WT/DS437/RW/Add.1  
 
21 March 2018  
(18-1693) Page: 1/63 
  Original: English  
 
  
UNITED STATES – COUNTERVAILING DUTY MEASURES  
ON CERTAIN PRODUCTS FROM CHINA  
 
RECOURSE TO ARTICLE 21.5 OF THE DSU BY C HINA 
FINAL REPORT OF THE PANEL  
Addendum  
This addendum  contains Annexes A to D to the Report of the Panel to be found in document 
WT/DS437/RW.  
 
 
_______________  
 
 WT/DS437/RW/Add.1  
 
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  LIST OF ANNEXES  
ANNEX A  
PANEL DOCUMENTS  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  A-2 
Annex A -2 Interim Review  A-6 
ANNEX B  
ARGUMENTS OF CHINA  
Contents  Page  
Annex  B-1 Integrated Executive Summary of China  B-2 
ANNEX C  
ARGUMENTS OF THE UNI TED STATES OF AMERIC A 
Contents  Page  
Annex  C-1 Integrated Executive Summary of the United States of America  C-2 
ANNEX D  
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  D-1 Integrated Executive Summary of Australia  D-2 
Annex  D-2 Integrated Executive Summary of Canada  D-5 
Annex  D-3 Integrated Executive Summary of the European  Union  D-9 
Annex  D-4 Integrated Executive Summary of Japan  D-12 
 WT/DS437/RW/Add.1  
 
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ANNEX A  
PANEL DOCUMENTS  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  A-2 
Annex A -2 Interim Review  A-6 
 
 WT/DS437/RW/Add.1  
 
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  ANNEX A -1 
WORKING PROCEDURES O F THE PANEL  
Adopted on 13 December 2016  
 
 
1.  In its proceedings, the Panel shall follow the relevant provisions of the Understanding on Rules 
and Procedures Governing the Settlement of Disputes (DSU). In addition, the following 
Working  Procedures shall apply.  
 
General  
 
2.  The deliberations of the Panel and the documents submitted to i t shall be kept confidential. 
Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute (hereafter 
"party") from disclosing statements of its own positions to the public. Members shall treat as 
confidential information submitt ed to the Panel by another Member which the submitting Member 
has designated as confidential. Where a party submits a confidential version of its written 
submissions to the Panel, it shall also, upon request of a Member, provide a non -confidential 
summary of the information contained in its submissions that could be disclosed to the public.  
 
3.  The Panel shall meet in closed session. The parties, and Members having notified their interest 
in the dispute to the Dispute Settlement Body in accordance with Art icle 10 of the DSU (hereafter 
"third parties"), shall be present at the meetings only when invited by the Panel to appear before 
it.  
 
4.  Each party and third party has the right to determine the composition of its own delegation 
when meeting with the Pan el. Each party and third party shall have the responsibility for all 
members of its own delegation and shall ensure that each member of such delegation acts in 
accordance with the DSU and these Working Procedures, particularly with regard to the 
confidenti ality of the proceedings.  
 
Submissions  
 
5.  Before the substantive meeting of the Panel with the parties, each party shall submit to the 
Panel a first written submission, and subsequently a written rebuttal, in which it presents the facts 
of the case and its arguments, and counter -arguments, respectively, in accordance with the 
timetable adopted by the Panel.  
 
6.  A party shall submit any request for a preliminary ruling at the earliest possible opportunity 
and in any event no later than in its first writ ten submission to the Panel. If China requests such a 
ruling, the United States shall submit its response to the request in its first written submission. If 
the United States requests such a ruling, China shall submit its response to the request prior to 
the substantive meeting of the Panel, at a time to be determined by the Panel in light of the 
request. Exceptions to this procedure shall be granted upon a showing of good cause.  
 
7.  Each party shall submit all factual evidence to the Panel preferably wit h its first written 
submission and no later than during the substantive meeting, except with respect to evidence 
necessary for purposes of rebuttal, answers to questions or comments on answers provided by the 
other party. Exceptions to this procedure shall  be granted upon a showing of good cause. Where 
such exception has been granted, the Panel shall accord the other party a period of time for 
comment, as appropriate, on any new factual evidence submitted after the substantive meeting.  
 
8.  Where the origin al language of exhibits is not a WTO working language, the submitting party or 
third party shall submit a translation into the WTO working language of the submission at the 
same time. The Panel may grant reasonable extensions of time for the translation of  such exhibits 
upon a showing of good cause. Any objection as to the accuracy of a translation should be raised 
promptly in writing, no later than the next filing or meeting (whichever occurs earlier) following 
the submission which contains the translation  in question. The Panel may grant exceptions to this WT/DS437/RW/Add.1  
 
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  procedure upon a showing of good cause, which may include the case where issues of translation 
arise later in the dispute. Any objection shall be accompanied by a detailed explanation of the 
grounds of o bjection and an alternative translation.  
 
9.  To facilitate the maintenance of the record of the dispute, and maximize the clarity of 
submissions, each party and third party shall sequentially number its exhibits throughout the 
course of the dispute. For e xample, exhibits submitted by China could be numbered CHN 1, CHN 2, 
etc. If the last exhibit in connection with the first submission was numbered CHN 5, the first 
exhibit of the next submission thus would be numbered CHN 6.  
 
Questions  
 
10.  The Panel may at any time pose questions to the parties and third parties, orally or in writing, 
including prior to the substantive meeting.  
 
Substantive meeting  
 
11.  Each party shall provide to the Panel the list of members of its delegation in advance of the 
meeting  with the Panel and no later than 5.00 p.m. on the previous working day.  
 
12.  The substantive meeting of the Panel shall be conducted as follows:  
 
a. The Panel shall invite China to make an opening statement to present its case first. 
Subsequently, the Pa nel shall invite the United States to present its point of view. 
Before each party takes the floor, it shall provide the Panel and other participants at 
the meeting with a provisional written version of its statement. In the event that 
interpretation is ne eded, each party shall provide additional copies to the interpreters. 
Each party shall make available to the Panel and the other party the final version of its 
opening statement as well as its closing statement, if available, preferably at the end 
of the m eeting, and in any event no later than 5.00 p.m. on the first working day 
following the meeting.  
 
b. After the conclusion of the statements, the Panel shall give each party the opportunity 
to ask each other questions or make comments, through the Panel. Ea ch party shall 
then have an opportunity to answer these questions orally. Each party shall send in 
writing, within a timeframe to be determined by the Panel, any questions to the other 
party to which it wishes to receive a response in writing. Each party s hall be invited to 
respond in writing to the other party's questions within a deadline to be determined by 
the Panel.  
 
c. The Panel may subsequently pose questions to the parties. Each party shall then have 
an opportunity to answer these questions orally. The Panel shall send in writing, 
within a timeframe to be determined by it, any questions to the parties to which it 
wishes to receive a response in writing. Each party shall be invited to respond in 
writing to such questions within a deadline to be determ ined by the Panel.  
 
d. Once the questioning has concluded, the Panel shall afford each party an opportunity 
to present a brief closing statement, with China presenting its statement first.  
 
Third parties  
 
13.  The Panel shall invite each third party to tr ansmit to the Panel a written submission prior to 
the substantive meeting of the Panel with the parties, in accordance with the timetable adopted by 
the Panel.  
 
14.  Each third party shall also be invited to present its views orally during a session of the  
substantive meeting, set aside for that purpose. Each third party shall provide to the Panel the list 
of members of its delegation in advance of this session and no later than 5.00 p.m. the previous 
working day.  
 WT/DS437/RW/Add.1  
 
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  15.  The third party session shall be conducted as follows:  
 
a. All third parties may be present during the entirety of this session.  
 
b. The Panel shall first hear the arguments of the third parties in alphabetical order. 
Third parties present at the third -party session and intending to pres ent their views 
orally at that session, shall provide the Panel, the parties and other third parties with 
provisional written versions of their statements before they take the floor. Third 
parties shall make available to the Panel, the parties and other th ird parties the final 
versions of their statements, preferably at the end of the session, and in any event no 
later than 5.00 p.m. of the first working day following the session.  
 
c. After the third parties have made their statements, the parties may be g iven the 
opportunity, through the Panel, to ask the third parties questions for clarification on 
any matter raised in the third parties' submissions or statements. Each party shall 
send in writing, within a timeframe to be determined by the Panel, any ques tions to a 
third party to which it wishes to receive a response in writing.  
 
d. The Panel may subsequently pose questions to the third parties. Each third party shall 
then have an opportunity to answer these questions orally. The Panel shall send in 
writing, within a timeframe to be determined by it, any questions to the third parties 
to which it wishes to receive a response in writing. Each third party shall be invited to 
respond in writing to such questions within a deadline to be determined by the Panel.  
 
Descriptive part  
 
16.  The description of the arguments of the parties and third parties in the descriptive part of the 
Panel report shall consist of executive summaries provided by the parties and third parties, which 
shall be annexed as addenda t o the report.  These executive summaries shall not in any way serve 
as a substitute for the submissions of the parties and third parties in the Panel's examination of 
the case.  
 
17.  Each party shall submit an integrated executive summary of the facts and arguments as 
presented to the Panel in its first written submissions, opening and closing oral statements and 
responses to questions and comments thereon following the substantive meeting, in accordance 
with the timetable adopted by the Panel. Each integra ted executive summary shall be limited to no 
more than 20 pages. The Panel will not summarize in a separate part of its report, or annex to its 
report, the parties' responses to questions.  
 
18.  Each third party shall submit an executive summary of its arg uments as presented in its 
written submission and statement in accordance with the timetable adopted by the Panel. This 
summary may also include a summary of responses to questions, where relevant. The executive 
summary to be provided by each third party s hall not exceed 6 pages.  
 
19.  The Panel reserves the right to request the parties and third parties to provide executive 
summaries of facts and arguments presented by a party or a third party in any other submissions 
to the Panel for which a deadline may  not be specified in the timetable.  
 
Interim review  
 
20.  Following issuance of the interim report, each party may submit a written request to review 
precise aspects of the interim report and request a further meeting with the Panel in accordance 
with the  timetable adopted by the Panel. The right to request such a meeting shall be exercised no 
later than at the time the written request for review is submitted.  
 
21.  In the event that no further meeting with the Panel is requested, each party may submit 
written comments on the other party's written request for review in accordance with the timetable 
adopted by the Panel. Such comments shall be limited to commenting on the other party's written 
request for review.  
 
22.  The interim report, as well as the fi nal report prior to its official circulation, shall be kept 
strictly confidential and shall not be disclosed.  WT/DS437/RW/Add.1  
 
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Service of documents  
 
23.  The following procedures regarding service of documents shall apply:  
 
a. Each party and third party shall submit all  documents to the Panel by filing them with 
the DS Registry (office No. 2047).  
 
b. Each party and third party shall file 3 paper copies of all documents it submits to the 
Panel. However, when exhibits are provided on CD -ROMS/DVDs/USB keys, 
2 CD-ROMS/DVDs/ USB keys and 2 paper copies of those exhibits shall be filed. The 
DS Registrar shall stamp the documents with the date and time of the filing. The 
paper version shall constitute the official version for the purposes of the record of the 
dispute.  
 
c. Each party and third party shall also provide an electronic copy of all documents it 
submits to the Panel at the same time as the paper versions, in Microsoft Word 
format, either on a CD -ROM, a DVD, a USB key or as an e -mail attachment. If the 
electronic c opy is provided by e -mail, it should be addressed to DSRegistry@wto.org , 
and cc'd to judith.czako@wto.org , alexis.massot@wto.org  and rodd.izadnia@wto.org . 
If a CD -ROM, DVD or USB key is provided, it shall be filed with the DS Registry.  
 
d. Each party shal l serve any document submitted to the Panel directly on the other 
party. Each party shall, in addition, serve on all third parties its written submissions in 
advance of the substantive meeting with the Panel. Each third party shall serve any 
document submi tted to the Panel directly on the parties and all other third parties. 
Each party and third party shall confirm, in writing, that copies have been served as 
required at the time it provides each document to the Panel.  
 
e. Each party and third party shall f ile its documents with the DS Registry and serve 
copies on the other party (and third parties where appropriate) by 5.00 p.m. (Geneva 
time) on the due dates established by the Panel. A party or third party may submit its 
documents to another party or third  party in electronic format only, subject to the 
recipient party or third party's prior written approval and provided that the Panel 
Secretary is notified.  
 
f. The Panel shall provide the parties with an electronic version of the descriptive part, 
the inte rim report and the final report, as well as of other documents as appropriate. 
When the Panel transmits to the parties or third parties both paper and electronic 
versions of a document, the paper version shall constitute the official version for the 
purpos es of the record of the dispute.  
 
g. The Panel reserves the right to modify these procedures as necessary, after 
consultation with the parties.  
 
 
  WT/DS437/RW/Add.1  
 
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  ANNEX A -2 
INTERIM REVIEW  
1  INTRODUCTION  
1.1.  In accordance with Article 15.3 of the DSU, this section of the Report  sets out the 
Panel's  response to the parties' requests made at the interim review stage. We modified certain 
aspects of the Report in light of the parties' comments where we considered it appropriate, as 
explained below. In addition, a number of changes o f an editorial nature have been made to 
improve the clarity and accuracy of the Report or to correct typographical and other 
non-substantive errors, including those suggested by the parties.  
1.2.  As a result of the changes that we have made, the numbering of f ootnotes in the Final Report 
has changed from the Interim Report. References to footnotes and paragraph numbers in this 
section relate to the Interim Report and, where it differs, includes the corresponding footnote 
numbering in the Final Report.  
2  REQUESTS  FOR REVIEW SUBMITTED  BY CHINA  
Paragraph 7.6  
2.1.  China requests a correction of this paragraph to indicate that its claim under Article 1.1(a)(1) 
of the SCM Agreement was in relation to 11 (rather than 12) Section 129 proceedings.  
2.2.  The United States did not com ment on China's request.  
2.3.  We have decided to grant China's request and have edited this paragraph accordingly. 
Consequential to this adjustment, we have also edited paragraph 7.63.  
Paragraphs 7.6 and 7.7  
2.4.  China requests replacing the term "financial contribution" with "inputs at issue" as the use of 
the term "financial contribution" prejudges the question at issue, which is whether the entities 
providing the relevant inputs are public bodies.  
2.5.  The United St ates did not comment on China's request.  
2.6.  We have decided to grant China's request by replacing the term "financial contribution" in 
these paragraphs with "inputs at issue".  
Paragraph 7.27  
2.7.  China suggests the insertion of the term "allegedly" in the phrase "actions constituting a 
financial contribution". China also suggests additional text to reflect that the "broader government 
function" is in relation to the specific action that is alleged to constitute a financial contribution.  
2.8.  The United States did not c omment on China's request.  
2.9.  We have decided to grant China's request in part by including additional text as follows: "a 
broader government function than the specific action that is alleged to constitute a financial 
contribution". We see no need to modify t he Interim Report on the basis of China's other comment 
on this paragraph.  
Paragraph 7.31, footnote 64  
2.10.   China requests modification of this paragraph as it believes that the European Union did not 
argue that the focus of the public body analysis is the char acter of the relevant entity, as opposed 
to its conduct, but rather identified what it considered to be "the main contentious issue" in the 
dispute.  WT/DS437/RW/Add.1  
 
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  2.11.   The United States does not agree with China's suggestion and considers that footnote 64 of 
the Interim Rep ort correctly characterizes the positions of the European Union and other third 
parties.  
2.12.   We have decided to partially grant China's request by adjusting this footnote to include 
direct quotations from the European Union's third -party submission.  
Paragraphs  7.47, 7.51, 7.185(b), and 7.190(b)  
2.13.   China noted the absence of citations to the relevant portions of the Public Bodies 
Memorandum, CCP Memorandum, and the two memoranda relating to benchmarks in these 
paragraphs.  
2.14.   The United States did not provide any comm ent in this respect.  
2.15.   We have added citations to the relevant memoranda in these paragraphs.  
Paragraph 7.60  
2.16.   China requests modification of this paragraph to reflect that the GOC's refusal to respond to 
requests for information was a position taken by the US DOC that China contested during this 
compliance panel proceeding.  
2.17.   The United States does not agree with China's suggested modification of this paragraph. 
The United States notes the USDOC's position that the GOC declined to provide "complete" 
responses, an d thus considers that neither the USDOC nor the United States asserted that the 
GOC failed to respond at all in five of the Section 129 proceedings.  
2.18.   We have decided to grant China's request by modifying this paragraph to directly cite the 
USDOC's findings  in its preliminary determination, and by including a footnote referencing 
China's  argument that the GOC provided a "substantial portion" of the requested information in 
certain Section 129 proceedings regarding non -majority government -owned enterprises.  
Paragraph 7.75  
2.19.   China requests modification of this paragraph to reflect that its argument was in response to 
a statement made, and later retracted, by the United States at the Panel's meeting with the 
parties.  
2.20.   The United States disagrees with China's sugges tion to modify this paragraph. The United 
States considers that a statement that was explicitly retracted does not constitute an argument of 
the United States, and there is no basis to include a reference to an argument that the United 
States did not make.  
2.21.   We see no need to modify the Interim Report on the basis of China's comment on this 
paragraph. In our view, the quoted portion of China's argument is sufficiently clear without the 
suggested "context" that China requests to be reflected in this paragraph.  Further, the additional 
citations to Appellate Body statements requested by China appear in other paragraphs where 
relevant.  
Paragraphs 7.76 -7.78 
2.22.   China requests deletion or modification of these paragraphs as it considers that neither of 
the examples cit ed in paragraph 7.78 is relevant to the provision of inputs by SIEs or non -SIEs to 
respondent purchasers. China therefore does not believe that it is accurate for the Panel to cite 
these as examples of evidence or analysis in the Public Bodies Memorandum o f the conduct at 
issue in the Section 129 proceedings.  
2.23.   The United States considers that the relevant passages are not offered as examples of 
evidence in the Public Bodies Memorandum relating to "the provision of inputs by SIEs or non -SIEs WT/DS437/RW/Add.1  
 
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  to respondent pur chasers", but rather are references to "interventions by the Chinese government 
(including the CCP)" mentioned in paragraph 7.76.  
2.24.   We decline China's request to delete or modify the examples cited in paragraph 7.78, which 
pertain to "the conduct of providin g inputs, or other conduct at the firm level". We have decided to 
adjust the last sentence of paragraph 7.76 to correspond to the formulation in paragraph 7.78.  
Paragraphs 7.146, 7.200, and 7.206  
2.25.   China notes that there are several references in these para graphs to "government 
intervention" that should be preceded by the term "alleged".  
2.26.   The United States does not agree with China's suggestion to add the term "alleged" before 
"government intervention", as these paragraphs refer to the "findings" of the USDOC  and it would 
not be accurate to say that the USDOC made a finding of alleged government intervention.  
2.27.   We see no need to modify the Interim Report on the basis of China's comment on this 
paragraph, as the relevant statements refer to the findings that were  in fact reached by the 
USDOC concerning "government intervention".  
Paragraph 7.183  
2.28.   China requests modification of the paragraph to reflect that the information provided in 
response to the Benchmark Questionnaires was provided by the GOC rather than by mandatory 
respondents.  
2.29.   The United States did not comment on China's request.  
2.30.   We have decided to grant China's request by replacing the reference to "mandatory 
respondents" in this paragraph with "the GOC".  
Paragraph 7.184  
2.31.   China suggests modification of thi s paragraph to reflect that the cited evidence and analysis 
were only "purportedly" relevant to the question at issue.  
2.32.   The United States does not agree with China's suggestion to add the term "purportedly" 
before "relevant" in this paragraph because. The " question" identified in this paragraph is a quote 
from the Benchmark Memorandum describing the evidence considered and analysis undertaken, 
and the Benchmark Memorandum refers to the Appellate Body's findings as to the relevance of 
such evidence and analys is to the benchmark question.  
2.33.   We see no need to modify the Interim Report on the basis of China's comment on this 
paragraph. In this paragraph, the Panel describes the content of the Benchmark Memorandum in 
relation to the specific question that was review ed by the USDOC. The Panel subsequently 
assesses whether the USDOC's analysis in relation to this question supports the determination 
made, in consideration of the requirements under Article 14(d).  
Paragraph 7.197  
2.34.   China requests modification of this parag raph to reflect that the USDOC did not "establish" 
the existence of "pervasive government intervention".  
2.35.   The United States disagrees with China's suggestion as it considers that there is no dispute 
that the USDOC identified and established pervasive govern ment intervention, notwithstanding 
China's claims about the effects of that intervention.  
2.36.   In light of China's comment, we have decided to replace the word "established" with 
"identified".  WT/DS437/RW/Add.1  
 
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  Paragraph 7.251  
2.37.   China suggests a revision to this paragraph to more accurately reflect China's arguments 
before the Panel by adding the phrase "and taking the USDOC's public body determinations at face 
value".  
2.38.   The United States does not agree with China's suggested additional phrase as it could be 
misconstrued as the Panel 's view if it were to appear in the manner China suggests, when in fact 
that Panel examined the USDOC's public body determinations and found that they are not 
inconsistent with the SCM Agreement.  
2.39.   We see no need to modify the Interim Report on the basis of  China's comment on this 
paragraph, as the paragraph in question specifically concerns the requirements under 
Article  2.1(c) relating to de facto  specificity. The fact that the USDOC's public body determinations 
are contested by China is addressed in the r elevant sections of the Report. Moreover, the current 
text of this paragraph accurately reflects that China considers that the information at issue "at 
most" constitutes evidence that the GOC has provided financial contributions, rather than 
subsidies, dur ing the relevant period.   
Paragraph 7.278(c)  
2.40.   China suggests a modification of this paragraph to accurately reflect the cited part of the 
Input Specificity Memorandum.  
2.41.   The United States did not comment on China's request.  
2.42.   We have decided to accept China's request by quoting directly from the relevant portion of 
the Inputs Specificity Memorandum.  
3  REQUESTS FOR REVIEW SUBMITTED BY THE UNI TED STATES  
Paragraph 7.37  
3.1.  The United States asks the Panel to change the reference to "Section 129 investigations" to 
"Secti on 129 proceedings" throughout the Report, in order to better distinguish original 
investigations from implementation proceedings conducted pursuant to section 129 of the Uruguay 
Round Agreements Act. The changes would affect the following paragraphs: 7.84, 7.89, 7.108, 
7.143, 7.146, 7.179, 7.192, 7.206, 7.214, 7.219, 7.223, 7.227 (footnote 373 of the Interim 
Report, renumbered to footnote 383 of the Final Report), 7.240, 7.254, 7.294, 7.301, 7.302, 
7.303 (two instances), 7.304, 7.306, 7.308, and 7.316.  
3.2.  China did not comment on the United States' request.  
3.3.  We have decided to grant the United States' request by replacing the terms "Section 129 
investigation(s)" by "Section 129 proceeding(s)" throughout the Report in the paragraphs 
identified by the United Sta tes, including corresponding edits in paragraphs 7.213, 7.220, 7.221, 
and 7.222 and headings 7.3.3.3.3.1 and 7.3.3.3.3.2.  
Paragraph 7.48(g)(ii)  
3.4.  The United States asks the Panel to delete the phrase "and the strategic decision making of 
the enterprise" to accurately reflect the original text of the 2010 OECD economic survey of China 
presented in this paragraph.  
3.5.  China did not comment on the United States' request.  
3.6.  We have decided to grant the United States' request by deleting the repetition of "and the 
strategic decision making of the enterprise" in paragraph 7.48(g)(ii) of the Interim Report.  WT/DS437/RW/Add.1  
 
