notified - programme 
No.81. Item No.2 in the US submission was, in  fact, a specific administrative measure adopted 
during the implementation of item No.1 in th e US submission or programme No.81 in China's 
notification. Therefore, it should not have been singled out and listed as another separate subsidy program. Item No.3 in the US submission had been notified as programme No. 82 in China's 
notification. Item No.4 in the US submission had also been covered in China's notification. This 
item mentioned Articles 8, 9, and 10 in the Provisions of the State Council on the Encouragement of Foreign Investment. In China's notification, Article 8 was found in programme No.2; Article 9 in programme No.6; and Article 10 in programme No.1(3). 
96.  Item No.5 in the US submission had been co vered in China's notification. This item mentioned 
Articles 6, 7, and 10 of the Income Tax Law of th e People's Republic of China on Enterprises with 
Foreign Investment and Foreign Enterprises. In China's notification, the three Articles were found 
respectively in programme No.2, programme No.11, and programmes No. 12 and No. 1. Item No.6 
in the US submission had been incorporated in China's notification. This item mentioned Articles 73(6), 75(7), 75(8) and 81 of the Rules fo r the Implementation of the Income Tax Law of 
the People's Republic of China on Enterprises wi th Foreign Investment and Foreign Enterprises. 
Corresponding programmes in China's notifica tion were programmes No. 14, No. 2, No. 6, 
No. 1(3) and No. 11(5). Item No .8 in the US submission, concerning Taxation Policy of Imported Equipment, was notified as programme No. 83 in China's notification.  
97.  The last part of the US submission concerned other subsidies. It was divided into two sections 
of prohibited subsidies and actionable subsidies. In the section of prohibited subsidies, under "Central Government Subsidy Programs", item 1 concerning High-Tech Industrial Development 
Zones had been notified in programmes No.8 and No.9 in China's notification. Item 3 concerning 
Income Tax Exemption for Investment in Domestic Technological Renovation had been notified as G/SCM/M/85 
 
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  in programme No. 82 in China's notification. In other words, item 3 in the fourth part of the US 
submission and item 3 in the third part of the US submission were, in fact, the same programme 
that China had already notified. In the same section of prohibited subsidies, under "Sub-Central Government Subsidy Programs", Income Tax Programmes for FIEs in Guangdong Province 
identified in item 4, had been notified as Central Government programmes implemented 
nationwide. They were not only found in Guangdong  Province, but all other Provinces, Autonomous 
Regions, and Municipalities directly under the Central Government. China notified them as 
programmes No. 1, No. 2, No. 3, No. 4, No. 5, No. 6, No. 8, No. 9, No. 10, No. 11, No. 12, No. 81, 
and No. 83. Income Tax Programmes for FIEs Located in Qingdao Municipality, identified in item 11, had also been notified in China's notification as programmes No. 1, No. 3, No. 4, No. 5, No. 40, No. 41, No. 82, No. 83, and No. 85. These were also programmes of the Central 
Government implemented nationwide. However, they were repeatedly listed in the US submission 
due to the US misclassifying them as local programs. Income Tax Programmes in Huimin Industrial Park in Zhejiang Province, identified in item 12,  had been notified as programmes No. 1, No. 2, 
No. 4, No. 6, No. 12, No. 40, No. 41 and No. 83.  
98.  Income Tax Offsets and/or Refunds for FIEs Purchasing Domestic Equipment in Qingdao 
Municipality and those tax preferences concerning Hangzhou Economic & Technological 
Development Zone identified in item 13 had been notified as programmes No. 1, No. 2, No. 6, and 
No. 12 in China's notification. Under this item, information provided by the US concerning the Income Tax Offsets and/or Refunds for FIEs Purchasing Domestic Equipment in Qingdao Municipality seemed to reproduce those of item 11, i.e. Income Tax Programmes for FIEs Located 
in Qingdao Municipality.  
