WT/DS505/1  
G/L/1144  
G/SCM/D109/1  
 
5 April 2016  
(16-1879)  Page: 1/5  
  Original: English  
 
 UNITED STATES – COUNTERVAILING MEASURES ON SUPERCALENDERED PAPER 
 FROM CANADA 
REQUEST FOR CONSULTATIONS BY CANADA 
The following communication, dated 30 March 2016,  from the delegation of Canada to the 
delegation of the United States and to the Chairperson of the Dispute Settlement Body, is 
circulated in accordance with Article 4.4 of the DSU.  
_______________ 
  
My authorities have instructed me to request consultations with the Government of the United 
States pursuant to Article 4 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes, Article XXII:1 of the General Agreement on Tariffs and Trade 1994 
("GATT 1994") and Article 30 of the Agreement on Subsidies and Countervailing Measures  ("SCM 
Agreement") concerning certain countervailing measures with respect to Supercalendered Paper 
from Canada  as well as the United States' ongoing conduct of applying adverse facts available to 
measures "discovered" during the course of a countervailing duty investigation.     
 
1  SUPERCALENDERED PAPER FROM CANADA 
The US countervailing measures at issue with respect to Supercalendered Paper from Canada , 
inter alia , include: 
 
1. Supercalendered Paper from Canada:  Initiation of Countervailing Duty Investigation, 80 
Fed. Reg. 15981 (March 26, 2015); 
 2. Supercalendered Paper from Canada:  Final Affirmative Countervailing Duty 
Determination , 80 Fed. Reg. 63535 (October 20, 2015); 
 
3. Issues and Decision Memorandum for the Final Determination in the Countervailing Duty 
Investigation of Supercalendered Paper from Canada (October 13, 2015); 
 
4. Supercalendered Paper from Canada: Countervailing Duty Order , 80 Fed. Reg. 76668 
(December 10, 2015);  
 
5. The initiation checklist, preliminary determination, questionnaires, verification reports, 
calculations memoranda, other determinat ions, memoranda, reports and measures 
related to the investigation of Supercalendered Paper from Canada ; and   
 
6. 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 (February 8, 2016), including any 
decision to initiate an investigation into the new subsidy allegations filed by the petitioner on February 16, 2016.   
 
Canada considers these US countervailing measures to be inconsistent with provisions of the SCM Agreement and the GATT 1994, including: 
 WT/DS505/1 • G/L/1144 • G/SCM/D109/1 
 
- 2 - 
 
  1. Articles 11.2 and 11.3 of the SCM Agreement as the United States improperly initiated 
an investigation into the provision of Crown stumpage by the Government of Nova Scotia to Port Hawkesbury Paper LP ("PHP") on the basis of an application that did not 
contain sufficient evidence concerning the existence, amount, and nature of the alleged 
subsidy; 
 2. Article 1.1(a)(1)(iv) of the SCM Agreement as the United States improperly found that 
the Government of Nova Scotia and the Nova Scotia Utility and Review Board 
("NSUARB") entrusted or directed Nova Scotia Power Inc. ("NSPI") to provide a financial contribution within the meaning of Article 1.1(a)(1)(iii) to PHP; 
 
3. Article 12.8 of the SCM Agreement as the United States failed to inform the interested 
parties of the essential facts under consideration before it found that the Government of Nova Scotia entrusted or directed NSPI to provide a financial contribution within the 
meaning of Article 1.1(a)(1)(iii) to PHP by obligating NSPI to "serve any resident or 
company" within the province;  
 
4. Articles 1.1(b) and 14(d) of the SCM Agreement as the United States erroneously 
determined that the Government of Nova Scotia and NSUARB through their alleged entrustment and direction of NSPI conferred a benefit to PHP through the provision of 
electricity for less than adequate remuneration;  
 
5. 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 as the United States erroneously found that PHP, rather than the 
previous owner, was the recipient of certain financial contributions and that the benefit 
associated with these financial contributions was not extinguished by Pacific West Commercial Corporation's arm's-length purcha se of NewPage Port Hawkesbury for fair 
market value;  
 6. Articles 12.1 and 12.8 of the SCM Agreement as the United States did not provide 
Resolute FP Canada Inc. ("Resolute") with no tice of the information it required or the 
essential facts under consideration before finding that Resolute provided insufficient 
evidence to establish that its acquisition of its subsidiary, Fibrek, occurred through an arm's-length transaction for fair market value;   
 
7. 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 as the United States improperly failed to find that Fibrek, rather than 
Resolute, was the recipient of certain financial contributions and that the benefit 
associated with these financial contributions was extinguished by Resolute's arm's-length purchase of Fibrek for fair market value;  
 