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  Paragraph 7.147  
3.7.  The United States asks the Panel to modify the last sentence of this paragraph to better 
reflect the United States' response to Panel question No.  35.  
3.8.  China did not comment on the United States' request.  
3.9.  We have decided to edit footnote 255 (footnote 262 of the Final Report) to reflect both the 
United States' response to Panel question No. 35, as well as the statement in the Supporting 
Benchmark Me morandum that the USDOC did not need to conduct a specific analysis of the 
market for each input in China during the period of investigation.  
Paragraph 7.161  
3.10.   The United States asks the Panel to replace the reference to "the market" by a reference to 
"a ma rket" in this paragraph to clarify that the Panel is referring to markets in general.  
3.11.   China did not comment on the United States' request.  
3.12.   We see no need to modify the Interim Report on the basis of the United States' comment on 
this paragraph.  
Paragraph  7.177  
3.13.   The United States asks the Panel to clarify that this section of the report relates not only to 
investigations involving steel inputs, but also to the Solar Panels investigation.  
3.14.   China did not comment on the United States' request.  
3.15.   We have decided to grant the United States' request by clarifying the first sentence of 
paragraph 7.177 as follows:  
We recall that in the Section 129 determinations at issue, the USDOC concluded with 
respect to the Pressure Pipe, Line Pipe, and OCTG proceedings …  
We have  also added the following text after the discussion of steel inputs in 
paragraphs  7.177 -7.178:  
With respect to the Solar Panels investigation, the USDOC concluded that the GOC 
"significantly distorts prices in this industry such that there are no potentia l 
benchmarks from the domestic industry."FN 
FN: Supporting Benchmark Memorandum, (Exhibit USA -84), p. 9.  
Paragraph 7.178  
3.16.   The United States asks the Panel to clarify that the relevant evidence on the record 
incorporates multiple GOC responses and three memo randa relating to benchmarks (the 
Benchmark Memorandum, Supporting Benchmark Memorandum, and Final Benchmark 
Determination).  
3.17.   China did not comment on the United States' request.  
3.18.   We have decided to grant the United States' request in part, by adding a refer ence to the 
Final Benchmark Determination in paragraph 7.178.  
3.19.   We see no need to modify the Interim Report on the basis of the United States' other 
comments on this paragraph because we consider that the wording of paragraph 7.178 of the 
Interim Report cor rectly describes the record. In particular, we consider that the reference to "the WT/DS437/RW/Add.1  
 
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  GOC's response to Benchmark Questionnaire s" in this paragraph sufficiently indicates that the GOC 
provided several questionnaire responses.  
Paragraph 7.196  
3.20.   The United State s asks the Panel to modify this paragraph by referring to reasoned and 
adequate explanation s for [the USDOC's] determination s. 
3.21.   China did not comment on the United States' request.  
3.22.   We have decided to grant the United States request in part by referring to 
USDOC's  determination s. However we see no need to modify the Interim Report with respect to 
the other comments made by the United States on this paragraph.  
Paragraph 7.224  
3.23.   The United States asks the Panel to clarify, in this paragraph that China has not 
demonstrated an inconsistency with Articles 1.1(b) and 14(d) in the Solar Panels Section 129 
proceedings.  
3.24.   China asks the Panel to reject the United States' request and sugge sts that the Panel should 
modify paragraph 7.222 by clarifying that the last sentence of this paragraph relates only to the 
question of whether the USDOC failed to consider in -country prices that were available on the 
record.   
3.25.   In view of the parties' comm ents, we have clarified in the second sentence of paragraph 
7.223 that "the USDOC failed to explain, in the OCTG, Solar Panels, Pressure Pipe, and Line Pipe 
Section 129 proceedings, how government intervention in the market resulted  in domestic prices 
for the inputs at issue deviating from a market – determined price." We have also modified the last 
sentence of paragraph 7.222 to clarify that this paragraph relates only to the question of whether 
the USDOC failed to consider in -country prices that were avai lable on the record.  
Paragraph 7.228  
3.26.   The United States asks the Panel to clarify that the USDOC analysed a range of evidence – 
including the granting of subsidies – in order to determine if input prices were market -determined 
for purposes of measuring the  adequacy of remuneration.  
3.27.   China did not comment on the United States' request.  
3.28.   We see no need to modify the Interim Report on the basis of the United States' comment on 
this paragraph as we consider that the paragraph in question is sufficiently clear.  
Paragraph 7.241  
3.29.   The United States asks the Panel to quote the full sentence extracted from the Benchmark 
Memorandum.  
3.30.   China did not comment on the United States' request.  
3.31.   We have decided to grant the United States request by quoting the sentence in its enti rety.   
Paragraph 7.245  
3.32.   The United States asks the Panel to clarify that the alleged subsidies were one of the many 
factors that were the basis of the USDOC's benchmark determinations.  
3.33.   China did not comment on the United States' request.  WT/DS437/RW/Add.1  
 
- A-12 - 
 
  3.34.   We have decided to  grant the United States request by editing the relevant paragraph 
accordingly.  
Paragraph 7.343 and footnote 537 (footnote 547 of the Final Report)  
3.35.   The United States asks the Panel to modify footnote 537 to better reflect the explanation 
given by the Unit ed States in paragraph 270 of its second written submission.  
3.36.   China did not comment on the United States' request.  
3.37.   We have decided to grant the United States request by editing the relevant footnote to 
include a more complete quotation of the United States ' second written submission.  
Paragraph 7.349  
3.38.   The United States asks the Panel to refer to administrative reviews and sunset reviews as 
being conducted in "proceedings" rather than "investigations", in order to more clearly reflect the 
distinction between t hese types of proceedings and original investigations.  
3.39.   China did not comment on the United States' request.  
3.40.   We have decided to grant the United States' request and have modified accordingly the 
following paragraphs of the Interim Report, as well as associ ated headings: 7.351, 7.363, 7.364, 
7.374, 7.381, 7.385, 7.394, 7.395, 7.399, 7.401, 7.406, 7.407, 7.409, 7.415, 7.428 -7.434, 7.437, 
7.439 -7.441, 7.443 -7.445, 7.447 -7.449, 7.451 -7.453, 7.455, 7.459, 7.460, 7.462 -7.464, 
7.466 -7.468, and 7.470.  
Paragraph 7. 375 
3.41.   The United States asks the Panel to replace "original OCTG determination" and "original 
determination" with the terms "OCTG investigation".  
3.42.   China did not comment on the United States' request.  
3.43.   We have decided to grant the United States request and have  thus edited this paragraph 
accordingly.  
Paragraph 7.385 and footnote 581 (footnote 591 of the Final Report)  
3.44.   The United States asks the Panel to add references to the Public Bodies and CCP 
Memoranda in footnote 581.  
3.45.   China did not comment on the United States' request.  
3.46.   We have decided to grant the United States request and have thus edited this paragraph 
accordingly.  
Paragraph 7.431  
3.47.   The United States asks the Panel to refer specifically to the two separate questions 
examined by the USDOC in sunset review s: (a) whether revocation of the CVD order would be 
likely to lead to continuation or recurrence of a countervailable subsidy and (b) which rate to 
report to the US International Trade Commission as the net countervailable subsidy rate likely to 
prevail if  the order were revoked.  
3.48.   China did not comment on the United States' request.  
3.49.   We have decided to grant the United States request in part and have thus edited paragraph 
7.431 accordingly. Having clarified the USDOC's analysis in this paragraph, we do not s ee the need 
to also edit paragraphs 7.438, 7.442, 7.446, 7.450, 7.454, 7.461, and 7.469 . WT/DS437/RW/Add.1  
 
- A-13 - 
 
  Paragraph 7.457  
3.50.   With regard to the nature of the USDOC determination in the context of sunset reviews, the 
United States asks the Panel to refer to "the determination of the net countervailable subsidy rates 
likely to prevail" rather than to the "calculation" of a subsidy rate.  
3.51.   China did not comment on the United States' request.  
3.52.   We have decided to grant the United States request and have thus edited this paragraph 
accordingly.  
 
_______________  
 
 
 
 
 WT/DS437/RW/Add.1  
 
- B-1 - 
 
  ANNEX B  
ARGUMENTS OF CHINA  
Contents  Page  
Annex  B-1 Integrated Executive Summary of China  B-2 
 
 WT/DS437/RW/Add.1  
 
- B-2 - 
 
  ANNEX B -1 
INTEGRATED EXECUTIVE SUMMARY OF  CHINA  
21 June 2017  
 
I. The Section 129 Public Body Determinations Do Not Bring the United States into 
Compliance with Its Obligations Under the SCM Agreement  
 
A. Introduction  
 
1. It has been more than five years since the Appellate Bod y rejected the USDOC's application 
of a per se  rule of majority government ownership to determine whether Chinese enterprises are 
"public bodies" under Article 1.1(a)(1) of the SCM Agreement. In US – Anti-Dumping and 
Countervailing Duties (China)  ("DS379") , the Appellate Body explained that an investigating 
authority conducting a public body analysis must instead determine whether the entity is "vested 
with authority to exercise governmental functions".1 The Appellate Body explained that an 
investigating authority must "engage in a careful evaluation of the entity in question" in order to 
"identify its common features and relationship with government in the narrow sense, having 
regard, in particular, to w hether the entity exercises authority on behalf of government".2 
 
2. In the more than five years since the Appellate Body issued its report in DS379, the USDOC 
has never once engaged in the "careful evaluation" described by the Appellate Body when 
conducti ng a public body analysis of Chinese enterprises. To the contrary, what the USDOC has 
done is take the per se  rule of majority government ownership that the Appellate Body rejected 
and replace it with a per se  rule that is substantially broader. Whereas th e old per se  rule led the 
USDOC to conclude that all majority government -owned entities in China are public bodies, the 
new per se  rule leads the USDOC to conclude that all companies in China , regardless of ownership, 
are public bodies.  
 
3. The new framewo rk applied by the USDOC is described in its "Public Bodies Memorandum", 
which the USDOC first issued in 2012 during the Section 129 proceedings that followed the 
adoption of the reports in DS379. The Public Bodies Memorandum begins with the USDOC's 
asserti on that "an important inquiry in a public body analysis is a determination of 'what functions 
or conduct are of a kind that are ordinarily classified as governmental in the legal order of the 
relevant Member'".3 Based on its review of certain of China's le gal instruments and policies, the 
USDOC concludes that "government oversight and control of the economy, and in particular 
economic decision -making in the state sector", is a "government function" in China for purposes of 
its public bodies analysis.4 The U SDOC also refers to this function as "maintaining and upholding 
the socialist market economy".5 
 
4. After identifying this alleged "government function", the USDOC then analyses whether 
state-invested enterprises ("SIEs") possess, exercise, or are vested w ith authority to "maintain 
and uphold the socialist market economy".6 The USDOC explains that the evidence relevant to this 
determination concerns "the breadth and depth of government control over the economy as a 
whole and over SIEs generally in China".7 Based on its review of certain "indicia" of alleged 
"control", the USDOC concludes that "the government exercises meaningful control over certain 
categories of SIEs in China, and that this control allows the government to use these SIEs as 
instrumentalitie s to effectuate the governmental purpose of maintaining the predominant role of 
the state sector in the economy and upholding the socialist market economy".8 
                                                
1 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 318.  
2 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 319.  
3 Public Bodies Memorandum, p. 2, quoting Appellate Body Report, US – Anti-Dumping and 
Countervailing Duties (China) , para. 297 (CHI -1). 
4 Public Bodies Me morandum, p. 11 (CHI -1). 
5 Public Bodies Memorandum, p. 6 (CHI -1). 
6 Public Bodies Memorandum, p. 12 (CHI -1). 
7 Public Bodies Memorandum, p. 12 (CHI -1). 
8 Public Bodies Memorandum, p. 37 (CHI -1). WT/DS437/RW/Add.1  
 
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5. Since the USDOC issued the Public Bodies Memorandum in 2012, the USDOC has routinely 
conducted  its public body "analysis" within the framework of this Memorandum. The outcome has 
been the same in each instance, including in the Section 129 proceedings under review here. For 
all companies that are majority government -owned, the USDOC has concluded o n the basis of its 
analysis in the Public Bodies Memorandum that the companies are public bodies. For all companies 
that are not majority government -owned, the USDOC has resorted to "adverse facts available" 
based on the GOC's failure to respond to certain  questions regarding the Chinese Communist Party 
(CCP). On the basis of the "facts available" in the Public Bodies Memorandum, the USDOC has then 
concluded that all non -majority government -owned enterprises are also public bodies.  
 
6. Accordingly, the result of the USDOC's "refined" analytical framework for determining 
whether companies in China are public bodies is that, since 2012, the USDOC has consistently 
concluded that all input suppliers in countervailing duty investigations of i mports from China are 
public bodies within the meaning of Article 1.1(a)(1) of the SCM  Agreement. The USDOC has 
reached this conclusion without ever once considering the relevance of any of the evidence that 
the GOC and the mandatory respondents have place d on the record calling into question the 
legitimacy of the USDOC's analysis, including the evidence provided by the GOC in the context of 
these Section 129 proceedings.  
 
7. In DS379, the Appellate Body made clear that "control of an entity by a governmen t, in 
itself, is not sufficient to establish that an entity is a public body".9 Nonetheless, the USDOC 
spends the vast majority of the Public Bodies Memorandum analysing "the breadth and depth of 
government control over the economy as a whole and over SIEs  generally in China".10 It appears 
to be the USDOC's view that what distinguishes its new control -based standard from the control -
based standard that the Appellate Body expressly rejected in DS379 is the USDOC's explanation 
that the control that it purports  to identify "allows the government to use these SIEs as 
instrumentalities to effectuate the governmental purpose of maintaining the predominant role of 
the state sector in the economy and upholding the socialist market economy".11 This is the alleged 
"gove rnment function" that Chinese enterprises are "performing", and it is the performance of this 
function that makes the "indicia of control" identified by the USDOC "meaningful".  
 
8. The glaring defect in the USDOC's analysis is that the USDOC fails to expla in how the 
"government function" it has identified is relevant to the public body inquiry. The USDOC's 
conclusion that "maintaining and upholding the socialist market economy" is a "government 
function" amounts to a conclusion that China is a socialist mar ket economy – a fact which is 
undisputed. Broadly speaking, a purpose of the Chinese government is undoubtedly to "maintain 
and uphold" China's economy, just as other WTO Member governments "maintain and uphold" 
their economies. This conclusion has no disc ernible relevance, however, to "whether conduct 
falling within the scope of Article 1.1(a)(1) is that of a public body".12 
 
9. In China's view, both the Appellate Body's interpretative analysis of the term "public body" 
in DS379 and US – Carbon Steel (India ) ("DS436"), and the Appellate Body's application of its 
analytical framework to state -owned commercial banks (SOCBs) in DS379, demonstrate that there 
must be a "clear logical connection" between the "government function" identified by an 
investigating aut hority and the conduct that is alleged to constitute a financial contribution.13 
                                                
9 Appellate Body Report, US – Anti-Dumping and Countervailin g Duties (China) , para. 320.  
10 Public Bodies Memorandum, p. 12 (CHI -1). 
11 Public Bodies Memorandum, p. 37 (CHI -1). 
12 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 317.  
13 China notes that the "clear logical connection" standard was introduced by the United  States in its 
second written submission, and is not language that China used in its own written submissions. See 
United  States' second written submission, para. 30; see also United  States' opening statement, para. 18. 
However, China explained in its opening statement at the meeting of the parties that if it was in fact the U.S. 
position that there must be a "clear logical connection" between the "government function" and the conduct at 
issue under Article  1.1(a)(1), the n China believed that the parties were essentially in agreement regarding the 
proper legal standard. See China's opening statement, para. 18. The United  States made clear at the meeting 
of the parties that this is an accurate characterization of the U.S. v iew, at least for purposes of the Panel's 
evaluation of the USDOC's public body determinations in the Section 129 proceedings. Accordingly, China 
adopted the U.S. terminology, because China believes that it is an effective (and shorter) way to explain 
China's view, which is that an entity must be vested with authority that it exercises when engaged in the 
conduct at issue under Article  1.1(a)(1), but that the authority vested in the entity may be for the purpose of 
performing a "government function" that is  broader than the particular conduct at issue under WT/DS437/RW/Add.1  
 
- B-4 - 
 
   
10. In the United  States' view, "it is not necessary for the Panel to define the outer bounds of 
what may constitute 'governmental authority' or a 'governmental function' for the purpose of 
resolving this dispute", because "the 'governmental function' identified by the USDOC – 
maintaining and upholding the socialist market economy – has a clear, logical connection to the 
particular conduct under Article 1.1(a)(1) of the SCM  Agreement – providing goods."14 The 
United  States maintains that "[t]he producers of inputs that provided those inputs to the company 
respondents in the investigation were, in doing so, acting to maintain the predominant role of the 
state sector in the economy , and upholding the socialist market economy."15 
 
11. In order to support this assertion, the United  States explains as follows:  
 
Ample record evidence supports the USDOC's conclusion that the Government of 
China exercises meaningful control over the entit ies at issue such that the government 
can use the entities "to effectuate the governmental purpose of maintaining the 
predominant role of the state sector in the economy and upholding the socialist 
market economy." Thus, any time the entities provided inpu ts to the company 
respondents in the investigation – the activity in which the entities engaged on a day -
to-day basis and also conduct that is described under Article 1.1(a)(1) of the 
SCM Agreement – the entities were acting in support of a governmental fu nction in 
China.16 
 
However, the use of the word "[t]hus" at the beginning of the second sentence above does not 
change the fact that the conclusion that follows is a complete non sequitur. Even if it were true 
that the GOC can "use the entities at issue 't o effectuate the governmental purpose of maintaining 
the predominant role of the state sector in the economy and upholding the socialist market 
economy'", it does not automatically follow that the entities' conduct of providing the relevant 
inputs was in s upport of this function.17 
 
12. In fact, in the Pressure Pipe, Line Pipe, Kitchen Shelving, OCTG , and Steel Cylinders  
investigations, the GOC provided extensive evidence in response to the Public Body Questionnaire 
that cuts directly against the conclusion that the entities' conduct of providing the relevant inputs 
was in support of this function. Yet the USDOC ignored this information in its public body 
determinations.18 
 
13. Specifically, as China explained in detail in Section II.D.4 of its first written s ubmission, the 
USDOC failed to consider the various laws and regulations submitted by the GOC that specifically 
insulate SIEs from government interference in their day -to-day business operations. The USDOC 
ignored all of the industrial plans from the provi nces and municipalities where the respondents and 
input producers from the investigations at issue were located, and the fact that none of these 
plans support the conclusion that the entities at issue were performing a "government function" 
when they provi ded inputs. The USDOC also ignored the entity -specific information submitted in 
the Kitchen Shelving  and OCTG investigations that likewise indicated that the entities at issue were 
not vested with relevant government authority, simply asserting that the GO C "refused to respond 
to the Department's requests" and that "information necessary to the analysis of whether the 
producers are 'public bodies' is not available on the record".19 
 
                                                                                                                                                  
Article  1.1(a)(1). See, e.g. China's response to Panel Question  4. China also believes that the idea that the 
"government function" must have a "clear logical connection" to the relevant conduct of that e ntity under 
Article  1.1(a)(1) is consistent with the European Union's view that an investigating authority should examine 
whether the "alleged financial contribution falls within the scope of the governmental function said to make the 
entity a public body. " See European Union oral statement, para. 7.  
14 United  States ' response to Panel question 3, para. 20.  
15 United  States ' response to Panel question 12, para. 89.  
16 United  States ' response to Panel question 12, para. 92.  
17 As China discussed in response to Panel question 4, the USDOC cites evidence that SIE investments  
must be in -line with state industrial policies, but cites no evidence supporting the same conclusion in relation 
to the provision of inputs.  
18 The only information cited by the USDOC in support of the proposition that it "considered" and "relied 
on" evidence provided by the GOC in making its public body determinations was information concerning the 
level of government ownership of the enterprises at issue. See China's first written submission, 
paras.  160-161. 
19 See Preliminary Public Bodies Determination, p.  15 (CHI -4). WT/DS437/RW/Add.1  
 
- B-5 - 
 
  14. The United  States has provided no compelling justification for the USDOC 's failure to comply 
with its obligation to provide a reasoned explanation for why it "rejected or discounted" evidence 
that was contrary to a conclusion that there was a "clear logical connection" between the alleged 
"government function" that it identifi ed and the conduct at issue.  
 
15. The United  States has also steadfastly refused to answer China's questions regarding how 
such a sweeping conclusion would make sense. For example, despite repeated prompting by 
China, the United  States has never explained  how an SIE selling inputs to a private  company for 
less than adequate remuneration would be "acting in support" of the alleged function of 
"maintaining the predominant role of the state sector in the economy". Such a conclusion is even 
less plausible when the input producer is itself a private company, as were many in the Section 
129 proceedings at issue.  
 
16. Furthermore, despite its agreement that "evidence regarding the scope and con tent of 
government policies relating to the sector in which an investigated entity operates" is relevant to 
an investigating authority's public body analysis20, the United  States never explained how 
government policies relating to a particular sector would possibly be relevant under the USDOC's 
framework. If all entities providing all inputs are acting in support of the alleged "government 
function" of "maintaining the predominant role of the state sector in the economy", it seems clear 
to China that sector -specific evidence is utterly irrelevant to the USDOC.  
 
17. In light of the fact that the United  States' assertion that the USDOC established a "clear 
logical connection" between the alleged "government function" and the conduct at issue cannot be 
substant iated based on the record of the Section 129 proceedings, the United  States has also 
suggested that there may not need to be a "clear logical connection" in all cases.  
 
18. In this respect, the United  States highlights the Appellate Body's observation that "there are 
different ways in which a government could be understood to vest an entity with 'governmental 
authority', and therefore different types of evidence may be relevant in this regard".21 The 
United  States explains that in its view, this indicate s that the Appellate Body "has understood the 
concepts of 'governmental authority' and 'governmental function' as being more open -ended than 
China suggests"22, and that "a wide range of governmental functions could be relevant to the 
public body analysis."23 
 
19. While the United  States has repeatedly emphasized the fact that an entity may be vested 
with authority in "different ways", the United  States has never explained why this leads to the 
conclusion that the concepts of "governmental authority" and "gove rnmental function" are "more 
open-ended than China suggests". In light of the Appellate Body's emphasis that the relevant legal 
standard is always the same24, China does not understand why the manner  in which an entity is 
vested with authority to perform go vernment functions should change whether or not there needs 
to be a "clear logical connection" between the authority vested in the entity and the conduct at 
issue under Article 1.1(a)(1).  
 
20. Furthermore, while the United  States argues that "a wide range  of governmental functions 
could be relevant to the public body analysis", the United  States has also emphasized that its 
argument is not that "a public body is an entity vested with authority to perform any function that 
is 'ordinarily' considered a gover nmental function".25 However, the United  States has never 
articulated how it proposes to distinguish between the "wide range of governmental functions" that 
it believes would be relevant to the public body analysis, and those "governmental functions" that 
it believes would not be relevant to such an analysis. Rather, in relation to the proper analytical 
framework for determining whether an entity is a public body, the United  States has left the Panel 
with numerous contradictory statements and unanswered ques tions.  
 