99.  Item 14 identified Income Tax Programmes in the Hangzhou Export Processing Zone in 
Zhejiang Province. Under this particular item, information provided by the US seemed to be 
exactly the same as information identified in its item 13 concerning Hangzhou Economic & 
Technological Development Zone, for which the corresponding programmes in China's notification had just been cited. Item 15 concerned Income Tax Programmes for Export-Oriented FIEs in 
Dongguan City in Guangdong Province. These pr ogrammes were notified as programmes No. 1, 
No. 2, No. 3, No. 5, No. 6, No. 8, No. 11, No. 12 , No. 40, No. 41 and No. 83 in China's notification. 
Also, the information provided by the US under this item repeated information provided under item 20 of the "Sub-Central Government Subsidy Programs" in the section of actionable subsidies, 
and also overlapped with information provided under item 15 of the "Sub-Central Government 
Subsidy Programs" in the section on actionable subsidies. Item 16 identified Export-Based "Reward" Subsidies for Enterprises in Huimin Industrial Park in Zhejiang Province; this item was 
exactly the same as information provided in item 12 concerning Income Tax Programmes in 
Huimin Industrial Park in Zhejiang Province.  
100.  Regarding the section on actionable subsidies, under "Central Government Subsidy 
Programs", Item 6 referred to Preferential Tax Policies for Township Enterprises. It was 
programme No.30 in China's notification. In the same section, under "Sub-Central Government 
Subsidy Programs", Items 10 and 12 identify respectively Income Tax Exemption for Investors in Designated Geographical Regions of Liaoning Prov ince, Zhejiang Province and Shandong Province. 
China believed that the corresponding programme wa s No.12 in China's notification. On item 14 
concerning Import tariff and VAT refunds and exemptions for FIEs in Zhejiang, information provided by the US corresponded to programmes No. 1, No. 2, No. 3, No. 4, No. 5, No. 6, No. 11, 
No. 12, No. 40, No. 41 and No. 83 in China's notification.  
101.  For item 15 on Import Tariff Refunds and Exemptions for FIEs in Guangdong, this had been 
notified in programmes No. 11 and No. 83 in Ch ina's notification. While implementation of 
programme No. 11 was limited only to Special Economic Zones, programme No. 83 was 
implemented nationwide and was not limited on ly to Guangdong Province. Furthermore, the 
information provided by the US under this item repeated information provided under item 20, and item 15 of the "Central Government Subsidy Programs" in the section of prohibited subsidies. 
Item 17, i.e. Import Tariff Exemptions for the "Encouragement of Investment by Taiwanese 
Compatriots" had been notified as programme No. 83 in China's notification. Import Tariff Exemptions were now implemented on an MFN basis and were not limited only to investors from 
Chinese Taipei. For item 20 on Income Tax Programmes for FIEs in Dongguan City in Guangdong 
Province, information provided by the US repeated information provided under item 15 of the "Sub-Central Government Subsidy Programs" in the section of prohibited subsidies.  G/SCM/M/85 
 
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  102.  On item 22 concerning VAT Exemptions for Newly Purchased Equipment in the Jinzhou 
District of Dalian City, information provided by the US corresponded to programmes No. 1, No. 2, No. 5, No. 6, No. 12 and No. 40 in China's notification. On item 25 concerning Support for Registered High-Tech Projects by the Governme nt of Huadu District of the Guangzhou City, 
information provided by the US corresponded to programmes No. 1, No. 2, No. 3, No. 6, No. 12, 
No. 43, No. 81 and No. 83 in China's notification. 
103.  Producing these findings had been painful and time-consuming, and was still on-going. China 
wished to clarify the so-called non-notification by China of the alleged subsidies contained in the 
US Article 25.10 submission. Such an accusation  was irresponsible if the US had studied the 
Chinese notification seriously or had understood it correctly. China might provide additional information in future Committee meetings following the on-going verification and analysis back in 
China. 
104.  The US considered the clarification to be a helpful but preliminary response to the US 
Article 25.10 submission. Because of the vast amount  of details in the Chinese statement, the US 
asked if China would provide this information in writing. The US requested that this item remain on 
the agenda of the Committee's next meeting.  