8. Articles 10, 19.1, 19.3 and 19.4 of the SCM Agreement and Article VI:3 of the GATT 
1994 as the United States failed to ascertain the precise amount of subsidies attributable to the product under investigation and improperly attributed certain alleged subsidies to 
the production of supercalendered paper that were provided to the production of other 
products that were not under investigation;  
 
9. Articles 1.1(a)(1), 1.1(b), 2, 11.1, 11.2, 11.3, 11.6, 12.1, 12.2, 12.3, 12.7, 12.8 and 14 
of the SCM Agreement as the United States: 
 
a. failed to assess whether information "discovered" during the course of the verification 
of Resolute was accurate, adequate and provided sufficient evidence of the existence 
of a subsidy,  
 
b. failed to make a reasoned determination as  to whether the "discovered" information 
reflected the provision of a financial contribution that conferred a benefit to Resolute or whether this "discovered" information could have been specific,  
 
c. improperly resorted to adverse facts available as the information it "discovered" was 
not "necessary information" that related to the alleged subsidies set out in the notice of initiation, 
 WT/DS505/1 • G/L/1144 • G/SCM/D109/1 
 
- 3 - 
 
  d. improperly found that Canada and Resolute did not respond to questionnaires to the 
best of their ability and resorted to adverse facts available when neither Canada nor Resolute had significantly impeded the investigation, 
 
e. improperly relied on adverse facts available with respect to the "discovered" 
information to determine the existence of a countervailable subsidy as well as the amount of subsidy for Resolute,  
 
f. failed to provide Canada and Resolute ample opportunity to present in writing all 
relevant evidence in relation to the information it "discovered" during verification,  
 
g. failed to accord Resolute the right to present evidence orally in relation to the 
information the United States "discovered" during verification, and 
 
h. failed to inform Canada and Resolute of th e essential facts under consideration prior to 
the final determination so as to provide them with an opportunity to defend their interests;  
 
10. Articles 10, 12.7, 19.1, 19.3 and 19.4 of the SCM Agreement and Article VI:3 of the 
GATT 1994 as the United States improperly calculated an "all others" rate for Irving Paper Ltd. and Catalyst Paper that was derived from: (1) alleged company-specific 
subsidies that were only provided to PHP; and (2) Resolute's countervailing duty rate 
which was based, in part, on adverse facts available;  
 
11. Articles 11.2 and 11.3 of the SCM Agreement should the United States improperly 
initiate an investigation into the petitioner's new subsidy allegations during its expedited reviews of Irving and Catalyst on the basis of an application that contains insufficient 
evidence concerning the existence, amount, and nature of the alleged subsidy; and  
 12. Articles 19.1, 19.3 and 19.4 of the SCM Agreement should the United States improperly 
initiate an investigation into the petitioner's new subsidy allegations during its 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.  
 
These US countervailing measures have also, to the extent not already specified above, resulted in 
the imposition or levying of countervailing duties in a manner that is inconsistent with Articles 10, 19.1, 19.3, 19.4 and 32.1 of the SCM Agreement and Article VI:3 of the GATT 1994.  In addition, 
these US measures fail to set out in sufficient detail the findings and conclusions reached and all 
relevant information on issues of fact and law in contravention of Articles 22.3 and 22.5 of the SCM Agreement.  
2  THE UNITED STATES' ONGOING CONDUCT OF IMPROPERLY APPLYING ADVERSE 
FACTS AVAILABLE TO "DISCOVERED" INFORMATION 
The United States improperly applies adverse facts available in order to countervail information 
that it "discovers" during the course of an investigation.  The United States claims that the 
application of adverse facts available to countervail information that it "discovers" during the course of an investigation is permissible as interested Members and interested parties should have 
disclosed this information in response to a question concerning "any other forms of assistance."  It 
also refuses to accept or consider evidence concerning this "discovered" information.  
 Canada considers that this ongoing conduct, or rule or norm of general and prospective 
application, is a measure that is inconsistent with the SCM Agreement.  This US measure is 
evidenced, inter alia , by the following:   
 
1. Countervailing Duty Investigation of Certain Polyethylene Terephthalate Resin from the 
People's Republic of China: Final Affirmative Determination , 81 Fed. Reg. 13,337 (March 
14, 2016), and Issues and Decision Memorandum for the Final Determination in the 
Countervailing Duty Investigation of Certain Polyethylene Terephthalate Resin from the 
People's Republic of China  (March 4, 2016);   
 WT/DS505/1 • G/L/1144 • G/SCM/D109/1 
 
- 4 - 
 
  2. Supercalendered Paper from Canada:  Final Affirmative Countervailing Duty 
Determination , 80 Fed. Reg. 63,535 (October 20, 2015), and Issues and Decision 
Memorandum for the Final Determination in the Countervailing Duty Investigation of Supercalendered Paper from Canada  (October 13, 2015); 
 
3. Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules,  ("Solar 
Cells") from the People's Republic of China: Final Results of the Countervailing Duty 
Administrative Review , 80 Fed. Reg. 41,003 (July 14, 2015),  and Issues and Decision 
Memorandum for the for the Final Determination in the Countervailing Duty Investigation of Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, ("Solar Cells") from the People's Republic of China (July 7, 2015); 
 
4. Certain Crystalline Silicon Photovoltaic Products  ("Solar Panels ") from the People's 
Republic of China: Final Affirmative Countervailing Duty Determination , 79 Fed. Reg. 
76,962, and Issues and Decision Memorandum for the Final Determination in the 
Countervailing Duty Investigation of  Certain Crystalline Silicon Photovoltaic Products ("Solar Panels") from the People's Republic of China (December 15, 2014);  
 
5. Certain Frozen Warmwater Shrimp from the Peop le's Republic of China: Final Affirmative 
Countervailing Duty Determination, 78 Fed. Reg. 50,391 (August 19, 2013), and Issues 
and Decisions Memorandum  for the Final Determination of Certain Warmwater Shrimp 
from the People's Republic of China (August 12, 2013); 
 6. Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, ("Solar 
Cells") from the People's Republic of China: Final Affirmative Countervailing Duty 
Determination and Final Affirmative Critical Circumstances Determination , 77 Fed. Reg. 
63,788 (Oct. 17, 2012), and Issues and Decision Memorandum for the Final 
Determination in the Countervailing Duty Investigation of Crystalline Silicon Photovoltaic 
Cells, Whether or Not Assembled Into Module s, from the People's Republic of China 
(October 9, 2012);  
 
7. final determinations, issues and decision memoranda and similar determinations issued 
in other US investigations or reviews, which reflect this ongoing US conduct; and 
 
8. Section 502 of the Trade Preferences Extension Act which amended section 776 of the 
Tariff Act of 1930 to confirm and broaden the discretion of the United States to apply 
adverse facts available.   
 
Canada considers this ongoing US conduct to be inconsistent with Articles 10, 11.1, 11.2, 11.3, and 11.6 of the SCM Agreement.  In particular , the United States fails to assess whether 
"discovered" information provides sufficient evidence  of the existence of a subsidy as required by 
Articles 11.1, 11.2 and 11.6 which results in the imposition of countervailing duties in a manner 
inconsistent with Article 10 of the SCM Agreement.  The United States also does not review the accuracy and adequacy of the "discovered" information to determine whether it provides sufficient 
evidence as required by Article 11.3 of the SCM Agreement.   
 This US measure also improperly applies adverse facts available to "discovered" information that is 
not "necessary information" in a manner that is inconsistent with Article 12.7 of the SCM 
Agreement.  The "discovered" information is not "necessary" as it is not related to alleged subsidies set out in the public notice of initiation which are the proper subject matter of the investigation.  It follows that the fact that this "discovered" information was not disclosed cannot 
be considered a failure to provide "necessary information" or an effort to significantly impede the 
investigation.   
Canada separately considers the ongoing US conduct of applying adverse facts available in relation 
to information "discovered" during the course of the investigation to be inconsistent with Articles 12.1, 12.7 and 12.8 of the SCM Agreement.  In particular, this ongoing conduct results in the 
United States: 
 
1. failing to provide interested Members and interested parties with ample opportunity to 
present in writing all evidence they consider relevant to the information "discovered" WT/DS505/1 • G/L/1144 • G/SCM/D109/1 
 
- 5 - 
 
  during the course of the investigation in a manner that is inconsistent with Article 12.1 
of the SCM Agreement; 
2. failing to disclose the essential facts under consideration within sufficient time for 
interested Members or interested parties to defend their interests in accordance with 
Article 12.8 of the SCM Agreement; and 
 3. improperly applying adverse facts available in a manner that is inconsistent with Article 
12.7 of the SCM Agreement as the interested Members and interested parties did not 
refuse or fail to provide necessary information or otherwise impede the investigation.   
As a consequence of the breaches described above,  this ongoing US conduct is also inconsistent 
with Articles 1.1(a)(1), 1.1(b), 14, 19.1, 19.3, 19.4 and 32.1 of the SCM Agreement and 
Article VI:3 of the GATT 1994.   
 
* * * 
 
The US countervailing measures in Supercalendered Paper from Canada  and the ongoing US 
conduct of applying adverse facts available to information "discovered" during the course of an 
investigation, therefore, nullifies or impairs benefits accruing to Canada directly or indirectly under 
the cited agreements.  Canada reserves the right to address additional measures and claims in the course of 
consultations. 
 Canada looks forward to receiving the United States' reply to this request and to determining a 
mutually convenient date for consultations. 
  
__________