                                                
20 United  States ' response to Panel question 5, para. 32, citing Appellate Body Report, US – Carbon 
Steel, para. 4.29.  
21 United  States ' response  to Panel question 3, paras. 18 -19, quoting Appellate Body Report, US – 
Carbon Steel (India) , para. 4.29.  
22 United  States ' response to Panel question 3, para. 19.  
23 United  States ' response to Panel question 3, para. 19, quoting Appellate Body Report, US – Carbon 
Steel (India) , para. 4.29.  
24 See Appellate Body Report, US – Carbon Steel (India) , para. 4.37.  
25 United  States ' second written submission, para. 43.  WT/DS437/RW/Add.1  
 
- B-6 - 
 
  21. For example, the United  States maintains that it is not arguing that "any entity 'empowered 
by the law of the State to exercise elements of the governmental authority' [is a 'public body'] 
regardless of whether that entity was acting in that c apacity  when engaged in the conduct that is 
the subject of the financial contribution inquiry."26 Yet the United  States maintains that an entity 
vested with authority to "take steps, as needed, to address certain public health issues of pressing 
concern to the state" would properly be considered a public body even if it were providing "cheap 
iron ore".27 
 
22. Accordingly, contrary to the initial statement above, the United  States does appear to 
believe that an entity can be a public body under Article 1.1(a)( 1) regardless of whether the entity 
is acting pursuant to the authority with which it has been vested, at least in some instances . But 
the United  States has provided no basis for the Panel to distinguish these instances from those 
where it believes that an  entity must be empowered to exercise elements of governmental 
authority and must be " acting in that capacity " in order to be a public body.  
 
23. The United  States has repeatedly noted throughout these proceedings that "rather than 
focusing on the conduct  undertaken by the entity, the Appellate Body has emphasized that the 
focus of the public body analysis is on the 'evaluation of the core features of the entity concerned, 
and its relationship with the government in the narrow sense.'"28 Yet the United  States does not 
dispute that when an investigating authority evaluates evidence of "meaningful control" as part of 
its evaluation of the "core features of the entity concerned", as the USDOC did in the Public Bodies 
Memorandum, any alleged government control m ust be exercised in relation to the conduct at 
issue under Article 1.1(a)(1)  in order for such alleged control to be "meaningful".29 The 
United  States' insistence that an investigating authority must focus on the "core features of the 
entity" rather than on  the conduct at issue cannot be reconciled with the United  States' 
acknowledgment that the conduct at issue is an essential element of a proper "meaningful control" 
analysis.  
 
24. The United  States maintains that "China's attack on Commerce's public body determinations 
in the section 129 proceedings here is, in reality, an attack on the findings of the Appellate Body in 
US – Anti-Dumping and Countervailing Duties (China) " in relation to SOCBs.30 Yet as China 
explained in detail in response to Panel question  4, the United  States' own chart in its second 
written submission highlights the difference between the evidence that the Appellate Body focused 
on in its evaluation of whether SOCBs were performing a "government function" when they 
provided loans, and the  evidence that the USDOC relied upon to determine that every single entity 
at issue in the Section 129 proceedings was a public body.31 The United  States' insistence that the 
Appellate Body was not focused on evidence related to the conduct of SOCBs when th ey provided 
loans is also belied by the United  States' own understanding that the Appellate Body was 
examining whether there was sufficient evidence before the USDOC to conclude that the banks 
were "effectively carrying out government functions" when they "'exercise[d] … their functions' 
(lending) ".32 
 
25. Finally, the United  States maintains that China's position regarding the nature of the 
government authority that must be vested in an entity in order for that entity to be a public body 
is "not in accord w ith the findings in prior reports", "is not supported by the text of 
Article  1.1(a)(1) of the SCM  Agreement", and "is not logical."33 Yet China's position is 
indistinguishable from the United  States' own position in DS436, where the United  States argued 
before the Appellate Body that "the authority required of a public body" is the authority to exercise 
the "key governmental functions" in the subparagraphs of Article 1.1(a)(1).34 If the United  States 
believes that China's position in these proceedings is unsu pported and illogical, then it is likewise 
                                                
26 United  States ' second written submission, para. 61 (emphasis added).  
27 United  States ' second writt en submission, paras. 41, 89.  
28 See, e.g. United  States ' second written submission, para. 39, quoting Appellate Body Report, US – 
Anti-Dumping and Countervailing Duties (China) , para. 317.  
29 See United  States ' second written submission, para. 56.  
30 United  States ' response to Panel question 3, para. 19.  
31 See China's response to Panel question 4.  
32 United  States ' second written submission, US – Countervailing Measures (China)  (31 May 2013), 
para. 37 (CHI -68) (emphasis added).  
33 United  States ' opening statement, para. 20.  
34 See United  States ' opening statement before the Appellate Body, US – Carbon Steel (India)  
(24 September 2014), para. 11 (CHI -67). WT/DS437/RW/Add.1  
 
- B-7 - 
 
  condemning its own position before the Appellate Body in the last dispute to examine the meaning 
of the term "public body".  
 
26. In China's view, the contradictory nature of the U.S. submissions reflects the fact that while 
the United  States recognizes the palpably absurd consequences that would flow from the 
conclusion that a public body is an entity vested with any government authority whatsoever, the 
United  States is still trying to defend the USDOC's public bod y determinations in the Section 129 
proceedings at issue. And despite the Appellate Body's unambiguous rejection of the USDOC's 
per se control -based rule in DS379, the USDOC remains unwilling to relinquish a per se  
control -based rule when it comes to a pub lic body analysis of Chinese enterprises.  
 
27. In order to maintain such a per se  rule, the USDOC has identified a "government function" 
that is so broad that the USDOC believes that it covers any and all conduct by any and all 
companies in China.35 As is evident in these Section 129 proceedings, the USDOC believes that the 
expansive "government function" it has identified permits it to ignore any evidence relevant to the 
particular enterprises or industries at issue.  
 
28. The USDOC's analysis bears  no relationship to the case -by-case inquiry that the 
Appellate  Body described in DS379. China recalls the Appellate Body's statement in DS379 that a 
public body is an entity "vested with certain  governmental responsibilities, or exercising certain  
governm ental authority".36 The United  States has not explained how an investigating authority 
would determine whether the government authority vested in an entity is relevant to the public 
body inquiry, and part of the "certain government authority" identified by the Appellate Body, if 
not by reference to whether that authority is logically connected to the conduct that is potentially 
being attributed to the government.  
 
29. The USDOC's failure to demonstrate a "clear logical connection" between the alleged 
"govern ment function" and the conduct at issue, and the USDOC's failure to consider evidence to 
the contrary, renders the USDOC's public body determinations inconsistent with Article 1.1(a)(1) 
of the SCM  Agreement. The USDOC's Section 129 public body determinatio ns have not brought the 
United  States into compliance with its obligations under the SCM  Agreement.  
 
B. The Public Bodies Memorandum Is Inconsistent "As Such" with 
Article  1.1(a)(1) of the SCM Agreement  
 
30. Before the original Panel, China challenged the USDOC's "rebuttable presumption", 
articulated in the context of the Kitchen Shelving  investigation, that majority government -owned 
entities in China are public bodies. The original Panel found that the Kitchen Shelving  policy was 
"as such" inconsistent wit h Article 1.1(a)(1) of the SCM Agreement, because it reflected the same 
government ownership and control standard that had been found by the Appellate Body in DS379 
to be insufficient, as a matter of law, to establish a "public body" within the meaning of that 
provision.  
 
31. In the Section 129 determinations at issue in this dispute, the USDOC stopped relying on the 
Kitchen Shelving  framework and relied instead on the Public Bodies Memorandum to find that all 
entities at issue were "public bodies". Like the "rebuttable presumption", the Public Bodies 
Memorandum is "as such" inconsistent with Article 1.1(a)(1) of the SCM  Agreement for  the 
following four reasons.  
 
                                                
35 The logical extension of the U.S. arguments before the Panel is that the United  States  believes that 
the evidence that the Appellate Body emphasized in relation to SOCBs in DS379 – that SOCBs were required to 
take into account government industrial policies when making loans  – would be unnecessary to support a 
finding that every SOCB in China is a public body. Instead, the United  States  believes that it would be sufficient 
for the USDOC to cite the Public Bodies Memorandum for the proposition that all SOCBs in China are 
performing the function of "maintaining and upholding the socialist market economy", wi thout ever 
demonstrating that this alleged "government function" has anything to do with the provision of loans by the 
relevant entities. The United  States  believes that because the GOC can allegedly use SIEs "to effectuate the 
governmental purpose of main taining the predominant role of the state sector in the economy and upholding 
the socialist market economy", it follows that these entities are performing this "government function" when 
engaged in any conduct.  
36 Appellate Body Report, US – Anti-Dumping an d Countervailing Duties (China) , para. 296 (emphasis 
added).  WT/DS437/RW/Add.1  
 
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  32. First, China demonstrated that the Public Bodies Memorandum is a measure "taken to 
comply" that falls within this Panel's terms of reference under Article 21.5 of the DSU. Despite the 
fact that the Public Bodies Memorandum  was adopted ostensibly to implement the DSB 
recommendations and rulings in DS379, it was the basis for each of the USDOC's determinations in 
the Section 129 determinations that constitute the declared measures taken to comply in this 
dispute .37 The fact th at the Public Bodies Memorandum was issued seven days prior to the filing of 
consultations request in the original dispute is immaterial, because it is undisputedly "part of each 
of the administrative records of each of the section 129 proceedings that the  USDOC undertook to 
implement the recommendations and rulings of the DSB in this dispute."38 
 
33. Second, China established that the Public Bodies Memorandum is a measure susceptible to 
challenge in WTO dispute settlement proceedings. The scope of measures that may be challenged 
before a WTO panel is, in principle, broad, and "any acts or omissions attributable to a 
WTO Member can be a measure of that Member for purposes of dispute settlement proceedings."39 
It is undisputed that the Public Bodies Memorandum is an act attributable to the United  States, 
and China had no obligation to demonstrate that it establishes a "practice" or "methodology", as 
the United  States argues.40 
 
34. Third, China demonstrated that the Public Bodies Memorandum provides a rule or nor m of 
general and prospective application that is challengeable "as such". By its express terms, the 
Public Bodies Memorandum articulates an analytical framework that is general, because it applies 
to an unidentified number of Chinese economic operators, an d prospective, because it applies to 
all future CVD investigations of Chinese imports. As such, the Public Bodies Memorandum has 
normative value, because it provides administrative guidance and creates expectations among the 
public and private actors as to  the USDOC's public body analysis. The existence of a rule or norm 
of general and prospective application is corroborated by evidence that the USDOC has 
systematically applied the Public Bodies Memorandum to make public body determinations since 
its public ation.41 
 
35. Fourth and finally, the Public Bodies Memorandum is "as such" inconsistent with 
Article  1.1(a)(1) of the SCM  Agreement because it restricts, in a material way, the USDOC's 
discretion to act consistently  with Article 1.1(a)(1) of the SCM  Agreem ent. Pursuant to the Public 
Bodies Memorandum framework, commercial entities in China are divided in three categories: 
(i) all entities in which the Government of China has a controlling ownership interest are 
irrebuttably presumed to be "public bodies"; ( ii) entities in which the government of China retains 
a "significant ownership interest" are "public bodies", where there are "additional indicia that show 
whether such SIEs are used as instruments by the government to uphold the socialist market 
economy";  and (iii) entities with "little or no formal government ownership" are "public bodies", 
where there is evidence that the government exercises "meaningful control" over the entity. The 
USDOC's conclusions in relation to all three "categories" of entities a re necessarily inconsistent 
with Article 1.1(a)(1) in each instance in which the Public Bodies Memorandum is applied, because 
the USDOC's conclusions are based on a flawed understanding of what constitutes "meaningful 
control", and in the absence of any de termination that a particular entity is performing a 
"government function" when engaged in the conduct that is the subject of the financial 
contribution inquiry.  
 
II. The USDOC's Decision to Reject In -Country Benchmark Prices Is Inconsistent with 
Articles  14(D), 1.1(B) and 32.1 of the SCM Agreement  
 
A. Articles 14(d) and 1.1(b) of the SCM Agreement  
 
36. In the original proceedings before the Panel, the United  States defended the USDOC's 
findings of "distortion" on the grounds that the Government of China p layed "a predominant role … 
in the market" as a provider of the inputs in question. On appeal, the Appellate Body reaffirmed 
that, under this rationale, an investigating authority must demonstrate that the government 
                                                
37 China's second written submission, para. 108.  
38 China's responses to Panel questions, para. 48 (referring to United  States ' response to Panel 
question  19, para. 139. See also United  States ' response to Panel question 23, para. 148).  
39 China's second written submission, para. 111, quoting Appellate Body Report, US – Corrosion -
Resistant Steel Sunset Review , para. 81.  
40 United  States ' first written submission, para. 167.  
41 China's second written su bmission, para. 117 (referring to Exhibit CHI -54). WT/DS437/RW/Add.1  
 
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  possessed and exercised market power so  as to cause the prices of other suppliers to align with a 
government -determined price. Because the USDOC had made no such showing, the 
Appellate  Body found that the determinations at issue were inconsistent with Article 14(d) of the 
SCM Agreement.  
 
37. In the Section 129 determinations before the Panel, the USDOC abandoned its rationale 
based on the government's role as a provider of the good. The reason for this abandonment is 
clear: the record evidence demonstrated that the Government of China did not po ssess and 
exercise market power in the markets for hot rolled steel, steel rounds and billets, stainless steel 
coil, or polysilicon (the relevant inputs at issue). The facts and economics simply did not support 
the USDOC's original rationale. The United  States' submissions to the Panel confirm that the 
United  States has abandoned this rationale.  
 
38. In place of its original rationale, the USDOC adopted a sweeping new theory for rejecting 
available domestic benchmark prices under Article 14(d). The USDOC's determinations, and the 
United  States' defence of those determinations as set forth in submissions to the Panel, make clear 
that this new theory is not constrained in any meaningful way either by the text of the treaty or by 
facts. It is a theory that repl aces customary rules of treaty interpretation with terms and 
distinctions that are entirely of the United  States' own invention, and that replaces careful 
evaluation of the evidence with sweeping, unsubstantiated assertions.  
 
39. Article 14(d) of the SCM A greement requires an investigating authority to evaluate the 
adequacy of remuneration for the provision of a good "in relation to prevailing market conditions 
for the good … in the country of provision … (including price, quality, availability, marketabili ty, 
transportation and other conditions of purchase and sale)". As a result of the parties' submissions, 
the Panel has before it two competing interpretations of what this provision means and, in 
particular, when this provision permits an investigating aut hority to resort to a benchmark outside 
the country of provision.  
 
40. Consistent with the ordinary meaning of its terms, as confirmed by prior panel and Appellate 
Body reports, China considers that the phrase "prevailing market conditions … in the country  of 
provision" refers to prices that are determined by the interplay of supply and demand within the 
country of provision. The Appellate Body has found that the term "market" in Article 14(d) refers 
to "the area of economic activity in which buyers and sel lers come together and the forces of 
supply and demand affect prices".42 Domestic benchmark prices are "market" prices when they are 
"between independent buyers and sellers in a competitive market where prices are determined by 
the forces of supply and dema nd".43 
 
41. Article 14(d) further specifies that the adequacy of remuneration shall be determined in 
relation to prevailing  market conditions within the country of provision. The ordinary meaning of 
the term "prevailing" is "as they exist" or "which are pre dominant".44 Article 14(d) therefore 
requires the investigating authority to evaluate the adequacy of remuneration in relation to the 
existing or predominant market conditions within the country of provision. The Appellate Body has 
held that to the extent t hat in -country prices are market determined, i.e. determined by the forces 
of supply and demand, such prices "would necessarily have the requisite connection with the 
prevailing market conditions in the country of provision that is prescribed by the second  sentence 
of Article 14(d)".45 
 
42. In the five Appellate Body reports to have addressed the issue of "distortion" under 
Article  14(d), the Appellate Body has consistently referred to "distortion" as the circumstance in 
which the government effectively dete rmines the price at which the good is sold, thus rendering 
the comparison required by Article 14(d) circular. This is the "very limited" circumstance that the 
Appellate Body first identified in US – Softwood Lumber IV  as justifying the use of out -of-countr y 
benchmarks. The three circumstances that panels and the Appellate Body have identified as 
potentially justifying the use of out -of-country benchmarks are all circumstances in which the 
                                                
42 Appellate Body Report, US – Carbon Steel (India) , para. 4.150, citing Appellate Body Report, US – 
Upland Cotton , para. 404. See also Appellate Body Report,  EC – Aircraft, para. 981 (finding that the term  
"market" refers to "a sphere in which goods and services are exchanged between willing buyers and sellers").  
43 Panel Report, US – Softwood Lumber IV , para. 4.154.  
44 Panel Report, US – Softwood Lumber III , para. 7.50 (quoting Concise Oxford English Dictionary, 
p. 1084).  
45 Appellate Body Report, US – Carbon Steel (India) , para. 4.151.  WT/DS437/RW/Add.1  
 
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  government effectively determines the price at which the good is sold , either de jure or de facto . 
These circumstances are: (1) where the government sets prices administratively; (2) where the 
government is the sole supplier of the good; and (3) where the government possesses and 
exercises market power as a provider of the good so as to cause the prices of private suppliers to 
align with a government -determined price.  
 
43. It is undisputed that Chinese prices for the inputs at issue are not set administratively, and 
the USDOC made no finding that they are. It is likewise undisputed that the GOC is not the sole 
provider of these inputs. Nor did the USDOC find that the GOC pos sessed and exercised market 
power in the relevant input markets during the periods of investigation so as to cause the prices of 
other input suppliers to align with a government -determined price. The USDOC's Section 129 
determinations are therefore not bas ed upon any of the three rationales that the DSB has 
previously recognized as a potential basis for rejecting in -country benchmark prices under 
Article  14(d). Nor do the USDOC's Section 129 determinations relate, more generally, to the DSB's 
concern with c ircular price comparisons.  
 
44. The USDOC's Section 129 determinations are, instead, based on a different interpretation of 
Article 14(d), one that the United  States has struggled to articulate coherently during the course of 
these proceedings. To the ext ent that the United  States' proposed interpretation can be inferred 
from its submissions, it appears to be the United  States' position that Article 14(d) allows an 
investigating authority to go beyond the question of whether in -country prices were determin ed by 
the interplay of supply and demand and undertake an additional  inquiry into whether any type of 
government policy or action "affected" the conditions of supply and demand within the relevant 
market. The United  States appears to consider that an inves tigating authority may evaluate the 
"nature" of any type of government policy or action and the "degree" of its influence upon the 
conditions of supply and demand, and on that basis find that available benchmark prices were not 
sufficiently  determined by t he interplay of supply and demand to require their use under 
Article  14(d).  
 
45. The United  States does not offer an interpretative basis for its belief that Article 14(d) 
permits an additional inquiry into whether government policies or actions "affect co nditions" in the 
market. The United  States does not contest the finding of the panel and Appellate Body in US – 
Softwood Lumber IV  that the term "market" in Article 14(d) does not "refer to a 'pure' market, to a 
market 'undistorted by government interventi on', or to a 'fair market value'".46 Nor does the 
United  States contest that a wide variety of government policies and actions have the potential to 
"affect conditions" in a market. Most importantly, the United  States offers no basis to distinguish, 
either as a matter of treaty interpretation or in practice, among all of the different ways in which 
government policies and actions "affect conditions" in markets, based either on the "nature" of 
those policies and actions or the "degree" of influence that they have on market conditions.  
 
46. Beginning with the "nature" of different types of government policies or actions that affect 
market conditions, the United  States offers no interpretative basis for the suggestion that the term 
"market" in Article 14(d) allo ws the forces of supply and demand to be influenced by certain types 
of government policies or actions, but not others. Governments "affect conditions" in the 
marketplace in a myriad of different ways, from the macro (e.g. monetary and fiscal policies) to 
the micro (e.g. laws and regulations that affect particular products or industries). The 
United  States offers no interpretation of the term "market" that would allow only some of these 
government policies or actions to affect the conditions of supply and d emand within a market.  
 
47. The United  States likewise offers no explanation or interpretative support for its suggestion 
that government policies and actions may affect the forces of supply and demand only to some 
"degree". What is this "degree", and how would it be expressed? How is this "degree" discernible 
in the phrase "prevailing market conditions"? The United  States' emphasis on the "degree" of 
government influence upon the forces of supply and demand is particularly troubling in light of the 
fact th at the United  States eschews any obligation to examine actual domestic benchmark prices 
or to identify any causal pathway by which government policies or actions affected those prices. 
The United  States seems to consider that the "degree" of government inf luence upon domestic 
benchmark prices is relevant, but then wants to avoid any obligation to evaluate and substantiate 
what that "degree" of influence actually was.  
                                                
46 Appellate Body Report, US – Softwood Lumber IV , para. 87 (quoting Panel Report, US – Softwood 
Lumber IV , paras. 7.50 -7.51).  WT/DS437/RW/Add.1  
 
- B-11 - 
 
   
48. In sum, the interpretation of Article 14(d) on which the USDOC's Section 129 determina tions 
are based is unfounded as a matter of treaty interpretation. Because the determinations at issue 
are based on the United  States' erroneous interpretation of Article 14(d), the Panel must find that 
the determinations are inconsistent with Article 14(d ) for this reason alone.  
 
49. Under a proper interpretation of Article 14(d), the evidence on the record of the Section 129 
proceedings demonstrated that prices for the inputs at issue were determined by the interplay of 
supply and demand and therefore con stituted "market" prices within the meaning of Article 14(d). 
Notwithstanding the fact that the USDOC did not even bother to solicit information concerning 
Chinese prices for the inputs at issue – the very prices that the USDOC found to be "distorted" – 
the Government of China placed spot market prices for the three steel products on the record. 
These prices, along with the market commentary accompanying these prices, plainly evinced the 
operation of market forces for these products. Neither the USDOC in it s determinations, nor the 
United  States in seeking to defend those determinations, offered any basis in the record evidence 
to reject the operation of market forces evident in these pricing data.  
 
50. The operation of market forces in the Chinese steel se ctor was further evidenced by the 
market structure of the steel industry during the period 2006 -2008 and, in particular, by the 
rapidly growing levels of private investment in the steel industry during that period. SIE producers 
of the products at issue re presented no more than half of domestic Chinese production of these 
products, with non -SIE producers and foreign -invested producers accounting for the remainder of 
the market. Privately -owned steel producers, both Chinese and non -Chinese, invested billions  of 
dollars in the Chinese steel industry during the period 2006 -2008. These undisputed facts cannot 
be reconciled with the USDOC's conclusion that private Chinese prices for the inputs at issue were 
not market -determined prices.  
 
51. At no point in its d eterminations did the USDOC identify a causal relationship between the 
"distortion" factors that it claimed to identify and the prices charged by Chinese suppliers of the 
inputs in question, whether SIE or non -SIE suppliers. During the course of the Panel proceedings, 
the United  States made clear that, in its view, it was neither "necessary nor possible" for the 
USDOC to demonstrate a causal relationship between the "distortion" factors that it relied upon, on 
the one hand, and the domestic benchmark prices  that it chose to reject, on the other. This means 
that the USDOC's findings of "distortion" are based on nothing more than assertion. In the absence 
of any evidence that the factors identified by the USDOC had any effect on available benchmark 
prices, the  USDOC's findings of "distortion" cannot be sustained under any conceivable 
interpretation of Article 14(d).  
 
52. For these reasons, the Panel should find that the Section 129 determinations at issue remain 
inconsistent with Articles 1.1(b) and 14(d) of t he SCM Agreement.  
 