105.  The Committee took note of the questions, answers and statements made.  
11  NON-NOTIFICATION BY INDIA OF A LLEGED SUBSIDIES CONTAINED IN THE 
REQUEST BY THE US UNDER ARTICLE 25.10 OF  THE SCM AGREEMENT - REQUEST BY THE 
US 
106.  The Chair recalled that the US request to India under Article 25.10 could be found in 
document G/SCM/Q2/IND/20, dated 10 October 2011.  107.  The US recalled that India's last "new and fu ll" subsidy notification covered only three export 
subsidy programmes administered by the central government. At the time that India submitted 
this notification, the US and several other Members had expressed serious concerns about its 
timeliness and completeness. A subsidies notification that included only a small fraction of the programmes that should be notified under Article 25 should not be considered a full notification. 
This approach would undermine the notification obligation of the Agreement and raised serious 
systemic issues. 
108.  In the spring of 2011, the US had informed the Committee that if Members were not going 
to honour their subsidy notification obligation, the US would have to consider other alternatives 
under the Agreement, such as the mechanism under Article 25.10. On 6 October 2011, the US had 
submitted a request to India under Article 25.10 of the Agreement which listed approximately 50 subsidy programmes at both the central and sub-central levels in India that had not been notified, 
and requested that they be promptly notified. Al though not required under Article 25.10, the US 
had included in its submission copies of all the underlying legal measures that established all 50 programs. These subsidy programmes provided specific subsidies within the meaning of the 
Agreement, and should, therefore, be notified.  
109.  India had not notified any programmes pursuant to the US 2011 request, despite the 
requirement in Article 25.10 that any non-notified specific subsidy programmes should be notified "promptly" to the Committee. That said, India subsequently had submitted a notification covering 
numerous fishery subsidy programmes, which the US appreciated, given this critical sector. At the 
previous meeting, India had stated that it was consulting with state governments to seek the necessary information to notify certain programmes. The US requested an update on that process.  
110.  The EU remained concerned about India's record in notifying its subsidies under the 
Agreement. The EU recalled its comments made under the previous item regarding the importance 
of the subsidy notification exercise in ensuring transparency and effectiveness in the Committee's 
work. India should avoid further delays and comply with its obligations under the Agreement by 
filing a complete and up-to-date notification as quickly as possible.  G/SCM/M/85 
 
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  111.  Canada reiterated its comments from the previous agenda item on the importance of 
notification for transparency. Indian notification s to date appeared neither timely nor complete, 
and Canada was looking forward to India's response to the US submission. 
112.  Japan supported the views of the previous  speakers, and emphasized the importance of 
notification. It urged India to make timely and complete notifications as soon as possible. 
113.  India recalled its previous detailed explanations of how some of the programmes listed in the 
US request had already been included in its previous subsidy notifications. Paragraph 123 of the 
minutes of the October 2011 Committee meeting reflected the details provided by India on many 
of the schemes and explained that they were in th e nature of refund or exemption of duties borne 
by inputs used in exported products. Some of the schemes pertained to service sectors and were, 
therefore, not subject to notification. Also, some  of the schemes were in the nature of general 
infrastructure and not specific.  
114.  The central government was consulting with various ministries and the state governments on 
the remaining programs. Gathering the information was continuing but required resources. As a 
part of that process, India recently had notified subsidy programmes relating to the fisheries 
sector. This went beyond the central programmes to the state level programmes and represented movement ahead. India was committed to meeting its obligations under the Agreement. 
115.  The Committee took note of the questions, answers and statements made.  
12  LOCAL CONTENT REQUIREMENT IN RENEWABLE ENERGY SECTOR SUBSIDY SCHEMES 
IN THE US - ITEM REQUESTED BY INDIA 
116.  The Chair informed Members that this item had been placed on the agenda at the request of 
India, which had circulated a request to the US pursuant to Article 25.8, contained in document 
G/SCM/Q2/USA/59.  