B. Article 32.1 of the SCM Agreement  
 
53. Article 32.1 of the SCM Agreement imposes limits on "the range of actions that a Member 
may take unilaterally to counter … subsidization".47 Under Part V of the SCM  Agreement, the 
permissible resp onses to injurious subsidization are definitive countervailing duties, provisional 
measures, and price undertakings.48 In the Section 129 determinations at issue, the United  States 
countered subsidies allegedly provided to the Chinese steel industry by rely ing upon these alleged 
subsidies as a basis for rejecting available in -country benchmarks when evaluating the adequacy 
of remuneration for steel inputs provided to downstream producers of finished products. This is not 
one of the permissible responses to s ubsidization, and this action is therefore inconsistent with 
Article 32.1.  
 
54. Central to the USDOC's rationale for rejecting available in -country benchmarks in the 
Section 129 determinations at issue is its finding that Chinese steel producers receive "s ubsidies". 
If the United  States believes that Chinese steel producers receive "subsidies", the steps that the 
SCM Agreement permits it to take are: (1) impose definitive countervailing duties, provisional 
                                                
47 Appellate Body Report, US – Offset Act (Byrd Amendment),  para. 252.  
48 Appellate Body Report, US – Offset Act (Byrd Amendment),  para. 231. Part III of the SCM Agreement 
allows a Member to take countermeasures if a subsidizing Member fails to withdraw a prohibited subsidy or 
fails to take appropr iate steps to  remove the adverse effects of an actionable subsidy  or withdraw the 
actionable subsidy . WT/DS437/RW/Add.1  
 
- B-12 - 
 
  measures, or price undertakings in respect of any s teel products imported into the United  States 
that the United  States properly determines to be subsidized and causing injury; (2) undertake a 
proper upstream subsidy analysis to determine whether Chinese producers of the relevant steel 
products did, in fac t, receive actionable subsidies and, if so, how much of the subsidy (if any) 
passed through to downstream purchasers of these products; or (3) request consultations and, if 
necessary, initiate dispute settlement proceedings under Part III of the SCM  Agreem ent if the 
United  States considers that subsidies allegedly provided to Chinese steel producers are prohibited 
subsidies or cause adverse effects.  
 
55. The SCM  Agreement does not contemplate that a Member may counteract subsidization by 
relying upon the ex istence of such subsidies (whether or not shown to be actionable subsidies) and 
their presumed effects as a basis for rejecting in -country benchmarks under Article 14(d). This 
action would circumvent the disciplines that the SCM  Agreement imposes upon the steps that a 
Member may take to counteract subsidization. This action against subsidization is not 
contemplated by the SCM  Agreement and, in fact, directly contravenes the disciplines that the 
SCM Agreement imposes upon actions against alleged upstream sub sidies. The Panel must 
therefore find that the USDOC's Section 129 determinations are inconsistent with Article 32.1 of 
the SCM  Agreement.  
 
III. The USDOC's Section 129 Determinations Remain Inconsistent with Article 2.1(c) 
of the SCM Agreement  
 
56. In the  original proceedings, the Panel found that 12 of the countervailing duty 
determinations at issue were inconsistent with Article 2.1(c) of the SCM  Agreement because the 
USDOC had failed to take into account "the extent of diversification of economic activi ties within 
the jurisdiction of the granting authority, as well as of the length of time during which the subsidy 
programme has been in operation", as required by the last sentence of that provision. The 
United  States did not appeal these findings of the P anel. As a result, the USDOC was required to 
reconsider its findings of specificity in respect of the alleged provision of inputs for less than 
adequate remuneration in each of the investigations at issue.  
 
57. The second of the two factors in the last sen tence of Article 2.1(c) requires the investigating 
authority to take into account "the length of time during which the subsidy programme has been in 
operation". It is evident that, in order to take this factor into account, the investigating authority 
must first identify the relevant "subsidy programme", and then determine the length of time 
during which that subsidy programme, so identified, has been in operation. Only then can the 
investigating authority evaluate whether a subsidy programme has been "use[ d] … by a limited 
number of certain enterprises" taking into account "the length of time during which the subsidy 
programme has been in operation".  
 
58. The Appellate Body has stated that the term "programme" refers to "a plan or scheme of 
any intended pro ceedings (whether in writing or not); an outline or abstract of something to be 
done".49 While a "subsidy programme" would ordinarily be evidenced in writing, "[a] subsidy 
scheme or plan may also be evidenced by a systematic series of actions pursuant to wh ich 
financial contributions that confer a benefit have been provided to certain enterprises."50 The 
"evidence" that the USDOC relied upon in the Section 129 determinations to establish the 
existence and content of twelve input -specific "subsidy programmes" consisted of nothing more 
than the fact that the respondent producers had received these alleged subsidies over the course 
of the one -year period of investigation.  
 
59. The inescapable logic of the USDOC's reasoning is that the provision of a subsidy  would  be 
sufficient to establish the existence of a subsidy programme . In addition, the subsidy  that gave 
rise to the specificity inquiry in the first place would define the content and scope of the subsidy 
programme , so that the two become coterminous. This re asoning, if accepted, would collapse the 
distinction between a "subsidy" and a "subsidy programme", and would render meaningless the 
separate and independent requirement of identifying a "subsidy programme" pursuant to which 
the subsidies at issue were gra nted. Specificity under Article 2.1(c) would become a circular and 
self-fulfilling inquiry. Not only is this a nonsensical result, but it cannot be reconciled with the 
                                                
49 Appellate Body Report, para. 4.141.  
50 Appellate Body Report, para. 4.141.  WT/DS437/RW/Add.1  
 
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  Appellate Body's prior findings. The mere repetition  of actions, without a showing of an y 
systematic feature, cannot establish "a systematic series of actions" probative of a plan or scheme.  
 
60. Because the USDOC's Section 129 determinations did not properly identify and substantiate 
on the basis of positive evidence the existence, scope, a nd content of a "subsidy programme" or 
"subsidy programmes", it follows that the USDOC did not properly evaluate "the length of time 
during which the subsidy programme has been in operation" as required by the recommendations 
and rulings of the DSB. The US DOC could not have identified the length of time during which a 
"subsidy programme" has been in operation without properly identifying what that "subsidy 
programme" is. However, even if the Panel were to accept the USDOC's identification of input -
specific "subsidy programmes", the Panel would still need to reject the USDOC's evaluation of "the 
length of time during which" these alleged "subsidy programmes" have been in operation.  
 
61. The evidentiary basis for the USDOC's finding that the "subsidy programm es" at issue had 
not been in operation "for a limited period of time only" was based on China's explanation that 
SOEs "began producing and selling the inputs" at issue in the PRC "at some point during the period 
covered by the first Five -Year Plan (1953 -1957) and possibly earlier". The problem with the 
USDOC's conclusion is that the fact that Chinese SOEs have produced and sold  a particular input 
over a long period of time does not constitute evidence that those inputs have been sold for less 
than adequate remuneration  over the same period of time.  
 
62. At the very most, and taking the USDOC's public body determinations at face value, the fact 
that Chinese SOEs have produced and sold a particular input over a long period of time serves only 
as evidence that the GOC has provided financial contributions  over that period, not evidence that 
the GOC has provided subsidies over that period. As the Appellate Body has found, "[t]he mere 
fact that financial contributions have been provided to certain enterprises is no t sufficient … to 
demonstrate that such contributions have been granted pursuant to a plan or scheme for purposes 
of Article 2.1(c) of the SCM  Agreement".51 This would include for the purpose of determining "the 
length of time during which the subsidy progr amme has been in operation". Thus, the fact that 
Chinese SOEs have produced and sold the inputs at issue since at least 1957 is insufficient, on its 
face, to establish the length of time during which the alleged "subsidy programmes" have been in 
operation.   
 
IV. The USDOC's Section 129 Land Specificity Determination in Thermal Paper Remains 
Inconsistent with Article 2.2 of the SCM Agreement  
 
63. In DS379, the Appellate Body explained that under Article 2.2 of the SCM Agreement, "[t]he 
necessary limitation on access to the subsidy can be effected through an explicit limitation on 
access to the financial contribution, on access to the benefit, or on access to both".52 The Appellate 
Body also explained that it did not read the panel report in DS379 as implying that "the mere 
existence of a 'distinct' regime would enable a subsidy to be found to be specific to a designated 
geographical region, even if the identical subsidy were also available to enterprises outside that 
designated geographical region".53 
 
64. Despite the Appellate Body's clear message in DS379 that the "mere existence of a 'distinct' 
regime" does not permit an investigating authority to conclude that an alleged land -use rights 
subsidy is regionally specific under Article 2.254, the USDOC explained i n these Section 129 
proceedings that, since DS379, it has "hinged its regional specificity analysis on whether there is a 
'distinct land regime' within [a designated geographical region]".55 
 
65. In relation to the Thermal Paper  investigation, the GOC did n ot respond to the USDOC's 
Section 129 land specificity questionnaire, and so the USDOC concluded based on "adverse facts 
available" that "the LTAR program at issue constitutes a 'distinct land regime' and is therefore 
specific".56 It is well established, ho wever, that the application of "facts available" does not excuse 
the application of an improper legal standard.  
                                                
51 Appellate Body Report, para. 4.143.  
52 Appellate Body Report, US – Anti-Dump ing and Countervailing Duties (China) , para. 378. See  ibid. 
para. 413.  
53 Appellate Body Report,  US – Anti-Dumping and Countervailing Duties (China) , para. 421.  
54 Appellate Body Report,  US – Anti-Dumping and Countervailing Duties (China) , para. 421.  
55 See Preliminary Land Specificity Determination , p. 6 (CHI-24). 
56 See Preliminary Land Specificity Determination , pp. 9 -12 (CHI -24).  WT/DS437/RW/Add.1  
 
- B-14 - 
 
   
66. Based on the investigation record, the USDOC knew that the granting authority did not 
provide land -use rights at a price that was not avai lable to companies outside of the relevant zone. 
The USDOC also knew that there was evidence on the record that cheaper land was available 
outside of the zone. Despite this evidence, the USDOC still concluded that the provision of land -
use rights for LTAR was specific to the ZETDZ because "the LTAR program at issue constitutes a 
'distinct land regime' and is therefore specific".57 
 
67. The USDOC was able to reach this conclusion only because the USDOC applies a legal 
standard under Article 2.2 pursuant to wh ich all "incentives or preferential policies" are potential 
evidence of a "distinct land regime" for the provision of land -use rights. This legal standard cannot 
be reconciled with the Appellate Body's finding that "[t]he necessary limitation on access to the 
subsidy can be effected through an explicit limitation on access to the financial contribution, on 
access to the benefit, or on access to both".58 Accordingly, the Panel should find the legal standard 
applied by the USDOC in Thermal Paper  is inconsisten t with Article 2.2 of the SCM Agreement.  
 
V. The Final Determination in the Solar Panels Investigation Is Inconsistent with 
Articles 1, 2, and 14 of the SCM Agreement for the Same Reasons that the 
Preliminary Determination Was Found Inconsistent by the DSB  
 
68. Before the Panel in the original proce eding, China challenged the USDOC's preliminary  public 
body, input specificity, and benchmark determinations. The Panel concluded that the USDOC's 
preliminary public body determinations were inconsistent with Article 1.1(a)(1) of the 
SCM Agreement59, and th at the USDOC's preliminary input specificity determinations were 
inconsistent with Article 2.1(c).60 On appeal, the Appellate Body found that the USDOC's 
preliminary benchmark distortion determination was inconsistent with Articles 1.1(b) and 14(d) of 
the S CM Agreement.61 
 
69. China considers that the USDOC's final determination in Solar Panels  is a measure "taken to 
comply" under Article 21.5 of the DSU. China believes that the USDOC's final public body, input 
specificity, and benchmark determinations are in consistent with the aforementioned provisions of 
the SCM Agreement for the same reasons identified by the Panel and the Appellate Body in relation 
to the preliminary determinations. Accordingly, China believes that the Panel should conclude that 
the USDOC' s final determinations in the Solar Panels  investigation with regard to public body, 
input specificity, and benchmark distortion are inconsistent with the SCM Agreement.  
 
VI. The United States Has Failed to Bring Itself into Conformity with the 
SCM Agreeme nt in Respect of Subsequent Administrative Reviews, Sunset 
Reviews, and the Ongoing Conduct of Assessing and Collecting Countervailing 
Duties and Cash Deposits Under the Countervailing Duty Orders at Issue  
 
70.  The United  States has failed to bring itself  into conformity with its obligations under the 
SCM Agreement by continuing to issue administrative reviews and sunset reviews under the 
countervailing duty orders at issue in the original dispute, in each instance applying erroneous 
legal standards which serve as a basis for the continued assessment and collection of 
countervailing duties subsequent to the expiration of the RPT.  
 
71. The subsequent administrative and sunset reviews fall within this Panel's terms of reference 
under Article 21.5 of the DSU b ecause they have a sufficiently close nexus, in terms of nature, 
effects and timing , to both the DSB recommendations and rulings and to the Section 129 
determinations which constitute the "declared" measures taken to comply.  
 
72. More specifically, the us e of unlawful legal standards in successive public body, benefit, and 
specificity determinations under the same CVD order provides a sufficiently close link, in terms of 
nature  or subject matter, between the DSB recommendations and rulings, the subsequent reviews, 
and the Section 129 determinations. Similarly, the unlawful inclusion of the improperly initiated 
export restraint subsidies in the calculation of the "all others" rate in successive determinations 
                                                
57 Preliminary Land Specificity Determination, p. 12 (CHI -24). 
58 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , paras. 378 and 413.  
59 See Panel Report, paras. 7.75, 8.1(i).  
60 See Panel Report, paras. 7.257, 8.1(v).  
61 See Appellate Body Report, paras. 4.97, 5.1(b).  WT/DS437/RW/Add.1  
 
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  under the Magnesia Bricks  order provides a suffic iently close link, in terms of nature  or subject 
matter, between the DSB recommendations and rulings, those subsequent reviews, and the 
Section 129 determination in that countervailing duty order.  
 
73. In terms of effects , each of the subsequent administra tive reviews at issue in this dispute 
has generated countervailing duty rates and cash deposit rates that replaced the effects of those 
determinations found to be WTO -inconsistent in the original dispute, or the effects of the 
Section  129 determinations. S imilarly, the sunset reviews at issue have the same effects as the 
immediately preceding review determination, and the superseding Section 129 determinations, as 
a basis for the continued imposition of unlawful countervailing duties under the same CVD orde r.  
 
74.  Finally, each successive review is closely linked, in terms of timing , to the immediately 
preceding review, to the original countervailing duty determination, or to the Section 129 
determination that it superseded. In this regard, the United  States is incorrect that measures pre -
dating the end of the RPT or measures post -dating panel establishment are outside this Panel's 
terms of reference, because both categories of measures may have a bearing on whether the 
United  States achieved substantive co mpliance by the end of the RPT.62 
 
75. On substance, the subsequent reviews at issue constitute a failure by the United  States to 
bring itself into conformity with the covered agreements by the end of the RPT because they 
continue to reflect legal standards  that are inconsistent with Articles 1.1(a)(1), 1.1(b), 2.1(c), 2.2, 
11.3 and 14(d) of the SCM  Agreement, and because they result in the assessment and collection 
of countervailing duties and cash deposits in a manner inconsistent with Articles 19.1, 19.3 
and 19.4 of the SCM  Agreement, and Article VI:3 of the GATT 1994.  
 
76. Finally, the subsequent administrative reviews, sunset reviews, and Section 129 
determinations challenged by China in these proceedings demonstrate that the continued and 
systematic ap plication of erroneous legal standards in a string of successive determinations 
leading to the continued assessment and collection of countervailing duties under the CVD orders 
at issue constitutes "ongoing conduct" that is separately challengeable in WTO dispute settlement 
proceedings.  
 
77. Such "ongoing conduct" is not only a measure susceptible to challenge in WTO dispute 
settlement, but also a measure that falls within this Panel's terms of reference under Article 21.5 
of the DSU, given the pervasive l inks that it has, in terms of nature, effects and timing, to both the 
DSB recommendations and rulings and to the declared measures taken to comply. In this regard, 
the United  States is incorrect that the ongoing conduct challenged by China had not material ized 
at the time of Panel establishment or constitutes "future" conduct. To the contrary, the subsequent 
administrative reviews, sunset reviews, and Section 129 determinations challenged by China in 
these proceedings demonstrate that the United  States has systematically applied the unlawful 
public body, benefit, and specificity legal standards in successive determinations made in each 
countervailing duty order at issue, leading to the continued imposition of unlawful countervailing 
duties and/or cash deposi ts under those orders. Similarly, the subsequent reviews in 
Magnesia  Bricks  demonstrate that the USDOC systematically included improperly initiated export 
restraint subsidies in the "adverse facts available" rates in a string of successive determinations 
issued under that CVD order. This evidence unquestionably demonstrates that the application of 
these unlawful legal standards in successive determinations under the CVD orders at issue 
constitutes "conduct that is currently taking place and is likely to continue in the future."63 
 
78. The United  States is also incorrect in stating that the countervailing duty determinations at 
issue are more complex and fact -specific than the determinations at issue in US – Continued 
Zeroing . In fact, the subsequent reviews at issue demonstrate that the application of unlawful 
legal standards by the  USDOC does not depend on the underlying facts in the administrative 
record of the investigation, or on the degree of cooperation by the respondents. To the contrary, 
the application of unlawful legal standards is the unchanged component in each subsequent  review 
at issue, and the only aspect which the United  States purportedly attempted to modify in the 
Section 129 determinations.  
 
                                                
62 China's second written submission, paras. 231 and 236 (quoting Appellate Body Report,  US – Zeroing 
(Japan) (Article 21.5 – Japan) , para. 122.  
63 China's second written submission, para. 258 (quoting Appellate Body Report, Argentina – Import 
Measures , para. 5.144, in turn quoting Panel Report, US – Orange Juice (Brazil) , para. 7.175).  WT/DS437/RW/Add.1  
 
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  79. For the reasons articulated above, the continued and systematic application of erroneous 
legal standards in a string of c onnected and successive determinations leading to the assessment 
and collection of countervailing duties under the CVD orders at issue constitutes "ongoing conduct" 
that is inconsistent with Articles 1.1(a)(1), 1.1(b), 2.1(c), 2.2, 11.3, and 14(d) of the 
SCM Agreement. Such ongoing conduct is also inconsistent with Articles 19.1, 19.3, 19.4 of the 
SCM Agreement, and Article VI:3 of the GATT 1994, because it results in the United  States levying 
countervailing duties and cash deposits in excess of the amount of subsidization.  
 
_______________  
 
 
 WT/DS437/RW/Add.1  
 
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  ANNEX C  
ARGUMENTS OF THE UNI TED STATES OF AMERIC A 
Contents  Page  
Annex  C-1 Integrated Executive Summary of the United States of America  C-2 
 
 WT/DS437/RW/Add.1  
 
- C-2 - 
 
  ANNEX C -1 
INTEGRATED EXECUTIVE  SUMMARY OF THE UNITE D STATES OF AMERICA  
21 June 2017  
 
I. INTRODUCTION  
1. To bring the United States into compliance with the recommendations of the Dispute 
Settlement Body ("DSB") with respect to "as applied" findings made by the original Panel and the 
Appellate Body, the U.S. Department of Commerce ("USDOC") conducted proceedi ngs pursuant to 
section 129 of the Uruguay Round Agreements Act ("section 129 proceedings"), in which the 
USDOC made and published revised determinations.  
 
2. China erroneously claims that the United States has failed to comply with the 
recommendations and  rulings adopted by the DSB in this dispute. China also attempts to expand 
the proper scope of this compliance proceeding by challenging purported measures that are not 
measures taken to comply subject to review by this Panel. The Panel's objective assessm ent of the 
matter is not assisted when, as the United States has identified in its submissions, China 
mischaracterizes the determinations of the USDOC; or distorts the arguments made by the United 
States in this compliance proceeding and in other disputes;  or misstates the findings of the 
Appellate Body in prior reports. China's approach to this compliance proceeding places additional 
burdens on the Panel to sort through the accuracy of China's assertions and arguments before it 
can even begin to evaluate t heir merits. This is not an efficient use of the resources of the WTO 
dispute settlement system, which is under serious stress.  
 
3. On the substance, China has failed to propose interpretations of the Agreement on Subsidies 
and Countervailing Measures ("SCM Agreement") that would accord with the customary rules of 
interpretation of public international law, and China has failed to acknowledge the extensive 
analysis and ample record evidence that support the USDOC's determinations in the section 129 
proceedi ngs at issue here. The United States has demonstrated that it has implemented the 
recommendations of the DSB and brought its measures into conformity with the SCM Agreement. 
The Panel therefore should reject China's claims.  
 
II. CHINA'S ARGUMENTS CO NCERNIN G ARTICLE 1.1(A)(1) OF THE SCM AGREEMENT  
LACK MERIT  
A. The United States Has Complied with the DSB's Recommendations 
Concerning the "As Applied" Findings with Respect to Public Bodies  
4. China wrongly argues that the USDOC's public body determinations in t he section 129 
proceedings at issue here do not bring the United States into compliance with U.S. obligations 
under the SCM Agreement. China's argument is premised on a novel, flawed interpretation of the 
term "public body" in Article 1.1(a)(1) of the SCM Agreement. Furthermore, China asks the Panel 
to ignore the massive amount of record evidence that the USDOC collected and analyzed, which 
provides ample support for the USDOC's public body determinations. China's arguments are utterly 
without merit.  
 
1. China's Interpretive Arguments Lack Merit  
5. The novel interpretation of the term "public body" that China proposes fails to take into 
account the interpretive findings of the original Panel and reflects a misreading of the original 
panel report and relevant  Appellate Body reports. Article 21.5 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes  ("DSU") instructs a panel to evaluate "the 
existence or consistency with a covered agreement of measures taken to comply with the 
recomm endations and rulings" of the DSB. In effect, Article 21.5 takes the underlying panel 
findings, as modified by the Appellate Body, as a given. In the guise of a new interpretive 
argument, China is re -arguing an excessively narrow approach to the legal inte rpretation of the 
term "public body" that was rejected by the original Panel.  WT/DS437/RW/Add.1  
 
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6. The original Panel understood that "the critical consideration in identifying a public body is 
the question of authority to perform governmental functions," and "[t]herefore,  an investigating 
authority must evaluate the core features of the entity in question and its relationship to 
government, in order to determine whether it has the authority to perform governmental 
functions."  
 
7. China argues, in effect, that an entity may  be deemed a public body only where there is 
specific evidence that the particular activity in which the entity is engaging, e.g., selling the 
relevant input to the investigated purchaser, is a government function, and that engaging in that 
activity is con sistent with the government's objectives. China denies that its position is that the 
government function and the conduct under Article 1.1(a)(1) must be the same, but China's 
arguments belie its assertion. China's proposed approach to the public body analy sis is untenable 
and entirely at odds with findings in prior reports.  
 
8. Rather than focusing on the conduct undertaken by the entity, the Appellate Body has 
emphasized that the focus of the public body analysis is on the "evaluation of the core features of 
the entity concerned, and its relationship with the government in the narrow sense." China, with 
its focus on the particular " conduct  that is the subject of the financial contribution inquiry," 
appears to suggest that an entity may be deemed a public bo dy only when the entity is 
"exercising " governmental authority. That is contrary to the Appellate Body's findings, under which 
an entity might be deemed a public body when there is evidence that the entity possesses or is 
vested with governmental authority , even if there is no evidence that the entity is exercising 
governmental authority at the time of the particular transaction at issue.  
 