117.  India referred to G/SCM/N/220/USA in which the US had notified a number of federal and 
sub-federal subsidy programs. In addition to these programs, a number of US states, local 
governments and authorities maintained subsidy programmes to promote renewable energy. India was concerned that some of these subsidy schemes had provisions relating to local or domestic 
content requirements which raised issues of consistency with Article 3.2 read with Article 3.1 (b) of 
the Agreement. There were also issues of consistency with the TRIMs Agreement read with relevant provisions of GATT. India requested the US to provide details as to which of the state, regional or local level renewable energy programmes provided subsidies, including incentives or 
additional incentives or rebates or credits, contingent upon compliance with domestic content 
requirements such as equipment manufactured or principally manufactured in certain parts of the state, or specific percentages of manufacturing or assembling to be done in a particular region, or 
manufacturing to be done by companies having sign ificant presence in a particular region, or using 
domestic feedstock, etc.  
118.  India sought information, as detailed in G/SCM/Q2/USA/59, with respect to the specific 
renewable energy sector subsidy programmes of the States of Delaware, Minnesota, 
Massachusetts and Connecticut. The relevant provisions of the Public Acts and Guidelines raised concerns about their compatibility with the relevant provisions of the Subsidies Agreement. In the State of Delaware, under the Solar Renewable Energy Credits program, The Delaware Code, Title 
26- Public Utilities, Ch.1.- Public Service Commission, Subchapter III-A - Renewable Energy 
Portfolio Standards (Renewable Energy Portfolio Standards Act) as per Article 356(d) provided that, "a Retail Electricity Supplier or a Rural Electric Cooperative shall receive an additional 10% 
credit toward meeting the RPS for solar or wind energy installations sited in Delaware, provided 
that a minimum of 50% of the cost of the rene wable energy equipment, inclusive of mounting 
components, relates to Delaware manufactured equipment".  
119.  Similarly, in the state of Minnesota, the Xcel Energy Solar Rewards Programme enabled 
customers to access the Minnesota Bonus PV Solar Rebate Programme which, under the heading "Programme Qualifications", stated, among other conditions, that to qualify for the Minnesota Bonus incentive program, an applicant must "… install qualified 'Minnesota Bonus' PV modules as 
defined by state statute". Furthermore, the 2012 Minnesota Statutes, Chapter 116C, section 7791, G/SCM/M/85 
 
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  subd. 3 stated that, "Subd. 3. Rebate eligibility. (a) To be eligible for a rebate under this section, a 
solar photovoltaic module: must be manufactured in Minnesota". 
120.  In Massachusetts, the Programme Manual of the Commonwealth Solar II Photovoltaic Rebate 
Programme (Solicitation No. 2013 CSII-Version 13.0) provided additional rebate for both 
commercial as well as residential projects under the heading "Massachusetts Company 
Components Adder". To qualify for this adder, the System Owner must provide evidence that the modules, the inverter(s), and any other significant component which was important to the 
electricity production of the project were manufactured by a company with a significant 
Massachusetts presence, as determined at the sole discretion of MassCEC.  
121.  In Connecticut, The Residential Solar Investment Programme enabled the eligible recipients 
to access an additional incentive provided in s. 109 of the Public Act No.11-80, which stated that, 
"Sec.109. The Public Utilities Regulatory Authority shall provide an additional incentive of up to 
five per cent of the then-applicable incentive prov ided pursuant to section 106 of this act for the 
use of major system components manufactured or assembled in Connecticut, and another 
additional incentive of up to five per cent of the then applicable incentive provided pursuant to 
section 106 of this act for the use of major system components manufactured or assembled in a distressed municipality, as defined in section 32-9p of the general statutes, or a targeted 
investment community, as defined in section 32-222 of the general statutes".  
122.  In addition to its questions on each of these programmes in G/SCM/Q2/USA/59, India 
requested the US to provide details regarding the current status of each programme, policy or implementing measure in terms of its duration and/or any other time-limits attached to it. India 
also had noticed the presence of subsidies contingent upon local content requirements in the 
renewable energy programmes of the states of Mi chigan, California and Texas. India would ask 
questions about those programmes at the forthcom ing meeting of the Committee on Trade Related 
Investment Measures for the sake of efficiency, although these programmes also raised issues of 
consistency with Article 3.2 read with Article 3.1 (b) of the Subsidies Agreement. Further, India had come across similar programmes mandating local content requirements in some other US 
states, which it was still examining. India reques ted the US to respond to the questions raised 
under Article 25.8 listed in G/SCM/Q2/USA/59 in accordance with Article 25.9. India also asked the US to explain why these programmes had not been included in its subsidy notification. 
123.  The US replied that, as it had just recently received the questions, it needed to consult with 
local officials and would revert with responses. 124.  India requested that this item be included in the agenda of the Committee's next meeting. 
125.  The Committee took note of the ques tions and answers and statements made.  
13  DATE OF NEXT REGULAR MEETING 
126.  The Chair informed Members that the Committee would hold its next regular meeting during 
the week of 14 October 2013. The exact date woul d be confirmed in due course. This meeting 
would be immediately preceded by a special meeting for review of subsidy notifications. The 
proposed date was earlier than usual to allow the Committee to adopt its annual report in time to be considered at the meeting of the Council for Trade in Goods which in turn would report to Ministers on the activities of its subsidiary bodies.  
127.  The Committee so decided. 
14  OTHER BUSINESS 
14.1  Certain possible government assistance provided to a pulp and paper mill in Nova 
Scotia, Canada - Item requested by the US and EU 
128.  The US noted its continued serious concern ov er a provincial government assistance package 
given to a paper mill in Port Hawkesbury, Nova Scotia, Canada. The assistance package at issue 
was given after the paper mill went bankrupt and was sold to a new owner. In the press, the new 
owner made it clear that, absent a certain level of government assistance, the plant was not G/SCM/M/85 
 
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  economically viable and would not be re-opened. Negotiations with the Provincial Government 
resulted in what appeared to be a very generous assistance package that led to the re-opening of 
the plant and the start-up of production, sales and exports. 
129.  As had been feared at the Committee's previous meeting, the production and sales of this 
plant had begun to have serious negative consequences in the market for U.S. paper producers. 
Specifically, according to industry and trade press sources, since the re-opening of the plant a few months earlier: (1) imports into the US from Canada had increased 13 per cent – despite a market 
that was shrinking overall; (2) shipments from US producers had decreased 10 per cent; (3) US 
capacity utilization was down; and (4) prices had fa llen. All of this had happened after the receipt 
of a government assistance package that the ne w owner admitted in the press was needed for the 
plant to survive. But for the receipt of the government assistance package, it appeared that the 
plant at Port Hawkesbury would not be in production. The US urged the Canadian Government and 
the Provincial Government of Nova Scotia to re-c onsider this generous support package, and avoid 
the negative consequences this package appeared to be having on US producers and others 
competing in the US market. 
130.  The EU requested information from Canada on the aid package reportedly given to the Port 
Hawkesbury paper mill by the provincial governme nt of Nova Scotia. The EU presumed that this 
scheme would be notified in Canada's 2013 new and full subsidy notification. 
131.  Canada stated that it took the concerns seriously and reiterated that the circumstances of 
the sale of the Port Hawkesbury mill and its re-o pening were a matter of public record in the 
context of court-sanctioned creditor protection proceedings in which US creditors and other 
stakeholders had figured prominently in the deci sion-making. Canada indicated that the Federal 
Government and the Government of Nova Scotia had worked with the US and the EU to resolve this issue and had already provided responses to the US government's first set of questions in 
November, and to a second set of questions in February. It had provided as much information as 
possible while respecting the business confidentiality of the information. 
132.  The Committee took note of the statements made. 
14.2  United States Countervailing Duty In vestigation of Frozen Warm Water Shrimp - 
Item requested by Viet Nam 
133.  Viet Nam stated that on 18 January 2013, the US had initiated a countervailing duty 
investigation on imports of frozen warm water shrimp from Viet Nam. This was the fourth 
countervailing duty investigation against Viet Nam by the US since Viet Nam acceded to the WTO. 
Viet Nam did not provide subsidies inconsistent with WTO rules and did not have the resources to provide such subsidies.  
134.  Viet Nam urged the US to follow WTO transparency principles in conducting investigations. 
First, Viet Nam requested that the US designate Viet Nam as a developing country in an expedited manner for purposes of the application of countervailing measures. Despite three previous 
countervailing duty investigations and a request from Viet Nam, the US had not taken any action. 