9. Again and again, the Appellate Body has emphasized the relevance of the "core features of 
the entity and its relationship to the government in the narrow sense," as opposed to a focus on 
the particular conduct in which the entity is engaged. Contrary to the narrow focus on the conduct 
of the entity in question that China now proposes, when the Appellate Body has provided guidance 
concerning the public body analysis, it consistently has called for a wider -ranging examination of a 
variety of kinds of evidence, which the Appellate Body has explained is "bound to differ from entity 
to entity, State to State, and case to case."  
 
10. China misreads the US – Anti-Dumping and Countervailing Duties (China) Appellate Body 
report. Rather than focusing its review narrowly on evidence and analysis relating to the conduct 
of the SOCBs when they were making particular loans, the Appellate Body observed that the 
USDOC had "discussed extensive evidence relating to t he relationship between the SOCBs and the 
Chinese Government, including  evidence that the SOCBs are meaningfully controlled by the 
government in the exercise of their functions." The evidence that SOCBs were meaningfully 
controlled in the exercise of their  functions was "include[ed]" in the broader discussion of evidence 
relating to the relationship between the SOCBs and the Chinese Government.  
 
11. China's argument that the "conduct" of the entity is the proper focus of the public body  
analysis also does n ot accord with the Appellate Body's explanation that a focus on the conduct of 
an entity is more relevant when examining a private body  under Article 1.1(a)(1)(iv) of the 
SCM Agreement. The troubling implication of China's new proposed interpretation is th at there 
would be no need for a public body category at all in Article 1.1(a)(1), which is inconsistent with 
the principle of effectiveness and thus contrary to the customary rules of interpretation.  
 
12. The United States also has demonstrated that China' s arguments related to the object and 
purpose of the SCM Agreement and the relevance to the Panel's interpretative analysis of the 
International Law Commission's Draft Articles on Responsibility of States for Internationally 
Wrongful Acts ("ILC Articles") are at odds with Appellate Body guidance and lack merit.  
 
2. The USDOC's Public Body Determinations in the Section 129 Public 
Proceedings Comply with the Recommendations of the DSB and Are 
Not Inconsistent with Article 1.1(a)(1) of the SCM Agreement  
13. The original Panel explained that "simple ownership or control by a government of an entity 
is not sufficient" to establish that an entity is a public body. "A further inquiry is needed." Such a 
"further inquiry" is precisely what the USDOC undertook in the section 129 proceedings.  
 WT/DS437/RW/Add.1  
 
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  14. China attempts to support its arguments by focusing narrowly on individual documents on 
the record of the section 129 proceedings, but the USDOC's determinations were based on the 
totality of the evidence on the record. The A ppellate Body has found previously that "[w]hen an 
investigating authority relies on the totality of circumstantial evidence, this imposes upon a panel 
the obligation to consider, in the context of the totality of the evidence, how the interaction of 
certain pieces of evidence may justify certain inferences that could not have been justified by a 
review of the individual pieces of evidence in isolation."  
 
15. The USDOC's public body determinations are set forth and explained in a preliminary 
determination a nd a final determination that the USDOC produced as part of the section 129 
proceedings, as well as in memoranda analyzing public bodies in China (the Public Bodies 
Memorandum) and discussing the relevance of the Chinese Communist Party ("CCP") to the publ ic 
body analysis (the CCP Memorandum). All of these documents, read together, present the 
USDOC's analysis and explanation underlying its public body determinations. The USDOC's public 
body determinations are based on analysis and explanation that, altoget her, spans more than 90 
pages, and in turn that analysis and explanation is founded on more than 3,100 pages of evidence 
that the USDOC itself compiled and placed on the record, as well as the USDOC's consideration of 
information and arguments submitted by  the Government of China ("GOC") and other interested 
parties.  
 
16. The USDOC examined the functions or conduct that are of a kind ordinarily classified as 
governmental in the legal order of China, the role played by the CCP in China's system of 
governance , and the manifold indicia of control indicating that relevant input providers possess, 
exercise, or are vested with governmental authority. The USDOC requested information from the 
GOC about the relevant input providers in the section 129 proceedings and considered the 
information the GOC provided or failed to provide. The USDOC addressed the GOC's arguments in 
the Public Bodies Final Determination in the section 129 proceedings. Ultimately, the USDOC 
"concluded that certain categories of state -invested en terprises (SIEs) in China properly are 
considered to be public bodies for the purposes of the United States CVD law, and other categories 
of enterprises in China may be considered public bodies under certain circumstances."  
 
17.  The USDOC's public body d eterminations were reasoned and adequate and included 
extensive analysis and explanation; they were based on the totality of the evidence on the record; 
and they were supported by ample record evidence of the "core features" of the entities in 
question and  their "relationship to the government," which establishes that the entities possess, 
exercise, or are vested with governmental authority to perform governmental functions in China. It 
is clear on the face of the USDOC's determinations that the USDOC prope rly applied the correct 
interpretation of the term "public body" in Article 1.1(a)(1) of the SCM Agreement.  
 
3. China's Arguments Against the USDOC's Public Body 
Determinations in the Section 129 Proceedings Lack Merit  
18. China's arguments against the US DOC's public body determinations fail because they are all 
premised on China's new proposed interpretation of the term "public body," which the 
United  States has shown is legally erroneous and does not accord with findings in prior reports.  
 
19. China's a rguments also are unfounded. China argues that the USDOC is required "to 
undertake a new analysis for each countervailing duty investigation" and further contends that the 
USDOC failed to "engage in a case -by-case analysis." In fact, the USDOC requested fr om the GOC 
entity -specific information about the relevant input providers in each of the section 129 
proceedings, but the GOC refused to provide much of the requested information. Specifically, in 
seven of the twelve section 129 proceedings ( Lawn Groomers,  Wire Strand, Seamless Pipe, Print 
Graphics, Drill Pipe, Aluminum Extrusions, and Solar Panels ), the GOC completely failed to 
cooperate and respond to the USDOC's request for information. In the remaining five proceedings 
(Pressure Pipe, Line Pipe, Kitchen  Shelving, OCTG, and Steel Cylinders ), the GOC only partially 
responded to the USDOC's request. As a result of the GOC's non -cooperation, the USDOC relied 
upon the facts that were available on the record, that is, the Public Bodies Memorandum and the 
CCP M emorandum, which present pertinent analysis and explanation relating to the government 
and economic system of China. Such analysis and explanation is relevant in a countervailing duty 
investigation involving allegations that an input provider in China is a  public body, particularly 
where the GOC fails to cooperate and provide the requested entity -specific information.  
 WT/DS437/RW/Add.1  
 
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  20. China contends that "the GOC provided extensive evidence" to the USDOC and the USDOC 
"ignored" that evidence. This is untrue. Rather tha n failing to evaluate the evidence submitted by 
the GOC, and far from rejecting or discounting that evidence, the USDOC actually discussed that 
evidence at length and the USDOC relied on the evidence for its conclusions.  
 
21. China asserts that "[t]he USD OC provided no … 'reasoned and adequate explanation' on the 
face of its published determinations, much less address 'alternative explanations that could 
reasonably be drawn from the evidence'." As the Panel will see for itself when it examines the 
USDOC's preliminary and final determinations and the Public Bodies Memorandum and the CCP 
Memorandum, China's assertion is absurd.  
 
4. Even under China's New, Flawed Proposed Interpretation of the 
Term "Public Body," the USDOC's Section 129 Public Body 
Determinations that Were Based on the Facts Otherwise Available 
Are Not Inconsistent with the SCM Agreement  
22. The USDOC requested from the GOC entity -specific information that would be relevant even 
under China's new proposed interpretation of the term " public body." However, as discussed 
above, in seven of the twelve section 129 proceedings, the GOC simply refused to respond to the 
USDOC's request for information. In the remaining five section 129 proceedings, the GOC, while 
providing responses to some q uestions, did not provide the entity -specific information requested 
by the USDOC. Thus, the GOC deprived the USDOC of the kind of entity -specific evidence 
contemplated by China's new proposed interpretation. Accordingly, the USDOC's determinations 
justifia bly would have been based on facts available and an adverse inference in selecting from the 
facts available, as they, in fact, were.  
 
23. Nevertheless, even under China's new proposed interpretation of the term "public body," the 
USDOC provided a reasoned and adequate explanation, which was supported by ample record 
evidence, and the analysis, explanation, reasoning, and conclusions in the U SDOC's facts available 
determinations would be equally relevant under China's new proposed interpretation of the term 
"public body." Accordingly, the USDOC's discussion and the evidence underlying it was probative of 
and supported a public body determinati on even under China's proposed interpretation.  
 
B. China's "As Such" Claim Concerning the Public Bodies Memorandum Fails  
24. China's claim that the Public Bodies Memorandum is inconsistent "as such" with 
Article  1.1(a)(1) of the SCM Agreement fails for a number of reasons.  
 
25. First, China cannot bring a challenge against the Public Bodies Memorandum within the 
scope of this Article 21.5 compliance proceeding because the memorandum is not a measure taken 
to comply in this dispute. The Public Bodies Memor andum was published in connection with 
measures taken to comply with the DSB's recommendations and rulings in an entirely different, 
earlier dispute. Article 21.5 of the DSU does not permit the kind of lateral challenge China 
attempts. Additionally, the Pu blic Bodies Memorandum was published prior to the commencement 
of this dispute. China could have challenged the memorandum in the original proceeding, but it 
opted not to do so. Thus, the Public Bodies Memorandum is outside the scope of this Article 21.5 
compliance proceeding.  
 
26. Second, the Public Bodies Memorandum is not a measure susceptible to WTO dispute 
settlement, as confirmed when viewed in light of the analysis applied in other reports. Applying the 
same analysis to the Public Bodies Memorandum t hat the original Panel applied to the Kitchen 
Shelving policy reveals striking contrasts and supports the conclusion that the Public Bodies 
Memorandum is not "a measure susceptible to WTO dispute settlement." China makes unfounded 
assertions but points to no language suggesting that the USDOC intended in the Public Bodies 
Memorandum to describe an "approach," "policy," "long standing practice," or "methodology."   
 
27. The Public Bodies Memorandum, on its face, does not purport to establish or describe a le gal 
standard adopted or applied by the USDOC. Indeed, the Public Bodies Memorandum expressly 
states that the USDOC was not announcing through the issuance of the memorandum an approach 
that would be applied in every countervailing duty proceeding. The USDO C, in the Public Bodies 
Memorandum, presented extensive analysis and explanation and came to certain conclusions after 
examining voluminous evidence relating to the government and economic system of China. The WT/DS437/RW/Add.1  
 
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  analysis, explanation, and evidence in the Pub lic Bodies Memorandum relates to China in general; 
it may be highly relevant to and may support the USDOC reaching the same conclusions in other 
countervailing duty proceedings involving China. The USDOC's decisions to incorporate by 
reference and rely on the Public Bodies Memorandum – and the evidence to which it refers – in 
subsequent countervailing duty proceedings that also involved products from China did not, after 
the fact, confer on the Public Bodies Memorandum a status as a "measure" for which ther e is no 
support in the text of the Public Bodies Memorandum itself.  
 
28. The Public Bodies Memorandum is not "mandatory" as it does not have any legal effect upon 
the USDOC. The Public Bodies Memorandum does not, on its face, even purport to set forth an 
"internal policy." The Public Bodies Memorandum does not describe any rebuttable presumptions, 
nor any other policy.  
 
29. Third, China argues that the Public Bodies Memorandum prescribes future conduct but China 
makes no attempt to "clearly establish, throu gh arguments and supporting evidence," that the 
Public Bodies Memorandum is a rule or norm that has general and prospective application. 
Instead, China offers bare assertions without even pointing to any language in the memorandum.  
 
30. The Public Bodies Memorandum does not announce a "policy" in a "declaratory style." At 
most, all that is before the Panel now is "simple repetition." That is, the USDOC has, on a number 
of occasions, decided to put the Public Bodies Memorandum – and all of the evidence to w hich it 
refers – on the administrative records of countervailing duty proceedings involving products from 
China. That is entirely appropriate given that the underlying facts regarding China's government 
and economic system are the same in all of those coun tervailing duty proceedings. In light of 
China's refusal to provide requested information to the USDOC in many countervailing duty 
proceedings, it is not surprising that the USDOC has put the Public Bodies Memorandum and 
supporting information on the recor d of subsequent countervailing duty proceedings to provide 
relevant facts for its determinations.  
 
31. Fourth, and finally, China's claim fails because the Public Bodies Memorandum does not 
necessarily result in an inconsistency with Article 1.1(a)(1) of the SCM Agreement. The Public 
Bodies Memorandum, by its terms, neither "obliges" the USDOC to do anything nor "restricts" the 
USDOC from doing anything. The Public Bodies Memorandum does not require the USDOC to reach 
any WTO -inconsistent determination. Ra ther, to the extent the USDOC places the Public Bodies 
Memorandum and supporting evidence onto the record of a countervailing duty proceeding, the 
USDOC in that proceeding would determine what significance to give to the findings in the Public 
Bodies Memor andum in the context of making its determination in that proceeding.  
 
III. CHINA'S CLAIMS REGAR DING BENCHMARKS LACK  MERIT  
32. China erroneously claims that Article 14(d) of the SCM Agreement does not permit the use 
of alternative benchmarks – even where prices are distorted in the country of provision – unless 
the government is a monopoly provider or relies exclusively on a "pric e-setting mechanism" to 
control the marketplace. But recourse to an alternative benchmark for the benefit analysis under 
Article 14(d) is warranted once an investigating authority has established and explained that in -
country prices are not market -determin ed.  
 
33. China has failed to refute the comprehensive evidence that "systemic and pervasive 
government intervention . . . diminishes the impact of market signals," limits private enterprise to 
a "subordinate" role, and results in a persistent imbalance be tween supply and demand. The 
USDOC fully explained that prices in the domestic market for steel and polysilicon inputs are not 
properly described as market -determined; they are distorted by virtue of the GOC's policy 
interventions and a number of other fac tors. In light of this, the USDOC determined that the 
relevant input prices "are not based on market conditions within the meaning of Article 14(d) of 
the SCM Agreement and, as result . . . are inappropriate to use as benchmarks to determine the 
adequacy o f remuneration." This is consistent with the recommendations of the DSB.  
 
A. Article 14(d) Permits the Use of External Benchmarks  
34. Article 14(d) provides that the adequacy of remuneration for government -provided goods or 
services "shall be determined in  relation to prevailing market conditions for the good or service in 
question in the country of provision or purchase." In the Appellate Body's words, a "proper finding" WT/DS437/RW/Add.1  
 
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  that "recourse to an alternative benchmark is justified requires an investigating auth ority to 
properly evaluate whether the proposed benchmark prices are market determined or distorted by 
governmental intervention."  
 
35. The use or rejection of in -country prices is not a question of whether there are no "market 
conditions" or market force s, but rather a question of whether the market conditions allow for the 
use of an in -country benchmark or call for the use of an out -of-country benchmark. Here, the 
USDOC found that the "market conditions necessary to create the establishment of equilibriu m 
prices are not present in China's steel market, i.e., conditions that result 'from the discipline 
enforced by an exchange that is reflective of the supply and demand of both sellers and buyers in 
{the} market.'"  
36. In US – Carbon Steel (India) , the Appellate Body defined "prevailing market conditions" as 
consisting of "generally accepted characteristics of an area of economic activity in which the forces 
of supply and demand interact to determine market prices." Further, in EC – Large Civil Air craft 
(AB), the Appellate Body clarified that "market prices" are "not dictated solely by the price a seller 
wishes to charge, or by what a buyer wishes to pay. Rather, the equilibrium price established in 
the market results from the discipline enforced by  an exchange that is reflective of the supply and 
demand of both sellers and buyers in that market."  
37. The USDOC conducted a market analysis and found that the requisite "market conditions" do 
not exist in China's steel and polysilicon sectors, as the Ap pellate Body has defined the term. 
Applying the standard articulated by the Appellate Body does not require a finding that there are 
no other types of  market conditions that exist in a particular sector, or that prices for the good in 
question are wholly u nresponsive to external market forces.  
38. An interpretation of Article 14(d) that requires the total absence of any market conditions 
would effectively equate to a situation where, through government regulation or administrative 
fiat, the price for the g ood in question is set by the government. Although this is one situation 
identified by the Appellate Body in which domestic prices can be disregarded for the benefit 
analysis under Article 14(d), it is not a determination that is required for other situati ons where, as 
here, pervasive government intervention in the sector is determined to distort prices for the good 
in question.  
 
39. China misreads the Appellate Body findings in prior disputes when it argues that the 
distortions evaluated in those disputes are the only types of distortions that would call for the use 
of out -of-country benchmarks. Simply because the Appellate Body has not previously considered 
the type of pervasive distortions at issue here does not support the conclusion that those 
distortio ns are irrelevant to the benchmark selection analysis. Indeed, in US – Softwood 
Lumber  IV, for example, the Appellate Body cautioned that its findings were "expressly limited to 
considering only the situation of government predominance in the market as a p rovider of goods 
because it was 'the only one raised on appeal .'" The Appellate Body stated explicitly that it was not  
"foreclosing the possibility  that there could be situations other than price distortion due to 
government predominance as a provider in t he market, in which Article 14(d) permits the use of 
out-of-country prices for the purpose of determining a benchmark."  
40. Nor is there anything in the Appellate Body's prior reports that suggests – as China asserts – 
that there should be an arbitrary lin e between prices that are "effectively determined" by a 
government and prices that are distorted by the government's extensive interference in a sector 
(both as a supplier and otherwise). Moreover, the Appellate Body in this very dispute recognized 
that "w hat allows an investigating authority to reject in -country prices is price distortion ." Because 
price distortion can exist in scenarios other than where the government has effectively set sector -
wide prices, China's proposed reading of Article 14(d) would arbitrarily and incorrectly preclude 
investigating authorities from addressing situations in which government action has rendered 
prices not market -determined.  
41. The U.S. position in this dispute, by contrast, is grounded in the text of Article 14(d) as  
interpreted by the Appellate Body. In particular, in US – Carbon Steel (India) , the Appellate Body 
found that "prevailing market conditions" under Article 14(d) consist of "generally accepted 
characteristics of an area of economic activity in which the fo rces of supply and demand interact to 
determine market prices." In EC – Large Civil Aircraft , the Appellate Body found that "market 
prices" are "not dictated solely by the price a seller wishes to charge, or by what a buyer wishes to WT/DS437/RW/Add.1  
 
- C-8 - 
 
  pay. Rather, the equil ibrium price  established in the market results from a discipline enforced by 
an exchange that is reflective of the supply and demand of both sellers and buyers in that 
market." Furthermore, under EC – Large Civil Aircraft (AB) , this equilibrium must result  from the 
discipline enforced by an exchange reflective of both supply and demand.  
42. In the section 129 proceedings, the USDOC applied this analytical framework to its 
evaluation of the record evidence. Based on consideration of the totality of the evide nce, the 
USDOC concluded that the "market conditions necessary to create the establishment of equilibrium 
prices are not present in China's steel market, i.e., conditions that result 'from the discipline 
enforced by an exchange that is reflective of the su pply and demand of both sellers and buyers in 
{the} market.'"  
43. As USDOC found based on record evidence, China intervenes heavily in its steel and 
polysilicon sectors to achieve certain outcomes. The outcomes it achieves through these 
interventions are n ot consistent with or reflective of a market discipline between buyers and 
sellers. China has not even attempted to refute these facts. Instead, China proposes that 
authorities are limited in their investigation by a per se rule of China's own invention. C hina's per 
se rule, however, cannot be supported under any interpretation of the SCM Agreement. Rather, as 
the Appellate Body has stated, "[p]roposed in -country prices will not be reflective of prevailing 
market conditions in the country of provision  when they deviate from a market -determined price 
as a result of government intervention in the market ." The proper focus is on the distortion that 
occurs "as a result" of the intervention, not on whether the government intervention took a certain 
form.  
44. China overlooks the fact that widespread government intervention in a particular sector can 
fundamentally distort market signals, regardless of whether that intervention comes in the form of 
direct control over prices or more general control over a company's i nternal business decisions. It 
is not necessary to demonstrate that prices have been de jure or de facto determined  by the 
government to find that such prices are not market -determined for purposes of Article 14(d).    
45. China's approach makes an arbitra ry distinction between an investigating authority's ability 
to consider price distortion caused by direct government influence over pricing and price distortion 
caused indirectly by extensive government interference in a sector, including interference with  the 
entities operating in that sector. China presents no basis in law or logic for the proposition that an 
authority is foreclosed from conducting a holistic analysis that takes account of all types of 
government interference. Further, China's position is  inconsistent with the object and purpose of 
the SCM Agreement: if accepted, it would prevent WTO Members from fully offsetting the effects 
of an injurious subsidy by applying countervailing duties.  
46. China's argument is based on the premise that the WTO  Agreement must be construed so as 
to avoid any situation in which an authority (or dispute settlement panel) must conduct a close, 
case-by-case factual evaluation of a particular situation. But China presents no support for this 
premise. Indeed, many issu es involving measures challenged under the WTO Agreement – such as 
trade remedy measures, or SPS measures, or measures subject to de facto national treatment 
claims – require a close factual analysis. China presents no basis for its argument that a WTO 
discipline must be governed by simplistic tests.  
47. The Appellate Body has explained that: "the task of a panel [is] to assess whether the 
explanations provided by the authority are 'reasoned and adequate.'" The United States recalls 
that it is not the task of a panel task to evaluate the underlying evidence to make its own de novo  
findings, or to substitute its own judgment for that of the investigating authority. This type of 
evaluation, and the appropriate standard of review, is the same regardless of whet her the issue 
under examination is relatively simple (such as that involving a straightforward mathematical 
operation), or relatively complex, such as that involving market distortion and the authority's 
choice of a benchmark. Accordingly, the central poin t in this dispute is whether the USDOC 
provided a reasoned and adequate explanation for its decision to employ out -of-country 
benchmarks in the particular proceedings at issue.  WT/DS437/RW/Add.1  
 
- C-9 - 
 
  B. The USDOC Provided a Reasoned and Adequate Explanation  
48. The USDOC's benchmark determinations in the subject proceedings are well reasoned and 
based on the totality of the available record evidence, which includes information provided by 
China, evidence of broad -based intervention within the relevant markets, and the demons trated 
effects that the intervention has had on conditions in China's steel and polysilicon sectors. The 
USDOC's  redeterminations rely upon extensive evidence from a variety of sources, including 
reports and research from independent multilateral instituti ons such as the OECD and the 
World  Bank.  
49. The USDOC identified a number of organizations and enterprises that serve as "instruments 
for policy implementation" and "legally require SIEs to act as instrumentalities of the state to carry 
out its policy go als and industrial plans rather than commercial, market -oriented outcomes." The 
USDOC concluded that SIEs are a "unique" kind of organization, and "are considered a potent 
mechanism for the government to implement national policies." The USDOC concluded th at these 
policies, actors, and actions create a "critical nexus" of policy and ownership that is unique to 
China. The USDOC reasoned that the "degree and nature of the GOC interventions" is unlike the 
"governmental regulatory frameworks [that] affect comme rcial enterprises in most economies" 
and that "the institutional framework . . . creates a milieu  in which SIE decision -making is 
insulated from the disciplines of market forces."  
 