Second, Viet Nam urged the US to provide adequate rules for avoiding the imposition of a double remedy, especially in the context of antidumpin g and countervailing duty proceedings which were 
not concurrent. Third, as the US presumed that any Vietnamese firm in a sector for which the 
Government had issued a development plan would automatically be found to be receiving 
countervailable subsidies unless it was selling at or above an international price (in other words, an outside benchmark) determined by the US, Viet Nam urged the US to act consistently with the 
Subsidies Agreement, particularly with Articles 2 and 14 regarding specificity and benefit issues in 
determining the existence of such a countervailable subsidy. It also requested the US to use a domestic benchmark in its methodology for calculating margins.  
135.  Viet Nam was also concerned that the US was investigating up-stream subsidies (subsidies 
to raw shrimp suppliers) without a proper allegation or evidence that such subsidies were passed through to the downstream producer of the merc handise subject to investigation. Consequently, 
Viet Nam believed that this aspect of the US investigation should be terminated until a proper 
upstream subsidy allegation had been made and supported by evidence. G/SCM/M/85 
 
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  136.  Viet Nam would closely follow the progress of the investigation and methodologies used by 
the US regarding these issues because some of the practices might have potential adverse effects on the final results of the investigation and did not reflect the actual business performance of the concerned companies. Viet Nam hoped that the US would thoroughly address these concerns.   
137.  The US noted that this matter concerned an on-going investigation initiated pursuant to a 
properly submitted petition of the US domestic industry. The US conducted its proceedings in an 
open and transparent manner, in accordance with US law and its international obligations and 
taking into account the views of interested parties. The US Department of Commerce had not yet 
issued a preliminary determination in this investigation. In making its determination, the reasons and rationale for the determination would be provided in a written memorandum which would be available to the public including explanations that responded to any arguments raised by 
interested parties in the course of the proceeding s. The US had met with Viet Nam to discuss this 
issue and would continue to do so.  
138.  The Committee took note of the statements made.  
14.3  Article 27.4 communications from four  delegations -  Report by the Chair 
139.  The Chair reported that communications received from the delegations of El Salvador, 
Dominican Republic, Guatemala, and Jordan, ci rculated in G/SCM/N/251/SLV, /DOM, /GTM, 
and /JOR on 8 January 2013, contained among other things a statement "to initiate the process of 
consultation with the Committee, pursuant to the third sentence of Article 27.4". 
140.  Further to the circulation of these communications, he had received a request from these 
four delegations to put this matter on the agenda of the present meeting. This had been reflected 
in the annotated draft agenda for the meeting. Ho wever, he subsequently had received a further 
request to withdraw this item from the agenda, to allow more time for the relevant delegations to obtain instructions from their capitals. The item thus did not figure on the agenda.  
141.  The Chair had reported these developments to Members at the informal meeting held on 
25 March. He also had reported to Members, for transparency, that subsequent to the circulation of the communications from the four delegation s, a number of other delegations had conveyed 
general questions about them pertinent to the conduct of the Committee's business. The questions 
included: what exactly was the request to be consulted with the Committee, noting that the four delegations were awaiting a final determination by their respective Capitals regarding the relevant 
subsidies; what sort of process was envisaged in the Committee for these communications; how 
these were communications related to the General Council Decision of July 2007; and whether the 
General Council Decision had implications for what this Committee could do.  
142.  As the Chair of the Committee, he had been  ready to facilitate a discussion among Members 
concerning these communications. Given that the four delegations had indicated that they were 
still consulting their Capitals for instructions, it made more practical sense for his successor to see how he might facilitate when the four delegations were more ready.  
143.  The Committee took note of the report. 
15  ELECTION OF OFFICERS 
144.  On the basis of the proposal received from the Chair of the Council for Trade in Goods, the 
Committee elected Mr Marcus Bartley Johns of Australia as Chair, by acclamation, to take effect at 
the end of the meeting. 
145.  On the basis of the Committee Chair's consultations, the Committee elected 
Mr Hamed El Etreby of Egypt as  Vice-Chair, by acclamation. 
146.  The Chair appreciated the work of his Vice-Chair, Mr William Kendall of Canada, who had 
assisted him in all aspects of his work, and thanked the Secretariat.  
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