50. Through this "critical nexus" in the steel sector, China ensures that steel prices align with 
policy goals. The USDOC found that in practice, active government management and the "ensuing 
interference in [SIE] decision -making, result in the SIEs implementing state policy, which may 
require pursuing actions inconsistent with market disciplines and the firm's . . . market goals." This 
politicization of business decisions "necessarily removes" these businesses "from the principles of 
the market economy and competition." The  USDOC concluded that prices flowing from those 
entities  were not reflective of "market conditions," insofar as they do not result from the "discipline 
enforced by an exchange that is reflective of supply and demand of both buyers and sellers." The 
USDOC also found that domestic private prices in the steel sect or are not reflective of market 
conditions, based not only upon evidence of the "significant market share" garnered by SIEs, but 
also broad -based governmental intervention in favor of the state share of the economy that "goes 
beyond that of ownership in as sets or share of production" and that "distorts market signals for all 
participants in the sectors, just as surely as does the presence of monopoly market power."  The 
USDOC also cited evidence that certain governmental interventions directly extended to pr ivate 
enterprises and affected their pricing, such as forced mergers and acquisitions and the presence of 
export taxes.  
 
51. Price operates as a signal to convey the relative supply and demand. But when "government 
policies inflate supply (or otherwise dis tort choices by market participants that would affect their 
pricing), the price no longer corresponds with the information it should signal." The USDOC cited 
extensive evidence that in China's steel sector, China intervenes heavily to achieve certain 
outco mes in pursuit of desired policy goals, which are not consistent with or reflective of market 
disciplines between buyers and sellers. This heavy -handed intervention distorts choices by market 
participants, and has had the effect of inflating supply. Based on the totality of the evidence on the 
record, the prices at which steel goods are sold cannot fairly be viewed as "market prices."  
 
52. With respect to Solar Products , the USDOC solicited detailed information but the GOC 
declined to respond.  In the absenc e of market information needed to conduct further analysis, the 
USDOC relied on the facts available, i.e., evidence of extensive Chinese governmental intervention 
at various levels in the polysilicon market, and the existence of export restraints that arti ficially 
depressed domestic prices for polysilicon. On this basis, the USDOC found that all domestic prices 
for polysilicon within China were distorted by governmental intervention and were, thus, not 
useable "market" benchmarks.  
 
C. China's Arguments Have  No Merit  
53. Instead  of engaging with the evidence, China argues that the USDOC should have taken a 
different approach. In China's view, the phrase "prevailing . . . conditions" in Article 14(d) means 
those conditions – seemingly in every possible situati on, and regardless of the level of distortion – 
must be the conditions as affected by government policies and actions. This interpretation is 
untenable. If accepted, authorities would be required to ignore the existence of government -WT/DS437/RW/Add.1  
 
- C-10 - 
 
  created distortions in  the marketplace.  The fundamental issue, however, in determining whether to 
rely upon an out -of-country benchmark under Article 14(d) is, in fact, the existence of price 
distortion. And, because price distortion can arise due to government intervention, Ar ticle 14(d) 
cannot be read to preclude an investigating authority from addressing situations in which 
government action has rendered prices not market -determined. Indeed, the Appellate Body in US 
– Carbon Steel (India) (AB)  confirmed as much, stating that "in-country prices will not be 
reflective  of prevailing market conditions  . . . when they deviate from a market -determined price 
as a result of  government intervention in the market."  
54. China also insists that the USDOC should have limited its assessment to an examination of 
prices themselves and ignored other evidence that is relevant to an evaluation of price distortion. 
This argument is not supportable. Nothing in the SCM Agreement dic tates the specific mode of 
analysis that an authority must employ in conducting a benchmark analysis. Nor has the Appellate 
Body prescribed a certain approach. In fact, the Appellate Body in this dispute stated that the 
"specific type of analysis . . . wil l vary." The Appellate Body even described a number of 
approaches that might be employed, stating, for example, that "investigating authorities may have 
to examine the structure  of the relevant market" or the "nature" of the entities operating in that 
market. The Appellate Body also made clear that what ultimately determines whether "recourse to 
an alternative benchmark is justified" depends not on the mode of analysis, but on "whether the 
proposed benchmark prices are market determined or distorted by gove rnmental intervention."  
55. Price validation exercises become problematic because systemic distortions resulting from 
pervasive state influence throughout China's economy may preclude any meaningful quantitative 
analysis of prices. Any "baseline" that coul d be calculated to compare input prices could be 
influenced by the same systemic distortions as the prices themselves. Moreover, it is not 
necessary to look at input prices to determine that excess supply (all else being equal) has the 
effect of suppressin g prices for a particular product.  
56. While nothing in the SCM Agreement supports China's insistence that a particular type of 
analysis is required, the "market power" approach that China advocates is fundamentally flawed. 
This approach presupposes that a  government exercises market power exclusively through the 
economic behavior of state -owned suppliers. This, however, excludes from consideration the 
impact of legal and policy instruments that influence – and empower – state-invested enterprises. 
China's approach also depends on the assumption that state -invested enterprises operate as 
profit -seeking commercial actors. But this assumption is unfounded in a system where state -
owned and politicized enterprises are used as tools of policy implementation and a re insulated 
from competitive market pressures.  
57. China's reliance on a certain private investments in the steel industry also is misplaced. 
Indeed, the USDOC's determinations were not premised  on the lack of any private involvement in 
the sector. To the  contrary, the USDOC based its determination on a thorough, holistic analysis of 
the sector, and found extensive evidence that the sector as a whole was distorted.  
58. With respect to the Solar Products  redetermination and the use of an external benchmark 
for polysilicon, the USDOC's findings were fully explained in the redetermination. In particular, the 
USDOC explained that China decided not to participate in the proceeding, and thereby refused to 
provide the requested information. In the absence of China 's participation, the USDOC relied on 
multiple sources of evidence on the record, and reasonably found that the GOC intervened at 
various levels in the polysilicon market. China has done nothing to question the adequacy of the 
USDOC's explanation regarding  the polysilicon market in China.  
59. China encourages the Panel to disregard the USDOC's evidentiary findings. This is at odds 
with the appropriate standard of review. In the words of the original Panel in this dispute: "a panel 
reviewing a determination  . . . based on the 'totality' of the evidence . . . must conduct its review 
on the same basis." Where "an investigating authority relies on individual pieces of circumstantial 
evidence viewed together as support for a finding, a panel reviewing such a det ermination 
normally should consider that evidence in its totality in order to assess its probative value with 
respect to the agency's determination." An analysis of the evidence in this dispute – when 
examined in light of the totality of the circumstances – demonstrates a probative and objective 
basis for the determination that the relevant prices in China are not market -determined.  In each of 
the disputed proceedings, this analysis comports with Article 14(d).  WT/DS437/RW/Add.1  
 
- C-11 - 
 
  IV. CHINA'S CLAIMS CONCE RNING ARTICLE 32.1 O F THE SCM AGREEMENT LA CK 
MERIT  
60. China's claim under Article 32.1 that the USDOC's price distortion analysis somehow 
constitutes an impermissible specific action against subsidization has no merit. China has not 
articulated a cognizable claim nor has it id entified the measure it seeks to challenge.  
61. China's panel request asserts that the "benchmark determinations" in four of the section 129 
proceedings are inconsistent with Article 32.1. Yet, in the course of this dispute, China's 
presentation of this is sue has appeared in a variety of inconsistent formulations, each of which 
fails to identify the specific measure that China challenges. Nor has China identified any specific 
action against subsidization apart from the countervailing duty determinations the mselves. Given 
that the imposition of countervailing duties is a permissible response to injurious subsidization, 
China has no basis for its Article 32.1 claim.  
62. As an initial matter, China has failed to comply with the requirements of Article 6.2 of th e 
DSU to "identify the specific measures at issue." Indeed, the measure that China is challenging has 
been unclear and has remained a moving target throughout the course of this Article 21.5 
proceeding. In its panel request, China pointed to the "benchmark  determinations." In its first 
written submission, China asserted that "the USDOC's reliance on subsidies  allegedly provided to 
upstream steel producers . . . is unquestionably 'a specific action against a subsidy.'" But even 
within the same paragraph Chin a also asserted that the "rejection of in -country benchmark prices" 
is a "measure" that acts against subsidization. China's second written submission further confuses 
its Article 32.1 claim because it identifies different "measures" as being at issue in th is Article 21.5 
proceeding.  
63. Given these inconsistent (and underdeveloped or abandoned) descriptions of the "measure," 
which do not correspond to the "benchmark determinations" mentioned in its panel request, this 
Panel should reject China's claim becau se China failed to comply with Article 6.2 of the DSU by not 
identifying any of these alleged "measures at issue." As the Appellate Body has made clear, a 
party cannot expand a WTO dispute to include measures which were not included within its panel 
reques t. China is now impermissibly attempting to do so.  
64. An Article 32.1 claim can only succeed if, inter alia , the action being challenged is not in 
accordance with the provisions of GATT 1994, as interpreted by the SCM Agreement. In this 
regard, a measure is in accordance with the GATT 1994, as interpreted by the SCM Agreement, if 
it is one of the four permissib le responses to subsidization: i) definitive countervailing duties, ii) 
provisional measures, iii) undertakings, and iv) countermeasures.  To the extent China is 
challenging the imposition of countervailing duties, China is improperly attempting to challeng e 
one of the four permissible responses to subsidization in its Article 32.1 claim.  
65. Further, China's arguments, in their entirety, are based on the unsupported premise that the 
USDOC's discussion of subsidies is a necessary and sufficient cause for the  USDOC's finding of 
distortion. Crucially, China cannot and does not, establish that this premise is true. China's 
argument also requires an assumption that the benefit amount calculated by the USDOC regarding 
the subsidization of the downstream product be ars a specific relationship to the distortion finding 
rather than, for example, the benchmark price that was used in each case. China has also failed to 
support this proposition.  
66. Article 32.1 does not contemplate challenging intermediate analytical ste ps that take place 
when carrying out a CVD investigation. In particular, the Appellate Body in US – Softwood 
Lumber  IV and in other reports has recognized that calculating a benefit and using out -of-country 
benchmarks to do so is consistent with the obliga tions of the SCM Agreement.  
67. The USDOC's analysis of China's steel sector discussed many aspects of government 
intervention; this analysis cannot be considered an "action" taken by the United States. The only 
"action" here – as China recognized during the Panel meeting – is the imposition of countervailing 
duties. Moreover, the USDOC's analysis of China's steel sector does not contain an "upstream 
subsidy analysis" as China has suggested. The USDOC's analysis likewise does not have an 
adverse bearing on  subsidies provided to upstream producers and thus does not result in an 
implicit upstream subsidy determination, as China claims. The use or rejection of in -country prices WT/DS437/RW/Add.1  
 
- C-12 - 
 
  only bears on the measurement of the adequacy of remuneration for the subsidies bei ng 
investigated.  
V. CHINA'S CLAIMS CONCE RNING ARTICLE 2.1(C)  OF THE SCM AGREEMENT  LACK 
MERIT  
68. With respect to the USDOC's findings that the provision of material inputs for less than 
adequate remuneration was de facto  specific, the United States has taken all steps necessary to 
bring its determinations into compliance with Article 2.1(c). The USDOC identified the subsidies at 
issue and the systematic series of actions pursuant to which those subsidies were provided. In  
doing so, the USDOC properly took account of the length of time the relevant programs have been 
in operation. The USDOC sought information for each subsidy program under investigation. The 
USDOC reviewed record evidence confirming how the subsidies were p rovided to a limited number 
of recipients over time. In each case, the USDOC provided a reasonable and adequate explanation 
of its determination that the systematic provision of inputs was de facto specific.  
69. For each of the inputs at issue, the USDOC i dentified a series of systematic activities that 
demonstrate the existence of a subsidy program. The USDOC determined, "[o]n the basis of case 
specific input purchase information, which was reported to the Department in the 12 CVD 
investigations and compil ed in the Department's Inputs Memorandum," that "there is adequate 
evidence in each of the 12 CVD investigations that public bodies systematically provided stainless 
steel coil, hot -rolled steel, wire rod, steel rounds, caustic soda, green tubes, primary a luminum, 
seamless tubes, standard commodity steel billets and blooms, polysilicon, and coking coal for LTAR 
to producers in the PRC."  
70. Given that the subsidies at issue appeared to be provided to a limited number of producers, 
the USDOC considered wheth er this limitation might simply reflect that the subsidy programs were 
only recently introduced (should that be the case). The USDOC explained that it "interprets the 
criterion concerning the duration of a subsidy program to mean that where a new subsidy p rogram 
is recently introduced, it is unreasonable to expect that use of the subsidy will spread throughout 
the economy in question instantaneously." Therefore, to determine whether the limited number of 
recipients related to the duration of the subsidies i n each investigation, the USDOC requested that 
the GOC explain for each input at issue (1) "how long SOEs have been producing and selling the 
input in the PRC," (2) "how long the input has been produced in the PRC," and (3) "how long the 
input has been con sumed in the PRC."  
71. Based upon China's response, the USDOC found that, "at the latest, SOEs were producing 
and providing the inputs at issue in the five proceedings in which the GOC provided responses 
within the geographic location of China by 1957." T he USDOC further explained that "for those 
subsidies at issue, we have preliminarily determined that the subsidy program has not been in 
operation 'for a limited period of time only' and, therefore, the length of time in which the subsidy 
program has been in operation does not change the Department's determination that the input 
LTAR programs in each of those cases were de facto  specific." In other words, the limited number 
of recipients did not result from a limited duration of the subsidies at issue.  
72. China argues that the fact that Chinese SOEs have produced and sold a particular input over 
a period of time does not constitute evidence that those inputs have been sold for less than 
adequate remuneration  over that period of time. China's argument, howev er, fundamentally 
misunderstands the inquiry at issue in the last sentence of Article 2.1(c) of the SCM Agreement. 
That provision requires that the USDOC take account of "the length of time that the subsidy 
programme has been in operation," where, as the A ppellate Body has explained, the term "subsidy 
programme" "refers to a plan or scheme  regarding the subsidy at issue." That plan or scheme, i.e., 
the "programme," "may . . . be  evidenced by  a systematic series of actions pursuant to which  
financial contrib utions that confer a benefit have been provided to certain enterprises," but that is 
not to say that each of these actions would need to meet the definition of a "subsidy" under 
Article  1 of the SCM Agreement.  
73. China misunderstands where the "subsidy pr ogram" element fits into the overall 
subsidization analysis. The identification of a subsidy requires three separate elements: a finding 
of a (1) financial contribution that (2) confers a benefit and (3) the subsidy is specific. As the 
Appellate Body state d, "the existence  of a subsidy is to be analysed under Article 1.1 of the WT/DS437/RW/Add.1  
 
- C-13 - 
 
  SCM Agreement. By contrast, Article 2.1 assumes the existence of a financial contribution that 
confers a benefit, and focuses on the question of whether that subsidy is specific ." 
74. As one component of a de facto  specificity analysis involving the provision of inputs, an 
authority may identify a program involving the repeated provisions  of inputs over the relevant 
period. The repeated provision of inputs need not consist exclusively  of subsidized  inputs. Thus, 
China is wrong in asserting that the program must consist only of activities that have been 
definitively identified as subsidies. Rather, the relevant inquiry is the existence of repeated 
instances in which inputs were provided  as the result of some sort of planned series of activities or 
events, which is evidence of the series of actions or activity that constitutes a program.  
75. China's argument is based on an incorrect reading of Appellate Body decisions – one that 
ignores t he substance of Articles 1 and 2 of the SCM Agreement and offers no basis upon which to 
undermine the USDOC's specificity findings. China cannot credibly claim that the subsidies at issue 
were provided to an unlimited number of users or were made widely av ailable outside the 
identified industries.  
76. China demonstrates a misunderstanding of Articles 1 and 2 of the SCM Agreement by 
asserting that "[a] 'subsidy programme' is a programme of subsidies." The Appellate Body 
expressly stated that the subsidy prog ram is an action or series of actions pursuant to which the 
subsidy in question is provided. China suggests that the elements of a subsidy must be present in 
each of the actions that constitute a program, but as we have explained, the identification of a 
subsidy and its elements is separate from the determination of whether that subsidy is specific. 
The question of specificity speaks to whether there is a limitation on access to the subsidy and not 
whether a subsidy has been provided historically as well. H ere, that limitation is evident in the 
number of recipients. The SCM Agreement does not provide that an additional finding of historical  
subsidization is required.  
VI. CHINA'S CLAIMS CONCE RNING ARTICLE 2.2 LA CK MERIT  
77. With respect to the land specificit y determination in Thermal Paper  – one of the section 129 
proceedings in which China declined to participate – the USDOC had only limited evidence 
regarding "preferential treatment" in land -use rights because China refused to provide requested 
information.  The USDOC properly relied on the available evidence; namely, a statement that the 
respondent received preferential treatment. The USDOC found that statement probative and 
tending to support a determination that that respondent received preferential treatm ent within the 
zone. When the USDOC sought to further examine the issue during the section 129 proceeding, 
China failed to provide requested information. China repeatedly mischaracterizes the USDOC's 
determination. T he USDOC  properly determined that the la nd at issue was provided pursuant to a 
"distinct land regime" and is therefore specific.  
78. The original Panel found that a firm's presence in a zone was not enough to establish that 
the subsidy was provided to limited recipients. Rather, the Panel found that there must also be 
some "finding that the provision of land within the park or zone is d istinct from the provision of 
land outside the park or zone." The Panel observed that the USDOC's original determinations 
would have been adequately supported if USDOC had established that "the conditions for the 
provision of land within the ... zone were different from and preferential to the conditions outside 
the ... zone, in terms of special rules or distinctive pricing." In the redeterminations at issue, the 
USDOC thus considered whether the provision of land within the park or zone is distinct from th e 
provision of land outside the park or zone, and whether the conditions for the provision of land 
within the zone are different from and preferential to the conditions outside the zone.  
 
79. At issue was the 2005 purchase of granted land -use rights by th e respondent, 
Guangdong  Guanhao High -Tech Co., Ltd. (GG), located in the Zhanjiang Economic and 
Technological Development Zone (ZETD Zone). With respect to GG's purchase of land -use rights in 
the ZETD  Zone, the USDOC requested that China provide informatio n about whether a "distinct 
land regime" existed, " e.g., whether the prices or terms of sale, including other incentives tied to 
the purchase of the land inside the geographic region at issue, are different from those offered 
outside of the geographic regi on." If such differences were found, the USDOC explained, this would 
serve as the basis for finding regional specificity. The USDOC's analytical approach is consistent 
with the DSB's recommendations because, just as the Panel suggested, it evaluates whethe r the 
conditions on which land was sold inside a zone were distinct from those outside the zone.  WT/DS437/RW/Add.1  
 
- C-14 - 
 
   
80. China  argues that the USDOC based its determination on a misplaced interpretation of the 
term "preferential treatment" in a government -issued land apprais al.  These claims are predicated 
on China's misunderstanding of the USDOC's determination and a misreading of the record. The 
USDOC's determination relied on the facts available from the original investigation because China 
declined to respond to the USDOC 's requests for information pertaining to land. Without this 
information, the USDOC found that it was unable to fully investigate certain aspects of the 
provision of land at issue. The investigation record indicates that the land appraisal issued to the 
respondent refers to "preferential treatment," but beyond this observation the USDOC was unable 
to further examine the exact terms of that "preferential treatment."  
 
81. Company officials in their comparison appraisal report indicated that the government's 
preferential policies resulted in an "appraisal price . . . of a particular nature," which suggests that 
the "preferential treatment" at issue affected pricing. The verification report also explains that the 
USDOC examined an appraisal for land outside of t he ZETD Zone, but could not reach a resolution 
as to whether it presented comparable terms. Thus, the USDOC relied on this evidence of 
"preferential treatment" as it constituted the facts available and found that that the GOC sold the 
land in question to t he respondent at a price and at terms that were not available to other firms, 
i.e., firm located outside of the ZETD Zone. The record does not contain any evidence additional to 
the comparison appraisal from the original investigation upon which the USDOC could have relied. 
China had the opportunity to provide additional information, but China declined to cooperate in 
this proceeding.  
 
VII. THE PANEL SHOULD REJ ECT CHINA'S CHALLENG E TO COMPLETED OR FU TURE 
REVIEWS OR SO -CALLED "ONGOING COND UCT"  
82. China seeks to expand the scope of this Article 21.5 proceeding beyond the existence or 
consistency of measures taken to comply with the DSB's recommendations, asserting that the 
Panel's terms of reference include certain additional proceedings and so -called ongoing conduct 
that should be adjudicated in this proceeding. China's attempt to expand the scope of U.S. 
implementation obligations has no basis in the DSU, and China's claims against alleged 
"subsequent closely connected measures" are invalid for sev eral reasons.  
83. China has failed to make out its claims or a prima facie  case with respect to the additional 
reviews, sunset reviews and so -called "ongoing conduct." China's "claims" consist of little more 
than a list of proceedings without the evidence  or argument to satisfy its burden as the 
complaining party. China has failed to meet its burden of argument with respect to any of these 
claims. These additional reviews and sunset determinations are not sufficiently closely connected 
because they do not,  as China claims, consist of simply applying "the same" or "equally unlawful 
legal standards." Rather, they consist of fact -intensive determinations that in each case depend on 
the evidence and circumstances of the proceeding.  
84. China has also not demons trated that these subsequent proceedings are closely connected 
because it has not established the facts and circumstances of each of the additional proceedings. 
Although China refers the Panel to excerpts from each of the subsequent determinations, China 
neglects to provide the necessary analysis that would be required to make conclusions about the 
investigating authority's reasoning or evidence in each case. As the Appellate Body observed in US 
– Gambling , a claim necessarily must fail if the complaining M ember does not make a prima facie  
case, and moreover, it would be legal error for a panel to make the prima facie  case for a 
complaining Member.  
85. The Panel should likewise reject China's attempt to expand the terms of reference to include 
these past pro ceedings given China's failure to put forth a prima facie case that the findings and 
analysis in subsequent proceedings are "closely connected" to the measures taken to comply. The 
United States emphasizes that the question of whether subsequent reviews ar e "related in nature" 
is not the applicable threshold for determining whether a "particularly close relationship" or 
"sufficiently close nexus" exists in connection with the measures taken to comply. Rather, China's 
claim depends on two questions: (1) whet her the challenged measure existed at the time of panel 
establishment, and (2) whether it is closely connected with a measure taken to comply. Here, the 
answer to both questions is "no," and thus China's claims fail.  WT/DS437/RW/Add.1  
 
- C-15 - 
 
  86. The first question – whether the me asure exists at the time of panel establishment – is 
fundamental to any WTO proceeding. A complaining party may wish to cover measures that may 
be adopted in the future, but the DSU does not contemplate such an approach. To do so would 
require a panel to c hase after a moving target and the panel process could not function effectively 
if that were the case. The only exception is in the case of a measure with the "same essence," 
which is not the case in this dispute.  
87. With respect to the second question, a  measure that exists at the time of panel 
establishment – even if not labeled as a compliance measure – may fall within the terms of 
reference of a compliance proceeding under Article 21.5 as a "measure taken to comply" by virtue 
of its "particularly close  relationship" or "sufficiently close nexus" to a compliance measure. 
"Determining whether this is the case requires a panel to scrutinize these relationships, which 
may, depending on the particular facts, call for an examination of the timing, nature, and  effects  of 
the various measures."  
88. China's core argument is that the subsequent reviews are related in nature because they are 
related to the same countervailing duty orders. However, the mere fact that the reviews are 
related to the same order is insu fficient to establish that the determinations made therein have the 
same nature such that the reviews have a "particularly close relationship" or "sufficiently close 
nexus" with the section 129 proceedings at issue in this dispute. Rather, it would be nece ssary to 
establish that the nature of the analyses and individual findings within each review are of the same 
nature. Here, China has failed to do so. The nature of the findings made in the challenged 
subsequent reviews vary according to the facts of each given proceeding, the time period at issue, 
the sequence of questionnaires issued and responses provided, and the analysis of the evidence in 
each case.  
89. Despite China's attempts to liken the question before the Panel in this dispute to the 
question of zeroing, China has not demonstrated – or even provided a plausible explanation – that 
the nature  of the inconsistencies found in the original determinations can be found in the 
subsequent proceedings. When the Appellate Body discussed the nature of related  proceedings in 
the zeroing context, the Appellate Body recognized the fact that several DSB findings had already 
established the existence of an "as such" measure. The Appellate Body's decisions in US – Zeroing 
(Japan) (Article 21.5 – Japan)  (and in US – Zeroing (EC) (Article 21.5 – EC)) were decided in an 
environment where there were no questions as to whether the action in subsequent proceedings 
was of the same nature as in the original proceedings. The zeroing methodology (the use of which 
hinged only on whether a respondent's sales database included sales with "negative" margins) is a 
vastly simpler type of "measure" than the challenged determinations, which are highly fact -specific 
determinations that take into account the totality of the relevant evi dence that is available on the 
record of each proceeding.  
90. In contrast to the calculation issue in those disputes, the issue addressed in the section 129 
proceedings pertains to whether or not the given facts, taken together, demonstrate a 
countervailab le subsidy. The questions of whether there is evidence of a financial contribution by a 
public body, evidence that a benefit is thereby provided, and evidence that a subsidy is specific – 
are questions of an altogether different nature from the question of  recalculating a dumping 
margin without zeroing.  
91. Given that the public bodies, input specificity, land, and benchmark determinations, are 
highly fact -specific determinations that take into account the totality of the relevant evidence that 
is available  on the record of each proceeding as part of its analysis, it cannot reasonably be found, 
without close examination of the specific determination in each challenged proceeding, that the 
determinations in subsequent administrative and sunset reviews are of the same nature as the 
originally challenged proceedings.  
92. China's claims with respect to "future conduct" are also not within the Panel's terms of 
reference. Measures that are not yet in existence at the time of panel establishment – much less 
those wh ich may never come into being – cannot be within a panel's terms of reference.  
93. China has likewise failed to establish that any so -called "ongoing conduct" exists that may 
be challenged as a rule or norm of general and prospective application. In the v iew of the 
United  States, "ongoing conduct" is not cognizable as a measure that is susceptible to challenge. WT/DS437/RW/Add.1  
 
- C-16 - 
 
  China has failed to establish that any such "ongoing conduct" exists or is likely to continue under 
the challenged orders that are at issue in this  dispute. Likewise, even if the Panel were to find that 
China has established the subsequent reviews constitute the "ongoing conduct," China has not 
demonstrated a "particularly close relationship" or "sufficiently close nexus" to the declared 
"measure tak en to comply" and it cannot be presumed that such a close connection exists.  
94. In advancing its "ongoing conduct" claim, China has failed to even identify the indeterminate 
number of measures comprising the purported "ongoing conduct" "measure," much les s identify 
the conduct within such measures that is purportedly inconsistent with the SCM Agreement. Thus, 
China has not only failed to establish the "string of determinations, made sequentially. . . over an 
extended period of time" that would be required to support its claims related to alleged "ongoing 
conduct," but also has failed to establish that the challenged practices "would likely continue to be 
applied in successive proceedings." Thus, China's claims in relation to "ongoing conduct" must be 
reject ed. 
VIII.  FACTS AVAILABLE  
95. The Panel cannot make any findings under Article 12.7 of the SCM Agreement regarding the 
USDOC's use of facts available in the challenged proceedings. A party claiming a breach of a 
provision of a WTO agreement by another Memb er bears the burden of asserting and proving its 
claim. As the Appellate Body has explained, a complaining party will satisfy its burden of proof 
"when it establishes a prima  facie case by putting forward adequate legal arguments and 
evidence." A " prima fa cie case is one which, in the absence of effective refutation by the defending 
party, requires a panel, as a matter of law , to rule in favour of the complaining party presenting 
the prima facie  case." The case presented by China fails to meet this standard . To meet its burden, 
China must adequately identify measures that fall within the scope of the panel's terms of 
reference, and it must make an adequate legal argument for each of its claims and "adduce[] 
evidence sufficient to raise a presumption that wha t it claims is true." The panel may not make the 
case for it.  
96. China, as the complaining party in this Article 21.5 proceeding, must make a prima facie  
case with respect to each of the measures that purportedly constitute an inconsistency with 
Article  12.7 of the SCM Agreement. Although China put forth various claims with respect to the 
USDOC's use of facts available in its panel request, it subsequently failed to make a prima facie 
case with respect to these claims. Moreover, China concedes that it does  not challenge what the 
facts are in these proceedings, but rather challenges the "legal standard." China claims that, 
regardless of whether the USDOC relied on the facts available, its decisions are "just as 
inconsistent." In other words, China recognizes  that there is no basis upon which to make 
Article  12.7 findings.  
97. The United States notes that China's response to the Panel's questions confirms that "China 
is not pursuing claims under Article 12.7." The United States does not agree with China that t he 
Panel can make findings under Article 12.7 when China failed to challenge the application of 
Article  12.7 in the first place.  
 
IX. CONCLUSION  
98. The United States respectfully requests that the Panel find that the United States has 
complied with the re commendations of the DSB and that the U.S. measures taken to comply are 
not inconsistent with the SCM Agreement.  
 
_______________  
 
 
 
 
 WT/DS437/RW/Add.1  
 
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  ANNEX D  
ARGUMENTS OF  THE THIRD PARTIES  
Contents  Page  
Annex  D-1 Integrated Executive Summary of Australia  D-2 
Annex  D-2 Integrated Executive Summary of Canada  D-5 
Annex  D-3 Integrated Executive Summary of the European  Union  D-9 
Annex  D-4 Integrated Executive Summary of Japan  D-12 
 
 
  WT/DS437/RW/Add.1  
 
- D-2 - 
 
  ANNEX D -1 
INTEGRATED EXECUTIVE  SUMMARY OF AUSTRALIA  
11 May 2017  
 
 
I. INTRODUCTION  
1. Members of the Panel, thank you for the opportunity to present Australia's views in this 
dispute. While not taking a position on the particular facts at issue in this dispute, Australia 
considers that significant questions about the proper interpretation o f the Agreement on Subsidies 
and Countervailing Measures (SCM Agreement)  arise regarding "public body" and "benefit".  
 
II. PUBLIC BODY  
2. Australia agrees with the approach articulated by the Appellate Body in US – Anti-Dumping 
and Countervailing Duties ( China ) and reiterated in US – Carbon Steel (India)  for determining 
whether certain conduct is that of a public body. In particular, such a determination "must be 
made by evaluating the core features of the entity and its relationship to government" and "mu st 
focus on evidence relevant to the question of whether the entity is vested with or exercises 
governmental authority."1 Based on this approach, the focus of the determination is clearly on the 
entity itself, and whether that entity possesses, exercises, or is vested with governmental 
authority.  
 
3. China's proposed interpretation has a different focus. Under China's approach, an 
investigating authority must assess the particular conduct or transaction at issue – such as 
providing inputs or purchasing good s – and determine whether that conduct or transaction 
involves the performance of a governmental function.2 For China, therefore, the question of 
whether an entity constitutes a "public body" is transaction -dependent. It can vary depending on 
the act in qu estion.3 The same entity may be a "public body" for some transactions, but not for 
others.  
 
4. This approach is problematic for a number of reasons. First, it does not accord with the text 
of Article 1.1(a)(1). In particular, the text distinguishes between  "two principal categories of 
entities": governments and public bodies on the one hand, and private entities on the other.4 As 
the Appellate Body recognised in US – Anti-Dumping and Countervailing Duties (China ), all 
conduct of governments and public bodie s constitutes a financial contribution where it falls within 
subparagraphs (i) -(iii) and the first clause of subparagraph (iv).5 There is no separate, context -
specific requirement to determine whether such conduct involves the discharge of a governmental 
function in each instance. Rather, the "governmental" character of those entities is sufficient.6 By 
contrast, for "private entities", there must be an additional showing that the specific conduct in 
question results from entrustment or direction by governm ent to carry out such conduct.7 
Therefore, whether the conduct of a private entity is subject to Article 1.1(a)(1) is context -
dependent.  
 
5. If – as for "private entities" – the test for "public bodies" were to require a context -
dependent assessment of wh ether the specific conduct in question flowed from the exercise of a 
governmental function, there would be no meaningful difference between "public bodies" and 
"private entities". This would render their separate inclusion in the text inutile. Further, suc h an 
interpretation would be inconsistent with the Appellate Body's distinction between the 
governmental character of public bodies and the non -governmental character of private entities.8 
                                                
1 Appellate Body Reports, US – Anti-Dumping and Countervailing Duties (China ), para. 345 ; US – 
Carbon Steel (India) , para. 4.52.  
2 China's first written submission, para. 14.  
3 China's first written submission, paras. 93 -94 
4 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China ), para. 284.  
5 Ibid. 
6 Ibid paras. 284 and 291.  
7 Ibid. 
8 Ibid paras. 291 -292. WT/DS437/RW/Add.1  
 
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6. Second , contrary to China's understanding,9 the Appellate Body Report in US – 
Anti-Dumping and Countervailing Duties (China ) does not establish that investigating authorities 
must assess whether the specific conduct or transaction at issue involves the exercise of a 
government function as a pre -requisite to determinin g public body. Rather, in that case, the 
consideration of the specific conduct or transaction at issue was a consequence of the fact that 
such conduct was contained in the instrument vesting the relevant entities with governmental 
authority.10 There was no  suggestion that, had that instrument not mentioned that conduct, a 
finding of "public body" would have been precluded.11 The same is true for US – Carbon Steel 
(India) .12 
 
7. Third, China's approach would impose an impractical evidentiary burden on investigating 
authorities by requiring an investigating authority to obtain evidence that each transaction or 
series of transactions result from a particular performance of a governmental  function.  In 
Australia's view such a requirement would make it impractical to render findings on public bodies, 
particularly when faced with uncooperative parties. As a result, this approach would be 
inconsistent with the context afforded by other elemen ts of the SCM Agreement which affirm that 
investigations must be capable of rendering findings. In particular, this context includes: (i) 
Article  11.1, which describes the function of an investigation as to " determine  the existence, 
degree and effect of an y alleged subsidy"; (ii) Article 12.7, which enables an investigation to 
proceed even where interested Members or parties fail to provide necessary information; and (iii) 
Article 12.12, which clarifies that the due process safeguards contained in Article 1 2 are not 
intended to prevent an investigation "from proceeding expeditiously" in reaching determinations or 
applying countervailing measures. In Australia's view, the approach proposed by China would 
frustrate an investigating authority's discharge of its  function to make determinations on "public 
body" and is contrary to the contextual interpretation of the obligation within the SCM Agreement.  
 
III. BENEFIT  
8. Turning to China's "benefit" claims, we understand the disagreement between the Parties 
regardin g the interpretation of Article 14(d) in this dispute to hinge on this question: does de jure  
or de facto  price setting by government exhaust the "very limited"13 circumstances in which 
in-country prices can be rejected or adjusted, or could such a rejecti on also be justified on the 
basis of distortions caused by other kinds of governmental measures?14  
 
9. In Australia's view, the SCM Agreement does not define exhaustively the types of 
governmental measures that could justify rejecting or adjusting in -country prices. The fact that 
WTO jurisprudence has recognised de jure  and de facto  price setting as a potential basis for 
rejecting in -country prices does not mean that other governmental measures should necessarily be 
excluded in that regard.15 For instance,  a governmental measure – other than price setting – could 
have the effect of suppressing the prices of public bodies. If that governmental measure has the 
same effect on private prices, it may not be appropriate to use those private prices for a 
compariso n under Article 14(d). Instead, it may be appropriate in such circumstances to remove 
the price effects of the governmental measure, although we recognise that such circumstances 
have been described by the Appellate Body as "very limited".16 
 
10. Australia  does not express a view on whether the governmental measures at issue in the 
present dispute provided a sufficient basis for rejecting in -country prices. Nonetheless, Australia 
considers that the present dispute does not turn on whether those measures inv olve de jure  or 
                                                
9 China's first written submission, paras. 67 and 89 -91; second written submission, paras. 25, 30, and 
40-50. 
10 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China ), para. 349.  
11 See eg Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China ), para. 355.  
12 US – Carbon Steel (India) , para. 4.29: 'For example, evidence regarding the scope and content of 
government policies relating to the sector in which the investigated entity operates may inform  the question of 
whether the conduct of an entity is that of a public body.' (emphasis added)  
13 Appellate Body Report, US – Softwood Lumber IV , para. 102.  
14 See China's first written submission, paras. 240 and 243; United States' first written submission 
paras. 251 -255. 
15 Indeed, the Appellate Body has stated that ' We also do not exclude the possib ility that the 
government may distort in -country prices through other entities or channels than the provider of the good 
itself' (Appellate Body Report, US – Countervailing Measures (China),  fn 530 to para. 4.50).  
16 Appellate Body Report, US – Softwood Lu mber IV , para. 102.  WT/DS437/RW/Add.1  
 
- D-4 - 
 
  de facto price setting. For Australia, it is neither possible nor desirable to develop rigid legal rules 
for the kinds of governmental measures that might justify rejecting in -country prices. Such an 
assessment is necessarily case -specific.17 Therefore, the key question in the present dispute is 
whether the USDOC provided a reasoned and adequate explanation based on the particular record 
evidence in the investigation at issue for rejecting in -country prices.  
 
IV. CONCLUSION  
11. For the reas ons outlined, Australia submits that the Panel find: (i) that the determination of 
"public body" does not require evidence that the entity is performing a governmental function 
when engaging in the impugned conduct or transaction; and (ii) that the questio n of whether a 
given governmental measure falls within the "very limited" circumstances that justify rejecting or 
adjusting in -country prices under Article 14(d) is necessarily case -specific and not susceptible to 
rigid legal rules.  
 
12. Thank you for the opportunity to present Australia's views in this dispute.  
 
 
 
 
  
                                                
17 See Appellate Body Report, US – Countervailing Measures (China) , para. 4.51.  WT/DS437/RW/Add.1  
 
- D-5 - 
 
  ANNEX D -2 
INTEGRATED EXECUTIVE  SUMMARY OF CANADA  
21 June  2017  
 
 
I. INTRODUCTION  
1. Canada's views on public bodies, out -of-country benchmarks, ongoing conduct, and 
measures taken to comply are  set out below.  
II. PUBLIC BODIES  
2. The Appellate Body has found that in making a public body determination, the core features 
of the entity at issue and its relationship with the government are what matter. The conduct of the 
entity in making financial c ontributions is not the focus of the analysis. Rather, the conduct is to be 
analyzed with regard to the core characteristics and functions of the relevant entity, its 
relationship with the government, and the prevailing legal and economic environment.1 
3. Based on an evaluation of the core features of the entity and its relationship with the 
government, an investigating authority will determine either that an entity is a public body or that 
it is not, in the same way that an entity is either government or i t is not. The designation of public 
body is not dependent on each action the entity takes in relation to its function. Rather, a public 
body designation should be made on the basis of evidence related to government policies, the 
applicable legal order, the  prevailing economic environment in the country, and other evidence 
related to the core features of the entity and its relationship with the government.2 
4. In addition, evidence that a government exercises meaningful control over an entity and its 
conduct  may serve, in certain circumstances, as evidence that the relevant entity possesses 
governmental authority and exercises such authority in the performance of governmental 
functions.3 Meaningful government control over an entity's functions need not be eva luated in 
relation to each financial contribution.4 Evidence of meaningful control relates to the legal, 
economic and policy framework of the entity, not its conduct in the provision of financial 
contributions under inquiry.5 
5. China's interpretation that  "an entity must be performing a 'government function' when 
engaged in the conduct that is the subject of the financial contribution inquiry"6 would effectively 
render the term "public body" redundant with the "entrusts or directs" provision of 
Article  1.1(a)(1)(iv).  
III. OUT-OF-COUNTRY BENCHMARKS  
6. Article 14(d) establishes a guideline for determining whether a benefit is conferred in the 
context of a government's provision of goods and services and the purchase of goods.7 A 
comparison is generally requir ed in determining whether remuneration for the provision of a good 
is "less than adequate".8 This involves the selection of an appropriate comparator with which to 
                                                
1 Appellate Body Reports, US – Anti-Dumping and Countervailing Duties (China) , para. 317 and US – 
Carbon Steel (India) , para. 4.29.  
2 Appellate Body Report,  US – Carbon Steel (India) , para. 4.29.  
3 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China ), para. 318.  
4 Ibid. paras. 317 -318. 
5 Ibid. para. 350.  
6 China's first written submission, para. 91.  
7 Appellate Body Reports, US – Counter vailing Measures (China) , para. 4.84 and US – Carbon Steel 
(India) , para. 4.147.  
8 Appellate Body Reports, US – Countervailing Measures (China) , para. 4.44 and US – Carbon Steel 
(India) , para. 4.148.  WT/DS437/RW/Add.1  
 
- D-6 - 
 
  compare the government price for the good in question.9 Moreover, investigating authorities may 
consider the possibility of using out -of-country benchmarks in very limited circumstances.10 
7. The assessment of the benefit must be made in relation to prevailing market conditions in 
the country of provision.11 As a result, any benchmark for conduct ing such an assessment must 
consist of market -determined prices under the prevailing market conditions for the good in 
question in the country of provision".12 
8. The primary benchmark and starting point in any analysis must be prices from arm's length -
transactions in the country of provision. Nevertheless, it is not the source of the prices that is 
determinative, but rather whether the prices are market -determined and reflective of prevailing 
market conditions in the country of provision. In this respect, even the prices of government -
related entities in a predominant market position could be established on market principles.13 
9. The decision to reject in -country prices must be made on the basis of a market analysis that 
determines that such prices are not  market determined as a result of government intervention in 
the market.14 The key factor, nevertheless, is not government predominance or even the 
possession of sufficient market power per se .15 Rather, the key factor is evidence of how 
government predomi nance and the possession and exercise of market power has actually been 
used to cause price distortion. The investigating authority must demonstrate a clear evidentiary 
path from the government's predominant position to its possession of market power to it s exercise 
of that power to distort market prices.16 
10. Thus, in the context of this case, this compliance Panel must examine what the USDOC has 
actually done to analyze  the precise evidentiary path showing how the Chinese government has 
distorted prices in the market. Moreover, the USDOC must do so in a manner that is based on 
positive evidence and demonstrates an adequate explanation of this conclusion.  
IV. ONGOING CON DUCT  
11. The ability of Members to challenge unwritten measures, including ongoing conduct, is an 
important mechanism for achieving both the prompt settlement of disputes  and a final resolution 
to the dispute and is consistent with the principle that any act or omission attributable to a WTO 
Member can be challenged in WTO dispute settlement proceedings.17 
12. The Appellate Body has described ongoing conduct as, "conduct that is currently taking 
place and is likely to continue  in the future".18 The Appella te Body has said that to establish the 
existence of ongoing conduct a Member must show (i) that the measure is attributable to a 
Member; (ii) the precise content of the measure; (iii) the repeated application of the conduct; and 
(iv) the likelihood that su ch conduct will continue.19 
13. It is evident from these criteria that the analytical framework for ongoing conduct is not 
limited to the facts of cases ( i.e. Argentina – Import measures , US – Import Measures and US – 
                                                
9 Appellate Body Reports, US – Countervailing Measures (China) , para. 4.44 and US – Carbon Steel 
(India) , para. 4.148.  
10 Appellate Body Report, US – Softwood Lumber IV , para. 102.  
11 Appellate Body Reports, US – Countervailing Measures (China) , para. 4.46 and US – Carbon Steel 
(India) , para. 4.150.  
12 Appella te Body Reports, US – Countervailing Measures (China) , para. 4.46 and US – Carbon Steel 
(India) , para. 4.151.  
13 Appellate Body Reports, US – Countervailing Measures (China) , para. 4.48 and US – Carbon Steel 
(India) , para. 4.154.  
14 Appellate Body Reports,  US – Countervailing Measures (China) , para. 4.76 and US – Softwood 
Lumber IV , paras. 98 -99. 
15 Appellate Body Report, US – Countervailing Measures (China) , para. 4.59.  
16 Appellate Body Reports, US – Countervailing Measures (China) , paras. 4.52, 4.59 and 4.62 and US – 
Carbon Steel (India) , fn. 754.  
17 Appellate Body Report, US – Corrosion Resistant Steel Sunset Review , para. 81.  See also Appellate 
Body Report, Argentina – Import Measures , para. 5.109.  
18 Appellate Body Report, Argentina – Import Measures , para 5.144, citing Panel Report, US – Orange 
Juice (Brazil) , paras. 7.175 -7.176 (emphasis in original).  
19 Appellate Body Report, Argentina – Import Measures , paras 5.104 and 5.108.  WT/DS437/RW/Add.1  
 
- D-7 - 
 
  Orange Juice (Brazil) ) in which it has  existed to date. On the contrary, the analytical framework for 
ongoing conduct is capable of being applied in a broad range of circumstances, including the 
present case, provided the above four criteria are satisfied.  
14. Ongoing conduct is neither "an e ntirely new type of 'measure'"20, nor an "indeterminate 
number of future measures"21, as the United States claims; rather, ongoing conduct is an 
analytical tool for understanding and evaluating certain types of measures and requires evidence 
of repeated pa st application of the conduct in question.  
15. Understanding and applying the analytical device of ongoing conduct in a flexible manner is 
necessary to allow Members to obtain relief without having to return to dispute settlement multiple 
times.  
V. MEASUR ES TAKEN TO COMPLY  
16. The Appellate Body has found that under the Dispute Settlement Understanding , a failure to 
fully implement the Dispute Settlement Body's (DSB) recommendations and rulings cannot be 
found before the end of the reasonable period of ti me (RPT).22 However, once the RPT has expired, 
the implementing Member is obligated to fully comply with the recommendations and rulings of the 
DSB, and any WTO -inconsistency has to cease by the end of the RPT with prospective effect.23 
When it comes to th e assessment of any duties following the end of the RPT, whether 
implementation is compliant should not be determined by reference to the date when liability 
arises, but rather by reference to the time when final duty liabilities are assessed.24 Thus, any 
subsequent reviews or proceedings may not extend the use of WTO -inconsistent methodology 
beyond the end of the RPT.25 
17. In evaluating whether a Member has implemented the DSB's recommendations and rulings, 
a compliance panel is to examine "measures taken  to comply with the recommendations and 
rulings"26 of the DSB and is not limited to measures that a Member says it has taken to comply.27 
A panel may also examine the timing, nature, and effects of other measures to determine whether 
there is a close nexus  between such measures and the DSB's recommendations and rulings.28 This 
nexus -based test is principled and focuses on the substance of a respondent Member's actions or 
omissions rather than on formalistic labels.  
18. In its argument regarding Panel jurisd iction, the United States appears to be recycling lines 
of reasoning that were rejected by the Appellate Body in both US – Zeroing (EC) (Article 21.5 – 
EC) and US – Zeroing (Japan) (Article 21.5 – Japan) , and which would effectively undermine 
dispute settl ement concerning trade remedies measures. Relying on the past decisions of the 
Appellate Body, the Panel should reject the United States' assertion that measures completed 
during the course of compliance proceedings necessarily fall outside of the Panel's jurisdiction 
solely on the basis of their timing. Jurisdiction should instead be determined on the basis of all 
three elements of the nexus -based test. Moreover, it is not important whether any of the 
administrative and sunset reviews challenged by China w ere conducted before or after the end of 
the RPT.29 What is significant is whether WTO -consistent methodology is being applied by the 
investigating authority in any action taken related to a measure subject to implementation of DSB 
recommendations or rulin gs following the end of the RPT.  
19. Furthermore, a measure evidenced using the analytical tool of ongoing conduct is in 
principle  susceptible to review by a compliance panel.30 Whether a certain alleged ongoing conduct 
                                                
20 United States' first written submission, para. 328.  
21 United States' first written submission, para. 326.  
22 Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 299.  
23 Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 299.  
24 Ibid. para. 309.  
25 Ibid. 
26 Article 21.5 of the DSU.  
27 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 73.  
28 Ibid. para. 77.  
29 See United States' first written submission, para. 321, where the United States writes that "nearly all 
of the measures that China identifies were concl uded prior to the end of the RPT on April 1, 2016, and thus 
were not 'subsequently closely connected' to the measures taken to comply in this dispute".  
30 Appellate Body Report, Canada – Aircraft (Article 21.5 – Brazil) , para. 36.  WT/DS437/RW/Add.1  
 
- D-8 - 
 
  falls within the terms of reference of a compliance panel should be evaluated on the basis of the 
same nexus -based test that applies to all "measures taken to comply".  
20. If the Panel were to accept the interpretation advanced by the United States, Members 
would not be able to obtain effect ive relief against the United States' trade remedies system 
through WTO dispute settlement. If Members need to bring a new dispute for each connected 
stage of an investigation, such as an administrative or sunset review, the next review may have 
been compl eted before the end of the reasonable period of time to comply expires. Members 
seeking to challenge such a sequence of determinations would find themselves in a circular 
process with little prospect of ever obtaining effective relief. This interpretation could not only 
frustrate compliance proceedings, it would also be inconsistent with the objectives of promptly 
settling disputes and securing positive solutions to disputes.31 
  
                                                
31 Appellate Body Report,  US – Zeroing (Japan) (Article 21.5 – Japan), para. 122.  WT/DS437/RW/Add.1  
 
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  ANNEX D -3 
INTEGRATED EXECUTIVE  SUMMARY OF THE EUROP EAN UNION  
21 June  2017  
I. CONCERNING CHINA'S C LAIMS REGARDING THE USDOC'S PUBLIC BODY 
DETERMINATIONS  
A. "Public bodies" under Article 1.1(a)(1)  
1. In US — Anti-Dumping and Countervailing Duties (China) , the Appellate Body found that 
"being vested with, and exercising, authority to perform governmental functions" is a core feature 
of a "public body" in the sense of Article 1.1(a)(1). An entity can be vested with authority in many 
different ways. Whether an entity qualifies as a "public body" is, as the Appellate Body has 
emphasized, closely connected to the more general issue of attribution . All relevant evidence 
should be taken into account, and a wide range of factors (e.g. the links between the entity and 
the State, specific regulatory frameworks etc.), may be relevant. While this assessment must 
always be tailored to the circumstances of the case, in the EU's view, the investigating authority 
may also take into account more general assessments that have been placed on the record of the 
investigation.  
2. Demonstrating the exercise of "governmental functions" is one way of showing 
"governmental authority". Both parties seem to agree that, to the extent that a public body 
determination in a given case is based on the exercise of "governmental functions", the  
assessment should take into account the entity's conduct. This suggests that some nexus may 
need to exist between the governmental function the entity is alleged to exercise and the type of 
conduct the entity is actually engaged in. For example, we might ask whether the alleged financial 
contribution falls within the scope of the governmental function said to make the entity a public 
body. However, this is different from asking whether the specific financial contribution constitutes 
a governmental function . Unlike with private bodies, it is not necessary to show that a public body 
was specifically entrusted or directed to provide the financial contribution at issue. Thus, a 
financial contribution can be attributed to a public body not only when the governme nt in the 
narrow sense entrusted or directed the entity to provide it, but also if certain indicators relevant to 
the entity in general show that its conduct can be attributed to the WTO Member. It should also be 
kept in mind that there is no a priori  limitation on what can be a governmental function for a 
particular WTO Member.  
3. When deciding whether a certain entity is a public body, governmental regulation may be 
relevant. On the other hand, the mere fact that a sector is regulated does not in itself n ecessarily 
suffice to show that all entities in that sector are vested with governmental authority. Rather, all 
the relevant facts and elements would need to be taken into account.  
B. China's challenge against the Public Bodies Memorandum "as such"  
1. The timing of measures taken to comply  
4. Compliance proceedings under Article 21.5 can only assess the WTO consistency of 
measures "taken to comply". The Appellate Body has made clear that even if a measure is not 
declared  to be a measure taken to comply, it may also be susceptible to review by a panel acting 
under Article 21.5 if it is a "measure […] with a particularly close relationship to the declared 
"measure taken to comply."  
5. An aspect of the close nexus test which appears to be particularly relevant in this dispute is 
the element of timing . Proximity in time between the adoption of the measure at issue and the 
declared measure taken to comply speaks in favour of a finding that there was a close link. It is 
not, however, indispensable. In that respect,  the EU would observe the following.  
6. Compliance proceedings should not be used to "short -circuit" original panel proceedings. If 
there was nothing preventing a challenge against a measure at the time of the original panel 
request, then the complainant m ay well be precluded from challenging it in compliance 
proceedings.  
7. However, the Appellate Body has found that measures cannot be formalistically excluded 
from Article 21.5 proceedings for the sole reason that they pre -date the adoption of the 
recommend ations and rulings in the original dispute. The EU does not see why they could be WT/DS437/RW/Add.1  
 
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  similarly formalistically excluded if they pre -date the original panel request. Whether the 
complaining Member could have pursued a claim in the original proceeding is a more  complex 
matter than whether a particular legal text had been published prior to the original panel request. 
For example, a measure may become de facto  WTO-inconsistent over time even while its text 
remains the same. The crucial question, in the EU's view,  is whether the measure is indeed "taken 
to comply". If so, it is difficult to see how due process would be served by excluding it from the 
scope of Article 21.5 proceedings for reasons of timing alone. The Appellate Body has recognized 
as much (in US – Zeroing (EC) (Article 21.5 – EC)). 
2. Measures subject to challenge in WTO dispute settlement, "as 
such" and otherwise  
8. Article 3.3 of the DSU speaks simply of "measures taken by another Member". The concept 
of a measure is broad; it extends to any act or omission that is attributable to a WTO  Member. The 
arguments of the United States on this point seem to be more pertinent to a different, more 
specific issue: whether the measure has "general and prospective application".  
9. The evidence and arguments tha t must be supplied to show the existence of a measure are 
a function of how the measure is described or characterized by the complainant. A range of factual 
elements may come into play when deciding whether a measure indeed has general and 
prospective appl ication: for example, whether the challenged "rule or norm" is systematically 
applied, and what the "concrete instrumentalities" that evidence its existence are. The mere fact 
that the measure itself does not explicitly state that it is of general or prosp ective application (or, 
for example, that it lays down a policy that must be followed in all future cases) does not in itself 
settle the issue.  
II. CONCERNING CHINA'S C LAIM UNDER ARTICLE 1 4(D) REGARDING THE U SDOC'S 
REJECTION OF IN -COUNTRY BENCHMARK PR ICES  
10. The EU recalls that Article 14(d) SCM stipulates that the determination of benefit in case of 
the provision of goods by a government depends on whether the remuneration is less than 
adequate which shall be determined "in relation to prevailing market c onditions for the good in the 
country of provision." It follows that in -country prices must be "market -determined."  
11. The EU recalls the Appellate Body's statement that what permits the use of out -of-country 
benchmarks is price distortion which must be established on a case -by-case basis. The EU 
considers that a finding of price distortion may be the result of the market power of the 
government as a supplier of the good in question or the result of other government interventions 
not related to the govern ment's market power, or be based on a combination of both elements. 
While the EU considers that the legal and evidentiary threshold for a finding of price distortion is 
high because out -of-country benchmarks may only be used in "very limited circumstances" , it does 
not agree with China that the individual price must be "effectively determined" in the sense of 
being set or fixed by the government. The distortion by the government of important parameters 
that are relevant for price -building, for example gover nment interventions affecting demand or 
supply, may also be considered in this regard. At the other end of the spectrum, the EU does not 
believe that a mere "change in the conditions of competition" would, in itself and without more, 
necessarily always be enough for an inference of price distortion as proposed by Japan.  
12. The EU considers that an evidentiary link is required that leads from the government 
interventions in question to the distortion of the domestic price. Such evidentiary link will depend  
on the particular circumstances of each case.  
13. According to the EU several considerations may be relevant for establishing such an 
evidentiary link. First, evidence relating to government interventions that are directly relevant for 
prices or price -setting will normally carry more weight than evidence relating to government 
interventions that only have an indirect impact on prices. Second, and in a similar vein, the closer 
the relevant evidence is related to the product or sector in question, the more weight it will 
normally carry. For example, evidence regarding government interventions directly impacting the 
product or sector in question will carry more weight than evidence regarding government 
interventions regarding the overall economy, for example monetary policy. Third, the level of 
evidence required to demonstrate price distortion through government interventions may depend 
on the degree of market power of the government as a supplier. In particular, the more market 
power a government exercises as  supplier of the product in question, the less additional evidence 
regarding other government interventions will normally be required to show price distortion. The WT/DS437/RW/Add.1  
 
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  EU agrees with the United States that the "totality of the evidence" will be relevant for an  
assessment of price distortion.  
14. The EU does not take position whether the USDOC discharged its burden in the present 
case. 
III. CONCERNING CHINA'S C LAIM OF INCONSISTENC Y WITH ARTICLE 2.1(C ) 
A. China's claims regarding "subsidy programmes"  
15. The EU recalls that the Panel found in the original proceedings that "the consistent provision 
by the State -owned enterprises ("SOEs") in question of inputs for less than adequate 
remuneration" provided a sufficient basis for the USDOC's identification of subsidy  programmes.  
16. The EU disagrees with China's argument that the USDOC, by finding a "subsidy programme" 
through the mere identification of subsidies provided to individual companies, would "render 
meaningless" the distinction between the term "subsidy" and "subsidy progra mme" that would 
have been established by the Appellate Body. The EU considers that although Article 1.1 does not 
refer expressly to the term "programme", a number of terms in Article 1.1 indicate that the 
definition extends both to a subsidy in the form of  a subsidy to one enterprise, and a subsidy in 
the form of a subsidy programme.  
17. The main issue in this dispute appears to be not so much an issue of the correct definition of 
the term "subsidy" or "subsidy programme" as China seems to argue, but rathe r an evidentiary 
issue that is rooted in the particular situation of "unwritten" subsidies which are the subject of the 
present case.  
18. A different question and the issue which – at least in case of written measures - is usually 
the main focus of Articl e 2.1(c), is the question whether the subsidy programme so established, is 
"used by a limited number of enterprises". The EU considers that both issues should be kept 
strictly separate.  
B. China's claims regarding the "duration" of the subsidy programmes  
19. The EU recalls the statement of a previous panel which found that the notion of specificity 
has to do with whether a subsidy is sufficiently broadly available throughout an economy so as not 
to benefit "certain enterprises". The need to take account of  "the length of time during which the 
subsidy programme has been in operation" must be understood in this context.  
20. In deciding whether the USDOC adequately took into account the length of the subsidy 
programme, the EU considers that the Panel may take  into account: (i) the fact that it is 
uncontested by China that the subsidy programme existed for at least one year; (ii) the fact that 
the USDOC requested, and presumably analysed, data for a 3 -year period; (iii) the fact that the 
inputs in question have  been provided for a long period of time in a mature industry and (iv) the 
fact that China has not put forward any argument or evidence that the subsidy programme was 
only in existence of a short time period.  
IV. CONCERNING CHINA'S C LAIM OF INCONSISTENC Y WITH ARTICLE 2.2  
21. The EU recalls that the question of the legal relevance of a "distinct land regime" under 
Article 2.2 was brought before the Appellate Body by China in US – Anti-Dumping and 
Countervailing Duties (China) . While the Appellate Body did n ot rule on this issue, its statements 
in this respect imply support for the position that the mere existence of a "distinct land regime" 
within a wider geographical area of the granting authority, does not suffice to demonstrate 
regional specificity. The E U considers that the mere existence of a distinct land regime may 
normally not in itself be sufficient for a finding of regional specificity. An investigating authority 
must take into account all relevant evidence, notably evidence that land is provided fo r less than 
adequate remuneration also outside the industrial park in question.  
  WT/DS437/RW/Add.1  
 
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  ANNEX D -4 
 
INTEGRATED EXECUTIVE  SUMMARY OF JAPAN  
21 June  2017  
 
1. In this proceeding, Japan addresses the interpretation and application of the term "public 
body" in Article 1.1(a)(1) and the calculation of the amount of the subsidy under Article 14(d).  
I. PUBLIC BODY INQUIRY  
2. The standard for the analysis of "public body" that has been established in prior cases is 
whether the entity at issue "possesses, exercis es or is vested with governmental authority."   
3. The issue raised by China in these proceedings concerns the relationship between the 
government function and the conduct that allegedly constitutes a financial contribution. China's 
position is that the gov ernment function identified by an investigating authority, in the context of a 
public body analysis, must be the same government function that the entity at issue is performing 
when it engages in the conduct that is the subject of the financial contributio n inquiry.  
4. In Japan's view, an investigating authority is not required to establish such a link  between 
the relevant government function and the conduct that is the subject of the financial contribution 
inquiry, as t he relevant analysis must focus on the characteristics, features or nature of the 
relevant entity  and not on its specific conduct or transaction it engages in. T o require such a link 
would conflate two distinct requirements, namely, whether an entity is a "public body" and 
whether such enti ty's conduct is a "financial contribution."  
5. The focus on the characteristics or features of the relevant entity is evident throughout the 
Appellate Body's analysis. For example, in US — Anti-Dumping and Countervailing Duties (China) , 
the Appellate Body clearly stated that "[p]anels or investigating authorities confronted with the 
question of whether conduct falling within the scope of Article 1.1(a)(1) is that of a public body will 
be in a position to answer that question only by conducting a proper eval uation of the core 
features of the entity concerned , and its relationship with government in the narrow sense,"1 and 
that an investigating authority must "evaluate and give due consideration to all relevant 
characteristics of the entity" and must "avoid fo cusing exclusively or unduly on any single 
characteristic without affording due consideration to others that may be relevant."2 
6. The Appellate Body further found, in US — Carbon Steel (India) , that "[w]hether the conduct 
of an entity is that of a public body must in each case be determined on its own merits, with due 
regard being had to the core characteristics and functions of the relevant entity,  its relationship 
with the government, and the legal and economic environment prevailing in the country in wh ich 
the investigated entity operates."3  
7. With regard to specific elements or evidence to be evaluated, a flexible approach and an 
examination of different types of evidence are required given that "the precise contours and 
characteristics of a public body are bound to differ from entity to entity, State to State and case to 
case."4 In this regard, the Appellate Body further explained that "[t]here are many different ways 
in which government in the narrow sense could provide entities with authority" and  "[a]ccordingly, 
different types of evidence may be relevant to showing that such authority has been bestowed on 
a particular entity."5  
8. From the standpoint of Japan,  an important element in the evaluation of the "core features 
of the entity concerned, and its relationship with government in the narrow sense" is whether such  
an entity is structured in a manner that allows it to act not solely in accordance with commercial 
                                                
1 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 317. (emphasis 
added)  
2 Ibid., para. 319.  
3 Appellate Body Report, US – Carbon Steel (India) , para. 4.29. (emphasis  added)  
4 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 317.  
5 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 318.  WT/DS437/RW/Add.1  
 
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  considerations. Where an entity is structured in a manner that enables it to engage  in activities 
that a private market actor (in particular, a private company) is unable to reasonably and 
sustainably engage in, this would constitute a strong indication that the entity is vested with a 
governmental function, even if that entity is not ve sted with any  de jure  governmental authority, 
e.g. a regulatory power.  
9. What private entities can reasonably and sustainably engage in and what they are incapable 
of doing (i.e. what only the government can do) may be objectively distinguished since, fo r 
example, private entities' financial capabilities are limited unlike entities that have recourse to 
financial capabilities provided by the government. Therefore, Japan considers that whether an 
entity is structured to act  not solely in accordance with co mmercial considerations could bring an 
objective and strongly probative perspective to the "public body" analysis.  
10. Having said that, Japan would like to note that t he analysis of governmental function must 
always involve looking at the relationship bet ween the entity and the government in the narrow 
sense, and if there is no such a relationship found, it is difficult to say a "government " function  
exists . 
11. China 's proposed interpretation is problematic since it  would require a twofold assessment of 
whether a private body has been entrusted or directed to carry out a government function: first, 
as part of the evaluation of whether the relevant SOEs are public or private bodies; and, second, 
after they have been found to be private bodies, to determine whether there is entrustment or 
direction of such SOEs to carry out the particular conduct that is subject to financial contribution 
inquiry, as provided for in Article 1.1(a)(1)(iv). Thus, China's argument would result in drawing an 
arbitrary requirement that is specific to subparagraph (iv) and apply it to the whole of 
Article  1.1(a)(1) in the context of the independent requirement of "public body." Such an approach 
is not consistent with the customary rules of interpretation of international law reflecte d in the 
Vienna Convention.6 
II. THE CALCULATION OF T HE AMOUNT OF A SUBSI DY UNDER ARTICLE 14(D)  
12. Article 14 of the SCM Agreement sets out guidelines for the calculation of benefit. 
Subparagraph (d) of Article 14 concerns the provision of goods or servic es or the purchase of 
goods by a government. According to the guideline s provided in Article 14(d) of the 
SCM Agreement, the provision of goods or services or purchase of goods by a government shall 
not be considered as conferring a benefit unless the prov ision is made for less than adequate 
remuneration, or the purchase is made for more than adequate remuneration. Article 14(d) further 
explains that the adequacy of remuneration shall be determined in relation to prevailing market 
conditions for the good or  service in question in the country of provision or purchase.  
13. With respect to these guidelines, t he Appellate Body in US — Softwood Lumber IV has found 
that p rices in the market of the country of provision or purchase are "the primary, but not the 
exclusive benchmark" for the calculation of benefit under Article 14(d)  and has confirmed that "an 
investigating authority may use a benchmark other than private prices of the goods in the country 
of provision, when it has been established that private prices  of the goods in question in that 
country are distorted, because of the predominant role of the government in the market as a 
provider of the same or similar goods".  
14. China and the United States disagree with respect to the interpretation and application of 
the phrase "prevailing market conditions" and, in particular, as to the circumstances in which an 
investigating authority may depart from in -country prices to determine the adequacy of 
remuneration . 
15. China argues for a very strict standar d in which in -country prices must be used except when  
the investigating authority determines that "the government action or policy, whatever it is, 
effectively determined all other domestic prices for the same or similar goods, such that a 
                                                
6 See Appellate Body Report,  India – Patents (US) , para. 45.  WT/DS437/RW/Add.1  
 
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  comparison betwe en the price of the government -provided good and a domestic benchmark price 
would amount to a circular comparison between two government -determined prices."7 
16. The United States, for its part, submits that the fundamental issue in determining whether 
to rely on an out -of-country benchmark under Article 14(d) is price distortion. The United States 
argues that China's proposed interpretation would arbitrarily preclude investigating authorities 
from addressing situations in which government action has render ed prices not 
market -determine d.8 
17. Japan agrees with the United States that Article 14(d) does not establish that price 
distortion can be found only when an investigating authority finds that the government effectively 
determined all other domestic pric es for the same or similar goods. China's overly demanding test 
is not required by either the text of Article 14(d) or prior rulings . 
18. Japan recalls the Appellate Body's finding in US — Anti-Dumping and Countervailing Duties 
(China)  that the key questio n to be determined is whether there is "price distortion" in the market, 
and "price distortion must be established on a case -by-case basis. "9 The Appellate Body  in US — 
Carbon Steel (India)  has further explained that, in the context of Article 14(d), prev ailing market 
conditions "consist of generally accepted characteristics of an area of economic activity in which 
the forces of supply and demand interact to determine market prices."10 The Appellate Body in EC 
and certain member States — Large Civil Aircra ft has also explained that m arket prices are "not 
dictated solely by the price a seller wishes to charge, or by what a buyer wishes to pay."11 Instead, 
"the equilibrium price established in the market results from a discipline enforced by an exchange 
that is reflective of the supply and demand of both sellers and buyers in that market ."12 In 
economic terms, as the United States noted, "equilibrium" is "[a] situation in which supply and 
demand are matched and prices are stable ."  
19. Japan notes that, with r egard to specific elements to consider in finding "price distortion", 
the Appellate Body in US – Carbon Steel (India ) has stated that "an investigating authority may be 
called upon to examine various aspects of the relevant market."13 This examination may involve an 
assessment of the structure of the relevant market, including the type of entities operating in that 
market, their respective market share, as well as any entry barriers. It could also require 
assessing the behavior of the entities operating in that market in order to determine whether the 
government itself, or acting through government related entities, exerts market power so as to 
distort in -country prices.  
20. It is also notable that  the Appellate Body  in US — Countervailing Measures (China)  has 
made clear that what an investigating authority must do "will vary depending upon the 
circumstances of the case, the characteristics of the market being examined, and the nature, 
quantity, and quality of the information". Thus, as the Appellate Body  in US – Softwood Lumber IV 
and US — Countervailing Measures (China)  has stated , the assessment of price distortion is fact -
specific and must be conducted on a "case -by-case basis", taking into account "all of the 
evidence". These Appellate Body findings supp ort Japan's views that, for purposes of Article 14(d), 
"distortion" may be established through a holistic assessment of the market . Thus, even in cases 
where an investigating authority cannot find that the government effectively determined prices for 
the g ood in question, "distortion"  of the relevant market may be established when there is other 
evidence  that, considered through a holistic analysis of the market , indicates so .  
21. China's position seems to be based on the misunderstanding that in -country p rices can only 
be found to be distorted in situations in which the government administratively determines prices 
or is the provider of the good. However, the Appellate Body in US — Countervailing Measures 
                                                
7 China's  second written submission, para. 148.  
8 United States' second written submission, para. 165.  
9 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 446. 
10 Appellate Body Report, US — Carbon Steel (India) , para. 4.150. 
11 Appellate Body Report, EC and certain member States – Large Civil Aircraft , para 981.  
12 Ibid. 
13 Appellate Body Report, US — Carbon Steel (India) , para. 4.157. WT/DS437/RW/Add.1  
 
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  (China)  expressly left open the possibility "that t he government may distort in -country prices 
through other entities or channels than the provider of the good itself."14 
22. Japan also believes that a possible approach to determine distortion is to evaluate whether 
the price in the market is formed throug h arm 's length transactions based on the respective 
market actors ' commercial considerations. A "market " should in principle consist of actors that act 
solely in accordance with commercial considerations , as opposed to non -commercial 
considerations, such a s the achievement of governmental policy objectives . Evidence that actors 
do not operate on the basis of commercial considerations will provide a strong indication that 
prices resulting from interactions of these operators are distorted , and consequently m ay cause a 
price distortion of the relevant market . 
23. Finally, Japan agrees with Canada that "the investigating authority must demonstrate a clear 
evidentiary path". However, in Japan's view, this "evidentiary path" should be between the 
government inter vention (more broadly defined than predominance) and the distortion of market 
prices.  
 
__________  
                                                
14 Appellate Body Report, US — Countervailing Measures (China) , footnote 530 to para. 4.50.